<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
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JACOBSON RESONANCE ENTERPRISES, INC.
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) 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 the 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> 2
JACOBSON RESONANCE ENTERPRISES, INC.
8200 JOG ROAD, SUITE 100
BOYNTON BEACH, FLORIDA 33437
(561) 752-4141
-------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 14, 2000
-------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Jacobson Resonance Enterprises, Inc., a Nevada corporation (the "Company"), will
be held on Thursday, August 31, 2000, at 11:00 A.M., Mountain Daylight Time, at
the Bellagio Hotel, 3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109, for
the following purposes, all of which are set forth more completely in the
accompanying proxy statement:
1. To elect a total of four persons to the Board of Directors, one for a
one-year term, one for a two-year term, and two for three-year terms.
2. To amend the Company's Articles of Incorporation to increase the
authorized number of shares of the Company's Common Stock to
300,000,000 shares from 100,000,000 shares.
3. To amend the Company's Stock Option Plan to include a "cashless"
exercise provision.
4. To ratify the selection of Goldstein Golub Kessler LLP as the Company's
independent auditor for the year ending December 31, 2000; and
5. To transact such other business as may properly come before the
meeting.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on July 17, 2000, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting.
A FORM OF PROXY AND THE COMPANY'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31,
1999 IS ENCLOSED. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Dr. Jerry I. Jacobson, Chairman of the Board
Boynton Beach, Florida
August 14, 2000
<PAGE> 3
JACOBSON RESONANCE ENTERPRISES, INC.
8200 JOG ROAD, SUITE 100
BOYNTON BEACH, FLORIDA 33437
(561) 752-4141
-------------------------------------------------
PROXY STATEMENT
-------------------------------------------------
The enclosed proxy is solicited by the Board of Directors (the "Board")
of Jacobson Resonance Enterprises, Inc., a Nevada corporation (the "Company"),
for use at the Annual Meeting of Shareholders to be held on Thursday, August 31,
2000, at 11:00 A.M., Mountain Daylight Time, at the Bellagio Hotel, 3600 Las
Vegas Boulevard South, Las Vegas, Nevada 89109 (the "Meeting"). The approximate
date on which this statement and the enclosed proxy will first be sent to
Shareholders is August 14, 2000. The form of proxy provides a space for you to
withhold your vote for any proposal. You are urged to indicate your vote on each
matter in the space provided. If no space is marked, then the proxy will be
voted by the persons therein named at the meeting: (1) for the election of four
Directors to serve varying terms as specified elsewhere herein; (2) in favor of
the proposal to amend the Company's Articles of Incorporation; (3) in favor of
the proposal to amend the Company's Stock Option Plan; 4) for the ratification
of the selection of Goldstein Golub Kessler LLP as the Company's independent
auditors; and 5) in their discretion, upon such other business as may properly
come before the meeting. Whether or not you plan to attend the meeting, please
fill in, sign and return your proxy card in the enclosed envelope. The cost of
proxy solicitation by the Board will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies personally and by telephone and telegraph, all without extra
compensation.
At the close of business on July 17, 2000, the record date for the
meeting (the "Record Date"), the Company had outstanding 54,628,154 shares of
common stock (the "Common Stock") and 30,000 shares of convertible preferred
stock (the "Preferred Stock"). Dr. Jerry I. Jacobson, the Chairman, President
and Chief Executive Officer of the Company, owns all of the outstanding shares
of Preferred Stock. Each share of the Preferred Stock is entitled to 1,000 votes
on all matters submitted to a vote of the Company's shareholders. As a result,
Dr. Jacobson by himself possesses 48.2% of the combined voting power of the
Company's outstanding shares of preferred and common stock. Each share of Common
Stock entitles the holder thereof on the record date to one vote on each matter
submitted to a vote of Shareholders. Only holders of the Common Stock and
Preferred Stock of record at the close of business on July 17, 2000, are
entitled to notice of and to vote at the Meeting. If there are not sufficient
votes for approval of any of the matters to be voted upon at the Meeting, then
the Meeting may be adjourned in order to permit further solicitation of proxies.
The quorum necessary to conduct business at the Meeting consists of a majority
of the outstanding shares of Common Stock. The election of Directors will be by
a plurality of votes cast, either in person or by proxy, at the Meeting. The
approval of the proposals covered by this Proxy Statement, other than the
election of Directors, will require an affirmative vote of the holders of a
majority of the shares of Common Stock of the Company voting in person or by
proxy at the Meeting.
A STOCKHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING FORM HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY, BY EXECUTING A LATER-DATED PROXY, OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. UNLESS AUTHORITY IS WITHHELD, PROXIES THAT ARE
PROPERLY EXECUTED WILL BE VOTED FOR THE PURPOSES SET FORTH THEREON.
<PAGE> 4
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company currently has three Directors serving on its Board. The
Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION (1)
---- --- ------------
<S> <C> <C>
Dr. Jerry I. Jacobson (2) 54 Chairman of the Board, President
and Chief Executive Officer
Alfonso Serrato 55 Director
Debra M. Jacobson (2) 48 Director, Senior Vice President, Treasurer
and Secretary
Frank A. Chaviano 51 Senior Vice President
</TABLE>
-----------------------
(1) All directors historically were elected for terms of one year and until
their successors were elected and qualified. Beginning this year, the Board will
be divided into three classes as equal in number as possible, with each class
serving three-year terms after the initial phase-in of staggered terms over the
next two years. Any vacancy on the Board would be filled by majority vote of the
remaining directors. Board members are currently serving without compensation.
Officers are elected for terms of one year and until their successors have been
elected and qualified. They serve at the pleasure of the Board.
(2) Dr. Jerry I. Jacobson and Debra M. Jacobson are husband and wife.
DR. JERRY I. JACOBSON has been the Chairman, President and Chief
Executive Officer of the Company since June 1996 and of its privately-held
predecessor since March 1995. Dr. Jacobson holds a Bachelor of Arts degree in
Philosophy from Brooklyn College of the City University of New York and D.D.S.
and D.M.D degrees from Temple University. He has also received extensive
informal training in physics after auditing 25 courses at different universities
in the New York City metropolitan area. Since his discovery of Jacobson
Resonance, which Dr. Jacobson considers to be a new law of nature, Dr. Jacobson
has focused his efforts with respect to the use of Jacobson Resonance on medical
therapy for more than a decade. His publishing credits include more than 60
articles, more than 15 abstracts, three book chapters and two books. He holds
seven issued, allowed or pending United State of America patents, for three of
which there are currently patents issued or pending in 75 foreign countries.
ALFONSO SERRATO has been a Director of the Company since June 1998. Mr.
Serrato worked for Medtronic, Inc., a New York Stock Exchange company that is a
leading manufacturer and distributor of medical devices around the world, from
1978 until 1996 in
<PAGE> 5
various capacities. His positions included Vice President of Worldwide
Manufacturing and Vice President of Pacing Operations. He is the controlling
person of Serrato Enterprises, L.L.C., a licensee of the Company and the entity
that is spearheading the Company's European initiatives.
DEBRA M. JACOBSON has been a Director, the Treasurer and the Secretary
of the Company since August 1996 and Senior Vice President of the Company since
September 1999. She has been married to Dr. Jacobson and served as his private
secretary for approximately 25 years. As Dr. Jacobson has suffered from glaucoma
for over 20 years, Ms. Jacobson has been invaluable as a research assistant and
editor. Previously, Ms. Jacobson worked as a flight attendant for Eastern
Airlines and as a secretary. She is a graduate of the prestigious Katherine
Gibbs Secretarial School in New York, New York.
FRANK A. CHAVIANO joined the Company as Vice President in 1997 and
subsequently became Senior Vice President and Chief Operating Officer.
Previously, Mr. Chaviano served from 1996 to 1997 as Senior Vice President of
American Healthcorp responsible for physician practice management and
development. From 1994 until 1996, he was Senior Vice President of Integrated
Health Services, Inc., and from 1992 until 1994, he was Senior Vice President of
Integracare, Inc. In those positions Mr. Chaviano assisted with the acquisition
and development of more than 100 medical practices.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS
There were no formal meetings of the Board and two actions taken by
written consent without a meeting during 1999.
During 1999, there was no nominating committee, audit committee,
compensation committee or any other committee of the Board. Rather, the Board
has the responsibility for establishing broad corporate policies and for the
overall performance of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Securities and Exchange Commission has implemented a rule that
requires companies to disclose in their proxy statements information with
respect to reports that are required to be filed pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended, by directors, officers and 10%
shareholders of each company, if any of those reports are not filed timely.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company during 1999 and Forms 5, if any, with respect to that year, the
Company has determined that all required filings were made in a timely manner.
2
<PAGE> 6
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
Dr. Jacobson, the Company's Chairman of the Board and Chief Executive
Officer, does not receive any cash compensation from the Company. None of the
other directors or executive officers of the Company received more than $100,000
cash in annual salary and bonus in any of the last three full fiscal years of
the Company. However, Dr. Jacobson and each of the other directors and executive
officers of the Company have received various stock issuances and stock option
grants from the Company. Please see "Voting Security Ownership of Certain
Beneficial Owners and Management."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is the exclusive licensee of Jacobson Resonance from Dr.
Jacobson, who is the sole owner of record of all patents issued or patent
applications filed regarding Jacobson Resonance. The Company has the exclusive
rights to pursue whatever applications of Jacobson Resonance that it wants
through October 2004. In return, the Company is obligated to pay Dr. Jacobson a
3% or 4% royalty on revenues, depending upon the application.
To date, the Company has entered into two agreements with Serrato
Enterprises L.L.C. ("Serrato Enterprises"), an entity controlled by Alfonso
Serrato, a Director of the Company. In March 1999, the Company entered into a
ten-year license agreement with Serrato Enterprises for the marketing and
distribution of the Company's chronic pain reduction products in Europe, Africa
and the Middle East, excluding Israel and the nations that formerly constituted
the Union of Soviet Socialist Republics. The stated term of the agreement runs
through the year 2008 and contains two automatic renewals thereafter of five
years each, but is subject to earlier termination by either party upon at least
90 days' prior written notice to the other party. The Company is to receive a
sales royalty of 16% of gross sales payable on a quarterly basis within 30 days
after the end of each calendar quarter. The Company is also to receive a
manufacturing license override fee of $1,000 for each 18" and 22" Jacobson
Resonator and $1,500 for each 7' Jacobson Resonator ordered by and delivered to
the licensee. These fees are payable within 45 days of initial shipment of the
product from the manufacturing facility.
In October 1999, the Company entered into an additional and separate
ten-year license agreement with Serrato Enterprises for the manufacturing (as
distinguished from marketing and distribution) of the Company's chronic pain
reduction products in Europe, Africa and the Middle East, excluding Israel and
the nations that formerly constituted the Union of Soviet Socialist Republics.
The stated term of the agreement runs through the year 2009 and contains two
automatic renewals thereafter of five years each, but is subject to earlier
termination by either party upon at least 180 days' prior written notice to the
other party. The Company is to receive manufacturing royalties of $1,000 for
each 18" and 22" Jacobson Resonator, $1,500 for each 4' and 7' Jacobson
Resonator and $2,000 for each industrial and/or non-medical use Jacobson
Resonator manufactured and delivered by the licensee. These royalties are
payable on a quarterly basis within 30 days after the end of each calendar
quarter.
3
<PAGE> 7
Mr. Serrato in November 1998 made a $60,000 one-year loan to the
Company with interest at 7% per annum. He had the option at any time to convert
the loan and any accrued interest into shares of the Company's common stock at
$0.21 per share, which approximated the fair market value of the Company's
common stock at the time the loan was made. In March 1999, he converted the loan
and accrued interest into 291,305 shares of the Company's common stock.
From time to time since late 1997 on approximately a quarterly basis,
the Company has issued shares of its common stock to its executive officers
either in lieu of cash compensation or as bonuses. Debra M. Jacobson, a director
as well as an executive officer of the Company, has received stock in most of
these issuances. The following table sets forth pertinent information on the
issuances to Ms. Jacobson:
<TABLE>
<CAPTION>
Number of Value per Aggregate
Date Shares Share Value
---- ------ ----- -----
<S> <C> <C> <C> <C>
November 1997 5,000 $ 0.15 $ 750
July 1998 83,334 0.35 29,167
October 1998 25,000 0.25 6,250
December 1998 30,000 0.25 7,500
March 1999 98,572 0.35 34,500
May 1999 200,000 0.35 70,000
September 1999 100,000 0.21 21,000
December 1999 85,294 0.18 15,353
December 1999 100,000 0.21 21,000
February 2000 100,000 2.16 216,000
</TABLE>
4
<PAGE> 8
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 17, 2000, the beneficial
ownership of the voting securities of the Company by each person beneficially
owning more than 5% of such securities, by each of the directors and executive
officers of the Company, and by the directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner (1) of Beneficial Ownership (2) Outstanding
----------------------- --------------------------- -----------------
<S> <C> <C>
Dr. Jerry I. Jacobson 30,000 shares of Series A
Convertible Preferred Stock (3) 100.0%
10,892,146 shares of
Common Stock (4) 19.9%
Alfonso Serrato 1,020,495 (5) 1.8%
Debra M. Jacobson 2,097,200 (6) 3.8%
Frank A. Chaviano 592,866 (7) 1.1%
All directors and executive officers 14,602,707 (8) 26.3%
as a group (4 persons)
</TABLE>
-----------------------
(1) The address of each person named in the table is c/o Jacobson Resonance
Enterprises, Inc., 8200 Jog Road, Suite 100, Boynton Beach, Florida
33437.
(2) For all entries in the table other than the one for Dr. Jerry I.
Jacobson, the figures represent beneficial ownership of shares of the
Company's Common Stock.
(3) Each share of the Series A Convertible Preferred Stock is entitled to
1,000 votes on all matters submitted to a vote of the Company's
shareholders. As a result, Dr. Jacobson by himself possesses 48.2% of
the combined voting power of the Company's outstanding shares of
Preferred Stock and Common Stock. The Preferred Stock is not entitled
to any dividends and has a liquidation preference equal to its par
value, which is a total of $30.00. At the option of Dr. Jacobson, up to
one-half of the outstanding shares of the Preferred Stock can be
converted into shares of the Company's Common Stock in May of each of
the years 2001 and 2002. The conversion ratio is 1,000 shares of Common
Stock for each share of Preferred Stock.
5
<PAGE> 9
(4) This figure includes 10,792,146 shares owned of record by Dr. Jacobson
and 100,000 shares subject to options granted to Dr. Jacobson, which
options are exercisable within 60 days from the date hereof. This
figure excludes 100,000 shares subject to options granted to Dr.
Jacobson, which options are not exercisable within 60 days from the
date hereof. This figure also does not include beneficial ownership of
shares of the Company's common stock by Debra M. Jacobson, the wife of
Dr. Jacobson, as to which shares Dr. Jacobson disclaims any beneficial
interest. Ms. Jacobson's beneficial ownership is separately listed in
the table. Together Dr. and Ms. Jacobson beneficially own 12,759,344
shares, or 23.3%, of the outstanding shares of the Company's common
stock. This figure further excludes 400,000 shares owned of record by
the Perspectivism Foundation, of which Dr. Jacobson is the founder and
a director. Dr. Jacobson disclaims any beneficial interest in those
shares.
(5) This figure includes 448,638 shares owned of record by Mr. Serrato,
542,857 shares subject to warrants held by Mr. Serrato, and 29,000
shares subject to options granted to Mr. Serrato, which options are
exercisable within 60 days from the date hereof. This figure excludes
12,000 shares subject to options granted to Mr. Serrato, which options
are not exercisable within 60 days from the date hereof.
(6) This figure includes 1,967,200 shares owned of record by Ms. Jacobson
and 130,000 shares subject to options granted to Ms. Jacobson, which
options are exercisable within 60 days from the date hereof. This
figure excludes 50,000 shares subject to options granted to Ms.
Jacobson, which options are not exercisable within 60 days from the
date hereof. It also does not include beneficial ownership of shares of
the Company's common stock by Dr. Jerry I. Jacobson, the husband of Ms.
Jacobson, as to which shares Ms. Jacobson disclaims any beneficial
interest. Together, Dr. and Ms. Jacobson beneficially own 12,759,344
shares, or 23.3%, of the outstanding shares of the Company's common
stock. This figure also excludes 400,000 shares owned of record by the
Perspectivism Foundation, to which Ms. Jacobson donated the shares and
of which Ms. Jacobson is a director. Ms. Jacobson disclaims any
beneficial interest in those shares.
(7) This figure includes 412,866 shares owned of record by Mr. Chaviano and
180,000 shares subject to options granted to Mr. Chaviano, which
options are exercisable within 60 days from the date hereof. It
excludes 100,000 shares subject to options granted to Mr. Chaviano,
which options are not exercisable within 60 days from the date hereof.
(8) This figure includes 13,620,850 shares owned of record by the Company's
directors and executive officers as a group; 439,000 shares subject to
options granted to them, which options are exercisable within 60 days
from the date hereof; and 542,857 shares subject to warrants held by
them. Taking into account the 30,000 shares of the Company's Series A
Convertible Preferred Stock owned by Dr. Jacobson, the Company's
directors and executive officers collectively possess 51.5% of the
combined voting power of the Company's outstanding shares of Preferred
Stock and Common Stock.
6
<PAGE> 10
SHAREHOLDERS PROPOSALS
The Board on June 8, 2000, unanimously approved the following proposals
for presentation to the Company's Shareholders:
1. ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board be divided into three
classes, with all Directors in each class serving staggered three-year terms or
until their respective successors are qualified and elected. Beginning at the
2000 Annual Meeting of the Shareholders, the Directors of the first class shall
be elected to serve until the 2003 Annual Meeting; the Directors of the second
class, until the 2002 Annual Meeting; and the Directors of the third class,
until the 2001 Annual Meeting. Beginning at the 2001 Annual Meeting of the
Shareholders, and thereafter at each Annual Meeting, successors to the Directors
of the class whose terms of office then expire shall be elected to serve until
the third following Annual Meeting.
The Board has nominated a) Dr. Jerry I. Jacobson and Alfonso Serrato as
Class I Directors each for a term of three years, b) Debra M. Jacobson as a
Class II Director for a term of two years, and c) William Yamanashi as a Class
III Director for a term of one year. For biographical information regarding Dr.
Jerry I. Jacobson, Alfonso Serrato, and Debra M. Jacobson, please see
"MANAGEMENT - Directors and Executive Officers." Biographical information
regarding William Yamanashi is provided at the end of this proposal 1 below.
It is intended that the votes will be cast pursuant to the accompanying
proxy for the four nominees named above, unless otherwise directed. The Board
has no reason to believe that any of the nominees will become unavailable to
serve if elected. However, if any nominee should be unavailable, then proxies
solicited by the Board will be voted for the election of a substitute nominee
designated by the Board.
Dr. Jacobson, by reason of his ownership of record of approximately
48.2% of the combined voting power of the Company's outstanding shares of Common
Stock and Preferred Stock, may be in a position to elect all of the Directors of
the Company and thereby control the Company.
Proxies cannot be voted for a greater number of persons than the three
nominees named above. The Directors will be elected by a plurality of the votes
cast, either in person or by proxy, at the Meeting. Votes cast as abstentions
will not be counted as votes for or against the election of the Director and
therefore will have no effect on the number of votes necessary to elect the
Directors. So-called "broker non-votes" (brokers failing to vote by proxy shares
of the Company's Common Stock held in nominee name for customers) will not be
counted at the Meeting and also will have no effect on the number of votes
necessary to elect a Director.
WILLIAM YAMANASHI built the Company's first resonator in 1996 and has
been a member of the Company's Scientific Advisory Board since December 1996.
Dr. Yamanashi is currently
7
<PAGE> 11
assisting the Company with studies regarding the effects of Jacobson Resonance
on epilepsy and tachycardia (rapid heart action). In addition to assisting the
Company with its research and development, Dr. Yamanashi also serves as a
research professor of medicine and a medical physicist at the cardiovascular
section of the University of Oklahoma Health Sciences Center, in Oklahoma City,
Oklahoma, which he joined in 1990. Dr. Yamanashi holds a Ph.D. in Chemical
Physics from the Massachusetts Institute of Technology.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE PROPOSED NOMINEE FOR ELECTION TO THE
BOARD.
2. AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF SHARES
OF THE COMPANY'S AUTHORIZED COMMON STOCK.
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK
Proposed Article IV of the Company's Articles of Incorporation would
increase the authorized number of shares of Common Stock to 300,000,000 shares
from 100,000,000 shares. At the present time, the Company's authorized capital
stock consists of 100,000,000 shares of Common Stock, par value $.001 per share,
and 5,000,000 shares of Preferred Stock, par value $.001 per share. As of the
Record Date, 54,628,154 shares of Common Stock and 30,000 shares of Series A
Preferred Stock are outstanding. In addition, 30,000,000 shares of Common Stock
are reserved for issuance upon the conversion of the Series A Preferred Stock,
400,000 shares of Common Stock are reserved for issuance to members of the
Company's Sports Legends Committee, 2,991,783 shares of Common Stock are
reserved for issuance upon exercise of outstanding warrants, and 7,964,079
shares of Common Stock are reserved for issuance upon exercise of options.
Shareholders of the Company do not have preemptive rights to subscribe
for or purchase any of the additional shares of Common Stock to be authorized.
Additional shares could be issued for any proper corporate purpose, including
acquisitions, raising of additional equity capital, stock dividends or exercise
of stock options. The future issuance of additional shares of Common Stock on
other than a pro rata basis to existing shareholders will dilute the ownership
of the current shareholders, as well as their proportionate voting rights.
If the proposed amendment to the Company's Articles of Incorporation is
adopted, no further approval of the holders of Common Stock would be required
for the issuance of any of the additional authorized shares of Common Stock and,
absent any legal or stock exchange requirements, further approval of the holders
of Common Stock is not currently anticipated to be sought for issuance of any
such shares. The Company has no present plans to issue any shares of Common
Stock that would be authorized by the amendment; however, the Board has adopted
the Shareholders' Rights Plan described below, subject to shareholder approval
of this proposal.
8
<PAGE> 12
SHAREHOLDERS' RIGHTS PLAN
INTRODUCTION
The Board is aware of the very real possibility that the Company may be the
subject of a takeover attempt at any time in the future. At the present time,
the Company faces competition from other medical device companies that have
substantially greater financial, manufacturing, marketing and technological
resources than that of the Company. In addition, the health care and medical
device industries are characterized by increasing governmental regulation and
rapid technological progress. Each of these factors have created an atmosphere
conducive to consolidation. The Board considers that its evaluation of any
takeover bid received by the Company should be based on a determination of what
is in the best interests of the Company and all of its Shareholders. Factors
influencing that determination include the resultant effect of the takeover upon
the Company's then remaining minority Shareholders, its employees, its patients,
the communities that it serves and its other constituents.
Based on the philosophy just described, on June 8, 2000, the Board
determined in principle to adopt a Shareholder Rights Plan (the "Rights Plan")
providing for a dividend distribution of one right ("Right") for each
outstanding share of Common Stock. The Board is not aware of any currently
proposed or pending attempt to change control of the Company. Nevertheless, the
Board plans to adopt the Rights Plan now so that it will be in effect at the
time any takeover attempt does occur. The Board's determination to adopt the
Rights Plan is subject to (a) shareholder approval of an amendment to increase
the number of shares of Common Stock authorized for issuance, (b) review of
definitive documentation for the Rights Plan by the Company's legal counsel, (c)
the Board's formal adoption of definitive documentation for the Rights Plan, and
(d) the Company's receipt of a satisfactory fairness opinion from an investment
banking firm which is acceptable to the Company, all of which the Board
anticipates will take place shortly prior to the date of the Annual Meeting.
The Rights will have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
in a manner or on terms not approved by the Board, thereby discouraging a
merger, tender offer, proxy contest, or assumption of control by a holder of a
larger block of the Company's securities and the removal of incumbent
management. THE RIGHTS MAY MAKE THE ACCOMPLISHMENT OF A GIVEN TRANSACTION MORE
DIFFICULT AND LIMIT PARTICIPATION BY THE SHAREHOLDERS OF THE COMPANY IN CERTAIN
TRANSACTIONS, EVEN IF IT IS FAVORABLE TO THE INTERESTS OF THE SHAREHOLDERS OF
THE COMPANY, AND MAY THEREFORE BE DETRIMENTAL TO THE INTERESTS OF THE
SHAREHOLDERS OF THE COMPANY. On the other hand, while the Rights may have the
effect of protecting incumbent management, it may also provide management with
greater leverage in negotiating a takeover. The Rights should not deter any
prospective offeror willing to negotiate in good faith with the Board, nor
should the Rights interfere with any merger or other business combination
approved by the Board.
The following is a brief summary of the Rights Plan adopted in principle by
the Board.
SUMMARY OF RIGHTS PLAN
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS
REFERRED TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
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TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
On June 8, 2000, the Board determined in principle to declare a
dividend distribution of one Common Stock Purchase Right (a "Right") for each
outstanding share of Common Stock and each outstanding share of Preferred Stock.
The distribution will be payable to shareholders of record on the record date
set by the Board for the dividend distribution (the "Rights Record Date"). Each
Right will entitle the registered holder to purchase from the Company one share
of Common Stock of the Company at a per share price to be set by the Board in
the resolution declaring the dividend distribution (the "Exercise Price"). The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Florida Atlantic Stock Transfer,
Inc., a Florida corporation, as Rights Agent (the "Rights Agent").
AS DISCUSSED IN MORE DETAIL BELOW, INITIALLY THE RIGHTS WILL NOT BE
EXERCISABLE, CERTIFICATES WILL NOT BE SENT TO SHAREHOLDERS AND THE RIGHTS WILL
AUTOMATICALLY TRADE WITH THE COMMON STOCK.
The Rights, unless earlier redeemed by the Board, become exercisable
upon the close of business on the day (the "Distribution Date") that is the
earlier of (A) the tenth Business Day (as defined in the Rights Agreement)
following a public announcement that a person or group of affiliated or
associated persons, with certain exceptions set forth below, has acquired
beneficial ownership of 5% or more of the outstanding Voting Stock (as defined
in the Rights Agreement) of the Company (an "Acquiring Person") and (B) the
tenth Business Day (or such later date as may be determined by the Board and the
Continuing Directors (as defined in the Rights Agreement) prior to such time as
any person or group of affiliated or associated persons becomes an Acquiring
Person) after the date of the commencement or announcement of a person's or
group's intention to commence a tender or exchange offer the consummation of
which would result in the ownership of 5% or more of the Company's outstanding
voting stock (even if no shares are actually purchased pursuant to such offer).
Prior thereto, the Rights would not be exercisable, would not be represented by
a separate certificate, and would not be transferable apart from the Company's
Common Stock, but will instead be evidenced, with respect to any of the Common
Stock certificates outstanding as of Rights Record Date, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto.
An Acquiring Person does not include (A) the Company; (B) any
subsidiary of the Company; (C) any employee benefit plan or employee stock plan
of the Company or of any subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to the
terms of any such plan; (D) any person or group whose ownership of 5% or more of
the shares of voting stock of the Company then outstanding results solely from
(i) any action or transaction or transactions approved by the Board before such
person or group became an Acquiring Person or (ii) a reduction in the number of
issued and outstanding shares of voting stock of the Company pursuant to a
transaction or transactions approved by the Board (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon acquisition of an additional 1% of
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<PAGE> 14
the Company's Voting Stock unless such acquisition of additional Voting Stock
will not result in such person or group becoming an Acquiring Person by reason
of such clause (i) or (ii)); or (E) any person who, as of the Rights Record
Date, together with all affiliates and associates of such person, was the
beneficial owner of 5% or more of the voting stock of the Company outstanding as
of such date; provided, however, that any person described in this clause (E)
shall no longer be an exempt person and shall become an Acquiring Person if such
person, together with all affiliates and associates of such person, after May 1,
2000 acquires beneficial ownership of an additional 1% or more of the Voting
Stock (unless such acquisition is pursuant to a transaction described in clause
(D)(i) or (D)(ii) above).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Rights Record Date will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as of
the Rights Record Date, with or without a copy of this Summary of Rights
attached thereto, will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate
certificates alone will evidence the Rights from and after the Distribution
Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on July 17, 2010 (the "Final Expiration
Date"), unless earlier redeemed by the Company as described below.
The number of shares of Common Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed, in the event that, after the
time that the Rights become exercisable, the Company were to be acquired in a
merger or other business combination (in which any shares of Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred in one or a series of related
transactions, except in any such case pursuant to a transaction approved by the
Board and Continuing Directors, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right will from and
after such date have the right to receive, upon payment of the Exercise Price,
that number of shares of common stock of the acquiring company having a market
value at the time of such transaction equal to two times the Exercise Price. In
addition, unless the Rights are earlier redeemed, in the event that a person or
group becomes an Acquiring Person, the Rights Agreement provides that each
holder of record of a Right, other than the Acquiring Person (whose Rights will
thereupon become null and void), will thereafter have the right to receive, upon
payment of the Exercise Price, that number of shares of the Common Stock having
a market value at the time of the transaction equal to two times the Exercise
Price.
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Fractions of shares of Common Stock may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares.
At any time on or prior to the close of business on the earlier of (i)
the tenth Business Day after the time that a person has become an Acquiring
Person (or such later date as the Company may determine in certain instances) or
(ii) the Final Expiration Date, the Company may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (the "Redemption Price"). The Rights
may be redeemed after the time that any Person has become an Acquiring Person
only if approved by a majority of the Continuing Directors. Immediately upon the
effective time of the action of the Board authorizing redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price or the Final Expiration Date, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
the Company may amend the Rights in any manner that does not materially
adversely affect the interests of holders of the Rights as such. Amendments to
the Rights Agreement from and after the time that any person becomes an
Acquiring Person requires the approval of a majority of the Continuing Directors
(as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K after its
adoption. A copy of the Rights Agreement, if adopted, would be available
thereafter free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the draft Rights Agreement, which is incorporated in this summary
description herein by reference.
The Rights Plan is consistent with the corporate laws of the State of
Nevada and the existence of the Rights Plan will not affect the Company's
ability to list its Common Stock on the Bulletin Board.
EXISTING ANTI-TAKEOVER PROVISIONS OF THE COMPANY
The Rights Plan is one component of the Board's anti-takeover
preparedness, and should be examined as it relates to various provisions in the
Company's Articles of Incorporation and Bylaws, to be described hereafter. Each
of the provisions may have the effect of discouraging certain takeover attempts
or making them more difficult to accomplish. The Board does not currently intend
to propose any additional provisions that can be considered to have a similar
effect on takeover attempts.
On May 7, 1997, pursuant to a written consent of a majority of the
Company's Shareholders, the Shareholders of the Company adopted an amendment to
the Company's
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Articles of Incorporation to authorize 5,000,000 shares of preferred stock and
to give the Board the authority to designate the rights and preferences thereof.
The grant to the Board of the authority to issue the preferred stock in series
and to determine the relative rights and preferences of each series permits the
Company to take advantage of the significant flexibility offered by the variety
of characteristics that can be given to preferred stock. The Board can thereby
tailor the terms of each series of preferred stock in light of the purpose of
its issuance and the economic conditions at that time. The Board has the power
to determine the voting rights of any preferred stock that is issued; and such
voting rights may include more than one vote per share. Issuance of preferred
stock to persons friendly to the Company's present management may discourage or
make more difficult a takeover attempt on the Company and thus tend to
perpetuate the Company's incumbent management. The Board currently has no plans
for the issuance of any additional shares of the preferred stock.
On June 8, 2000, at a special meeting of the Board and pursuant to its
unanimous consent, the Board amended the Bylaws of the Company to include the
following provisions:
(a) Evaluation of Takeover Bids
Instead of making a forced sale, the Board may base its response to a
takeover bid upon its evaluation of what is in the best interests of the Company
and the Shareholders. The consideration offered, even though it may be in excess
of the then market price, may be less than the consideration that the Board
could obtain for the Shareholders in a freely negotiated transaction because the
latter would reflect not only the current, but also the future, value of the
Company. For this purpose, the Board may consider not only the consideration
offered in the takeover bid in relation to the then current market price but
also the current value of the Company in a freely negotiated transaction and the
Board's estimate of the Company's future value as an independent entity. In
addition, the Board may also consider such other factors as it determines to be
relevant, including the social, legal and economic effects on employees,
patients and other constituents of the Company and on the communities in which
the Company operates. While the value of the consideration offered to the
Company's Shareholders is a very important factor in the evaluation of a
takeover bid, the Board believes all other relevant factors should be
considered.
(b) Shareholder Action
The Company's Bylaws contain safeguards designed to preclude action by
any Shareholder or Shareholders holding less than a majority of the Company's
outstanding voting stock. Because a quorum can be as little as a simple majority
of the Company's outstanding voting stock, any person controlling more than 25%
of the Company's outstanding voting stock could conceivably dictate adoption,
amendment or repeal of bylaws at a meeting of Shareholders. In order to prevent
this, the Company's Bylaws provide that the Board and the Shareholders each have
the power to adopt, alter, amend or repeal bylaws, but that the Shareholders may
do so only upon the affirmative vote of two-thirds of the Company's outstanding
stock entitled to vote thereon, as opposed to a mere majority of a quorum.
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In addition, in order to provide Dr. Jacobson with a veto power against
Shareholders attempting to take control of the Company through a written consent
of Shareholders in lieu of a meeting, the Bylaws require the approval of
two-thirds of the Company's outstanding voting stock in order to effect change
through a written consent of Shareholders in lieu of a meeting. By contrast,
under the Nevada Revised Statutes, only a majority of the outstanding voting
power of a company is required to effect change through a written consent of
shareholders in lieu of a meeting.
(c) Removal of Directors
In order to help ensure that Directors of the Company are not removed
for the sole purpose of enabling a person to obtain control of the Company, the
Bylaws provide that Directors of the Company may only be removed for cause.
(d) Classification of Directors
The Bylaws of the Company provide for the classification of directors
as to the duration of their respective terms of office or as to their election.
For several important reasons, it is believed desirable to elect directors for
terms of greater duration than one year. The Company, like any other
profit-making business enterprise, must engage in long-range planning in order
to maintain its profitability in all types of economic climates. Effective
long-range planning requires extensive knowledge of the history of the Company
and of previous economic conditions. In addition, stability in the leadership of
the Company will enable it to attract and retain able management personnel.
Because all of these matters must necessarily be multi-year in nature, longer
terms of office for directors can enhance the performance of these directorial
functions. And staggering the terms of office of the directors can further
enhance this performance, it is believed, by providing greater continuity in the
knowledge among directors of the business of the Company and the background
thereto.
In the election of directors, Nevada corporate law provides for only
one vote per share for each director unless cumulative voting has been
established in the corporation's Articles of Incorporation. The Company's
Articles of Incorporation do not provide for cumulative voting.
Implementation of this Proposal is not contingent upon the Board
adopting the Rights Plan; however, if the Rights Plan is not adopted, the Board
may elect not to implement this Proposal.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
3. AMENDMENT OF STOCK OPTION PLAN TO INCLUDE A "CASHLESS" EXERCISE
PROVISION.
On August 31, 1998, the Board adopted a Stock Option Plan (the "Option
Plan") for the purpose of providing an additional incentive to attract, retain
and motivate highly qualified and competent persons who are key to the Company,
and upon whose efforts and judgments the success of the Company is largely
dependent. These person include key employees, consultants,
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independent contractors, advisory board members, Officers and Directors. The
Option Plan authorizes the grant of options to purchase Common Stock of the
Company to persons who are eligible to participate thereunder, thereby
encouraging stock ownership in the Company by such persons, all upon and subject
to the terms and conditions of the Option Plan.
Based upon the above philosophy, and in order to provide yet further
incentive to all key employees, the Board believes that the best interests of
the Company will be served by amending the Option Plan to include a "cashless"
exercise provision for such individuals. A "cashless" exercise provision allows
for the exercise of options by an optionee without any out-of-pocket expense to
the optionee, thereby facilitating option exercises.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
4. RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
It is intended that the votes will be cast pursuant to the accompanying
proxy for the ratification of Goldstein Golub Kessler LLP ("GGK"), as the
Company's independent auditor, unless otherwise directed. GGK's service as the
Company's independent auditor began with the audited financial statements for
1999.
No member of GGK or any associate thereof has any financial interest in
the Company or its subsidiaries. By mutual agreement, a member of that firm will
not attend the Meeting and therefore will not have the opportunity to make a
statement or be available to respond to questions.
Shareholder approval of the Company's auditor is not required under
Nevada law. The Board is submitting its selection of GGK to its Shareholders for
ratification in order to determine whether the Shareholders generally approve of
the Company's auditor. If the selection of GGK is not approved by the
Shareholders, the Board will reconsider its selection.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
5. OTHER MATTERS
The Board is not aware of any other business that may come before the
meeting. However, if additional matters properly come before the meeting, then
proxies will be voted at the discretion of the proxy-holders.
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SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at, and included in the
Company's proxy statement and proxy relating to, the 2001 Annual Meeting of
Shareholders of the Company must be received by the Company no later than April
17, 2001, at its principal executive offices, located at 8200 Jog Road, Suite
100, Boynton Beach, Florida 33437. Shareholder proposals intended to be
presented at, but not included in the Company's proxy statement and proxy for,
that meeting must be received by the Company no later than July 3, 2001, at the
foregoing address; otherwise, such proposals will be subject to the grant of
discretionary authority contained in the Company's form of proxy to vote on
them.
ADDITIONAL INFORMATION
A copy of the Company's Form 10-KSB for the year ended December 31,
1999 is being provided to Shareholders with this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Dr. Jerry I. Jacobson, Chairman of the Board
August 14, 2000
Boynton Beach, Florida
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FORM OF PROXY
PROXY FOR ANNUAL MEETING OF
JACOBSON RESONANCE ENTERPRISES, INC.
8200 JOG ROAD, SUITE 100, BOYNTON BEACH, FLORIDA 33437
(561) 752-4141
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF
JACOBSON RESONANCE ENTERPRISES, INC.
THE UNDERSIGNED hereby appoint(s) Debra M. Jacobson and Frank A.
Chaviano, or either of them, with full power of substitution, to vote at the
Annual Meeting of Shareholders of Jacobson Resonance Enterprises, Inc., a Nevada
corporation (the "Company"), to be held on August 31, 2000, at 11:00 A.M.
Mountain Daylight Time, at the Bellagio Hotel, 3600 Las Vegas Boulevard South,
Las Vegas, Nevada 89109, or any adjournment thereof, all shares of the common
stock which the undersigned possess(es) and with the same effect as if the
undersigned was personally present, as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
PROPOSAL (1): ELECT DIRECTORS.
Class I: Dr. Jerry I. Jacobson and Alfonso Serrato
Class II: Debra M. Jacobson
Class III: William Yamanashi
( ) For All Nominees Listed Above ( ) Withhold Authority to Vote
(except as marked to the contrary below) for All Nominees Listed Above
------------------------------------------------------------------------------------------
(To withhold vote for any nominee or nominees, print the name(s) above.)
PROPOSAL (2): APPROVE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
( ) For ( ) Against ( ) Abstain
PROPOSAL (3): APPROVE AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN.
( ) For ( ) Against ( ) Abstain
PROPOSAL (4): RATIFY SELECTION OF INDEPENDENT AUDITOR.
( ) For ( ) Against ( ) Abstain
PROPOSAL (5): TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
( ) In their discretion, the proxy-holders are ( ) Withhold Authority
authorized to vote upon such other business
as may properly come before the meeting or
any adjournment thereof.
</TABLE>
<PAGE> 21
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4 AND IN THE
DISCRETION OF THE PROXIES NOMINATED HEREBY ON ANY OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons, then each should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should include their
capacity or title.)
Please sign, date and promptly
return this Proxy in the enclosed
envelope.
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Signature Date
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Signature Date
2
