SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, For Use of the
[_] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
DATALINK.NET, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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[_] Check box if any part of the fee is offset as provided by Exchange Act
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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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4) Date Filed:
<PAGE>
DATALINK.NET, INC.
1735 Technology Drive, Suite 790
San Jose, California 95110
(408) 367-1700
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 11, 2001
To the Shareholders of Datalink.Net, Inc.:
You are cordially invited to attend the Special Meeting of Shareholders of
Datalink.net, Inc., a Nevada corporation. We will be holding the Special Meeting
at the Company's offices at 1735 Technology Drive, Suite 790, San Jose,
California 95110, on Thursday, January 11, 2001, at 2:00 p.m., Pacific Time.
At the Special Meeting, we will ask you to:
1. Approve an amendment to the Company's Articles of Incorporation to change
the name of the Company to "Semotus Solutions, Inc."
2. Approve an amendment to the Company's Employee Stock Option Plan to
increase the number of shares of Common Stock issuable upon the exercise
of options granted under the Plan from 2,500,000 shares to 3,500,000.
3. Transact such other business as may properly come before the meeting or
any adjournment thereof.
Enclosed with this letter is a Proxy Statement, a proxy card and a return
envelope.
Only holders of the $.01 par value Common Stock of the Company of record at
the close of business on December 5, 2000 are entitled to notice of and to vote
at the Special Meeting. The proxies are being solicited by the Board of
Directors of the Corporation.
Your vote is very important to us. All shareholders, whether or not you
expect to attend the Special Meeting of Shareholders in person, are urged to
sign and date the enclosed Proxy and return it promptly in the enclosed
postage-paid envelope which requires no additional postage if mailed in the
United States. If you attend the meeting, you may vote in person, even though
you have previously returned your proxy.
By Order of the Board of Directors
/s/ Anthony N. Lapine
Anthony N. Lapine, President
San Jose,
California December 8, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
General Information.................................................. 1
Information About the 2000 Special Meeting and Voting................ 1
Proposals to be Presented at the Special Meeting
Proposal 1: Approve Amendment to Articles of Incorporation....... 3
Proposal 2: Approve Amendment to 1996 Stock Option Plan.......... 3
Security Ownership of Certain Beneficial Owners and Management....... 4
Directors and Executive Officers..................................... 6
Executive Compensation............................................... 6
Certain Relationships and Related Transactions....................... 8
Shareholder Proposals................................................ 9
<PAGE>
DATALINK.NET, INC.
1735 Technology Drive, Suite 790
San Jose, California 95110
(408) 367-1700
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 11, 2001
GENERAL INFORMATION
This Proxy Statement provides information that you should read before you
vote on the proposals that will be presented to you at the Special Meeting of
Datalink.net, Inc. ("Datalink.net" or the "Company"). The Special Meeting will
be held on January 11, 2001 at 2:00 p.m., Pacific Time, at the Company's offices
at 1735 Technology Drive, Suite 790, San Jose, California 95110.
This Proxy Statement provides detailed information about the Annual Meeting,
the proposals you will be asked to vote on at the Annual Meeting, and other
relevant information. The Board of Directors of Datalink.net is soliciting these
proxies.
At the Special Meeting, you will be asked to vote on the following proposals:
1. Approve an amendment to the Company's Articles of Incorporation.
2. Approve an amendment to the Company's 1996 Stock Option Plan.
3. Such other matters as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF
THESE PROPOSALS.
On December 11, 2000, we began mailing information to people who, according
to our records, owned shares of common stock in Datalink.net as of the close of
business on December 5, 2000.
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
The Special Meeting
The Special Meeting will be held at the Company's offices at 1735 Technology
Drive, Suite 790, San Jose, California 95110, on Thursday, January 11, 2001, at
2:00 p.m., Pacific Time.
This Proxy Solicitation
We are sending you this proxy statement because Datalink.net's Board of
Directors is seeking a proxy to vote your shares at the Special Meeting. This
proxy statement is intended to assist you in deciding how to vote your shares.
It is anticipated that this Proxy Statement and the accompanying Proxy will be
mailed on or about December 11, 2000 to the Company's shareholders who,
according to our stockholder records, owned shares at the close of business on
December 5, 2000.
Datalink.net is paying the cost of requesting these proxies. Datalink.net's
directors, officers and employees may request proxies in person or by telephone,
mail, telecopy or letter. Datalink.net will reimburse brokers and other nominees
their reasonable out-of-pocket expenses for forwarding proxy materials to
beneficial owners of our shares.
<PAGE>
Voting Your Shares
You may vote your shares at the Special Meeting either in person or by proxy.
To vote in person, you must attend the Special Meeting and obtain and submit a
ballot. Ballots for voting in person will be available at the Special Meeting.
To vote by proxy, you must complete and return the enclosed proxy card in time
to be received by us by the Special Meeting. By completing and returning the
proxy card, you will be directing the persons designated on the proxy card to
vote your shares at the Special Meeting in accordance with the instructions you
give on the proxy card.
If you hold your shares with a broker and you do not tell your broker how to
vote, your broker has the authority to vote on all proposals.
IF YOU DECIDE TO VOTE BY PROXY, YOUR PROXY CARD WILL BE VALID ONLY IF YOU
SIGN, DATE AND RETURN IT BEFORE THE SPECIAL MEETING SCHEDULED TO BE HELD ON
January 11, 2001.
For the proposals, you may vote "FOR," "AGAINST" or "ABSTAIN." If you
"ABSTAIN" as to any proposal, it has the same effect as a vote "AGAINST" that
proposal.
Failure to return a proxy card or vote in person will not affect the outcome
of the proposals as long as a quorum is achieved. If you sign your proxy card or
broker voting instruction card with no further instructions, your shares will be
voted in accordance with the recommendations of the Board ("FOR" all of the
Company's nominees to the Board, and "FOR" all other items described in this
proxy statement and in the discretion of the proxy holders on any other matters
that properly come before the meeting).
We have described in this proxy statement all the proposals that we expect
will be made at the Special Meeting. If we or a stockholder properly present any
other proposal to the meeting, we will use your proxy to vote your shares on the
proposal in our best judgment.
Revoking Your Proxy
If you decide to change your vote, you may revoke your proxy at any time
before it is voted. You may revoke your proxy in one of three ways:
o You may notify the Secretary of Datalink.net in writing that you wish to
revoke your proxy at the following address: Datalink.net, Inc., 1735
Technology Drive, Suite 790, San Jose, California 95110, Attention: Tali
Durant, Secretary. We must receive your notice before the time of the
Special Meeting.
o You may submit a proxy dated later than your original proxy.
o You may attend the Special Meeting and vote. Merely attending the
Special Meeting will not by itself revoke a proxy; you must obtain a
ballot and vote your shares to revoke the proxy.
Vote Required by Approval
Shares Entitled to Vote. On December 5, 2000, 15,______ shares of Common
Stock were issued and outstanding, each of which is entitled to one vote on each
of the proposals.
Quorum. The quorum requirement for holding the meeting and transacting
business is a majority of the outstanding shares present in person or
represented by proxy and entitled to be voted. A quorum will be present if
____________ votes are represented at the Annual Meeting, either in person (by
the stockholders) or by proxy. If a quorum is not present, a vote cannot occur.
Both abstentions and broker non-votes are counted as present for the purposes of
determining the presence of a quorum.
Votes Required. All proposals require the affirmative "FOR" vote of a
majority of those shares present and entitled to vote. If you are a beneficial
owner and do not provide the shareowner of record with voting instructions, your
shares may constitute broker non-votes. In tabulating the voting result for any
particular proposal, shares that constitute broker non-votes are not considered
entitled to vote on that proposal and will not be considered votes cast for the
foregoing purposes. Thus, broker non-votes will not affect the outcome of any of
the matters being voted upon at the meeting. Generally, broker non-votes occur
when shares held by a broker for a beneficial owner are not voted with respect
to a particular proposal because (1) the broker has not received voting
instructions from the beneficial owner, and (2) the broker lacks discretionary
voting power to vote such shares.
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<PAGE>
PROPOSAL 1:
AMENDMENT TO ARTICLES OF INCORPORATION CONCERNING NAME CHANGE
The Board of Directors has approved an amendment to the Articles of
Incorporation to change the name of the Company to "Semotus Solutions, Inc." The
new name is being proposed to better reflect the Company's enterprise strategy
to emphasize its end-to-end solutions being offered to a broad range of
businesses. Additionally, the new name eliminates any confusion that has existed
regarding the Datalink name. There has been some confusion between us and other
companies also using the Datalink name that are not related to us and operate in
an entirely different business segment. Finally, the name change creates the
opportunity to generate a stronger company identity and branding power.
Beginning in January of 2001, the Company would like to begin doing business
under the "Semotus Solutions, Inc." name.
Board Recommendation
The Board of Directors unanimously recommends a vote "FOR" approval of the
amendment to the Articles of Incorporation.
PROPOSAL 2:
APPROVE AMENDMENT TO THE 1996 STOCK OPTION PLAN
Description of the Plan
In June 1996, the Company adopted the 1996 Stock Option Incentive Plan (the
"Plan"). The "Plan" provides for the granting of stock options to acquire common
stock and/or the granting of stock appreciation rights to obtain, in cash or
shares of common stock, the benefit of the appreciation of the value of shares
of common stock after the grant date. The Company is currently authorized to
issue up to 2,500,000 shares of common stock under the Plan, and intends to seek
Shareholder approval to issue additional shares. The Plan expires ten years
after its adoption.
Under the Plan, the Board of Directors may grant incentive stock options to
purchase shares of the Company's common stock only to employees, directors,
officers, consultants and advisers of the Company. The Board of Directors may
grant options to purchase shares of the Company's common stock at prices not
less than fair market value, as defined under the Plan, at the date of grant for
incentive stock options. The Board of Directors also has the authority to set
exercise dates (no longer than ten years from the date of grant), payment terms
and other provisions for each grant. In addition, incentive options may be
granted to persons owning more than 10% of the voting power of all classes of
stock, at a price no lower than 110% of the fair market value at the date of
grant, as determined by the Board of Directors. Options granted under the Plan
generally vest over four years at a rate of 25% after year one and then equally
on a monthly basis over the next three years from the date of grant. As of
December 1, 2000, no stock appreciation rights have been granted under the Plan.
The Company's Board of Directors granted a total of 1,556,456 options to a
total of 57 employees, directors and consultants during the fiscal year period
ended March 31, 2000. As of December 1, 2000, the Board of Directors granted a
total of 2,481,977 options to a total of 90 employees, directors and
consultants, which does not exceed the grants currently authorized by the
Shareholders. As of December 1, 2000, options to purchase 337,154 shares of
Common Stock have been exercised.
Amendment
On November 20, 2000 the Board of Directors voted, subject to shareholder
approval, to increase the number of shares of Common Stock subject to options
under the 1996 Plan from 2,500,000 to 3,500,000. The Board of Directors believes
that the proposed increase is necessary in order for the Company to have
sufficient flexibility to provide the amounts and types of incentives to its
current and future officers, employees, directors and consultants which are
deemed necessary to encourage the Company's success.
As of December 1, 2000, stock options to purchase up to 2,481,977 shares of
Common Stock were granted under the 1996 Plan, none of which are contingent upon
Shareholder approval. Under the plan as proposed to be
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<PAGE>
amended, there are a total of 1,018,023 stock options available to be granted.
However, no determination has been made related to these grants.
Option Grants. The following table sets forth certain information concerning
the number and value of the total number of current outstanding stock options
made under the Company's 1996 Stock Option Plan to each of the Named Executive
Officers, Executive Officers as a group, Non-Executive Directors as a group, and
Non-Executive Officer Employees as a group. As of December 1, 2000, no stock
appreciation rights have been granted to these individuals.
1996 Stock Option Table
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Options Exercise Expiration
Name and Position Granted(#)(*) Price ($/SH) Date Value($)(**)
----------------- ------------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Anthony LaPine; CEO, .................... 370,000(1) $3.85 01/12/10 $ 55,500
President and Chairman of the Board 140,000(2) $1.72 09/17/06 $319,200
Charles K. Dargan, Director.............. 20,000(2) $1.25 04/01/04 $ 55,000
and Exececutive Vice President of 20,000(2) $6.50 01/24/05 -0-
Administration 140,000(3) $5.44 10/19/10 -0-
William Mahan; CFO ...................... 77,500(4) $0.50 10/05/08 $271,250
Stas Wolk; COO .......................... 160,000(3) $5.44 10/19/10 -0-
Valerie Goodwin; VP Sales ............... 70,000(3) $5.44 10/19/10 -0-
Executive Group ......................... 1,471,666(5) N/A(5) N/A $990,730
Non-Executive Director Group ............ 50,000(6) N/A(6) N/A $ 20,000
Non-Executive Officer ................... 960,311(7) $3.44(7) N/A $540,790
Employees Group
</TABLE>
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* Options expire 90 days after the termination of employment of the option
holder.
** The Dollar Value of these options to purchase Datalink.net common stock
represents the difference between the exercise price of the options and
$4.00 which was the last reported sale price of Datalink.net common stock
on November 29, 2000.
(1) One-third of the options become exercisable beginning January 12, 2001.
Thereafter, the remaining two-thirds of the options become exercisable
monthly in equal increments over a two-year period.
(2) The options are immediately exercisable in their entirety.
(3) One-fourth of the options become exercisable beginning October 19, 2001.
Thereafter, the remaining three-fourths of the options become exercisable
monthly in equal increments over a three-year period.
(4) 2,500 options become exercisable monthly until October, 2002.
(5) Includes the options to purchase Datalink.net common stock listed above
(Mssrs. LaPine, Dargan, Mahan, Wolk, Goodwin), and options to purchase
Datalink.net common stock granted to other executive officers, including:
Pamela LaPine, who was granted 50,000 options at $2.20 per share which are
currently exercisable, 50,000 options at $3.85 per share of which one-third
vest on January 12, 2001 and the remaining two-thirds become exercisable
monthly in equal installments over a two-year period thereafter, and 50,000
options at $5.44 per share, one-quarter of which become exercisable on
October 19, 2001, and the remaining three-fourths of the options become
exercisable monthly in equal increments over a three-year period; Tali
Durant,
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<PAGE>
who was granted 20,000 options at $1.47 of which 5,000 have been exercised
and the remaining 15,000 are outstanding, of which 833 become exercisable
monthly until August 13, 2001, 10,000 options at $3.34 per share of which
one-fourth became exercisable on December 15, 2000 and the remaining
three-fourths become exercisable monthly in equal installments over a
three-year period thereafter, and 20,000 options at $8.31 per share of
which one-fourth became exercisable on May 31, 2001 and the remaining
three-fourths become exercisable monthly in equal installments over a
three-year period thereafter, and 25,000 options at $5.44 of which
one-fourth became exercisable on October 19, 2001 and the remaining
three-fourths become exercisable monthly in equal installments over a
three-year period thereafter; Cornel Fota, who was granted (i) 8,000
options at $0.56 of which 3,832 have been exercised and 4,168 are still
outstanding, of which 167 become exercisable monthly until October 30,
2002, and (ii) 6,000 options at $1.29 per share of which 5,914 have been
exercised and 86 are currently outstanding and exercisable, and (iii) 2,000
options at $1.29 of which 172 have been exercised and 1,828 are currently
outstanding, of which 42 become exercisable monthly until October 1, 2001,
and (iv) 4,000 options at $1.29 per share, of which 2,082 have been
exercised and 1,918 are currently outstanding of which 84 become
exercisable monthly until February 10, 2002, and (v) 10,000 options at
$2.06 of which one-fourth became exercisable on July 1, 2000 and the
remaining three-fourths become exercisable monthly in equal installments
over a three-year period thereafter, and (vi) 20,000 options at $1.47, of
which one-fourth became exercisable on November 17, 2000 and the remaining
three-fourths become exercisable monthly in equal installments over a
three-year period thereafter, and (vii) 50,000 options at $3.34 of which
one-fourth become exercisable on December 15, 2000 and the remaining
three-fourths become exercisable monthly in equal installments over a
three-year period thereafter, and (viii) 40,000 options at $5.25 of which
one-fourth became exercisable on October 25, 2001 and the remaining
three-fourths become exercisable monthly in equal installments over a
three-year period thereafter; Eric Fernwood, who was granted 126,000
options at $13.75 per share, of which one-fourth vest beginning May 15,
2001, and the remaining three-fourths become exercisable monthly in equal
increments over a three-year period.
(6) Includes options to purchase common stock of Datalink.net granted to the
non-executive directors, Jason Pavona and Fred Hoar. Jason Pavona has been
issued 40,000 options to purchase common stock of Datalink.net at $3.50 per
share, 20,000 of which are currently exercisable and 20,000 of which
one-twelfth of the options became exercisable on February 12, 2000.
Thereafter, one-twelfth of the options become exercisable monthly over a
one-year period. Fred Hoar was granted 10,000 options to purchase common
stock of Datalink.net at $8.50 per share. One-third of the options become
exercisable beginning May 31, 2001. Thereafter, the remaining two-thirds of
the options become exercisable monthly in equal increments over a two-year
period.
(7) Represents options to purchase common stock of Datalink.net granted to all
non-executive officer employees, with a weighted average exercise price of
$3.44, vesting over a four year period and expiring after ten years from
the date of the grant.
Board Recommendation
The Board of Directors unanimously recommends a vote "FOR" approval of the
amendment to the 1996 Plan.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any matter to be presented at the Meeting other than as set forth
herein. However, if any other matters are properly brought before the Meeting,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgment of the persons voting them. A majority
vote of the shares represented at the meeting is necessary to approve any such
matters.
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<PAGE>
EXECUTIVE COMPENSATION
The information in this Executive Compensation Section for the last three
fiscal years is the same as in the previous Proxy Statement filed on July 13,
2000. More current information relating to stock options is located in the 1996
Stock Option table above.
Summary Compensation. The following table presents the compensation for the
Company's President and each Executive Officer who received compensation that
exceeded $100,000 for the fiscal years ended March 31 1998, 1999, and 2000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------- ------------------------- -----------------
Securities
Other Underlying All
Annual Restricted Options/ Other
Compen- Stock SARs LTIP Compen-
Name and Principal Position Year Salary Bonus sation Award(s) (Number) Payouts sation
--------------------------- ---- ------ ------- ---------- ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony LaPine, ................ 2000 $240,000 -0- 11,000(1) -0- 1,210,000(2) -0- -0-
CEO and Chairman 1999 $140,000 -0- 11,000(1) -0- 1,210,000(2) -0- -0-
of the Board 1998 $140,000 -0- 11,000(1) -0- 400,000(2) -0- -0-
Nicholas Miller, ............... 2000 -0- -0- -0- -0- 100,000(3) -0- -0-
1999 -0- -0- -0- -0- 100,000(3) -0- -0-
1998 $135,000 -0- 9,000(1) -0- 400,000(3) -0- -0-
William Mahan, ................. 2000 $135,000 -0- 6,000(1) -0- 77,500(4) -0- -0-
Chief Financial Officer
Charles Dargan, ................ 2000 $155,000 $25,000(5) -0- -0- 220,000(6) -0- -0-
Executive Vice President
of Operations, and Director
</TABLE>
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(1) Represents car allowances.
(2) For year 1999 and 2000: Represents warrants to purchase 400,000 shares of
the Company's common stock at $1.875 per share which vest over a three-year
period and warrants to purchase 300,00 shares of the Company's common stock
at $2.375 per share that are immediately exercisable and 140,000 options to
purchase the Company's common stock at $1.72 which are immediately
exercisable, and options to purchase 370,000 shares of the Company's common
stock at $3.85 per share which vest over a three year period.
For year 1998: Represents 400,000 warrants to purchase shares of the
Company's common stock at 1.875 per share which vest over a three-year
period.
(3) For year 1998: Represents warrants to purchase 100,000 shares of the
Company's common stock at $1.875 per share which vest over a three year
period and options to purchase 300,000 shares of the Company's common stock
as $2.20 which are immediately exercisable.
For year 1999: Represents warrants to purchase 100,000 shares of the
Company's common stock at $1.875 per share which vest over a three year
period.
(4) Represents stock options to purchase 77,500 shares of the Company's Common
Stock at $.50 which vest over a four year period.
(5) Represents a moving expenses allowance.
6
<PAGE>
(6) Represents 20,000 options at $6.50 per share that vest immediately, 20,000
options to purchase Common Stock at $1.25 per share that immediately vest,
and 180,000 options to purchase the Company's common stock at $11.83, of
which 140,000 vest over a four year period and 40,000 vest based upon a
performance plan.
Option Grants. The following table sets forth certain information concerning
individual grants of stock options made to each of the Executive Officers named
above during the fiscal year ended March 31, 2000. No stock appreciation rights
were granted to these individuals during the year.
Individual Grants
------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted(#)(*) Fiscal Year Price($/SH) Date
---- ------------- ------------ ----------- ----------
Anthony LaPine 370,000(1) 24% $ 3.85 01/12/10
Charles K. Dargan 20,000(2) 1% $ 6.50 01/24/05
140,000(3) 9% $11.83 02/24/10
---------------
* Options expire 90 days after the termination of employment of the option
holder.
(1) One-third of the options become exercisable beginning January 12, 2001.
Thereafter, the remaining two-thirds of the options become exercisable
monthly in equal increments over a two-year period thereafter. These
options are not contingent upon Shareholder approval.
(2) The options are immediately exercisable in there entirety.
(3) One-fourth of the options become exercisable beginning February 24, 2001.
Thereafter, the remaining three-fourths of the options become exercisable
monthly in equal increments over a three-year period. These options are not
contingent upon Shareholder approval.
Aggregate Option Exercises. The following table sets forth certain
information concerning individual exercises of stock options of the Executive
Officers named above during the fiscal year ended March 31, 2000.
Aggregated Option Exercises In Last Fiscal Year
and FY-End Option Values
<TABLE>
<CAPTION>
Securities Underlying
Shares Unexercised
Acquired Options at FY-End Value of Unexercised-in-the
on Value Exercisable/ Money Options at FY-End
Name Exercise(#) Realized Unexercisable Exercisable/Unexercisable
---- ----------- ---------- --------------------- ----------------------------
<S> <C> <C> <C> <C>
Anthony N. LaPine................ -0- -0- 706,666 / 503,334 $21,046,947 / $14,351,653
Nicholas Miller.................. 66,666 $1,997,647 -0- / 33,334 -0- / $ 998,853
Charles K. Dargan................ -0- -0- 40,000 / 140,000 $ 1,118,600 / $ 2,801,400
William A. Mahan................. 42,500 $ 298,875 -0- / 77,500 -0- / $ 2,428,850
</TABLE>
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(1) Options were "in the money" because the closing price of Datalink.net's
common stock on March 31, 2000 exceeded the exercise price of the options.
The value of unexercised options represents the difference between the
exercise price of net options and $31.84 which was the last reported sale
price of Datalink.net common stock on March 31, 2000.
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<PAGE>
DIRECTOR COMPENSATION
Except for reimbursement for reasonable travel expenses relating to
attendance at board meetings and discretionary grants of stock options,
directors are not compensated for their services as directors. Directors who are
employees are eligible to participate in our equity incentive plan.
The following table identifies options that we have granted to non-employee
directors since January 1, 1997.
Number of
Shares Underlying
Non-Employee Director Options (#) Exercise Price ($)
--------------------- ----------------- ------------------
Frederick H. Hoar.............. 20,000 $1.56
Jason Pavona................... 40,000 $3.50
EMPLOYMENT AGREEMENTS
The Company entered into a three-year employment agreement with Anthony
LaPine, which became effective on May 1, 1996, and was extended to May 1, 2004.
As the Company's CEO, Anthony LaPine receives a base salary of $240,000 per
year, plus discretionary increases in conformity with the Company's standard
review procedure. In addition, to his base salary, Mr. LaPine shall be paid an
annual bonus during the term of the agreement in an amount equal to 86 % of the
base salary, provided there is satisfactory achievement of agreed upon
performance goals. Mr. LaPine will also be given a car allowance that is not to
exceed $1,000 a month. Mr. LaPine receives full health, dental, vision, and
disability insurance. If the Company terminates Mr. LaPine's employment
agreement prior to May 1, 2004 for reasons other than disability, or if Mr.
LaPine terminates the agreement for "good reason" as defined in the agreement,
the Company is mandated to continue paying the salary and other benefits for the
duration of the term.
Concurrently with the execution of the employment agreement, Mr. LaPine
entered into a Stock Purchase Agreement pursuant to which he purchased 2,000,000
shares of the Common Stock of Datalink Communications Corporation (which were
later exchanged for 2,000,000 shares of the Company's Common Stock), and as
payment therefor Mr. LaPine executed a non-recourse promissory note in the
amount of $1,500,000. The note bears interest at 5% per annum and the principal
plus interest are due on or before April 1, 2001. As security for the note, Mr.
LaPine granted the Company a security interest in the 2,000,000 shares of Common
Stock.
The Board of Directors has agreed that no bonuses will be paid to Mr. LaPine
until the Company has four consecutive profitable quarters. The performance
goals for Mr. LaPine will be established by the compensation committee.
EMPLOYEE WARRANTS
In addition to the stock options granted under the Company's Employee Stock
Option Plan, in August 1997, the Board of Directors approved the issuance of
warrants to Anthony N. LaPine and Nicholas R. Miller as of the initial closing
date of the Company's recent private offering. Mr. LaPine received warrants to
purchase 400,000 shares of Common Stock at $1.875 per share. These vest over a
three-year period in equal installments of one-third of the total shares on each
anniversary of the date of grant, and expire five years from the closing date of
the Company's recent private offering. Mr. Miller received warrants to purchase
400,000 shares of Common Stock at $1.875 per share. Of these warrants, 300,000
have been terminated and the remaining 100,000 will vest over a three-year
period in equal installments of one-third of such number on each anniversary of
the date of grant. These warrants also expire five years from the closing date
of the private offering. The above warrants were approved pursuant to the
requirements of the Company's letter of intent with the Placement Agent.
On December 1, 1999, the Company issued warrants to purchase 300,000 shares
of common stock at $2.375 per share to the Chief Executive Officer.
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SHAREHOLDER PROPOSALS
If you intend to propose any matter for action at our 2001 Annual Meeting of
Stockholders and wish to have the proposal included in our proxy statement, you
must submit your proposal to the Secretary of Datalink.net at 1735 Technology
Drive, Suite 790, San Jose, California 95110, on or before March 15, 2001, not
later than 5:00 p.m. Pacific Standard Time. Please note that proposals must
comply with all of the requirements of Rule 14a-8 under the Securities Exchange
Act of 1934. Only then can we consider your proposal for inclusion in our proxy
statement and proxy relating to the 2001 Annual Meeting. We will be able to use
proxies you give us for the next year's meeting to vote for or against any
shareholder proposal that is not included in the proxy statement at our
discretion unless the proposal is submitted to us on or before March 15, 2001.
Anthony N. Lapine, President
San Jose, California
December 11, 2000
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PROXY CARD TO COME
