SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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
BUYERSONLINE.COM, INC.
(Name of Registrant as Specified in Its Charter)
Commission File Number: 0-26917
Not Applicable
(Name of Persons 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:_____________________________________
2) Aggregate number of securities to which transaction
applies:_____________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated
and state how it was determined): __________________________
4) Proposed maximum aggregate value of
transaction:______________________________
5) Total fee paid:___________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:______________________________________
2) Form, Schedule or Registration Statement No.:_________________________
3) Filing Party:________________________________________
4) Date Filed:__________________________________________
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BUYERSONLINE.COM, INC.
66 E. Wadsworth Park Drive, Suite 101
Draper, Utah 84020
SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 4, 2000
PROXY STATEMENT AND NOTICE
SOLICITATION OF PROXIES
The enclosed proxy is being solicited by the Board of
Directors of BuyersOnline.com, Inc., 66 E. Wadsworth Park Drive,
Suite 101, Draper, Utah 84020, a Delaware corporation
("BuyersOnline" or the "Company"), for use at the Special Meeting
of the Stockholders of BuyersOnline (the "Special Meeting") to be
held at 9:30 a.m., on October 4, 2000, at the principal office of
the Company listed above, and at any adjournment thereof. This
Proxy Statement, together with the Company's 1999 Special Report,
serves as notice of the Special Meeting, a description of the
proposals to be addressed at the Special Meeting, and a source of
information on the Company and its management.
Stockholders may revoke their proxies by delivering a
written notice of revocation to the Secretary of the Company at
any time prior to the exercise thereof, by the execution of a
later-dated proxy by the same person who executed the prior proxy
with respect to the same shares, or by attendance at the Special
Meeting and voting in person by the person who executed the prior
proxy.
The solicitation will be primarily by mail but may also
include telephone, telegraph, or oral communication by officers
or regular employees. Officers and employees will receive no
additional compensation in connection with the solicitation of
proxies. All costs of soliciting proxies will be borne by the
Company. The approximate mailing date of the proxy statement and
proxy to stockholders is August 28, 2000.
All proxies will be voted as specified. In the absence of
specific instructions, proxies will be voted FOR:
(1) The election of Theodore Stern, Rod Smith, Gary Smith,
Edward Dallin Bagley, Steve Barnett, Harold C. McCray,
and Steven Scott as Directors of BuyersOnline to serve
for a term of one year and until their successors are
duly elected and qualified;
(2) Approval of an amendment to the Certificate of
Incorporation of the Company increasing the number of
authorized shares of common stock, par value $0.0001,
to 100,000,000;
(3) Approval of an amendment to the Long Term Incentive
Stock Plan of the Company increasing the number of
shares of common stock authorized for granting awards
under the Plan;
(4) Ratification of the appointment of Arthur Andersen LLP
as independent auditors of the Company for 2000; and
(5) Approval of all other matters by the persons named in
the proxies in accordance with their judgment.
Please sign your name exactly as it appears on the proxy.
Stockholders receiving more than one proxy because of shares
registered in different names or addresses must complete and
return each proxy in order to vote all shares to which entitled.
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OUTSTANDING SHARES AND VOTING RIGHTS
Record Date. Stockholders of record at the close of
business on August 25, 2000, are entitled to notice of and to
vote at the Special Meeting or any adjournment thereof.
Shares Outstanding. As of August 25, 2000, a total of
3,733,940 shares of the Company's common stock were outstanding
and entitled to vote at the Special Meeting. As of the Record
Date, the Company had one class of preferred stock outstanding,
Series A Convertible Preferred Stock, which is not entitled to
vote on any of the matters to be voted upon by stockholders at
the Special Meeting.
Voting Rights and Procedures. Each outstanding share of
common stock is entitled to one vote on all matters submitted to
a vote of stockholders. The Company's Bylaws and Delaware law
require the presence, in person or by proxy, of a majority of the
outstanding shares entitled to vote to constitute a quorum to
convene the Special Meeting. Shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a
broker or nominee which are represented at the meeting, but with
respect to which such broker or nominee is not empowered to vote
on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum.
Stockholder Proposals for the 2001 Annual Meeting.
Proposals from stockholders intended to be included in the
Company's proxy statement for the 2001 Annual Meeting must be
received by the Secretary of the Company on or before January 15,
2001, and may be omitted unless the submitting stockholder meets
certain requirements. It is suggested that the proposal be
submitted by certified mail, return-receipt requested.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Special Meeting, all Directors of BuyersOnline will
be elected to serve until the annual meeting of stockholders in
the year 2001. First Level Capital, Inc., the placement agent
for our 1999 offering of Series A Convertible Preferred Stock, is
entitled until June 25, 2001, to designate two persons as
nominees for election to the Board of Directors pursuant to the
sales agent agreement with BuyersOnline. Theodore Stern and
Steve Barnett are the designated nominees of First Level Capital.
The Board of Directors nominates for election as Directors:
Theodore Stern Steve Barnett
Rod Smith Harold C. McCray
Gary Smith Steven Scott
Edward Dallin Bagley
Set forth below under the caption "DIRECTORS AND EXECUTIVE
OFFICERS", is information on the age, presently held positions
with the Company, principal occupation now and for the past five
years, other directorships in public companies, and tenure of
service with the Company as a Director for each of the nominees.
Vote and Recommendation
Each Director is elected by vote of a plurality of the
shares of voting stock present and entitled to vote, in person or
by proxy, at the Special Meeting. Abstentions or broker non-
votes as to the election of directors will not affect the
election of the candidates receiving the plurality of votes.
Unless instructed to the contrary, the shares represented by the
proxies will be voted FOR the election of the nominees named
above as directors. Although it is anticipated that each nominee
will be able to serve as a director, should any nominee become
unavailable to serve, the proxies will be voted for such other
person or persons as may be designated by the Company's Board of
Directors.
The Board Recommends a Vote "FOR" The Nominees
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APPROVAL OF AMENDMENT TO INCREASE NUMBER OF AUTHORIZED COMMON SHARES
(PROPOSAL NO. 2)
The Company's Certificate of Incorporation at present
authorizes the issuance of 20,000,000 shares of common stock and
5,000,000 shares of preferred stock. For the reasons set forth
below, the Board of Directors believes the Company's Certificate
of Incorporation should be amended to authorize the issuance of
up to 100,000,000 shares of common stock. No change will be made
in the authorized preferred stock. The Company has no present
intention to issue additional shares of common stock. The text
of the proposed amendment is as follows.
Section 1 of Article IV of the Certificate of
Incorporation is deleted and the following provision
inserted in lieu thereof:
ARTICLE IV
CAPITAL STOCK
1. Shares, Classes and Series Authorized.
The total number of shares of all classes of capital
stock that the Corporation shall have authority to issue is
105,000,000 shares. Stockholders shall not have any
preemptive rights, nor shall stockholders have the right to
cumulative voting in the election of directors or for any
other purpose. The classes and the aggregate number of
shares of stock of each class that the Corporation shall
have authority to issue are as follows:
(a) 100,000,000 shares of Common Stock, $0.0001 par
value ("Common Stock").
(b) 5,000,000 shares of Preferred Stock, $0.0001 par
value ("Preferred Stock").
Of the 20,000,000 authorized shares of common stock, a
substantial amount is either outstanding or reserved for issuance
on exercise of outstanding options, warrants or rights. The
Board of Directors believes that amending the Certificate of
Incorporation to permit the Board to issue up to 100,000,000
shares of common stock will provide the Company with much-needed
flexibility to satisfy the Company's future financing
requirements. The Board does not propose to issue common stock
for any such financing purposes at the present time.
Nevertheless, the Board of Directors believes that the proposed
increase is desirable so that, as the need may arise, the Company
will have more financial flexibility and be able to issue shares
of common stock, without the expense and delay of a special
stockholders' meeting, in connection with future opportunities
for equity financings, acquisitions, management incentive and
employee benefit plans, and for other corporate purposes.
Authorized but unissued shares of common stock may be issued
at such times, for such purpose and for such consideration as the
Board of Directors may determine to be appropriate without
further authority from the Company's stockholders, except as
otherwise required by applicable corporate law.
Although the Board of Directors has no present intention of
doing so, the Company's authorized but unissued common stock or
preferred stock could be issued in one or more transactions,
which would make more difficult or costly, and less likely, a
takeover of the Company. Issuing additional shares of stock
would also have the effect of diluting the stock ownership of
persons seeking to obtain control of the Company. Moreover,
certain companies have issued rights to purchase their common
stock, with such rights having terms designed to encourage in
certain potential acquisitions negotiation with the company's
board of directors. The authorized but unissued shares of common
stock or preferred stock would be available for use in connection
with the issuance of such rights. The increase in the authorized
shares of common stock in not being recommended in response to
any specific effort of which the Company is aware to obtain
control of the Company, nor is the Board of Directors currently
proposing to stockholders any anti-takeover measures.
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Vote and Recommendation
Approval of the amendment to increase the authorized common
shares requires the affirmative vote of the holders of a majority
of the issued and outstanding shares of common stock.
Abstentions as to this Proposal 2 will be treated as votes
against proposal 2. Broker non-votes, however, will be treated
as unvoted for purposes of determining approval of Proposal 2 and
will not be counted as votes for or against Proposal 2. Properly
executed, unrevoked Proxies will be voted FOR Proposal 2 unless a
vote against Proposal 2 or abstention is specifically indicated
in the Proxy.
The Board of Directors Recommends a Vote "For" the Amendment.
APPROVAL OF AMENDMENT TO LONG TERM STOCK INCENTIVE PLAN
(PROPOSAL NO. 3)
The Company's Long Term Stock Incentive Plan ("Plan") was
adopted in 1999. Under the Plan, a maximum of 600,000 shares of
common stock may be subject to outstanding awards and the number
of shares subject to an award granted to any individual in any
calendar year may not exceed 30,000 shares. As of July 31, 2000,
awards in the form of stock options to purchase a total of
464,042 shares were outstanding under the plan.
The proposed amendments to the Plan would increase the
maximum number of shares that may be subject to awards to
1,200,000, increase the maximum number of shares that may be
subject to incentive stock option awards to 1,200,000, and
increase the maximum shares or share value subject to awards,
including performance based compensation, granted to any
individual in any calendar year to 100,000 shares.
No awards have been approved by the Company that have been
granted subject to approval of the amendments to the Plan, and no
awards are under consideration at the present time.
Nevertheless, the Board of Directors believes that the proposed
increase in shares subject to the Plan and awards under the Plan
is desirable so that, as the need may arise, the Company will
have more flexibility in structuring compensation arrangements to
attract and retain employees and consultants for the Company.
Vote and Recommendation
The affirmative vote of a majority of the shares of common
stock represented at the Special Meeting in person or by proxy is
required to approve the amendments to the Plan. Broker non-votes
will be treated as unvoted for purposes of determining approval
of Proposal 3 and will not be counted as votes for or against
Proposal 3. Properly executed, unrevoked Proxies will be voted
FOR Proposal 3 unless a vote against Proposal 3 or abstention is
specifically indicated in the Proxy.
The Board of Directors Recommends a Vote "For" Approval of the
Amendments to the Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 4)
The accounting firm of Arthur Andersen LLP has been approved
by the Board, upon recommendation by the Audit Committee, to
serve as independent auditors of the Company for 2000, subject to
approval by the stockholders by an affirmative vote of a majority
of the outstanding shares of the Company's Common Stock
represented at the Special Meeting. Arthur Andersen has served
as independent auditors of the Company since 1997. The Company
has been advised that neither Arthur Andersen nor any of its
members or associates has any relationship with the Company or
any of its affiliates, except in the firm's capacity as the
Company's independent auditors.
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Representatives of Arthur Andersen will be present at the
Special Meeting of Stockholders, will be afforded an opportunity
to make a statement if they desire, and will be available to
respond to appropriate questions from stockholders.
Vote and Recommendation
The affirmative vote of a majority of the shares of Common
Stock represented at the Special Meeting in person or by proxy is
required to approve the selection of Arthur Andersen to serve as
independent auditors of the Company for 2000. Broker non-votes
will be treated as unvoted for purposes of determining approval
of Proposal 4 and will not be counted as votes for or against
Proposal 4. Properly executed, unrevoked Proxies will be voted
FOR Proposal 4 unless a vote against Proposal 4 or abstention is
specifically indicated in the Proxy.
The Board of Directors Recommends a Vote "For" the Ratification
of the Appointment of Arthur Andersen LLP.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The table on the following page sets forth as of August 25,
2000, the number and percentage of the outstanding shares of
common stock which, according to the information supplied to
BuyersOnline, were beneficially owned by (i) each person who is
currently a director, (ii) each executive officer, (iii) all
current directors and executive officers as a group and (iv) each
person who, to the knowledge of BuyersOnline, is the beneficial
owner of more than 5% of the outstanding common stock. Except as
otherwise indicated, the persons named in the table have sole
voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.
[This space left blank.]
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Amount and Nature of Beneficial Ownership
Common Conversion Warrants Percent
Name and Address Shares Rights(1) & Options(2) of Class(3)
Principal stockholder
George Brimhall 0 350,000 0 8.6
9211 North Martingale Road
Paradise Valley, AZ 85253
Officers and directors
Theodore Stern 13,988 80,000 265,000 8.8
2210 One PPG Place
Pittsburgh, PA 15222
Rod Smith (4) 315,677 0 472,569 18.7
66 E. Wadsworth Park Drive
Draper, Utah 84020
Gary Smith (4) 323,067 0 65,000 10.2
66 E. Wadsworth Park Drive
Draper, Utah 84020
Edward Dallin Bagley 351,552 20,000 175,000 13.9
2350 Oakhill Drive
Salt Lake City, Utah 84121
Steve Barnett 912 20,000 125,000 3.8
666 Dundee Road, Suite 1704
Northbrook, IL 60062
Harold C. McCray 0 0 90,000 2.4
10940 Wilshire Blvd., Suite 200
Los Angeles, CA 90024
Steven Scott 0 0 35,000 0.9
4525 S. Wasatch Blvd., Suite 302
Salt Lake city, UT 84124
G. Douglas Smith (4) 60,685 0 238,914 7.5
66 E. Wadsworth Park Drive
Draper, Utah 84020
Paul Jarman 46,352 0 216,798 6.7
66 E. Wadsworth Park Drive
Draper, Utah 84020
All Executive officers
and Directors as a Group
(9 persons) 1,112,233 120,000 1,683,281 52.7
(1) These figures represent shares issuable on exercise of
outstanding convertible securities. George Brimhall is the
holder of a promissory note in the principal amount of
$1,050,000, which is convertible to 350,000
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shares of common stock. The remaining persons with figures
in this column hold Series A Convertible Preferred Stock,
which is non-voting but is presently convertible to voting
common stock.
(2) These figures represent options and warrants that are vested
or will vest within 60 days from the date as of which
information is presented in the table.
(3) These figures represent the percentage of ownership of the
named individuals assuming each of them alone has exercised
his options or conversion rights, and percentage ownership
of all officers and directors as a group assuming all
purchase and conversion rights held by such individuals are
exercised.
(4) Gary Smith is the father of Rod Smith and G. Douglas Smith.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Officers
The following table sets forth the names, ages, and
positions with BuyersOnline for each of the directors and
officers.
Name Age Positions (1) Since
Theodore Stern 70 Chairman of the Board and Director 1999
Rod Smith 44 President, Chief Executive 1996
Officer and Director
Gary Smith 62 Director 1999
Edward Dallin Bagley 61 Director 1999
Steve Barnett 58 Director 2000
Harold C. McCray 58 Director 2000
Steven Scott 52 Director 2000
G. Douglas Smith 30 Vice President of Marketing 1997
Paul Jarman 30 Treasurer, Secretary and Vice 1997
President of Business Development
All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualify.
Officers serve at the discretion of the Board of Directors.
The following is information on the business experience of
each director and officer.
Theodore Stern retired as senior executive vice president
and member of the board of directors of Westinghouse Electric
Corporation at the end of 1992, after 34 years of service in a
variety of positions with that company. After retiring form
Westinghouse Electric, Mr. Stern served as vice chairman of the
board of directors of Superconductivity, Inc., of Madison,
Wisconsin, a small technology company, until it was acquired in
April 1997. Mr. Stern currently is a member of the board of
directors of Northern Power Systems of Waitsfield, Vermont, a
manufacturer of renewable generation systems. Mr. Stern is also
self-employed as a consultant to manufacturing companies.
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Rod Smith founded the predecessor of BuyersOnline in January
1996 and has served as the President and Chief Executive Officer
since that time. From January 1993 to November 1995, Mr. Smith
was an independent distributor of health and beauty products
provided by NuSkin International, a consumer products network
marketing organization.
Gary Smith was the founder, majority owner and former
President of HealthRider, Inc. From 1991 until sale of the
business in 1997, he managed and directed every phase of business
and sales operations at HealthRider. From 1997 to the present,
Mr. Smith has been self-employed as a business consultant and
advisor.
Edward Dallin Bagley has been self-employed as an investment
and financial consultant for the past five years. He is
currently a director of Tunex International, Inc., Gentner
Communications, and NESCO Corp.
Steve Barnett has been self-employed for the past five years
as a consultant to manufacturing and distribution companies on
improving operations and business restructuring. He has
continued to purchase and manage privately manufacturing
companies, as well as serving on the boards of non-owned private
companies in connection with his consulting services. Since
1990, Mr. Barnett has been a Director of Chicago's Jewish
Federation and Jewish United Fund and a Vice Chairman of the
Board of Directors since 1997. Currently, he is a member of the
JF/JUF Executive and Overall Planning & Allocations Committees.
Harold C. McCray is founder and President of McCray,
Shriver, Eckdahl & Associates, Inc. Founded in 1972, this
executive search firm specializes in the placement of directors,
presidents, chief executive officers, chief operating officers
and other senior officers in engineering, marketing,
manufacturing, finance, and general management throughout the
United States and internationally.
Steven Scott co-founded American Telecast Corp. with a
partner in 1976, which is engaged in the business of developing
television marketing campaigns for products and services. Mr.
Scott is the winner of seven NIMA awards and two PLAY awards for
best "Program Length Advertisements" from 1992 to 1998 by the two
trade organizations in direct response television marketing.
G. Douglas Smith joined BuyersOnline in April 1997, and is
responsible for all aspects of marketing, including brand
strategy, advertising, promotions, corporate communication, and
product development. For six years prior to April 1997, Mr.
Smith served first as the Director of Media and then Senior Vice
President of HealthRider, Inc., an exercise equipment company
based in Salt Lake City, Utah. At HealthRider Mr. Smith was
responsible for infomercial marketing, which was the primary
sales strategy for HealthRider products.
Paul Jarman became employed by BuyersOnline in April 1997,
and is responsible for all facets of operations. He also comes
to BuyersOnline from HealthRider, where he was employed from
March 1994 to August 1996, first as Texas Regional Manager for 15
retail locations, then Western Area Manager in charge of 95
retail locations, and finally Acting Director of Retail
Operations managing 250 retail locations. In August 1996, Mr.
Jarman moved to HealthRider's marketing department as the
Director of New Product Development, where he served until April
1997.
Board Meetings and Committees/Compensation
The Board of Directors met one time during the year ended
December 31, 1999, which was attended by all members. The Board
of Directors maintained regular contact during 1999, and a number
of corporate matters were handled through written consents of the
Board that were signed by all members. The Board of Directors
had not established any committees in 1999. In April 2000, the
Board formed the Compensation Committee, the members of which
include Theodore Stern, Edward Dallin Bagley, Steve Barnett, and
Harold C. McCray. The Compensation Committee considers salary
and benefit matters for the executive officers and key personnel
of the Company. In April 2000, the Board also formed the Audit
Committee, the members of which are Theodore Stern, Edward Dallin
Bagley, and Steve Barnett. The Audit Committee is responsible
for financial reporting matters, internal controls, and
compliance with financial polices of the Company, and meets with
the Company's auditors when appropriate.
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In April 2000, the Board of directors granted to each of the
outside Directors, including Theodore Stern, Gary Smith, Edward
Dallin Bagley, Steve Barnett, Harold C. McCray, and Steven Scott
options to purchase 25,000 shares of common stock at an exercise
price of $5.0625 per share exercisable over a term of five years.
These options were issued in consideration of services rendered
and to be rendered during the year 2000. At the same time the
Board of Directors also granted to Theodore Stern, Gary Smith,
and Edward Dallin Bagley options to purchase 12,500 shares of
common stock at an exercise price of $5.0625 per share
exercisable over a term of five years for services rendered as
Directors in 1999. Theodore Stern was granted an additional
option to purchase 15,000 shares of common stock at an exercise
price of $5.0625 per share exercisable over a term of five years
in consideration for services to be rendered as Chairman of the
Board.
Section 16(a) Filing Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires officers and Directors of BuyersOnline and persons who
own more than ten percent of a registered class of BuyersOnline's
equity securities to file reports of ownership and changes in
their ownership on Forms 3, 4, and 5 with the Securities and
Exchange Commission, and forward copies of such filings to
BuyersOnline. Based on the copies of filings received by
BuyersOnline, during the most recent fiscal year the directors,
officers, and beneficial owners of more than ten percent of the
equity securities of BuyersOnline registered pursuant to Section
12 of the Exchange Act have filed on a timely basis all required
Forms 3, 4, and 5 and any amendments thereto, except Rod Smith,
Gary Smith, G. Douglas Smith, and Paul Jarman each of whom made
late filings of Form 3 reporting their initial security ownership
in BuyersOnline.
Potential Change in Control
In August 2000, BuyersOnline obtained a verbal commitment
for a loan to BuyersOnline in the amount of $6,000,000 from
Hartford Financial Group, Inc., a Louisiana corporation. As
proposed, the loan will bear interest at a rate equal to three
percentage points in excess of the prime lending rate as quoted
from time to time by Bank of America, N.A. at Dallas, Texas.
Interest on the loan will be paid monthly, and all principal is
due three years from the date of the loan. The Company's payment
obligation was to be secured by 13,715,000 shares of BuyersOnline
common stock. In the event the Company defaults in its
obligations under the loan, Hartford Financial Group would be
entitled to take possession of the shares of common stock pledged
as security, which would result in a change in voting control of
the Company. Hartford Financial Group has not performed under
the loan agreement and the Company has elected to terminate the
transaction. Nevertheless, the Company may revive the
transaction if Hartford Financial Group demonstrates its ability
to perform.
EXECUTIVE COMPENSATION
Annual Compensation
The table on the following page sets forth certain
information regarding the annual and long-term compensation for
services in all capacities to BuyersOnline for the prior fiscal
years ended December 31, 1999, 1998 and 1997, of those persons
who were either (i) the chief executive officer during the last
completed fiscal year or (ii) one of the other four most highly
compensated executive officers of the end of the last completed
fiscal year whose annual salary and bonuses exceeded $100,000
(collectively, the "Named Executive Officers").
Annual Long Term
Compensation Compensation
Securities
Underlying All Other
Name and Principal Position Year Salary ($) Options/SARs(#) Compensation($)
Rod Smith 1999 69,250 81,319 7,728
Chairman, President, Chief 1998 69,829 141,250 7,468
Executive Officer 1997 75,050 250,000 0
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Employment and Other Arrangements
Rod Smith, G. Douglas Smith, and Paul Jarman each received a
salary of $6,500 per month for their respective services to
BuyersOnline as executive officers. In January 2000 Rod Smith's
salary increased to $132,000 per year and the salary of G.
Douglas Smith and Paul Jarman increased to $108,000 per year. In
the event BuyersOnline receives private or public financing for
infomercial development and test marketing in 2000, Rod Smith's
annual salary rate will increase from the date of such financing
to $150,000 per year. BuyersOnline does not have a written
employment agreement with any of its executive officers. All
executive officers participate in insurance and benefit programs
established by BuyersOnline for its full time employees.
Upon recommendation of the Compensation Committee of the
Board of Directors, BuyersOnline agreed to issue to Rod Smith
effective April 7, 2000 options exercisable at a price of $5.0625
per share to purchase up to 225,000 shares of common stock based
on the number of members at December 31, 2000, and the earnings
of BuyersOnline for the last calendar quarter of 2000 before
certain expenses. The Company must have more than 30,000 members
for any options to vest and the number of options that will vest
is proportionate to the number of members between 30,000 and
120,000. Furthermore, if earnings before certain expenses for
the fourth quarter of 2000 do not equal or exceed $500,000, no
options will vest.
Stock Options
The following table sets forth certain information with
respect to grants of stock options during 1999 to the Named
Executive Officers.
% of Total
Number of Options/SARs
Securities Granted to
Underlying Employees in Exercise or Expiration
Name and Principal Options Fiscal Year Base Price ($/Sh) Date
Position Granted
Rod Smith 81,319 15.8 2.00 March 2008
Chairman, President
Chief
Executive Officer
The following table sets forth certain information with
respect to unexercised options held by the Named Executive
Officers. No outstanding options held by the Named Executive
Officers were exercised in 1999.
Number of Securities Value of Unexercised
Underlying In-the-Money Options
Unexercised Options At Fiscal Year End
at Fiscal YearEnd (#) ($) (1)
Exercisable/ Exercisable/
Name and Principal Unexercisable Unexercisable
Position
Rod Smith, Chairman, 472,569/ -0- -0-/ -0-
President and Chief
Executive Officer
___________________________________________
(1) This value is determined on the basis of the difference
between the fair market value of the securities underlying the
options and the exercise price at December 31, 1999. The fair
market value of BuyersOnline's common stock at December 31, 1999,
is determined by the last sale price on that date, which was
$2.00 per share.
Description of Long Term Stock Incentive Plan
The purpose of the Long Term Stock Incentive Plan is to
provide directors, officers, employees, and consultants with
additional incentives by increasing their ownership interests in
BuyersOnline. Directors, officers, and other employees of
BuyersOnline and its subsidiaries are eligible to participate in
the plan. In addition, awards
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may be granted to consultants providing valuable services to
BuyersOnline. As of July 31, 2000, BuyersOnline and its
affiliates employed approximately 82 individuals and retained
approximately four consultants who are eligible to participate in
the plan. A committee of the board or the entire board grants
awards under the plan. Awards may include incentive stock
options, non-qualified stock options, stock appreciation rights,
stock units, restricted stock, restricted stock units,
performance shares, performance units, or cash awards.
As described above, we are proposing to amend the Plan to
increase the number of shares of common stock subject to the Plan
and the number of shares that may be issued as awards under the
Plan. The following description is based on the Plan as it
exists prior to approval of the amendments.
The committee or the Board of Directors has discretion to
determine the terms of a plan award, including the type of award,
number of shares or units covered by the award, option price,
term, vesting schedule, and post-termination exercise period or
payment. Notwithstanding this discretion: (i) the number of
shares subject to an award granted to any individual in any
calendar year may not exceed 30,000 shares; (ii) the option price
per share of common stock may not be less than 100 percent of the
fair market value of such share at the time of grant or less than
110% of the fair market value of such shares if the option is an
incentive stock option granted to a stockholder owning more than
10% of the combined voting power of all classes of the stock of
BuyersOnline (a "10% stockholder"); and (iii) the term of any
incentive stock option may not exceed 10 years, or five years if
the option is granted to a 10% stockholder. As of July 31, 2000,
awards in the form of stock options to purchase a total of
464,042 shares were outstanding under the plan.
A maximum of 600,000 shares of common stock may be subject
to outstanding awards, determined immediately after the grant of
any award under the plan. Shares of common stock, which are
attributable to awards that have expired, terminated, or been
canceled or forfeited during any calendar year, are available for
issuance or use in connection with future awards.
The plan was effective March 11, 1999, and is not limited in
duration. No incentive stock option may be granted more than 10
years after the effective date. The Plan may be amended by the
Board of Directors without the consent of the stockholders,
except that stockholder approval is required for any amendment
that materially increases the aggregate number of shares of stock
that may be issued under the plan or materially modifies the
requirements as to eligibility for participation in the plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion includes certain relationships and
related transactions which occurred during the Company's fiscal
year ended December 31, 1999, as well as the interim period ended
July 31, 2000.
Prior to becoming a director, Steve Barnett was providing
consulting services to BuyersOnline under an agreement pursuant
to which he received options to purchase 100,000 shares of our
common stock at a price of $2.00 per share exercisable through
August 11, 2004, and a cash fee of $200 per hour. Mr. Barnett
will continue to provide those services to BuyersOnline under the
agreement through August 11, 2001.
BuyersOnline will use the services of McCray, Shriver,
Eckdahl & Associates, the firm in which one of the directors,
Harold C. McCray, is a principal, to locate management,
marketing, and technical personnel needed for our business. We
will pay the same rates for those services as other clients of
McCray, Shriver, Eckdahl & Associates that are not affiliated.
Prior to becoming a director, BuyersOnline engaged Steven
Scott to supervise production of the Company's infomercial and
work on other marketing projects. The engagement is for a term
of one year ending August 31, 2000. For his services and use of
office space in California, Mr. Scott receives $10,000 per month.
If BuyersOnline rolls out the infomercial successfully, Mr. Scott
is entitled to receive options to purchase 500,000 shares of
common stock at an exercise price of $2.00 per share.
From May through July 2000, certain directors loaned funds
to the Company as bridge financing for the Company's working
capital needs. In consideration for making the loans, the
Company issued to the directors
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warrants to purchase common stock of the Company at an exercise
price between $2.00 and $2.50 exercisable for a term of five
years. The following table summarizes the loan transactions
between the Company and the directors.
Annual
Principal Maturity Interest Number of
Name Amount Date Rate Warrants
Theodore Stern $200,000 June 30, 2001 14% 100,000
$175,000 July 31, 2000 18% 87,500
$50,000 August 31, 2000 18% 25,000
Edward Dallin Bagley $200,000 June 30, 2001 14% 100,000
$75,000 July 31, 2000 18% 37,500
Harold C. McCray $150,000 July 31, 2000 18% 75,000
None of the directors listed has demanded payment of the
loans that were due July 31, 2000.
In January 1998, BuyersOnline entered into a one year
consulting agreement with Gary Smith, a director, pursuant to
which BuyersOnline agreed to pay $5,000 per month to Mr. Smith
for marketing and other related consulting services. The
agreement was subsequently modified to cancel the consulting
payments during 1998 and to continue the consulting agreement for
an additional one-year term beginning January 1, 1999.
At December 31, 1998, BuyersOnline owed a total of $353,810
to Gary Smith, Edward Dallin Bagley, and Rod Smith, all of who
are directors and principal stockholders, either in the form of
notes or accrued interest. During 1999, Rod Smith loaned
BuyersOnline an additional $49,000. Interest expense during 1999
on the entire amount owing by BuyersOnline to all three
individuals aggregated $12,422. All such amounts were paid in
1999 except for $125,000 owed to Gary Smith. This remaining
amount was converted into 62,500 shares of common stock at $2.00
per share.
FORM 10-KSB
Upon written request, the Company will provide to stockholders,
without charge, a copy of the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1999, as filed with the
Securities and Exchange Commission. Requests should be directed
to Rod Smith, President, BuyersOnline, Inc., 66 E. Wadsworth Park
Drive, Suite 101, Draper, Utah 84020. This Report is also
available from the Commission's Internet web site,
http://www.sec.gov.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors of the Company knows of no other matters which may come
before the Special Meeting. However, if any matters other than
those referred to herein should be presented properly for
consideration and action at the Special Meeting, or any
adjournment or postponement thereof, the proxies will be voted
with respect thereto in accordance with the best judgment and in
the discretion of the proxy holders.
Please sign the enclosed proxy and return it in the enclosed
return envelope.
Dated: August 28, 2000
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[Proxy Form Appendix]
BUYERSONLINE.COM, INC.
66 E. Wadsworth Park Drive, Suite 101
Draper, Utah 84020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Rod Smith and Paul Jarman as
Proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and to vote, as
designated below, all the shares of Common Stock of
BuyersOnline.com, Inc. (the "Company") held of record by the
undersigned on August 25, 2000, at the Special Meeting of
Stockholders to be held on October 4, 2000, and at any
adjournment or postponement thereof.
Proposal No. 1 The election of each of the following persons as
directors of the Company
(1) Theodore Stern (2) Rod Smith (3) Gary Smith
(4) Edward Dallin Bagley (5) Steve Barnett (6) Harold C. McCray
(7) Steven Scott
[ ] For all nominees
[ ] Withhold all nominees
[ ] Withhold authority to vote for any individual nominee.
Write number(s) of nominee(s) _______
Proposal No. 2 Approve the amendment to the Certificate of
Incorporation of the Company increasing the number of
authorized shares of common stock, par value $0.0001,
to 100,000,000
[ ] For [ ] Against [ ] Abstain
Proposal No. 3 Approve the amendment to the Long Term Incentive
Stock Plan of the Company increasing the number of
shares of common stock authorized for granting awards
under the Plan
[ ] For [ ] Against [ ] Abstain
Proposal No. 4 Ratification of the appointment of Arthur Andersen
LLP as independent auditors
[ ] For [ ] Against [ ] Abstain
Note The proxies are authorized to vote in accordance with their
judgment on any matters other than those referred to herein
that are properly presented for consideration and action at
the Special Meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is given, this proxy will be voted for Proposal No.'s 1, 2, 3 and 4.
All other proxies heretofore given by the undersigned to vote
shares of stock of the Company, which the undersigned would be
entitled to vote if personally present at the Special Meeting or
any adjournment or postponement thereof, are hereby expressly
revoked.
Dated:________________________________, 2000
__________________________________________
__________________________________________
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Please sign it exactly as name appears hereon. 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 or partnership, please
sign in full corporate or partnership name by an authorized
officer or person.
Please mark, sign, date and promptly return the proxy card using
the enclosed envelope. If your address is incorrectly shown,
please print changes.
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