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 Section 240.14a-11(c) or
Section 240.14a-12
UBARTER.COM INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
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<PAGE>
UBARTER.COM INC.
21400 INTERNATIONAL BLVD., SUITE 207
SEATTLE, WASHINGTON 98198
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 30, 1999
To the Shareholders of Ubarter.com Inc.
Notice is hereby given that the annual meeting of shareholders ("Annual
Meeting") of Ubarter.com Inc. ("Ubarter.com" or the "Company") will be held at
the DoubleTree Hotel Seattle Airport located at 18740 Pacific Highway South,
Seattle, Washington on Thursday, September 30, 1999, beginning at 1:00 p.m.
local time, for the following purposes:
(1) To elect a board of three directors to serve for ensuing year and
until their successors are elected.
(2) To approve a proposal to authorize the Company to issue up to
10,000,000 shares of preferred stock.
(3) To ratify the appointment of Moss Adams LLP as auditors for fiscal
year ending March 31, 2000.
(4) To consider and act upon any other matters as may properly come before
the Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on August 6, 1999,
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting in person, please complete, sign, date, and return the
accompanying proxy in the enclosed envelope. Your proxy may be revoked at any
time prior to the Annual Meeting. If you later desire to revoke your proxy, you
may do so at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
Richard L. Mayer
Secretary
<PAGE>
UBARTER.COM INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 30, 1999
GENERAL INFORMATION
Your proxy, using the enclosed form, is solicited by the Board of Directors
of Ubarter.com Inc. ("Ubarter.com" or the "Company") for the Annual Meeting of
Shareholders ("Annual Meeting") to be held at 1:00 p.m. on Thursday, September
30, 1999, at the DoubleTree Hotel Seattle Airport located at 18740 Pacific
Highway South, Seattle, Washington, and at any adjournment thereof. Management
anticipates that the mailing to shareholders of this proxy statement and
enclosed proxy will occur on or about August 31, 1999.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Shareholders. Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS
The Company's common stock is the only type of security entitled to vote at
the Annual Meeting. Only shareholders of record at the close of business on
August 6, 1999 ("Record Date") are entitled to receive notice of the Annual
Meeting and to vote the shares they hold at the Annual Meeting or at any
adjournment or postponement. As of the Record Date, there were 5,946,400 shares
of common stock outstanding, each share being entitled to one vote on each
matter to be voted upon. There is no cumulative voting.
The presence at the meeting, either in person or by proxy, of the holders
of at least 40% of the shares of common stock outstanding on the Record Date
will constitute a quorum, permitting the transaction of business at the Annual
Meeting. Proxies received but marked as abstentions and broker non-votes will be
included in the calculation of the number of shares considered to be present at
the Annual Meeting. The affirmative vote by holders of a majority of the shares
present and entitled to vote will be required to elect Directors, approve a
proposal to authorize the Company to issue up to 10,000,000 shares of preferred
stock and to approve additional proposals which may be presented at the Annual
Meeting.
Whether or not you are able to attend the meeting in person, you are urged
to complete, sign, date, and return the accompanying proxy in the enclosed
envelope. Your proxy is solicited by the Company's Board of Directors and when
properly completed, will be voted at the Annual Meeting in accordance with your
instructions. Proxies which are executed but do not specify a vote for, against,
or in abstention, will be voted FOR the nominees of the Board of Directors and
FOR proposals contained in this Proxy Statement. With respect to any other
matters that may come properly before the Annual Meeting, the proxies will be
voted as recommended by the Board of Directors or, if no recommendation is
given, in the discretion of the proxy holders.
Your proxy may be revoked or changed at any time prior to the Annual
Meeting. You may do this by advising the Secretary of the Company in writing of
your desire to revoke your proxy, or by sending the Secretary another signed
proxy with a later date before the beginning of the Annual Meeting. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you may
do so by voting in person. Expenses in connection with the solicitation of
proxies will be paid by Ubarter.com. Proxies are being solicited primarily by
mail, although employees of Ubarter.com (including officers) who will receive no
extra compensation for their services may solicit proxies by telephone,
telegraph, facsimile transmission or in person. The Company has not retained a
proxy solicitor in connection with the Annual Meeting.
A copy of the Company's Annual Report for the year ended March 31, 1999 is being
furnished to each shareholder with this Proxy Statement.
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<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's bylaws provide that the Board of Directors shall consist of
no fewer than one nor more than nine members, as established by the Board of
Directors from time to time. The Board of Directors has established the number
of directors at three. Three directors have been nominated for election to the
Company's Board of Directors at the Annual Meeting to hold office until the next
annual meeting of shareholders or until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal. The
Board of Directors is currently in the process of identifying additional outside
directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES
NAMED BELOW. The affirmative vote of a majority of the shares of Common Stock
present and entitled to vote at the Annual Meeting is necessary to elect the
nominees for director named below. It is intended that the persons named as
proxies in the enclosed form of proxy will vote the proxies received by them for
the election as directors of the nominees named below.
Name Age Position
---- --- --------
Steven M. White 41 Chief Executive Officer, President,
Director and Chairman of the Board
Eric T. Best 28 Nominee
John A. Wade 37 Nominee
Following is a discussion of the business background of each nominee
director.
Steven M. White has been a member of the Board of Directors and has served
as President and Chief Executive Officer since September 1996. From July 1983
until its merger with Ubarter.com in November of 1996, Mr. White served as
President of Cascade Trade Association, a private company involved in the barter
business. He has over nineteen years experience in sales and management,
including over fifteen years affiliated with companies involved in the barter
business. He is currently serving as Chairman of the Board of Directors of the
National Association of Trade Exchanges for the 1999-2000 term and served as its
President for the 1998-1999 term. See "Certain Relationships and Related
Transactions - Merger with Cascade Trade Association."
Eric T. Best is co-founder and has served as Chief Officer Sales &
Marketing, MindCorps, Inc., Seattle, Washington, since October 1996. MindCorps,
Inc. works with companies in creating enterprise-scale Internet projects. Prior
to co-founding MindCorps Inc., Mr. Best was a Professional Consultant to
Microsoft in Internet development, business operations and marketing for The
Microsoft Network from June 1995 to October 1996. Prior to that, Mr. Best served
as Technical Advisor, Rural Telemedicine Network at the University of Washington
School of Medicine from June 1994 to June 1995.
John A. Wade is currently Secretary, Vice President, Finance and Chief
Financial Officer for FreeShop.com. FreeShop.com is a leading provider of direct
marketing services on the Internet. Prior to joining FreeShop.com in May 1998,
Mr. Wade served six years as the Chief Financial Officer/Chief Operating Officer
for Buzz Oates Enterprises, a real estate development company. Prior to that,
Mr. Wade served as the controller for A&A Properties, an asset management
corporation, the controller for Labels West, a manufacturing concern, and as an
auditor and taxation specialist at McGladrey and Pullen, an international
accounting firm.
Board Committees and Meetings
During the fiscal year ended March 31, 1999, the Board of Directors held
six meetings. During this period, each of the directors attended or participated
in more than 75% of the total number of meetings of the Board of Directors.
Ubarter.com's Board of Directors also acts from time to time by written action
in lieu of meetings.
The Board of Directors has not yet established a Compensation Committee or
an Audit Committee. Ubarter.com does not intend to establish a Nominating
Committee. When established, the Compensation Committee will make
2
<PAGE>
recommendations concerning the salaries and incentive compensation of employees
of, and consultants to, Ubarter.com and will administer Ubarter.com's 1998 Stock
Option Plan. When established, the Audit Committee will be responsible for
reviewing the results and scope of audits and other services provided by
Ubarter.com's independent auditors.
Director Compensation
Except for grants of stock options and reimbursement of expenses,
Ubarter.com generally does not compensate its directors or officers for the
services they render us as directors. Ubarter.com does not compensate its
directors for committee participation or for performing special assignments for
the Board of Directors. Under the Company's 1998 Stock Option Plan, non-employee
directors receive stock options to purchase shares of common stock upon their
initial election to the board of directors and automatic grants of stock options
to purchase 5,000 shares of common stock each year upon their re-election at the
annual meeting of shareholders, exercisable at not less than the fair market
value of the Company's common stock on the day of grant. The options vest and
become exercisable on the one-year anniversary of the director's election or
re-election to the Board of Directors. Steven White received options to purchase
5,000 shares of common stock at an exercise price of $.813 per share for his
service as a director. If elected at the Annual Meeting, Messrs. Best and Wade
will each receive options to purchase 10,000 shares of common stock at the fair
market value of the Company's common stock on the day of grant. Mr. White will
not receive compensation or options for his service as a director.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
TO AUTHORIZE 10,000,000 SHARES OF PREFERRED STOCK
On July 15, 1999, Ubarter's Board of Directors approved an amendment to the
Company's Articles of Incorporation, as amended, that would authorize the
Company to issue, from time to time, as determined by the Board of Directors, up
to 10,000,000 shares of preferred stock, $.001 par value per share ("Preferred
Shares"). If the proposed amendment is approved, the Board of Directors would be
empowered, without the necessity of further action or authorization by the
Company's shareholders (unless such action or authorization is required in a
specific case by applicable laws or regulations or stock exchange rules), to
authorize the issuance of the Preferred Shares from time to time in one or more
series or classes, and to fix by resolution the designations, preferences,
limitations, restrictions and relative rights of each such series or class. Each
series or class of Preferred Shares could, as determined by the Board of
Directors at the time of issuance, rank, with respect to dividends and
redemption and liquidation rights, senior to the Company's shares of common
stock, $.001 par value per share ("Common Shares"). No preferred stock is
presently authorized by the Company's Articles of Incorporation, as amended.
The Preferred Shares will provide authorized and unissued shares of
preferred stock which may be used by the Company for any proper corporate
purpose. Such purpose might include, without limitation, issuance as part or all
of the consideration required to be paid by the Company in the acquisition of
other businesses or properties, or issuance in public or private sales for cash
as a means of obtaining additional capital for use in the Company's business and
operations. There are no transactions presently under review by the Board of
Directors which contemplate the issuance of Preferred Shares, though as part of
the Company's efforts to raise capital, it may issue one or more series in the
future.
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It is not possible to state the precise effects of the authorization of the
Preferred Shares upon the rights of the holders of the Company's Common Shares
until the Board of Directors determines the respective preferences, limitations,
and relative rights of the holders of each class or series of the Preferred
Shares. However, such effects might include: (a) reduction of the amount
otherwise available for payment of dividends on Common Shares, to the extent
dividends are payable on any issued Preferred Shares; (b) restrictions on
dividends on the Common Shares; (c) dilution of the voting power of the Common
Shares to the extent that the Preferred Shares had voting rights; (d) conversion
of the Preferred Shares into Common Shares at such prices as the Board
determines, which could include issuance at below the fair market value or
original issue price of the Common Shares; and (e) the holders of Common Shares
not being entitled to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference granted to holders of the Preferred
Shares.
Although the Board of Directors would authorize the issuance of Preferred
Shares based on its judgment as to the best interests of the Company and its
shareholders, the issuance of authorized Preferred Shares could have the effect
of diluting the voting power per share and could have the effect of diluting the
book value per share of the outstanding Common Shares. In addition, the
Preferred Shares could, in certain instances, render more difficult or
discourage a merger, tender offer, or proxy contest and thus potentially have an
"anti-takeover" effect, especially if Preferred Shares were issued in response
to a potential takeover. In addition, issuances of authorized Preferred Shares
can be implemented, and have been implemented by some companies in recent years,
with voting or conversion privileges intended to make acquisition of the Company
more difficult or more costly. Such an issuance could deter the types of
transactions which may be proposed or could discourage or limit the shareholders
participation in certain types of transactions that might be proposed (such as a
tender offer), whether or not such transactions were favored by the majority of
the shareholders, and could enhance the ability of officers and directors to
retain their positions.
If the amendment is authorized, Article Number Four of the Company's
Articles of Incorporation, as amended, will be amended to read as follows:
4.1 The total number of shares of stock which the Corporation shall have
authority to issue is 35,000,000 shares, which shall consist of
25,000,000 shares of common stock, $.001 par value per share ("Common
Shares") and 10,000,000 shares of preferred stock, $.001 par value per
share ("Preferred Shares"). Shares of any class of stock of the
Corporation may be issued for such consideration and for such
corporate purposes as the Board of Directors may from time to time
determine.
4.2 The Board of Directors is hereby authorized from time to time, without
shareholder action, to provide for the issuance of Preferred Shares in
one or more series not exceeding in the aggregate the number of
Preferred Shares authorized by these Articles of Incorporation, as
amended from time to time; and to determine with respect to each such
series the voting powers, if any (which voting powers, if granted, may
be full or limited), designations, preferences, and relative,
participating, option, or other special rights, and the
qualifications, limitations, or restrictions relating thereto,
including without limiting the generality of the foregoing, the voting
rights relating to Preferred Shares of any series (which may be one or
more votes per share or a fraction of a vote per share, which may vary
over time, and which may be applicable generally or only upon the
happening and continuance of stated events or conditions), the rate of
dividend to which holders of Preferred Shares of any series may be
entitled (which may be cumulative or noncumulative), the rights of
holders of Preferred Shares of any series in the event of liquidation,
dissolution, or winding up of the affairs of the Corporation, the
rights, if any, of holders of Preferred Shares of any series to
convert or exchange such Preferred Shares of such series for shares of
any other class or series of capital stock or for any other
securities, property, or assets of the Corporation or any subsidiary
(including the determination of the price or prices or the rate or
rates applicable to such rights to convert or exchange and the
adjustment thereof, the time or times during which the right to
convert or exchange shall be applicable, and the time or times during
which a particular price or rate shall be applicable), whether or not
the shares of that series shall be redeemable, and if so, the terms
and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different
conditions and at different redemption dates, and whether any shares
of that series shall be redeemed pursuant to a retirement or sinking
fund or otherwise and the terms and conditions of such obligation.
4
<PAGE>
4.3 Before the Corporation shall issue any Preferred Shares of any series,
Articles of Amendment or Restated Articles of Incorporation, fixing
the voting powers, designations, preferences, the relative,
participating, option, or other rights, if any, and the
qualifications, limitations, and restrictions, if any, relating to the
Preferred Shares of such series, and the number of Preferred Shares of
such series authorized by the Board of Directors to be issued shall be
filed with the Secretary of State in accordance with the laws of the
State of Nevada and shall become effective without any shareholder
action.
There are currently 25,000,000 Common Shares authorized under the Company's
Articles of Incorporation, as amended. The proposed amendment would not change
the number of Common Shares currently authorized.
The affirmative vote by holders of a majority of the shares of Common Stock
present and entitled to vote at the meeting is required to approve the proposed
amendment. If the amendment is not approved by the shareholders, the Company's
Articles of Incorporation, as amended, which do not authorize the issuance of
any Preferred Shares, will continue in effect. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE PROPOSAL.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Moss Adams LLP as independent auditors
for the Company for the fiscal year ending March 31, 2000. Representatives of
Moss Adams LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions from shareholders.
In the event the shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if the Board of
Directors feels that such a change would be in the Company's and the
shareholders' best interests.
Andersen Andersen & Strong L.C. audited the Company's financial statements
annually since fiscal 1996 through fiscal 1998. Subsequent to the completion of
the audit for the fiscal year ended March 31, 1998, the Company hired a partner
of Andersen Andersen & Strong L.C. to serve as the Company's Chief Financial
Officer. Because it could no longer serve us as an independent accounting firm
for the fiscal year ended March 31, 1999, the former accounting firm declined to
stand for re-election at the 1998 Annual Meeting of Shareholders. During January
1999, the Company engaged the firm of Moss Adams LLP as the Company's
independent auditors for the fiscal year ended March 31, 1999. The reports of
Andersen Andersen & Strong L.C. for prior fiscal years have not contained an
adverse opinion or disclaimer of opinion, nor were they modified as to
uncertainty, audit scope or accounting principles. There were no disagreements
with the former accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT YOU VOTE FOR RATIFICATION
OF THE APPOINTMENT OF MOSS ADAMS LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers, who serve at the discretion of the Board of
Directors, are as follows:
Name Age Position
- ---- --- --------
Steven M. White 41 Chief Executive Officer,
President, Director and
Chairman of the Board
Richard L. Mayer 60 Vice President, Chief Credit
Officer and Secretary
Alan N. Zimmelman 54 Vice President
Kevin R. Andersen 47 Chief Financial Officer and
Treasurer
Bob Bagga 30 Chief Operating Officer
5
<PAGE>
Following is a discussion of the business background of each executive
officer.
Steven M. White has been a member of the Board of Directors and has served
as President and Chief Executive Officer since September 1996. From July 1983
until its merger with Ubarter.com in November of 1996, Mr. White served as
President of Cascade Trade Association, a private company involved in the barter
business. He has over nineteen years experience in sales and management,
including over fifteen years affiliated with companies involved in the barter
business. He is currently serving as Chairman of the Board of Directors of the
National Association of Trade Exchanges for the 1999-2000 term and served as its
President for the 1998-1999 term. See "Certain Relationships and Related
Transactions - Merger with Cascade Trade Association."
Richard L. Mayer has been a member of the Board of Directors since
September 1996. He is not standing for re-election at the Annual Meeting. Mr.
Mayer joined Ubarter.com as a Vice President in November 1996 and was appointed
Corporate Secretary in November 1998 and Chief Credit Officer in March 1999.
From November 1995 until its merger with Ubarter.com, he was Vice President of
Marketing for Cascade Trade Association, a private company involved in the
barter business. He has over thirty years experience in sales and management,
including over six years affiliated with companies involved in the barter
business. From April 1989 to November 1995, he was the owner of Money Mailer of
the Sound, a private company involved in direct mail. From 1960 until 1989, he
was employed by General Electric Capital Corp.
Alan N. Zimmelman has been a member of the Board of Directors since
November 1997. He is not standing for re-election at the Annual Meeting. Mr.
Zimmelman joined Ubarter.com as its Vice President of Operations in November
1997. From November 1987 to August 1996, he was President of BXI West Los
Angeles, a private company involved in the barter business. He has over
twenty-six years experience in sales and management, including over ten years
affiliated with companies involved in the barter business, twelve years
affiliated with companies in the hotel industry and five years affiliated with
companies in hospital administration.
Kevin R. Andersen has served as Chief Financial Officer since joining
Ubarter.com in August 1998. Mr. Andersen has been partner with the firm of
Andersen Andersen & Strong L.C. since 1990. He was formerly with the national
accounting firm of Laventhol & Horwath where he served in the Las Vegas, Nevada
office and in the firm's national tax office in Washington D.C. Mr. Andersen was
on the Laventhol & Horwath Teaching Faculty and has been a Professor of Taxation
at the Washington College of Law. Mr. Andersen received a B.S. degree in
Accounting from the University of Utah in 1977, a Master of Accountancy
(Taxation) from UNLV in 1988, and has been a CPA since 1980.
Bob Bagga has served as Chief Operating Officer since joining Ubarter.com
in March 1999. Prior to joining Ubarter.com, Mr. Bagga was Chief Executive
Officer of Barter Business Exchange Inc. from 1997 and prior to that was Vice
President from 1992 to 1997. Mr. Bagga has been a member of the board of
directors of the International Reciprocal Trade Association since 1996. See
"Certain Relationships and Related Transactions - Acquisition of Barter Business
Exchange Inc."
Significant Employees and Consultants. The Company employs several
administrative, technical, sales and support personnel who perform various
day-to-day tasks and conduct operations. In addition, Ubarter.com from time to
time uses consultants or consulting firms to assist in developing its business
plan and operations. The following individuals are significant employees or
consultants of Ubarter.com.
Liad Y. Meidar, 24, is President of Astra Ventures LLC and since October
1998, has performed the duties of the Company's Vice President, Strategic
Development. Ubarter.com retained Astra Ventures in October 1998 to advise the
Chief Executive Officer and Board of Directors on corporate planning, mergers
and acquisitions. From July 1997 to September 1998, Mr. Meidar was an investment
banker in the Financial Sponsors Group at BT Alex. Brown Incorporated where he
served financial sponsor clients in transactions involving high yield debt
issuances, senior debt underwriting and syndication and international
acquisitions. Mr. Meidar received a B.A. degree in Economics from Princeton
University in June 1997. See "Certain Relationships and Related Transactions -
Relationship with Astra Ventures LLC."
6
<PAGE>
Dan C. Schneider, 45, has served as Chief Technology Officer since joining
Ubarter.com in August 1998. From 1985 to 1998, he worked at Darigold Inc. as
manager of its PC-related activities. He was responsible for the deployment of
UNIX-based, DOS-based, and Windows-based systems and networks, and managed
hardware and software support. In 1997, he developed the corporate website for
Darigold, and established a password-protected database allowing milk producers
to check daily quality control testing data. Mr. Schneider received a B.A.
degree in Business Administration from Central Washington University in 1977.
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid to or earned by
Ubarter.com's President and Chief Executive Officer. No other executive officer
of Ubarter.com received total annual salary, bonus and other compensation in
excess of $100,000 in the fiscal year ended March 31, 1999.
Summary Compensation Table
--------------------------
<TABLE>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name and Principal Securities Underlying
Position Year Salary Bonus Options
- -------- ---- ------ ----- -------
<S> <C> <C> <C> <C>
Steven M. White, 1999 $85,000
President and CEO 1998 $75,000 45,000
</TABLE>
Employment Contracts and Change in Control Agreements
Steven M. White. Pursuant to an Employment Agreement effective as of
November 24, 1998, the Company employs Steven White as President and Chief
Executive Officer. His term of employment commenced on December 1, 1998 and
continues for a period of three years. Mr. White's salary is $85,000 per annum,
which may be increased annually at the discretion of the Board of Directors.
Richard L. Mayer. Pursuant to an Employment Agreement effective as of
November 24, 1998, the Company employs Richard Mayer as Vice President and Chief
Credit Officer. His term of employment commenced on December 1, 1998, and
continues for a period of three years. Mr. Mayer's initial salary is $50,000 per
annum, which may be increased annually at the discretion of the Board of
Directors.
Alan N. Zimmelman. Pursuant to an Employment Agreement effective as of
November 24, 1998, the Company employs Alan Zimmelman as Vice President of
Corporate Barter. His term of employment commenced on December 1, 1998, and
continues for a period of three years. Mr. Zimmelman's initial salary is $50,000
per annum, which may be increased annually at the discretion of the Board of
Directors.
Kevin R. Andersen. Pursuant to an Employment Agreement effective as of
August 1, 1998, the Company employs Kevin Andersen on a part-time basis as Chief
Financial Officer. His term of employment commenced on August 1, 1998, and
continues for a period of three years. Mr. Andersen's base salary is $75,000 per
annum, which may be increased on a temporary basis for additional
project-related accounting duties, or increased annually at the discretion of
the Board of Directors.
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<PAGE>
Bob Bagga. Pursuant to an Employment Agreement effective as of March 1,
1999, the Company employs Bob Bagga as Chief Operating Officer for a period of
two years. Mr. Bagga's base salary is CD$120,000 (approximately US$80,000) per
annum, which may be increased annually at the discretion of the Board of
Directors.
Each of the agreements for Messrs. White, Zimmelman, Mayer, Andersen and
Bagga entitle them to receive options to purchase 40,000 shares of common stock
for each year of employment, which will vest 50% on the first anniversary of the
date of grant, 75% on the date which is 18 months from the grant date and be
fully vested on the second anniversary of the grant date. Mr. Andersen's initial
grant of 40,000 options were fully vested as of their date of grant. All
agreements contain a change of control provision that provides for the
continuing employment of the officer for the duration of the term of the
agreement in the event of a merger, acquisition of Ubarter.com or sale of
substantially all of its assets. Upon the change of control event the agreements
provide that in addition to any payments made for continued employment,
individuals will receive additional payments from the Company as follows:
$150,000 each for Messrs. White, Bagga, Mayer and Zimmelman, and $50,000 for
Kevin Andersen.
Stock Options
The following tables summarize option grants made by the Company to its
Chief Executive Officer during the fiscal year ended March 31, 1999, and the
value of options granted during fiscal 1999 and held by such person at March 31,
1999. No stock options were exercised during fiscal 1999.
<TABLE>
Option Grants in Fiscal Year Ended March 31, 1999
Percent of
Total
Options
Granted
Number of Securities To Employees Exercise or
Underlying Options In Fiscal Base Price Expiration
Name Granted Year 1998 ($/Share) Date(2)
---- ------- --------- --------- -------
<S> <C> <C> <C> <C>
Steven M. White, 45,000 (1) 14.4% $0.8125 June 1, 2003
President and CEO
</TABLE>
(1) The options are 50% vested on June 1, 1999, 75% vested on December 1, 1999
and are fully vested on June 1, 2001. Upon the occurrence of certain
defined accelerating events, these options would become immediately
exercisable.
8
<PAGE>
Aggregated Option Exercises During Year Ended
March 31, 1999 and Value of Options at March 31, 1999
<TABLE>
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-the-Money Options
Exercise Realized Options at March 31, 1999 at March 31, 1999 (1)
-------- -------- ------------------------- --------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven M. White -- -- -- 45,000 -- $75,960
</TABLE>
(1)"Value" has been determined based upon the difference between the per share
exercise price and the market value of the Common Stock at March 31, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of June 30, 1999 for (a) each person
known by the Company to be a beneficial owner of five percent or more of common
stock, (b) each executive officer named in the Summary Compensation Table above
and director and nominee for director, and (c) all directors and executive
officers as a group. Except as otherwise indicated, the shareholders listed in
the table have sole voting and investment power with respect to the Common Stock
owned by them.
Name and Address(1)
of Beneficial Owner Amount and Nature
of Shares of Beneficial Ownership Percentage
--------- ----------------------- ----------
Steven M. White(2) 1,419,196 23.8%
Eric T. Best - -
c/o MindCorps, Inc.
1326 5th Ave., Suite 510
Seattle, WA 98101
John A. Wade (3) 2,250 *
c/o Freeshop.com
95 So. Jackson Street, Ste. 300
Seattle, WA 98104
Astra Ventures LLC(4) 631,500 9.6%
140 West 57th Street, Suite 8D
New York, NY 10019
New Horizons LP(5) 1,214,800 19.2%
248 West Park Avenue
Long Beach, NY 11561
All executive officers and 1,681,846 27.8%
directors as a group(2) 7 persons)
- -------------------------------
* Less than 1%.
9
<PAGE>
(1) The business address of Steven White is 21400 International Blvd., Suite
207, Seattle, WA 98198
(2) Includes the following number of shares which could be acquired within 60
days of June 30, 1999, through the exercise of stock options: Steven White,
22,500 shares; and all directors and executive officers, 107,500 shares.
(3) Includes 2,250 shares of Common Stock owned by Mr. Wade's wife, which he is
deemed to beneficially own.
(4) Includes 630,000 shares which could be acquired within 60 days of June 30,
1999, through the exercise of stock options held by Astra Ventures LLC.
Liad Y. Meidar is the President and controlling equity owner of Astra
Ventures LLC. Mr. Meidar is deemed the beneficial owner of the options
owned by Astra Ventures LLC because of his power to vote and dispose of the
shares underlying the options. See "Certain Relationships and Related
Transactions - Relationship with Astra Ventures LLC."
(5) Sors Inc., as general partner, is also deemed the beneficial owner of the
shares of the common stock owned by New Horizons LP because of its power to
vote and dispose of those shares. Includes 400,000 shares which could be
acquired through the exercise of outstanding warrants.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and all persons who beneficially own more than
10 percent of the outstanding shares of the Company's Common Stock to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of such Common Stock. Directors, executive officers and
such beneficial owners are also required to furnish the Company with copies of
all Section 16(a) reports they file. To the Company's knowledge, based solely
upon a review of the copies of such reports furnished to the Company and written
representations that no other reports were required during the fiscal year ended
March 31, 1999, all Section 15(a) reporting requirements applicable to the
Company's directors, executive officers and such beneficial owners were complied
with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Merger with Cascade Trade Association.
Prior to the November 1996 merger of Ubarter.com with Cascade Trade
Association, Steven White and Richard Mayer were executive officers of Cascade
Trade Association. In September 1996, Mr. White and Mr. Mayer were appointed
directors of Ubarter.com and Mr. White was appointed an officer. Mr. White was
the principal shareholder of Cascade Trade Association. In connection with the
merger, Mr. White was issued 1,800,000 shares of common stock of Ubarter.com.
10
<PAGE>
Acquisition of Barter Business Exchange Inc.
In connection with the Company's acquisition of Barter Business Exchange
Inc. effective March 1, 1999, Mr. Bagga, the Company's Chief Operating Officer,
received consideration of CD$2,450,000 (US$1,641,500)(subject to certain
adjustments) consisting of: (i) cash payments of CD$850,000 (US$563,300) and
US$100,000 at closing; (ii) issuance of a promissory note in the principal
amount of CD$850,000 (US$563,300), which is subject to adjustment, if
applicable, as discussed below; (iii) payment of CD$250,000 (US$167,500) Ubarter
Dollars at closing; and (iv) issuance of 150,000 shares of the Company's common
stock (having a value of US$375,000 as of the closing date). The promissory note
bears no interest and is payable March 1, 2000. The principal amount of the note
will be reduced by the amount, if any, that 10% of the consolidated cash
revenues of Ubarter.com for the period from March 1, 1999 to March 1, 2000, is
less than CD$750,000. The 10% cash revenues do not include trade dollar revenues
but will include any incremental cash revenues to Ubarter.com from any
acquisitions of a majority interest in any entities during the period and cash
revenues derived from strategic alliances or joint ventures during the period.
The Company's obligations under the note are secured by a share pledge agreement
under which the Company pledged the BBE shares to Mr. Bagga. If 10% of the
consolidated cash revenues of Ubarter.com during the period from March 1, 1999
to March 1, 2000, exceed CD$750,000 (US$500,000), the Company must pay Mr. Bagga
such amount over CD$750,000 (US$500,000) in equivalent value of the Company's
common stock. These shares are to be registered and freely tradeable, with a
value per share equal to the closing trading price on the business day
immediately proceeding March 1, 2000.
The Company agreed to register the resale of the 150,000 shares issued to
Mr. Bagga after the closing of the acquisition. Upon registration, those shares
are to have a minimum aggregate value of $350,000. If the minimum aggregate
value is below this amount, then the Company must make up the difference by
making, at the Company's option, a cash payment or through issuing additional
shares of the Company's common stock. Mr. Bagga has agreed not to sell any of
those shares prior to September 1, 1999, and, thereafter, not to sell more than
25,000 of those shares per month without prior notice to Ubarter.com. As a part
of the acquisition, the Company entered into a two-year employment agreement
with Mr. Bagga and named him Chief Operating Officer.
Relationship with Astra Ventures LLC.
The Company has entered into a consulting agreement with Astra Ventures
LLC. Astra Ventures has agreed to serve as the Company's advisor through
December 31, 2001, focusing on potential acquisitions, strategic planning and
business development. Liad Y. Meidar is the President and controlling equity
owner of Astra Ventures LLC. As a part of the consulting arrangement with Astra
Ventures, Mr. Meidar acts as the Company's Vice President, Strategic
Development. For their services, Astra Ventures will receive cash compensation
of $100,000 per year and an aggregate total of 630,000 stock options on a fully
diluted basis. All such options were fully vested as of their date of grant and
terminate on October 1, 2003. Of these options, 50,000 are exercisable at the
price of $4.00; 40,000 at $6.00; 60,000 at $8.00; 80,000 at $10.00; 160,000 at
$12.00; and 240,000 at $14.00. If the Company consummates a merger or
acquisition transaction during the term of the agreement or within one year
thereafter, Astra Ventures will receive a fee equal to 3% of the consideration
paid by us, payable in cash or, at Astra Ventures' option, in shares of the
Company's common stock valued at fair market value. In connection with the
Company's acquisition of Barter Business Exchange Inc. in March 1999, Astra
Ventures elected to receive options to purchase 40,000 shares of the Company's
common stock at an exercise price of $2.75 per share in lieu of cash
compensation. These options become 50% vested on March 2, 2000, 75% vested on
September 2, 2000 and fully vested on March 2, 2001. The options expire upon the
earlier of (i) March 2, 2004 or (ii) in the event the consulting agreement with
Astra Ventures is terminated or not renewed, on the expiration of 90 days from
the date of termination of such agreement.
11
<PAGE>
Relationship With New Horizons L.P.
New Horizons L.P. is one of the Company's significant shareholders. The
general partner of New Horizons LP is Sors Inc., which is managed by Joseph
MacDonald. The spouse of Mr. MacDonald, Mary Martin, entered into a consulting
agreement with us in August 1998. In exchange for investor relations and
consulting services rendered and for reimbursement of expenses, the Company paid
Ms. Martin $2,000 per month and granted her 40,000 options, which were fully
vested as of their grant date, and are exercisable at $.8125 per share. The
agreement was terminated in April 1999.
In July 1998, New Horizons LP purchased 400,000 units, consisting of one
share of common stock and one Warrant, offered by us in a private placement for
$1.25 per unit. The Warrants entitle New Horizons LP to purchase 400,000 shares
of common stock at a price of $1.50 per share.
SHAREHOLDER PROPOSALS FOR 2000 PROXY STATEMENT
To be considered for inclusion in the proxy materials relating to the 2000
annual meeting of shareholders, shareholder proposals must be at the Company's
principal executive offices, 21400 International Blvd., Suite 207, Seattle,
Washington 98198, no later than December 29, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
Richard L. Mayer
Secretary
August 31, 1999
12
<PAGE>
[Form of Proxy]
UBARTER.COM INC.
PROXY FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Steven M. White and Richard L. Mayer, and each
of them, with full power to appoint a substitute, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders of
Ubarter.com Inc. to be held on September 30, 1999, and at all adjournments
thereof, as specified below on the matters referred to, and, in their
discretion, upon any other matters which may be brought before the meeting:
1. Election of Directors:
/ / FOR all nominees (EXCEPT AS MARKED TO THE CONTRARY BELOW)
/ / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
To withhold authority to vote for a specific nominee, place a line through such
nominee's name below:
Steven M. White
Eric T. Best
John A. Wade
2. To approve a proposal to authorize the Company to issue up to 10,000,000
shares of Preferred Stock:
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the appointment of Moss Adams LLP as independent auditors for the
fiscal year ending March 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
4. To vote with discretionary authority on any other business as may properly
be presented at the meeting.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for each item.
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.
Dated: ----------------, 1999
Signature -----------------------------
Signature if held jointly ---------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
