UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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|
T
Filed by a Party other than the Registrant |_|
£
Check the appropriate box:
|_|
T Preliminary proxy statement |_| Proxy Statement
£Confidential, for useUse of the |X| Definitive proxy statement Commission onlyOnly (as permitted
|_| Definitive additional materials by Rule 14a-6(e)(2))
|_|
£ Definitive Proxy Statement
£ Definitive Additional Materials
£ Soliciting material under Rule 14a-12
ePlus inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Material Pursuant to §240.14a-12
| EPLUS INC. |
| (Name of Registrant as Specified In Its Charter) |
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| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of
filing feeFiling 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.
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(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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(5) Total fee paid:
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
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400 Herndon Parkway
Herndon, Virginia 20170
August 5, 2003
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of ePlus
inc. on September 18, 2003. The annual meeting will begin at 8:00 a.m. local
time at the Courtyard Marriott, 533 Herndon Parkway, Herndon, Virginia 20170.
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. We first began mailing these proxy materials on
or about August 5, 2003 to all stockholders of record at the close of business
on July 21, 2003. This mailing includes the proxy statement, proxy card, a
return envelope, and the ePlus 2003 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 may still do so.
We look forward to seeing you in Herndon, Virginia on September 18, 2003.
Very truly yours,
/s/ Phillip G. Norton
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Phillip G. Norton, President
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| £ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
| £ | Fee paid previously with preliminary materials. |
| £ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: |
| (2) | Form, Schedule or Registration Statement No.: |
EPLUS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to
To be held on [Monday, September 18, 2003
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15, 2008]
To the Stockholders of ePlusePlus inc.:
The annual meetingAnnual Meeting of stockholdersStockholders of ePlusePlus inc., a Delaware corporation, will be held on September 18, 2003,[September 15, 2008], at the Courtyard Marriott, 533 Herndon Parkway,
Herndon,Hyatt Regency, 1800 Presidents Street, Reston, Virginia, 20170,20190 at 8:00 a.m. local time for the purposes stated below:
1. To elect two Class I Directors, each to serve a term of three
years and until their successors have been duly elected and
qualified.
2. To ratify the appointment of Deloitte & Touche LLP as our
independent auditors for our fiscal year ending March 31, 2004.
3. To approve and adopt an amendment to the ePlus inc. Certificate
of Incorporation to decrease the number of shares of our
authorized stock from 52 million shares (consisting of 50 million
shares of common stock, par value $0.01 per share, and 2 million
preferred shares, par value $0.01 per share) to 27 million shares
(consisting of 25 million shares of common stock, par value $0.01
per share, and 2 million preferred shares, par value $0.01 per
share).
4. To approve an amendment to the ePlus inc. Amended and Restated
1998 Long-Term Incentive Plan, which sets the number of shares of
common stock available for awards under the plan at 3,000,000.
5. To transact such other business as may properly come before the
annual meeting.
| 1. | To elect as directors the two Class III Directors, three Class II Directors, and three Class I Directors named in the attached proxy statement, each to serve a term as described in the proxy statement, and until their successors have been duly elected and qualified; |
| 2. | To approve the 2008 Non-Employee Director Long-Term Incentive Plan; |
| 3. | To approve the 2008 Employee Long-Term Incentive Plan; |
| 4. | To approve our Amended and Restated Certificate of Incorporation; |
| 5. | To ratify the appointment of Deloitte & Touche LLP as our independent auditors for our fiscal year ending March 31, 2009; |
| 6. | To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
Under the provisions of our Bylaws, and in accordance with Delaware law, the Board of Directors has fixed the close of business on July 21, 2003[July 25, 2008] as the record dateRecord Date for stockholders entitled to notice of and to vote at the annual
meeting.
Annual Meeting.
Whether or not you expect to be present at the meeting,Annual Meeting, please date and sign the enclosed proxy cardProxy Card and mail it promptly in the enclosed envelope to NATIONAL
CITY BANK, Corporate Trust Operations, Post OfficeProxy Tabulator, P.O. Box 92301, Cleveland, Ohio
44193-0900.535300, Pittsburgh, PA, 15253-9837. If you submit your proxy and then decide to attend the Annual Meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the Proxy Statement.
| By Order of the Board of Directors |
| |
| /s/ Erica S. Stoecker |
| [August 15, 2008] | Erica S. Stoecker |
| Corporate Secretary |
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ePlus inc.
www.eplus.com
PROXY STATEMENT
FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS
We sent you this proxy statement and the enclosed proxy card because the Board of Directors of ePlus inc.
/s/ Erica S. Stoecker
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August 5, 2003 Erica S. Stoecker
Corporate Secretary
TABLE OF CONTENTS
Page
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Information about ePlus inc................................................1
Information about(sometimes referred to as “we”, “us”, “our”, “the Company” and “ePlus”), a Delaware corporation, is soliciting your proxy to vote at the 2008 Annual Meeting.......................................1
Information about this Proxy Statement.....................................2
Information about Voting...................................................2
Quorum Requirements........................................................3
Voting Requirements........................................................3
Dissenters' RightsMeeting of Appraisal............................................4
Voting Securities, Principal Holders thereof,Stockholders and Management...............5
Directors and Executive Officers...........................................6
Compensation of Directors and Executive Officers......................... .14
Performance Graph..........................................................19
Certain Transactions.......................................................20
Proposal 1: Election of Class I Directors.................................22
Proposal 2: Ratification of Appointment of Deloitte & Touche LLP as
Independent Auditors..........................................22
Proposal 3: Amendment to the ePlus inc. Certificate of Incorporation......23
Proposal 4: Amendment to the ePlus inc. Amended and Restated Long-Term
Incentive Plan................................................24
Other Proposed Action......................................................31
Stockholder Proposals and Submissions......................................32
Appendix A: Proposed Amendment to the Certificate of Incorporation........A-1
Appendix B:at any adjournment or postponement thereof. The ePlus inc. Amended and Restated 1998 Long-Term
Incentive Plan................................................B-1
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INFORMATION ABOUT EPLUS INC.
ePlus inc. has been in the business of selling, leasing, financing, and managing
information technology and other assets for over 12 years. We have developed our
Enterprise Cost Management model through development and acquisition of
software, products, and business process services over the past five years. 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. The information on our website is not
incorporated into this proxy statement.
INFORMATION ABOUT THE ANNUAL MEETING
Our annual meeting will be held on September 18, 2003[September 15, 2008] at 8:[8:00 a.m. local time] at the Courtyard Marriott, 533 Herndon Parkway, Herndon,Hyatt Regency, 1800 Presidents Street, Reston, Virginia, 20170.
The20190. You are invited to attend the annual meeting has been called to consider and take action on the following
proposals:
1. To elect two Class I Directors, each to serve a term of three years
and until their successors have been duly elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as our independent
auditors for our fiscal year ending March 31, 2004.
3. To approve and adopt an amendment to the ePlus inc. Certificate of
Incorporation to decrease the number of shares of our authorized stock
from 52 million shares (consisting of 50 million shares of common
stock, par value $0.01 per share, and 2 million preferred shares, par
value $0.01 per share) to 27 million shares (consisting of 25 million
shares of common stock, par value $0.01 per share, and 2 million
preferred shares, par value $0.01 per share).
4. To approve an amendment to the ePlus inc. Amended and Restated 1998
Long-Term Incentive Plan, which sets the number of shares of common
stock available for awards under the plan at 3,000,000.
5. To transact such other business as may properly come before the annual
meeting.
Our Board of Directors, or in the case of proposal 2, the Audit Committee of our
Board of Directors, has unanimously approved each of the proposals and
recommendswe request that you vote on the proposals described in favor of each ofthis proxy statement. However, you do not need to attend the proposals. All holdersannual meeting to vote your shares. Instead, you may complete, sign and return the enclosed proxy card.
The Company intends to mail this proxy statement and accompanying proxy card on or about [August 15, 2008] to all stockholders of record entitled to vote at the annual meeting.
Only stockholders of
our common stockrecord at the close of business on
July 21, 2003, the record[July 25, 2008], or “record date,
” will be entitled to vote at the annual meeting.
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INFORMATION ABOUT THIS PROXY STATEMENT
We have sent youOn this proxy statement because ePlus' Boardrecord date, there were [NUMBER OF SHARES] shares of Directorscommon stock outstanding and entitled to vote. Each share of common stock is soliciting your proxyentitled to one vote aton each matter properly brought before the annual meeting. ePlus is bearing
| Ø | What is the difference between holding shares as a registered stockholder and as a beneficial holder? |
If on the cost
of this proxy solicitation. If you own ePlus common stockrecord date your shares were registered directly in more than one
account, such as individually and also jointlyyour name 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 stockholder 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, National City Bank, Victor LaTessa, at (216)
222-3579. This proxy statement contains information that wethen you are required to
provide to you under the rulesa stockholder of the Securities and Exchange Commission and is
designed to assist you in voting your shares. On or about August 5, 2003, we
began mailing these proxy materials to all stockholdersrecord. As a stockholder of record, at the close
of business on July 21, 2003.
INFORMATION ABOUT VOTING
Stockholders canyou may vote in person at the annual meeting or by proxy. To vote by proxy please mailusing 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,card. Whether 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, we urge you to complete, sign and return the proxy card to ensure your vote is counted.
If on the record date your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner you have the right to direct your broker or other agent on how to vote the shares in your account by following the voting instructions included in their mailing. You are also invited to attend the annual meeting. However, since you are not the stockholder of record you may not vote your shares in person at the annual meeting unless you should contactrequest and obtain a valid proxy from your broker or agent
in whose name your sharesother agent.
There are registered to obtainfive matters scheduled for a broker's proxy card and
bring it to the 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.vote:
| · | Election of three Class I directors, three Class II directors and two Class III directors. |
| · | Approval of the 2008 Non-Employee Director Long-Term Incentive Plan |
| · | Approval of the 2008 Employee Long-Term Incentive Plan |
| · | Approval of our Amended and Restated Certificate of Incorporation; and |
| · | Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for our fiscal year ending March 31, 2009. |
| Ø | Can I change my vote after submitting my proxy? |
Yes. You
may specify whether your shares should be voted for
none, one or both of the nominees for director and 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:
o the election of both the Class I nominees for director;
o the ratification of the appointment of Deloitte & Touche LLP as our
independent auditors for the fiscal year ending March 31, 2004;
o the approval of the proposal to amend the ePlus Certificate
of Incorporation to decrease the number of shares of our authorized
stock from 52 million shares (consisting of 50 million shares of
common stock, par value $0.01 per share, and 2 million preferred
shares, par value $0.01 per share) to 27 million shares (consisting of
25 million shares of common stock, par value $0.01 per share and 2
million preferred shares, par value $0.01 per share); and
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o the approval of an amendment to the ePlus inc. Amended and Restated
1998 Long-Term Incentive Plan, which sets the number of shares of
common stock available for awards under the plan at 3,000,000.
You maycan revoke or change your proxy at any time before it is voted by sendingthe final vote at the annual meeting. If you are a stockholder of record, you may revoke your proxy in any one of three ways:
| · | You may submit another properly completed proxy card with a later date. |
| · | You may send a written notice that you are revoking your proxy to the Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia, 20171. |
| · | You may attend the annual meeting and vote in person. Attending the annual meeting will not, by itself, revoke your proxy. |
Please note that to be effective, your new proxy card or written notice of your revocation to ePlus'must be received by the Corporate Secretary Erica S.
Stoecker at ePlus' principal executive office.
QUORUM REQUIREMENTS
Asprior to the annual meeting.
If you are a beneficial owner of July 21, 2003, the record date for this solicitation of proxies, there
were 9,475,901 shares, of common stock outstanding, each of which is entitled to
one vote. The holders of record of a majority of the shares of common stock
entitled toyou may submit new voting instructions by contacting your broker or other agent. You may also vote at the meeting, present in person or by proxy, will constitute
a quorum for the transaction of business at the annual meeting if you obtain a legally valid proxy from your broker or any
adjournment thereof. If a quorum is not present,other agent as described above.
Votes will be counted by the inspector of election appointed for the annual meeting, may be
adjourned until a quorum is obtained.
VOTING REQUIREMENTS
Proposal 1: Election of Class I Directors
To be elected as a Class I Director,who will separately count “For” and “Against” votes, abstentions and broker non-votes. A “broker non-vote” occurs when a nominee mustholding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions. Discretionary authority is allowed for Proposal 1 and Proposal 5. Discretionary authority is not allowed for Proposals 2, 3 or 4. Broker non-votes will have no effect and will not be onecounted towards the vote for Proposals 1, 2, 3, and 5. For Proposal 4, broker non-votes will have the same effect as “Against” votes. For Proposal 1, abstentions will have no effect. For Proposals 2, 3, 4 and 5, abstentions will be counted toward the vote total and will have the same effect as “Against” votes.
| Ø | What are the voting requirements for each proposal? |
| · | For Proposal 1, election of directors, nominees who receive a plurality of the votes cast will be elected director. Abstentions and broker non-votes will have no effect. |
| · | To be approved, Proposal 2, approval of the 2008 Non-Employee Director Long-Term Incentive Plan, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. |
| · | To be approved, Proposal 3, approval of the 2008 Employee Long-Term Incentive Plan, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. |
| · | To be approved, Proposal 4, approval of our Amended and Restated Certificate of Incorporation, must receive a “For” vote from the majority of the outstanding shares entitled to vote. Abstentions and broker non-votes will have the same effect as an “Against” vote. |
| · | To be approved, Proposal 5, ratification of appointment of independent auditors, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. |
A quorum of affirmative votes cast at the meeting for Class
I Directors.
Proposal 2: Ratification of Appointment of Deloitte & Touche LLP as Independent
Auditors
Tostockholders is necessary to hold a valid annual meeting. A quorum will be approved, Proposal 2 requires the affirmative vote of the holders ofpresent if at least a majority of the outstanding shares present in person orare represented by proxy at the
meetingor by stockholders present and entitled to vote at the annual meeting. On the record date, there were [NUMBER OF SHARES] shares outstanding and entitled to vote. Thus, at least [ NUMBER OF SHARES ] shares must be represented by proxy or by stockholders present and entitled to vote at the annual meeting to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker or bank) or if you vote in person at the proposal.
Proposal 3: Amendment toannual meeting. We will count abstentions and broker non-votes for purposes of determining a quorum. If there is no quorum, the ePlus inc. Certificate of Incorporation
To be approved, Proposal 3 requires the affirmative votechairman of the annual meeting or holders of a majority of the sharesvotes present at the annual meeting may adjourn the annual meeting to another time or date.
| Ø | Who pays for the cost of this proxy solicitation? |
We will pay for the entire cost of common stock outstandingsoliciting proxies. In addition to these mailed proxy materials, our directors and entitledemployees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may retain the services of Georgeson Inc. in connection with soliciting proxies for the Annual Meeting of Stockholders for an estimated fee of $1,200 to vote$1,600, plus appropriate out-of-pocket expenses. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
| Ø | How do I submit a proposal for the Annual Meeting of Stockholders in 2009? |
To be considered for inclusion in the Company’s proxy statement and form of proxy for next year’s annual meeting, your stockholder proposal must be submitted in writing by [April 17], 2009 to the Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. Proposals must be received by that date and satisfy the requirements under applicable SEC Rules (including SEC Rule 14a-8) to be included in the proxy statement and on the proposal.
Proposal 4: Amendment toproxy card that will be used for solicitation of proxies by the ePlus incBoard for the 2009 Annual Meeting.
On June 25, 2008, our Board of Directors approved the Amended and Restated
Long-Term Incentive
Plan
To be approved, Proposal 4 requiresBylaws, which amended, among other things, the
affirmative vote of the holders of at
least a majority of the shares present in personprocedures for stockholders to submit proposals or
represented by proxy at the
meeting and entitlednominate directors. In accordance with our current Bylaws, if you wish to
vote on the proposal.
-3-
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 whethersubmit a proposal has been approved.
Therefore, an abstentionfor consideration at next year’s annual meeting that is not to be included in next year’s proxy materials, or wish to nominate a broker non-vote will not have any effect on the
votescandidate for proposal 1 but will have the effect as a vote against proposals 2, 3,
and 4.
All proxies 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 ofelection to the Board of Directors at next year’s annual meeting, your proposal or nomination must be submitted in writing and received by the Corporate Secretary not less than 60 days before the date of the first anniversary of this 2008 annual meeting if the 2009 annual meeting is held within 30 days of the anniversary of this 2008 annual meeting, otherwise, within seven days after the first public announcement of the date of the 2009 annual meeting.
A submission by an ePlus stockholder must contain the specific information required in ePlus’ Bylaws. If you would like a copy of ePlus’ current Bylaws, please write to the Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. ePlus’ current Bylaws may also be found on the Company’s website at http://www.eplus.com/bylaws.htm.
| Ø | Can I find additional information on the Company’s website? |
Yes. Although the information contained on our website is not part of this proxy statement, you will find information about ePlus and our corporate governance practices at http://www.eplus.com/about_us.htm. Our website contains information about our Board, Board Committees and their charters, a copy of our Bylaws, and Standard of Conduct and Ethics. Stockholders may obtain, without charge, hard copies of the above documents by writing to: Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171.
Role of the Board of Directors
Our Board plays an active role in overseeing management and representing the interests of stockholders. Directors are expected to attend Board meetings and the meetings of committees on which they serve. Directors are also frequently in communication with respectmanagement between formal meetings. During the fiscal year ended March 31, 2008, the Board met a total of seven times. All directors attended at least 75% of the total Board and committee meetings to which they were assigned in the fiscal year ended March 31, 2008. All members of the Board, who were members of the Board on such date, attended the last meeting of our stockholders.
Standard of Conduct and Ethics
We are committed to ethical behavior in all that we do. Our Standard of Conduct and Ethics applies to all of our directors, officers and employees. It sets forth our policies and expectations on a number of topics, including our commitment to promoting a fair workplace, avoiding conflicts of interest, compliance with laws (including insider trading laws), appropriate relations with government officials and employees, and compliance with accounting principles.
We also maintain a toll-free hotline through which employees may raise concerns regarding accounting or financial reporting matters. The hotline is available to all employees, 7 days a week, 24 hours a day, in English and in Spanish. Employees using the hotline may choose to remain anonymous. All hotline inquiries are forwarded to a member of our Audit Committee.
Our Standard of Conduct and Ethics is posted on our website at www.eplus.com/ethics.htm. Printed copies of the Standard of Conduct and Ethics may be obtained by stockholders, without charge, by contacting Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. We intend to make any required disclosures regarding any amendments of our Standard of Conduct and Ethics or waivers granted to any other business that may
come beforeof our directors or executive officers on our website at www.eplus.com.
Identifying and Evaluating Nominees for Directors
Each year, the Nominating and Corporate Governance Committee recommends to the Board the slate of directors to serve as management’s nominees for election by the stockholders at the annual meeting.
We may solicit proxies by use of the mails, in person, by telephone, e-mail, or
other electronic communications. We will bear the cost of soliciting proxies in
the accompanying form. We may reimburse brokerage firmsThe process for identifying and
others for their
expenses in forwarding proxy materialsevaluating candidates to be nominated 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 rightstarts with an evaluation of a
stockholder to dissent and obtain
payment for shares.
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VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF, AND MANAGEMENT
Except as set forth below, the following table sets forth certain information as
of July 15, 2003, with respect to: (1) each executive officer, director, and
director nominee; (2) all executive officers and directors of ePlus as a group;
and (3) all persons known by ePlus to be the beneficial owners of more than five
percent of our common stock.
Number of
Shares Percentage
Beneficially of Shares
Name of Beneficial Owner(1) Owned (2) Outstanding
--------------------------- --------- -----------
Phillip G. Norton (3).................................................. 2,346,000 24.0%
Bruce M. and Elizabeth D. Bowen (4).................................... 825,000 8.6
Steven J. Mencarini (5)................................................ 95,600 1.0
Kleyton L. Parkhurst (6)............................................... 229,000 2.4
C. Thomas Faulders, III (7)............................................ 43,507 *
Terrence O'Donnell (8)................................................. 60,000 *
Lawrence S. Herman..................................................... 7,500 *
All directors and named executive officers as a group (8 Individuals).. 3,606,607 34.9
Eric D. Hovde (9)...................................................... 711,492 7.5
Putnam Investments LLC (10)............................................ 1,235,191 13.1
- ----------
* less than 1%
(1) The business address of Messrs. Norton, Bowen, Mencarini, Parkhurst,
Faulders, O'Donnell, and Herman is 400 Herndon Parkway, Herndon, Virginia,
20170. The business address of Mr. Hovde is 1826 Jefferson Place, NW,
Washington, DC 20036. The business address of Putnam Investments LLC is One
Post Office Square, Boston, Massachusetts 02109.
(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 July 15,
2003, upon exercise of options or warrants. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not by any other person) and that are
exercisable within 60 days from July 15, 2003, have been exercised. The
ownership amounts reported for persons who we know own more than 5% 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, the
spouse of Mr. 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. Also includes 305,000 shares
of common stock issuable to Mr. Norton under options.
(4) Includes 520,000 shares held by Mr. and Mrs. Bowen, as tenantscandidate by the
entirety, and 160,000 shares held by Bowen Holdings LLC, 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 145,000 shares of common stock issuable to Mr. Bowen
under options.
(5) Includes 95,600 shares of common stock issuable to Mr. Mencarini under
options.
(6) Includes 216,000 shares of common stock issuable to Mr. Parkhurst under
options.
-5-
(7) Includes 43,507 shares of common stock issuable to Mr. Faulders under
options.
(8) Includes 60,000 shares of common stock issuable to Mr. O'Donnell under
options.
(9) Of the 711,492 shares beneficially owned by Eric D. Hovde, 386,800 of the
shares, beneficially owned are as managing member of Hovde Capital, L.L.C.,
the General Partner to Financial Institution Partners II, L.P., the direct
owner; 30,000 of the shares beneficially owned are as managing member of
Hovde Acquisition II, L.L.C., 19,000 of the shares beneficially owned are
as trustee for Hovde Financial, Inc. Profit Sharing Plan and Trust; 17,000
of the shares beneficially owned are as trustee for The Eric D. Hovde and
Steven D. Hovde Foundation; 32,824 of the shares beneficially owned are
held directly; and 225,868 of the shares beneficially owned are as
President, CEO and Managing Member of Hovde Capital Advisors LLC, the
Investment Manager to Financial Institution Partners III, L.P., Financial
Institution Partners, L.P., Financial Institution Partners, Ltd., and
Financial Institution Partners IV, L.P., the direct owners. This
information was obtained from Form 13D/A filed by Hovde Capital Advisors
LLC, Financial Institution Partners III, L.P., Financial Institution
Partners, L.P., Financial Institution Partners, Ltd., Eric D. Hovde, Steven
D. Hovde, Financial Institution Partners II, L.P., Hovde Capital, L.L.C.,
Hovde Acquisition II, L.L.C., The Eric D. Hovde and Steven D. Hovde
Foundation, Hovde Financial, Inc. Profit Sharing Plan and Trust, and
Financial Institution Partners IV, L.P., effective June 30, 2003.
(10) Includes shares held by the series of funds of Putnam to which Putnam
Investments LLC is investment adviser.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age, and position with ePlus inc. of
each person who is an executive officer or director.
Name Age Position Class
- ----------------------------------- --- ------------------------------------------------------------- -----
Phillip G. Norton......................59 Chairman of the Board, President, and Chief Executive Officer III
Bruce M. Bowen.........................51 Director and Executive Vice President III
Steven J. Mencarini....................48 Senior Vice President and Chief Financial Officer
Kleyton L. Parkhurst...................40 Senior Vice President, Assistant Secretary, and Treasurer
Terrence O'Donnell.....................59 Director II
C. Thomas Faulders, III................53 Director I
Lawrence S. Herman.....................59 Director I
The name and business experience during the past five years of each director and
executive officer of ePlus are described below.
Phillip G. Norton joined us in March 1993 and has served since then as our Chairman of the BoardCommittee, followed by the Committee in its entirety. Director candidates may also be identified by stockholders. In evaluating such nominations, the Nominating and Chief Executive Officer. Since September 1996, Mr.
Norton has also served as our President. Mr. Norton isCorporate Governance Committee seeks to achieve a 1966 graduatebalance of the
U.S. Naval Academy.
Bruce M. Bowen founded our company in 1990knowledge, experience, and served as our President until
September 1996. Since September 1996, Mr. Bowen has served as our Executive Vice
President, and from September 1996 to June 1997 also served as our Chief
Financial Officer. Mr. Bowen has servedcapability on our Board of Directors since our
founding. He is a 1973 graduate of the University of Maryland and in 1978
received a Masters of Business Administration from the University of Maryland.
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Steven J. Mencarini joined us in June of 1997 as Senior Vice President and Chief
Financial Officer. Prior to joining us, Mr. Mencarini was Controller of the
Technology Management Group of Computer Sciences Corporation, one of the
nation's three largest information technology outsourcing organizations. Mr.
Mencarini joined Computer Sciences Corporation in 1991 as Director of Finance
and was promoted to Controller in 1996. Mr. Mencarini is a 1976 graduate of the
University of Maryland and received a Masters of Taxation from American
University in 1985.
Kleyton L. Parkhurst joined us in May 1991 as Director of Finance and served as
our Secretary and Treasurer from September 1996 until September 2001. Since
September 2001 Mr. Parkhurst has served as our Assistant Secretary and
Treasurer. In July 1998, Mr. Parkhurst was made Senior Vice President for
Corporate Development. Mr. Parkhurst is currently responsible for all of our
mergers and acquisitions, investor relations, marketing, and the ePlus Group's
finance department. Mr. Parkhurst is a 1985 graduate of Middlebury College.
Terrence O'Donnell joined our Board of Directors in November 1996 upon the
completion of our initial public offering. Mr. O'Donnell is a partner with the
law firm of Williams & Connolly LLP in Washington, D.C. and Executive Vice
President and General Counsel of Textron, Inc. Mr. O'Donnell has practiced law
since 1977, and from 1989 through 1992 served as General Counsel to the U.S.
Department of Defense. Mr. O'Donnell presently also serves as a director of IGI,
Inc., an American Stock Exchange company. Mr. O'Donnell is a 1966 graduate of
the U.S. Air Force Academy and received a Juris Doctor from Georgetown
University Law Center in 1971.
C. Thomas Faulders, III joined our Board of Directors in July 1998. Mr. Faulders
is the Chairman, President, and Chief Executive Officer of LCC International,
Inc. From July 1998 to December 1999, Mr. Faulders served as Chairman of the Board of Telesciences, Inc., an information services company. From 1995 to 1998,
Mr. Faulders was Executive Vice President, Treasurer, and Chief Financial
Officer of BDM International, Inc., a prominent systems integration company. Mr.
Faulders is aDirectors. Furthermore, any member of the Board of Directors must have the highest personal ethics and values and have experience at the policy-making level of United Defense, Inc.,
Universal Technologybusiness, and Systems, Inc., and Sentori, Inc. He is a 1971 graduateshould be committed to enhancing stockholder value.
Stockholder proposals for nominations to the Board should be submitted to the Secretary of the UniversityCorporation as specified in the Corporation’s Bylaws. The information requirements for any stockholder proposal or nomination can be found in Section 2.8 of Virginia and in 1981 received a Masters of Business
Administration fromour Bylaws, available at http://www.eplus.com/bylaws.htm. Proposed stockholder nominees are presented to the Wharton SchoolChairman of the UniversityNominating and Corporate Governance Committee, who decides if further consideration should be given to the nomination by the Committee.
Communications with the Board of Directors
Persons interested in communicating with the directors regarding concerns or issues may address correspondence to a particular director, to the Board or to the independent directors generally, in care of ePlus inc. at 13595 Dulles Technology Drive, Herndon, Virginia 20171. If no particular director is named letters will be forwarded, as appropriate and depending on the subject matter, by the General Counsel to the Chair of the Audit Committee, the Chair of the Compensation Committee, or the Chair of the Nominating and Corporate Governance Committee. The General Counsel reviews such communications for re-electionspam (such as a Class
I Directorjunk mail or solicitations) or misdirected communications.
Effective at the 2003 annual meetingopening of stockholders.
Lawrence S.business on July 20, 2007, our common stock was delisted from The Nasdaq Global Market due to non-compliance with financial statement reporting requirements. Our common stock currently trades in the Over-the-Counter market and, therefore, we are not subject to the Nasdaq Marketplace Rules. However, our Board has reviewed the relationships concerning independence of each director on the basis of the definition of “independent” contained in the Nasdaq Marketplace Rules. In accordance with that review, our Board has made a subjective determination as to each independent director that no relationships exist that, in our Board’s opinion, would interfere with his exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed information provided by the directors and by management with regard to each director’s business and personal activities as they may relate to our business and our management.
The Board has determined that Messrs. O’Donnell, Cooper, Beimler, Herman, joined ourFaulders and Hovde are independent under the Nasdaq Marketplace Rules. The Board has also determined that the members of each committee of the Board are independent under the listing standards of the Nasdaq Marketplace Rules. In determining the independence of the directors, the Board considered the relationships described under “Related Party Transactions,” which it determined were immaterial to the individual’s independence.
The Board of Directors in March 2001. Mr. Herman is
onehas three standing committees: Audit, Compensation, and Nominating and Corporate Governance. The Audit Committee and Compensation Committee were prescribed by our bylaws throughout the year, and on June 25, 2008 the bylaws were amended to include, among other things, that the Nominating and Corporate Governance Committee shall also be a standing committee. The charter for each of BearingPoint's most senior Managing Directors and is responsible for
managing national alliances with e-government and enterprise software companies
inour committees can be found at http://www.eplus.com/committee_charters.htm.
The following table provides a summary of the
company's state and local government practice. During his career, Mr.
Herman has specialized in developing, evaluating, and implementing financial and
management systems and strategies for state and local governments aroundmembership of each of the
nation. Mr. Herman has been with BearingPoint for over thirty-five years. He has
directed a statewide performance auditcommittees of
North Carolina, resulting in a
strategic fiscal plan. He further directed similar statewide fiscal strategies
for the Commonwealth of Kentucky, the State of Louisiana, the State of Oklahoma,
and the District of Columbia. Mr. Herman received his B.S. degree in Mathematics
and Economics from Tufts University in 1965 and his Masters of Business
Administration in 1967 from Harvard Business School. Mr. Herman has been
nominated by the Board of Directors
for re-election as
a Class I Director at the
2003 annual meeting of
stockholders.
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Each executive officerMarch 31, 2008.
| Name | Audit | Compensation | Nominating and Corporate Governance |
| Mr. Beimler | Member | | Member (6) |
| Mr. Cooper | (1) | Chair | Member |
| Mr. Faulders | Member | Member (2) | (7) |
| Mr. Herman | Member | Member (3) | Chair |
| Mr. Hovde | | Member (4) | Member (8) |
| Mr. O’Donnell | Chair | (5) | Member (9) |
| (1) | Mr. Cooper was a member of the Audit Committee until June 13, 2007. |
| (2) | Mr. Faulders was the Chairman of the Compensation Committee until June 13, 2007. |
| (3) | Mr. Herman joined the Compensation Committee effective March 1, 2008. |
| (4) | Mr. Hovde joined the Compensation Committee effective June 13, 2007. |
| (5) | Mr. O’Donnell was a member of the Compensation Committee until March 1, 2008. |
| (6) | Mr. Beimler joined the Nominating and Corporate Governance Committee effective June 13, 2007. |
| (7) | Mr. Faulders was a member of the Nominating and Corporate Governance Committee until June 13, 2007. |
| (8) | Mr. Hovde joined the Nominating and Corporate Governance Committee effective June 13, 2007. |
| (9) | Mr. O’Donnell joined the Nominating and Corporate Governance Committee effective March 1, 2008. |
The Audit Committee of the Board of Directors assists the Board in its oversight of the Company’s corporate accounting and holds
hisfinancial reporting process. The Audit Committee is governed by a Board-approved charter stating its responsibilities. The Committee’s responsibilities include:
| · | appointment, compensation and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report and performing other audit, review or attest services for the Company; |
| · | to discuss the annual audited financial statements with management and the registered public accounting firm, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and recommend to the Board of Directors whether the audited financial statements should be included in the Company’s Form 10-K; |
| · | to discuss the Company’s unaudited financial statements and related footnotes and the “Management Discussion and Analysis” portion of the Company’s Form 10-Q for each interim quarter with management and the registered public accounting firm; and |
| · | to discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and ratings agencies with management and the registered public accounting firm, as appropriate. |
For additional information regarding the Audit Committee’s duties and responsibilities, please refer to the Audit Committee’s charter, which is available on the Company’s web site at http://www.eplus.com/committee_charters.htm.
Each of the members of the Audit Committee is independent within the meaning of the listing standards of Nasdaq Marketplace Rules and applicable SEC regulations. The Board has determined that Mr. Faulders is an audit committee financial expert within the meaning of SEC regulations. The Audit Committee met six times during the fiscal year ended March 31, 2008.
As required under the Sarbanes-Oxley Act of 2002, the Audit Committee has in place procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or her office until hisauditing matters, including procedures for the confidential and anonymous submission by employees of concerns regarding questionable accounting or her successor shall have been duly chosenauditing matters.
The Compensation Committee of the Board of Directors reviews and qualified or until his or her death or until he or she shall resign or be
removed as provided byapproves the Bylaws.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)overall compensation strategy and policies for the Company’s executives. Each of the members of the Compensation Committee is an independent director within the meaning of the Nasdaq Marketplace Rules, a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. During the fiscal year ended March 31, 2008, the Compensation Committee met eight times.
The Compensation Committee reviews the effectiveness of the Company’s executive officer compensation, including reviewing and approving goals and objectives for the Company’s executives. The Compensation Committee is responsible for evaluating and setting the compensation for our Chief Executive Officer, Phillip G. Norton. Mr. Norton is responsible for evaluating and recommending to the Compensation Committee the amount of compensation of our other executive officers. The Compensation Committee reviews such recommendations from Mr. Norton and has the authority to approve or revise such recommendations. The functions of the Committee can be found in its charter on our website at http://www.eplus.com/committee_charters.htm.
The Nominating and Corporate Governance Committee is responsible for developing and implementing policies and practices relating to corporate governance. The Nominating and Corporate Governance Committee is governed by a Board-approved charter stating its responsibilities. The Committee assists the Board by selecting and recommending Board nominees and making recommendations concerning the composition of Board committees. The Committee also reviews and recommends to the Board the compensation of non-employee directors. The Nominating and Corporate Governance Committee met five times during the fiscal year ended March 31, 2008. Each of the members of the Committee is an independent director within the meaning of the Nasdaq Marketplace Rules. The functions of the Committee are further described on our website at http://www.eplus.com/committee_charters.htm.
The following table sets forth the compensation for the members of the Board of Directors of ePlus for the fiscal year ended March 31, 2008. Mr. Norton, the Company’s Chairman of the Board, President and Chief Executive Officer, and Mr. Bowen, the Company’s Executive Vice President, do not receive any additional compensation for their service as a director. Mr. Norton’s and Mr. Bowen’s compensation is reported in “Executive Compensation” and accordingly is not included in the following table.
The general policy of the Board is that compensation for non-employee directors should be a mix of cash and equity-based compensation. Each non-employee director receives an annual retainer of $35,000 cash, which is paid in quarterly installments. All directors are also reimbursed for their out-of-pocket expenses incurred to attend Board or Committee meetings. In addition, we are submitting to stockholders for their approval, the 2008 Non-Employee Director Long-Term Incentive Plan which we intend to utilize for the equity-based component of our non-employee director compensation. The 2008 Non-Employee Director Long-Term Incentive Plan is described in more detail below under “Proposal 2.”
| | | Fees Earned or Paid in | | | Stock Awards | | | Option Awards | | | Non-Equity Incentive Plan Compen-sation | | | Change in Pension Value and Nonqualified Deferred Compensation | | | All Other Compen-sation | | | | |
| Name | | Cash ($) | | | ($) | | | ($) (1) | | | ($) | | | Earnings | | | ($) | | | Total ($) | |
| C. Thomas Faulders, III | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
| Terrence O'Donnell | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
| Milton E. Cooper, Jr. | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
| Lawrence S. Herman | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
| Eric D. Hovde | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
| Irving R. Beimler | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
| (1) | The outstanding number of stock options awarded to each director as of March 31, 2008 was Mr. Faulders 83,507; Mr. O’Donnell 80,000; Mr. Cooper 30,000; Mr. Herman 47,500; Mr. Hovde 0; and Mr. Beimler 0. |
The following table shows the ePlus common stock beneficially owned by each named executive officer, director, and all directors and named executive officers as a group as of June 30, 2008. All amounts are rounded to the nearest one-tenth.
| Name of Beneficial Owner(1) | | Number of Shares Beneficially Owned (2) | | | Percentage of Shares Outstanding | |
| Phillip G. Norton (3) | | | 2,216,000 | | | | 26.4 | % |
| Bruce M. Bowen (4) | | | 696,400 | | | | 8.3 | |
| Steven J. Mencarini (5) | | | 60,000 | | | | * | |
| C. Thomas Faulders, III (6) | | | 83,507 | | | | 1.0 | |
| Terrence O’Donnell (7) | | | 80,000 | | | | 1.0 | |
| Milton E. Cooper, Jr. (10) | | | 30,000 | | | | * | |
| Lawrence S. Herman (8) | | | 47,500 | | | | * | |
| Eric D. Hovde (9) | | | 1,265,129 | | | | 15.4 | |
| Irving R. Beimler | | | -- | | | | * | |
| All directors and executive officers as a group (9 Individuals) | | | 4,651,536 | | | | 50.8 | |
| (1) | The business address of Messrs. Norton, Bowen, Mencarini, Faulders, O’Donnell, Cooper, Herman, Hovde and Beimler is 13595 Dulles Technology Drive, Herndon, Virginia, 20171-3413. |
| (2) | A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days of June 30, 2008 upon exercise of options or warrants. Each beneficial owner’s percentage ownership is determined by assuming that options or warrants that are held by such person (but not by any other person) and that are exercisable within 60 days of June 30, 2008 have been exercised. |
| (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, the spouse of Mr. 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. Also includes 175,000 shares of common stock issuable to Mr. Norton under options that are exercisable within 60 days of June 30, 2008. Mr. Norton holds 1,000 shares of ePlus individually. |
| (4) | Includes 421,400 shares held by Mr. Bowen and his spouse, as tenants by the entirety, and 160,000 shares held by Bowen Holdings LLC, a Virginia limited liability company composed of Mr. Bowen and his three children, for which shares Mr. Bowen serves as manager. Also includes 115,000shares of common stock issuable to Mr. Bowen under options that are exercisable within 60 days of June 30, 2008. |
| (5) | Includes 60,000 shares of common stock issuable to Mr. Mencarini under options that are exercisable within 60 days of June 30, 2008. |
| (6) | Includes 83,507 shares of common stock issuable to Mr. Faulders under options that are exercisable within 60 days of June 30, 2008. |
| (7) | Includes 80,000 shares of common stock issuable to Mr. O’Donnell under options that are exercisable within 60 days of June 30, 2008. |
| (8) | Includes 47,500 shares of common stock issuable to Mr. Herman under options that are exercisable within 60 days of June 30, 2008. |
| (9) | Of the 1,265,129 shares beneficially owned by Eric D. Hovde, 28,559 shares are owned directly; Eric D. Hovde is the managing member (“MM”) of Hovde Capital, L.L.C., the general partner to Financial Institution Partners II, L.P., which owns 328,719 shares; Eric D. Hovde is the MM of Hovde Capital Limited IV LLC, the general partner to Financial Institution Partners IV, L.P., which owns 51,970 shares; Eric D. Hovde is the MM of Hovde Capital, Ltd., the general partner to Financial Institution Partners III, L.P., which owns 234,876 shares; Eric D. Hovde is the MM of Hovde Capital IV, LLC, the general partner to Financial Institution Partners, L.P., which owns 432,720 shares; Eric D. Hovde is the MM to Hovde Capital Offshore LLC, the management company to Financial Institution Partners, Ltd., which owns 118,020 shares; Eric D. Hovde is the MM of Hovde Acquisition II, L.L.C., which owns 30,000 shares; Eric D. Hovde is the trustee to The Hovde Financial, Inc. Profit Sharing Plan and Trust, which owns 19,000 shares; Eric D. Hovde is the trustee to The Eric D. and Steven D. Hovde Foundation, which owns 21,265 shares. |
| (10) | Includes 30,000 shares of common stock issuable to Mr.��Cooper under options that are exercisable within 60 days of June 30, 2008. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires ePlus'the Company’s directors and executive officers, directors, and persons who own more than ten percent of a
registered class of ePlus'the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of ePlus with the SEC.Company. Officers, directors and greater-than-ten-percentgreater than ten percent stockholders are required by SEC regulationsregulation to furnish ePlusthe Company with copies of all Section 16(a) forms that they file.
Based
To the Company’s knowledge, based solely
uponon a review of
Forms 3, Forms 4, and Forms 5the copies of such reports furnished to
ePlus
pursuant to Rule 16a-3 under the
Exchange Act, ePlus believesCompany and written representations that
all such
formsno other reports were 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 such forms.
The Board of Directors
ePlus' Bylaws, as amended on July 15, 2003, provide that the number of directors
of ePlus shall be five, 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 one director; and
Class III, comprised of two directors. Our director, Thomas L. Hewitt, who was a
Class II director resigned from the Board of Directors effective June 16, 2003,
such resignation was not as a result of any disagreement with management.
Subject to the provisions of the Bylaws, at each annual meeting of stockholders,
the successors to the class of directors whose term is then expiring shall be
elected to hold office for a term expiring at the third succeeding annual
meeting of stockholders. Messrs. Faulders and Herman, our Class I directors are
standing for re-election at the 2003 annual meeting. Each director holds office
until his or her successor has been duly elected and qualified or until he or
she has resigned or been removed in the manner provided in the Bylaws. The
members of the three classes of directors are as follows:
o Class I
C. Thomas Faulders, III
Lawrence S. Herman
o Class II
Terrence O'Donnell
o Class III
Phillip G. Norton
Bruce M. Bowen
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The Class II Director will stand for re-election at the annual meeting of
stockholders in 2004. The Class III Directors will stand for re-election at the
annual meeting of stockholders in 2005. 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.
There are no material proceedings to which any director, executive 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, executive 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.
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
director receives an annual grant of 10,000 stock options and $500 for each
committee meeting. All directors will be reimbursed for their out-of-pocket
expenses incurred to attend board or committee meetings.
Meetings and Committees of the Board of Directors
The Board of Directors met four times during the fiscal year ended March 31, 2003. In addition2008, all Section 16(a) filing requirements applicable to meetingsePlus’ executive officers, directors and greater than ten percent beneficial owners were complied with.
From April 1, 2007 to June 30, 2007, we leased approximately 50,232 square feet for use as our principal headquarter from Norton Building 1, LLC for a monthly rent payment of approximately $76,000. Effective July 1, 2007, we entered into an amendment which increased the full Board, directors also attended
meetingsleased square footage to 55,880 and the monthly rent payment to approximately $86,000. Norton Building 1, LLC is a limited liability company owned in part by Mr. Norton’s spouse and in part in trust for his children. As of Board Committees. No incumbent director attended fewer than 75% of
the total number of meetings heldMay 31, 2007, Mr. Norton, our President and CEO, has no managerial or executive role in Norton Building 1, LLC. The lease was approved by the Board of Directors prior to its commencement, and viewed by the meetings of
any committee on which the director served. The Board of Directorsas being at or below comparable market rents, and ePlus has the following committees: the Audit Committee, the Compensation Committee, the Stock
Incentive Committee, and the Nominating and Corporate Governance Committee.
Audit Committee
General. The Audit Committeeright to terminate up to 40% of the Boardleased premises for no penalty, with six months’ notice. During the years ended March 31, 2008 and March 31, 2007, we paid rent in the amount of Directors is responsible for
selecting ePlus' independent public accountants, monitoring$1,052,000 and reviewing$964,000, respectively.
Two of Mr. Norton’s sons are employed at the
quality and activitiesCompany. The first, a Director of
ePlus' internal and external audit functions,
monitoring the adequacy of ePlus' operating and internal controls as reported by
management and the external or internal auditors, and reviewing ePlus' periodic
reports that are filed with the Securities and Exchange Commission. The membersFinance at ePlus Government, inc., earned $200,000 in each of the
Audit Committee are Terrence O'Donnell (Chairman)fiscal years ended March 31, 2007 and 2008. His compensation is comprised of a base salary and a bonus. The second, a Senior Account Executive at ePlus Government, inc.,
C. Thomas Faulders,
III,earned $233,000 and
Lawrence S. Herman. During$331,000 in the fiscal years ended March 31, 2007 and 2008, respectively, in base salary and commissions. Mr. Norton’s brother is a Senior Account Executive at ePlus Group, inc., who earned $194,000 in the fiscal year ended March 31,
2003, five
meetings of the Audit Committee were held.
Audit Committee Report. The Audit Committee is composed of three directors who
are independent as defined under the rules of the National Association of
Securities Dealers. The committee operates under a written charter approved by
the Board of Directors, which was included as Appendix A to ePlus' proxy
statement for the 2001 annual meeting of stockholders.
The committee reviews ePlus' financial reporting process on behalf of the Board
of Directors. In fulfilling its responsibilities, the committee has reviewed2007 and
-9-
discussed the audited financial statements contained$193,000 in our Annual Report on
Form 10-K for the year ended March 31, 2003 with ePlus' management. Management
is responsible for our financial statements and the financial reporting process,
including internal controls. The independent accountants are responsible for
expressing an opinion on the conformity of those audited financial statements
with accounting principles generally accepted in the United States of America.
The Audit Committee has discussed with the independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. The committee has discussed
with the independent accountant the accountants' independence from ePlus and its
management including the matters in the written disclosures provided to the
committee as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. The committee has also
considered whether the provision of non-audit services by the independent
accountants to ePlus is compatible with maintaining auditors' independence.
Based on the reviews and discussions referred to above, the committee
recommended to the Board of Directors, and the Board of Directors approved, that
the audited financial statements be included in our Annual Report on Form 10-K
for the year ended March 31, 2003, for filing with the Securities and Exchange
Commission.
By The Audit Committee
Terrence O'Donnell (Chairman)
C. Thomas Faulders, III
Lawrence S. Herman
-10-
Compensation Committee
General. The Compensation Committee of the Board of Directors 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 during the fiscal year ended March 31, 2003 were C. Thomas Faulders,
III (Chairman)2008 in base salary and commission. The Senior Account Executives’ compensation, like that of their peers’, Terrence O'Donnell, and Thomas L. Hewitt, allis based primarily on the calculation of whom were
independent directors. Mr. Norton and Mr. Bowen, as directors, do not vote on
any matters affecting their personal compensation. Following the resignation of
Mr. Hewitt from the ePlus Board of Directors, Lawrence S. Herman became a member
of the Compensation Committee, replacing Mr. Hewitt. Mr. Herman is also an
independent director. Mr. Bowen and Mr. Norton are responsiblecommissions for reviewing and
establishing salaries, benefits, and other compensation, excluding stock-based
compensation, for all other employees.
Compensation arrangements during our 2003 fiscal year were determinedsales completed, in accordance with the executive compensation policy set forth below. The
Compensation Committee considers compensation paid to our executive officers to
be deductible for purposes of Section 162(m) of the Internal Revenue Code.
Compensation Committee Report. The Compensation Committee of thecommission plan.
Mr. Terrence O’Donnell, Board of
Directors has prepared the following report on our policies with respect to the
compensationDirector member, Chairman of
executive officers for the fiscal year ended March 31, 2003. The
compensation programs of ePlus are designed to align compensation with business
objectivesAudit Committee and
performance, and to enable ePlus to attract, retain, and reward
executives who contribute to the long-term success of ePlus.
The Compensation Committee believes that executive pay should be linked to
performance. Therefore, ePlus provides an executive compensation program which
includes three principal elements: (1) base pay, (2) potential cash bonus, and
(3) long-term incentive opportunities through the use of stock options.
Criteria for Determination of Executive Compensation. In determining each of the
principal elements of each executive's compensation, as well as the overall
compensation package thereof, the following criteria are considered by the
persons responsible for recommending or approving such compensation: (1) the
compensation awarded to executives with comparable titles and responsibilities
to those of such executive by companies in our industry (or, to the extent
information is not available, in comparable industries) whose revenues and
earnings are comparable to those of ePlus, as reported by reliable independent
sources; (2) the results of operations of ePlus during the past year, on an
absolute basis and compared with ePlus' targeted results for such year as well
as with the results of the comparable companies, as reported by reliable
independent sources; (3) the performance of such executive during the past year,
on an absolute basis and as compared with the performance targets set by ePlus
for such executive for such year and the performance of the other executives of
ePlus during such year; and (4) any other factor which the Compensation
Committee determines to be relevant. The weight to be given to each of the
foregoing criteria is determined by the Compensation Committee in the exercise
of its reasonable judgment in accordance with the purposes of this executive
compensation policy and may vary from time to time or from executive to
executive.
-11-
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 stockholders of ePlus. 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
Compensation Committee cannot predict with certainty how ePlus' compensation tax
deduction might be affected, the Compensation 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.
Chief Executive Officer Compensation. The executive compensation policy
described above is applied in setting Mr. Norton's compensation. Mr. Norton
generally participates in the same executive compensation plans and arrangements
available to the other executives. Accordingly, his compensation also consists
of an annual base salary, a potential annual cash bonus, and, potentially,
long-term equity-linked compensation in the form of stock options. The
Compensation Committee's general approach in establishing Mr. Norton's
compensation is to be competitive with peer companies, but to have a large
percentage of his target based upon objective performance criteria and targets
established in our strategic plan.
Mr. Norton's compensation for the year ended March 31, 2003 included $250,000 in
base salary. Mr. Norton received a bonus of $150,000 for the fiscal year ended
March 31, 2003. Mr. Norton's salary was based on, among other factors, ePlus'
performance and the 2002 compensation of chief executive officers of comparable
companies, although his compensation was not linked to any particular group of
these companies.
During the fiscal year ended March 31, 2003, one meeting of the Compensation
Committee was held.
BY THE COMPENSATION COMMITTEE
C. Thomas Faulders, III (Chairman)
Terrence O'Donnell
-12-
Stock Incentive Committee
The Stock Incentive Committee of the Board of Directors is authorized to award
stock, and various stock options and rights and other stock-based compensation
grants under the ePlus inc. Amended and Restated 1998 Long-Term Incentive Plan.
The members of the Stock Incentive Committee during the fiscal year ended March
31, 2003 were Mr. Bowen, Mr. Hewitt, and Mr. Norton. Except for formula plan
grants to the outside directors 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 ePlus inc. Amended and Restated 1998 Long-Term Incentive Plan. During
the fiscal year ended March 31, 2003, one meeting of the Stock Incentive
Committee was held. Nominating and Corporate Governance Committee On July 15, 2003, the Board of Directors formedmember, has a Nominatingson-in-law serving as Senior Account Executive at ePlus Group, inc. who earned $741,000 and Corporate
Governance Committee to assist the Board of Directors$845,000 in fulfilling its
oversight responsibilities under the NASDAQ Stock Market listing standardsbase salary and Delaware law. This committee is authorized and designated for the purposes of
(1) identifying individuals qualified to serve on the Board of Directors and to
select, or to recommend that the Board of Directors select a slate of director
nominees for election by the stockholders of ePlus at each annual meeting of the
stockholders of ePlus,commission in accordance with ePlus' Certificate of Incorporation
and Bylaws and with Delaware law, and (2) evaluating, developing, and
recommending to the Board of Directors a set of corporate governance policies
and principles to be applicable to ePlus. The Board of Directors appointed Mr.
Terrence O'Donnell, Mr. C. Thomas Faulders, III, and Mr. Lawrence S. Herman to
serve as members of the Nominating and Corporate Governance Committee, all of
whom are independent directors.
-13-
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table provides certain summary information concerning the
compensation earned, for services rendered in all capacities to ePlus, by ePlus'
Chief Executive Officer and certain other executive officers of ePlus, who we
refer to as the "named executive officers," for the fiscal years ended March 31, 2001, 2002,2007 and 2003. Certain columns have been omitted from this summary2008, respectively. His compensation, table, as they are not applicable.
Annual Compensation Long-Term Compensation
---------------------------------------- -----------------------------------
Securities
Underlying All Other
Name and Fiscal Bonus/ Options Compensation
Principal Position Year Salary ($) Commission ($) (#) ($)(1)
- ------------------------------------- --------- -------------- ---------------- ----------------- -----------------
Phillip G. Norton 2003 $250,000 $150,000 -- --
Chairman, Chief Executive 2002 250,000 150,000 -- $1,500
Officer and President 2001 250,000 147,773 -- 1,500
Bruce M. Bowen 2003 225,000 100,000 -- --
Director and 2002 225,000 100,000 -- 1,500
Executive Vice President 2001 225,000 100,000 -- 1,500
Kleyton L. Parkhurst 2003 200,000 100,000 30,000(3) --
Senior Vice President, Assistant 2002 200,000 75,000 1,500
Secretary and Treasurer 2001 175,000 70,000 30,000 1,500
Steven J. Mencarini 2003 185,000 71,250 12,000(3) --
Chief Financial Officer and 2002 182,500(2) 43,750 1,500
Senior Vice President 2001 168,751 25,000 15,000 1,500
- -------------------------
(1) All amounts reported represent ePlus' employer 401(k) plan matching
contributions.
(2) Difference in salary represents a salary increase effective July 1, 2001 to
$185,000.
(3) Stock options granted on June 28, 2002 under the ePlus Amended and Restated
Long-Term Incentive Plan.
Fiscal Year-end Option Values
The following table sets forth informationlike that of his peers’, is based primarily on the calculation of commissions for sales completed, in accordance with our commission plan.
On June 25, 2008 the Board adopted a written Related Party Transactions Policy in order to establish more detailed processes, procedures and standards regarding the
valuereview, approval and ratification of
unexercised
options heldrelated person transactions and to provide greater specificity regarding what types of transactions constitute related person transactions. All related person transactions are prohibited unless approved or ratified by the
named executive officers atAudit Committee or, in certain circumstances, the
end of fiscal year 2003. The
named executive officers did not exercise any options during fiscal year 2003.
-14-
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End($)(1)
------------------------------ ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Phillip G. Norton............. 305,000 -- 0 --
Bruce M. Bowen................ 145,000 -- 0 --
Kleyton L. Parkhurst.......... 195,000 45,000 80,000 6,900
Steven J. Mencarini........... 88,200 19,500 0 2,760
- -------------------
(1) Based on a last sale price of $7.20 per share asChair of the close of business
on March 31, 2003.
Equity Compensation Plan Information
The following table gives information about ePlus' common stock that may be
issued upon the exercise of options, warrants, and rights under all of ePlus'
existing equity compensation plans as of March 31, 2003, including the ePlus
inc. Amended and Restated 1998 Long-Term Incentive Plan, Amended and Restated
Incentive Stock Option Plan, Amended and Restated Outside Director Stock Option
Plan, and Amended and Restated Nonqualified Stock Option Plan.
Number of securities
remaining available for
Number of securities to future issuance under equity
be issued upon exercise Weighted-average exercise compensation plans
of outstanding options, price of outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in column(1))
----------------- ----------------------- ----------------------------- -----------------------------
(1) (2) (3)
Equity compensation plans
approved by security
holders 2,013,688 $9.14 0(1)
Equity compensation plans
not approved by
security holders --- --- ---
Total 2,013,688 --- 0
(1) ePlus has reserved for issuance upon the grant or exercise of awards
pursuant to the ePlus inc. Amended and Restated 1998 Long-Term Incentive
Plan that number of shares of the authorized but unissued shares of common
stock equal to (1) 20% of the total number of shares of common stock
outstanding from time to time, as determined immediately after giving pro
forma effect to the assumed exercise of all options or other rights to
acquire common stock, less (2) any shares of common stock that have been
purchased under the Employee Stock Purchase Plan from time to time, and
less (3) any shares granted pursuant to the exercise of options or
otherwise granted as awards under the Amended and Restated Incentive Stock
Option Plan, Amended and Restated Outside Director Stock Option Plan, and
Amended and Restated Nonqualified Stock Option Plan.
-15-
Option Grants in Last Fiscal Year
The following table sets forth information concerning individual grants of stock
options to the named executive officers during fiscal year 2003.
Individual Grants
---------------------------------------------------
Number of Percentage of Potential Realized Value at
Securities Total Options Assumed Annual Rates of
Underlying Granted to Stock Price Appreciation
Options Employees Exercise for Option Term(2)
Granted in Fiscal Year Price Expiration ---------------------------
Name (#) (1) ($/sh) Date 5%($) 10%($)
- --------------------- --------- -------------- -------- -------- ------------ ------------
Phillip G. Norton -- -- -- -- -- --
Bruce M. Bowen -- -- -- -- -- --
Kleyton L. Parkhurst 30,000(3) 38.96% 6.97 6/27/12 131,400 333,300
Steven J. Mencarini 12,000(3) 15.58% 6.97 6/27/12 52,560 133,320
- ----------
(1) The percentage of total options granted to employees in fiscal year 2003 is
based on options to purchase an aggregate of 77,000 shares of Common Stock
options granted to employees during fiscal year 2003.
(2) The dollar amounts reported in the "Potential Realized Value at Assumed
Annual Rates of Stock Price Appreciation for Option Term" columns represent
hypothetical amounts that may be realized on exercise of options
immediately prior to the expiration of their term assuming the specified
compounded rates of appreciation of the Common Stock over the term of the
options. The 5% and 10% assumed annual rate of stock price appreciation are
required by the rules of the Securities and Exchange Commission and do not
reflect the Company's estimate or projection of future stock price growth.
(3) These options vest as follows: twenty percent after the first anniversary
of the grant, an additioanl thirty percent after the second anniversary of
the grant, and the remaining fifty percent after the third anniversary of
the grant.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
ePlus 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 provided 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.
The current annual base salaries ($250,000 in the case of Phillip G. Norton;
$225,000 in the case of Bruce M. Bowen; $200,000 in the case of Kleyton L.
Parkhurst; and $225,000 in the case of Steven J. Mencarini) are in effect and
each employee may be eligible for commissions or performance bonuses. The
performance bonuses for Phillip G. Norton and Bruce M. Bowen are discretionary,
based on the performance of ePlus and as approved by the CompensationAudit Committee.
The performance bonuses 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, employer 401(k)
contributions, 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
-16-
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.
These options have a ten year term and became exercisable and vested in 25%
increments over four years, ending on November 20, 1999. In February 1998, Mr.
Norton was also granted options to purchase 25,000 shares of common stock at a
price per share equal to $12.65 and in August 1999 was granted options to
purchase 175,000 shares of common stock at a price per share equal to $7.75
Under his original employment agreement, Bruce M. Bowen was granted options to
acquire 15,000 shares of common stock at a price per share equal to $8.75. These
options have a ten year term and became exercisable and vested in 25% increments
over four years, ending on November 20, 1999. In February 1998, Mr. Bowen was
also granted options to purchase 15,000 shares of common stock at a price per
share equal to $11.50 and in August 1999 was granted options to purchase 115,000
shares of common stock at a price per share equal to $7.75.
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. These options have a ten year term and became exercisable and vested in
25% increments over four years ending on November 20, 1999. In February 1998,
Mr. Parkhurst was also granted options to purchase 10,000 shares of common stock
at a price per share equal to $11.50 and in September 1998 was granted options
to purchase 50,000 shares of common stock at a price per share of $8.75. In
August 1999, Mr. Parkhurst was granted options to purchase 20,000 shares of
common stock at a price per share equal to $7.75 and in September 2000 was
granted options to purchase 30,000 shares of common stock at a price per share
equal to $17.375. In June 2002, Mr. Parkhurst was also granted 30,000 options to
purchase common stock at a price per share equal to $6.97.
In connection with his original employment, Steven J. Mencarini was granted
options to acquire 16,200 shares of common stock at a price per share equal to
$12.75. These options have a ten year term, and become exercisable and vest in
20% increments over five years at the end of each year of service, and are
subject to acceleration upon certain conditions. In September 1997, Mr.
Mencarini was also granted options to purchase 5,100 shares of common stock at a
price per share equal to $13.25 and in December 1997 was granted options to
purchase 9,400 shares of common stock at a price per share equal to $12.25. In
February 1998, Mr. Mencarini was granted options to purchase 5,000 shares of
common stock at a price per share equal to $11.50; in October 1998, he was
granted options to purchase 25,000 shares of common stock at a price per share
equal to $8.00; in August 1999 he was granted options to purchase 20,000 shares
of commmon stock at a price per share equal to $7.75; in September 2000 he was
granted options to purchase 10,000 shares of common stock at a price per share
equal to $17.375; and in December 2000 he was granted options to purchase 5,000
shares of common stock at a price per share equal to $7.75. In June 2002, Mr.
Mencarini was also granted 12,000 options to purchase common stock at a price
per share equal to $6.97 per share.
ePlus maintains key-man life insurance on Mr. Norton in the amount of $11
million.
-17-
Compensation Committee Interlocks and Insider Participation
For the year ended March 31, 2003, all decisions regarding executive
compensation were made by the Compensation Committee with respect to Mr. Norton
and Mr. Bowen. Compensation for other executives was made by the committee, Mr.
Norton, or Mr. Bowen consistent with Compensation Committee Policy. The members
of the Compensation Committee are C. Thomas Faulders, III (Chairman), Terrence
O'Donnell, and Lawrence S. Herman. 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.
-18-
PERFORMANCE GRAPH
The following graph shows the value as of March 31, 2003 of a $100 investment
made on March 31, 1998 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.
3/99 3/00 3/01 3/02 3/03
--------- ---------- ---------- --------- ----------
EPLUS INC. 60.00 240.91 66.82 69.02 52.36
NASDAQ STOCK MARKET (U.S.) 135.08 250.99 100.60 101.32 74.37
NASDAQ FINANCIAL 90.11 85.39 94.44 117.52 108.97
-19-
CERTAIN TRANSACTIONS
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 and/or stockholders on successful sales or financing
arrangements obtained on behalf of ePlus. Loans and advances to employees and/or
stockholders totaled $54,132 for the year ended March 31, 2003. There were no
loans or extensions of credit by ePlus or any ePlus subsidiary to any of the
ePlus directors or executive officers.
Leases with Related Parties
ePlus leases certain office space from related parties. During the year ended
March 31, 2003, ePlus paid $256,300 in rent to Phillip G. Norton, our chief
executive officer and president, and $228,000 in rent to Vince Marino, president
of ePlus Technology inc of PA, a wholly owned subsidiary of ePlus during the
fiscal year ended March 31, 2003. All leases with related parties are approved
in advance by the Board of Directors.
Indemnification Agreements
We have entered into separate but identical indemnification agreements with each of our directors and executive officers, and we expect to enter into similar 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 against any expenses or liabilities incurred in connection with any proceeding in which the director or officer may be involved as a party or otherwise, by reason of the fact that the director or officer is or was a director or officer of ePlus or by any reason of any action taken by or omitted to be taken by the director or officer while acting as an officer or director of ePlus. However, ePlus is only obligated to provide indemnification under the indemnification agreements if:
(1)
| · | the director or officer was acting in good faith and in a manner the director or officer reasonably believed to be in the best interests of ePlus, and, with respect to any criminal action, the director or officer had no reasonable cause to believe the director’s or officer’s conduct was unlawful; |
| · | the claim was not made to recover profits by the director or officer in violation of Section 16(b) of the Exchange Act or any successor statute; |
| · | the claim was not initiated by the director or officer; |
| · | the claim was not covered by applicable insurance; or |
| · | 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 102(b)(7) of the DGCL. Each Director and officer has undertaken to repay ePlus for any costs or expenses paid by ePlus if it is ultimately determined that the Director or officer is not entitled to indemnification under the indemnification agreements. |
The following table shows information regarding each person known to be a “beneficial owner” of more than 5% of our common stock as of June 30, 2008. For purposes of this table, beneficial ownership of securities generally means the power to vote or dispose of securities, regardless of any economic interest in the securities. All information shown is based on information reported on Schedule 13G filed with the SEC on the dates indicated in the footnotes to this table.
| Name of Beneficial Owner | | Number of Shares Beneficially Owned (2) | | | Percentage of Shares Outstanding | |
| John H. Lewis (1) | | | 416,373 | | | | 5.1 | % |
| | | | | | | | | |
| Patrick J. Retzer (2) | | | 474,023 | | | | 5.8 | |
| | | | | | | | | |
Dimensional Fund Advisors LP (3) 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 | | | 557,552 | | | | 6.8 | |
| (1) | The information as to John H. Lewis is derived from a Schedule 13G filed with the SEC on April 9, 2008. John H. Lewis reports that he is the controlling member of Osmium Partners, LLC, a Delaware limited liability company ("Osmium Partners"), which serves as the general partner of Osmium Capital, LP, a Delaware limited partnership (the "Fund"), Osmium Capital II, LP, a Delaware limited partnership ("Fund II"), and Osmium Spartan, LP, a Delaware limited partnership ("Fund III"). Mr. Lewis and Osmium Partners may be deemed to share with the Fund, Fund II, Fund III voting and dispositive power with respect to such shares. Each filer disclaims beneficial ownership with respect to any shares other than the shares owned directly by such filer. |
| (2) | The information as to Patrick J. Retzer is derived from a Schedule 13G filed with the SEC on April 23, 2008. |
| (3) | The information as to Dimensional Fund Advisors is derived from a Schedule 13G/A filed with the SEC on February 6, 2008. Dimensional Fund Advisors reports that it is an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (the “Funds”). In its role as investment advisor or manager, Dimensional possesses investment and/or voting power over our securities that are owned by the Funds, and may be deemed to be the beneficial owner of our shares held by the Funds. However, Dimensional disclaims beneficial ownership of all securities reported in its Schedule 13G/A. |
The following table sets forth the name, age and position, as of June 30, 2008, of each person who was an executive officer with ePlus on such date. To the Company’s knowledge, there are no family relationships between any director or executive officer and any other director or executive officer of the Company. Additionally, Mr. Norton serves as the Chairman of the Board of Directors and Mr. Bowen serves on the Board.
| NAME | AGE | POSITION |
| | |
| Phillip G. Norton | 64 | Director, Chairman of the Board, President and Chief Executive Officer |
| | |
| Bruce M. Bowen | 56 | Director and Executive Vice President |
| | |
| Steven J. Mencarini | 52 | Senior Vice President and Chief Financial Officer |
| | |
| Kleyton L. Parkhurst | 45 | Senior Vice President and Treasurer |
The business experience during the past five years of each executive officer of ePlus is described below.
Phillip G. Norton, Chairman of the Board, President and Chief Executive Officer
Mr. Norton joined us in March 1993 and has served since then as our Chairman of the Board and Chief Executive Officer. He was elected President of ePlus inc. in September 1996. Mr. Norton graduated from the U.S. Naval Academy in 1966.
Bruce M. Bowen, Director and Executive Vice President
Mr. Bowen founded our Company in 1990 and served as our President until September 1996. Since September 1996, Mr. Bowen has served as our Executive Vice President, and from September 1996 to June 1997 also served as our Chief Financial Officer. Mr. Bowen has served on our Board since our founding. He 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, Senior Vice President and Chief Financial Officer
Mr. Mencarini joined us in June 1997 as Senior Vice President and Chief Financial Officer. Prior to joining us, Mr. Mencarini was Controller of the Technology Management Group of Computer Sciences Corporation (“CSC”). Mr. Mencarini joined CSC in 1991 as Director of Finance and was promoted to Controller in 1996. Mr. Mencarini is a 1976 graduate of the University of Maryland and received a Masters of Taxation from American University in 1985.
Kleyton L. Parkhurst, Senior Vice President and Treasurer
Kleyton L. Parkhurst joined us in May 1991 as Director of Finance. Mr. Parkhurst has served as Secretary or Assistant Secretary and Treasurer since September 1996. In July 1998, Mr. Parkhurst was made Senior Vice President for Corporate Development. Mr. Parkhurst is currently responsible for all of our mergers and acquisitions, investor relations, and marketing. Mr. Parkhurst is a 1985 graduate of Middlebury College.
The following table includes certain compensation information concerning compensation paid to or earned by the Chief Executive Officer and the two other most highly compensated executive officers of our Company as of March 31, 2008 (the "named executive officers").
2008 Summary Compensation Table
| Name and Principal | | | | Salary | | Bonus | | Stock Awards | | Option Awards | | Non-Equity Incentive Plan Compen- sation | | Non-Qualified Deferred Compen- sation Earnings | | All Other Compen- sation | | | Total | |
| Position | | Year | | ($) | | ($) | | ($) | | ($)(1) | | ($) | | ($) | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | | | | | | |
| Phillip G. Norton - Chairman of the Board, President, and Chief Executive Officer | | 2008 | | | 395,561 | | - | | - | | | 999,941 | | | 200,000 | | - | | | 1,500 | (2) | | | 1,597,002 | |
| | 2007 | | | 375,000 | | | 150,000 | | - | | | 487,288 | | | - | | - | | | 1,500 | | | | 1,013,788 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bruce M. Bowen - Executive Vice President | | 2008 | | | 300,000 | | | - | | - | | | 164,370 | | | 150,000 | | - | | | 190,952 | (3) | | | 805,322 | |
| | 2007 | | | 300,000 | | | 75,000 | | - | | | 80,100 | | | - | | - | | | 166,712 | | | | 621,812 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Steven J. Mencarini - Chief Financial Officer and Senior Vice President | | 2008 | | | 286,827 | | | - | | - | | | 164,370 | | | 150,000 | | - | | | 74,292 | (4) | | | 675,489 | |
| | 2007 | | | 225,000 | | | 100,000 | | - | | | 80,100 | | | - | | - | | | 65,615 | | | | 470,715 | |
| (1) | The amounts in this column show the amount we have expensed during the fiscal year 2007 and 2008 under FAS 123R. There were no stock awards made to the named executive officers in fiscal year 2007 or 2008. The amounts shown in this column for fiscal year 2008 relate to options which were canceled on May 11, 2007. The assumptions used to calculate the accounting expense recognized in fiscal 2008 for these stock option awards are set forth in Note 11, “Stock-Based Compensation” to the Consolidated Financial Statements included in ePlus’ Annual Report on Form 10-K for fiscal 2008. |
| (2) | Includes $1,500 of our employer 401(k) matching contributions. |
| (3) | Includes $5,790 of country club dues, $1,500 of our employer 401(k) matching contributions, and $183,662, which represents for fiscal year 2008 the increase the cash benefit under the Supplemental Benefit Plan. |
| (4) | Includes $1,500 of our employer 401(k) matching contributions, and $72,792 which represents for fiscal year 2008 the increase in the cash benefit under the Supplemental Benefit Plan. |
Supplemental Benefit Plans
On February 28, 2005, our Board approved the adoption of separate ePlus inc. Supplemental Benefit Plans for each of Messrs. Bowen and Mencarini. The plans were developed and designed to provide each of the participating named executive officers with a long-term incentive plan outside of the Company’s normal incentive plans.
The plans are unfunded and nonqualified and are designed to provide the participants with a cash benefit that is payable only upon the earlier to occur of
| · | termination of employment; or |
| · | the expiration of the plans. |
Each plan terminates on August 11, 2014. Under the terms of the plans, the participants or their beneficiaries have only the right to receive a single lump-sum cash distribution upon the occurrence of one of the triggering events described above. Under the terms of the plans, the participants do not have a right to accelerate payments of the benefits payable under the plans. If a participant is terminated for cause (as defined in each plan) prior to the expiration of the respective plan, we will have no further obligation under the respective plan and the affected participant will not be entitled to any payments under such plan. In connection with the adoption of the plans, we have established a grantor trust to which we have transferred assets intended to be used for the benefit of the participants. Through the date of distribution of plan benefits, the assets of such trusts will remain subject to the claims of our creditors and the beneficiaries of the trusts shall have standing with respect to any criminal action, the director or
officer hadtrusts’ assets not greater than that of our general unsecured creditors. For the year ended March 31, 2008, there were no reasonable causepayments to believe the director's or officer's
conductparticipants under the plan. The Compensation Committee takes the amounts accruing under these plans into consideration when setting other long-term compensation awards.
Incentive Plan Awards Paid to Named Executive Officers
On February 29, 2008, the Board of Directors of the Company adopted the ePlus inc. Fiscal Year 2008 Executive Incentive Plan ("the Cash Incentive Plan"), effective March 6, 2008. Certain performance-based cash incentive compensation was unlawful;
(2)earned by eligible executive employees under the claim was not made to recover profits madeCash Incentive Plan.
The Cash Incentive Plan is administered by the director or
officer in violation of Section 16(b)Compensation Committee of the Exchange Act,Board, which has full authority to determine the participants in the Cash Incentive Plan, the terms and amounts of each participant’s minimum, target and maximum awards, and the period during which the performance is to be measured.
At the conclusion of the fiscal year ended March 31, 2008, the Compensation Committee determined the various corporate, unit and individual performance objectives described under the Cash Incentive Plan which were achieved. A cash payment to each respective executive was based on the level of attainment of the applicable performance objectives.
The award amount paid is a percentage of base salary based on the level of attainment of the applicable performance goals as amended,
or any successor statute;
(3)set forth in each participant’s award agreement. The 2008 performance criteria and their relative weights for each participant were as follows: Company financial performance, 66.6%; and individual performance, 33.3%. The Company financial performance was based on the claim was not initiatedCompany’s net earnings before taxes for the 2008 fiscal year as stated in the Company’s Form 10-K for such year. Such earnings were adjusted to exclude the incentive compensation accrued by the directorCompany under the Cash Incentive Plan, and also would have excluded, if they had been applicable, all items of income, gain or officer;
(4)loss determined by the claimBoard to be extraordinary or unusual in nature and not incurred or realized in the ordinary course of business, and any income, gain or loss attributable to the business operations of any entity acquired by the Company during the 2008 fiscal year. The Company financial performance set forth in each executive’s plan was not covered by applicable insurance;exceeded. The cash incentive compensation was capped at 50% of each executive’s salary, therefore, although the Company financial performance was exceeded, each executive received the maximum cash incentive payment of 50% of his salary. There were no waivers or (5)modifications to any specified performance targets, goals or conditions with respect to the claim was notCash Incentive Plan.
Employment Agreements
We have entered into employment agreements with Phillip G. Norton and Bruce M. Bowen, each effective as of September 1, 1996, and with Steven J. Mencarini, effective as of October 31, 2003.
Each of Messrs. Norton’s and Bowen’s employment agreements provide for an actinitial term of three years, and is subject to an automatic one-year renewal at the expiration thereof unless we or omissionthe employee provides notice of an intention not to renew at least thirty (30) days prior to expiration.
The employment agreements of Messrs. Norton and Bowen also contain a covenant not to compete on the part of each, whereby, in the event of a
directorvoluntary termination of
ePlus from
which a director may not be relieved of liability under Section
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103(b)(7)employment, upon expiration of the DGCL. Each directorterm of the agreement, or upon the termination of employment by us for cause, each is subject to restrictions on acquiring, consulting with, or otherwise engaging in or assisting in providing 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. Messrs. Norton and officer has undertakenBowen’s employment agreements do not provide for payment in the event of a change of control.
Mr. Mencarini’s employment agreement provides for an initial term of two years, and is subject to repay ePlusan automatic one-year renewal at the expiration thereof unless we provide at least six months’ prior notice of termination or the employee resigns for any costsreason. On April 28, 2008, we timely provided six months’ notice to Mr. Mencarini of non-renewal of his agreement. The notice did not otherwise affect Mr. Mencarini’s employment with us. The employment agreement requires us to pay severance to Mr. Mencarini if we terminate his employment during the term of the agreement other than for cause or expensesdisability, or if he resigns for good reason (as defined in the agreement). Mr. Mencarini’s employment agreement further provides that, should his employment be terminated for any reason within 90 days of a change of control, as defined in the agreement, and provided that he provides 180 days notice to the Company, he shall receive one year of salary and benefits.
Under the employment agreements, each receives certain other benefits, including medical, insurance, death and long-term disability benefits and reimbursement of employment-related expenses. Under Mr. Bowen’s employment agreement, country-club dues are paid by ePlus if itus. If Mr. Bowen’s employment is ultimately determinedterminated other than for cause, he is able to retain the country club membership provided he pays the country club dues. Under Mr. Norton’s employment agreement, we maintain key-man term life insurance in the amount of $11 million. Upon termination of employment for any reason, Mr. Norton has the right to have this policy transferred to him. However, we would not have further obligations to pay the premiums due on the policy. In addition, upon termination of employment, other than for cause, Mr. Norton has the right to receive season basketball tickets held by us, provided that the director or officercost of the tickets are paid by Mr. Norton.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2008
The following table sets forth outstanding option awards held by our named executive officers as of March 31, 2008.
| | | Option awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | Option Expiration Date |
| Phillip G. Norton | | | 175,000 | | | | - | | | | - | | | | 7.75 | | 8/11/2009 |
| | | | | | | | | | | | | | | | | | |
| Bruce M. Bowen | | | 115,000 | | | | - | | | | - | | | | 7.75 | | 8/11/2009 |
| | | | | | | | | | | | | | | | | | |
Steven J. Mencarini | | | 25,000 | | | | - | | | | - | | | | 8.00 | | 10/1/2008 |
| | | | 20,000 | | | | - | | | | - | | | | 7.75 | | 8/11/2009 |
| | | | 10,000 | | | | - | | | | - | | | | 17.38 | | 9/13/2010 |
| | | | 5,000 | | | | - | | | | - | | | | 7.75 | | 12/27/2010 |
(1) On May 11, 2007, Messrs. Norton, Bowen, Parkhurst and Mencarini entered into separate stock option cancellation agreements pursuant to which options to purchase 300,000 shares, 50,000 shares, 50,000 shares, and 50,000 shares, respectively, were cancelled. These cancelled awards are not included in this column. In accordance with SFAS No. 123R, “Share-Based Payment,” we recognized $1.5 million of share-based compensation expense relating to the cancellation of these options.
The following table provides information about our common stock that may be issued upon the exercise of options, warrants, and rights under all of our existing equity compensation plans as of March 31, 2008, including the ePlus inc. Amended and Restated 1998 Long-Term Incentive Plan, Amended and Restated Incentive Stock Option Plan, Amended and Restated Outside Director Stock Option Plan, and Amended and Restated Nonqualified Stock Option Plan.
| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | | | Weighted-average exercise price of outstanding options, warrants, and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | |
Equity compensation plans approved by security holders | | 1,240,813 | | | $ | 9.78 | | | 776,406 | |
Equity compensation plans not approved by security holders | | - | | | | - | | | - | |
| | 1,240,813 | | | $ | 9.78 | | | 776,406 | |
| | | | | | | | | | | |
(Proposal # 1 on Proxy Card)
In accordance with the terms of our certificate of incorporation, our Board of Directors is not entitled to
indemnification underpresently divided into three classes. Each class consists, as nearly as possible, of one-third of the indemnification agreements.
Future Transactions
ePlus' policy requires that all material transactions between ePlustotal number of directors, and its
officers, directors, or other affiliates musteach class has a three-year term. Vacancies on the Board of Directors may be approvedfilled by persons elected by a majority of the disinterested membersremaining directors. A director elected by the Board of Directors to fill a vacancy in a class shall serve for the remainder of the full term of that class, and until such director’s successor is elected and qualified or until such director’s death, resignation or removal. This includes vacancies created by an increase in the number of directors.
The Board of Directors presently has eight members. There are three Class I Directors, three Class II Directors, and two Class III Directors. The last election of any director was held at our annual meeting of stockholders in September 2005. Because each class serves for three years or until their successors are appointed, each class is presently up for election at this annual meeting. Each of the nominees for election is currently a director of the company and was selected by the Board of Directors as a nominee in accordance with the recommendation of the Nominating and Corporate Governance Committee.
At the 2008 annual meeting, stockholders will also vote on a proposal to amend the Company’s Certificate of Incorporation to de-classify the Board of Directors (Proposal No. 4). If the proposal is approved, each nominee for director in Classes II and III has agreed to resign effective at the 2009 annual meeting. Hence, beginning with the 2009 annual meeting, each of our directors would then stand for election for a one-year term and until each director’s successor is duly elected and qualified.
Biographical information for each nominee is provided below. A plurality of votes cast is required for the election of Directors. Your Board unanimously recommends a vote FOR each of the director-nominees.
C. Thomas Faulders, III joined our Board in July 1998. Mr. Faulders has been the President and Chief Executive Officer of the University of Virginia Alumni Association since 2005. Prior to that, Mr. Faulders served as the Chairman and Chief Executive Officer of LCC International, Inc. from 1999 to 2005 and as Chairman of Telesciences, Inc., an information services company, from 1998 to 1999. From 1995 to 1998, Mr. Faulders was Executive Vice President, Treasurer, and Chief Financial Officer of BDM International, Inc., a prominent systems integration company. Mr. Faulders is a member of the Board of DirectorsAdvisors of ePlus,Morgan Franklin and be on terms no
less favorable to ePlus than could be obtained from unaffiliated third parties.
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PROPOSAL 1
To Elect Two Class I Directors to Serve for Three Years and until their
Respective Successors Have Been Duly Elected and Qualified.
Thethe Board of Directors has concluded thatTrustees of Randolph College. He is a 1971 graduate of the re-electionUniversity of C. Thomas Faulders,
IIIVirginia and in 1981 received a Masters of Business Administration from the Wharton School of the University of Pennsylvania.
Lawrence S. Herman as Class I Directors isjoined our Board in March 2001. Mr. Herman has been with BearingPoint, Inc. since June 1967 and was one of BearingPoint’s most senior managing directors, responsible for managing the strategy and emerging markets in the best interest of ePluscompany’s state and recommends stockholder approvallocal government practice. In July 2007, Mr. Herman transitioned to a new role with BearingPoint as a managing director emeritus on a part time basis. During his career, Mr. Herman has specialized in developing, evaluating, and implementing financial and management systems and strategies for state and local governments around the nation. He has directed systems integration projects for state and local governments, and several statewide performance and budget reviews for California, North Carolina, South Carolina, Louisiana, Oklahoma, and others, resulting in strategic fiscal and technology plans. He is considered to be one of the re-election of C. Thomas Faulders,
IIInation’s foremost state budget and Lawrence S. Herman as Class I directors. The remaining three directors
will continue to serve in their positions for the remainder of their terms.
Biographical information concerning Mr. Faulders andfiscal planning experts. Mr. Herman received his B.S. degree in Mathematics and ePlus'
other directors can be found under "DirectorsEconomics from Tufts University in 1965 and his Masters of Business Administration in 1967 from Harvard Business School.
Eric D. Hovde joined our Board in November 2006. In 1987, Mr. Hovde founded Hovde Financial, Inc., and is the Chief Executive Officers."
Unless otherwise instructed or unless authority to voteOfficer, Managing Member and Chairman of, Hovde Capital Advisors LLC, Hovde Private Equity Advisors LLC, and Hovde Financial, Inc., respectively (the “Hovde Group”). The Hovde Group is withheld, all proxies
will be voted forfocused exclusively on the election of C. Thomas Faulders, IIIfinancial services industry and Lawrence S. Hermanprovides its clients with investment banking, asset management and merchant banking services. Mr. Hovde has also served as Class I Directors. Althougha director on numerous bank and thrift boards and currently serves on the Board of Directors and the Compensation Committee 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 namedSunwest Bank in the enclosed proxy card
will vote for the election of such other person or persons as may be nominated
byOrange County, California. Mr. Hovde also serves on the Board of Directors.
Vote RequiredDirectors and Audit Committee of Great Wolf Resorts, Inc. Mr. Hovde is the co-founder and a trustee of the Eric D. and Steven D. Hovde Foundation, an organization that actively supports clinical research in search of a cure for Approval.Multiple Sclerosis and charitable relief in devastated areas around the world. Mr. Hovde received his degrees in Economics and International Relations from the University of Wisconsin. He is licensed with the NASD as a registered representative and general securities principal.
Irving R. Beimler joined our Board in November 2006. Mr. Beimler has been with the Hovde Group since November 1997. Currently, he is serving as Portfolio Manager of Hovde Private Equity Advisors LLC. He has served as a senior officer, Interim President and Chief Executive Officer and a Board Member of numerous banks and thrifts during his career. He is a graduate of the State University of New York at Geneseo.
Milton E. Cooper, Jr. joined our Board in November 2003. Mr. Cooper served with Computer Sciences Corporation (“CSC”) from September 1984 until his retirement in May 2001, first as Vice President, Business Development and then (from January 1992) as President, Federal Sector. Before joining CSC, Mr. Cooper served in marketing and general management positions with IBM Corporation, Telex Corporation, and Raytheon Company. He also serves on the Board of Directors and on the Compensation Committee of both L-1 Identity Solutions, Inc. and Applied Signal Technology, Inc. Mr. Cooper is a 1960 graduate of the United States Military Academy. He served as an artillery officer with the 82nd Airborne Division before leaving active duty in 1963.
Terrence O’Donnell joined our Board in November 1996 upon the completion of our IPO. For the past eight years, Mr. O’Donnell has been the Executive Vice President and General Counsel of Textron, Inc. and a partner with the law firm of Williams & Connolly LLP in Washington, D.C. Mr. O’Donnell has practiced law since 1977, and from 1989 to 1992 served as General Counsel to the U.S. Department of Defense. Mr. O’Donnell presently also serves on the Board of Directors and the Compensation, Nominating and Audit Committees of IGI, Inc., an American Stock Exchange company. Mr. O’Donnell is a 1966 graduate of the U.S. Air Force Academy and received a Juris Doctor from Georgetown University Law Center in 1971.
Class III Director Nominees – Term Expiring in 2011
Phillip G. Norton joined us in March 1993 and has served since then as our Chairman of the Board and CEO. Since September 1996, Mr. Norton has also served as our President. Mr. Norton is a 1966 graduate of the U.S. Naval Academy.
Bruce M. Bowen founded our company in 1990 and served as our President until September 1996. Since September 1996, Mr. Bowen has served as our Executive Vice President, and from September 1996 to June 1997 also served as our CFO. Mr. Bowen has served on our Board since our founding. He is a 1973 graduate of the University of Maryland and in 1978 received a Masters of Business Administration from the University of Maryland.
Proposal 2 – Approval of the 2008 Non-Employee Director Long-Term Incentive Plan
(Proposal # 2 on Proxy Card)
On June 25, 2008, the Board of Directors adopted the 2008 Non-Employee Director Long-Term Incentive Plan, subject to stockholder approval (the “Non-Employee Director Plan”). The two persons receivingCompany’s current Long-Term Incentive Plan (the “1998 Amended Plan”) was adopted by shareholders in 2003. The 1998 Amended Plan provided that Directors would annually receive 10,000 options the greatest numberday after the Company’s annual meeting, but that no options shall be awarded pursuant to that provision after September 1, 2006. The most recent option grants awarded to non-employee directors under the 1998 Amended Plan were awarded in September 2005. No equity awards were granted to the non-employee directors during the 2006 or 2007 calendar years.
Eligible participants in the Non-Employee Director Plan are directors who, on the date such person is to receive a grant of affirmative votes castrestricted shares hereunder is not a current employee of the Company or any of the Company’s subsidiaries (“Outside Director”). Six of our directors proposed for election at the annual meeting will be eligible to participate in the Non-Employee Director Plan. Messrs. Norton and Bowen are not eligible to participate in the Non-Employee Director Plan.
Under the proposed Non-Employee Director Plan, each Non-Employee Director will receive a one-time grant on the date which is two business days after the date that a Form S-8 registration statement in respect of the shares subject to the Non-Employee Director Plan is filed with, and declared effective by, the Securities and Exchange Commission, of a number of restricted shares having a Fair Market Value (as defined in the Plan) on the date of grant (determined without regard to the restrictions applicable thereto) of $35,000. Thereafter, every September 25th beginning September 25, 2008, or, if September 25th is not a business day, then on the first business day thereafter, each director will receive an annual grant of restricted stock having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the aggregate dollar amount of cash compensation earned by an Outside Director during the Company’s fiscal year ended immediately prior to the respective Annual Grant Date. Alternatively, directors may elect to receive their cash compensation in restricted stock.
The restricted shares granted to directors under the Plan will be subject to restrictions prohibiting such restricted shares from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The restrictions with respect to each award of restricted shares shall lapse as to one-half of such restricted shares on each of the one-year and second-year anniversary date of the grant of such award; provided, however, that the restrictions with respect to such restricted shares shall lapse immediately in the event that (i) the director is nominated for a new term as an Outside Director but is not elected by stockholders of the Company, or (ii) the director ceases to be a member of the Board due to death, disability or mandatory retirement (if any). The restrictions with respect to all of a director's restricted shares shall lapse immediately prior to a Change in Control (as defined in the Non-Employee Director Plan) provided that the director is a member of the Board immediately prior to such Change in Control.
During the restriction period, a director will have the right to vote his or her restricted shares and have the right to receive any cash dividends with respect to such restricted shares. All distributions, if any, received by a director with respect to restricted shares as Class I
Directors.a result of any stock split, stock distribution, combination of shares, or other similar transaction will be subject to the same restrictions as are applicable to the restricted shares to which such distributions relate.
The purpose of the Non-Employee Director Plan is to align the economic interests of the directors with the interests of stockholders by including equity as a component of pay and to attract, motivate and retain experienced and knowledgeable directors.
Under the Non-Employee Director Plan, the total number of shares authorized for grant to non-employee directors is two hundred fifty thousand (250,000). The 1998 Amended Plan did not specify the total number of shares authorized for grants solely to non-employee directors. If the Non-Employee Director Plan is approved by stockholders, we will register under the Securities Act of 1933, as amended, 250,000 shares of our common stock for issuance pursuant to awards granted under the Non-Employee Director Plan.
The Non-Employee Director Plan may be amended by the Board, in its sole discretion, without stockholder approval, unless approval of a change is required by applicable law. The equity payable under the Non-Employee Director Plan is intended to constitute a designated percentage (initially 50%) of the compensation paid to a director each year and if the directors approve an increase in the total annual retainer, the value of the annual awards under the Non-Employee Director Plan will increase. It is not anticipated that stockholder approval of an increase in the total annual retainer would be sought. Any amendments made without stockholder approval could increase the costs of the Non-Employee Director Plan. A director’s consent would be required to revoke or alter an outstanding award in a manner unfavorable to such director.
Stockholders are requested in this Proposal 2 to approve the Non-Employee Director Plan. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve the Non-Employee Director Plan. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
The description above of the Non-Employee Director Plan is qualified in its entirety by reference to the full text of the Non-Employee Director Plan, a copy of which is attached as Annex A to these proxy materials.
Your Board unanimously recommends a vote FOR approval of the Non-Employee Director Plan.
Proposal 3 – Approval of the 2008 Employee Long-Term Incentive Plan
(Proposal # 3 on Proxy Card)
On June 25, 2008, the Board of Directors Recommendation. adopted the 2008 Long-Term Incentive Plan (the “Employee Plan”), subject to stockholder approval. No awards have been issued under the 1998 Amended Plan since September 2006. Options granted under the 1998 Amended Plan, and any earlier plan, will continue to be subject to the terms and conditions as set forth in the agreements evidencing such options, as well as the terms of the plan under which they were granted.
Stockholders are requested in this Proposal 3 to approve the Employee Plan. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve the Employee Plan. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
The description below of the Employee Plan is qualified in its entirety by reference to the full text of the Employee Plan, a copy of which is attached as Annex B to these proxy materials.
Your Board unanimously recommends a vote FOR approval of the 2008 Employee Long-Term Incentive Plan.
Summary of the Employee Plan
General
The Employee Plan allows for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other stock-based awards to ePlus employees. Under the Employee Plan, the total number of shares authorized for grant is 1,000,000. This reflects a decrease of 2,000,000 from the 1998 Amended Plan. Awards granted under the 1998 Amended Plan or any prior plan will not be counted toward the 1,000,000 authorized for grant under the Employee Plan. The approval of the Employee Plan will allow the Compensation Committee to continue to grant stock options and a broad array of other equity incentives at levels it determines appropriate, subject to certain limitations set forth in the Employee Plan. The purposes of the Employee Plan are to encourage employees of the Company to acquire a proprietary interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of its stockholders, and to enhance the ability of the Company and its affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depend. Shares under the Employee Plan will not be used to compensate our outside directors, who may be compensated under a separate Non-Employee Director Plan, described above under Proposal 2, if approved by stockholders.
The Employee Plan includes certain provisions intended to ensure compliance with Section 409A of the Internal Revenue Code regarding certain deferred compensation arrangements. These provisions are designed to exempt the awards from Section 409A, to preserve the intended tax treatments of the benefits provided with respect to the award under Section 409A, and to otherwise ensure compliance with the requirements of Section 409A.
Administration
Pursuant to its terms, the Employee Plan is administered by the Compensation Committee of the Board of Directors. The Compensation Committee has the power to do the following, among other powers: designate participants, determine the number, terms and conditions of any award, interpret and administer the Employee Plan, accelerate the vesting, exercise or payment of an award, correct any defect, supply any omission, or reconcile any inconsistency in the Employee Plan or any award in the matter and to the extent it shall deem desirable to carry the Employee Plan into effect, and make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Employee Plan.
Eligibility
In general, any employee of ePlus and its consolidated subsidiaries is eligible to be designated as a participant. As of June 30, 2008, we had approximately 687 employees.
Stock Subject to the Plan
A maximum of 1,000,000 shares of common stock are available for issuance under the Employee Plan, subject to adjustment as provided under the terms of the Employee Plan. Shares issuable under the Employee Plan may consist of authorized but unissued shares or shares held in our treasury. If any shares covered by an award granted under the Employee Plan are forfeited, or if an award otherwise terminates without the delivery of shares or of other consideration, then the shares covered by such award, or the number of shares otherwise counted against the aggregate number of shares available under the Employee Plan with respect to such award, to the extent of any such forfeiture or termination, shall again be available for granting awards under the Employee Plan. No more than 300,000 shares shall be available as incentive stock options, and no more than 500,000 may be available for awards granted in any form other than options or stock appreciation rights. In addition, the Employee Plan includes an annual per-person limitation of 50,000 options and stock appreciation rights, and also a 50,000 annual limit on restricted stock, restricted stock units, performance awards and other stock-based awards.
Section 409A
Except to the extent specifically provided otherwise by the Committee, awards are intended to satisfy the requirements of Section 409A of the Internal Revenue Code, so as to avoid the imposition of any additional taxes or penalties. Notwithstanding any provision in the Employee Plan to the contrary, with respect to any award that is subject to Section 409A, distributions on account of a separation from service may not be made to a “specified employee,” as defined by Section 409A, before six months after the date of separation from service, or, if earlier, the date of death of the employee.
Amendments to and Termination of the Plan
The Board of Directors may amend, alter, suspend, discontinue or terminate the Employee Plan, in whole or in part, provided that no material amendment may be made without stockholder approval if said approval is required by applicable law, rule or regulation. No amendment, alteration, suspension or discontinuation may be made without approval of stockholders if the action would increase the total number of shares available under the Employee Plan or would result in a repricing, as described below. No amendment of the Employee Plan may materially adversely affect any right of any participant with respect to any outstanding award without the participant’s written consent. If not earlier terminated by the Board of Directors, the Employee Plan will automatically terminate on [September 15, 2018]. No awards may be granted under the Employee Plan after it is terminated, but any previously granted awards will remain in effect until they expire.
Prohibition of Repricing
Except in the event of a stock dividend, recapitalization, stock split, merger, or other similar events defined in the Employee Plan, the Board may not, without stockholder approval, take any action that would: permit options, SARs, or other stock-based awards encompassing rights to purchase shares to be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted option or the grant price of a previously granted SAR, or the purchase price of a previously granted other stock-based award.
Terms of Options
The Committee may grant non-qualified stock options, incentive stock options, or a combination of the two. Each award will be evidenced by an agreement, which may have additional conditions or restrictions so long as such provisions are not inconsistent with the Employee Plan.
Exercise Price. The exercise price shall no be less than 100% of the fair market value (as defined in the Employee Plan) of the Company’s common stock on the date of the grant.
Option Term. The term of each Option shall not exceed ten years from the date of the grant.
Vesting. Unless the award agreement provides otherwise, and subject to the Committee’s authority to accelerate vesting, waive or amend terms, or otherwise modify an award, options shall become vested as follows: 20% of the shares shall first become exercisable on the one-year anniversary of the date of grant, 30% of the shares shall first become exercisable on the two-year anniversary of the date of grant, and the remainder shall first become exercisable on the three-year anniversary of the date of grant. All options shall become immediately exercisable upon a change in control.
Payment of Exercise Price. The exercise price shall be paid in full when an option is exercised, or, at the Committee’s discretion, may be paid pursuant to a broker-assisted cashless exercise, delivery of other shares of common stock of ePlus that have been held for at least six months, or a combination of the above methods.
Termination of Employment. Options become immediately exercisable upon the death or disability of a participant, and must be exercised, if at all, within one year after said death or disability, but in no event after the date the options would otherwise lapse. Upon retirement, all options that are not exercisable shall be forfeited, and if exercisable, the options must be exercised, if at all, within one year of retirement but in no event after the date the options would otherwise lapse. Options that are not exercisable shall lapse upon a termination of employment for cause. Upon termination of employment for any reason other than death, disability, retirement or cause, all options that are not exercisable as of the date of termination shall be forfeited, and if exercisable, must be exercised, if at all, within 90 days of termination of employment.
Restrictions on Transfer. No option shall be assignable, alienable, saleable or transferable by a participant other than by will or the laws of descent and distribution. However, the Committee may permit a participant to designate a beneficiary to exercise the rights of the participant upon the participant’s death.
Incentive Stock Options
Terms. The terms of incentive stock options (“ISOs”) shall be designed to comply with Section 422 of the Internal Revenue Code. In the event any provisions of the Employee Plan would contravene the Code, such Employee Plan provision shall not apply to ISOs. In addition to the above conditions regarding stock options, the following also apply to ISOs:
Amount of Award. The aggregate fair market value of stock (determined as of the time of grant) with respect to which such ISOs are exercisable for the first time by the participant during any calendar year may not exceed $100,000. To the extent an option initially designated as an ISO exceeds this value limit or otherwise fails to satisfy the requirements applicable to ISOs, it shall be deemed a non-qualified stock option.
Timing of Exercise. If the Committee exercises its discretion to permit an ISO to be exercised more than 90 days after the participant’s termination of employment, and the exercise occurs more than 90 days after the participant ceases being an employee (or more than 12 months in the event of the participant’s death or disability), such ISO shall be treated for all purposes as a non-qualified stock option.
Ten Percent Owners. Any ISO granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of the Company’s stock shall have an exercise price per share of at least 110% of the fair market value of the stock at the date of grant, and the ISO shall expire no later than five years after the date of grant.
Stock Appreciation Rights
The Committee may grant Stock Appreciation Rights (“SARs”). The grant price shall not be less than 100% of the fair market value of the stock on the date of grant, except that if a SAR is granted in tandem with an option, the grant price of the SAR shall not be less than the exercise price of the option. As determined by the Committee, the payment upon exercise may be paid in cash, shares to be valued at their fair market value on the date of exercise, by any other mode of payment deemed appropriate by the Committee or by any combination thereof. The term of each SAR shall not exceed ten years from the date of grant.
Restricted Stock and Restricted Stock Units
Restricted stock and restricted stock units (“RSUs”) may be awarded under the Employee Plan to any employee selected by the Compensation Committee. Generally, the Compensation Committee has the discretion to fix the amount, terms, conditions and restrictions applicable to restricted stock awards. Any restricted stock or RSUs granted may be evidenced as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of restricted stock granted under the Employee Plan, such certificate shall be registered in the name of the participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such restricted stock. Unless otherwise determined by the Committee, all shares of restricted stock and RSUs still subject to restriction shall be forfeited and reacquired by the Company upon termination of employment for any reason other than death or disability. Any conditions or restrictions on restricted stock shall lapse upon a change in control.
Performance Awards
The Employee Plan authorizes the Committee to grant Performance Awards, which include arrangements under which the grant, issuance, retention, vesting and/or transferability of any award is subject to performance criteria and additional terms or conditions as designated by the Committee. A performance award may be payable in cash, shares of common stock (including restricted stock), other securities or other awards.
Dividend Equivalents
The Employee Plan authorizes the Committee to grant participants awards under which the holders thereof are entitled to receive payments equivalent to dividends or interest, with respect to a number of shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional shares or otherwise reinvested.
Other Stock-Based Awards
The Employee Plan authorizes the Committee to grant participants other awards that are denominated or payable in shares, as the Committee deems consistent with the Employee Plan and as comply with applicable law. The awards shall be granted for no cash consideration, or for such minimal cash consideration as may be required by applicable law. Payment of the award may be made in cash, shares, rights in or to shares issuable under the award, other securities, or other forms as determined by the Committee, or in any combination thereof. The Committee may establish rules and procedures relating to the awards. Except as provided by the Committee, the award shall not be assignable, alienable, saleable, or transferable other than by will or the laws of descent and distribution, although the Committee may permit a participant to designate a beneficiary to exercise the rights of the participant upon the death of the participant.
Summary of Federal Income Tax Consequences of Options and Stock Appreciation Rights
The following is a brief summary of the principal United States Federal income tax consequences of stock options and stock appreciation rights under the Employee Plan, under current United States Federal income tax laws. This summary is not intended to constitute tax advice and is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences.
Nonqualified Stock Options. A participant will not recognize any income at the time a nonqualified stock option or stock appreciation right is granted, nor will we be entitled to a deduction at that time. When a nonqualified stock option or stock appreciation right is exercised, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares to which the option exercise pertains on the date of exercise over the exercise price (or, for a stock appreciation right, the cash or value of shares received on exercise). Payroll taxes are required to be withheld from the participant on the amount of ordinary income recognized by the participant. We generally will be entitled to a tax deduction with respect to a nonqualified stock option or stock appreciation right at the same time and in the same amount as the participant recognizes income. The participant’s tax basis in any shares acquired by exercise of a nonqualified stock option (or received on exercise of a stock appreciation right) will be equal to the exercise price paid plus the amount of ordinary income recognized.
Upon a sale of the shares received by a participant upon the exercise of a nonqualified stock option, any gain or loss will generally be treated as long-term or short-term capital gain or loss, depending on how long the participant held such shares prior to sale.
Incentive Stock Options. A participant will not recognize any income at the time an ISO is granted. Nor will a participant recognize any income at the time an ISO is exercised. However, the excess of the fair market value of the shares on the date of exercise over the exercise price paid will be a preference item that could create an alternate minimum tax liability. If a participant disposes of the shares acquired on exercise of an ISO after the later of two years after the date of grant of the ISO or one year after the date of exercise of the ISO (the “holding period”), the gain (i.e., the excess of the proceeds received on sale over the exercise price paid), if any, will be long-term capital gain eligible for favorable tax rates. If the participant disposes of the shares prior to the end of the holding period, the disposition is a “disqualifying disposition”, and the participant will recognize ordinary income in the year of the disqualifying disposition equal to the excess of the lesser of (i) the fair market value of the shares on the date of exercise or (ii) the amount received for the shares, over the exercise price paid. The balance of the gain or loss, if any, will be long-term or short-term capital gain or loss depending on how long the shares were held by the participant prior to disposition.
We generally are not entitled to a deduction as a result of the grant or exercise of an ISO. If a participant recognizes ordinary income as a result of a disqualifying disposition, we will be entitled to a deduction at the same time and in the same amount as the participant recognizes ordinary income.
Code Section 162(m). With certain exceptions, Section 162(m) of the Code limits deduction for compensation in excess of $1,000,000 paid to certain “covered employees” whose compensation is reported in the compensation table included in the Company’s annual proxy statements. However, compensation paid to such employees will not be subject to such deduction limitation if it is considered “qualified performance-based compensation” (within the meaning of Section 162(m) of the Code, which, among other requirements, requires stockholder approval of the performance measures available under a plan). As previously noted, notwithstanding the adoption of the Employee Plan by stockholders, we reserve the right to pay our employees, including recipients of awards under the Employee Plan, amounts which may or may not be deductible under Section 162(m) or other provisions of the Code.
Your Board unanimously recommends that youa vote in favorFOR approval of the 2008 Employee Long-Term Incentive Plan.
Proposal 4 - Approval of Amended and Restated Certificate of Incorporation
(Proposal # 4 on Proxy Card)
The Board of Directors proposes to amend and restate our Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”) to provide for the annual election of C. Thomas Faulders, IIIdirectors. Currently, the Board is divided into three classes, with directors elected to staggered three-year terms. Approximately one-third of our directors stand for election each year. If the proposed amendment to the Certificate of Incorporation is approved, directors will be elected to one-year terms of office starting at the 2009 Annual Meeting of Shareholders. The Amended and Lawrence
S. HermanRestated Certificate of Incorporation also makes less substantive revisions, such as Class I Directors.
PROPOSAL 2
To Ratifyupdating the Appointmentname and address of our registered agent .
This proposal results from an ongoing review of corporate governance matters by the Nominating and Corporate Governance Committee and the Board. In its review, the Committee and the Board considered the advantages of maintaining the classified Board structure in light of our current circumstances, including that a classified Board structure promotes Board continuity and stability, encourages a long-term perspective by company management, and reduces vulnerability to coercive takeover tactics. While the Committee and the Board continue to believe that these are important considerations, the Committee and the Board also considered potential advantages of declassification in light of our current circumstances, including the ability of stockholders to evaluate directors annually, as well as the maintenance of best practices in corporate governance by the Company.
This general description of the Amended and Restated Certificate of Incorporation is qualified in its entirety by reference to the full text of the Amended and Restated Certificate of Incorporation, a copy of which is attached as Annex C to these proxy materials.
This proposal will be approved, and the proposed Amended and Restated Certificate of Incorporation adopted, upon the affirmative vote of the holders of the majority of the outstanding shares entitled to vote. Abstentions and broker non-votes will have the same effect as an “Against” vote.
Your Board unanimously recommends a vote FOR approval of the Amended and Restated Certificate of Incorporation.
Proposal 5 – Ratification of the appointment of Deloitte & Touche LLP as ePlus' Independent
Auditorsour independent auditors for ePlus' Fiscal Year Endingour fiscal year ending March 31, 2004.
Subject to stockholder ratification, the2009
(Proposal # 5 on Proxy Card)
The Audit Committee of the Board of Directors has reappointed the
firm ofselected Deloitte & Touche LLP (“Deloitte”) as the Company’s independent auditors to examine ePlus'
financial statementsauditor for the fiscal year ending March 31, 2004.2009. Deloitte &
Touche has audited ePlus' financial statementsserved as the Company’s independent auditors since its inception.1990, and is an independent registered public accounting firm.
Neither the Company’s bylaws nor other governing documents or law require stockholder ratification of the appointment of Deloitte as the Company’s independent auditors. However, the Company is submitting the appointment of Deloitte to the stockholders for ratification as a matter of good corporate practice. If the stockholders dofail to ratify the appointment, the Audit Committee will reconsider whether or not ratify thisto retain that firm. Even if the appointment otheris ratified, the Audit Committee in its discretion may direct the appointment of different independent auditors willat any time if they determine that such a change would be considered byin the Audit Committee.
best interest of the Company and its stockholders.
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.
Audit Fees. The
Auditor’s Fees
With respect to the fiscal years ended March 31, 2007 and March 31, 2008, the aggregate fees to be chargedbilled by Deloitte were as follows:
| | | Fiscal 2008 | | | Fiscal 2007 | |
| Audit Fees | | $ | 2,029,800 | | | $ | 2,160,000 | |
| Audit Related Fees | | __ | | | __ | |
| Tax Fees | | | | | | | | |
| All Other Fees | | $ | 2,029,800 | | | $ | 2,160,000 | |
Audit-Related Fees. There were no audit-related fees billed by Deloitte & Touche
for
professional services rendered for the audit of our annual financial statementsLLP for the fiscal
yearyears ended March 31,
2003 and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for that fiscal year
were $255,000. To date, Deloitte & Touche LLP has billed $150,000 to ePlus for
the services performed in the fiscal year ended March 31, 2004.
-22-
Financial Information Systems Design and Implementation2008 or 2007.
Tax Fees. There were no fees billed by Deloitte & Touche LLP for tax-related services rendered for the fiscal years ended March 31, 2008 or 2007.
All Other Fees. There were no other fees billed by Deloitte & Touche LLP for professional services rendered for information
technologythe fiscal years ended March 31, 2008 or 2007.
There were no non-audit related services relatingprovided by Deloitte & Touche LLP during the last two fiscal years. The Audit Committee pre-approves all auditing services (which may entail providing comfort letters in connection with securities underwriting), and all non-audit services provided to us by Deloitte & Touche LLP, subject to a de minimis exception as set forth by the SEC.
To be approved, Proposal 5, ratification of appointment of independent auditors, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
Your board unanimously recommends voting FOR ratification of Deloitte and Touche LLP as the Company’s independent auditor for the fiscal year ending March 31, 2009.
Report of the Audit Committee
The primary role of the Audit Committee, as more fully described in its Charter, is to assist the Board of Directors in its oversight of the Company’s corporate accounting and financial information systems designreporting process and implementationto interact directly with and evaluate the performance of the Company’s independent auditors.
In the performance of its oversight function, the Audit Committee has reviewed the Company’s audited financial statements for the fiscal year ended March 31, 2003.
All Other Fees. There were no fees billed2008 and has met with both management and the Company’s independent auditors, Deloitte & Touche LLP, to discuss those financial statements. The Audit Committee has discussed with Deloitte & Touche LLP those matters related to the conduct of the audit that are required to be communicated by the independent auditors to the Audit Committee, including, as set forth in Statements of Auditing Standards No. 61, as amended (as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T), Deloitte & Touche LLP’s judgments as to the quality, not just the acceptability, of the Company’s accounting principles.
The Audit Committee met separately with the independent auditors, without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
The Audit Committee has received from Deloitte & Touche LLP the required written disclosures and letter regarding its independence from ePlus, as set forth by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees)(as adopted by the PCAOB in Rule 3600T), and has discussed with Deloitte & Touche LLP its independence. The Audit Committee has also reviewed and considered whether the provision of other non-audit services by Deloitte & Touche for services
renderedLLP is compatible with maintaining the auditors’ independence.
Based on these reviews and discussions, the Audit Committee recommended to ePlus, other than the services described above under "Audit Fees"Board of Directors, and the Board of Directors approved, that the audited financial statements of ePlus for the fiscal year ended March 31, 2003.
Vote Required2008 be included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on July 3, 2008.
Terrence O’Donnell, Chairman
The foregoing Report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
ANNEX A – 2008 NON-EMPLOYEE DIRECTOR LONG-TERM INCENTIVE PLAN
Section 1. Establishment and Purposes of the Plan.
(a) Purpose. The purposes of this ePlus inc. 2008 Non-Employee Director Long-Term Incentive Plan (the “Plan”) are to attract, retain and compensate for service as members of the Board of Directors of ePlus inc. (the “Company”) highly qualified individuals who are not current employees of the Company and to enable them to increase their ownership in the Company’s Common Stock. The Plan will be beneficial to the Company and its stockholders since it will allow these Directors to have a greater personal financial stake in the Company through the ownership of Common Stock, in addition to underscoring their common interest with stockholders in increasing the long-term value of the Common Stock.
(b) Effective Date; Shareholder Approval. The affirmative votePlan is effective [September 15], 2008, subject to the approval by the Company’s shareholders.
Section 2. Definitions.
As used herein, the following definitions shall apply:
“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.
“Applicable Laws” means the requirements relating to the administration of equity plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Restricted Shares are, or will be, granted under the Plan.
“Board” means the Board of Directors of the Company.
“Change in Control” means the occurrence of any of the following events with respect to the Company:
(i) the consummation of any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of at leastCommon Stock immediately prior to the merger own more than fifty percent (50%) of the outstanding common stock of the surviving corporation immediately after the merger; or
(ii) the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than to a subsidiary or affiliate; or
(iii) any action pursuant to which any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of capital stock entitled to vote generally for the election of directors of the Company (“Voting Securities”) representing more than fifty (50%) percent of the combined voting power of the Company’s then outstanding Voting Securities (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities); or
(iv) the individuals (x) who, as of the Effective Date, constitute the Board (the “Original Directors”) and (y) who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of a majority of the sharesOriginal Directors then still in office (such Directors being called “Additional Original Directors”) and (z) who thereafter are elected to the Board and whose election or nomination for election to the Board was approved by a vote 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 2.
Audit Committee Recommendation. The Audit Committee unanimously recommends that
you vote in favora majority of the ratificationOriginal Directors and Additional Original Directors then still in office, cease for any reason to constitute a majority of the appointmentmembers of Deloitte & Touche
LLPthe Board; or
(v) the dissolution or liquidation of the Company.
“Code” means the Internal Revenue Code of 1986, as independent auditors foramended.
“Committee” means a committee designated by the fiscal year ending March 31, 2004.
PROPOSAL 3
To Approve And Adopt An Amendment To The ePlus inc. Certificate Of Incorporation
To Decrease The Number Of Shares Of Authorized Stock Of ePlus From 52 Million
Shares (50 Million Shares Of Board and composed of not less than two “Non-Employee Directors” as defined in Rule 16b-3 under the Exchange Act, or any successor rule or definition adopted by the Securities and Exchange Commission.
“Common Stock Par Value $0.01 Per Share, And 2
Million Preferred Shares, Par Value $0.01 Per Share) To 27 Million Shares
(Consisting Of 25 Million Shares Of Common Stock, Par Value $0.01 Per Share, and
2 Million Preferred Shares, Par Value $0.01 Per Share).
The Board of Directors has adopted a resolution declaring it advisable and in” means the best interests of ePlus and its stockholders that the ePlus inc. Certificate
of Incorporation be amended to provide for a decrease in the authorized number
of shares of stock of ePlus from 52 million shares (consisting of 50 million
shares of common stock, par value $0.01 per share, of the Company.
“Director” means a member of the Board.
“Disability” means any illness or other physical or mental condition of a Participant which renders the Participant incapable of performing his or her customary and 2 million preferred
shares, parusual duties for the Company, or any medically determinable illness or other physical or mental condition resulting from a bodily injury, disease, or mental disorder that in the judgment of the Committee is permanent and continuous in nature. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of any date, the value $0.01 per share)of Common Stock determined as follows:
(i) if the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, the fair market value of a share of Common Stock shall be the closing sales price of a share of Common Stock as quoted on such exchange or system for such date (or the most recent trading day preceding such date if there were no trades on such date), as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(ii) if the Common Stock is regularly quoted by a recognized securities dealer but is not listed in the manner contemplated by clause (i) above, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iii) if neither clause (i) above nor clause (ii) above applies, the fair market value of a share of Common Stock shall be determined in good faith by the Committee based on the reasonable application of a reasonable valuation method.
“Outside Director” means any Director who, on the date such person is to 27 million shares (consistingreceive a grant of 25
million sharesRestricted Shares hereunder is not a current employee of common stock, par value $0.01 perthe Company or any of the Company’s subsidiaries.
“Participant” shall mean any Outside Director who holds a Restricted Stock Award granted or issued pursuant to the Plan.
“Plan” means this ePlus inc. 2008 Non-Employee Director Long-Term Incentive Plan.
“Restricted Shares” means Shares subject to a Restricted Stock Award.
“Restricted Stock Agreement” means any written agreement, contract, or other instrument or document, including an electronic communication, evidencing the terms and conditions of a Restricted Stock Award.
“Restricted Stock Award” means a grant of Restricted Shares pursuant to Section 7 of the Plan.
“Share” means a share and 2 million
preferred shares, par value $0.01 per share)of Common Stock, as adjusted in accordance with Section 9 of the Plan.
Section 3. Stock Subject to the Plan.
Subject to the provisions of Section 9 of the Plan, the maximum aggregate number of Shares that may be issued as Restricted Shares under the Plan is two hundred fifty thousand (250,000) Shares. The Shares may be authorized, but unissued, or treasury Shares. Restricted Shares that have been transferred back to the Company shall be available for future grants of Restricted Shares under the Plan.
Section 4. Such resolution also directs that
such proposalAdministration of the Plan.
(a) Administration. The Plan shall be submittedadministered by the Committee. The Committee shall have the authority, in its discretion:
(i) to ePlus' stockholdersdetermine the Fair Market Value of Common Stock;
(ii) to approve forms of agreement for consideration atuse under the annual meeting and recommends that the stockholders vote in favor of such
amendment at the annual meeting.
If Proposal 3 is approved by ePlus' stockholders, the annual Delaware franchise
tax, an amount calculated usingPlan;
(iii) to determine the number of capitalShares that may be issued as Restricted Shares and the terms and conditions of such Restricted Shares;
(iv) to construe and interpret the terms of the Plan;
(v) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vi) to allow Participants to satisfy withholding tax obligations by having the Company withhold from the shares of Common Stock to be issued upon vesting of Restricted Shares that number of Shares having a Fair Market Value equal to the amount required to be withheld, provided that withholding is calculated at the minimum statutory withholding level. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All determinations to have Shares withheld for this purpose shall be made by the Committee in its discretion;
(vii) to instruct a corporate officer to execute on behalf of the Company any instrument required to effect the grant of a Restricted Stock Award granted by the Committee; and
(viii) to make all other determinations deemed necessary or advisable for administering the Plan.
(b) Effect of Committee’s Decision. The Committee’s decisions, determinations and interpretations shall be final and binding on all Participants and anyone else who may claim an interest in Restricted Shares.
Section 5. Eligibility.
The only persons who shall be eligible to receive Restricted Stock Awards under the Plan shall be persons who, on the date such Awards are granted, are Outside Directors.
Section 6. Term of the Plan.
No Restricted Stock Award may be granted under the Plan after [September 15], 2018.
Section 7. Grants of Restricted Stock Awards.
(a) Initial Grant. Each individual who first becomes an Outside Director on or after the date of the approval of this Plan by the stockholders of the Company shall, upon first qualifying as an Outside Director, automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the product of the amount of cash compensation earned by an individual Outside Director during the twelve months immediately prior to his becoming an Outside Director multiplied by the quotient of the number of days until the next Annual Grant Date (as defined below) divided by 365; provided, however, that grants of Restricted Shares under this Plan shall not be made until a Form S-8 registration statement in respect of the Shares is filed with, and declared effective by, the Securities and Exchange Commission.
(b) Annual Grant. On September 25th of each year (the “Annual Grant Date”), beginning with September 25, 2008, or the next following business day if September 25th is not a business day, each Outside Director shall automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the aggregate dollar amount of cash compensation earned by an individual Outside Director who served on the board during the Company’s entire fiscal year ended immediately prior to the respective Annual Grant Date; provided, however, that grants of Restricted Shares under this Plan shall not be made until a Form S-8 registration statement in respect of the Shares is filed with, and declared effective by, the Securities and Exchange Commission.
(c) Special Grant. On the date which is two business days after the date that a Form S-8 registration statement in respect of the Shares is filed with, and declared effective by, the Securities and Exchange Commission, each Outside Director who was serving as an Outside Director on the day prior to the date of the approval of this Plan by the stockholders of the Company shall automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to thirty-five thousand dollars ($35,000).
(d) Stock Fee Election. An Outside Director may make an election (a "Stock Fee Election") to receive Restricted Shares in lieu of all or any part of the cash compensation payable to him or her for service on the Board for a calendar year. Any Stock Fee Election and any change or revocation thereof shall be made by delivering written notice thereof to the Committee prior to the end of the calendar year preceding the calendar year of service for which it is to be effective. Such Stock Fee Election shall remain in effect for each subsequent calendar year of service unless changed. An Outside Director may not elect to change his or her Stock Fee Election for a calendar year after the last day of the calendar year preceding the calendar year of service for which the election is made. Any Restricted Stock that relates to a Stock Fee Election shall be treated as a Restricted Stock Award for purposes of this Plan. The number of shares shall be determined by dividing the cash compensation deferred for a calendar quarter of service by the Fair Market Value as of the first business day of the following calendar quarter, and each such first business day shall be considered the grant date of the Restricted Stock Award.
Section 8. Terms of Restricted Stock Awards.
Except as provided herein, Restricted Shares shall be subject to restrictions (“Restrictions”) prohibiting such Restricted Shares from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The Restrictions with respect to each award of Restricted Shares shall lapse as to one-half of such Restricted Shares on each of the one-year and second-year anniversary date of the grant of such award; provided, however, that the Restrictions with respect to such Restricted Shares shall lapse immediately in the event that (i) the Participant is nominated for a new term as an Outside Director but is not elected by stockholders of the Company, or (ii) the Participant ceases to be a member of the Board due to death, disability or mandatory retirement (if any). Notwithstanding the foregoing, the Restrictions with respect to all of a Participant's Restricted Shares shall lapse immediately prior to a Change in Control provided that the Participant is a member of the Board immediately prior to such Change in Control.
The Company shall issue, in the name of each Participant to whom Restricted Shares have been granted, stock a company is
authorizedcertificates (in tangible or electronic form) representing the total number of Restricted Shares granted to issue, will decrease by approximately $30,000 per year.such Participant as soon as reasonably practicable after the grant. However, the Company or its transfer agent shall hold such certificates, properly endorsed for transfer, for the Participant’s benefit until such time as the Restriction Period applicable to such Restricted Shares lapses. Upon the effectexpiration or termination of the Restricted Period, the restrictions applicable to the Restricted Shares shall lapse and a stock certificate for the number of Restricted Shares with respect to which the restrictions have lapsed shall be delivered, free of all such anrestrictions, to the Participant or his or her beneficiary or estate, as the case may be. Except as described in the above paragraph, in the event that a Participant ceases to be a member of the Board before the applicable Restriction Period has expired or under circumstances in which the Restriction Period does not otherwise lapse, the Restricted Shares granted to such Participant shall thereupon be forfeited and transferred back to the Company.
During the Restriction Period, a Participant shall have the right to vote his or her Restricted Shares and shall have the right to receive any cash dividends with respect to such Restricted Shares. All distributions, if any, received by a Participant with respect to Restricted Shares as a result of any stock split, stock distribution, combination of shares, or other similar transaction shall be subject to the same restrictions as are applicable to the Restricted Shares to which such distributions relate.
Section 9. Adjustments Upon Changes in Capitalization.
Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Restricted Stock Award, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Restricted Stock Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of a Restricted Stock Award, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to a Restricted Stock Award.
Section 10. Grant Agreement.
Each grant of a Restricted Stock Award under the Plan will be evidenced by a Restricted Stock Agreement. Such document will contain such provisions as the Committee may in its discretion deem advisable, provided that such provisions are not inconsistent with any of the provisions of the Plan.
Section 11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan amendment to the Certificateextent necessary to comply with Applicable Laws.
(c) Effect of Incorporation,Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Restricted Shares granted under the Plan prior to the date of such termination.
Section 12. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to a Restricted Stock Award unless the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the issuance of Restricted Shares, the Company may require the Participant to represent and warrant at the time of any such issuance that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. Not in limitation of any of the foregoing, in any such case referred to in the preceding sentence the Committee may also require the Participant to execute and deliver documents containing such representations (including the investment representations described in this Section 12(b) of the Plan), warranties and agreements as the Committee or counsel to the Company shall deem necessary or advisable to comply with any exemption from registration under the Securities Act of 1933, as amended, any applicable State securities laws, and any other applicable law, regulation or rule.
(c) Additional Conditions. The Committee shall have the authority to condition the grant of any Restricted Shares in such other manner that the Committee determines to be appropriate, provided that such condition is not inconsistent with the terms of the Plan.
Section 13. Inability to Obtain Authority.
The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
Section 14. Reservation of Shares.
The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
Section 15. Stockholder Approval.
The Plan shall be subject to approval by the stockholders of the Company. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws.
Section 16. Withholding; Notice of Sale.
Each Participant shall, no later than the date as of which the value of a Restricted Stock Award or of any Shares or other amounts received thereunder first becomes includable in the gross income of the Participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to such income. The Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. The Company’s obligation to deliver stock certificates to any Participant is subject to and conditioned on any such tax obligations being satisfied by the Participant. Subject to approval by the Committee, a Participant may elect to have the minimum required tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from Shares to be issued pursuant to any Restricted Stock Award a number of Shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company Shares owned by the Participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the minimum withholding amount due.
Section 17. Code Section 83(b) Elections
Neither the Company, any Affiliate, nor the Committee shall have any responsibility in connection with a Participant’s election, or attempt to elect, under Code section 83(b) to include the value of a Restricted Stock Award in the Participant’s gross income for the year of payment. Any Participant who makes a Code section 83(b) election with respect to any such Restricted Stock Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.
Section 18. No Right to Continue as a Director
Neither this Plan, nor the granting of a Restricted Stock Award under this Plan, nor any other action taken pursuant to this Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a director for any period of time, or at any particular rate of compensation.
Section 19. Governing Law.
This Plan shall be governed by the laws of the State of Delaware.
ANNEX B– 2008 EMPLOYEE LONG-TERM INCENTIVE PLAN
Section 1. Establishment and Purpose
(a) Purpose. The purposes of this ePlus inc. 2008 Long-Term Incentive Plan (the “Employee Plan”) are to encourage Employees of ePlus inc. (together with any successor thereto, the “Company”) and its Affiliates (as defined below) to acquire a proprietary interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of its stockholders, and to enhance the ability of the Company and its Affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.
(b) Effective Date; Shareholder Approval. The Plan is effective [September 15], 2008, subject to approval by the Company’s shareholders.
Section 2. Definitions
As used in the Employee Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has no less than a 50% equity interest, as determined by the Committee. With respect to Incentive Stock Options, “Affiliate” means any entity, domestic or foreign, whether or not such entity now exists or is hereafter organized or acquired by the Company or by an Affiliate that is a “subsidiary corporation” within the meaning of Code Section 424(d) and the rules thereunder.
(b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award granted under the Employee Plan.
(c) “Award Agreement” shall mean any written agreement, contract, or other instrument or document, including an electronic communication, evidencing any Award granted under the Employee Plan.
(d) “Board” shall mean the Board of Directors of the Company.
(e) “Cause” means (except as otherwise provided in an Award Agreement) if the Committee, in its reasonable and good faith discretion, determines that the employee (i) fails to substantially perform his or her duties (other than as a result of Disability), after the Board or the executive to which the Participant reports delivers to the Participant a written demand for substantial performance that specifically identifies the manner in which the Participant has not substantially performed his or her duties; (ii) engages in willful misconduct or gross negligence that is materially injurious to the Company or a subsidiary; (iii) breaches his or her duty of loyalty to the Company or a subsidiary; (iv) removed without proper authorization from the premises of the Company or a subsidiary of a document (of any media or form) relating to the Company or a subsidiary or the customers of the Company or a subsidiary; (v) breaches any confidentiality and/or non-compete agreement between him or her and the Company; or (vi) has committed a felony or a serious crime involving moral turpitude.
(f) “Change in Control” means an event that is “a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation" within the meaning of Section 409A and that also falls within one of the following events with respect to the Company:
(i) the consummation of any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which Common Stock would
have authoritybe converted into cash, securities or other property, other than a merger of the Company in which the holders of Common Stock immediately prior to
issue up to twenty-five million (25,000,000)
sharesthe merger own more than fifty percent (50%) of
the outstanding common stock
and to designate and issue up to two million (2,000,000)
shares of preferred stock to stockholders, for such consideration and with such
rights and preferences as the Board of Directors may determine
-23-
without further action by the stockholders except as may be required by law. As
of the date hereof, ePlus has not designatedsurviving corporation immediately after the merger; or issued
(ii) the consummation of any sharessale, lease, exchange or other transfer (in one transaction or a series of preferred
stock andrelated transactions) of all, or substantially all, of the proposal will not changeassets of the authorized numberCompany, other than to a subsidiary or affiliate; or
(iii) any action pursuant to which any person (which term may include two or more persons consistent with Section 13(d)(3) of the Exchange Act), corporation or other entity shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of preferred stock. Ascapital stock entitled to vote generally for the election of directors of the record date there were 9,475,901 sharesCompany (“Voting Securities”) representing more than fifty (50%) percent of common
stock issuedthe combined voting power of the Company’s then outstanding Voting Securities (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities); or
(iv) the individuals (x) who, as of the Effective Date, constitute the Board (the “Original Directors”) and outstanding, and 1,088,484 shares of treasury stock. The Board
of Directors of ePlus has reserved 2,006,188 shares of common stock for issuance
pursuant(y) who thereafter are elected to the exercise of outstanding stock options. Accordingly, there remain
37,429,427 shares of common stock which are unissuedBoard and are not reservedwhose election, or nomination for any specific purpose. If the amendmentelection, to the Certificate of Incorporation isBoard was approved this number will be reduced to approximately 12,429,427 shares.
Vote Required for Approval. The affirmativeby a vote of the holders of a majority of the shares of common stock outstandingOriginal Directors then still in office (such Directors being called “Additional Original Directors”) and entitled(z) who thereafter are elected to vote on the proposal is
requiredBoard and whose election or nomination for approval of Proposal 3.
Theelection to the Board of Directors unanimously recommendswas approved by a vote FOR the approvalof a majority of the amendmentOriginal Directors and Additional Original Directors then still in office, cease for any reason to the Certificate of Incorporation.
PROPOSAL 4
To Approve An Amendment To The ePlus inc. Amended And Restated 1998 Long-Term
Incentive Plan, Which Sets The Number Of Shares Of Common Stock Available For
Awards Under The Plan At 3,000,000.
Effective July 15, 2003, pursuant to an action by written consent, ePlus' Board
of Directors approved and recommended to the stockholders an amendment to the
ePlus, inc. Amended and Restated 1998 Long-Term Incentive Plan (the "LTIP") that
would eliminate the "evergreen" share replenishment featureconstitute a majority of the LTIP and setmembers of the numberBoard; or
(v) the dissolution or liquidation of shares of ePlus common stock available for awards under the LTIP
at 3,000,000.
In order to preserve the full deductibility of awards made pursuant to the LTIP
under Section 162(m) ofCompany.
(g) “Code” shall mean the Internal Revenue Code of 1986, as amended (the
"Code"), the amendmentfrom time to the LTIP, is being submitted to ePlus' stockholders
for approval.
Specifically, the amendment amends Section 5.1 of the LTIP. Section 5.1 of the
LTIP currently provides that the number of shares of common stock which may be
subject to awards under the LTIP are equal to 20% of the outstanding shares of
common stock of ePlus, on a fully diluted basis, less shares issued pursuant to
our other equity plans, at the time of the award grant. At the time of the
original adoption of the LTIP it was anticipated that this formulation would
provide for a sufficient number of shares to be the subject of awards. In an
effort to strengthen stockholder value, ePlus has recently engaged in the
practice of repurchasing shares of ePlus common stock on the open market. As a
result of these repurchases, the number of outstanding shares of ePlus common
stock has been steadily decreasing, and, as a result under the current
formulation set forth in Section 5.1 of the LTIP, ePlus has been significantly
restricted as to the number of awards that may be granted under the LTIP. As
described below, management believes that there is value to the company's
stockholders in aligning the interests of its employees, officers, consultants,
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and directors with the interests of its stockholders. In addition, the awards
that are granted under the LTIP also assist us in recruiting qualified employees
who contribute to our success. The proposed amendment would amend Section 5.1 of
the LTIP to read as follows:
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
15.1, the aggregate number of shares of Stock reserved and available for
Awards or which may be used to provide a basis of measurement for or to
determine the value of an Award (such as with a Stock Appreciation Right or
Performance Unit Award)time.
(h) “Committee” shall be 3,000,000. Notwithstanding the foregoing,
not more than 10% of the shares authorized herein may be granted as Awards
of Restricted Stock or unrestricted Stock Awards.
If the amendment is approved by the stockholders, up to 3 million shares could
be subject to awards issued under the plan. Management believes that this
limitation will allow for the issuance of an appropriate number of awards for
the foreseeable without unnecessarily diluting the company's stockholders.
As of July 15, 2003, there were approximately 551 persons eligible to
participate in the LTIP. As of July 15, 2003, there were approximately 2,006,188
shares of ePlus' common stock subject to outstanding awards and no shares of
ePlus' common stock were reserved and available for future awards under the
plan.
A summary of the LTIP is set forth below. The summary is qualified in its
entirety by reference to the full text of the LTIP as it is proposed to be
amended, which is attached to this Proxy Statement as Appendix B.
General
The purpose of the LTIP is to promote the success, and enhance the value, of
ePlus by linking the personal interests of employees, officers, consultants and
directors to those of the stockholders, and by providing such employees,
officers, consultants, and directors with an incentive for outstanding
performance.
The LTIP authorizes the granting of awards ("Awards") to employees, officers,
consultants, and directors of ePlus or its subsidiaries in the following forms:
(1) options to purchase shares of common stock ("Options"), which may be
incentive stock options or non-qualified options; (2) stock appreciation rights
("SARs"); (3) performance units ("Performance Units"); (4) restricted stock
("Restricted Stock"); (5) dividend equivalents ("Dividend Equivalents"); (6)
other stock-based awards; or (7) any other right or interest relating to common
stock or cash. Not more than 10% of the shares authorized under the LTIP may be
granted as Awards of Restricted Stock or unrestricted Stock Awards. The maximum
number of shares of common stock with respect to one or more Options and/or SARs
that may be granted during any one calendar year under the LTIP to any one
participant is 500,000. The maximum fair market value of any Awards (other than
Options and SARs) that may be received by a participant (less any consideration
paid by the participant for such Award) during any one calendar year under the
LTIP is $2,000,000.
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Pursuant to Section 162(m) of the Code, ePlus may not deduct compensation in
excess of $1 million paid to the Chief Executive Officer and the four next most
highly compensated executive officers of ePlus. The LTIP is designed to comply
with Code Section 162(m) so that the grant of Options and SARs under the LTIP,
and other Awards, such as Performance Units, that are conditioned on the
performance goals described in the LTIP, will be excluded from the calculation
of annual compensation for purposes of Code Section 162(m) and will be fully
deductible by ePlus. The Board of Directors has approved the amended and
restated LTIP for submission to the stockholders in order to preserve the full
deductibility of awards made pursuant to the LTIP under Section 162(m) of the
Code.
Administration
The LTIP is administered bymean the Compensation Committee of the Board of Directors of ePlus. Exceptthe Company, or such other committee as such discretion may be limiteddesignated by the automatic provisions
with respect to annual grants of Options to non-employee directors, the
Compensation Committee has the power, authority, and discretion to designate
participants; determine the type or types of Awards to be granted to each
participant and the number, terms, and conditions thereof; establish, adopt, or
revise any rules and regulations as it may deem necessary or advisable to
administer the LTIP; and make all other decisions and determinations that may be
required under, or as the Compensation Committee deems necessary or advisable to
administer, the LTIP.
Formula Grants To Non-Employee Directors
Pursuant to the terms of the LTIP, on the day following each annual meeting of
ePlus' stockholders held on or before September 1, 2006, each non-employee
director of ePlus who is serving in such capacity as of such day will be granted
a non-qualified Option to purchase 10,000 shares of common stock (each, a
"Director Option"). Appropriate pro-rata grants will be madeBoard. However, if at any time
there are insufficient shares under the LTIP to make the full scheduled grants
of Director Options. The exercise price for each Director Option will be 100% of
the fair market value of the common stock on the date of grant. Each Director
Option will expire on the tenth anniversary of the date of grant unless earlier
terminated as provided below. A Director Option will not automatically lapse by
reason of the optionee ceasing to qualify as a non-employee director but
remaining as a member of the BoardCompensation Committee is not an “outside director” within the meaning of Directors. However, Director Options will
lapseSection 162(m) of the Code or is not a “non-employee director” as defined in Rule 16b-3 under the earliest of the following circumstances: (1) ten years after the
date of grant; (2) if the optionee ceases to serve as a member of the Board of
Directors for any reason other than by reason of death or disability, his
Director Options will lapse three months after such termination as a member of
the Board of Directors; provided, however, that if the director is removed for
cause, his Director Options will lapse immediately; and (3) if the optionee
ceases to serve as a member of the Board of Directors by reason of his death or
disability, his Director Options will lapse one year after such termination as a
member of the Board of Directors.
Each Director option will be immediately exercisable, in whole or in part, on
the first anniversary of the date of grant. Director Options are assignable or
transferable by the director by will, by the laws of descent and distribution,
or pursuant to a qualified domestic relations order, and will be transferable by
the director to any of the following permitted transferees, upon such reasonable
-26-
terms and conditions asExchange Act, the Compensation Committee may establish (and, unless
specifically permittedfrom time to time delegate some or all of its functions under the Employee Plan to a committee or subcommittee composed of members that meet the relevant requirements. The term “Committee” includes any such committee or subcommittee, to the extent of the Compensation Committee’s delegation.
(i) “Common Stock” shall mean shares of the Company’s common stock, par value $0.01 per share.
(j) “Disability” shall mean any illness or other physical or mental condition of a Participant which renders the Participant incapable of performing his or her customary and usual duties for the Company, or any medically determinable illness or other physical or mental condition resulting from a bodily injury, disease, or mental disorder that in the judgment of the Committee is permanent and continuous in nature. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition.
(k) “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Employee Plan.
(l) “Employee” means any person who is in the employ of the Company or any Affiliate, subject to the control and direction of the Company or any Affiliate as to both the work to be performed and the manner and method of performance.
(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(n) “Fair Market Value” shall mean, as of any date, the value of Common Stock determined as follows:
(i) if the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, the Fair Market Value of a share of Common Stock shall be the closing sales price of a share of Common Stock as quoted on such exchange or system for such date (or the most recent trading day preceding such date if there were no trades on such date), as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(ii) if the Common Stock is regularly quoted by a recognized securities dealer but is not listed in the manner contemplated by clause (i) above, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iii) if neither clause (i) above nor clause (ii) above applies, the Fair Market Value of a share of a share of Common Stock shall be determined in good faith by the BoardCommittee based on the reasonable application of Directorsa reasonable valuation method.
(o) “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Employee Plan that is intended to meet the requirements of Sections 422 of the Code, or any successor provision thereto.
(p) “Key Employee” shall mean an Employee who is a “covered employee” within the meaning of Section 162(m)(3) of the Code.
(q) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Employee Plan that is not an Incentive Stock Option.
(r) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
(s) “Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Employee Plan.
(t) “Participant” shall mean an Employee of the Company or of any Affiliate designated to be granted an Award under the Employee Plan.
(u) “Performance Award” shall mean any right granted under Section 6(d) of the Employee Plan.
(v) “Performance Criteria” shall mean any quantitative and/or qualitative measures, as determined by the Committee, which may be used to measure the level of performance of the Company or any individual Participant during a Performance Period, including any Qualifying Performance Criteria. With respect to any Award intended to satisfy the requirements of Code Section 162(m), performance criteria shall mean the Qualifying Performance Criteria.
(w) “Performance Period” shall mean any period as determined by the Committee in advance, such transfersits sole discretion.
(x) “Person” shall be limited to one transfer per director to no more than four transferees):
(1)mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.
(y) “Qualifying Performance Criteria” shall mean one or more of the following family membersperformance criteria, either individually, alternatively or in any combination, applied to either the company as a whole or to a business unit or Affiliate, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the Award: revenue, sales, net income, net earnings, earnings per share, return on total capital, return on equity, cash flow, operating profit and margin rate, subject to adjustment by the Committee to remove the effect of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence, related to the disposal of a segment or a business, or related to a change in accounting principle or otherwise.
(z) “Restricted Securities” shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions.
(aa) “Restricted Stock” shall mean any award of Shares granted under Section 6(c) of the director:Employee Plan.
(bb) “Restricted Stock Unit” shall mean any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,right granted under Section 6(c) of the Employee Plan that is denominated in Shares.
(cc) “Retirement” means retirement (i) at or sister-in-law, including adoptive relationships, (2) a trust, partnership,after age 55 with ten years of service or (ii) at or after age 65.
(dd) “Section 409A” means Section 409A of Code, and the Treasury regulations and other entity establishedauthoritative guidance issued thereunder.
(ee) “Shares” shall mean the Shares of Common Stock, and existingsuch other securities as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(d) of the Employee Plan.
(ff) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Employee Plan.
Section 3. Administration
Except as otherwise provided herein, the Employee Plan shall be administered by the Committee, which shall have the power to interpret the Employee Plan and to adopt such rules and guidelines for implementing the terms of the Employee Plan as it may deem appropriate. The Committee shall have the ability to modify the Employee Plan provisions, to the extent necessary, to accommodate any changes in laws and regulations in jurisdictions in which Participants will receive Awards.
(a) Subject to the terms of the Employee Plan and applicable law, the Committee shall have full power and authority to:
| (i) | designate Participants; |
| (ii) | determine the type or types of Awards to be granted to each Participant under the Employee Plan; |
| (iii) | determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards; |
| (iv) | determine the terms and conditions of any Award; |
| (v) | determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; |
| (vi) | determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Employee Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; |
| (vii) | interpret and administer the Employee Plan and any instrument or agreement relating to, or Award made under, the Employee Plan; |
| (viii) | establish, amend, suspend, or waive such rules and guidelines; |
| (ix) | accelerate the vesting, exercise or payment of an Award; |
| (x) | make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Employee Plan; and |
| (xi) | correct any defect, supply any omission, or reconcile any inconsistency in the Employee Plan or any Award in the manner and to the extent it shall deem desirable to carry the Employee Plan into effect. |
(b) Unless otherwise expressly provided in the Employee Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Employee Plan or any Award shall be within the sole benefitdiscretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or underbeneficiary of any Award, any stockholder, and any employee of the sole
controlCompany or of any Affiliate. In addition, actions of the Committee may be taken by the Committee but with one or more members abstaining or recusing himself or herself from acting on the matter, so long as two or more members remain to act on the matter. Such action, authorized by the Committee upon the abstention or recusal of such members, shall be the action of the above family membersCommittee for purposes of the director, or (3) any
other transferee specifically approved byEmployee Plan. The Committee may designate the Compensation Committee after
taking into account any state or federal tax, securities,Secretary of the Company or other laws
applicableemployees of the Company to transferable options.
No Directorassist the Committee in the administration and operation of the Employee Plan and may direct such persons to execute documents on behalf of the Committee.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(d),
The total number of shares of Common Stock reserved and available for delivery pursuant to Awards granted under the Employee Plan shall be one million (1,000,000); of which no more than five hundred thousand (500,000) may be available for Awards granted in any form provided for under the Employee Plan other than Options willor Stock Appreciation Rights. If any Shares covered by an Award granted under the Employee Plan, or to which such an Award relates, are forfeited, or if an Award otherwise terminates without the delivery of Shares or of other consideration, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares available under the Employee Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be granted after September 1, 2006. However,available for granting Awards under the Compensation Committee may make discretionary awardsEmployee Plan. Notwithstanding the foregoing but subject to non-employee directorsadjustment as provided in Section 4(d), no more than three hundred thousand (300,000) Shares shall be available for delivery pursuant to the other provisionsexercise of Incentive Stock Options.
Any Award made under a previous ePlus incentive plan shall continue to be subject to the terms and conditions of the LTIP beforeplan under which it was awarded and the applicable Award Agreement.
| (b) | Accounting for Awards. For purposes of this Section 4, |
| (i) | if an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Employee Plan; and |
| (ii) | Dividend Equivalents denominated in Shares and Awards not denominated in Shares but potentially payable in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Employee Plan in such amount and at such time as the Dividend Equivalents and such Awards are settled in Shares, provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards may only be counted once against the aggregate number of Shares available, and the Committee shall adopt procedures, as it deems appropriate, in order to avoid double counting. Any Shares that are delivered by the Company, and any Awards that are granted by, or become obligations of, the Company through the assumption by the Company or an Affiliate of, or in substitution for, outstanding awards previously granted by an acquired company, shall not be counted against the Shares available for granting Awards under this Plan. |
| (iii) | Notwithstanding anything herein to the contrary, any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Shares subject to an Award under the Employee Plan may not again be made available for issuance under the Employee Plan if such Shares are: (x) Shares that were subject to an Option or a stock-settled Stock Appreciation Right and were not issued upon the net settlement or net exercise of such Option or Stock Appreciation Right, (y) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes under Options or Stock Appreciation Rights, or (z) Shares repurchased on the open market with the proceeds of an Option exercise. |
(c) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or after September 1, 2006.
Discretionaryin part, of authorized but unissued Shares or of treasury Shares.
(d) Adjustments.
| (i) | In the event that the Committee shall determine that any stock dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in Statement of Financial Accounting Standards No. 123 (revised) or otherwise affects the Shares, then the Committee shall adjust the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Employee Plan: |
(A) the number and type of Shares or other securities which thereafter may be made the subject of Awards including the limit specified in Section 4(a) regarding the number of shares that may be granted in the form of Restricted Stock, Options. The CompensationRestricted Stock Units, Performance Awards, or Other Stock-Based Awards;
(B) the number and type of Shares or other securities subject to outstanding Awards;
(C) the number and type of Shares or other securities specified as the annual per-participant limitation under Section 6(g)(v) and (vi);
(D) the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and
(E) other value determinations applicable to outstanding awards.
Provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Employee Plan to violate Sections 422(b)(1) of the Code or any successor provision thereto; and provided further, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. Notwithstanding the foregoing, no adjustments shall be made with respect to Performance Awards granted to a Key Employee to the extent such adjustment would cause the Award to fail to qualify as performance-based compensation under Section 162(m) of the Code and no adjustment shall be required if the Committee determines that such action could cause an Award to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Code or otherwise could subject a Participant to the additional tax imposed under Section 409A in respect of an outstanding Award.
| (ii) | Consolidation, Merger or Sale of Assets. Upon the occurrence of (i) a merger, consolidation, acquisition of property or stock, reorganization or otherwise involving the Company in which the Company is not to be the surviving corporation, (ii) a merger, consolidation, acquisition of property or stock, reorganization or otherwise involving the Company in which the Company is the surviving corporation but holders of Shares receive securities of another corporation, or (iii) a sale of all or substantially all of the Company’s assets (as an entirety) or capital stock to another person, any Award granted hereunder shall be deemed to apply to the securities, cash or other property (subject to adjustment by cash payment in lieu of fractional interests) to which a holder of the number of Shares equal to the number of Shares the Participant would have been entitled, and proper provisions shall be made to ensure that this clause is a condition to any such transaction; provided, however, that for an Award that is not subject to Section 409A the Committee (or, if applicable, the board of directors of the entity assuming the Company’s obligations under the Employee Plan) shall, in its discretion, have the power to either: |
(a) provide, upon written notice to Participants, that all Awards that are currently exercisable must be exercised within the time period specified in the notice and that all Awards not exercised as of the expiration of such period shall be terminated without consideration; provided, however, that the Committee (or successor board of directors) may provide, in its discretion, that, for purposes of this subsection, all outstanding Awards are currently exercisable, whether or not vested; or
(b) cancel any or all Awards and, in consideration of such cancellation, pay to each Participant an amount in cash with respect to each Share issuable under an Award equal to the difference between the Fair Market Value of such Share on such date (or, if greater, the value per Share of the consideration received by holders of Shares as a result of such merger, consolidation, reorganization or sale) and the Exercise Price.
Section 5.�� Eligibility
Any Employee of the Company or of any Affiliate shall be eligible to be designated a Participant.
Section 6. Awards
(a) Options. Options granted under the Employee Plan may, at the discretion of the Committee, be in the form of either Non-Qualified Stock Options, Incentive Stock Options or a combination of the two. Where both a Non-Qualified Stock Option and an Incentive Stock Option are granted to a Participant at the same time, such Awards shall be deemed to have been granted in separate grants, shall be clearly identified, and in no event will the exercise of one such Award affect the right to exercise the other Award. Unless otherwise specified, an Option shall be a Non-Qualified Stock Option. Subject to Section 3, the Committee is hereby authorized to grant Options which
may be incentive stock options ("ISOs") or nonqualified stock options ("NQSOs"),
to participants. The exercise price of any Option mayParticipants with the following terms and conditions and with such additional terms and conditions, in either case not be less thaninconsistent with the fair
market valueprovisions of the underlyingEmployee Plan, as the Committee shall determine:
| (i) | Amount of Shares. The Committee may grant Options to a Participant in such amounts as the Committee may determine, subject to the limitations se forth in Section 6(g)(v) of the Employee Plan. The number of Shares subject to an Option shall be set forth in the applicable Award Agreement. |
| (ii) | Exercise Price. The exercise price per Share under an Option shall be determined by the Committee; provided, however, and except as provided in Section 4(d), that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. The exercise price of an Option, as determined by the Committee pursuant to this Section 6(a)(ii), shall be set forth in the applicable Award Agreement. |
| (iii) | Option Term. Except as set forth in Section 6(a)(vii) below, the term of each Option shall not exceed ten (10) years from the date of grant. |
| (iv) | Timing of Exercise. Except as may otherwise be provided in the Award Agreement or as the Committee may otherwise determine, and subject to the Committee’s authority under Section 3(a) to accelerate the vesting of an Award and to waive or amend any terms, conditions, limitations or restrictions of an Award, each Option granted under the Employee Plan shall be exercisable in whole or in part, subject to the following conditions, limitations and restrictions: |
| (A) | 20% of the Shares subject to an Option shall first become exercisable on the one-year anniversary of the date of grant, 30% shall first become exercisable on the two-year anniversary of the date of grant and the remainder shall first become exercisable on the three-year anniversary of the date of grant; |
| (B) | All Options subject to the Award shall become immediately exercisable upon a Change in Control; |
| (C) | All Options granted to a Participant shall become immediately exercisable upon the death or Disability of the Participant and must be exercised, if at all, within one year after such Participant’s death or Disability, but in no event after the date such Options would otherwise lapse. Options of a deceased Participant may be exercised only by the estate of the Participant or by the person given authority to exercise such Options by the Participant’s will or by operation of law. In the event an Option is exercised by the executor or administrator of a deceased Participant, or by the person or persons to whom the Option has been transferred by the Participant’s will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver Shares thereunder unless and until the Company is satisfied that the person or persons exercising the Option is or are the duly appointed executor(s) or administrator(s) of the deceased Participant or the person to whom the Option has been transferred by the Participant’s will or by the applicable laws of descent and distribution; |
| (D) | Upon an Employee’s Retirement, all Options that have not become exercisable as of the date of Retirement shall be forfeited and to the extent that Options have become exercisable as of such date, such Options must be exercised, if at all, within one year after Retirement, but in no event after the date such Options would otherwise lapse; and |
| (E) | The Option shall lapse upon termination of employment for Cause. Except as otherwise provided in Section 6(a)(vii) or Section 6(g)(xii), upon an Employee’s termination of employment, for any reason other than death, Disability, Retirement or Cause, all Options that have not become exercisable as of the date of termination shall be forfeited and to the extent that Options have become exercisable as of such date, such Options must be exercised, if at all, within 90 days after such termination of employment. |
| (v) | Payment of Exercise Price. The exercise price shall be paid in full when the Option is exercised and stock certificates shall be registered and delivered only upon receipt of such payment. Unless otherwise provided by the Committee, payment of the exercise price may be made in cash or by certified check, bank draft, wire transfer, or postal or express money order or any other form of consideration approved by the Committee. In addition, at the discretion of the Committee, payment of all or a portion of the exercise price may be made by |
| (A) | Delivering a properly executed exercise notice to the Company, or its agent, together with irrevocable instructions to a broker to deliver promptly to the Company the amount of sale proceeds with respect to the portion of the Shares to be acquired upon exercise having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the exercise price being so paid and appropriate tax withholding; |
| (B) | Tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Participant for at least six months having a Fair Market Value on the day prior to the date of exercise equal to the applicable portion of the exercise price being so paid; or |
| (C) | any combination of the foregoing. |
| (vi) | Incentive Stock Options. The terms of any Incentive Stock Option granted under the Employee Plan shall be designed to comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder which are hereby incorporated by reference. In the event that any provision of the Employee Plan would contravene the Code rules that apply to Incentive Stock Options, such Plan provision shall not apply to Incentive Stock Options. Incentive Stock Options granted under the Employee Plan shall be subject to the following additional conditions, limitations and restrictions: |
| (A) | Timing of Grant. No Incentive Stock Option shall be granted under the Employee Plan after the 10-year anniversary of the date the Employee Plan is adopted by the Board. |
| (B) | Amount of Award. The aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any subsidiary) may not exceed $100,000, taking Incentive Stock Option into account in the order in which they were granted. To the extent an Option initially designated as an Incentive Stock Option exceeds the value limit of this Section or otherwise fails to satisfy the requirements applicable to Incentive Stock Options, it shall be deemed a Non-Qualified Stock Option and shall otherwise remain in full force and effect. |
| (C) | Timing of Exercise. In the event that the Committee exercises its discretion to permit an Incentive Stock Option to be exercised by a Participant more than 90 days after the Participant’s termination of employment and such exercise occurs more than 90 days after such Participant has ceased being an Employee (or more than 12 months after the Participant is Disabled or dies), such Incentive Stock Option shall thereafter be treated as a Non-Qualified Stock Option for all purposes. |
| (D) | Transfer Restrictions. In no event shall the Committee permit an Incentive Stock Option to be transferred by a Participant other than by will or the laws of descent and distribution, and any Incentive Stock Option granted hereunder shall be exercisable, during his or her lifetime, only by the Participant. |
| (E) | Ten Percent Owners. No Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate unless the exercise price per share of such Option is at least 110% of the Fair Market Value per Share at the date of grant and the Option expires no later than five years after the date of grant. |
| (vii) | Extension of Option Term for Blackouts. At its discretion, the Committee may extend the term of any Option beyond its earlier termination pursuant to Section 6(a)(iii),(iv)(C), (iv)(D) or (iv)(E) if the Company had prohibited the participant from exercising the Option prior to termination or expiration in order to comply with applicable Federal, state, local or foreign law, provided that such extension may not exceed the earlier of 30 days from the date such prohibition is lifted or ten years after the Option grant date. |
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Employee Plan and any applicable Award Agreement, a Stock Appreciation Right Award granted under the Employee Plan shall confer on the date of grant. All Options will be
evidenced byholder thereof a written Award Agreement between ePlus and the participant, which
will include such provisions as may be specified by the Compensation Committee.
The terms of any ISO must meet the requirements of Section 422 of the Code.
Stock Appreciation Rights. The Compensation Committee may grant SARs to
participants. Upon the exercise of a SAR, the participant has the right to receive, upon exercise thereof, the excess if any, of:of (i) the fair market valueFair Market Value of one share of common
stockShare on the date of exercise over (ii) the grant price of the SARStock Appreciation Right as specified by the Committee, multiplied by the number of Stock Appreciation Rights granted. As determined by the Compensation Committee, which will notthe payment upon exercise may be less than the fair market value of
one share of common stockpaid in cash, Shares to be valued at their Fair Market Value on the date of grant. All awardsexercise, any other mode of SARs will be
evidencedpayment deemed appropriate by the Committee or any combination thereof. The Committee may establish a maximum appreciation value payable for stock appreciation rights.
| (i) | Grant Price. Shall be determined by the Committee, provided, however, and except as provided in Section 4(d), that such price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, except that if a Stock Appreciation Right is at any time granted in tandem with an Option, the grant price of the Stock Appreciation Right shall not be less than the exercise price of such Option. |
| (ii) | Term. The term of each Stock Appreciation Right shall not exceed ten (10) years from the date of grant. |
| (iii) | Time and Method of Exercise. The Committee shall establish in the applicable Award Agreement the time or times at which a Stock Appreciation Right may be exercised in whole or in part. |
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants.
| (i) | Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may establish in the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly after such restrictions have lapsed. |
| (ii) | Registration. Any Restricted Stock or Restricted Stock Units granted under the Employee Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Employee Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. |
| (iii) | Forfeiture. Upon termination of employment during the applicable restriction period for any reason other than death or Disability, except as determined otherwise by the Committee, all Shares of Restricted Stock and all Restricted Stock Units still, in either case, subject to restriction shall be forfeited and reacquired by the Company. |
(d) Performance Awards. The Committee is hereby authorized to grant Performance Awards to Participants. Performance Awards include arrangements under which the grant, issuance, retention, vesting and/or transferability of any Award is subject to such Performance Criteria and such additional conditions or terms as the Committee may designate. The Committee may establish a maximum Performance Award. Subject to the terms of the Employee Plan and any applicable Award Agreement, reflectinga Performance Award granted under the terms, methodsEmployee Plan:
| (i) | may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, or other Awards; and |
| (ii) | shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such Performance Periods as the Committee shall establish. |
(e) Dividend Equivalents. The Committee is hereby authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of settlement, form of consideration payable in settlement, and any
other terms and conditions of the SAR, asShares determined by the Compensation
Committee, atand the time of grant.
Performance Units. The Compensation Committee may grant Performance Units to
participants on such terms and conditions as may be selected by the Compensation
Committee. The Compensation Committee will have the complete discretion to
determine the number of Performance Units granted to each participant and to set
performance goals and other terms or conditions to payment of the Performance
Units in its discretion which, depending on the extent to which they are met,
will determine the number and value of Performance Units that will be paid to
the participant.
Restricted Stock Awards. The Compensation Committee may make awards of
Restricted Stock to participants, which will be subject to such restrictions on
transferability and other restrictions as the Compensation Committee may impose
(including, without limitation, limitations on the right to vote Restricted
Stock or the right to receive dividends, if any, on the Restricted Stock).
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Dividend Equivalents. The Compensation Committee is authorized to grant Dividend
Equivalents to participants subject to such terms and conditions as may be
selected by the Compensation Committee. Dividend Equivalents entitle the
participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of common stock subject to an Option Award or
SAR Award, as determined by the Compensation Committee. The Compensation Committee may provide that Dividend Equivalents be paid or distributed when
accrued orsuch amounts (if any) shall be deemed to have been reinvested in additional shares of common
stock,Shares or otherwise reinvested. Subject to the terms of the Employee Plan and any applicable Award Agreement, such Awards may have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards.Awards. The Compensation Committee may, subjectis hereby authorized to limitations
under applicable law, grant to participantsParticipants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of common stock,Shares (including, without limitation, securities convertible into Shares), as are deemed by the Compensation Committee to be consistent with the purposes of the LTIP, including without limitation sharesEmployee Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of common stock awarded purely as a "bonus"the Employee Plan and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of common stock, and Awards valued by
reference to book value of shares of common stock orapplicable Award Agreement, the value of securities of
or the performance of specified parents or subsidiaries of ePlus. The
Compensation Committee willshall determine the terms and conditions of any such Awards. Performance Goals.Shares or other securities delivered pursuant to a purchase right granted under this Section 6(f) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, or other Awards, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, and except as provided in Section 4(d), shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is.
(g) General.
| (i) | No Cash Consideration for Awards. Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. |
| (ii) | Awards may be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards. |
| (iii) | Forms of Payment under Awards. Subject to the terms of the Employee Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments. |
| (iv) | Limits on Transfer of Awards. Except as provided by the Committee, no Award and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime, only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. |
| (v) | Per-Person Limitation on Options and SARs. The number of Shares with respect to which Options and Stock Appreciation Rights may be granted under the Employee Plan during any calendar year to an individual Participant shall not exceed fifty thousand (50,000) Shares, subject to adjustment as provided in Section 4(d). |
| (vi) | Per-Person Limitation on Certain Awards. Other than Options and Stock Appreciation Rights, the aggregate number of Shares with respect to which Restricted Stock, Restricted Stock Units, Performance Awards and Other Stock-Based Awards may be granted under the Employee Plan during any calendar year to an individual Participant shall not exceed fifty thousand (50,000) Shares, subject to adjustment as provided in Section 4(d). |
| (vii) | Conditions and Restrictions upon Securities Subject to Awards. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability and forfeiture or repurchase provisions or provisions on payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation: (A) restrictions under an insider trading policy or pursuant to applicable law, (B) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (C) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (D) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations. |
| (viii) | Share Certificates. All Shares or other securities delivered under the Employee Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Employee Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or automated quotation system upon which such Shares or other securities are then listed, quoted, or traded, and any applicable Federal, state, or local securities laws, and the Committee may cause a legend or legends to be put on any such certificates or issue instructions to the transfer agent to make appropriate reference to such restrictions. |
| (ix) | Suspension of Exercise. The Company reserves the right from time to time to suspend the exercise of any stock option or stock appreciation right where such suspension is deemed by the Company as necessary or appropriate for corporate purposes. |
| (x) | Change in Control. Notwithstanding anything to the contrary in the Employee Plan, any conditions or restrictions on Restricted Stock shall lapse upon a Change in Control. |
| (xi) | Award Agreement. Each grant of an Award under the Employee Plan will be evidenced by an Award Agreement. Such document will contain such provisions as the Committee may in its discretion deem advisable, provided that such provisions are not inconsistent with any of the provisions of the Employee Plan. |
| (xii) | Special Forfeiture Provision. If the Committee, in its discretion, determines and the applicable Award Agreement so provides, a Participant who, without prior written approval of the Company, enters into any employment or consultation arrangement (including service as an agent, partner, stockholder, consultant, officer or director) to any entity or person engaged in any business in which the Company or its affiliates is engaged which, in the sole judgment of the Company, is competitive with the Company or any Affiliate, (i) shall forfeit all rights under any outstanding Option or Stock Appreciation Right and shall return to the Company the amount of any profit realized upon the exercise, within such period as the Committee may determine, of any Option or Stock Appreciation Right, and (ii) shall forfeit and return to the Company all Shares of Restricted Stock and other Awards which are not then vested or which vested but remain subject to the restrictions imposed by this Section 6(g)(xii), as provided in the Award Agreement. |
| (xiii) | No Repricing. Repricing of Options or Stock Appreciation Rights shall not be permitted without stockholder approval. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (A) changing the terms of an Option or Stock Appreciation Right to lower its exercise price (other than pursuant to Section 4(d)); (B) any other action that is treated as a “repricing” under generally accepted accounting principles; and (C) repurchasing for cash or canceling an Option or Stock Appreciation Right at a time when its exercise price is greater than the Fair Market Value of the underlying stock in exchange for another Award, unless the cancellation and exchange occurs in connection with an event set forth in Section 4(d). Such cancellation and exchange would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant. |
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Employee Plan:
(a) Amendments to the Employee Plan. The CompensationBoard of Directors of the Company may amend, alter, suspend, discontinue, or terminate the Employee Plan, in whole or in part; provided, however, that without the prior approval of the Company’s stockholders, no material amendment shall be made if stockholder approval is required by applicable law, rule or regulation, and; provided, further, that, notwithstanding any other provision of the Employee Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation, or termination shall be made without the approval of the stockholders of the Company that would:
| (i) | increase the total number of Shares available for Awards under the Employee Plan, except as provided in Section 4 hereof; or |
| (ii) | except as provided in Section 4(d), permit Options, Stock Appreciation Rights, or other Stock-Based Awards encompassing rights to purchase Shares to be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted Option or the grant price of a previously granted Stock Appreciation Right, or the purchase price of a previously granted Other Stock-Based Award. |
(b) Amendments to Awards. The Committee may determine thatwaive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. No such amendment or alteration shall be made which would impair the rights of any Participant, without such Participant’s consent, under any Award willtheretofore granted, provided that no such consent shall be determined solely on the basis of (1) the achievement by ePlus or a parent or
subsidiary of a specified target return, or target growth in return, on equity
or assets, (2) ePlus', parent's, or subsidiary's stock price, (3) the
achievement by an individual or a business unit of ePlus, parent, or subsidiary
of a specified target, or target growth in, revenues, net income, or earnings
per share, (4) the achievement of objectively determinable goalsrequired with respect to serviceany amendment or product delivery, servicealteration if the Committee determines in its sole discretion that such amendment or product quality, customer satisfaction,
meeting budgets, and/alteration either (i) is required or retentionadvisable in order for the Company, the Employee Plan or the Award to satisfy or conform to any law or regulation or to meet the requirements of employeesany accounting standard, or (5)(ii) is not reasonably likely to significantly diminish the benefits provided under such Award.
Section 8. General Provisions
(a) No Rights to Awards. No Employee, Participant or other Person shall have any combination of the
goals set forth in (1) through (4) above. Furthermore, the Compensation
Committee reserves the right for any reasonclaim to reduce (but not increase)be granted any Award notwithstandingunder the achievement of a specified goal. IfEmployee Plan, or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no obligation for uniformity of treatment of Employees, Participants, or holders or beneficiaries of Awards under the Employee Plan. The terms and conditions of Awards need not be the same with respect to each recipient.
(b) Withholding. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made onunder any Award or under the Employee Plan the amount (in cash, Shares, other securities, or other Awards) of withholding taxes due in respect of an Award, its exercise, or any payment or transfer under such basis,Award or under the Compensation Committee must establish goals priorEmployee Plan and to the
beginning of the period for whichtake such performance goal relates (or such later
dateother action as may be permitted under Code Section 162(m))necessary in the opinion of the Company or Affiliate to satisfy statutory withholding obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Any paymentNothing contained in the Employee Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award grantedshall not constitute an employment contract nor be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Employee Plan, unless otherwise expressly provided in the Employee Plan or in any Award Agreement.
(e) Governing Law. The validity, construction, and effect of the Employee Plan and any rules and regulations relating to the Employee Plan shall be determined in accordance with performance goalsthe laws of the State of Delaware and applicable Federal law without regard to conflict of law.
(f) Severability. If any provision of the Employee Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Employee Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Employee Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Employee Plan and any such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Employee Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Employee Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the Employee Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Employee Plan or any provision thereof, and, in the event of any conflict, the text of the Employee Plan, rather than such headings, shall control.
(j) Indemnification. Subject to requirements of Delaware State law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board or a delegate of the Committee so acting, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
(k) Compliance with Section 409A. Except to the extent specifically provided otherwise by the Committee, Awards under the Employee Plan are intended to satisfy the requirements of Section 409A so as to avoid the imposition of any additional taxes or penalties under Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Employee Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Employee Plan and/or Award Agreement will be conditioned ondeemed modified, or, if necessary, suspended in order to comply with the written certificationrequirements of Section 409A to the Compensationextent determined appropriate by the Committee, in each case thatwithout the performance goals andconsent of or notice to the Participant. Notwithstanding any other material conditions were satisfied.
Limitations on Transfer; Beneficiaries. Except for certain limited exceptions
applicable to Director Options, no Award will be assignable or transferable by a
participant other than by will or the laws of descent and distribution or,
exceptprovision in the case of an ISO, pursuantEmployee Plan to a qualified domestic relations order;
provided, however, that the Compensation Committee may (but need not) permit
other transfers where the Compensation Committee concludes that such
transferability (1) does not result in accelerated taxation, (2) does not cause
any Option intended to be an incentive stock option to fail to be described in
Code Section 422(b), and (3) is otherwise appropriate and desirable, taking into
account any factors deemed relevant, including without limitation, any state or
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federal tax or securities laws or regulations applicable to transferable Awards.
A participant may, in the manner determined by the Compensation Committee,
designate a beneficiary to exercise the rights of the participant and to receive
any distributioncontrary, with respect to any Award uponthat is subject to Section 409A, distributions on account of a separation from service may not be made to a “specified employee” (as defined by Section 409A) before the participant's death.
Acceleration Upon Certain Events. Upondate which is six (6) months after the participant'sdate of separation from service (or, if earlier, the date of death disabilityof the employee).
(l) No Representations or retirement,Covenants with Respect to Tax Qualification. Although the Company may endeavor to (i) qualify an Award for favorable U.S. tax provisions (e.g., incentive stock options under Section 422 of the Code) or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under the Employee Plan.
(m) Compliance with Laws. The granting of Awards and the issuance of Shares under the Employee Plan shall be subject to all outstanding Options, SARs,applicable laws, rules, and other Awardsregulations, and to such approvals by any governmental agencies or stock exchanges or automated quotation systems on which the Company is listed, quoted or traded as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Employee Plan prior to:
| (i) | obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and |
| (ii) | completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification is not current, has been suspended or otherwise has ceased to be effective. |
The inability or impracticability of the Company to obtain or maintain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(n) Code Section 83(b) Elections. Neither the Company, any Affiliate, nor the Committee shall have any responsibility in connection with a Participant’s election, or attempt to elect, under Code section 83(b) to include the value of a Restricted Stock Award in the natureParticipant’s gross income for the year of rights thatpayment. Any Participant who makes a Code section 83(b) election with respect to any such Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.
Section 9. Term of the Employee Plan
The Plan shall remain in full force and effect through [September 15], 2018, unless sooner terminated by the Board. After the Employee Plan is terminated, no future Awards may be exercised will become fully exercisablegranted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and all restrictionsconditions and the Employee Plan’s terms and conditions.
ANNEX C – AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EPLUS INC.
The present name of the corporation is ePlus inc. (the “Corporation”). The Corporation was incorporated under the name “MLC Holdings, Inc.” by filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on
outstanding Awards will lapse. Any Options or SARs will thereafter continue
or lapseAugust 27, 1996. This Amended and Restated Certificate of Incorporation of the Corporation, which restates and integrates and also further amends the provisions of the Corporation’s Certificate of Incorporation, was duly adopted in accordance with the
other provisions of
the LTIPSections 242 and
the Award
Agreement. In the event of a Change in Control of ePlus (as defined in the
LTIP), all outstanding Options, SARs, and other Awards in the nature of rights
that may be exercised will become fully vested and all restrictions on all and
is contingent upon qualifying for such accounting treatment will lapse. In the
event of (1) the commencement of a public tender offer for all or any portion245 of the
common stock, or (2) a proposalGeneral Corporation Laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code, as amended, and referred to
merge, consolidate, or otherwise combine
into and with another corporation (in which transaction ePlus would not survive)
is submitted to the stockholders of ePlus for approval, the Compensation
Committee may in its sole discretion declare all outstanding Options, SARs, and
other Awards in the nature of rights that may be exercised to become fully
vested, and/or all restrictions on all outstanding Awards to lapse, in each case
as of such date as the
Compensation Committee may, in its sole discretion,
declare, which may be on or before the consummation of such tender offer or
other transaction or event.
Termination And Amendment
The Board of Directors or the Compensation Committee may, at any time and from
time to time, terminate, amend, or modify the LTIP without stockholder approval;
provided, however, that the Compensation Committee may condition any amendment
on the approval of stockholders of ePlus if such approval is necessary or deemed
advisable with respect to tax, securities, or other applicable laws, policies,
or regulations. No termination, amendment, or modification of the LTIP may
adversely affect any Award previously granted under the LTIP, without the
written consent of the participant. The exercise price of any outstanding option
may not be reduced, directly or indirectly, without the prior approval of
stockholders.
Certain Federal Income Tax Effects
Nonqualified Stock Options. Under present federal income tax regulations, there
will be no federal income tax consequences to either ePlus or the participant
upon the grant of an NQSO (including the Director Options). However, the
participant will realize ordinary income on the exercise of the NQSO in an
amount equal to the excess of the fair market value of the common stock acquired
upon the exercise of such option over the exercise price, and ePlus will receive
a corresponding deduction. The gain, if any, realized upon the subsequent
disposition by the participant of the common stock will constitute short-term or
long-term capital gain, depending on the participant's holding period.
Incentive Stock Options. Under present federal income tax regulations, there
will be no federal income tax consequences to either ePlus or the participant
upon the grant of an ISO or the exercise thereof by the participant. If the
participant holds the shares of common stock for the greater of two years after
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the date the Option was granted or one year after the acquisition of such shares
of common stock (the "required holding period"), the difference between the
aggregate option price and the amount realized upon disposition of the shares of
common stock will constitute long-term capital gain or loss, and ePlus will not
be entitled to a federal income tax deduction. If the shares of common stock are
disposed of in a sale, exchange, or other "disqualifying disposition" during the
required holding period, the participant will realize taxable ordinary income in
an amount equal to the excess of the fair market value of the common stock
purchased at the time of exercise over the aggregate option price, and ePlus
will be entitled to a federal income tax deduction equal to such amount.
SARs. Under present federal income tax regulations, a participant receiving a
SAR will not recognize income, and ePlus will not be allowed a tax deduction, at
the time the Award is granted. When a participant exercises the SAR, the amount
of cash and the fair market value of any shares of common stock received will be
ordinary income to the participant and will be allowed as a deduction for
federal income tax purposes to ePlus.
Performance Units. Under present federal income tax regulations, a participant
receiving Performance Units will not recognize income and ePlus will not be
allowed a tax deduction at the time the Award is granted. When a participant
receives payment of Performance Units, the amount of cash and the fair market
value of any shares of common stock received will be ordinary income to the
participant and will be allowed as a deduction for federal income tax purposes
to ePlus.
Restricted Stock. Under present federal income tax regulations, and unless the
participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and ePlus will not be allowed a tax deduction, at the time the
Award is granted. When the restrictions lapse, the participant will recognize
ordinary income equal to the fair market value of the common stock, and ePlus
will be entitled to a corresponding tax deduction at that time.
Benefits To Named Executive Officers And Others
The table below reflects awards granted under the LTIP during the fiscal year
ended March 31, 2003 to the persons and groups indicated. With the exception of
annual formula grants to non-employee directors described above, any future
awards under the LTIP will be made at the discretion of the Compensation
Committee. Consequently, ePlus cannot determine, with respect to (1) the named
executive officers, (2) all current executive officers as a group, or (3) all
eligible participants, including all current officers who are not executive
officers, as a group, either the benefits or amounts that will be received in
the future by such persons or groups pursuant to the LTIP.
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ePlus inc. Amended and Restated 1998 Long-Term Incentive Plan
Stock Option Grants
----------------------------
Number of
Name and Position Dollar Value(1) Options
- ------------------------------------------------- --------------- -----------
Phillip G. Norton................................ -- --
Chairman, Chief Executive Officer and President
Bruce M. Bowen................................... -- --
Director and Executive Vice President
Kleyton L. Parkhurst............................. $189,600 30,000
Senior Vice President, Assistant Secretary and
Treasurer
Steven J. Mencarini.............................. $75,840 12,000
Chief Financial Officer and Senior Vice President
All Executive Officers as a Group................ $265,440 42,000
All Non-Executive Directors as a Group........... $0 0(2)
All Non-Executive Officer Employees as a Group... $265,440 42,000
- -------------------
(1) The dollar value of the options will be dependent on the difference between
the exercise price and the fair market value of the underlying shares on
the date of exercise (the "option spread"“Delaware General Corporation Law”). The dollar value of the options
shown above represents the option spread as of July 15 2003, based on the
weighed average exercise price of the options.
(2) Pursuant to the terms of the LTIP, on the day following each annual meeting
of the ePlus stockholders held on or before September 1, 2006, each
non-employee director of ePlus is granted a non-qualified stock option to
purchase 10,000 shares of common stock. ePlus currently has three
non-employee directors serving on its Board of Directors. In connection
with this provision, 10,000 options were granted to each of the
non-employee directors in April 2003.
Additional Information
The closing price of the common stock, as reported by the Nasdaq National Market
on July 21, 2003, was $13.29.
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 4.
Board of Directors Recommendation. The Board of Directors unanimously recommends
that you vote in favor of the amendment to the ePlus inc. Amended and Restated
1998 Long-Term Incentive Plan.
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
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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.
You 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, the 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 the meeting or, if later, the seventh day following the first public
announcement of the date of the meeting.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any stockholder wishes to present a proposal for inclusion in the proxy
materials to be solicited by the ePlus Board of Directors with respect to the
next annual meeting of stockholders, that proposal must be presented to ePlus'
management prior to April 4, 2004.
In accordance with ePlus' Bylaws, for a stockholder proposal or nomination to be
considered at a meeting of stockholders, the proposal must be submitted in
writing to the Secretary of ePlus not less 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.
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 inc. Certificate
of Incorporation. The only change to the Certificate of Incorporation affected
by this amendment is to decrease the number of authorized shares ePlus' stock,
as described in the proxy statement.
The Corporation's certificate of incorporation hereby is amended by deleting
existing Article "FOURTH" of the certificate of incorporationCorporation is hereby amended, integrated and restated to read in its entirety as follows:
FIRST
The name of the Corporation is ePlus inc.
SECOND
The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, 19801, and replacing it with the following language:
"FOURTH"
name of the Corporation’s registered agent in the State of Delaware is The Corporation Trust Company.
THIRD
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.
FOURTH
The total number of shares of all classes of stock which the Corporation shall have authority to issue is 27 million (27,000,000) shares consisting of 25 million (25,000,000) shares of common stock having a par value of $0.01$.01 per share (the "Common Stock"“Common Stock”) and 2two million (2,000,000) shares of preferred stock having a par value of $0.01$.01 per share (the "Preferred Stock"“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 anand 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)
a) the number of shares constituting any series and the distinctive designation of that series;
(b)
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)
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)
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;
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(e)
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 datesdate 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)rates;
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)
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)
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."
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APPENDIX B
EPLUS INC.
AMENDED AND RESTATED 1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1. GENERAL.
FIFTH
The purposeCorporation is to have perpetual existence.
SIXTH
In furtherance and not in limitation of the
ePlus inc. Amended and Restated 1998
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of ePlus inc. (the "Corporation"),powers conferred by
linking the personal interests of
its employees, officers, consultants and directors to those of Corporation
stockholders and by providing such persons with an incentive for outstanding
performance. The Plan is further intended to provide flexibility to the
Corporation in its ability to motivate, attract, and retain the services of
employees, officers, consultants and directors upon whose judgment, interest,
and special effort the successful conduct of the Corporation's operation is
largely dependent. Accordingly, the Plan permits the grant of incentive awards
from time to time to selected employees, officers, consultants and directors. In
addition, the Plan provides for automatic annual grants of options to
Non-Employee Directors of the Corporation as provided in Article 13.
ARTICLE 2
EFFECTIVE DATE
2.1. EFFECTIVE DATE. The Plan shall be effective as of the date upon which
it shall be approved by the Board (the "Effective Date"). However, the Plan
shall be submitted to the stockholders of the Corporation for approval within 12
months of the Board's approval thereof. No Incentive Stock Options granted under
the Plan may be exercised prior to approval of the Plan by the stockholders and
if the stockholders fail to approve the Plan within 12 months of the Board's
approval thereof, any Incentive Stock Options previously granted hereunder shall
be automatically converted to Non-Qualified Stock Options without any further
act. In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1. DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section, unless a clearly different meaning is required by the context. The
following words and phrases shall have the following meanings:
"Award" means any Option, Stock Appreciation Right, Restricted Stock
Award, Performance Unit Award, Dividend Equivalent Award, or Other
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Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.
"Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
"Board" meansstatute, the Board of Directors of the Corporation is expressly authorized to make, alter, or repeal the Bylaws of the Corporation.
"Cause"
SEVENTH
No person shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
EIGHTH
The Corporation shall indemnify, in the manner and to the fullest extent permitted by the Delaware General Corporation Law (and in the case of any amendment thereto, to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), any person (or the estate of any person) who is or was a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason
forof the fact that such person is or was a
Participant's terminationdirector or officer of
employmentthe Corporation, or
serviceis or was serving at the request of the Corporation as a director or
consultant shall have the meaning assigned such
term in the written employmentofficer of another corporation, partnership, joint venture, trust or other
agreement, if any, between such
Participant andenterprise, including service with respect to an employee benefit plan. The corporation may, to the
Corporation or an affiliated company, provided, however
that if there is no such agreement in which such term is defined, "Cause"
shall mean any of the following actsfullest extent permitted by the
Participant, as determinedDelaware General Corporation Law, purchase and maintain insurance on behalf of any such person against any liability which may be asserted against such person.�� To the fullest extent permitted by the
Board: gross neglect of duty, prolonged absence from duty withoutDelaware General Corporation Law, the
consent of the Corporation, intentionally engagingindemnification provided herein may include expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement and any
activity that is
in conflict with or adverse to the business or other interests of the
Corporation, or willful misconduct, misfeasance or malfeasance of duty
which is reasonably determined tosuch expenses may be
detrimental to the Corporation.
"Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 25% or more of the combined voting
power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that
for purposes of this subsection (1), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition by a Person
who is on the Effective Date the beneficial owner of 25% or more of
the Outstanding Corporation Voting Securities, (2) any acquisition
directly from the Corporation, (3) any acquisitionpaid by the Corporation
(4) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation
controlled by the Corporation, or (5) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (3) of this definition; or
(2) Individuals who, asin advance of the
Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majorityfinal disposition of
the Board; provided, however, that any individual
becoming a director subsequent to the Effective Date whose election,such action, suit or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
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occurs as a resultproceeding upon receipt of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consentsundertaking by or on behalf of a
Person other than the Board;person seeking indemnification to repay such amounts if it is ultimately determined that he or (3) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all ofshe is not entitled to be indemnified. The indemnification provided herein shall not be deemed to limit the assetsright of the Corporation (a "Business Combination"), in each case, unless,
followingto indemnify any other person for any such Business Combination, (1) all or substantially allexpenses to the fullest extent permitted by the Delaware General Corporation Law, nor shall it be deemed exclusive of the individuals and entities who were the beneficial owners of the
Outstanding Corporation Voting Securities immediately priorany other rights to such
Business Combination beneficially own, directly or indirectly, more
than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of
the corporation resultingwhich any person seeking indemnification from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Corporation may be entitled under any agreement, the Corporation’s Bylaws, vote of stockholders or alldisinterested directors, or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries)otherwise, both as to action in substantially the same proportionssuch person’s official capacity and as their
ownership, immediately prior to action in another capacity while holding such Business Combination of the
Outstandingoffice. The Corporation Voting Securities, (2) no Person (excluding
any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Corporation or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of the combined voting power
of the then outstanding voting securities of such corporation exceptmay, but only to the extent that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members of the Board of Directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" means the committee of the Board described in Article
4.
"Corporation" means ePlus inc., a Delaware corporation.
"Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).
"Disability"may (but shall mean any illness or other physical or mental condition
of a Participant that renders the Participant incapable of performing his
customary and usual duties for the Corporation, or any medically determinable
illness or other physical or mental condition resulting from a bodily injury,
disease or mental disorder which, in the judgment of the Committee, is permanent
and continuous in nature. The Committee may require such medical or other
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evidence as it deems necessary to judge the nature and permanency of the
Participant's condition. Notwithstanding the above, with respect to an Incentive
Stock Option, Disability shall mean Permanent and Total Disability as defined in
Section 22(e)(3) of the Code.
"Dividend Equivalent" means a right granted to a Participant under Article
11.
"Effective Date" has the meaning assigned such term in Section 2.1.
"Fair Market Value," on any date, means (1) if the Stock is listed on a
securities exchange or is traded over the Nasdaq National Market, the closing
sales price on such exchange or over such system on such date or, in the absence
of reported sales on such date, the closing sales price on the immediately
preceding date on which sales were reported, or (2) if the Stock is not listed
on a securities exchange or traded over the Nasdaq National Market, the mean
between the bid an offered prices as quoted by Nasdaq for such date, provided
that if it is determined that the fair market value is not properly reflected by
such Nasdaq quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be reasonable.
"Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.
"Non-Employee Director" means a member of the Board who is not an employee
of the Corporation or any Parent or Subsidiary.
"Non-Qualified Stock Option" means an Option that is not an Incentive Stock
Option.
"Option" means a right granted to a Participant under the Plan to purchase
Stock at a specified price during specified time periods. An Option may be
either an Incentive Stock Option or a Non-Qualified Stock Option; provided, that
Options granted under Article 13 shall be Non-Qualified Options.
"Other Stock-Based Award" means a right, granted to a Participant under
Article 12, that relates to or is valued by reference to Stock or other Awards
relating to Stock.
"Parent" means a corporation which owns or beneficially owns a majority of
the outstanding voting stock or voting power of the Corporation. For Incentive
Stock Options, the term shall have the same meaning as set forth in Code Section
424(e).
"Participant" means a person who, as an employee, officer, consultant or
director of the Corporation or any Subsidiary, has been granted an Award under
the Plan.
"Performance Unit" means a right granted to a Participant under Article 9,
to receive cash, Stock, or other Awards, the payment of which is contingent upon
achieving certain performance goals established by the Committee.
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"Plan" means the ePlus inc. Amended and Restated 1998 Long-Term Incentive
Plan, as amended from time to time.
"Restricted Stock Award" means Stock granted to a Participant under Article
10 that is subject to certain restrictions and to risk of forfeiture.
"Retirement" means a Participant's termination of employment with the
Corporation, Parent or Subsidiary after attaining any normal or early retirement
age specified in any pension, profit sharing or other retirement program
sponsored by the Corporation, or, in the event of the inapplicability thereof
with respect to the person in question, as determined by the Committee in its
reasonable judgment.
"Stock" means the $.01 par value common stock of the Corporation and such
other securities of the Corporation as may be substituted for Stock pursuant to
Article 15.
"Stock Appreciation Right" or "SAR" means a right granted to a Participant
under Article 8 to receive a payment equal to the difference between the Fair
Market Value of a share of Stock as of the date of exercise of the SAR over the
grant price of the SAR, all as determined pursuant to Article 8.
"Subsidiary" means any corporation, limited liability company, partnership
or other entity of which a majority of the outstanding voting stock or voting
power is beneficially owned directly or indirectly by the Corporation. For
Incentive Stock Options, the term shall have the meaning set forth in Code
Section 424(f).
"1933 Act" means the Securities Act of 1933, as amended from time to time.
"1934 Act" means the Securities Exchange Act of 1934, as amended from time
to time.
ARTICLE 4
ADMINISTRATION
4.1. COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Boardobligated to) authorize from time to time, by
the Board. The Committee shall consist of two or more members of the Board. It
is intended that the directors appointedgrant rights to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
1934 Act)indemnification and "outside directors" (within the meaning of Code Section 162(m) and
the regulations thereunder). However, the mere fact that a Committee member
shall fail to qualify under either of the foregoing requirements shall not
invalidate any Award made by the Committee which Award is otherwise validly made
under the Plan. The members of the Committee shall be appointed by, and may be
changed at any time and from time to time in the discretion of, the Board.
During any time that the Board is acting as administrator of the Plan, it shall
have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board.
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4.2. ACTION BY THE COMMITTEE. For purposesadvancement of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present atexpenses to any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, relyemployee or act upon any report or other information
furnished to that member by any officer or other employeeagent of the Corporation or
any Parent or Subsidiary, the Corporation's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.
4.3. AUTHORITY OF COMMITTEE. Except as provided below, the Committee has
the exclusive power, authority and discretion to do the following; except as
such discretion shall be limited by the automatic provisions of Article 13 with
respect to annual grants of Options to Non-Employee Directors:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapsefullest extent of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;
(e) Accelerate the vesting, exercisability or lapse of restrictions of
any outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines;
(f) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
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(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided herein; and
(l) Adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of non-U.S.
jurisdictions in which the Corporation or any Parent or Subsidiary may
operate, in order to assure the viability of the benefits of Awards granted
to participants located in such other jurisdictions and to meet the
objectives of the Plan.
Notwithstanding the above, the Board or the Committee may expressly
delegate to a special committee consisting of one or more directors who are also
officers of the Corporation some or all of the Committee's authority under
subsections (a) through (g) above with respect to those eligible Participants
who, at the time of grant are not, and are not anticipated to be become, either
(1) Covered Employees or (2) persons subject to the insider trading rules of
Section 16 of the 1934 Act.
4.4. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 15.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 3,000,000. Notwithstanding the foregoing, not more than 10% of
the shares authorized herein may be granted as Awards of Restricted Stock or
unrestricted Stock Awards.
5.2. LAPSED AWARDS. To the extent that an Award is canceled, terminates,
expires, lapses or is forfeited for any reason, any shares of Stock subject to
the Award will again be available for the grant of an Award under the Plan and
shares subject to SARs or other Awards settled in cash will be available for the
grant of an Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to the
contrary (but subject to adjustment as provided in Section 15.1), the maximum
number of shares of Stock with respect to one or more Options and/or SARs that
may be granted during any one calendar year under the Plan to any one Covered
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Employee shall be 500,000. The maximum fair market value (measured as of the
date of grant) of any Awards other than Options and SARs that may be received by
a Covered Employee (less any consideration paid by the Participant for such
Award) during any one calendar year under the Plan shall be $2,000,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are employees,
officers, consultants or directors of the Corporation or a Parent or Subsidiary.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee, provided that the exercise
price for any Option shall not be less than the Fair Market Value as of the
date of the grant.
(b) Time And Conditions Of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part,
subject to Section 7.1(e). The Committee also shall determine the
performance or other conditions, if any, that must be satisfied before all
or part of an Option may be exercised or vested. The Committee may waive
any exercise or vesting provisions at any time in whole or in part based
upon factors as the Committee may determine in its sole discretion so that
the Option becomes exerciseable or vested at an earlier date. The Committee
may permit an arrangement whereby receipt of Stock upon exercise of an
Option is delayed until a specified future date.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants; provided that
if shares of Stock are used to pay the exercise price of an Option, such
shares must have been held by the Participant for at least six months. When
shares of Stock are delivered, such delivery may be by attestation of
ownership or actual delivery of one or more certificates.
(d) Evidence Of Grant. All Options shall be evidenced by a written
Award Agreement between the Corporation and the Participant. The Award
Agreement shall include such provisions, not inconsistent with the Plan, as
may be specified by the Committee or, in the case of Options granted
pursuant to Article 13, by the provisions of Article 13.
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7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Exercise Price. The exercise price per share of Stock shall be set
by the Committee, provided that the exercise price for any Incentive Stock
Option shall not be less than the Fair Market Value as of the date of the
grant.
(b) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) Lapse Of Option. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if an Option is
exercised after the dates specified in paragraphs (3), (4) and (5) below,
it will automatically become a Non-Qualified Stock Option:
(1) The Incentive Stock Option shall lapse as of the option expiration
date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years after it is
granted, unless an earlier time is set in the Award Agreement.
(3) If the Participant terminates employment for any reason other than
as provided in paragraph (4) or (5) below, the Incentive Stock Option shall
lapse, unless it is previously exercised, three months after the
Participant's termination of employment; provided, however, that if the
Participant's employment is terminated by the Corporation for Cause, the
Incentive Stock Option shall (to the extent not previously exercised) lapse
immediately.
(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is previously
exercised, one year after the Participant's termination of employment.
(5) If the Participant dies while employed, or during the three-month
period described in paragraph (3) or during the one-year period described
in paragraph (4) and before the Option otherwise lapses, the Option shall
lapse one year after the Participant's death. Upon the Participant's death,
any exercisable Incentive Stock Options may be exercised by the
Participant's beneficiary, determined in accordance with Section 14.6.
Unless the exercisability of the Incentive Stock Option is accelerated as
provided in Article 15, if a Participant exercises an Option after termination
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of employment, the Option may be exercised only with respect to the shares that
were otherwise vested on the Participant's termination of employment.
(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with respect
to which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00.
(e) Ten Percent Owners. No Incentive Stock Option shall be granted to any
individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Corporation or any Parent or Subsidiary unless the exercise price per share of
such Option is at least 110% of the Fair Market Value per share of Stock at the
date of grant and the Option expires no later than five years after the date of
grant.
(f) Expiration Of Incentive Stock Options. No Award of an Incentive Stock
Option may be made pursuant to the Plan after the day immediately prior to the
tenth anniversary of the Effective Date.
(g) Right To Exercise. During a Participant's lifetime, an Incentive Stock
Option may be exercised only by the Participant or, in the case of the
Participant's Disability, by the Participant's guardian or legal representative.
(h) Non-Employees. The Committee may not grant an Incentive Stock Option to
a non-employee. The Committee may grant an Incentive Stock Option to a director
who is also an employee of the Corporation or Parent or Subsidiary but only in
that individual's position as an employee and not as a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to
grant Stock Appreciation Rights to Participants on the following terms and
conditions:
(a) Right To Payment. Upon the exercise of a Stock Appreciation Right,
the Participant to whom it is granted has the right to receive the excess,
if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as determined
by the Committee, which shall not be less than the Fair Market Value
of one share of Stock on the date of grant.
(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
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settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined by
the Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.
ARTICLE 9
PERFORMANCE UNITS
9.1. GRANT OF PERFORMANCE UNITS. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant, subject
to Section 5.4. All Awards of Performance Units shall be evidenced by an Award
Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Units gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Units are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the number and value of Performance Units that will be
paid to the Participant.
9.3. OTHER TERMS. Performance Units may be payable in cash, Stock, or other
property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards
of Restricted Stock to Participants in such amounts and subject to such terms
and conditions as may be selected by the Committee. All Awards of Restricted
Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
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Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1. GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Award, as determined by the Committee.
The Committee may provide that Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares of Stock, or
otherwise reinvested.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
ARTICLE 13
Annual Award of options to Non-Employee Directors
13.1. GRANT OF OPTIONS. Each Non-Employee Director who is serving in such
capacity as of the day following the annual meeting of the Corporation's
stockholders ("Annual Meeting") held in 1998 shall be granted a Non-Qualified
Option to purchase up to 10,000 shares of Stock, subject to adjustment as
provided in Section 15.1. As of the day following each subsequent Annual
Meeting, each Non-Employee Director who is serving in such capacity as of such
date shall be granted a Non-Qualified Option to purchase 10,000 shares of Stock,
subject to adjustment as provided in Section 15.1. Each such day that Options
are to be granted under this Article 13 is referred to hereinafter as a "Grant
Date."
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If on any Grant Date, shares of Stock are not available under the Plan to
grant to Non-Employee Directors the full amount of a grant contemplated by the
immediately preceding paragraph, then each Non-Employee Director shall receive
an Option (a "Reduced Grant") to purchase shares of Stock in an amount equal to
the number of shares of Stock then available under the Plan divided by the
number of Non-Employee Directors as of the applicable Grant Date. Fractional
shares shall be ignored and not granted.
If a Reduced Grant has been made and, thereafter, during the term of the
Plan, additional shares of Stock become available for grant, then each person
who was a Non-Employee Director both on the Grant Date on which the Reduced
Grant was made and on the date additional shares of Stock become available (a
"Continuing Non-Employee Director") shall receive an additional Option to
purchase shares of Stock. The number of newly available shares shall be divided
equally among the Options granted to the Continuing Non-Employee Directors;
provided, however, that the aggregate number of shares of Stock subject to a
Continuing Non-Employee Director's additional Option plus any prior Reduced
Grant to the Continuing Non-Employee Director on the applicable Grant Date shall
not exceed 10,000 shares (subject to adjustment pursuant to Section 15.1). If
more than one Reduced Grant has been made, available Options shall be granted
beginning with the earliest such Grant Date.
13.2. OPTION PRICE. The option price for each Option granted under this
Article 13 shall be the Fair Market Value on the date of grant of the Option.
13.3. Term. Each Option granted under this Article 13 shall, to the extent
not previously exercised, terminate and expire on the date ten (10) years after
the date of grant of the option, unless earlier terminated as provided in
Section 13.4.
13.4. LAPSE OF OPTION. An Option granted under this Article 13 shall not
automatically lapse by reason of the Participant ceasing to qualify as a
Non-Employee Director but remaining as a member of the Board. An Option granted
under this Article 13 shall lapse under the earliest of the following
circumstances:
(1) The Option shall lapse ten years after it is granted.
(2) If the Participant ceases to serve as a member of the Board for
any reason other than as provided in paragraph (3) or (4) below, the Option
shall lapse, unless it is previously exercised, three months after the
Participant's termination as a member of the Board; provided, however, that
if the Participant is removed for cause (determined in accordance with the
Corporation's Bylaws, as amended from time to time), the Option shall (to
the extent not previously exercised) lapse immediately.
(3) If the Participant ceases to serve as a member of the Board by
reason of his Disability, the Option shall lapse, unless it is previously
exercised, one year after the Participant's termination as a member of the
Board.
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(4) If the Participant dies while serving as a member of the Board, or
during the three-month period described in paragraph (2) or during the
one-year period described in paragraph (3) and before the Option otherwise
lapses, the Option shall lapse one year after the Participant's death. Upon
the Participant's death, any exercisable Options may be exercised by the
Participant's beneficiary, determined in accordance with Section 14.6.
If a Participant exercises Options after termination of his service on the
Board, he may exercise the Options only with respect to the shares that were
otherwise exercisable on the date of termination of his service on the Board.
Such exercise otherwise shall be subject to the terms and conditions of this
Article 13.
13.5. Exercisability. Each Option granted under this Article 13 shall be
immediately exercisable, in whole or in part, on the first anniversary of the
date of grant.
13.6. Exercise and Payment. An Option granted under this Article 13 shall
be exercised by written notice directed to the Secretary of the Corporation (or
his designee) and accompanied by payment in full of the exercise price in cash,
by check, in shares of Stock, or in any combination thereof; provided that if
shares of Stock surrendered in payment of the exercise price were themselves
acquired otherwise than on the open market, such shares shall have been held by
the Participant for at least six months. To the extent permitted under
Regulation T of the Federal Reserve Board, and subject to applicable securities
laws, such Options may be exercised through a broker in a so-called "cashless
exercise" whereby the broker sells the Option shares and delivers cash sales
proceeds to the Corporation in payment of the exercise price.
13.7. Transferability of Options. Any Option granted pursuant to this
Article 13 shall be assignable or transferable by the Participant by will, by
the laws of descent and distribution, or pursuant to a qualified domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
section applied to an Award under the Plan. In addition, any Option granted
pursuant to this Article 13 shall be transferable by the Participant to any of
the following permitted transferees, upon such reasonable terms and conditions
as the Committee may establish (and, unless specifically permitted by the Board
in advance, such transfers shall be limited to one transfer per Participant to
no more than four transferees): (1) one or more of the following family members
of the Participant: any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, (2) a trust, partnership or other entity established and existing
for the sole benefit of, or under the sole control of, one or more of the above
family members of the Participant, or (3) any other transferee specifically
approved by the Committee after taking into account any state or federal tax,
securities or other laws applicable to transferable options.
13.8. Termination of Article 13. No Options shall be granted under this
Article 13 after September 1, 2006.
13.9. Non-Exclusivity. Nothing in this Article 13 shall prohibit the
Committee from making discretionary Awards to Non-Employee Directors pursuant to
the other provisions of the Plan before or after September 1, 2006. Options
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granted pursuant to this Article 13 shall be governed by the provisions of this Article 13Eighth as they apply to the indemnification and by other provisionsadvancement of expenses of directors and officers of the PlanCorporation.
NINTH
From time to
the extent not inconsistent
withtime any of the provisions of
Article 13.
ARTICLE 14
PROVISIONS APPLICABLE TO AWARDS
14.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
14.2. EXCHANGE PROVISIONS. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 14.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
14.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
14.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
14.5. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Corporation or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (1) does not result in accelerated taxation,
(2) does not cause any Option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (3) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
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limitation, any state or federal tax or securities laws or regulations
applicable to transferable Awards.
14.6. BENEFICIARIES. Notwithstanding Section 14.4, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
14.7. STOCK CERTIFICATES. All Stock issuable under the Plan is subject to
any stop-transfer orders and other restrictions as the Committee deems necessary
or advisable to comply with federal or state securities laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate or issue instructions to the transfer
agent to reference restrictions applicable to the Stock.
14.8. ACCELERATION UPON DEATH OR DISABILITY OR RETIREMENT. Notwithstanding
any other provision in the Plan or any Participant's Award Agreement to the
contrary, upon the Participant's death or Disability during his employment or
service as a consultant or director, or upon the Participant's Retirement, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised (including, without limitation, Options granted
pursuant to Article 13) shall become fully exercisable and all restrictions on
outstanding Awards shall lapse. Any Option or Stock Appreciation Rights Awards
shall thereafter continue or lapse in accordance with the other provisions of
the Plan and the Award Agreement. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Section
7.2(d), the excess Options shall be deemed to be Non-Qualified Stock Options.
14.9. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise provided
in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised (including, without limitation, Options granted
pursuant to Article 13) shall become fully exercisable and all restrictions on
outstanding Awards shall lapse; provided, however that such acceleration will
not occur if, in the opinion of the Corporation's accountants, such acceleration
would preclude the use of "pooling of interest" accounting treatment for a
Change in Control transaction that (1) would otherwise qualify for such
accounting treatment, and (2) is contingent upon qualifying for such accounting
treatment. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Section 7.2(d), the excess Options
shall be deemed to be Non-Qualified Stock Options.
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14.10. ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Corporation of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the 1934
Act, the Committee may in its sole discretion declare all outstanding Options,
Stock Appreciation Rights, and other Awards in the nature of rights that may be
exercised (including, without limitation, Options granted pursuant to Article
13) to be fully exercisable, and/or all restrictions on all outstanding Awards
to have lapsed, in each case, as of such date as the Committee may, in its sole
discretion, declare, which may be on or before the consummation of such
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
14.11. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an event
has occurred as described in Section 14.9 or 14.10 above, the Committee may in
its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised (including, without limitation, Options granted
pursuant to Article 13) shall become fully or partially exercisable, and/or that
all or a part of the restrictions on all or a portion of the outstanding Awards
shall lapse, in each case, as of such date as the Committee may, in its sole
discretion, declare. The Committee may discriminate among Participants and among
Awards granted to a Participant in exercising its discretion pursuant to this
Section 14.11.
14.12. EFFECT OF ACCELERATION. If an Award is accelerated under Section
14.9 or 14.10, the Committee may, in its sole discretion, provide (1) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (2) that the Award will be settled in cash rather
than Stock, (3) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (4) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.
14.13. PERFORMANCE GOALS. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees, but excluding Options granted pursuant
to Article 13) shall be determined solely on the basis of (1) the achievement by
the Corporation or a Parent or Subsidiary of a specified target return, or
target growth in return, on equity or assets, (2) the Corporation's, Parent's or
Subsidiary's stock price, (3) the achievement by an individual or a business
unit of the Corporation, Parent or Subsidiary of a specified target, or target
growth in, revenues, net income or earnings per share, (4) the achievement of
objectively determinable goals with respect to service or product delivery,
service or product quality, customer satisfaction, meeting budgets and/or
retention of employees or (5) any combination of the goals set forth in (1)
through (4) above. If an Award is made on such basis, the Committee shall
establish goals prior to the beginning of the period for which such performance
goal relates (or such later date as may be permitted under Code Section 162(m)
or the regulations thereunder) and the Committee may for any reason reduce (but
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not increase) any Award, notwithstanding the achievement of a specified goal.
Any payment of an Award granted with performance goals shall be conditioned on
the written certification of the Committee in each case that the performance
goals and any other material conditions were satisfied.
14.14. TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur (1) in a circumstance in which a Participant
transfers from the Corporation to one of its Parents or Subsidiaries, transfers
from a Parent or Subsidiary to the Corporation, or transfers from one Parent or
Subsidiary to another Parent or Subsidiary, or (2) in the discretion of the
Committee as specified at or prior to such occurrence, in the case of a
spin-off, sale or disposition of the Participant's employer from the Corporation
or any Parent or Subsidiary. To the extent that this provision causes Incentive
Stock Options to extend beyond three months from the date a Participant is
deemed to be an employee of the Corporation, a Parent or Subsidiary for purposes
of Section 424(f) of the Code, the Options held by such Participant shall be
deemed to be Non-Qualified Stock Options.
ARTICLE 15
CHANGES IN CAPITAL STRUCTURE
15.1. GENERAL. In the event of a corporate transaction involving the
Corporation (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
authorization limits under Section 5.1 and 5.4 shall be adjusted
proportionately, and the Committee may adjust Awards to preserve the benefits or
potential benefits of the Awards. Action by the Committee may include: (1)
adjustment of the number and kind of shares which may be delivered under the
Plan; (2) adjustment of the number and kind of shares subject to outstanding
Awards; (3) adjustment of the exercise price of outstanding Awards; and (4) any
other adjustments that the Committee determines to be equitable. In addition,
the Committee may, in its sole discretion, provide (1) that Awards will be
settled in cash rather than Stock, (2) that Awards will become immediately
vested and exercisable and will expire after a designated period of time to the
extent not then exercised, (3) that Awards will be assumed by another party to a
transaction or otherwise be equitably converted or substituted in connection
with such transaction, (4) that outstanding Awards may be settled by payment in
cash or cash equivalents equal to the excess of the Fair Market Value of the
underlying Stock, as of a specified date associated with the transaction, over
the exercise price of the Award, or (5) any combination of the foregoing. The
Committee's determination need not be uniform and may be different for different
Participants whether or not such Participants are similarly situated. Without
limiting the foregoing, in the event a stock dividend or stock split is declared
upon the Stock, the authorization limits under Section 5.1 and 5.4 shall be
increased proportionately, and the shares of Stock then subject to each Award
shall be increased proportionately without any change in the aggregate purchase
price therefor.
B-18
ARTICLE 16
AMENDMENT, MODIFICATION AND TERMINATION
16.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of stockholders of the
Corporation if such approval is necessary or deemed advisable with respect to
tax, securities or other applicable laws, policies or regulations.
16.2. AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that, subject to the terms of the
applicable Award Agreement, such amendment, modification or termination shall
not, without the Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled (at the spread value in the case of an Option or Stock
Appreciation Right) on the date of such amendment or termination; and provided
further that, except as otherwise provided in the anti-dilution provision of the
Plan, the exercise price of any Option may not be reduced, directly or
indirectly, without the prior approval of the stockholders of the Company. No
termination, amendment, or modification of the Plan shall adversely affect any
Award previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 17
GENERAL PROVISIONS
17.1. NO RIGHTS TO AWARDS. No Participant or employee, officer, consultant
or director shall have any claim to be granted any Award under the Plan, and
neither the Corporation nor the Committee is obligated to treat Participants and
employees, officers, consultants or directors uniformly.
17.2. NO STOCKHOLDER RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.
17.3. WITHHOLDING. The Corporation or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Corporation, an amount sufficient to satisfy federal, state, and
local taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require or permit
that any such withholding requirement be satisfied, in whole or in part, by
withholding from the Award shares of Stock having a Fair Market Value on the
date of withholding equal to the minimum amount (and not any greater amount)
required to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes.
B-19
17.4. NO RIGHT TO EMPLOYMENT OR OTHER STATUS. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Corporation or any Parent or Subsidiary to terminate any Participant's
employment or status as a consultant or director at any time, nor confer upon
any Participant any right to continue as an employee, officer, consultant or
director of the Corporation or any Parent or Subsidiary.
l7.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Corporation or any Parent or Subsidiary.
17.6. INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Committee shall be indemnified and held harmless by the
Corporation from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Corporation an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Corporation's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify them or hold
them harmless.
17.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.
17.8. EXPENSES. The expenses of administering the Plan shall be borne by
the Corporation and its Parents or Subsidiaries.
17.9. TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
17.10. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
17.11. FRACTIONAL SHARES. No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up.
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17.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Corporation
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under no obligation to
register under the 1933 Act,amended, altered, or any state securities act, any of the shares of
Stock issued in connection with the Plan. The shares issued in connection with
the Plan may in certain circumstances be exempt from registration under the 1933
Act,repealed, and the Corporation may restrict the transfer of such shares in such manner
as it deems advisable to ensure the availability of any such exemption.
17.13. GOVERNING LAW. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governedother provisions authorized by the laws of the State of Delaware.
17.14. ADDITIONAL PROVISIONS. Each Award AgreementDelaware at the time in force may contain such other
termsbe added or inserted in the manner and conditions asat the Committee may determine; provided that such other
termstime prescribed by said laws, and conditions are not inconsistent with the provisions of this Plan.
The foregoing is hereby acknowledged as being the ePlus inc. Amended and
Restated 1998 Long-Term Incentive Plan as adopted by the Board of Directors of
the Corporation on July 28, 1998 and approved byall rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article Ninth.
IN WITNESS WHEREOF, ePlus inc. has caused this Amended and Restated Certificate of Incorporation to be executed by its duly authorized officer on September 16, 1998; and as amended and restated on July 15, 2003
by the Boardthis ______ day of Directors___________, 2008.
| EPLUS INC. |
| |
| |
| Signature: __________________________ |
| |
| Name: _____________________________ |
| |
| Title: ______________________________ |
[FORM OF PROXY CARD]
ePlus inc. Proxy
Annual MeetingsMeeting of Stockholders Of
ePlus
ePlus inc.
[September 18, 2003
15, 2008]
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Erica S. Stoecker and Kleyton L. Parkhurst, and Steven J. Mencarini, and each or either of them, proxies, with power of substitution, to vote all shares of the undersigned at the annual meetingAnnual Meeting of stockholdersStockholders of ePlusePlus inc., a Delaware corporation, to be held on September 18, 2003[September 15, 2008] at 8:00 a.m. at the Courtyard Marriott, 533 Herndon Parkway, Herndon,Hyatt Regency located at 1800 Presidents Street, Reston, Virginia 20170, or at any adjournment thereof, upon the matters set forth in the Proxy Statement for such meeting,Meeting, and in their discretion, upon such other business as may properly come before the meeting.
1. To elect twoMeeting.
| 1. | To elect as Directors, each to serve a term as described below |
| · | To elect three Class I Directors, each to serve a term of one year and until their successors have been duly elected and qualified. |
TO VOTE FOR ALL THE NOMINEES LISTED BELOW
£ FOR ALL THE NOMINEES LISTED BELOW £ WITHHOLD AUTHORITY
C. Thomas Faulders, III
Lawrence S. Herman
Eric D. Hovde
OR TO VOTE FOR EACH NOMINEE SEPARATELY
| C. Thomas Faulders, III | £ FOR £ WITHHOLD AUTHORITY |
| Lawrence S. Herman | £ FOR£ WITHHOLD AUTHORITY |
| Eric D. Hovde | £ FOR £ WITHHOLD AUTHORITY |
| · | To elect three Class II Directors, each to serve a term of two years and until their successors have been duly elected and qualified. |
TO VOTE FOR ALL THE NOMINEES LISTED BELOW
£ FOR ALL THE NOMINEES LISTED BELOW £ WITHHOLD AUTHORITY
Irving R. Beimler
Milton E. Cooper, Jr.
Terrence O’Donnell
OR TO VOTE FOR EACH NOMINEE SEPARATELY
| Irving R. Beimler | £ FOR £ WITHHOLD AUTHORITY |
| Milton E. Cooper, Jr. | £ FOR £ WITHHOLD AUTHORITY |
| Terrence O’Donnell | £ FOR £ WITHHOLD AUTHORITY |
| · | To elect two Class III Directors, each to serve a term of three years and until their successors have been duly elected and qualified. |
TO VOTE FOR BOTH THE NOMINEES LISTED BELOW
[ ]
£ FOR BOTH THE NOMINEES LISTED BELOW [ ]£ WITHHOLD AUTHORITY
C. Thomas Faulders, III Lawrence S. Herman
Phillip G. Norton Bruce M. Bowen
OR TO VOTE FOR EACH NOMINEE SEPARATELY
C. Thomas Faulders, III [ ] FOR [ ] WITHHOLD AUTHORITY
Lawrence S. Herman [ ] FOR [ ] WITHHOLD AUTHORITY
| Phillip G. Norton | £ FOR £ WITHHOLD AUTHORITY |
| Bruce M. Bowen | £ FOR £ WITHHOLD AUTHORITY |
2. To approve the 2008 Non-Employee Director Long-Term Incentive Plan
3. To approve the 2008 Employee Long-Term Incentive Plan
4.To approve our Amended and Restated Certificate of Incorporation
5. To ratify the appointment of Deloitte & Touche LLP as ePlus'ePlus’ independent auditors for ePlus'ePlus’ fiscal year ending March 31, 2004.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve and adopt an amendment to the ePlus inc. Certificate of
Incorporation to decrease the number of shares of our authorized stock from
52 million shares (consisting of 50 million shares of common stock, par
value $0.01 per share and 2 million preferred shares, par value $0.01 per
share) to 27 million shares (consisting of 25 million shares of common
stock, par value $0.01, and 2 million preferred shares, par value $0.01 per
share).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve an amendment to the ePlus inc. Amended and Restated 1998
Long-Term Incentive Plan, which sets the number of shares of common stock
available for awards under the Plan at 3,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2009.
Dated:________________, 2003
Signature: ______________________________________________________________
Signature if held jointly: ______________________________________________
2008
| 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.