-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K0q0cPLDyUODFheKfpA1WRyyxRoX0jV51dqY3q2M0QCu9JQ3LSJQ/0bEEze6B8tg pdDRmK98qSrZeW/OQVxveQ== 0001014909-02-000005.txt : 20020414 0001014909-02-000005.hdr.sgml : 20020413 ACCESSION NUMBER: 0001014909-02-000005 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020315 FILED AS OF DATE: 20020123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGITEC 2000 INC CENTRAL INDEX KEY: 0001048729 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 541287957 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23291 FILM NUMBER: 02514602 BUSINESS ADDRESS: STREET 1: 8 WEST 38TH ST CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2129448888 DEF 14A 1 f14a_0302proxy.txt PROXY STMT. 3/15/02 ANNUAL MTG. SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. __) Filed by the Registrant |X| Filed by a Party other than the Registrant Check the appropriate box: |_| Preliminary Proxy Statement |_| Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |X| Definitive Proxy Statement |_| Definitive Additional Materials |_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 DIGITEC 2000, INC. - ------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): |X| No fee required. Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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: - ------------------------------------------------------------------------------- (5) Total fee paid: - ------------------------------------------------------------------------------- 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.: - ------------------------------------------------------------------------------- (3) Filing Party: - ------------------------------------------------------------------------------- (4) Date Filed: DIGITEC 2000, INC. 99 Madison Avenue, Third Floor New York, New York 10016 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held on March 15, 2002 NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of DigiTEC 2000, Inc., a Nevada corporation (the "Company"), will be held at the offices of the Company, 99 Madison Avenue, Third Floor, New York, New York 10016 on Friday, March 15, 2002 at 10:00 a.m., New York time, for the following purposes: 1. To elect five directors, each to serve for a term of one year. 2. To approve the appointment of Deloitte & Touche LLP to act as the Company's independent certified public accountants for the Company's fiscal year ending June 30, 2002; and 3. To act upon any other matter which may properly be brought before the meeting or any adjournment thereof. Only shareholders of record at the close of business on February 11, 2002 will be entitled to notice of and to vote at the Annual Meeting and at any adjournment thereof. You are cordially invited to attend the Annual Meeting. Whether or not you plan to attend, please mark, date and sign the accompanying proxy and return it in the enclosed envelope. If you do attend, you may revoke your proxy and vote your shares in person if you wish to do so. By Order of the Board of Directors, DIEGO E. ROCA, Secretary New York, New York February 18, 2002 DIGITEC 2000, INC. PROXY STATEMENT for ANNUAL MEETING OF SHAREHOLDERS To Be Held on March 15, 2002 This Proxy Statement and accompanying proxy is being furnished to shareholders of DigiTEC 2000, Inc., a Nevada corporation (the "Company"), in connection with the solicitation of proxies on behalf of the Board of Directors of the Company for use at the Annual Meeting of Shareholders to be held on Friday, March 15, 2002 at 10:00 a.m., New York time at the offices of the Company, 99 Madison Avenue, Third Floor, New York, New York 10016, and at any adjournment thereof (the "Annual Meeting"). The mailing address of the principal executive offices of the Company is 99 Madison Avenue, Third Floor, New York, New York 10016. It is anticipated that this Proxy Statement, related form of proxy and Notice of Annual Meeting of Shareholders will be mailed to shareholders of the Company on or about February 18, 2002. VOTING If the enclosed form of proxy is executed and returned, all shares represented thereby will be voted in accordance with the shareholder's instructions. If no such instructions are specified, the proxy will be voted FOR the election as directors of the nominees named herein, or of such substitute nominee or nominees as may be designated by the Board of Directors if the nominees named herein are unable to serve and FOR approval of the appointment of Deloitte & Touche LLP, independent certified public accountants, as the Company's independent auditors for its 2002 fiscal year and until their successor is appointed and approved. A proxy may be revoked at any time before it is exercised either by executing and filing, prior to the commencement of the Annual Meeting, a subsequently dated proxy revoking the proxy previously given or by voting in person at the Annual Meeting. The Company will bear its own cost of the solicitation of proxies. Proxies will be solicited initially by mail. Further solicitation may be made by directors, officers and employees of the Company personally, by telephone or otherwise, but such person will not be specifically compensated for such services. The Company also intends to make, through bankers, brokers or other persons, a solicitation of proxies of beneficial holders of the Common Stock, $.001 par value per share (the "Common Stock") and the Series A Preferred Stock, $.001 par value per share (the "Preferred Stock"), of the Company. Upon request, the Company will reimburse brokers, dealers, banks or similar entities acting as nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the Annual Meeting to the beneficial owners of Common Stock which such persons hold of record. The Company has retained Corporate Investors Communications, Inc. to perform solicitation services in connection with this proxy statement. For such services, Corporate Investors Communications, Inc. will receive an estimated fee of up to $7,500 and will be reimbursed for certain out-of-pocket expenses and indemnified against certain liabilities incurred in connection with this proxy solicitation. VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS Holders of the Common Stock and the Preferred Stock of the Company, as of February 11, 2002, the record date for determining persons entitled to notice of, and to vote at, the Annual Meeting, are entitled to vote on all matters at the Annual Meeting. Each share of Common Stock entitles the holder to one vote, and each share of Preferred Stock entitles the holder to 11.98 votes (the number of shares of Common Stock into which a share of Preferred Stock may be converted upon regular conversion at the current conversion price of $8.3463 per share), on each matter submitted to a vote of the shareholders. The holders of shares representing a majority of the votes of the issued and outstanding stock and entitled to vote, present in person or represented by proxy, constitute a quorum for the meeting. As of February 11, 2002, the Company had outstanding and entitled to vote 7,058,988 shares of Common Stock and 61,050 shares of Preferred Stock entitled to 731,462 votes. The holders of Common Stock and Preferred Stock vote together as a class, except as required by law and as otherwise provided in the Certificate of Designation establishing the Preferred Stock. Proxies indicating shareholder abstentions will be counted for purposes of determining whether there is a quorum at the Annual Meeting, but will not be voted on any matter and, therefore, except in the case of director elections, will have the same effect as a vote against the matter. Shares represented by "broker non-votes" (i.e., shares held by brokers or nominees that are represented at a meeting, but with respect to which the broker or nominee is not empowered to vote on a particular proposal) will be counted for purposes of determining whether there is a quorum at the Annual Meeting, but will not be voted on any matter and will not be included for purposes of determining the aggregate voting power or number of votes cast at the Annual Meeting. 2 PRINCIPAL SECURITY HOLDERS The following table sets forth certain information with respect to the only persons known by the Company, based on statements filed by such persons pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the "34 Act"), to own beneficially in excess of 5% of the Common Stock as of January 18, 2002.
Shares Name and Address Beneficially Percent of Beneficial Owner Position Owned(1) of Class - ------------------- -------- ------------ -------- Frank C. Magliato Chairman, Chief 1,752,510 23.0% 99 Madison Avenue, Third Floor Executive Officer, New York, NY 10016 President and Director Telephone Electronics Corporation Shareholder 1,475,126 20.9% 200 Southwest Street Jackson, MS 39201 Dealer Capital Corporation Shareholder 900,000 11.3% 3635 Garden Brook, Suite 8600 Farmers Branch, TX 75324
- -------------- (1) Pursuant to Rule 13d-3(d)(1) under the 34 Act, the table includes shares of Common Stock that can be acquired through the exercise of options, warrants or convertible securities within 60 days. The percent of the class owned by each such person has been computed assuming the exercise of all such options, warrants or convertible securities deemed to be beneficially owned by such person, and assuming that no options held by any other person have been exercised. Except as indicated, each individual has sole voting power and sole investment power over all shares listed opposite his name. (2) Includes 250,000 shares of Common Stock held in trust for Kendall Magliato, daughter of Mr. Magliato. Mr. Magliato's spouse is the trustee for such shares and Mr. Magliato disclaims beneficial interest therein. Also includes 150,000 shares of Common Stock underlying warrants to purchase Common Stock held by Mr. Magliato and 150,000 shares underlying such warrants held by his wife. (3) Consists of 900,000 shares of Common Stock underlying warrants to purchase Common Stock 3 SECURITY OWNERSHIP OF MANAGEMENT The table below sets forth information concerning the shares of Common Stock beneficially owned, as of January 18, 2002, by each director, the individuals nominated for election as directors, the Chief Executive Officer and the other executive officers who were serving during the Company's last fiscal year. Directors are elected annually and officers serve at the will of the Board of Directors.
Shares Name and Address Beneficially Percent of Beneficial Owner Position Owned(1) of Class - ------------------- -------- ------------ -------- Frank C. Magliato Chairman, Chief 1,752,510(2) 23.0% 99 Madison Avenue, Third Floor Executive Officer, New York, NY 10016 President and Director Lori Ann Perri Director 122,911(3) 1.7% 99 Madison Avenue, Third Floor New York, NY 10016 Francis J. Calcagno Director 152,000(4) 2.1% 99 Madison Avenue, Third Floor New York, NY 10016 Cloyce C. Clark, Jr. Director 272,400(5) 3.8% TecNet, Inc. 3016 Lincoln Court Garland, TX 75041 Diego E. Roca Senior Vice President, 425,000(6) 5.4% 99 Madison Avenue, Third Floor Chief Operating Officer, New York, NY 10016 Chief Accounting Officer, Secretary and Director Barry Catmur Vice President of 15,996(7) 0.19% 99 Madison Avenue, Third Floor Operations New York, NY 10016 All Named Executive Officers and 2,740,817(8) 33.7% Directors as a Group (6 Persons)
- -------------- (1) Pursuant to Rule 13d-3(d)(1) under the 34 Act, the table includes shares of Common Stock that can be acquired through the exercise of options within 60 days. The percent of the class owned by each such person has been computed 4 assuming the exercise of all such options deemed to be beneficially owned by such person, and assuming that no options held by any other person have been exercised. Except as indicated, each individual has sole voting power and sole investment power over all shares listed opposite his name. (2) Includes 250,000 shares of Common Stock held in trust for Kendall Magliato, daughter of Mr. Magliato. Mr. Magliato's spouse is the trustee for such shares and Mr. Magliato disclaims beneficial interest therein. Also includes 150,000 shares of Common Stock underlying warrants to purchase Common Stock held by Mr. Magliato and 150,000 shares underlying such warrants held by his wife. (3) Includes a warrant to purchase 72,911 shares of Common Stock and an option to purchase 50,000 shares. (4) Includes a warrant to purchase 100,000 shares of Common Stock. (5) Includes a warrant to purchase 150,000 shares of Common Stock. (6) Includes an option to purchase 337,500 shares of Common Stock and warrants to purchase 62,500 shares of Common Stock. (7) Term in office expired January 14, 2002. (8) These shares include all of the shares issuable pursuant to the options and warrants described above. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The following table sets forth information regarding the directors and executive officers of the Company. Name Age Position ---- --- -------- Frank C. Magliato 50 Chairman, Chief Executive Officer, Chief Financial Officer, President and Director Francis J. Calcagno 52 Director Lori Ann Perri 38 Director Cloyce C. Clark, Jr. 54 Director Diego E. Roca 34 Senior Vice President, Chief Operating Officer, Chief Accounting Officer, Secretary, Treasurer and Director 5 The principal occupation for the past five years, and other biographical information with respect to each of the directors and executive officers of the Company is as follows: Frank C. Magliato has served as Chairman, Chief Executive Officer, President and a director of the Company since June of 1995. From February of 1993 to June of 1995, he was employed as President of Windsor Associates of New York City, a telecommunications consulting firm. From December of 1988 to February of 1993, he was employed as President of Telecorp Funding, Inc. and subsidiaries, a telecommunications company in New York City. Mr. Magliato received a Bachelor of Science degree in Engineering from Rensselaer Polytechnic Institute in 1973. He is a sibling of Lori Ann Perri. Francis J. Calcagno, a director of the Company since December 22, 1997, has been employed by Dominick & Dominick, LLC since February 1998 as a Senior Managing Director. From February of 1994 to January of 1998 he was employed as managing director in the corporate finance practice of Deloitte & Touche LLP ("Deloitte & Touche"). Prior to joining Deloitte & Touche, Mr. Calcagno was the Vice President in charge of Corporate Development of Franklin Holding Company, a publicly-held company from 1993 to 1994. Mr. Calcagno received a Bachelor of Science degree in Electrical Engineering from Worcester Polytechnic Institute in 1971 and an MBA from Washington University in 1973. Lori Ann Perri, CPA, sibling of Frank C. Magliato, has served as a director of the Company since November of 1995. She has been employed by Time Inc., the publishing division of Time Warner Inc., in New York City since August of 1995 and presently serves as Director of Finance and Administration. From August of 1993 to August of 1995, she was employed by Computer Dynamics, Inc. of Virginia Beach, Virginia as Director of Finance and Accounting. Ms. Perri received a Bachelor of Science degree in Accounting from Hofstra University in 1987. She is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. Cloyce C. Clark, Jr., a director of the Company since November 2000, has been Vice President of TecNet, Inc. since September, 1988. Mr. Clark received a Bachelor of Science with a major in Accounting and a minor in Economics from Louisiana University-Monroe in January, 1970. During the period from 1970 to 1975, Mr. Clark helped build Century Tel into a multi state public holding company of rural LECs. Prior to taking his current position at TecNet, Mr. Clark operated his own companies in the computer service bureau, commercial printing, direct mail and retail point of sale fields from 1976 to 1988. Barry P. Catmur was employed by the Company from June of 1996 to January 15, 2002. From June of 1996 he was employed as the Vice President of Special Projects and Business Development to November of 1998. In November of 1998 he was promoted to Vice President of Operations. From 1989 through 1996 he was involved in the management and operation of restaurants and clubs in Newport, Rhode Island, New York City, New York and Southampton, New York. Prior to this he was a licensed Stock Broker in New York City. Mr. Catmur received a Bachelor of Science degree in Resource Economics from the University of Vermont in 1983. 6 Diego E. Roca became a director of the Company on January 11, 2002, He began employment with the Company during July of 1995 on a part-time basis. He began full-time employment during September 1996 when he became Vice President of Operations. On June 8, 1998 he was named Chief Operating Officer. As of June, 1999 he became Vice President of National Business Development. From May of 1995 to September of 1996, he served as a consultant to various entities in the telecommunications industry. From October of 1991 to May of 1995, he was employed by Telecorp Funding, Inc. and subsidiaries. He served as Assistant Controller in 1991 and became Controller in 1992. Mr. Roca received a Bachelor of Science degree in Accounting from Queens College in 1992. BOARD OF DIRECTORS AND COMMITTEES Board of Directors and Committee Meetings - ----------------------------------------- During fiscal year ended June 30, 2001, the Board of Directors met eight times, the Audit Committee met five times and the Compensation Committee met twice. On March 31, 1998, the Board of Directors established the following additional Committees to perform duties previously performed by the Board of Directors acting as a whole: the Audit Committee; the Compensation Committee; and the Awards Committee. Each of the Company's Directors attended at least 75% of the total number of meetings of the Board and Committees on which he served during the Company's fiscal year ended June 30,2001. The Company does not have a committee of directors concerned with the selection of nominees for election as directors, a matter which is considered by the entire Board of Directors. Committees of the Board of Directors - ------------------------------------ AUDIT COMMITTEE. The Audit Committee consists of two independent directors, Francis J. Calcagno and Cloyce C. Clark, Jr., and Lori Ann Perri, a relative of the Chief Executive Officer and President of the Company. Pursuant to Section 4200(a)(14) of the National Association of Securities Dealers Inc. Rules of the Association, Mr. Calcagno and Mr. Clark, are the independent members of the Audit Committee. The Audit Committee recently adopted a written charter under which it is charged with providing oversight of the Company's financial reporting process, recommending the engagement of independent accountants to audit the Company's financial statements, discussing the scope and results of the audit with the independent accountants, reviewing the need for internal auditing procedures, reviewing the Company's system of internal controls and performing such other related duties and functions as are deemed appropriate by the Audit Committee and the Board of Directors. The Audit Committee reviews and discusses the audited financial statements of the Company with Management. COMPENSATION COMMITTEE; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Compensation Committee consists of one independent director, Francis J. Calcagno, and Frank C. Magliato, who is also the President and Chief Executive Officer of the Company. The Compensation Committee is responsible for reviewing general policy matters relating to compensation and benefits of directors and officers, and determining the total compensation of the officers and directors of the Company. 7 AWARDS COMMITTEE. The Awards Committee consists of Francis J. Calcagno. The Awards Committee is comprised solely of "disinterested persons" and "Non-Employee Directors" as such terms are used in Rule 16b-3 promulgated under the Exchange Act, and "outside directors" as such term is used in Treasury Regulation Section 1.162-27(c)(3) promulgated under the Internal Revenue Code of 1986, as amended (the "Code"). The Awards Committee is responsible for administering the DigiTEC 2000, Inc. Stock Incentive Plan (the "Plan"), including the granting of awards pursuant to the Plan. Audit Committee Report - ---------------------- The Audit Committee meets with the Company's independent public accountants to review the terms and conditions of their engagement and upon conclusion of the annual audit to review the findings of the auditors and the terms of any management letter submitted. The Audit Committee has recommended that the consolidated balance sheet of DigiTEC 2000, Inc. and subsidiary as of June 30, 2001, and related consolidated statements of loss, stockholders' deficit and cash flows for the year then ended be included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001, based upon its review thereof and meetings with the Company's independent accountants. In connection with the engagement of Deloitte & Touche LLP ("Deloitte & Touche"), the Audit Committee discussed its independence from the Company as required under the Independence Standards Board Standard No. 1, and will receive Deloitte & Touche's confirmation of such independence prior to the Annual Meeting. The Audit Committee currently has no information which would lead it to believe that any unusual matters arose during the most recently completed audit that would require discussion with the Company's independent public accountants pursuant to SAS No. 61 (Codification of Statements on Auditing Standards, AU Section 380). Submitted by, The Audit Committee Lori Ann Perri Francis J. Calcagno ELECTION OF DIRECTORS At this Annual Meeting five directors will be elected to serve until the 2002 Annual Meeting of Shareholders and until their respective successors are elected and qualify. Unless otherwise specified, shares represented by proxies solicited hereby will be voted for the election of MR. FRANK C. MAGLIATO, MR. FRANCIS J. CALCAGNO, MR. CLOYCE C. CLARK, JR., MS. LORI ANN PERRI AND DIEGO E. ROCA to serve a one-year term. Set forth above under "Directors and Executive Officers of the Company" is certain information regarding the nominees. All nominees have agreed to serve if 8 elected. If for any reason not now known by the Company any of said nominees should not be able to serve, the proxies will be voted for a substitute nominee or nominees who will be designated by the Board of Directors. The affirmative vote of a plurality of the total votes cast is required for the election of directors. APPOINTMENT OF AUDITORS On April 18, 2000, the Board of Directors of the Company, on the recommendation of its Audit Committee, appointed the accounting firm of Deloitte & Touche, LLP ("Deloitte & Touche"), independent certified public accountants, as the independent auditors of the Company for its fiscal year ending June 30, 2002. Deloitte & Touche has no financial interest of any kind in the Company and has no other connection with the Company except for providing occasional management consultation services. BDO Seidman LLP had been the Company's independent certified public accountants since July 1995. A representative of Deloitte & Touche is expected to be present at the Annual Meeting. He will have an opportunity to make a statement if he desires to do so and will be available to respond to appropriate questions from any shareholders. The affirmative vote of a majority of the votes cast by holders of the outstanding shares of Common Stock and the outstanding shares of Preferred Stock present in person or by proxy and entitled to vote at the Annual Meeting, voting as a single class, is required to approve the appointment of Deloitte & Touche. During the fiscal year ended June 30, 2001, the Company paid $216,850 to its independent public accountants for audit fees and nothing for consulting fees. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE APPOINTMENT OF DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 2002. 9 EXECUTIVE COMPENSATION The following table sets forth information with respect to the aggregate remuneration paid by the Company to the Chief Executive Officer and two other executive officers (the "Named Executives") of the Company for the fiscal years ended June 30, 2001, 2000 and 1999, including payments on accrued salary from previous periods.
- ------------------------------------------------------------------------------------- Annual Long Term (a) (b) Compensation Compensation Awards ------------- ------------------- - ------------------------------------------------------------------------------------- Payments on Past Salary Name and Fiscal Salary Accrued Securities Principal Position Year ($) ($) Underlying Options/SARs - ------------------------------------------------------------------------------------- Frank C. Magliato, Chief 2001 $135,000 $23,500 -- Executive Officer, President 2000 $165,375 $ -- -- and Director 1999 $155,208 $ -- -- - ------------------------------------------------------------------------------------- Diego E. Roca, Senior Vice 2001 $124,992 $23,500 -- Preisdent, Chief Accounting 2000 $140,616 $ -- -- Officer, Secretary and 1999 $150,827 $ -- -- Treasurer - ------------------------------------------------------------------------------------- Barry Catmur, Vice President 2001 $ 92,000 $ -- -- of Operations 2000 $ 79,666 $ -- -- 1999 $ 77,369 $ -- -- - -------------------------------------------------------------------------------------
Employment Agreements - --------------------- The Company entered into separate employment agreements with Messrs. Magliato and Roca, which by their terms expired June 30, 2000, but have been continued without amendment or written agreement. Except with respect to the positions to be occupied, the duties to be performed and the remuneration to be paid, the agreements of Messrs. Magliato and Roca are on identical terms and conditions and provide for the following: (i) a term of three years commencing June 30, 1997; (ii) the Board of Directors to review each employee's base salary at least annually during the term and the Board of Directors to be able to increase such salaries in its sole discretion; (iii) if an employee's service is 10 actually or constructively terminated by the Company without cause, for the payment of the employee's then base salary and performance bonus for the remainder of the term; (iv) that in the event of the death of an employee, for the payment of the employee's then base salary to the employee's surviving spouse or estate as is applicable for a period of six months; (v) in the event of the disability of employee, compensation will terminate except to the extent payment is provided for in the then-existing disability or extended side plan; (vi) the full participation by the employee in the Company's benefits available to the Company's other employees; (vii) that all trade secrets, inventions, work products, methods, software and similar property which relate to the Company's business and are developed by the employee are the property of the Company; (viii) in the event of either the employee's voluntary termination of employment, the employee's involuntary termination for cause or the employee's failure to accept an extension of the employment agreement on substantially similar terms, the employee agrees not to conduct any activity competitive to the Company for a period of two years from the termination; (ix) in the event the Company does not renew the employment agreement on substantially similar terms at its expiration, employee shall receive six months severance pay; and (x) other terms customarily contained in similar employment agreements. Messrs. Magliato and Roca will devote full-time to the affairs of the Company. The employment agreements of Messrs. Magliato and Roca provide for base salaries as follows: (i) Mr. Magliato-$175,000 in fiscal 1998, $225,000 in fiscal 1999 and $250,000 in fiscal 2000 and (ii) Mr. Roca-$150,000 in fiscal 1998, $200,000 in fiscal 1999 and $225,000 in fiscal 2000. In fiscal 1998 and in connection with his employment agreement Mr. Roca also received an option to purchase 187,500 shares of Common Stock at $14.50 per share. In addition to the base salaries, the employment agreements of Messrs. Magliato and Roca provide for an annual performance bonus commencing in the fiscal year ending June 30, 1997 (prorated for the number of months the agreements were in effect for the fiscal year ending June 30, 1997) to each of the officers equivalent to a percentage of the Company's adjusted annual net income before depreciation and amortization, interest and income tax as follows: (i) Mr. Magliato-2% and (ii) Mr. Roca-1.5%. Stock Option Grants - ------------------- There were no grants made of stock options during the year ended June 230, 2001 and no outstanding options were exercised. Director Remuneration - --------------------- All directors are reimbursed for out-of-pocket expenses incurred in connection with attendance at Board of Directors and committee meetings. Each non-employee director also receives annual compensation of $15,000, which has not been paid during the last two fiscal years but has been accrued. Compensation Committee Report on Executive Compensation - ------------------------------------------------------- EXECUTIVE COMPENSATION POLICY. Since the formation of the Compensation Committee and the Awards Committee on March 31, 1998, the Company's compensation 11 policy for all of its executive officers is formulated and administered by the Compensation Committee of the Board of Directors. The Awards Committee, which is comprised solely of "disinterested persons" or "Non-Employee Directors," as such terms are used in Rule 16b-3 promulgated under the 34 Act, and "outside directors," as such term is used in Treasury Regulation Section 1.162-27(c)(3) promulgated under the Code, separately administers the Plan, under which the Company periodically grants options to the executive officers and other employees of the Company. Prior to the formation of the foregoing Committees, executive and director compensation and the determination of the individuals to be granted options and the exercise prices, vesting provisions and other terms of options granted under the Plan were at the discretion of the entire Board of Directors. GENERAL. The primary goals of the Company's compensation policy are to attract, retain and motivate skilled executive officers, and to provide incentives for them to act in the best interests of the Company's shareholders. In determining the level of executive compensation, certain quantitative and qualitative factors, including, but not limited to, the Company's operating and financial performance, the individual's level of responsibilities, experience, commitment, leadership and accomplishments relative to stated objectives, and marketplace conditions are taken into consideration. In negotiating the terms of employment agreements with Messrs. Magliato and Roca, the Board of Directors had taken into consideration Mr. Magliato's and Mr. Roca's significant roles in establishing the Company as a leader in an emerging new niche of the telecommunications industry and marketplace conditions. Summaries of the key provisions of these employment agreements are included elsewhere in this Proxy Statement. See "Employment Agreements." In view of the Company's financial condition during the fiscal year ended June 30, 2001, no cash bonuses were authorized for the Chief Executive Officer or Chief Operating Officer. While Messrs. Magliato's and Roca's base salaries were continued under the terms of their employment agreements which expired June 30, 2000, they only received cash compensation of approximately fifty percent of their salaries. Messrs. Magliato and Roca have agreed to defer the remaining portions due them until fiscal 2002. CHIEF EXECUTIVE OFFICER'S COMPENSATION. For 2001, the compensation of Frank C. Magliato was continued under the terms of his employment agreement. Mr. Magliato received approximately fifty percent of the base salary called for in his employment agreement. Mr. Magliato has agreed to defer the remaining portion until fiscal 2002. CHIEF OPERATING OFFICER'S COMPENSATION. For 2001, the compensation of Diego Roca was continued under the terms of his employment agreement. Mr. Roca received approximately fifty percent of the base salary called for in his employment agreement. Mr. Roca has agreed to defer the remaining portion until fiscal 2002. Section 162(m) of the Code. Section 162(m) of the Code generally limits to $1 million the deductibility by the Company of compensation paid in any one year to any executive officer named in the Summary Compensation Table above. As none 12 of the executive officers of the Company are currently paid compensation in excess of $1 million, the Company has not yet developed a policy with respect to Section 162(m) of the Code. Submitted by, The Compensation Committee Francis J. Calcagno Frank C. Magliato MARKET PRICE AND DIVIDEND INFORMATION The Company's Common Stock has been quoted on the OTC Bulletin Board under the symbol OGTT since October of 1996. On January 18, 2002, its Common Stock was delisted from the OTC Bulletin Board because the Company was late in filing its Annual Report on Form 10-KSB for the fiscal year ended June 30, 2001 and its Quarterly Report on Form 10-QSB for the quarter ended September 30, 2001. These reports have been filed and the Company is taking action to reinstate the Common Stock on the OTC Bulletin Board. The following table sets forth high and low bid prices of the Common Stock on the OTC Bulletin Board for the periods indicated. The bid prices represent prices between dealers, which do not indicate retail markups, markdowns or commissions and the bid prices may not represent actual transactions: Quarter Ending High Low -------------- -------- ------- September 30, 1999 $2.6875 $1.09375 December 31, 1999 $1.9375 $1.1875 March 31, 2000 $2.00 $1.125 June 30, 2000 $1.50 $0.8125 September 30, 2000 $1.71875 $1.00 December 31, 2000 $1.9375 $1.4375 March 31, 2001 $1.8125 $1.3125 June 30, 2001 $1.65 $1.05 The number of record holders of Common of the Company at June 30, 2001 was 642. Additional owners of the Common Stock hold their shares at street name with various brokerage and depository firms. The holders of Common Stock are entitled to receive dividends as may be declared by the Board of Directors out of funds legally available therefore. The Company has never declared any dividend. It does not anticipate declaring and paying any cash dividend in the foreseeable future. 13 COMPLIANCE WITH SECTION 16(a) OF THE 34 ACT Section 16(a) of the 34 Act requires the Company's officers and directors, and persons who own more than ten percent of the Company's Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the National Association of Securities Dealers. Officers, directors and beneficial owners of greater than ten percent of the Company's Common Stock are required by regulation to furnish the Company with copies of all Section 16(a) forms they file. The Company has concluded, based solely on a review of the copies of the Section 16(a) report forms furnished to the Company, that with respect to the fiscal year ending June 30, 2000 all such forms were filed in a timely manner by the Company's officers, directors and greater than ten-percent beneficial owners except for (1) Cloyce C. Clark, Jr. who was four months late filing his Initial Report on Form 3 and three days late filing a Form 4 for March of 2001 on the acquisition of 25,000 shares of common stock, and (ii) Frank c. Magliato who filed a Form 4 in April of 2001 for March of 2000 on the acquisition of warrants to purchase 300,000 shares of Common Stock and three days late filing a Form 4 for March of 2001 on the acquisition of 20,000 shares of Common Stock. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During September 1998, the Company issued $1,200,000 of 10% six-month promissory notes to officers/directors of the Company and immediate family members of such parties, which were subsequently exchanged in May 1999 for 10% two-year convertible promissory notes. During the fiscal years ended June 30, 2001 and 2000, the Company paid $900,000 and $300,000, respectively, in scheduled principal payments on the convertible promissory notes. In October of 1998, the Company borrowed $100,000 from an immediate family member of an officer/director of the Company. During the fiscal years ended June 30, 2001 and 2000, the Company paid $17,000 and $83,000 in scheduled principal payments. Effective January 1999, the Company's two executive officers agreed to a deferral of 50% of their base salaries under their respective employment agreements (which expired June 30, 2000) until such time as the Company was able to generate positive cash flows from operations. Approximately $47,000 of the deferred compensation was paid during the fiscal year ended June 30, 2001, and the outstanding balance of $313,000 is included within "Accounts payable and accrued expenses" at year-end. In November 1998 the Company reached a verbal agreement with TecNet to carry the remaining unprocessed minutes on the Company's facilities-based debit cards. In February of 1999, the Company began funding its operating shortfalls through the issuance of demand promissory notes to TecNet bearing an annual interest rate of 10%. Subsequently, in the fourth quarter of 1999, the Company reached a verbal agreement with TecNet whereby TecNet would become the sole provider of bundled prepaid calling card services to the Company and the sole 14 carrier for carrying the traffic and processing the minutes related to the prepaid calling cards. TecNet provided approximately $43.8 million in telecommunications services for the fiscal year ended June 30, 2001. In addition, TecNet provided approximately $122,000 and $133,000 of consulting and administrative services to the Company during the fiscal years ended June 30, 2001 and 2000, respectively, which have been accounted for as capital contributions. The following presents the detail of the payable to TecNet at June 30, 2001: Demand notes payable $9,683,450 Payable for bundled phone cards 3,327,270 Payable for telecommunication services 4,391,190 Accrued interest 1,200,883 ----------- $18,602,793 =========== ANNUAL REPORT AND FINANCIAL INFORMATION A copy of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001, containing audited consolidated financial statements of the Company for the past two fiscal years, has been enclosed with this Proxy Statement. DATE FOR SHAREHOLDER PROPOSALS Shareholder proposals intended for submission at the 2002 Annual Meeting of Shareholders must be received by the Company at its principal executive offices, 99 Madison Avenue, Third Floor,, New York, New York 10016, no later than June 10, 2002 to be eligible for inclusion in the Company's proxy statement and form of proxy relating to the 2002 Annual Meeting of Shareholders. OTHER MATTERS The Board of Directors knows of no other matters to be brought before the Annual Meeting. However, if any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy intend to vote the shares represented by such proxy in accordance with their best judgment. PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY New York, New York February 18, 2002 15 DIGITEC 2000, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 15, 2002 The undersigned hereby appoints Diego E. Roca and Frank C. Magliato, and each of them, proxies with full power of substitution to vote all shares of the Common Stock, $.001 par value per share, and the Series A Preferred Stock, $.001 par value per share, of DIGITEC 2000, INC., which the undersigned is entitled to vote at the Annual Meeting of Shareholders of DIGITEC 2000, INC. to be held on Friday, March 15, 2002 at 10:00 a.m. and at any adjournment thereof, as designated below with respect to the election of four directors and approval of the appointment of Deloitte & Touche LLP as independent certified public accountants for fiscal year ending June 30, 2002 and, in the discretion of such proxies, with respect to such other matters as may properly come before the meeting, hereby revoking any proxy heretofore given. The undersigned hereby acknowledges receipt of the Notice of, and Proxy Statement for, the aforesaid Annual Meeting. 1. Election of Directors: Francis J. Calcagno, Frank C. Magliato, Cloyce C. Clark, Jr., Lori Ann Perri and Diego E. Roca: FOR |_| WITHHOLD |_| FOR EXCEPT |_| vote for all nominees To withhold authority to vote for any individual nominee while voting for the remainder, write this nominee's name in the following space: ---------------------------------------------------------------------------- 2. Proposal to approve appointment of Deloitte & Touche LLP as the Company's independent certified public accountants for the fiscal year ending June 30, 2002. FOR |_| AGAINST |_| ABSTAIN |_| (PLEASE MARK, SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE ENCLOSED ENVELOPE.) This proxy will be voted as directed on the reverse side by the undersigned shareholder. The Board of Directors recommends a vote FOR the election of each nominee above named, and if no direction is made, this proxy will be voted FOR the election of each nominee. The Board of Directors also recommends a vote FOR the proposal to approve the appointment of Deloitte & Touche LLP as the Company's independent certified public accountants for the fiscal year ending June 30, 2002, and if no direction is made, this proxy will be voted FOR each such proposal. Number and class of shares owned:_____________ Dated:________________________, ______________ (X)___________________________________________ (X)___________________________________________ (Please date and sign exactly as indicated. For joint accounts, each joint owner should sign. When signing as attorney, executor, administrator, trustee or guardian, or for a corporation, please give your full title.) Unless the date has been inserted above, the proxy shall be deemed to be dated for all purposes as of the date on which it is received by DigiTEC 2000, Inc. (PLEASE MARK, DATE AND SIGN AND RETURN IN THE ENCLOSED ENVELOPE.) -----END PRIVACY-ENHANCED MESSAGE-----