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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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EPLUS INC.
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[EPLUS LETTERHEAD]
August 24, 2001
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of ePlus
inc. on September 20, 2001. The annual meeting will begin at 10:30 a.m. local
time at the Hyatt Regency Reston, 1800 Presidents Street, Reston, Virginia
20191.
The formal notice of the meeting follows on the next page. In addition,
information regarding each of the matters you will be asked to vote on at the
annual meeting is contained in the attached proxy statement. We urge you to read
the proxy statement carefully. Mailing of proxy materials will begin on August
24, 2001 to all stockholders of record at the close of business on July 28,
2001. The mailing will include the proxy statement, proxy card, a return
envelope, and the ePlus 2001 annual report.
It is important that you vote at the annual meeting. Whether or not you plan to
attend in person, we urge you to complete, date, and sign the enclosed proxy
card and return it as promptly as possible in the accompanying envelope. If you
are a stockholder of record and do attend the meeting and wish to vote your
shares in person, even after returning your proxy, you still may do so.
We look forward to seeing you in Reston, Virginia on September 20, 2001.
Very truly yours,
/s/ Phillip G. Norton
Phillip G. Norton, President
[EPLUS LETTERHEAD]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held September 20, 2001
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To the Stockholders of ePlus inc.:
The annual meeting of stockholders of ePlus inc., a Delaware corporation, will
be held on September 20, 2001, at the Hyatt Regency Reston, 1800 Presidents
Street, Reston, Virginia 20191, at 10:30 a.m. local time for the purposes stated
below:
1. To elect two Class II 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, 2002.
3. To transact such other business as may properly come before the
annual meeting.
Under the provisions of our Bylaws, and in accordance with Delaware law, the
board of directors has fixed the close of business on July 28, 2001 as the
record date for stockholders entitled to notice of and to vote at the annual
meeting,
Whether or not you expect to be present at the meeting, please date and sign the
enclosed proxy card and mail it promptly in the enclosed envelope to First Union
National Bank, 1525 W.T. Harris Blvd., 3C3, Charlotte, NC 28288-1113.
ePlus inc.
/s/ Kleyton L. Parkhurst
August 24, 2001 Kleyton L. Parkhurst, Secretary
TABLE OF CONTENTS
Page
Information about ePlus Inc....................................................1
Information about the Annual Meeting...........................................1
Information about the Proxy Statement..........................................1
Information about Voting.......................................................2
Quorum Requirements............................................................2
Voting Requirements............................................................2
Dissenters' Rights of Appraisal................................................3
Voting Securities, Principal Holders thereof, and Management...................4
Directors and Executive Officers...............................................5
Compensation of Directors and Executive Officers..............................11
Performance Graph.............................................................16
Certain Transactions..........................................................17
Proposal 1....................................................................19
Proposal 2....................................................................20
Other Proposed Action.........................................................21
Stockholder Proposals and Submissions.........................................21
INFORMATION ABOUT EPLUS INC.
ePlus inc. provides an Internet-based, business-to-business supply chain
management solution for information technology and other operating resources. On
November 2, 1999, we introduced our remotely-hosted electronic commerce
solution, ePlusSuite, which combines Internet-based tools with dedicated
customer service to provide a comprehensive outsourcing solution for the
automated procurement, management, financing and disposition of operating
resources. The address of our principal executive office is 400 Herndon Parkway,
Herndon, Virginia 20170 and our telephone number at that address is (703)
834-5710. Our website is located at www.ePlus.com. 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 20, 2001 at 10:30 a.m. local time
at the Hyatt Regency Reston, 1800 Presidents Street, Reston, Virginia 20191.
The annual meeting has been called to consider and take action on the following
proposals:
1. To elect two Class II 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, 2002.
3. To transact such other business as may properly come before the
meeting.
Our board of directors has unanimously approved each of the proposals and
recommends that you vote in favor of each of the proposals. All holders of
record of our common stock at the close of business on July 28, 2001, the record
date, will be entitled to vote at the annual meeting.
INFORMATION ABOUT THE PROXY STATEMENT
We have sent you this proxy statement because ePlus' board of directors is
soliciting your proxy to vote at the annual meeting. ePlus is bearing the cost
of this proxy solicitation. If you own ePlus common stock in more than one
account, such as individually and also jointly with your spouse, you may receive
more than one set of these proxy materials. To assist us in saving money and to
provide you with better 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, First Union National Bank at (800) 829-8432. This
proxy statement contains information that we are required to provide to you
under the rules of the Securities and Exchange Commission and is designed to
assist you in voting your shares. On August 24, 2001, we began mailing these
proxy materials to all stockholders of record at the close of business on July
28, 2001.
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INFORMATION ABOUT VOTING
Stockholders can vote in person at the annual meeting or by proxy. To vote by
proxy, please mail the enclosed proxy card in the enclosed envelope. Please sign
and date your proxy card before mailing.
Each share of ePlus common stock is entitled to one vote on all matters
presented at the annual meeting. If your shares are held in the name of a bank,
broker or other holder of record, you will receive instructions from the holder
of record that you must follow in order for your shares to be voted. If your
shares are not registered in your own name and you plan to attend the annual
meeting and vote your shares in person, you should contact your broker or agent
in whose name your shares are registered to obtain a broker's proxy card and
bring it annual meeting in order to vote. If you vote by proxy, the individuals
named on the card (your proxy holders) will vote your shares in the manner you
indicate. You may specify whether your shares should be voted for or if
authority to vote is withheld as to the nominees for director and whether your
shares should be voted for or against each of the other proposals. If you sign
and return the card without indicating your instructions, your shares will be
voted for:
o the election of both the Class II nominees for director; and
o the ratification of the appointment of Deloitte & Touche LLP as
our independent auditors for the fiscal year ending March 31,
2002.
You may revoke or change your proxy at any time before it is voted by sending a
written notice of your revocation to ePlus' Corporate Secretary, Kleyton L.
Parkhurst at ePlus' principal executive office.
QUORUM REQUIREMENTS
As of July 28, 2001, the record date for this solicitation of proxies, there
were 10,153,007 shares of common stock outstanding. The holders of record of a
majority of the shares of common stock entitled to vote at the meeting, present
in person or by proxy, will constitute a quorum for the transaction of business
at the annual meeting or any adjournment thereof. If a quorum should not be
present, the annual meeting may be adjourned until a quorum is obtained.
VOTING REQUIREMENTS
Proposal 1
To be elected as a Class II Director, a nominee must be one of the two persons
receiving the greatest number of affirmative votes cast at the meeting for Class
II Directors.
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Proposal 2
To be approved, Proposal 2 requires the affirmative vote of the holders of at
least a majority of the shares present in person or represented by proxy at the
meeting and entitled to vote on the proposal.
Effect of Abstentions and Broker Non-Votes
Abstentions and broker non-votes will be counted only for the purpose of
determining the existence of a quorum, but will not be counted as an affirmative
vote for the purposes of determining whether a proposal has been approved.
Therefore, an abstention or a broker non-vote will not have any effect on the
votes for Proposals 1 and 2.
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 of the board of directors with respect to any other business that may
come before the annual meeting.
We may solicit proxies by use of the mails, in person or by telephone, e-mail or
other electronic communications. We will bear the cost of soliciting proxies in
the accompanying form. We may reimburse brokerage firms and others for their
expenses in forwarding proxy materials to the beneficial owners and soliciting
them to execute the proxies.
DISSENTERS' RIGHTS OF APPRAISAL
The board of directors does not propose any action for which the laws of the
state of Delaware, or the Certificate of Incorporation, Bylaws or corporate
resolutions of ePlus provide a right of a stockholder to dissent and obtain
payment for shares.
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VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF, AND MANAGEMENT
The following table sets forth certain information as of July 28, 2001, the
record date 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 the ePlus to be the beneficial owners of more than five
percent of our common stock.
NUMBER OF PERCENTAGE
SHARES OF
BENEFICIALLY SHARES
NAME OF BENEFICIAL OWNER (1) OWNED (2) OUTSTANDING
---------------------------- ------------ -----------
Phillip G. Norton (3) 2,364,750 22.6%
Bruce M. and Elizabeth D. Bowen (4) 825,000 8.0
Steven J. Mencarini (5) 62,180 *
Kleyton L. Parkhurst (6) 199,000 1.9
C. Thomas Faulders, III (7) 13,507 *
Terrence O'Donnell (8) 30,000 *
Lawrence S. Herman -- --
Thomas L. Hewitt -- --
All directors and named executive officers as
a group (8 Individuals) 3,494,437 32.0
TC Plus, LLC (9) 1,015,552 10.0
Eric D. Hovde 560,024 5.5
Firsthand Capital Management, Inc. (10) 832,300 8.2%
--------------------------
* less than 1%
(1) The business address of Messrs. Norton, Bowen, Mencarini, Parkhurst,
Faulders, O'Donnell, Herman and Hewitt is 400 Herndon Parkway, Herndon
Virginia, 20170. The business address of TC Plus, LLC is 1455 Pennsylvania
Avenue, N.W., Suite 350, Washington, D.C. 20004. The business address of
Mr. Hovde is 1826 Jefferson Place, N.W., Washington, D.C. 20036. The
business address of Firsthand Capital Management, Inc. is 125 South Market,
Suite 1200, San Jose, California 95113.
(2) Unless otherwise indicated and subject to community property laws where
applicable, each of the stockholders named in this table has sole voting
and investment power with respect to the shares shown as beneficially owned
by such stockholder. A person is deemed to be the beneficial owner of
securities that can be acquired by such person within 60 days from July 28,
2001, the record date, upon exercise of options or warrants. Each
beneficial owner's percentage ownership is determined by assuming options
or warrants that are held by such person (but not by any other person) and
that are exercisable within 60 days from July 28, 2001, the record date,
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, trustee
for the benefit of Phillip G. Norton, Jr., u/a dated as of July 20, 1983;
Patricia A. Norton, the spouse of Mr. Norton, trustee for the benefit of
Andrew L. Norton, u/a dated as of July 20, 1983; Patricia A. Norton,
trustee for the benefit of Jeremiah O. Norton, u/a dated as of July 20,
1983; and Patricia A. Norton. Patricia A. Norton is the sole stockholder of
J.A.P., Inc., and Mr. Norton is the sole director and President of J.A.P.,
Inc. Mr. Norton and J.A.P. Investment Group, L.P. are parties to a
stockholders agreement with TC Plus, LLC, Bruce M. Bowen, and Kevin M.
Norton and Patrick J. Norton who are Mr. Norton's brothers. Also includes
323,750 shares of common stock issuable to Mr. Norton under options. See
"Certain Transactions--TC Plus LLC."
(4) Includes 520,000 shares held by Mr. and Mrs. Bowen, as tenants by the
entirety, and 160,000 shares held by Bowen Holdings L.C., a Virginia
limited liability company, composed of Mr. Bowen and three minor children
of whom Mr. Bowen is legal guardian and for which shares Mr. Bowen serves
as manager. Also includes 145,000 shares of common stock issuable to Mr.
Bowen under options. Mr. Bowen is party to a stockholders agreement with TC
Plus, LLC, Phillip G. Norton, Kevin M. Norton and Patrick J. Norton. See
"Certain Transactions--TC Plus LLC."
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(5) Includes 62,180 shares of common stock issuable to Mr. Mencarini under
options.
(6) Includes 186,000 shares of common stock issuable to Mr. Parkhurst under
options.
(7) Includes 13,507 shares of common stock issuable to Mr. Faulders under
options.
(8) Includes 30,000 shares of common stock issuable to Mr. O'Donnell under
options.
(9) Includes 1,015,552 shares of our common stock owned by TC Plus, LLC. Thayer
Equity Investors III, L.P. is the managing member of TC Plus, LLC. TC
Equity Partners, L.L.C. is the sole general partner of Thayer Equity
Investors III, L.P., and has sole voting and investment power with respect
to the shares of our common stock held by TC Plus, LLC. TC Plus, LLC is
party to a stockholders agreement with Phillip G. Norton, J.A.P. Investment
Group, L.P., Bruce M. Bowen, Kevin M. Norton and Patrick J. Norton which,
among other things, grants TC Plus, LLC authority to effectively appoint
two members of our board of directors. Currently, TC Plus, LLC does not
exercise its right to appoint directors of ePlus pursuant to the
stockholders agreement. See "Certain Transactions--TC Plus LLC."
(10) Includes shares held by the series of funds of Firsthand Funds to which
Firsthand Capital Management, Inc. is investment adviser.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position with ePlus of each
person who is an executive officer, director or significant employee.
Name Age Position Class
---- --- -------- -----
Phillip G. Norton.............. 57 Chairman of the Board, President III
andChief Executive Officer
Bruce M. Bowen................. 49 Director and Executive Vice III
President
Steven J. Mencarini............ 46 Senior Vice President and
Chief Financial Officer
Kleyton L. Parkhurst........... 38 Senior Vice President,
Secretary and Treasurer
Terrence O'Donnell............. 57 Director II
Thomas L. Hewitt............... 62 Director II
C. Thomas Faulders, III........ 51 Director I
Lawrence S. Herman............. 57 Director I
The name and business experience during the past five years of each director,
executive officer and key employee of ePlus are described below.
Phillip G. Norton joined us in March 1993 and has served since then as our
Chairman of the Board and Chief Executive Officer. Since September 1996, Mr.
Norton has also served as our President. Mr. Norton is a 1966 graduate of the
U.S. Naval Academy. Mr. Norton has been designated as a director by the
management stockholders party to the stockholders agreement by and among ePlus,
TC Plus, LLC, Phillip G. Norton, Bruce M. Bowen, J.A.P. Investment Group, L.P.,
Kevin M. Norton and Patrick J. Norton. See "Certain Transaction - TC Plus, LLC."
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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 Chief
Financial Officer. Mr. Bowen has served 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.
Mr. Bowen has been designated as a director by the management stockholders party
to the stockholders agreement by and among ePlus, TC Plus, LLC, Phillip G.
Norton, Bruce M. Bowen, J.A.P. Investment Group, L.P., Kevin M. Norton and
Patrick J. Norton. See "Certain Transaction - TC Plus, LLC."
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, since
September 1996, has also served as our 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 and
investor relations. Mr. Parkhurst has syndication expertise in commercial
nonrecourse debt, federal government leases, state and local taxable and
tax-exempt leases, and computer lease equity placements. 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 he has practiced
law since 1977, with the exception of the period from 1989 through 1992 when he
served as General Counsel to the U.S. Department of Defense. Mr. O'Donnell
presently also serves as a director of IGI, Inc., a Nasdaq National Market
company. Mr. O'Donnell is a 1966 graduate of the U.S. Air Force Academy and in
1971 received a Juris Doctor from Georgetown University Law Center. Mr.
O'Donnell has been nominated by the board of directors for re-election as a
Class II Director at the 2001 annual meeting of stockholders.
Thomas L. Hewitt joined our board of directors in June 2001. Until the sale of
the company in 2000, Mr. Hewitt was the Chief Executive Officer and Chairman of
Federal Sources, Inc., which he founded in December 1984. Federal Sources, Inc.
is a market research and consulting firm focused on information technology in
the federal government. He is also the Chief Executive Officer of Global
Governments, Inc., which he founded in January 2000. Global Governments, Inc. is
a company focused on strategic planning and marketing in the international
government information technology marketplace. Mr. Hewitt also serves on the
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board of directors of Halifax, Inc., an America Stock Exchange company. Mr.
Hewitt received his Bachelor of Science in Aeronautical Engineering from North
Carolina State University and his masters of Business Administration from Long
Island University. Mr. Hewitt has been nominated by the board of directors for
re-election as a Class II Director at the 2001 annual meeting of stockholders.
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 which is a
wholly owned subsidiary of TRW, Inc. Mr. Faulders is a member of the board of
directors of James Martin & Co., Universal Technology and Systems, Inc. and the
Ronald Reagan Institute for Emergency Medicine. He is a 1971 graduate of the
University of Virginia and in 1981 received a Masters of Business Administration
from the Wharton School of the University of Pennsylvania.
Lawrence S. Herman, joined our board of directors in March 2001. Mr. Herman is
one of KPMG Consulting's most senior state and local government managing
directors and is responsible for managing national alliances with e-government
and enterprise software companies. During his career, Mr. Herman has specialized
in developing financial and management strategies for state and local
government. Mr. Herman has been with KPMG for over thirty-three years. He has
directed a statewide performance audit 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 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.
Each executive officer of ePlus is chosen by the board of directors and holds
his or her office until his or her successor shall have been duly chosen and
qualified or until his or her death or until he or she shall resign or be
removed as provided by the Bylaws.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
ePlus' officers and directors, and persons who own more than ten percent of a
registered class of ePlus' equity securities, to file reports of ownership and
changes in ownership of equity securities of ePlus with the SEC and the Nasdaq
National Market. Officers, directors and greater-than-ten-percent stockholders
are required by SEC regulation to furnish ePlus with copies of all Section 16(a)
forms that they file.
Based solely upon a review of Forms 3, Forms 4 and Forms 5 furnished to ePlus
pursuant to Rule 16a-3 under the Exchange Act, ePlus believes that all such
forms required to be filed pursuant to Section 16(a) of the Exchange Act were
timely filed, as necessary, by the officers, directors and security holders
required to file such forms.
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The Board of Directors
ePlus' Bylaws, as amended, provide that the number of directors of ePlus shall
be six, until this number is amended by a resolution duly adopted by the board
of directors or the stockholders (subject to certain provisions of the Bylaws
relating to the entitlement of holders of preferred stock to elect directors).
Our board of directors is divided into three classes: Class I, comprised of two
directors; Class II, comprised of two directors; and Class III, comprised of two
directors. Subject to the provisions of the Bylaws, at each annual meeting of
stockholders, the successors to the class of directors whose term is then
expiring shall be elected to hold office for a term expiring at the third
succeeding annual meeting of stockholders. 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
Thomas L. Hewitt
o Class III
Phillip G. Norton
Bruce M. Bowen
The Class II Directors will stand for re-election at the annual meeting of
stockholders in 2001, The Class III Directors are expected to stand for
re-election at the annual meeting of stockholders in 2002. The Class I Directors
will stand for re-election at the annual meeting of stockholders in 2003. 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.
-8-
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
special 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,
2001. In addition to meetings of the full board, directors also attended
meetings of board committees. No incumbent director attended fewer than 75% of
the total number of meetings held by the board of directors and the meetings of
any committee on which the director served. The board of directors has the
following committees: the audit committee, the compensation committee and the
stock incentive committee.
Audit Committee
General. The audit committee of the board of directors is responsible for making
recommendations to the board concerning the engagement of independent public
accountants, monitoring and reviewing the quality and activities of ePlus'
internal and external audit functions and monitoring the adequacy of ePlus'
operating and internal controls as reported by management and the external or
internal auditors. The members of the audit committee are C. Thomas Faulders,
III, Terrence O'Donnell and Thomas L. Hewitt. During the fiscal year ended March
31, 2001, two 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 is included as Appendix A to this proxy statement.
The committee reviews ePlus' financial reporting process on behalf of the board
of directors. In fulfilling its responsibilities, the committee has reviewed and
discussed the audited financial statements contained in our Annual Report on
Form 10-K for the year ended March 31, 2001 with ePlus' management and the
independent accountants. 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.
-9-
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. In addition, the committee has
discussed with the independent accountants 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, 2001, for filing with the Securities and Exchange
Commission.
BY THE AUDIT COMMITTEE
C. Thomas Faulders, III
Terrence O'Donnell
Thomas L. Hewitt
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 are Terrence O'Donnell, C. Thomas Faulders, III and Thomas L. Hewitt,
all of whom are non-employee directors. Mr. Norton and Mr. Bowen, as directors,
do not vote on any matters affecting their personal compensation. Mr. Bowen and
Mr. Norton are responsible for reviewing and establishing salaries, benefits and
other compensation, excluding stock-based compensation, for all other employees.
During the fiscal year ended March 31, 2001, one meeting of the compensation
committee was held.
Report Of The Compensation Committee. The compensation programs of ePlus are
designed to align compensation with business objectives and performance, and to
enable ePlus to attract, retain and reward executives who contribute to the
long-term success of ePlus. The compensation committee believes that executive
pay should be linked to performance. Therefore, ePlus provides an executive
compensation program which includes base pay, potential cash bonus, and
long-term incentive opportunities through the use of stock options.
The role of the compensation committee is limited to the review of the
compensation, excluding stock-based compensation for Mr. Norton and Mr. Bowen,
who are principal 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.
BY THE COMPENSATION COMMITTEE
Terrence O'Donnell
C. Thomas Faulders, III
Lawrence S. Herman
-10-
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 ePlus' Master Stock Incentive Plan and its component plans, which
include the Amended and Restated Incentive Stock Option Plan, the Amended and
Restated Outside Director Stock Option Plan, the Amended and Restated
Nonqualified Stock Option Plan, and the Employee Stock Purchase Plan. The
members of the stock incentive committee are Mr. Bowen, Mr. Hewitt and Mr.
Norton. Except for formula plan grants to the outside directors under the
Amended and Restated Outside Director Stock Option Plan and grants that are
approved by a majority of the disinterested members of the board of directors,
no member of the stock incentive committee or the compensation committee is
eligible to receive grants under the Stock Incentive Plan or the Long Term
Compensation Plan. During the fiscal year ended March 31, 2001, one meeting of
the stock incentive committee was held.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table provides certain summary information concerning the
compensation earned, for services rendered in all capacities to ePlus, by ePlus'
Chief Executive Officer and certain other executive officers of ePlus, who we
refer to as the "named executive officers," for the fiscal years ended March 31,
1999, 2000 and 2001. Certain columns have been omitted from this summary
compensation table as they are not applicable.
-11-
ANNUAL COMPENSATION Long Term
------------------- Compensation All Other
Bonus/ Awards Compensation
Name and Principal Position Fiscal Year Salary ($) Commission ($) Options/SARs (#) ($) (1)
--------------------------- ----------- ---------- -------------- ---------------- -------
Phillip G. Norton 2001 $250,000 $147,773 $1,500
Chairman, Chief Executive 2000 233,000 132,000 175,000
Officer and President 1999 200,000
Bruce M. Bowen 2001 225,000 100,000 1,500
Director, Executive Vice President 2000 191,667 100,000 115,000 1,500
1999 150,000 1,500
Kleyton L. Parkhurst 2001 175,000 (2) 70,000 30,000 1,500
Senior vice President, 2000 140,000 60,000 20,000 1,500
Secretary and Treasurer 1999 120,000 65,000 1,500
Steven J. Mencarini 2001 168,751 (3) 25,000 15,000 1,500
Chief Financial Officer and 2000 150,000 25,000 20,000 1,500
Senior Vice President 1999 137,500 20,000 775
------------------------
(1) All amounts reported represent ePlus' employer 401(k) plan matching
contributions.
(2) Difference in salary represents a salary increase effective 10/4/00 to $200,000.
(3) Difference in salary represents a salary increase effective 7/1/00 to
$175,000 per year.
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to options
granted during the last fiscal year to the named executive officers.
Potential
Number of Percent of Total Realizable Value
Securities Options/SARs at Assumed Annual
Underlying Granted to Rates of Stock
Options/ Employees in Exercise or Expiration Price Appreciation
Name SARs Granted(#)(1) Fiscal Year (2) Base Price ($/Sh) Date for Option Term (3)
---- ------------------ --------------- ----------------- ---------- -------------------
5% ($) 10% ($)
------ -------
Kleyton L. Parkhurst...... .30,000...... ....5.2%..............$17.38.......9/13/10 $327,905 $830,977
Steven J. Mencarini........ .10,000........ ...1.7................17.38.......9/13/10 109,301 276,992
5,000 0.9 7.75 12/27/10 24,370 61,758
------------------------
(1) All options were granted under the long-term incentive plan. Options vest
over three years at 20%, 30% and 50%.
(2) Based on an aggregate of 579,250 shares granted during fiscal year 2001 to
certain employees of ePlus.
-12-
(3) Potential realizable value is calculated based on an assumption that the
price of ePlus' common stock will appreciate at the assumed annual rates
shown (5% and 10%), compounded annually, from the date of grant of the
option until the end of the option term (10 years). The 5% and 10% assumed
rates of appreciation are required by the rules of the SEC and do not
represent ePlus' estimate of future market prices of the common stock.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-end
Option/SAR Values
The following table sets forth certain information with respect to options
exercised during ePlus' fiscal year ended March 31, 2001 by the named executive
officers, and with respect to unexercised options held by such persons at the
end of fiscal year 2001.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Fiscal Options/SARs at Fiscal
Year-End (#) Year-End ($)(1)
------------ ---------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Phillip G. Norton -- -- 323,750 6,250 $309,200 --
Bruce M. Bowen -- -- 145,000 -- 172,000 --
Kleyton L. Parkhurst -- -- 155,000 55,000 318,000 $11,000
Steven J. Mencarini -- -- 55,920 39,780 43,675 22,075
------------------------
(1) Based on a closing bid price of $9.19 per share as of the close of business
on March 31, 2001.
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 salary ($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 $185,000 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 compensation 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.
-13-
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 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.
ePlus had paid a $120,000 annual guarantee fee payable in $10,000 monthly
payments to Patricia A. Norton, wife of Phillip G. Norton, in consideration of
providing certain guarantees and collateral for ePlus' NationsBank and First
Union credit facilities. This fee was terminated when the secured credit
facilities were terminated and the guarantee released.
Under his original employment agreement, Bruce M. Bowen was granted options to
acquire 15,000 shares of common stock at a price 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 115,00
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 May 2000, was granted
options to purchase 30,000 shares of common stock at a price per share equal to
$18.75.
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 $13.75 and, in December 1997, was granted options to
purchase 9,400 shares of common stock at a price per share equal to $12.35. 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; and, in May 2000, he was granted options to purchase 10,000
shares of common stock at a price per share equal to $18.75.
-14-
ePlus maintains key-man life insurance on Mr. Norton in the amount of $10
million. ePlus maintains its key-man life insurance policy on Mr. Norton with
the Transamerica Occidental Life Insurance Company.
Compensation Committee Interlocks and Insider Participation
For the year ended March 31, 2001, all decisions regarding executive
compensation were made by the compensation committee, when applicable, or by Mr.
Norton as President. The members of the compensation committee are Terrence
O'Donnell, C. Thomas Faulders, III 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.
-15-
PERFORMANCE GRAPH
The following graph shows the value as of March 31, 2001 of a $100 investment
made on November 15, 1996 in ePlus' common stock (with dividends, if any,
reinvested), as compared with similar investments based on (1) the value of the
NASDAQ Stock Market Index (U.S.) (with dividends reinvested) and (2) the value
of the NASDAQ financial index. The stock performance shown below is not
necessarily indicative of future performance.
3/97 3/98 3/99 3/00 3/01
---- ---- ---- ---- ----
EPLUS INC.......................126.32 144.74 86.84 348.68 96.72
NASDAQ STOCK MARKET (U.S.)...... 96.98 147.00 198.60 369.40 147.88
NASDAQ FINANCIAL................109.53 170.19 153.36 145.34 160.76
-16-
CERTAIN TRANSACTIONS
TC Plus LLC
On October 23, 1998, we sold 1,111,111 shares of common stock at a price of
$9.00 per share and a warrant to acquire an additional 1,090,909 shares of our
common stock at an exercise price of $11.00 per share, subject to certain
anti-dilution adjustment, to TC Plus, LLC, formerly named TC Leasing, LLC, for
total consideration of $10 million. TC Plus, LLC is controlled by Thayer Equity
Investors III, L.P., a private equity investment fund. TC Equity Partners,
L.L.C. is the sole general partner of Thayer Equity Investors III, L.P.
The stock purchase agreement entered into in connection with the transaction
imposed certain super-majority voting requirements on our board of directors and
restricted our ability to engage in mergers or other material transactions. We
also entered into a stockholders agreement with TC Plus, LLC, Phillip G. Norton,
Bruce M. Bowen, J.A.P. Investment Group, L.P., Kevin M. Norton and Patrick J.
Norton. The stockholders agreement as originally entered into provided for
restrictions on transfers of shares, restriction on the issuance of shares,
board representation, the forced sale of ePlus by TC Plus, LLC in certain
circumstances and registration rights.
The warrant gave us the right to require TC Plus, LLC to exercise the warrant if
our common stock closed at or above $11.00 per share for 20 consecutive trading
days. On December 23, 1999, this condition was satisfied, and we gave notice to
TC Plus, LLC to require exercise.
On February 25, 2000, we entered into an agreement with TC Plus, LLC, which was
amended on April 11, 2000, to defer the obligation of TC Plus, LLC to exercise
the warrant and to permit TC Plus, LLC to exercise the warrant simultaneously
with a follow-on public offering of common stock on a cashless basis in exchange
for a commitment by TC Plus, LLC to waive certain provisions of the stock
purchase agreement and amend the stockholders agreement. Upon the cashless
exercise of the warrant, which was completed on April 14, 2000, we issued to TC
Plus, LLC 709,956 shares of our common stock.
The agreement, as amended, provides for the waiver of all super-majority voting
requirements and restrictions on mergers and material transactions contained in
the stock purchase agreement. The stockholders agreement, as amended, has the
following provisions:
o Our board of directors will have six members with two directors designated
by TC Plus, LLC, two directors designated by the management stockholders
party to the agreement and two non-employee directors designated by a
nominating committee comprised of one individual designated by TC Plus, LLC
and one individual designated by the management stockholders party to the
agreement. Currently, TC Plus, LLC does not exercise its right to appoint
directors of ePlus pursuant to the stockholders agreement. Phillip G.
Norton and Bruce M. Bowen serve as the directors designated by the
management stockholders.
o TC Plus, LLC has the right to demand registration of its shares, under the
Securities Act of 1933, on three separate occasions. TC Plus, LLC also has
the right to include its shares in any other registration by us of our
-17-
common stock. We are responsible for all of the registration expenses
incurred in connection with TC Plus, LLC's exercise of these registration
rights.
o If we agree to purchase any shares of our common stock held by the
management stockholders party to the agreement, we must give notice to TC
Plus, LLC. If TC Plus, LLC wishes to participate, we must purchase its
shares on the same terms and conditions as we purchase the shares held by
the management stockholders.
o Shares held by stockholders party to the stockholders agreement are no
longer subject to the terms of the agreement when they are transferred in a
registered offering or pursuant to Rule 144 under the Securities Act.
o All rights and obligations under the stockholders agreement terminate when
TC Plus, LLC no longer holds 5% of our outstanding stock and shall remain
terminated even if TC Plus, LLC later acquires 5% or more of our
outstanding stock. TC Plus, LLC currently holds 1,015, 552 or approximately
10.0% of our outstanding shares of common stock.
Advances and Loans to Employees and Stockholders
ePlus has in the past provided loans and advances to employees and certain
stockholders. Such balances are to be repaid from personal funds or commissions
earned by the employees and/or stockholders on successful sales or financing
arrangements obtained on behalf of ePlus. Loans and advances to employees and/or
stockholders totaled $66,082 for the year ended March 31, 2001.
Reimbursement of Certain Expenses
ePlus leases certain office space from entities which are owned, in part, by
executives of our subsidiaries. During the year ended March 31, 2001, rent
expense paid to these related parties was $248,849.
Sale of Equity Investment
On May 23, 2000, ePlus Capital, Inc., one of our wholly owned subsidiaries,
exercised a warrant to purchase 3,450,000 shares of the common stock of
solven.com inc. ePlus Capital, Inc. then sold those shares to Immedient
Corporation in exchange for a cash payment of $344,891, a warrant to purchase
222,500 shares of unregistered common stock of Immedient at an exercise price of
$10.00 per share, and 260,953 shares of unregistered common stock of Immedient
Corporation. Immedient is an affiliate of Thayer Equity Investors III, L.P.
which is the managing member of TC Plus, LLC.
-18-
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 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;
(2) the claim was not made to recover profits made by the director
or officer in violation of Section 16(b) of the Exchange Act, as
amended, or any successor statute;
(3) the claim was not initiated by the director or officer;
(4) the claim was not covered by applicable insurance; or
(5) the claim was not for an act or omission of a director of ePlus
from which a director may not be relieved of liability under
Section 103(b)(7) of the DGCL. Each 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.
Future Transactions
ePlus' policy requires that all material transactions between ePlus and its
officers, directors or other affiliates must be approved by a majority of the
disinterested members of the board of directors of ePlus, and be on terms no
less favorable to ePlus than could be obtained from unaffiliated third parties.
PROPOSAL 1
To Elect Two Class II Directors to Serve for Three Years and until their
Respective Successors Have Been Duly Elected and Qualified.
The board of directors has concluded that the re-election of Terrence O'Donnell
and Thomas L. Hewitt as Class II Directors is in the best interest of ePlus and
recommends stockholder approval of the re-election of Terrence O'Donnell and
Thomas L. Hewitt as Class II directors. The remaining four directors will
continue to serve in their positions for the remainder of their terms.
Biographical information concerning Mr. O'Donnell and Mr. Hewitt, and ePlus'
other directors can be found under "Directors and Executive Officers."
-19-
Unless otherwise instructed or unless authority to vote is withheld, all proxies
will be voted for the election of Terrence O'Donnell and Thomas L. Hewitt as
Class II Directors. Although the board of directors of ePlus does not
contemplate that such nominees will be unable to serve, if such a situation
arises prior to the annual meeting, the persons named in the enclosed proxy card
will vote for the election of such other person or persons as may be nominated
by the board of directors.
Vote Required for Approval. The two persons receiving the greatest number of
affirmative votes cast at the annual meeting will be elected as Class II
Directors.
Board of Directors Recommendation. The board of directors unanimously recommends
that you vote in favor of the election of Terrence O'Donnell and Thomas L.
Hewitt as Class II Directors.
PROPOSAL 2
To Ratify the Appointment of Deloitte & Touche LLP as ePlus' Independent
Auditors for ePlus' Fiscal Year Ending March 31, 2002.
Subject to stockholder ratification, the board of directors has reappointed the
firm of Deloitte & Touche LLP as the independent auditors to examine ePlus'
financial statements for the fiscal year ending March 31, 2002. Deloitte &
Touche has audited ePlus' financial statements since its inception. If the
stockholders do not ratify this appointment, other independent auditors will be
considered by the board of directors upon recommendation of the audit committee.
Representatives of Deloitte & Touche are expected to attend the annual meeting
and will have the opportunity to make a statement if they desire and to respond
to appropriate questions.
Audit Fees. The aggregate fees billed by Deloitte & Touche for professional
services rendered for the audit of our annual financial statements for the
fiscal year ended March 31, 2001 and for the reviews of the financial statements
included in our Quarterly Reports on Form 10-Q for that fiscal year were
$139,000.
Financial Information Systems Design and Implementation Fees. There were no fees
billed by Deloitte & Touche for professional services rendered for information
technology services relating to financial information systems design and
implementation for the fiscal year ended March 31, 2001.
All Other Fees. There were no fees billed by Deloitte & Touche for services
rendered to the ePlus, other than the services described above under "Audit
Fees" and "Financial Information Systems Design and Implementation Fees" for the
fiscal year ended March 31, 2001.
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 2.
-20-
Board of Directors Recommendation. The board of directors unanimously recommends
that you vote in favor of the ratification of the appointment of Deloitte &
Touche LLP as independent auditors for the fiscal year ending March 31, 2002.
OTHER PROPOSED ACTION
The board of directors does not intend to bring any other matters before the
annual meeting, nor does the board of directors know of any matters which other
persons intend to bring before the annual meeting. If, however, other matters
not mentioned in this proxy statement properly come before the annual meeting,
the persons named in the accompanying form of proxy will vote thereon in
accordance with the recommendation of the board of directors.
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 ePlus' board of directors with respect to the next
annual meeting of stockholders, that proposal must be presented to ePlus'
management prior to April 24, 2002.
Whether or not you expect to be present at the annual meeting, please sign and
return the enclosed proxy card promptly. Your vote is important. If you are a
stockholder of record and attend the annual meeting and wish to vote in person,
you may withdraw your proxy at any time prior to the vote.
-21-
APPENDIX A
EPLUS, INC.
AUDIT COMMITTEE CHARTER OF THE BOARD OF DIRECTORS
Purpose
The Audit Committee of the Board of Directors shall assist the Board in
monitoring (1) the integrity of the financial statements of the company, (2) the
company's compliance with legal and regulatory requirements and (3) the
independence and performance of the company's internal and external auditors.
Composition
Effective June 14, 2001, the membership of the audit committee shall consist of
at least three members of the Board of Directors, who shall serve at the
pleasure of the Board of Directors and be appointed by the full Board of
Directors, and who shall meet the following criteria:
1. Each member of the Audit Committee must be an `independent director' within
the meaning of the applicable rules of The Nasdaq Stock Market, Inc. as in
effect on June 14, 2001.
2. Each member of the Audit Committee must be able to read and understand
fundamental financial statements, including the company's balance sheet,
income statement, and cash flow statement, or become able to do so within a
reasonable period of time after his or her appointment to the Audit
Committee.
3. At least one member of the Audit Committee shall have past employment
experience in finance or accounting, requisite professional certification
in accounting, or other comparable experience or background which results
in the individual's financial sophistication, including being or having
been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
Prior to June 14, 2001, the membership of the Audit Committee shall consist of
at least two members of the Board of Directors, who shall serve at the pleasure
of the Board of Directors and be designated by the full Board of Directors, and
who shall be `independent directors' within the meaning of the applicable rules
of The Nasdaq Stock Market, Inc. as in effect prior to that date.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
1. Provide an open avenue of communication between the independent auditor,
Internal Audit, and the Board of Directors.
2. Review and update the committee's charter annually.
3. Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
4. Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors.
5. Review with the independent auditors, the company's internal auditor and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the committee
periodically should review company policies and procedures regarding
compliance with applicable laws and regulations and with the code of
conduct, if any.
6. Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year, and coordination of such plans with the
independent auditors.
7. Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan,
with explanations for any deviations from the original plan.
8. Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Any changes
in accounting principles should be reviewed.
9. Provide sufficient opportunity for the internal and independent auditors to
meet with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
10. Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each meeting with, the Board of Directors.
11. Confirm and assure the independence of the independent auditor and the
objectivity of the internal auditor.
12. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgement, that is appropriate.
Relationship with Auditors and Board of Directors
-------------------------------------------------
The company's independent auditors are ultimately accountable to the Board of
Directors of the company and to the Audit Committee, as representatives of the
stockholders of the company. The Board of Directors and the Audit Committee have
ultimate authority and responsibility to select, evaluate, and, where
appropriate, replace the independent auditors.
[FORM OF PROXY CARD]
ePlus inc. Proxy
Annual Meetings of Stockholders Of
ePlus inc.
September 20, 2001
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Phillip G. Norton, Bruce M. Bowen and C. Thomas
Faulders, III, and each or any of them, proxies, with power of substitution, to
vote all shares of the undersigned at the annual meeting of stockholders of
ePlus inc., a Delaware corporation, to be held on September 20, 2001 at 10:30
a.m. at Hyatt Regency Reston, 1800 Presidents Street, Reston, Virginia 20191, or
at any adjournment thereof, upon the matters set forth in the Proxy Statement
for such meeting, and in their discretion, upon such other business as may
properly come before the meeting.
1. TO ELECT TWO CLASS II DIRECTORS TO SERVE FOR 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
Thomas L. Hewitt Terrence O'Donnell
OR TO VOTE FOR EACH NOMINEE SEPARATELY
Thomas L. Hewitt [ ]FOR [ ]WITHHOLD AUTHORITY
Terrence O'Donnell [ ]FOR [ ]WITHHOLD AUTHORITY
2. TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS EPLUS' INDEPENDENT
AUDITORS FOR EPLUS' FISCAL YEAR ENDING MARCH 31, 2002.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
Dated: , 2001
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Signature:
Signature if held jointly:
NOTE: When shares are held by joint tenants, both should sign. Persons signing
as Executor, Administrator, Trustee, etc. should so indicate. Please sign
exactly as the name appears on the proxy.
THE SHARES REPRESENTED BY ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH
THE CHOICES SPECIFIED ON SUCH PROXIES. THE SHARES REPRESENTED BY A PROXY WILL BE
VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY SPECIFICATION IS MADE. ALL VALID
PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF THE BOARD OF DIRECTORS WITH
RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.