<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
INC.UBATOR CAPITAL, INC.
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(Name of Registrant as Specified in Its Charter)
Not Applicable
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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
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
inc!ubator Capital, Inc.
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Inc.ubator Capital, Inc. (the "Company"), which will be held on
September 6, 2000 at 2:00 P.M. (local time) at the office of Inc.ubator Capital,
Inc., 9777 Wilshire Boulevard, Suite 718, Beverly Hills, CA 90212. The official
notice of the Annual Meeting together with a proxy statement and form of proxy
are enclosed. Please give this information your careful attention. At the
meeting, stockholders of Inc.ubator Capital, Inc. are being asked to elect
directors of Inc.ubator Capital, Inc.
Whether or not you expect to attend the meeting in person it is
important that your shares be voted at the meeting. We urge you to specify your
choices by marking the enclosed proxy and returning it promptly.
Sincerely,
Harry J. Weitzel
Chairman and Chief Executive Officer
Jason W. Galanis
President
<PAGE>
Inc.ubator Capital, Inc.
9777 Wilshire Boulevard
Suite 718
Beverly Hills, CA 90212
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held September 6, 2000
---------------------------
TO OUR STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Inc.ubator Capital, Inc. (the "Company") will be held on
September 6, 2000 at 2:00 P.M. (local time), at the office of Inc.ubator
Capital, Inc., 9777 Wilshire Boulevard, Suite 718, Beverly Hills, CA 90212 for
the following purposes:
1. To elect directors named herein to serve for terms
described in the accompanying Proxy Statement and until
their successors are elected and qualified, as more
fully described in the accompanying Proxy Statement;
2. To act upon such other business as may properly come
before this meeting or any postponement or adjournment
thereof.
The Board of Directors is not aware of any other business to come
before the Annual Meeting.
The Board has fixed July 26, 2000 as the record date for the
determination of stockholders entitled to vote at the Annual Meeting. Only
stockholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the Annual Meeting.
A complete list of stockholders entitled to vote at the Annual Meeting
is available for examination by any stockholder, for any purpose germane to the
Annual Meeting, between 9:00 a.m. and 5:00 p.m. at the office of the Company
located at 9777 Wilshire Boulevard, Suite 718, Beverly Hills, CA 90212 for a
period of ten days prior to the Annual Meeting, as well as at the Annual
Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
Michael Bodnar
Secretary
Beverly Hills, California
July 28, 2000
<PAGE>
Inc.ubator Capital, Inc.
9777 Wilshire Boulevard
Suite 718
Beverly Hills, CA 90212
----------------------------
PROXY STATEMENT
----------------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Inc.ubator Capital, Inc. (the "Company") for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on September 6, 2000
at 2:00 P.M. (local time) at the office of the Company, 9777 Wilshire Boulevard,
Suite 718, Beverly Hills, CA 90212 and at any postponement or adjournment
thereof. The approximate date on which this proxy statement and the accompanying
form of proxy will first be sent or given to stockholders is July 28, 2000.
Sending in a signed proxy will not affect the stockholder's right to
attend the Annual Meeting and vote in person since the proxy is revocable. Any
stockholder giving a proxy has the power to revoke it by, among other methods,
delivering a later dated proxy or giving written notice to the Secretary of the
Company at any time before the proxy is exercised.
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or facsimile by directors, officers or employees of the
Company and its subsidiaries without additional compensation. Upon request by
brokers, dealers, banks or voting trustees, or their nominees who are record
holders of the Company's common stock, par value $0.001 per share (the "Common
Stock"), the Company is required to pay the reasonable expenses incurred by such
record holders for mailing proxy materials and annual stockholder reports to any
beneficial owners of the Common Stock.
A form of proxy is enclosed. If properly executed and received in time
for voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Common Stock and Series A Preferred Stock for election of the nominees for
director named in this proxy statement.
<PAGE>
The enclosed proxy confers discretionary authority to vote with respect
to any and all of the following matters that may come before the Annual Meeting:
(i) matters which the Company has not received notice at least 90 days but not
more than 120 days prior to the Annual Meeting, (ii) approval of the minutes of
a prior meeting of stockholders, if such approval does not amount to
ratification of the action taken at the Annual Meeting; (iii) the election of
any person to any office for which a bona fide nominee is unable to serve or for
good cause will not serve; (iv) any proposal omitted from this proxy statement
and form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); and (v) matters incident to the
conduct of the Annual Meeting. In connection with such matters, the persons
named in the enclosed form of proxy will vote in accordance with their best
judgment.
The Company is not currently aware of any matters which will be brought
before the Annual Meeting (other than procedural matters) which are not referred
to in the enclosed notice of the Annual Meeting.
The Company had 19,655,000 shares of Common Stock outstanding and
8,500,000 shares of Series A Preferred Stock outstanding at the close of
business on July 26, 2000 (the "Record Date"). Stock price and share information
contained in this proxy statement has been adjusted to give effect to a 2 for 1
stock split in the form of a stock dividend paid on December 30, 1999 (the
"Stock Dividend"). In order for a quorum to be present at the Annual Meeting, a
majority of the outstanding shares of the Company's Common Stock as of the close
of business on the Record Date must be present in person or represented by proxy
at the Annual Meeting. All such shares that are present in person or represented
by proxy at the Annual Meeting will be counted in determining whether a quorum
is present, including abstentions and broker non-votes.
Each share of Common Stock outstanding is entitled to one vote on each
matter which may be brought before the Annual Meeting. Each share of Series A
Preferred Stock outstanding is entitled to two votes on each matter which is
brought before the Annual Meeting. Holders of the Series A Preferred Stock vote
together with holders of the Common Stock as a single class. The election of
directors will be determined by a plurality vote. Under the Delaware General
Corporation Law, an abstention, withholding of authority to vote or broker
non-vote on any proposal, other than the election of directors, will have the
same legal effect as an "against" vote.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of July 26, 2000, the beneficial
ownership of the Company's Common Stock: (i) by each person known by the Company
to be the beneficial owner of five percent or more of the Company's outstanding
Common Stock, (ii) by each director and nominee for director of the Company,
(iii) by the chief executive officer and each executive officer whose
compensation would have exceeded $100,000 during fiscal 2000 (the "Named
Officers"), and (iv) by the directors, director nominee and executive officers
of the Company as a group. Unless otherwise specified, all persons listed below
have sole voting and investment power with respect to their shares. The business
address of the officers of the Company is that of the Company.
2
<PAGE>
<TABLE>
<CAPTION>
Number of Common Number of Preferred
Name, Position and Address Shares Beneficially Percentage Shares Beneficially Percentage
of Beneficial Owner Owned(1) of Class Owned (1) of Class
---------------------------------------------------- ------------------- ---------- ------------------- ----------
<S> <C> <C> <C> <C>
Thesseus International Asset Fund NV 4,000,000 (2) 20.4% -- --
Zeelandia Office Park
16 Kaya W.F.G. (Jombi)
Mensing, Curacao,
Netherlands Antilles
Harry J. Weitzel 2,000,000 (4) 9.2 -- --
Chairman and Chief Executive Officer
Jason W. Galanis 2,000,000 (3) 9.2 8,500,000 (4) 100%
President, Chief Operating Officer, Chief Business
Development Officer and Director
Michael Bodnar 100,000 (5) 0.5 -- --
Treasurer, Chief Financial Officer, Secretary
And Director
Leighton A. Bloom 2,000,000 (6) 9.2 -- --
Chief Technology Officer and Director
George C. Pilallis 1,000,000 (8) 4.8 -- --
Executive Vice President and Director
Kevin L. Washington (9) 2,000,000 (3) 9.2 8,500,000 (4) 100
Executive Vice President and Director
Rory F. Knight 400,000 (7) 2.0 -- --
Director
Nicholas Wise 1,000,000 (8) 4.8 -- --
Director
Kyle Washington (9) 1,640,000 8.3 -- --
10 Pemberton Avenue
North Vancouver, B.C.
V7P 2R1
Directors and Executive Officers as a Group 10,500,000 34.8 8,500,000 (4) 100
(8 persons) (10)
</TABLE>
-----------------------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC. Accordingly they may include securities owned by
or for, among others, the wife and/or minor children or the individual and
any other relative who has the same home as such individual, as well as
other securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days after the date of this table. Beneficial ownership
may be disclaimed as to certain of the securities.
3
<PAGE>
(2) Trustkantoor Curacao, the Ernst and Young affiliate which is the resident
director of Thesseus, has sole voting and dispositive power over the
shares held by Thesseus. Jason W. Galanis is a one fourth beneficiary of a
family trust that owns 90,867 shares of Series C Preferred Stock and
2,970,640 shares of common stock of Thesseus. Mr. Galanis has no voting or
dispositive power over the shares held by Thesseus. Until their
resignation as of April 10, 2000, Harry Weitzel, Mr. Galanis and Rory
Knight were directors of Thesseus.
(3) Represents 2,000,000 shares underlying options which are exercisable
within 60 days of the record date for the Annual Meeting. Excludes
17,000,000 shares of Common Stock which Messrs. Galanis and Washington
have the right to acquire upon the conversion of the 8.5 million shares of
Series A Preferred Stock held jointly by Messrs. Galanis and Washington
based on the current exchange ratio. Assuming conversion of all of the
Series A Preferred Stock at the current exchange ratio of 2 for 1, Messrs.
Galanis and Washington would be the beneficial holders of an additional
46.4% of the outstanding common stock.
(4) Represents shares of Series A Preferred Stock held jointly by Messrs.
Galanis and Washington which are currently convertible into two shares of
common stock (subject to adjustment). Messrs. Washington and Galanis have
shared voting and investment power over the related securities.
(5) Represents 100,000 shares underlying options which are currently
exercisable.
(6) Represents 2,000,000 shares underlying options which are currently
exercisable.
(7) Represents 400,000 shares underlying options which are currently
exercisable.
(8) Represents 1,000,000 shares underlying options which are currently
exercisable.
(9) Kevin Washington and Kyle Washington are brothers.
(10) Includes 10.5 million shares subject to options which are currently
exercisable and 8.5 million shares of Series A Preferred Stock, each
convertible into two shares of common stock. Excludes 17,000,000 shares of
Common Stock which could be acquired upon conversion of the Series A
Preferred Stock held jointly by Messrs. Galanis and Washington based upon
the current exchange ratio.
On May 22, 2000, Inc.ubator entered into a term sheet (the "Term
Sheet") to acquire all of the outstanding capital stock of ThemeWare Corporation
("ThemeWare"), a California corporation, which provides software and consulting
services for individuals and small businesses to connect to and learn about the
Internet.
The Term Sheet provides, among other things, that Inc.ubator will
acquire 100% of the outstanding capital stock of ThemeWare for $135 million in
Inc.ubator's registered common stock. Based on the Company's market price of the
common stock on July 24, 2000, the Company would be required to issue
approximately 41.0 million shares of its common stock to the current
shareholders of ThemeWare. The issuance of these shares, as contemplated in the
Term Sheet, would result in shareholders of ThemeWare controlling a majority of
the outstanding common stock of Inc.ubator. There is no assurance that the
acquisition will be consummated or that if consummated it will be pursuant to
the terms of the Term Sheet.
4
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
The Company's Amended and Restated Bylaws currently provide that the
Board shall consist of not less than one nor more than nine directors and that
within these limits the number of directors shall be as established by the
Board. The Board has set the number of directors at eight. The Company's Amended
and Restated Certificate of Incorporation provides that the Board of Directors
shall be divided into three classes, having staggered terms of office, which are
as equal in number as possible. The Company's Board of Directors was divided
into three classes as required by the Amended and Restated Certificate of
Incorporation. At the Annual Meeting, director nominees will be elected to serve
for terms of one, two or three years depending upon the class in which each
director serves or until their successors are elected and qualified.
The initial directors of Class I, Michael Bodnar and Leighton A. Bloom,
have been nominated to serve for terms of one year or until the 2001 Annual
Meeting of Stockholders. The initial directors of Class II, George C. Pilallis,
Kevin L. Washington and Dr. Rory F. Knight, have been nominated to serve for
terms of two years or until the 2002 Annual Meeting of Stockholders. The initial
directors of Class III, Harry J. Weitzel , Jason W. Galanis and Nicholas Wise,
have been nominated to serve for a term of three years or until the 2003 Annual
Meeting of Stockholders. At each Annual Meeting of Stockholders following the
2000 Annual Meeting, elections shall be held to elect directors, whose term has
expired, for a term of three years and after the expiration of such term, shall
thereafter be elected every three years for a three year term. The Company's
Amended and Restated Articles of Incorporation does not permit stockholders to
cumulate their votes for the election of directors.
The following table sets forth certain information, as of the Record
Date, regarding the Company's Board of Directors. The Board has nominated the
nominees named below, which nominees are currently serving as directors and have
indicated their willingness to continue serving as directors. The Board knows of
no reason why any such nominees would be unable to serve as a director. If any
nominee should for any reason become unable to serve, then valid proxies will be
voted for the election of such substitute nominee as the Board of Directors may
designate or the Board may reduce the number of directors to eliminate the
vacancy.
<TABLE>
<CAPTION>
Position(s) Held Director Term to
Name Age (1) In the Company Since Expire
---------------- ------- --------------------------------------------- -------- -------
<S> <C> <C> <C> <C>
Harry J. Weitzel 61 Chairman and Chief Executive Officer 1999 2003
Jason W. Galanis 30 President, Chief Operating Officer, Chief 1999 2003
Business Development Officer and Director
Michael Bodnar 51 Treasurer, Chief Financial Officer, 1999 2001
Secretary and Director
Leighton A. Bloom 65 Chief Technology Officer and Director 1999 2001
George C. Pilallis 52 Executive Vice President and Director 1999 2002
Kevin L. Washington 27 Executive Vice President and Director 1999 2002
Dr. Rory F. Knight 46 Director 1999 2002
Nicholas Wise 42 Director 1999 2003
</TABLE>
---------------------------
(1) As of the Record Date.
5
<PAGE>
The principal occupation of each director of the Company and each of
the nominees for director is set forth below. All directors have held their
present position for at least five years unless otherwise indicated.
Harry J. Weitzel-- Chairman and Chief Executive Officer. Mr. Weitzel
became the Company's Chairman and Chief Executive Officer in November 1999. Mr.
Weitzel currently is, and has been since June 1998, the Managing Principal of
Cedar Cove Advisors, LLC, a private investment management and financial advisory
firm located in Lexington Park, Maryland. From August 1996 to May 1998, he was
the Chief Executive Officer of Pacific Consumer Funding, LLC, ("PCF") a national
originator, servicer and seller of non-prime consumer loans located in Dallas,
Texas. Mr. Weitzel continues to serve as a consultant to Pacific USA Holdings
Corp., PCF's parent. From January 1992 to July 1996, Mr. Weitzel was President
of the Consumer Asset Management Division ("CAMD"), formerly CLS Corporation, of
Electronic Data Systems Corporation. Mr. Weitzel was also a founder of Thesseus
and served as a director from inception in 1997 until April 10, 2000.
Jason W. Galanis -- President, Chief Operating Officer, Chief Business
Development Officer and Director. Mr. Galanis became President, Chief Operating
Officer and a Director of the Company in November 1999. He became the Company's
Chief Business Development Officer in February 2000. Mr. Galanis is a principal
of Vianden Capital Management, L.L.C., the investment advisor to Thesseus, a
closed-end, split income venture capital fund that he founded to invest in
early-stage financial services companies in North America and the UK, which he
founded in December 1997. He is a managing director of KnightVianden, Oxford,
UK, a financial services company, which he co-founded with Dr. Knight and Mr.
Washington in October 1998. In January 1996 a company affiliated with The Credit
Store acquired Service One International, Inc., an established 15-year old
credit card originator and servicer located in Sioux Falls, South Dakota. In
October 1996 the trust and other shareholders sold The Credit Store and its
affiliates, including Service One, to a New York-based financial services group.
The transaction included a technology licensing and gross royalty agreement
called the Mutual Business Development Agreement (MBDA), now partially owned by
the Company. Mr. Galanis has also served as a director of Thesseus from February
9, 1998 until April 10, 2000. In June 1992, he co-founded a credit card
receivables originator, which became The Credit Store (OTCBB: PLCR). He
completed the Advanced Management Programme at Templeton College, Oxford
University.
Michael Bodnar -- Treasurer, Chief Financial Officer, Secretary and
Director. Mr. Bodnar has been Chief Financial Officer of the Company since
November 1999. Mr. Bodnar is also Chief Financial Officer and Treasurer of
Thesseus, a position he has held since December 1997. From June 1997 until he
joined Thesseus, Mr. Bodnar was Chief Financial Officer of Financial Asset
Management Group, a group of financial services sector companies with offices in
Vancouver that concentrated in the distressed debt field. From March 1983 to
April 1997 Mr. Bodnar was Vice President, Finance for Wosk's Ltd., a major
Western Canadian retailer of furniture, appliances and electronics products,
where his responsibilities included overseeing all areas of consumer finance,
including credit card programs. Prior to that, Mr. Bodnar spent 10 years with
KPMG in Vancouver, B.C., where he performed audit and general business advisory
services, leaving as a Senior Manager in 1983. He has been a member of the
British Columbia and Canadian Institutes of Chartered Accountants since 1978.
Dr. Rory F. Knight-- Director. Dr. Knight is Dean of Templeton College,
the graduate business school at Oxford University, a position he has held since
1994. He is also a Fellow in Finance at Templeton College. Prior to coming to
Oxford he was the Deputy Director of a foundation within the Swiss National Bank
(the central bank of Switzerland) from 1986 to 1994. In this capacity he worked
directly with the Directorate and with the International Banking sector. Dr.
Knight's work on stockholder value has been published internationally and
includes the Value Creation Quotient (VCQJ), his public company quantitative
analysis. Dr. Knight also advises a number of multinational businesses and is on
the board of an international investment fund.
6
<PAGE>
Dr. Knight acts as a consultant to a number of banks and large
corporations on financial management issues. He has also held chairs in Finance
in the University of Cape Town and IMD, Lausanne, and is the Chairman of the
Finance group within the Ecole Nationale des Ponts et Chaussees in Paris. In
1997, the University of Oxford appointed Dr. Knight to the newly created post of
Deputy Director in the University's School of Management Studies with special
responsibility for Executive Education. Dr. Knight's role has been to develop
and co-ordinate the University's accredited courses for managers and executives.
Dr. Knight was also a founder of Thesseus and served as a director from
its inception in 1997 until April 10, 2000. Dr. Knight is chairman and founding
partner of KnightVianden Capital an Oxford based financial services group,
founded with Jason Galanis and Kevin Washington.
Kevin Washington--Executive Vice President and Director. Mr. Washington
became Executive Vice President and Director of the Company in November 1999.
Mr. Washington is and has been since 1997 a principal in Olympic Holdings, a
privately held equity securities investment and trading firm with offices in Los
Angeles and London. He is a founding partner of KnightVianden Capital, an Oxford
based financial services group founded with Jason Galanis and Dr. Knight.
KnightVianden Capital operates KnightVianden Research Associates within
Templeton (Oxford University) which focuses on risk and value with a particular
focus in biotechnology, Internet companies and financial services. Mr.
Washington is also a partner in a family partnership which has interests in real
estate, avionics and other venture capital investments.
Leighton A. Bloom -- Chief Technology Officer and Director. Mr. Bloom
became Chief Technology Officer and Director of the Company in November 1999.
Mr. Bloom is currently and has been since 1998 a technology consultant to Key
Bank, a national bank, on Internet and intranet information retrieval and
publishing. He was a senior technology consultant to Chemical Bank and its
successor, Chase Manhattan Bank, from 1993 until August 1999, developing
techniques for management of, and information mining and distribution from, very
large investment databases in support of private, corporate and mutual fund
asset managers, most recently for intranet publication. Previously, from 1991 to
1993, Mr. Bloom was a senior consultant to Donaldson, Lufkin & Jenrette on the
collection, management and internal publication of investment banking
information; to Avon Corporation on data mining and analysis of marketing
program effectiveness; and to Aetna, Inc. on the optimization of computer-based
corporate health care customer service interactions. During 38 years in the
computer industry, Mr. Bloom has developed systems for several other firms in
the financial services industry as well as firms in other industries that
include publishing, litigation, real estate, natural resources, manufacturing,
transportation, communications, and advertising.
George C. Pilallis-- Executive Vice President and Director. Mr.
Pilallis joined the Company as Managing Director in December 1999 and became
Executive Vice President in February 2000. From June 1997 to December 1999, Mr.
Pilallis was President and Chief Executive Officer of Advantage Funding Group,
Inc. a subsidiary of Pacific Consumer Funding ("PCF") an originator, servicer
and seller of non-prime consumer loans located in Boston, Massachusetts. Mr.
Pilallis previously held the position of Managing Director for PCF, a unit of
Pacific USA Holdings Corp., a national originator, servicer and seller of
non-prime consumer loans located in Dallas, Texas from March 1997 to January
1998. From June 1991 to February 1997, Mr. Pilallis was Managing Director of
Capital Markets of the Consumer Asset Management Division ("CAMD"), formerly CLS
Corporation, of Electronic Data Systems Corporation. Mr. Pilallis was
responsible for all aspects of consumer loan outsourcing services for capital
market transactions, particularly those involving non-prime and sub-prime
asset-backed classes in automobile, home equity and credit cards. Prior to
joining CAMD, Mr. Pilallis held a variety of executive positions with SMS
Corporation, GE Capital Mortgage Insurance and the John H. Harland Company.
7
<PAGE>
Nicholas P. Wise -- Director. Mr. Wise became a Director of the Company
in December 1999. Mr. Wise has a long career managing public policy issues in
Washington, D.C., which assists the Company in advancing business, policy and
social issues for its target market, a generally socially disadvantaged
demographic group. He is President and founder of the government affairs firm of
Wise & Associates, Washington, D.C., specializing in legislative and regulatory
matters before the Congress and executive branch agencies, a position he has
held since January 1997.
From 1983 until 1986, Mr. Wise was an attorney on the staff of Senator
Mike DeWine (Rep: Ohio). He served as Senator DeWine's Chief Counsel and
Legislative Director from 1986 to 1989. From 1989 to 1992, he served as Deputy
Assistant Attorney General at the Department of Justice, where he was Attorney
General Thornburgh's liaison with Congress and to the Counsel to the President.
Mr. Wise served as Chief Strategist and Chief Counsel for Senator DeWine from
1992 through 1997.
Mr. Wise earned his J.D. at Case Western Reserve University in 1983 and
his B.A. (cum laude) at the University of Cincinnati in 1980. Mr. Wise is a
member of the Ohio and Virginia Bar.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NOMINEES FOR DIRECTOR.
Board, Committees and Attendance at Meetings
The Board of Directors of the Company held four meetings during the
fiscal year ended March 31, 2000. During fiscal 2000, no director attended fewer
than 75% of the aggregate of the total number of Board meetings on which he
served. No committees were established during fiscal 2000. The following is a
description of each of the committees of the Board of Directors of the Company.
Audit Committee. The members of the Audit Committee are Messrs. Wise
and Knight. The Audit Committee, which was established May 1, 2000, reviews the
Company's audited financial statements and makes recommendations to the Board
concerning the Company's accounting practices and policies and the selection of
independent accountants. The Audit Committee did not meet during fiscal 2000.
Compensation of Directors
General. During fiscal 2000, non-employee directors of the Company did
not receive any compensation for meetings attended. The Company issued stock
options to its non-employee directors which are presently exercisable. Messrs.
Knight and Wise were granted options to purchase 400,000 and 1,000,000 shares of
common stock at exercise prices of $0.04 and $2.00, respectively. The Board of
Directors may determine to pay fees to members of the Board in the future,
although the amount of timing of payment of such fees has not yet been
determined.
8
<PAGE>
Executive Compensation
The following table sets forth information regarding compensation paid
by the Company and its subsidiaries to the Chief Executive Officer and each
Named Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
----------------------------------------- ---------------------------------------
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options/ All Other
Principal Position Year Salary Bonus Compensation(1) Award(s) SARS (#) Compensation
----------------------------- ------- ------ ----- --------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harry J. Weitzel 2000 0 0 0 0 2,000,000(3) 0
Chairman and Chief Executive
Officer
George C. Pilallis 2000 $37,500(2) 0 0 0 1,000,000(4) 0
Executive Vice President and
Director
</TABLE>
----------------------------
(1) Excludes perquisites and other personal benefits that do not exceed
$50,000 or 10% of each officer's total salary and bonus.
(2) Mr. Pilallis joined the Company effective January 1, 2000 at an annual
salary of $150,000.
(3) Represents options to purchase 2,000,000 shares of common stock at the
exercise price of $.045.
(4) Represents options to purchase 1,000,000 shares of common stock at the
exercise price of $2.00.
1999 Stock Option Plan
The Board of Directors and stockholders holding a majority of the
outstanding common stock of the Company have also adopted the 1999 Stock Option
Plan (the "Stock Option Plan"), which provides for the issuance of options to
acquire up to 15,000,000 shares (as adjusted for the Company's December 30, 1999
stock split) of the Company's common stock. As of July 26, 2000, options to
purchase 10,500,000 shares had been granted. None of these options had been
exercised as of such date. The purpose of Stock Option Plan is provide
additional financial incentive to officers, directors, key employees and
important consultants of the Company (and its present or future subsidiary
corporations).
Certain of the options issued under the Stock Option Plan may
constitute incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The remainder of the
options issued under the Stock Option Plan will constitute nonqualified stock
options.
The Stock Option Plan is administered by the Board of Directors until
the Board determines to establish an option committee (the "Committee") to do
so. Subject to the express provisions of the Stock Option Plan, the Committee
has authority to interpret the Stock Option Plan and make all other
determinations necessary or advisable for the administration of the Stock Option
Plan. The Committee has authority, subject to the express provisions of the
Stock Option Plan, to select individuals to participate in the Stock Option
Plan, and to determine the number of shares subject to each option, the time at
which the option is to be granted, the type of option, the option period, the
option price, and the manner in which the options become exercisable, and to
adopt other provisions as it deems necessary or desirable.
9
<PAGE>
The Stock Option Plan provides for the grant of options representing up
to an aggregate of 15,000,000 shares of common stock, subject to adjustment as
discussed below. If an option granted under the Stock Option Plan expires, is
canceled, or terminates unexercised as to any share of common stock subject
thereto, or such shares will again be available for purposes of the Stock Option
Plan. In the event of any change in the outstanding shares of common stock of
the Company by reason of any stock dividend or split, reorganization or
recapitalization, merger, dissolution, combination or exchange of shares or
other similar corporate change, the number of shares of stock subject to the
Stock Option Plan and the aggregate number of shares in outstanding option
agreements shall be equitably adjusted by the Committee.
The option price per share of common stock will be fixed by the
Committee, but the option price for incentive stock options will not be less
than 100% of the fair market value on the date the option is granted. The
Committee will determine the expiration date of each option, but, in the case of
an incentive stock option, such expiration date will not be later than ten years
after the date of grant. No option shall be assignable or transferable by an
optionee except by will or the laws of descent and may be exercised during the
life of the optionee only by the optionee, except that the Committee may
determine the extent and manner in which optionees may designate a beneficiary
to exercise the option after the optionee's death or transfer any option.
The Board of Directors may amend, suspend, or terminate the Stock
Option Plan at any time. Termination of the Stock Option Plan will not affect
the rights of optionees under options previously granted to them. All unexpired
options will continue until, by their own terms and conditions, they lapse or
terminate. No incentive stock options may be granted after the tenth (10th)
anniversary of the effective date of the Stock Option Plan.
10
<PAGE>
The following table sets forth information regarding the option values
of options held by the named officers at fiscal year end. No options were
exercised during fiscal 2000.
AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs at
Shares Options/ SARs at Fiscal Fiscal Year End
Acquired on Value Year End Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable (1) Unexercisable (2)
----------------------------- ----------- ----------- ------------------------ --------------------
<S> <C> <C> <C> <C>
Harry J. Weitzel 0 0 2,000,000/0 16,160,000/0
Chairman and Chief Executive
Officer
George C. Pilallis 0 0 1,000,000/0 6,125,000/0
Executive Vice President and
Director
</TABLE>
---------------------
(1) Shares subject to options and exercise prices have been adjusted as a
result of the Stock Dividend.
(2) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options granted based upon the closing
sales price per share of $8.125 on March 31, 2000.
The following table sets forth information regarding options to
purchase shares of Common Stock granted to the Named Officers during fiscal
2000. The Stock Option Plan does not provide for the grant of stock appreciation
rights ("SARs").
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price
Name Granted (#)(1) Fiscal Year ($/sh) Expiration Date
------------------------------- -------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Harry J. Weitzel 2,000,000(2) 19% .045 November 2004
Chairman and Chief Executive
Officer
George C. Pilallis 1,000,000(3) 9.5% 2.00 December 2009
Executive Vice President and
Director
</TABLE>
----------------------
(1) Shares subject to option have been adjusted as a result of the Stock
Dividend.
(2) Such options have a term of 5 years and are fully vested.
(3) Such options have a term of 10 years and are fully vested.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Several of the members of Inc.ubator's management team, namely, Harry
Weitzel, Kevin Washington and Jason Galanis, were, until their resignation on
April 10, 2000, principals in Thesseus International Asset Fund NV ("Thesseus"),
the entity from which Inc.ubator acquired its interests in Eikos Acquisition
Limited, eCard Solutions, Inc. (formerly Brunswick Capital Partners, Inc.) and
InfoBase Direct Marketing Services, Inc. ("InfoBase"). Inc.ubator acquired 100%
of Eikos for 3.0 million shares of common stock (as adjusted for the Stock
Dividend) and 8.5 million shares of Series A Preferred Stock. Each share of
Series A Preferred Stock converts into 2 shares of common stock. Inc.ubator also
initially acquired from Thesseus, in exchange for 2,000,000 shares of Inc.ubator
common stock, preferred stock convertible into 40% of the common stock of eCard
Solutions, Inc. and preferred stock convertible into 49% of the common stock of
InfoBase. As a result, these transactions did not result from arms-length
negotiations. The related agreements may include terms and conditions that may
be more or less favorable to Inc.ubator than terms contained in similar
agreements negotiated with third parties. Michael Bodnar is an officer of
Thesseus.
Thesseus and Inc.ubator also have an informal arrangement pursuant to
which Inc.ubator reimburses Thesseus for its pro rata share of administrative
expenses as determined by management. These administrative expenses include
among other things, rent, administrative staff and office costs. During the 2000
fiscal year, Inc.ubator paid Thesseus $71,000 for these expenses.
Kevin Washington and Jason Galanis are principals of K. Washington -
Galanis Investments LLC, from which Inc.ubator acquired 100% of [email protected],
Inc. for 4,000,000 shares of Common Stock (as adjusted for the Stock Dividend).
As a result, this transaction did not result from arms-length negotiations and
the related agreement may include terms and conditions that may be more or less
favorable to Inc.ubator than the terms contained in similar agreements
negotiated with third parties.
In order to fund the initial payment required in respect of the
ThemeWare acquisition described above, the Company received a $1,000,000 loan
from Derek M. Galanis, a brother of Jason Galanis. Subsequently, on July 7,
2000, the stockholder agreed to convert this loan into 1,000,000 non-voting,
non-redeemable, Series B, 8% cumulative preferred shares in return for 50,000
two year warrants each entitling the holder to acquire one common share for
$2.50. The preferred shares are convertible into 250,000 common shares, subject
to anti-dilution provisions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's directors, executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on 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, 2000, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with except for the late filing of a Form 3
by Messrs. Pilallis, Wise, Weitzel, Knight, Galanis, Washington and Bodnar.
12
<PAGE>
STOCKHOLDER PROPOSALS
The deadline for providing the Company timely notice of any stockholder
proposal to be submitted outside of the Rule 14a-8 process for consideration at
the Company's 2001 Annual Meeting of Stockholders (the "2001 Meeting") will be
not less than ninety days nor more than one hundred and twenty days prior to the
first anniversary of the preceding year's annual meeting; provided, that if the
date of the annual meeting is advanced by more than twenty days or delayed by
more than seventy days from such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than one hundred and twenty days
prior to such annual meeting and not later than the close of business on the
later of the ninetieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. As to all such matters which the Company does not have notice on or
prior to the time period set forth in the preceding sentence discretionary
authority shall be granted to the persons designated in the Company's proxy
related to the 2001 Meeting to vote on such proposal. In addition, the Rule
14a-8 requirements applicable to inclusion of stockholder proposals in the
Company's proxy materials related to the 2001 Meeting require that a stockholder
proposal regarding the 2001 Meeting must be submitted to the Company at its
office located at 9777 Wilshire Boulevard, Suite 718, Beverly Hills, California
90212, by March 31, 2001 to receive consideration for inclusion in the Company's
2001 proxy materials. Any such proposal must also comply with the proxy rules
under the Exchange Act, including Rule 14a-8.
INDEPENDENT PUBLIC ACCOUNTANTS
Effective January 12, 2000, the Company determined not to renew its
engagement with the accounting firm of Barry Friedman, P.C. and appointed KPMG
LLP as its independent auditors. There were no disagreements on any matter of
accounting principles or practices, financial statement presentation or
disclosure, or auditing scope or procedures with the Company's prior
accountants. The independent accountants' reports on the Company's financial
statements for the past two years did not contain an adverse opinion, disclaimer
of opinion nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. The decision to change certifying accountants was
approved by the Company's Board of Directors. During the Company's two most
recent fiscal years there were no disagreements or "reportable events" with the
Company's former or current independent accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
Based upon the recommendation of the Audit Committee, the Board of
Directors has selected KPMG LLP to be the Company's independent certified public
accountants for fiscal 2000.
A representative of KPMG LLP is expected to be present at the Annual
Meeting to have the opportunity to make a statement if he or she desires to do
so and to be available to respond to appropriate questions.
13
<PAGE>
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to
Stockholders for the year ended March 31, 2000 (the "Annual Report"). The Annual
Report contains the Company's audited financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH 31, 2000 REQUIRED
TO BE FILED WITH THE SEC WITHOUT CHARGE, EXCEPT FOR EXHIBITS TO THE REPORT, BY
SENDING A WRITTEN REQUEST THEREFOR TO:
Jason W. Galanis
9777 Wilshire Boulevard
Suite 718
Beverly Hills, CA 90212
By Order of the Board of Directors,
Harry J. Weitzel
Chairman and Chief Executive Officer
14
<PAGE>
REVOCABLE PROXY
INC.UBATOR CAPITAL, INC.
Annual Meeting of Stockholders - September 6, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INC.UBATOR
The undersigned hereby constitutes and appoints Jason Galanis and Harry
Weitzel and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution for and in the name, place and stead of the
undersigned to appear at the Annual Meeting of Stockholders (the "Annual
Meeting") of Inc.ubator Capital, Inc. ("Inc.ubator" or the "Company"), to be
held on September 6, 2000, and at any postponement or adjournment thereof, and
to vote all of the shares of Common Stock of Inc.ubator which the undersigned is
entitled to vote, with all the powers and authority the undersigned would
possess if personally present. The undersigned directs this proxy to vote as
indicated on the reverse side of this proxy card:
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
INSTRUCTIONS TO THE CONTRARY ARE INDICATED, THE PERSONS NAMED HEREIN INTEND TO
VOTE FOR THE ELECTION OF THE NOMINEE. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR, IF
ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS
CONFERRED BY THIS PROXY. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY AS
TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
(Continued and to be signed on reverse side)
<PAGE>
<TABLE>
<S> <C>
Please mark your votes as in this example. _X_
The Board of Directors recommends a VOTE "FOR" the election of the nominees listed below.
I. The election as directors of all of the following nominees for the term set forth below and until their
successors are elected and qualified:
Class I (term of one year) - Michael Bodnar and Leighton A. Bloom.
Class II (term of two years) - George C. Pilallis, Kevin L. Washington and Dr. Rory F. Knight.
Class III (term of three years) - Harry J. Weitzel, Jason W. Galanis and Nicholas Wise.
[ ] FOR [ ] VOTE WITHHELD
To withhold a vote for any individual nominee(s) write the name(s) of the nominee(s) on the following
line_____________________________.
II. In their discretion, the proxies are authorized to vote on any other business as may properly
come before the Annual Meeting or any postponement or adjournment thereof.
Should the undersigned be present and choose to vote at the Annual Meeting or at any adjournments or postponements
thereof, and after notification to the Secretary of Inc.ubator at the Annual Meeting of the stockholder's decision to terminate
this proxy, then the power of such attorneys or proxies shall be terminated and shall have no force and effect. This proxy may also
be revoked by filing a written notice of revocation with the Secretary or by duly executing a proxy bearing a later date.
The undersigned hereby acknowledges receipt of the Company's 2000 Annual Report to Shareholders, Notice of the Company's
Annual Meeting and the Proxy Statement relating thereto.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
_________________________________ _________________________________ DATE:__________________________, 2000
Signature(s) (Please date this Proxy)
NOTE: It would be helpful if you signed your name exactly as it appears on your stock certificate(s), indicating any official
position or representative capacity. If shares are registered in more than one name, all owners should sign.
Please date, sign and mail your proxy card back as soon as possible.
</TABLE>
