<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
</TABLE>
<TABLE>
<S> <C>
GO2NET, INC.
- --------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(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:
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(4) Date Filed:
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</TABLE>
<PAGE>
GO2NET, INC.
ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
The Annual Meeting of the Stockholders of Go2Net, Inc. will be held on
Friday, March 17, 2000, at 9:00 a.m., Local Time, at The Bell Harbor
International Conference Center, The Harbor Dining Room, 2211 Alaskan Way,
Seattle, Washington, for the following purposes:
1. To elect five directors of the Company to serve until the next Annual
Meeting of Stockholders as more fully described in the accompanying Proxy
Statement.
2. To consider and act upon a proposal to ratify, confirm and approve the
Go2Net, Inc. 2000 Stock Option Plan.
3. To consider and act upon a proposal to ratify, confirm and approve the
selection of KPMG, LLP as the independent certified public accountants of
the Company for fiscal year 2000.
4. To consider and act upon any other business which may properly come before
the meeting.
The Board of Directors has fixed the close of business on January 27, 2000
as the record date for the meeting. All stockholders of record on that date are
entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHETHER
OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors
ETHAN CALDWELL
GENERAL COUNSEL AND SECRETARY
Seattle, Washington
January 28, 2000
<PAGE>
GO2NET, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Go2Net, Inc. (the "Company") for use at the
2000 Annual Meeting of Stockholders to be held on Friday, March 17, 2000, at the
time and place set forth in the notice of the meeting, and at any adjournments
thereof. The approximate date on which this Proxy Statement and form of proxy
are first being sent to stockholders is February 4, 2000.
If the enclosed proxy is properly executed and returned, it will be voted in
the manner directed by the stockholders. If no instructions are specified with
respect to any particular matter to be acted upon, proxies will be voted in
favor thereof. In addition, if other matters come before the meeting, the
persons named in the accompanying proxy and acting thereunder will have
discretion to vote on those matters in accordance with their best judgement. Any
person signing the enclosed form of proxy has the power to revoke it by voting
in person at the meeting, or by giving written notice of revocation to the
Secretary of the Company at any time before the proxy is exercised.
The holders of a majority in interest of all Common Stock, par value $.01
per share ("Company's Common Stock" or "Common Stock") issued, outstanding and
entitled to vote are required to be present in person or be represented by proxy
at the meeting in order to constitute a quorum for the transaction of business.
Each share of Common Stock outstanding on the record date (including Common
Stock issuable upon conversion of Series A Preferred Stock) will be entitled to
one vote on all matters. The five candidates for election as directors at the
Annual Meeting who receive the highest number of affirmative votes will be
elected. The approval of the Company's 2000 Stock Option Plan and the
ratification of the independent accountants of the Company for the current year
will require the affirmative vote of a majority of the shares of the Company's
Common Stock present or represented and entitled to vote at the Annual Meeting.
The Company will bear the cost of the solicitation. The Company has retained
Morrow & Co. to solicit proxies for a fee of $6,500 plus expenses not to exceed
$1,000. Additionally, regular employees or representatives of the Company (none
of whom will receive any extra compensation for their activities) may also
solicit proxies by telephone, telecopier and in person and arrange for brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
materials to their principals at the expense of the Company.
The Company's principal executive offices are located at 999 Third Avenue,
Suite 4700, Seattle, Washington 98104, (206) 447-1595.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on January 27, 2000 are
entitled to notice of and to vote at the meeting. On January 24, 2000, the
Company had outstanding and entitled to vote 39,508,189 shares of Common Stock
(including Common Stock issuable upon conversion of Series A Preferred Stock).
Each outstanding share of the Company's Common Stock (including Common Stock
issuable upon conversion of Series A Preferred Stock) entitles the record holder
to one vote. All votes will be tabulated by employees of Continental Stock
Transfer & Trust Company, the Company's transfer agent for the Common Stock, who
will serve as inspectors of election. Because abstentions with respect to any
matter are treated as shares present or represented and entitled to vote for the
purposes of determining whether that matter has been approved by the
stockholders, abstentions have the same effect as negative votes for each
proposal other than the election of directors. Broker non-votes are not deemed
to be present or represented for purposes of determining whether stockholder
approval of that matter has been obtained, but they are counted as present for
purposes of determining the existence of a quorum at the Annual Meeting.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at five for the
coming year. It is proposed that each of the nominees listed below will be
elected to hold office until the next Annual Meeting of Stockholders and until
his successor is duly elected and qualified or until he sooner dies, resigns or
is removed.
The persons named in the accompanying proxy will vote, unless authority is
withheld, for the election of the nominees named below. If any nominee should
become unavailable for election, which is not anticipated, the persons named in
the accompanying proxy will vote for such substitute as the Board of Directors
may recommend. No nominee is related to any other executive officer of the
Company.
NOMINEES
The nominees for election as directors, their ages, their positions with the
Company, the period during which they have served as directors and their
principal occupations and other directorships held by them are set forth below.
Russell C. Horowitz, 33 years old, is a founder of Go2Net and has served as
its Chief Executive Officer, Chief Financial Officer and Chairman since its
inception in February 1996. From February 1996 until January 1999, he served as
Go2Net's President. In March 1996, Mr. Horowitz founded Xanthus Capital, L.P., a
Seattle, Washington-based merchant bank that focuses primarily on developing
companies in emerging growth industries or special situations. Mr. Horowitz
serves as the Chief Executive Officer and a director of Xanthus Management,
L.L.C., the general partner of Xanthus Capital, L.P., and of DMR Investments,
L.L.C., the investment advisor to Xanthus Capital, L.P. In July 1992,
Mr. Horowitz was a founder of Active Apparel Group, Inc., a New York-based
apparel supplier. From 1992 until April 1994, Mr. Horowitz served as its Chief
Financial Officer; and from May 1994 until May 1997, Mr. Horowitz served as its
Director of Corporate Development and Investor Relations. Prior to July 1992,
Mr. Horowitz served as a financial advisor to start-up and developing companies.
Mr. Horowitz received a B.A. in Economics from Columbia College of Columbia
University in 1988.
William D. Savoy, 35 years old, has been a director of the Company since
May 1999. He is a nominee of Vulcan Ventures, Inc., a significant stockholder of
the Company. Currently, Mr. Savoy serves as President of Vulcan Northwest Inc.,
managing the personal finances of Paul G. Allen, and Vice President of Vulcan
Ventures Incorporated, a venture capital fund wholly-owned by Mr. Allen. From
1987 until November 1990, Mr. Savoy was employed by Layered, Inc. and became its
President in 1988. Mr. Savoy serves on the Advisory Board of DreamWorks SKG and
also serves as director of CNET, Inc., Harbinger Corporation, High Speed Access
Corporation, Metricom, Inc., Telescan, Inc., Ticketmaster
Online-CitySearch, Inc., USA Networks, Inc. and Value America.
Diane Daggatt, 39 years old, has been a director of the Company since
May 1999. She is a nominee of Vulcan Ventures, Inc., a significant stockholder
of the Company. She has served as an investment analyst at Vulcan
Northwest Inc. since July 1998, focusing on new media, e-commerce, and
traditional retailing companies. From May 1996 to June 1998, she was a Vice
President and Equity Research Analyst at Dain Rauscher Wessels where she focused
on branded consumer and specialty retailing companies. From September 1994 to
May 1996, Ms. Daggatt was employed as a consumer analyst for Pacific Crest
Securities. From May 1989 to September 1994, she served as a research analyst
for Beekman Capital Management. Prior to joining Beekman, she served for seven
years in various merchandising positions at The Bon Marche, a division of
Federated Department Stores. Ms. Daggatt serves as a director of
Fatbrain.com, Inc. Ms. Daggatt holds a BA in Business Administration from
Washington State University and is a Chartered Financial Analyst.
2
<PAGE>
Dennis Cline, 39 years old, has served as a director of the Company since
December 1996. Mr. Cline is a founder and the Chief Executive Officer of
DirectWeb, Inc., an Internet solutions provider. Until 1999, Mr. Cline served as
the Executive Vice-President of Worldwide Sales for Network Associates, Inc.
also a provider of network security and management tools whose common stock is
traded on the Nasdaq National Market System under the symbol "NETA." Mr. Cline
has served in a variety of executive sales positions for Network Associates
since 1994. From January 1993 to November 1993, Mr. Cline was Vice President of
Worldwide Sales for Fifth Generation Systems, a software utilities company.
Prior to 1993, Mr. Cline worked in sales management for various technology
companies including: GCC Technologies, Inc., a manufacturer of computer
printers, Alias Research, a graphic software company, Claris Corporation, an
application software company, and Microsoft Corp.
William A. Fleckenstein, 45 years old, has served as a director of the
Company since June 1999. He has also been the President of Fleckenstein
Capital, Inc., a registered investment advisor, since 1996. Mr. Fleckenstein
also held that position from 1982, when he originally founded Fleckenstein
Capital, until 1990, when Fleckenstein Capital merged with Olympic Capital
Management, Inc., a registered investment adviser. Mr. Fleckenstein served as a
partner at Olympic Capital from 1990 until 1996, at which time Mr. Fleckenstein
reestablished Fleckenstein Capital. Mr. Fleckenstein also serves as a director
of Pan American Silver Corp. Mr. Fleckenstein graduated from the University of
Washington in 1976 with a B.A. in mathematics.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1999, there were four meetings of the Board of Directors of
the Company. All of the directors attended at least 75% of the aggregate of
(i) the total number of meetings of the Board of Directors during which they
served as director and (ii) the total number of meetings held by committees of
the Board of Directors on which they served. The Board of Directors does not
have a Nominating Committee. During fiscal 1999, none of the directors received
compensation for serving as directors of the Company, except that Mr. Horowitz
received compensation as an employee of the Company. Directors are reimbursed
for reasonable out-of-pocket expenses incurred in attending meetings of the
Board or committees thereof.
The Board of Directors has a Compensation Committee whose present members
are Mr. Cline and Ms. Daggatt. The Compensation Committee determines the
compensation to be paid to key officers of the Company and administers the
Company's stock option plans. During fiscal 1999, the Compensation Committee
acted by written consent 17 times and met four times.
The Company also has an Audit Committee whose present members are
Messrs. Cline and Savoy. The Audit Committee reviews with the Company's
independent auditors the scope of the audit for the year, the results of the
audit when completed and the independent auditors' fee for services performed.
The Audit Committee also recommends independent auditors to the Board of
Directors and reviews with management various matters related to its internal
accounting controls. During fiscal 1999, there was one meeting of the Audit
Committee.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of January 24, 2000 (i) by each
person who is known by the Company to own beneficially more than five percent
(5%) of the Company's Common Stock, (ii) by each of the Company's directors,
(iii) by each executive officer of the Company, and (iv) by all directors and
executive officers who served as directors or executive officers at January 24,
2000 as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------- ----------------------- ----------------
<S> <C> <C>
Russell C. Horowitz(2)..................................... 3,671,486 9.11%
c/o Go2Net, Inc. 999 Third Avenue
Seattle, Washington 98104
John Keister(3)............................................ 915,000 2.27%
c/o Go2Net, Inc.
999 Third Avenue
Seattle, Washington 98104
Michael J. Riccio, Jr.(4).................................. 618,588 1.54%
c/o Go2Net, Inc.
999 Third Avenue
Seattle, Washington 98104
Dr. Oren Etzioni........................................... 2,700 0.01%
c/o Go2Net, Inc.
999 Third Avenue
Seattle, Washington 98104
Dennis Cline(5)............................................ 133,810 0.34%
40 Landing Ct.
Moorstown, New Jersey 08057
William D. Savoy(6)........................................ 0 0.00%
c/o Vulcan Ventures Incorporated
110 110th Avenue N.E., Suite 550
Bellevue, Washington 98004
Dianne Daggatt(6).......................................... 2,400 0.00%
c/o Vulcan Ventures Incorporated
110 110th Avenue N.E., Suite 550
Bellevue, Washington 98004
William A. Fleckenstein.................................... 0 0.00%
600 University Street, Suite 3011
Seattle, Washington 98101
Vulcan Ventures Incorporated(7)............................ 11,922,406 30.18%
110 110th Avenue N.E., Suite 550
Bellevue, Washington 98004
All executive officers and 5,343,954 12.78%
directors as a group (8 persons)(2)(3)(4)(5)(7)............
</TABLE>
- ------------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable, or become exercisable within 60 days from the date
hereof, are deemed outstanding. However, such shares are not deemed
outstanding for purposes of computing the percentage ownership of any other
person. Percentage ownership is based on 39,508,189 shares of Common Stock
outstanding as of January 24, 2000 which includes shares of
4
<PAGE>
Series A Preferred Stock convertible into 9,095,782 shares of Common Stock
on an as converted basis because the Series A Preferred Stock votes on an as
converted basis with the Common Stock as a single class.
(2) Includes 1,800,000 shares of Common Stock held by The Porpoise Corporation,
a Washington corporation wholly owned by Mr. Horowitz and 407,656 shares of
Common Stock held by Xanthus Management, LLC, of which Mr. Horowitz is a
director and an executive officer. Mr. Horowitz disclaims beneficial
ownership of the shares held by Xanthus Management, LLC, except to the
extent of his pecuniary interests therein. Also, includes options to
purchase 795,750 shares of Common Stock that are currently exercisable, or
become exercisable within 60 days of the date hereof.
(3) Includes options to purchase 847,000 shares of Common Stock that are
currently exercisable, or become exercisable within 60 days of the date
hereof.
(4) Includes options to purchase 618,422 shares of Common Stock that are
currently exercisable, or become exercisable within 60 days of the date
hereof.
(5) Includes options to purchase 40,000 shares of Common Stock that are
currently exercisable.
(6) Each of William D. Savoy and Diane Daggatt disclaims beneficial ownership of
the shares held by Vulcan.
(7) Includes 300,000 shares of Series A Preferred Stock, which are convertible
into 9,075,782 shares of Common Stock. Also includes 40,000 shares owned
directly by Paul G. Allen.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons owning more than 10% of the outstanding
Common Stock of the Company to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% holders of Common Stock of the Company are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on copies of such forms furnished as provided above, management
believes that through the date hereof all Section 16(a) filing requirements
applicable to its officers, directors and owners of greater than 10% of its
Common Stock were complied with except as follows. Russell C. Horowitz, John
Keister and Michael J. Riccio, Jr. each filed a late Form 5 reporting option
grants. The Form 5 filed by Mr. Horowitz also discloses one gift and one
purchase under the 1999 Employee Stock Purchase Plan. The Form 5 filed by
Mr. Riccio also discloses one purchase under the 1999 Employee Stock Purchase
Plan. Oren Etzioni filed a late Form 5 reporting option grants as well as an
option exercise and two sales which had been previously unreported. William
Fleckenstein filed a late Form 5 reporting an option grant as well as two
previously unreported option exercises and stock sales.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors has
furnished the following report on executive compensation.
The Committee administers the Company's executive compensation program. The
Committee, which is composed of two independent directors, establishes and
administers the Company's executive compensation policies and plans and
administers the Company's stock option and other equity-related employee
compensation plans. The Committee considers internal and external information in
determining officers' compensation.
5
<PAGE>
COMPENSATION PHILOSOPHY
The Company's compensation policies for executive officers are based on the
belief that the interests of executives should be closely aligned with those of
the Company's stockholders. The Compensation policies are designed to achieve
the following objectives:
Offer compensation opportunities that attract highly qualified executives,
reward outstanding initiative and achievement, and retain the leadership and
skills necessary to build long-term stockholder value.
Maintain a significant portion of executives' total compensation at risk,
tied to both the annual and long-term financial performance of the Company and
the increase in stockholder value as measured principally by the trading price
of the Company's Common Stock.
Further the Company's short and long-term strategic goals and values by
aligning compensation with business objectives and individual performance.
COMPENSATION PROGRAM
The Company's executive compensation program has three major integrated
components, base salary, annual incentive awards, and long term incentives. The
Company emphasizes the award of stock options as long term incentives to
executive officers.
BASE SALARY. Base salary levels for executive officers are determined
annually by reviewing the competitive pay practices of Internet companies of
similar size and market capitalization, the skills, performance level, and
contribution to the business of individual executives, and the needs of the
Company. Overall, the Company believes that base salaries for its executive
officers are below competitive salary levels for similar positions in these
Internet companies.
ANNUAL INCENTIVE AWARDS. The Company's executive officers may be eligible
to receive annual cash bonus awards designed to motivate executives to attain
short-term and long-term corporate and individual management goals. The
Committee establishes the annual incentive opportunity for each executive
officer in relation to his or her base salary. For 1999, there was no formal
bonus program established for executives.
LONG-TERM INCENTIVES. As noted above, the Company has relied substantially
on long-term equity compensation as the principal means of compensating and
incentivizing its executive officers. The Committee believes that stock
ownership is an excellent vehicle for compensating its officers and employees.
The Company provides long-term incentives through its 1996 Stock Option Plan and
its 1999 Employee Stock Purchase Plan, the purpose of which is to create a
direct link between executive compensation and increases in stockholder value.
Stock options are granted at fair market value and vest in installments
generally over one to four years. Thus, the value of the stockholders'
investment in the Company must appreciate before the optionee receives any
financial benefit. Additionally, the employee must remain in the Company's
employ for the period required for the stock option to be exercisable, thus
providing an incentive to remain in the Company's employ. When determining
option awards for an executive officer, the Committee considers the executive's
current contribution to Company performance, the anticipated contribution to
meeting the Company's long term strategic performance goals, and industry
practices and norms. Long-term incentives granted in prior years and existing
levels of stock ownership are also taken into consideration. Because the receipt
of value by an executive officer under a stock option is dependent upon an
increase in the price of the Company's Common Stock, this portion of the
executive's compensation is directly aligned with an increase in stockholder
value. The Company's 1999 Employee Stock Purchase Plan allows employees to
acquire Common Stock through payroll deductions and promotes broad-based equity
participation throughout
6
<PAGE>
the Company. The Committee believes that such stock plans align the interests of
the employees with the long-term interests of the stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Horowitz's base salary, annual incentive award and long-term incentive
compensation are determined by the Committee based upon the same factors as
those employed by the Committee for executive officers generally.
Mr. Horowitz's current annual base salary is $36,000 subject to annual review
and increase by the Board of Directors of the Company. During fiscal 1999,
Mr. Horowitz was granted options to purchase 120,000 shares of Common Stock at
an exercise price of $4.07 per share, the fair market value of the Company's
Common Stock on the date of the grant. The options have a 48-month term and
provide that one-quarter of the options vest on each annual anniversary of the
option grant. Accordingly, through his ownership of Company Common Stock and
options to purchase Common Stock, Mr. Horowitz's pecuniary interests are aligned
with those of the Company's stockholders.
SECTION 162(M) LIMITATION
Section 162(m) of the U.S. Internal Revenue Code limits the tax
deductibility by a corporation of compensation in excess of $1,000,000 paid to
the Chief Executive Officer and any other or its four most highly compensated
executive officers. However, compensation which qualifies as "performance-based"
is excluded from the $1,000,000 limit if, among other requirements, the
compensation is payable only upon attainment of pre-established, objective
performance goals under a plan approved by stockholders.
The Compensation Committee does not presently expect total cash compensation
payable for salaries and bonuses to exceed the $1,000,000 limit for any
individual executive. Having considered the requirements of Section 162(m), the
Compensation Committee believes that stock option grants to date meet the
requirement that such grants be "performance-based" and are, therefore, exempt
from the limitations on deductibility. The Compensation Committee will continue
to monitor the compensation levels potentially payable under the Company's cash
compensation programs, but intends to retain the flexibility necessary to
provide total cash compensation in line with competitive practices, the
Company's compensation philosophy and the Company's best interests.
COMPENSATION COMMITTEE
DENNIS CLINE
DIANNE DAGGATT
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Cline and Ms. Daggatt serve as members of the Compensation Committee.
Neither Mr. Cline nor Ms. Daggatt was an officer or employee of the Company or
any of its subsidiaries during fiscal 1999. Until May 1999, Dr. Oren Etzioni,
who was not then an employee of the Company, served on the Compensation
Committee.
The Company is party to an agreement with DirectWeb, Inc. pursuant to which
the Company provides content and services to DirectWeb in exchange for eight
monthly payments of $35,000 commencing March 1999 and 12 monthly payments
commencing November 1999 which shall initially be $60,00 per month and shall
increase to $85,000 in May 2000. Dennis Cline, a director of the Company, is the
Chief Executive Officer of DirectWeb as well as a director and stockholder.
Additionally, Russell C. Horowitz, the Chief Executive Officer and Chairman of
the Company is a director of DirectWeb.
7
<PAGE>
The terms of the agreement between the Company and DirectWeb were determined on
an arm's length basis.
The Company is conducting a nationwide marketing and branding campaign
focused on major college and professional sports stadiums and arenas, including
home games of the National Football League's Seattle Seahawks and the National
Basketball Association's Portland Trail Blazers, both of which are owned by Paul
G. Allen. The marketing campaign is being handled by Action Sports Media, a
sports venue-marketing firm founded by Vulcan Ventures Inc. in exchange for the
payment of $212,000. Vulcan holds approximately 30% of the Company's voting
capital stock. The terms of the arrangement between the Company and Action
Sports Media were determined on an arm's length basis.
On October 1, 1999, the Company entered into an agreement with Charter
Communications and Vulcan Ventures to form Broadband Partners, a joint venture.
Broadband Partners intends to provide broadband portal services initially to
customers of Charter Communications, RCN Corporation and HighSpeed Access
Corporation, and potentially to other cable operators. Vulcan Ventures will own
55.2%, Charter Communications will own 24.9% and Go2Net will own 19.9% of
Broadband's capital stock. Vulcan Ventures holds approximately 30% of the
Company's voting capital stock. Vulcan is a minority stockholder of RCN
Corporation and High Speed Access Corporation and a majority stockholder in
Charter Communications. The terms of the agreement were determined on an arm's
length basis.
On July 7, 1999, the Company acquired 896,057 shares of common stock of
CommTouch Software, LTD and received warrants to acquired an additional
1,136,000 shares of common stock. The stock and warrants were valued at
$13,970,628. In conjunction with the equity investment, the Company received one
seat on CommTouch's board of directors and entered into a distribution and
marketing agreement with CommTouch. Vulcan is a minority stockholder of
CommTouch. The terms of the agreement between the Company and CommTouch were
determined on an arm's length basis.
On July 21, the Company acquired 428,571 shares of common stock of
Click2Learn, Inc. and received warrants to acquire an additional 428,571 shares
of common stock. The stock and warrants were valued at $3,245,7000. In
conjunction with the equity investment the Company entered into a three-year
marketing, distribution, licensing and co-branding partnership with Click2Learn.
Vulcan is a majority stockholder of Click2Learn. The terms of the agreement
between the Company and Click2Learn were determined on an arm's length basis.
On November 3, 1998, the Company purchased 13,158 shares of Series D
Preferred Stock of Conducent Technologies, Inc. valued at approximately
$250,000. Martin Schoffstall, the Chief Executive Officer of Conducent is a
former member of the Company's Board of Directors. The terms of the agreement
between the Company and Conducent were determined on an arm's length basis.
8
<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the change in the Company's cumulative total
stockholder return on its Common Stock (as measured by dividing (i) the sum of
(A) the cumulative amount of dividends for the period indicated, assuming
dividend reinvestment, and (B) the difference between the Company's share price
at the end of the period and April 23, 1997, the date the Company's Common Stock
commenced trading on The Nasdaq SmallCap Market; by (ii) the share price at
April 23, 1997) with the cumulative total return of The Nasdaq Stock Market
(U.S.) Index and the cumulative total return of the NASDAQ stocks business
services index (assuming the investment of $100 in the Company's Common Stock,
the Nasdaq Stock Market (U.S.) Index and the NASDAQ stocks business services
index on April 23, 1997, and reinvestment of all dividends). During fiscal year
1999, the Company paid no dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR GO2NET, INC.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES. PRODUCED ON 01/19/2000
INCLUDING DATA TO 09/30/1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GO2NET, INC.
<S> <C>
04/23/1997 100.0
04/30/1997 108.2
05/30/1997 82.3
06/30/1997 62.0
07/31/1997 68.4
08/29/1997 68.4
09/30/1997 89.9
10/31/1997 81.0
11/28/1997 72.2
12/31/1997 69.6
01/30/1998 98.7
02/27/1998 165.2
03/31/1998 172.2
04/30/1998 273.4
05/29/1998 250.6
06/30/1998 298.7
07/31/1998 273.4
08/31/1998 224.1
09/30/1998 151.9
10/30/1998 222.8
11/30/1998 344.3
12/31/1998 358.3
01/29/1999 1124.1
02/26/1999 1184.8
03/31/1999 2686.1
04/30/1999 3108.9
05/28/1999 2105.1
06/30/1999 3721.5
07/30/1999 2379.7
08/31/1999 2632.9
09/30/1999 2622.8
LEGEND
SYMBOL CRSP TOTAL RETURNS INDEX FOR:
Go2Net, Inc.
Nasdaq Stock Market (US Companies)
NASDAQ Stocks (SIC 7300-7399 US Companies) Business services
Notes:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is
not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on
04/23/1997.
<CAPTION>
NASDAQ STOCK MARKET NASDAQ STOCKS
<S> <C> <C> <C> <C> <C> <C>
04/23/1997 100.0 100.0
04/30/1997 102.7 104.2
05/30/1997 114.4 116.2
06/30/1997 117.9 118.8
07/31/1997 130.3 130.7
08/29/1997 130.1 127.3
09/30/1997 137.8 129.7
10/31/1997 130.6 126.9
11/28/1997 131.3 129.9
12/31/1997 129.1 122.5
01/30/1998 133.1 131.5
02/27/1998 145.7 149.0
03/31/1998 151.0 161.4
04/30/1998 153.6 163.1
05/29/1998 145.1 151.5
06/30/1998 155.2 179.6
07/31/1998 153.4 173.3
08/31/1998 123.1 140.6
09/30/1998 140.1 168.6
10/30/1998 146.2 164.8
11/30/1998 161.0 191.5
12/31/1998 181.9 220.6
01/29/1999 208.3 268.5
02/26/1999 189.6 239.0
03/31/1999 203.4 269.1
04/30/1999 209.2 260.9
05/28/1999 204.3 251.5
06/30/1999 222.6 280.2
07/30/1999 219.3 261.7
08/31/1999 228.0 275.7
09/30/1999 227.7 288.3
LEGEND
SYMBOL 04/1997 09/1997 03/1998 09/1998 03/1999 09/1999
100.0 89.9 172.2 151.9 2686.1 2622.8
100.0 137.8 151.0 140.1 203.4 227.7
100.0 129.7 161.4 168.6 269.1 288.3
Notes:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is
not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on
04/23/1997.
</TABLE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
9
<PAGE>
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE PRECEDING REPORT OF THE COMPENSATION
COMMITTEE AND STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's Chief Executive Officer, President and Chief Operating
Officer for all services rendered in all capacities to the Company for the
Company's fiscal year ended September 30, 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS # COMPENSATION($)(1)
- --------------------------- -------- -------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Russell C. Horowitz................... 1999 $ 36,000 $ 0 120,000 $25,857
1998 $ 36,000 $ 0 300,000 $15,729
1997 $ 36,000 $ 0 600,000 $17,791
Chief Executive Officer
John Keister.......................... 1999 $ 72,000 $ 0 120,000 $31,242
1998 $ 72,000 $ 0 400,000 $11,263
1997 $ 45,000 $ 0 600,000 $ 9,459
President
1999 $112,500 $25,000 1,200,000 $15,045
Michael J. Riccio, Jr.................
1998 $ 0 $ 0 60,000 $ 0
1997 $ 0 $ 0 40,000 $ 0
Chief Operating Officer
</TABLE>
- ------------------------
(1) Includes amounts paid for keyman life insurance, car allowances, parking and
medical and dental insurance.
GRANTS OF STOCK OPTIONS
The following table sets forth certain information with respect to
individual grants of stock options to the Named Executive Officers during the
fiscal year ended September 30, 1999.
1999 OPTION GRANTS(L)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZATION
----------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION -------------------------
NAME GRANTED 1999 PRICE DATE 5% 10%
- ---- ----------------- --------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Russell C. Horowitz.......... 120,000 1.9045 4.07 10/13/04 $ 166,102 $ 376,830
John Keister................. 120,000 1.9045 4.07 10/13/04 $ 166,102 $ 376,840
Michael J. Riccio, Jr........ 1,200,000 19.0450 4.03 10/13/04 $1,709,027 $3,768,303
</TABLE>
(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on the Securities and Exchange Commission rules. Actual gains,
if any, on stock option exercises are dependent on the future performance of
the Common Stock, the timing of such exercises and the option holder's
continued employment through the vesting period. The amounts reflected in
this table may not accurately reflect or predict the actual value of the
stock options.
10
<PAGE>
STOCK OPTION EXERCISES AND SEPTEMBER 30, 1999 STOCK OPTION VALUES
Set forth in the table below is information concerning the value of stock
options held at September 30, 1999 by the Named Executive Officers of the
Company.
AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND OPTION VALUES AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES SEPTEMBER 30,1999 AT SEPTEMBER 30, 1999(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Russell C. Horowitz........... -- -- 795,750 224,250 $49,435,110 $13,514,490
John Keister.................. -- -- 847,000 273,000 $52,638,960 $16,566,640
Michael J. Riccio, Jr......... 116,000 $4,745,696 618,422 564,778 $37,626,583 $34,293,320
</TABLE>
- ------------------------
(1) The amounts set forth represent the difference, if positive, between the
fair market value of the Common Stock underlying the options at
September 30, 1999 ($64.75 per share) and the exercise price of the options,
multiplied by the applicable number of options.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Russell C.
Horowitz, John Keister and Michael J. Riccio, Jr. pursuant to which they serve
as Chief Executive Officer, President and Chief Operating Officer, respectively,
of the Company.
Mr. Horowitz's employment agreement with the Company expires January 31,
2002. Under this agreement, Mr. Horowitz receives an annual salary of $36,000.
Mr. Keister's employment agreement with the Company expires January 31, 2002.
Under this agreement, Mr. Keister receives an annual salary of $72,000.
Mr. Riccio's employment agreement with the Company expires January 31, 2002.
Under this agreement, Mr. Riccio receives an annual salary of $150,000, and a
signing bonus of $25,000. Mr. Riccio was also granted options to purchase common
stock under the employment agreement.
Each of the employment agreements described above provides for certain
employee benefits, including, without limitation, participation in the Company's
stock option plan or any other incentive or bonus plan which the Company may
institute in the future, as well as health insurance. Each of the employment
agreements provides for a one-year non-competition period following termination
of the employment agreement.
11
<PAGE>
APPROVAL OF ADOPTION OF THE
GO2NET, INC. 2000 STOCK OPTION PLAN
GENERAL
The Go2Net, Inc. 2000 Stock Option Plan (the "2000 Plan") is intended to
attract and retain key employees, directors and consultants of the Company, to
provide an incentive for them to achieve long-range performance goals and to
enable them to participate in the long-term growth of the Company. Under the
2000 Plan, incentive stock options may be granted to employees and officers of
the Company or any subsidiary and non-qualified stock options may be granted to
employees, officers, directors and consultants of the Company or any subsidiary.
Six Million (6,000,000) shares of Common Stock of the Company may be issued
pursuant to the 2000 Plan. As of January 24, 2000, the shares reserved for
issuance under the 2000 Plan had a market value of $413,750,000. The shares
issued pursuant to the 2000 Plan shall be either shares of the company's
authorized but unissued Common Stock or shares of Common Stock reacquired by the
Company and held as treasury shares. The number of shares issuable under the
2000 Plan is subject to annual increase equal to five percent (5%) of the
outstanding Common Stock (including any shares issuable upon conversion of any
then outstanding shares of preferred stock of the Company) and appropriate
adjustment in the event of a stock split, a subdivision or consolidation of
shares of Common Stock, capital adjustments or payments of stock dividends or
distributions or other increases or decreases in the outstanding shares of
Common Stock effected without receipt of consideration by the Company.
Set forth below is a summary of the principal provisions of the 2000 Plan, a
copy of which may be obtained from the Secretary of the Company upon request.
The Board of Directors has adopted the 2000 Plan, subject to stockholder
approval. If the 2000 Plan does not receive stockholder approval, then the it
will not take effect.
ADMINISTRATION
The Board of Directors adopted the 2000 Plan as of December 30, 1999. The
2000 Plan is administered by the Compensation Committee of the Board of
Directors, subject to the supervision and control of the entire Board. The
members of the Compensation Committee are appointed by the Board of Directors,
and the Board may from time to time appoint a member or members of the
Compensation Committee in substitution for or in addition to the member or
members then in office and may fill vacancies on the Compensation Committee
however caused. The present members of the Compensation Committee are Mr. Cline
and Ms. Daggatt.
ELIGIBILITY
Subject to the provisions of the 2000 Plan, the Compensation Committee has
the authority to select optionees and to determine the terms of the options
granted, including (i) the number of shares subject to each option, (ii) when
the option becomes exercisable, (iii) the exercise price of the option,
(iv) the duration of the option (which in the case of an incentive stock option
granted to employees or officers holding 10% or more of the voting stock of the
Company cannot be in excess of five years), and (v) the time, manner and form of
payment upon exercise of an option.
In determining the eligibility of an individual to be granted an option, as
well as in determining the number of shares to be optioned to any individual,
the Compensation Committee takes into account the position and responsibilities
of the individual being considered, the nature and value to the Company or its
subsidiaries of the individual's service and accomplishments, his or her present
and potential contribution to the success of the Company or its subsidiaries,
and such other factors as the Compensation Committee deems relevant.
12
<PAGE>
TERMS OF OPTIONS
Options granted under the 2000 Plan are exercisable at such times and during
such period as is set forth in the option agreement, but cannot have a term in
excess of ten years from the date of grant. The Compensation Committee is
entitled to accelerate the date of exercise of any installment of any option,
except that without the consent of the optionee, the Compensation Committee
shall not accelerate the exercise date of any installment of any incentive stock
option if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Internal Revenue Code of 1986, as amended
(the "Code"). The option agreement may contain such provisions and conditions as
may be determined by the Compensation Committee. The option exercise price for
options designated as non-qualified stock options granted under the 2000 Plan is
determined by the Compensation Committee. The option exercise price for
incentive stock options granted under the 2000 Plan shall be no less than fair
market value of the Common Stock of the Company at the time the option is
granted and no less than 110% of the fair market value in the case of employees
or officers holding 10% or more of the voting stock of the Company. Options
granted under the 2000 Plan may provide for the payment of the exercise price by
delivery of cash or a check payable to the Company or shares of Common Stock of
the Company owned by the optionee having a fair market value equal in amount to
the exercise price of the options being exercised, or any combination thereof.
The maximum number of shares of Common Stock with respect to which an option or
options may be granted to any employee in any one calendar year cannot exceed
1,000,000 shares and the maximum number of shares of Common Stock for which
options designated as incentive stock options may be granted during the term of
the 2000 Plan cannot exceed 10,000,000 shares.
An option is not transferable by the optionee except by will or by the laws
of descent and distribution; provided, however, that the Compensation Committee
may permit the further transferability on a general or specific basis. Options
are exercisable only while the optionee remains in the employ of the Company or
for a limited period of time thereafter.
TERMINATION OR AMENDMENT OF THE 2000 PLAN
Unless sooner terminated, the 2000 Plan shall terminate on December 30,
2009, ten years from the date on which the 2000 Plan was adopted by the Board of
Directors of the Company. The Board of Directors may at any time terminate the
2000 Plan or make such modification or amendment as it deems advisable;
provided, however, that the Board of Directors may not, without stockholder
approval, increase the maximum number of shares for which options may be granted
or change the designation of the class of persons eligible to receive options
under the 2000 Plan or make any other change in the 2000 Plan which requires
stockholder approval under applicable law or regulations. The Compensation
Committee may terminate, amend or modify any outstanding option without the
consent of the option holder, provided however that, without the consent of the
optionee, the Compensation Committee shall not change the number of shares
subject to an option, or the exercise price or term thereof.
RECAPITALIZATION; REORGANIZATION; CHANGE OF CONTROL
The 2000 Plan provides that the number and kind of shares as to which
options may be granted thereunder and as to which outstanding options then
unexercised shall be exercisable shall be adjusted to prevent dilution in the
event of any reorganization or recapitalization (other than as the result of an
Acquisition, as such term is hereinafter defined), reclassification, stock
subdivision, combination of shares or dividends payable in capital stock. If the
Company is to be consolidated with or acquired by another entity in a merger or
in a sale of all or substantially all of the Company's assets or otherwise (an
"Acquisition"), the Compensation Committee or the Board of Directors of any
entity assuming the obligations of the Company (the "Successor Board"), shall,
as to outstanding options, either (i) make appropriate provision for the
continuation of such options by substituting on an equitable basis for the
13
<PAGE>
shares then subject to such options the consideration payable with respect to
the outstanding shares of Common Stock in connection with the Acquisition,
(ii) upon written notice to the optionees, provide that all options must be
exercised (to the extent then exercisable) within a specified number of days of
the date of such notice, at the end of which period the options shall terminate,
or (iii) terminate all options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such options (to the
extent then exercisable) over the exercise price thereof.
Upon dissolution or liquidation of the Company, all options granted under
the 2000 Plan shall terminate.
TAX EFFECTS OF PARTICIPATION IN THE 2000 PLAN
INCENTIVE STOCK OPTIONS. Except as provided below with respect to the
alternative minimum tax, the optionee will not recognize taxable income upon the
grant or exercise of an incentive stock option. In addition, if the optionee
holds the shares received pursuant to the exercise of the option for more than
one year after the date of transfer of stock to the optionee upon exercise of
the option and for more than two years after the option is granted, the optionee
will recognize long-term capital gain or loss upon the disposition of the stock
measured by the difference between the option exercise price and the amount
received for such shares upon disposition.
In the event that the optionee disposes of the stock prior to the expiration
of the required holding periods (a "disqualifying disposition"), the optionee
generally will recognize ordinary income to the extent of the lesser of (i) the
fair market value of the stock at the time of exercise over the exercise price,
or (ii) the amount received for the stock upon disposition over the exercise
price. The basis in the stock acquired upon exercise of the option will equal
the amount of income recognized by the optionee plus the option exercise price.
Upon eventual disposition of the stock, the optionee will recognize long-term or
short-term capital gain or loss, depending on the holding period of the stock
and the difference between the amount realized by the optionee upon disposition
of the stock and his basis in the stock.
For alternative minimum tax purposes, the excess of the fair market value of
stock on the date of the exercise of the incentive stock option over the
exercise price of the option is included in alternative minimum taxable income
for alternative minimum tax purposes. If the alternative minimum tax does apply
to the optionee, an alternative minimum tax credit may reduce the regular tax
upon eventual disposition of the stock.
The Company will not be allowed an income tax deduction upon the grant or
exercise of an incentive stock option. Upon a disqualifying disposition of
shares by the optionee acquired upon exercise of the incentive stock option, the
Company generally will be allowed a deduction in an amount equal to the ordinary
income recognized by the optionee.
Under proposed regulations issued by the Internal Revenue Service, the
exercise of an option with previously acquired stock of the Company will be
treated as, in effect, two separate transactions. Pursuant to Section 1036 of
the Code, the first transaction will be a tax-free exchange of the previously
acquired shares for the same number of new shares. The new shares will retain
the basis and, except, as provided below, the holding periods of the previously
acquired shares. The second transaction will be the issuance of additional new
shares having a value equal to the difference between the aggregate fair market
value of all of the new shares being acquired and the aggregate option exercise
price for those shares. Because the exercise of an incentive stock option does
not result in the recognition by the optionee of income, this issuance will also
be tax-free (unless the alternative minimum tax applies, as described above).
The optionee's basis in these additional shares will be zero and the optionee's
holding period for these shares will commence on the date on which the shares
are transferred. For purposes of the one and two-year holding period
requirements which must be met for favorable
14
<PAGE>
incentive stock option tax treatment to apply, the holding periods of previously
acquired shares are disregarded.
NON-QUALIFIED STOCK OPTIONS. As in the case of incentive stock options, no
income is recognized by the optionee on the grant of a nonqualified stock
option. On the exercise by an optionee of a non-qualified option, generally the
excess of the fair market value of the stock when the option is exercised over
its cost to the optionee will be (a) taxable to the optionee as ordinary income
and (b) generally deductible for income tax purposes by the Company. The
optionee's tax basis in his stock will equal his cost for the stock plus the
amount of ordinary income he had to recognize with respect to the non-qualified
stock option.
The Internal Revenue Service will treat the exercise of a non-qualified
stock option with already owned stock of the Company as two transactions. First,
there will be a tax-free exchange of the old shares for a like number of new
shares under Section 1036 of the Code, with the exchanged shares retaining the
basis and holding periods of the old shares. Second, there will be an issuance
of additional new shares representing the spread between the fair market value
of all the new shares (including the exchanged shares and the additional new
shares) and the aggregate option price therefor. The fair market value of the
additional new shares will be taxable as ordinary income to the employee under
Section 83 of the Code. The additional new shares will have a basis equal to the
fair market value of the additional new shares.
Accordingly, upon a subsequent disposition of stock acquired upon the
exercise of a non-qualified option, the optionee will recognize short-term or
long-term capital gain or loss, depending upon the holding period of the stock
equal to the difference between the amount realized upon disposition of the
stock by the optionee and his basis in the stock.
NEW PLAN BENEFITS
It is not possible to state the persons who will receive stock options under
the 2000 Plan in the future, nor the amount of options which will be granted
thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG, LLP as independent certified
public accountants to audit the consolidated financial statements of the Company
and its subsidiaries for the fiscal year ending September 30, 2000. KMPG, LLP
has served as independent accountants since July 1999 to audit the financial
statements of the Company.
On July 14, 1999, the audit committee of the Board of Directors of
Go2Net, Inc. (the "Company") approved a resolution to dismiss Ernst & Young LLP
("E&Y") as the Company's independent accountants, effectively immediately. On
July 19,1999, the Company engaged KPMG, LLP as the Company's independent
accountants upon such terms as may be negotiated by management.
E&Y's reports with respect to the Company's financial statements for the
fiscal years ended September 30, 1997 and 1998 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified as to uncertainty,
audit scope or accounting principles. In connection with the audits of the
Company's financial statements for each of the two fiscal years ended
September 30, 1997 and 1998 and in the subsequent interim periods through
July 14, 1999, there were no disagreements with E&Y on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which, if not resolved to the satisfaction of E&Y would have caused
E&Y to make reference to the matter in their report.
15
<PAGE>
Prior to July 1999, there were no consultations with KPMG, LLP regarding the
application of accounting principles to specific transactions, or the type of
audit opinion that might be rendered. The Company has authorized E&Y to respond
fully to the inquiries of KPMG, LLP as the successor independent accountants of
the Company.
A representative of KPMG, LLP is expected to be present at the Annual
Meeting and will have the opportunity to make a statement if he or she so
desires and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF KPMG, LLP.
TIME FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission, any
proposal submitted for inclusion in the Company's Proxy Statement relating to
the Annual Meeting of Stockholders to be held in 2001 must be received at the
Company's principal executive offices in Seattle, Washington on or before
October 7, 2000. Receipt by the Company of any such proposal from a qualified
stockholder in a timely manner will not ensure its inclusion in the proxy
material because there are other requirements in the proxy rules for such
inclusions. If the Company is not notified of a stockholder proposal by
December 21, 2000, then the proxies held by management of the Company provide
discretionary authority to vote on such stockholder proposal, even though the
proposal is not discussed in the Proxy Statement.
OTHER MATTERS
Management knows of no matters which may properly be and are likely to be
brought before the meeting other than the matters discussed herein. However, if
any other matters properly come before the meeting, the persons named in the
enclosed proxy will vote in accordance with their best judgment.
10-K REPORT
THE COMPANY WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH A COPY
OF AN ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE COMPANY'S MOST RECENT FISCAL YEAR, WITHOUT CHARGE, UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE SENT TO
RUSSELL C. HOROWITZ, GO2NET, INC., 999 THIRD AVENUE, SUITE 4700, SEATTLE,
WASHINGTON 98104. ADDITIONALLY, THE ANNUAL REPORT ON FORM 10-K IS AVAILABLE ON
THE SEC'S WEBSITE AT HTTP://WWW.SEC.GOV.
VOTING PROXIES
The Board of Directors recommends an affirmative vote on all proposals
specified. Proxies will be voted as specified. If signed proxies are returned
without specifying an affirmative or negative vote on any proposal, the shares
represented by such proxies will be voted in favor of the Board of Directors'
recommendations.
By order of the Board of Directors
ETHAN CALDWELL
GENERAL COUNSEL AND SECRETARY
January 28, 2000
16
<PAGE>
Appendix A
GO2NET, INC.
2000 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This stock option plan (the "PLAN") is intended to provide incentives:
(a) to the officers and other employees of Go2Net, Inc. (the "COMPANY") and any
present or future subsidiary corporations of the Company by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "INCENTIVE STOCK OPTIONS" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE") ("ISO" or "ISOS"); and
(b) to officers, employees, directors, independent contractors, advisers, and
consultants of the Company and any present or future subsidiaries or other
entities designated by the Board of Directors of the Company in which the
Company has a material business interest by providing them with opportunities to
purchase stock in the Company pursuant to options granted hereunder which do not
qualify as ISOs ("NON-QUALIFIED OPTION" or "NON-QUALIFIED OPTIONS").
2. STOCK SUBJECT TO THE PLAN.
(a) The total number of shares of the authorized but unissued shares of the
common stock, $.01 par value, of the Company ("COMMON STOCK") for which
options may be granted under the Plan shall not exceed 6,000,000 shares,
plus an annual increase to be added on October 1st of each year equal to
five percent (5%) of the outstanding Common Stock (including for this
purpose any shares of Common Stock issuable on conversion of any
outstanding preferred stock of the Company) on such date; provided,
however, that notwithstanding the foregoing, the total number of shares
of Common Stock for which options designated as ISOs may be granted under
the Plan shall not exceed 10,000,000 shares, in each case subject to
adjustment as provided in Section 11 hereof.
(b) If an option granted hereunder shall expire or terminate for any reason
without having been exercised in full, or an option shall be cancelled or
settled in cash, the unpurchased shares subject thereto shall again be
available for subsequent option grants under the Plan.
(c) Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Committee (as defined in
Section 3 below).
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a committee (the "COMMITTEE")
consisting of two or more members of the Company's Board of Directors.
The Board of Directors may from time to time appoint a member or members
of the Committee in substitution for or in addition to the member or
members then in office and may fill vacancies on the Committee however
caused. The Committee shall choose one of its members as Chairman and
shall hold meetings at such times and places as it shall deem advisable.
A majority of the members of the Committee shall constitute a quorum and
any action may be taken by a majority of those present and voting at any
meeting. Any action may also be taken without the necessity of a meeting
by a written instrument signed by a majority of the Committee. The
decision of the Committee as to all questions of interpretation and
application of the Plan shall be final, binding and conclusive on all
persons. The Committee shall have the authority to adopt, amend and
rescind such rules and regulations as, in its opinion, may be advisable
in the administration of
A-1
<PAGE>
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Option Agreement (as
defined in Section 5) in the manner and to the extent it shall deem
expedient to carry the Plan into effect and shall be the sole and final
judge of such expediency. No Committee member shall be liable for any
action or determination made in good faith.
(b) Subject to the terms of the Plan, the Committee shall have the authority
to (i) determine the employees of the Company and its subsidiary
corporations (from among the class of employees eligible under Section 4
to receive ISOs) to whom ISOs may be granted, and to determine (from the
class of individuals eligible under Section 4 to receive Non-Qualified
Options) to whom Non-Qualified Options may be granted; (ii) determine the
time or times at which options may be granted; (iii) determine the option
price of shares subject to each option which price shall not be less than
the minimum price specified in Section 6; (iv) determine whether each
option granted shall be an ISO or a Non-Qualified Option; (v) determine
(subject to Section 9) the time or times when each option shall become
exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on the
shares subject to options and the nature of such restrictions, and
(vii) determine the terms and conditions of the Option Agreement as
described in Section 5.
4. ELIGIBILITY.
Options designated as ISOs may be granted only to officers and other
employees of the Company or any "SUBSIDIARY CORPORATION" as defined in
Section 424 of the Code. Non-Qualified Options may be granted to any officer,
employee, director, independent contractor, adviser, or consultant of the
Company or of any of its subsidiaries or "DESIGNATED ENTITIES" (as described in
Section 1). Non-Qualified Options may be granted to an individual in connection
with the hiring or engagement of the individual prior to the date that the
individual first performs services for the Company, any subsidiary, or
designated entity.
No option designated as an ISO shall be granted to any employee of the
Company or any subsidiary corporation if such employee owns, immediately prior
to the grant of an option, stock representing more than 10% of the voting power
or more than 10% of the value of all classes of stock of the Company or a
"PARENT CORPORATION" (as defined in Section 424 of the Code) or a subsidiary
corporation, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 6 hereof
shall apply.
The maximum number of shares of Common Stock with respect to which an option
or options may be granted to any individual under the Plan in any one calendar
year shall not exceed 1,000,000 shares of Common Stock, taking into account
shares under options that are granted during such calendar year and also
terminated in such calendar year, subject to adjustment as provided in
Section 11.
5. OPTION AGREEMENT.
Each option shall be evidenced by an option agreement (the "OPTION
AGREEMENT") between the Company and the optionee to whom such option is granted,
which Option Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Option Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the Plan as may be
determined by the Committee. By way of illustration and not limitation, the
Committee may include in the Option
A-2
<PAGE>
Agreement of all or any option holders provisions to address special
circumstances such as termination of employment by the Company for cause, change
in status from employee to consultant, forfeiture of option gains for
competition or other activities materially detrimental to the interests of the
Company, beneficiary designations, reduction in hours from full-time employment,
and paid and unpaid leaves of absence. The date of grant of an option shall be
as determined by the Committee. More than one option may be granted to an
individual.
6. OPTION PRICE.
The option price or prices of shares of the Company's Common Stock for
options designated as Non-Qualified Options shall be as determined by the
Committee, but in no event shall the option price be less than the minimum legal
consideration required therefor under the laws of the State of Delaware or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized. The option price or prices of shares of the Company's Common Stock
for ISOs shall be the fair market value of such Common Stock at the time the
option is granted as determined by the Committee.
7. MANNER OF PAYMENT; MANNER OF EXERCISE.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to the exercise price of such options,
(ii) shares of Common Stock of the Company owned by the optionee having a
fair market value equal in amount to the exercise price of the options
being exercised, or (iii) any combination of (i) and (ii) provided,
however, that payment of the exercise price by delivery of shares of
Common Stock of the Company owned by such optionee may be made only under
such circumstances and on such terms as may from time to time be
established by the Committee and reflected in the Option Agreements. The
fair market value of any shares of the Company's Common Stock which may
be delivered upon exercise of an option shall be determined by the
Committee in accordance with Section 6 hereof. With the consent of the
Committee and reflected in the Option Agreements, payment may also be
made by delivery of a properly executed exercise notice to the Company,
together with a copy of irrevocable instruments to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the
exercise price. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.
(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or
in part from time to time, by giving written notice, signed by the person
or persons exercising the option, to the Company, stating the number of
shares with respect to which the option is being exercised, accompanied
by payment in full for such shares as provided in paragraph (a) above.
Upon such exercise, delivery of a certificate for paid-up non-assessable
shares shall be made at the principal office of the Company to the person
or persons exercising the option at such time, during ordinary business
hours, after ten business days from the date of receipt of the notice by
the Company, as shall be designated in such notice, or at such time,
place and manner as may be agreed upon by the Company and the person or
persons exercising the option.
A-3
<PAGE>
8. EXERCISE OF OPTIONS.
Subject to the provisions of Sections 9 through 11, each option granted
under the Plan shall be exercisable as follows:
(a) VESTING. The option shall either be fully exercisable on the date of
grant or shall become exercisable thereafter in such installments as the
Committee may specify.
(b) FULL VESTING OF INSTALLMENTS. Once an installment becomes exercisable it
shall remain exercisable until expiration or termination of the option,
unless otherwise specified by the Committee.
(c) PARTIAL EXERCISE. Each option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
(d) ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment or any option;
provided, however, that the Committee shall not (except as otherwise
permitted under Section 11), without the consent of an optionee,
accelerate the exercise date of any installment of any option granted to
any employee as an ISO if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code.
9. TERM OF OPTIONS: EXERCISABILITY.
(a) TERM. Each option shall expire not more than ten (10) years from the
date of the granting thereof, but shall be subject to earlier termination
as provided in the Option Agreement.
(b) EXERCISABILITY. Except as otherwise provided in the Option Agreement, an
option granted to an employee optionee who ceases to be an employee of
the Company or one of its subsidiaries shall be exercisable only to the
extent that the right to purchase shares under such option has accrued
and is in effect on the date such optionee ceases to be an employee of
the Company or one of its subsidiaries.
10. OPTIONS NOT TRANSFERABLE. The right of any optionee to exercise any
option granted to him or her shall not be assignable or transferable by such
optionee otherwise than by will or the laws of descent and distribution, or
pursuant to a domestic relations order, and any such option shall be exercisable
during the lifetime of such optionee only by him; provided, however, that the
Committee may permit the further transferability on a general or specific basis
and may impose conditions and limitations on any permitted transferee. Any
option granted under the Plan shall be null and void and without effect upon the
bankruptcy of the optionee to whom the option is granted, or upon any attempted
assignment or transfer, except as herein provided, including without limitation
any purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, divorce, except as provided
above with respect to Non-Qualified Options, trustee process or similar process,
whether legal or equitable, upon such option.
11. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to options granted to him or her hereunder shall
be adjusted as hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company relating to such
option.
(a) STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of options shall be appropriately
A-4
<PAGE>
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
(b) CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "ACQUISITION"), the Committee or
the board of directors of any entity assuming the obligations of the
Company hereunder (the "SUCCESSOR BOARD"), shall, as to outstanding
options, either (i) make appropriate provision for the continuation of
such options by substituting on an equitable basis for the shares then
subject to such options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition; or
(ii) upon written notice to the optionees, provide that all options must
be exercised, to the extent then exercisable, within a specified number
of days of the date of such notice, at the end of which period the
options shall terminate; or (iii) terminate all options in exchange for a
cash payment equal to the excess of the fair market value of the shares
subject to such options (to the extent then exercisable) over the
exercise price thereof.
(c) RECAPITALIZATION OR REORGANIZATION. In the event of a recapitalization
or reorganization of the Company (other than a transaction described in
paragraph (b) above) pursuant to which securities of the Company or of
another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an option shall be entitled to
receive for the purchase price paid upon such exercise the securities he
would have received if he had exercised his option prior to such
recapitalization or reorganization.
(d) MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to paragraphs (a), (b) or (c) with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"MODIFICATION" of such ISOs (as that term is defined in Section 424 of
the Code) or would cause any adverse tax consequences for the holders of
such ISOs. If the Committee determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments.
(e) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, each option will terminate immediately prior
to the consummation of such proposed action or at such other time and
subject to such other conditions as shall be determined by the Committee.
(f) ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the
Company.
(g) FRACTIONAL SHARES. No fractional shares shall be issued under the Plan
and the optionee shall receive from the Company cash in lieu of such
fractional shares.
(h) ADJUSTMENTS. Upon the happening of any of the events described in
paragraphs (a), (b) or (c) above, the class and aggregate number of
shares set forth in Section 2 hereof that are subject to options which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this Section 11 and, subject to
Section 3, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by exercise
of an option made hereunder receives shares or securities or cash in connection
with a corporate transaction described in paragraphs (a), (b) or (c) above as a
result of owning such restricted Common Stock, such shares or
A-5
<PAGE>
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.
12. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option granted under the Plan shall
confer upon any option holder any right with respect to the continuation of his
employment by the Company (or any subsidiary) or interfere in any way with the
right of the Company (or any subsidiary), subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the option holder from the rate
in existence at the time of the grant of an option. Whether an authorized leave
of absence, or absence in military or government service, shall constitute
termination of employment shall be determined by the Committee at the time.
13. WITHHOLDING.
The Company's obligation to deliver shares or provide any benefits under
this Plan shall be subject to the option holder's satisfaction of all applicable
income, employment, and excise tax withholding requirements of all applicable
jurisdictions. With the approval of the Committee, which it shall have sole
discretion to grant, and on such terms and conditions as the Committee may
impose, the option holder may satisfy the foregoing condition by electing to
have the Company withhold from delivery shares having a value equal to the
amount of tax to be withheld. The Committee shall also have the right to require
that shares be withheld from delivery to satisfy such condition.
14. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 7, the Company may delay the
issuance of shares covered by the exercise of an option and the delivery
of a certificate for such shares until the delivery or distribution of
any shares issued under this Plan complies with all applicable laws
(including without limitation, the Securities Act of 1933, as amended),
and with the applicable rules of any stock exchange upon which the shares
of the Company are listed or traded.
(b) It is intended that all exercises of options shall be effective, and the
Company shall use its best efforts to bring about compliance with all
applicable legal and regulatory requirements within a reasonable time,
except that the Company shall be under no obligation to qualify shares or
to cause a registration statement or a post-effective amendment to any
registration statement to be prepared for the purpose of covering the
issue of shares in respect of which any option may be exercised, except
as otherwise agreed to by the Company in writing.
15. LOANS.
The Company may make loans to optionees to permit them to exercise options.
If loans are made, the requirements of all applicable Federal and state laws and
regulations regarding such loans must be met.
16. MODIFICATION OF OUTSTANDING OPTIONS.
The Committee may authorize the amendment of any outstanding option with the
consent of the optionee when and subject to such conditions as are deemed to be
in the best interests of the Company and in accordance with the purposes of this
Plan.
A-6
<PAGE>
17. APPROVAL OF SHAREHOLDERS.
The Plan shall be subject to approval by the vote of shareholders holding at
least a majority of the voting stock of the Company voting in person or by proxy
at a duly held shareholders' meeting, or by written consent of stockholders
holding at least a majority of the voting stock of the Company, within twelve
(12) months after the adoption of the Plan by the Board of Directors and shall
take effect as of the date of adoption by the Board of Directors upon such
approval. The Committee may grant options under the Plan prior to such approval,
but any such option shall become effective as of the date of grant only upon
such approval and, accordingly, no such option may be exercisable prior to such
approval.
18. TERMINATION AND AMENDMENT.
Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan was duly adopted by the Board of
Directors of the Company. The Board of Directors may at any time terminate the
Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 18, the Board of
Directors may not terminate, modify, or amend the Plan without shareholder
approval if such shareholder approval is required by applicable law. The
Committee may terminate, amend, or modify any outstanding option without the
consent of the option holder, provided, however, that, except as provided in
Section 11, without the consent of the optionee, the Committee shall not change
the number of shares subject to an option, nor the exercise the price thereof,
nor extend the term of such option.
19. RESERVATION OF STOCK.
The Company shall at all times during the term of the Plan reserve and keep
available such number of shares of stock as will be sufficient to satisfy the
requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
20. LIMITATION OF RIGHTS IN THE OPTION SHARES.
Any communication or notice required or permitted to be given under the Plan
shall be in writing, and mailed by registered or certified mail or delivered by
hand, if to the Company, to its principal place of business, attention:
President, and, if to an optionee, to the address as appearing on the records of
the Company.
A-7
<PAGE>
Appendix B
PROXY
GO2NET, INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
MARCH 17, 2000
The undersigned hereby appoints Russell C. Horowitz and John Keister, and each
of them, with full power and substitution, proxies to represent the undersigned
at the 2000 Meeting of Stockholders of Go2Net, Inc. to be held on March 17,
2000, at 9:00 a.m., at The Bell Harbor International Conference Center, 2211
Alaskan Way, Seattle, Washington, and at any adjournment or adjournments
thereof, to vote in the name and place of the undersigned, with all powers which
the undersigned would possess if personally present, all the shares of Go2Net,
Inc. standing in the name of the undersigned upon such business as may properly
come before the meeting.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
1. Election of Directors:
<TABLE>
<S> <C> <C>
FOR WITHHOLD FOR ALL EXCEPT (STRIKE A LINE THROUGH NOMINEE NAME)
/ / / / / /
</TABLE>
Nominees: Russell C. Horowitz, William D. Savoy, Diane Daggatt, Dennis Cline,
William A. Fleckenstein
2. To consider and act upon a proposal to adopt the Company's 2000 Stock Option
Plan.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
3. To consider and act upon a proposal to ratify, confirm and approve the
selection of KPMG, LLP as the independent certified public accountants of the
Company for fiscal year 2000.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
4. In their discretion, the proxies are authorized to vote upon such business as
may properly come before the meeting.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
<TABLE>
<S> <C>
HAS YOUR ADDRESS CHANGED? I plan to attend in person / /
- ------------------------------------------------------------ I do not plan to attend in person / /
- ------------------------------------------------------------ Mark box at right if comments or
- ------------------------------------------------------------ address change have been noted on
the reverse side of this card / /
</TABLE>
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS AN AFFIRMATIVE VOTE ON ALL PROPOSALS SPECIFIED. SHARES WILL BE VOTED
AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS 2, 3 AND 4 AS SET FORTH IN
THE PROXY STATEMENT.
PLEASE VOTE, DATE, AND SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
DO YOU HAVE COMMENTS?
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Date:____________, 2000
----------------------------------
Stockholder sign here
----------------------------------
Co-owner sign here
Please sign exactly as your
name(s) appear(s) on the Proxy.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
