<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
INDENET, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE> 2
INDENET, INC.
16000 VENTURA BOULEVARD
ENCINO, CALIFORNIA 91436
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 4, 1997
Notice is hereby given that the Annual Meeting of Stockholders of
IndeNet, Inc., a Delaware corporation (the "Company"), will be held at the
offices of Enterprise Systems Group, Inc., the Company's subsidiary, at 5475
Tech Center Drive, Colorado Springs, Colorado 80919 on Thursday, December 4,
1997, at 10:00 a.m., for the following purposes:
(1) To elect five members of the Company's Board of Directors to
serve until the next annual meeting of stockholders or until
their successors are duly elected and qualified;
(2) To ratify the appointment by the Board of Directors of BDO
Seidman as the independent accountants of the Company for the
fiscal year ending March 31, 1998; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Your attention is directed to the accompanying proxy statement. Only
stockholders of record at the close of business on October 10, 1997 will be
entitled to notice of and to vote at the meeting and any adjournment thereof.
Please sign, date and complete the enclosed proxy and return it
promptly in the accompanying pre-addressed envelope, whether or not you expect
to attend the Annual Meeting, to ensure that your shares will be represented.
A majority of the outstanding shares of voting stock must be represented (in
person or by proxy) at the Annual Meeting in order that business may be
transacted. Therefore, your promptness in returning the enclosed proxy will
help to ensure that the Company will not have to bear the expense of
undertaking a second solicitation. A stockholder who executes and returns the
accompanying proxy may revoke such proxy at any time before it is voted at the
Annual Meeting by following the procedures set forth in the attached proxy.
By Order of the Board of Directors
Andre A. Blay
Chairman of the Board
Encino, California
October 22, 1997
PLEASE SIGN AND DATE THE ENCLOSED FORM OF PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
IN ORDER TO ENSURE THAT YOUR VOTES ARE COUNTED.
<PAGE> 3
INDENET, INC.
16000 VENTURA BOULEVARD
ENCINO, CALIFORNIA 91436
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 4, 1997
INTRODUCTION
PERSONS MAKING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of IndeNet, Inc., a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Stockholders to be held
on Thursday, December 4, 1997, and at any adjournment thereof (the "Annual
Meeting"). This proxy statement is first being mailed to stockholders on or
about October 22, 1997. You are requested to sign, date and return the
enclosed proxy card in order to ensure that your shares are represented at the
Annual Meeting.
A form of proxy is enclosed for your use. The shares represented by
each properly executed unrevoked proxy will be voted as directed by the
stockholder executing the proxy. If no direction is made, the shares
represented by each properly executed unrevoked proxy will be voted "FOR" (i)
the election of management's nominees for the Board of Directors and (ii) the
ratification of the appointment by the Board of Directors of BDO Seidman as the
independent accountants of the Company for the fiscal year ending March 31,
1998. With respect to any other item of business that may come before the
Annual Meeting, the proxy holders will vote the proxy in accordance with the
recommendation of management of the Company.
The cost of solicitation of proxies, including the cost of preparation
and mailing of the Notice of Annual Meeting, this Proxy Statement, and the
enclosed proxy, will be borne by the Company. It is anticipated that brokerage
houses, fiduciaries, nominees, and others will be reimbursed for their
out-of-pocket expenses in forwarding proxy material to beneficial owners of
stock held in their names. Directors, officers, or employees of the Company
may solicit proxies by telephone or in person without additional compensation.
The Company has engaged D. F. King & Co., Inc., 77 Water Street, New York, N.
Y. 10005, to solicit proxies, and anticipates paying compensation to that
solicitor for such services in an amount of approximately $3,500, plus
expenses.
REVOCABILITY OF PROXY
Any proxy given by a stockholder of the Company may be revoked at any
time before it is voted at the Annual Meeting by a written notice to the
Secretary of the Company, or upon request if the stockholder is present at the
meeting. Each valid proxy returned that is not revoked, unless indicated
otherwise on the proxy card, will be voted in the election of directors for the
nominee as described herein.
VOTING SECURITIES
Holders of record of the Company's Common Stock, $.001 par value (the
"Common Stock"), at the close of business on October 10, 1997 (the "Record
Date") are entitled to notice of and to vote at the meeting or any adjournment
thereof. As of the Record Date, there were 17,695,313 shares of Common Stock
issued and outstanding. Holders of Common Stock are entitled to cast one vote
per share on each matter presented for
<PAGE> 4
consideration and action by the stockholders. The presence, in person or by
proxy, of stockholders entitled to cast at least a majority of the outstanding
shares of Common Stock will constitute a quorum for the transaction of business
at the Annual Meeting. The outstanding shares of the Company's preferred stock
are non-voting shares.
Abstentions may be specified as to all proposals to be brought before
the Annual Meeting other than the election of directors. Votes cast by proxy
or in person at the Annual Meeting will be tabulated by the inspectors of
election appointed for the meeting, and will determine whether or not a quorum
is present. The inspectors of election will treat abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum, but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders for a vote. Ratification of the appointment of
the independent accountants will require the affirmative vote of at least a
majority in voting interest of the stockholders present in person or by proxy
at the Annual Meeting and entitled to vote thereon. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter and, therefore, will have no
effect on the outcome of the vote.
The Directors to be elected at the Annual Meeting will be elected by a
plurality of the votes cast. Nominees receiving the highest number of
affirmative votes cast, up to the number of directors to be elected, will be
elected as directors. Only votes cast for a nominee will be counted, except
that each properly executed unrevoked proxy will be voted for management's
nominee for the Board of Directors in the absence of instructions to the
contrary. Abstentions, broker non-votes and instructions on a proxy to
withhold authority to vote for management's nominees will result in the
respective nominees receiving fewer votes.
ELECTION OF DIRECTORS
At the Annual Meeting, five directors, who will constitute the entire
Board of Directors, are to be elected to serve until the next Annual Meeting of
stockholders or until their successors shall be elected and shall qualify. All
nominees have consented to being named herein and have agreed to serve if
elected. The names of such nominees are as follows:
Andre A. Blay
Thomas H. Baur
H. Bradley Eden
Richard L. Schleufer
Robert Beauregard
Management proxies will be voted FOR the election of all of the above
named nominees unless the stockholders indicate that the proxy shall not be
voted for all or any one of the nominees. If for any reason any nominee
should, prior to the Annual Meeting, become unavailable for election as a
director, an event not now anticipated, the proxies will be voted for such
substitute nominee, if any, as may be recommended by management. In no event,
however, shall the proxies be voted for a greater number of persons than the
number of nominees named.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended March 31, 1997, the Board of Directors held
five meetings. No incumbent member who was a director during the past fiscal
year attended fewer than 75% of the aggregate of all meetings of the Board of
Directors and all meetings of the committees of the Board of Directors on which
he served.
The Audit Committee of the Board of Directors reviews the independence,
professional services, fees, plans and results of the independent auditors'
engagement and recommends their retention or discharge to the Board of
Directors. During the last completed fiscal year, the Audit Committee held one
meeting. All members of the
2.
<PAGE> 5
Audit Committee participated in the one meeting of the Audit Committee that was
held during the last completed fiscal year. The Audit Committee currently
consists of Messrs. Schleufer, Eden and Beauregard. The Compensation Committee
of the Board of Directors reports to the Board of Directors on issues relating
to executive compensation issues and administers the Company's 1992 Stock
Option Plan. During the last completed fiscal year, the Company's Compensation
Committee held two meetings. All members of the Compensation Committee
participated in all of the Compensation Committee meetings held during the last
completed fiscal year. The Compensation Committee currently consists of
Messrs. Blay, Baur, Eden and Beauregard.
Other than the Audit Committee and the Compensation Committee, the
Company has no other committees of its Board of Directors.
MANAGEMENT OF THE COMPANY
Set forth below is certain information with respect to the current
directors, director nominee and executive officers of the Company:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------- ---------
<S> <C> <C> <C>
Andre A. Blay 60 Chairman of the Board and Chief Executive Officer 1996
Thomas H. Baur 52 Director 1995
H. Bradley Eden 38 Director 1997
Richard L. Schleufer 44 Director of the Company and Chief Executive 1996
Officer of Enterprise Systems Group Limited
Robert Beauregard 58 Director Nominee 1997
Richard J. Parent 38 Chief Financial Officer and Secretary --
</TABLE>
ANDRE A. BLAY has been a Director of the Company since the Company's
acquisition of Starcom Television Services, Inc. ("Starcom") in February 1996.
Mr. Blay assumed the office of Chief Executive Officer of the Company in July
1997. Until it was acquired by the Company, Mr. Blay served as a director of
Starcom. Mr. Blay is also currently a major shareholder and Director of Media
Station, a multimedia company based in Ann Arbor, Michigan, and is an advisor
to the Enterprise Development Fund and Michigan State University Foundation.
Mr. Blay founded Magnetic Video Corp., the world's first pre-recorded video
cassette Company in 1969, which was acquired by Twentieth Century Fox in 1979,
and founded the Blay Corp. in 1981 with offices in Detroit and London, which
was subsequently acquired by Coca-Cola. Mr. Blay has also produced motion
pictures for Universal, Columbia and Paramount. In 1990, Mr. Blay acquired a
major interest in Avalon Communications, a cable programming Company, which was
subsequently sold to BET Holdings, a cable company listed on the New York Stock
Exchange. Mr. Blay received a B.A. and an M.B.A. from Michigan State
University in 1959 and 1970, respectively.
THOMAS H. BAUR has been a Director of the Company since March 17, 1995.
Mr. Baur also is, and since 1975 has been the Chairman and Chief Executive
Officer of Mediatech, Inc. Mediatech was a wholly owned subsidiary of the
Company until July 18, 1997, at which time the Company sold all of its interest
in Mediatech to an unaffiliated third party. Mr. Baur is also the Chairman and
largest stockholder of Travel Technology Group, a private corporate travel
management company. Mr. Baur is a member of the Board of Directors of the
Chicago Museum of Broadcast Communication, was a founder of the International
Television Association and the Chicago Coalition and received the Arthur
Andersen & Co. small business award for excellence in 1989. Mr. Baur also
received the Alumnus of the Year Award from Southern Illinois University in
1990. Mr. Baur received a B.A. Degree in Business and Mass Communications from
Southern Illinois University in 1970.
3.
<PAGE> 6
H. BRADLEY EDEN has been a director of the Company since June 1997. Mr.
Eden is currently the Chairman of Eden Capital, Ltd., a holding company formed
by Mr. Eden in 1996 ("Eden") to hold ownership interests in various investment
advisory firms. Before forming Eden, Mr. Eden served as President of Fund
Evaluation Group, an investment consulting firm which he co-founded in 1985.
Mr. Eden is registered as an Investment Advisor with the SEC and serves on the
Board of Directors of the Centre College Alumni Association and the Summit
Country Day School, respectively. Mr. Eden received a J.D. from Salmon P.
Chase College of Law in Cincinnati, Ohio in 1985 and a B.A. from Centre College
of Kentucky in 1981.
RICHARD L. SCHLEUFER has been a Director of the Company since the
Company acquired Enterprise Systems Group Limited ("Enterprise") in May 1996.
Mr. Schleufer was the President and Chief Executive Officer of Enterprise
Systems Group, Inc., the North American subsidiary of Enterprise, from 1987
until June 1996, at which time he was appointed the Chief Executive Officer of
Enterprise. Mr. Schleufer joined Enterprise Systems Group, Inc. in 1986 as its
Vice President of Finance and Administration. Mr. Schleufer received his
Bachelor's Degree in Business Management and Accounting from the University of
Colorado in 1975, and has been a Certified Public Accountant in Colorado since
1976.
ROBERT BEAUREGARD has been a director of the Company since October 1997.
Mr. Beauregard has been the president of The Beauregard Group, Inc., a
marketing and communications consulting company since its foundation by Mr.
Beauregard in 1995. From 1988 to 1994, Mr. Beauregard was the group publisher
and then President of Sports Publishing Group, Inc., a Times Mirror Magazine
company. Prior thereto, from 1964 until joining Times Mirror, Mr. Beauregard
held various executive offices with several J. Walter Thompson advertising
agency and publishing companies in Canada, Europe and the United States. Mr.
Beauregard received a M. B. A. from the Richard Ivey School of Business and his
B.A. from Loyola College, Montreal, Quebec.
RICHARD J. PARENT has been an employee of the Company since 1993 and the
Secretary and Chief Financial Officer of the Company since May 1996. From 1990
until he joined the Company, Mr. Parent was an audit manager at BDO Seidman in
Los Angeles, California. Mr. Parent received his Bachelor's Degree from the
University of Southern California in 1982 and has been a Certified Public
Accountant since 1988.
All Directors hold office until the next annual meeting of the Company's
stockholders or until their successors are elected or appointed. Officers are
elected by and serve at the discretion of the Board of Directors. No director
or executive officer is related to any other director or executive officer.
4.
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of October 10, 1997 by
(i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each of the directors and director
nominees, (iii) each of the Company's executive officers named in the
compensation tables included below in this Proxy Statement, and (iv) all
current directors and executive officers as a group. Except as noted, the
Company believes that the persons listed below have sole investment and voting
power with respect to the Common Stock owned by them.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF OF
NAME AND ADDRESS (1) COMMON STOCK OUTSTANDING
-------------------- ---------------- -----------
<S> <C> <C>
Robert W. Lautz, Jr ............................... 324,441 1.8%
Thomas H. Baur .................................... 1,077,030(2) 6.1%
Robert E. Derham .................................. 291,780(3) 1.6%
Andre A. Blay(4) .................................. 759,332(5) 4.2%
Killer Barn, Inc.(6) .............................. 1,530,000 8.6%
821 Tavern Road
Alpine, CA 91901
Graeme R. Jenner .................................. 134,135 *
Richard L. Schleufer .............................. 190,203(7) 1.1%
Richard J. Parent ................................. 39,251 *
H. Bradley Eden ................................... -- *
Robert Beauregard ................................. -- *
All Directors and Officers as
as a group (7 persons) .......................... 4,346,172(8) 23.6%
- ---------------
</TABLE>
* Less than 1%.
(1) The address of each person listed in the table without an address is c/o
the Company at 16000 Ventura Boulevard, Suite 700, Encino, California
91436.
(2) Includes 100,000 shares which are not outstanding but are subject to
currently exercisable options.
(3) Includes 235,000 shares which are not outstanding but are subject to
currently exercisable options.
(4) Includes shares owned by the Andre A. Blay Trust.
(5) Includes 295,833 shares issuable under currently exercisable options, but
does not include 200,000 shares subject to options that are not currently
exercisable.
(6) Killer Barn, Inc. is owned and controlled by Mr. William D. Killion who
served as a director of IndeNet from November 1995 until January 30, 1997.
(7) Includes 125,000 shares which are not outstanding but are subject to
currently exercisable options.
(8) Includes 755,833 shares which are not outstanding but are subject to
currently exercisable options.
5.
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth the compensation for services in all
capacities to the Company for the fiscal years ended December 31, 1994, March
31, 1996 and March 31, 1997 for the Chief Executive Officer of the Company
during the fiscal year end March 31, 1997 ("fiscal 1997") and each of the other
executive officers of the Company (with the Chief Executive Officer
collectively, the "Named Executives") whose total annual salary and bonus
during fiscal 1997 exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
----------------------- ------------------------
SHARES OF
RESTRICTED COMMON STOCK
FISCAL YEAR STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION ENDED(1) SALARY($) BONUS($) AWARDS OPTIONS COMPENSATION($)
- -------------------------- ------ ------- ------ ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Lautz, Jr ...... 1997 $440,000(8) $ -- -- 100,000 $ 9,000(2)
Chief Executive Officer, 1996(1) 160,000 60,000 -- 335,000 9,000(2)
Director(3) ............ 1994 90,000 -- -- 232,000 9,000(2)
Graeme R. Jenner(4) ...... 1997 234,555 -- -- 200,000 124,960(5)
Chief Operating Officer
Richard L. Schleufer ..... 1997 160,000 -- -- 125,000 9,600(2)
President of Enterprise
Richard J. Parent ........ 1997 112,979 -- -- 80,000 4,500(2)
Chief Financial Officer 1996(1) 42,500 1,000 -- 20,000 8,657(7)
Robert E. Derham ......... 1997 125,000 -- -- 100,000 6,000(2)
Managing Director of 1996 125,000 -- -- 135,000 6,000(2)
Mediatech, Inc.(6)
</TABLE>
- ---------------
(1) During 1996 the Company changed its fiscal year end from December 31 to
March 31 resulting in a 15-month transitional year to the fiscal year
ended March 31, 1996. Information herein has been annualized to account
for the Company's change of its fiscal year in 1996.
(2) Automobile allowance.
(3) Mr. Lautz resigned from all positions he held in the Company effective
March 31, 1997.
(4) Mr. Jenner resigned from all positions he held with the Company effective
July 21, 1997.
(5) Consists of $4,500 as an automobile allowance, $87,080 of relocation
expense reimbursement paid in connection with Mr. Jenner's relocation
from the United Kingdom to the United States, and $33,380 for pension and
permanent health insurance premiums.
(6) The Company sold all of its interest in Mediatech, Inc. on July 18, 1997.
Accordingly, Mr. Derham no longer is an employee of the Company.
(7) Represents consulting fees paid to Mr. Parent.
(8) Includes $250,000 paid to Mr. Lautz upon his termination on March 31,
1997 as the severance amount payable under his employment agreement.
This amount also includes $45,000 of previously deferred compensation
that was paid to him in fiscal 1997.
The following table sets forth certain information with respect to stock
options granted by the Company to the Named Executives during the year ended
March 31, 1997.
OPTION GRANTS DURING THE FISCAL YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES EXERCISE PRICE
NAME OPTIONS GRANTED IN FISCAL YEAR (PER SHARE) EXPIRATION DATE
---- --------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Robert W. Lautz, Jr. 100,000 6% 100,000 @ $2.25 August 23, 2001
Graeme R. Jenner 200,000 12% 125,000 @ $6.37 May 24, 1999
75,000 @ $2.25 August 23, 2001
Richard J. Parent 80,000 5% 80,000 @ $2.25 August 23, 2001
Richard L. Schleufer 125,000 7% 75,000 @ $6.37 May 24, 1999
50,000 @ $2.25 August 23, 2001
Robert E. Derham 100,000 6% 75,000 @ $6.00 April 1, 2001
25,000 @ $2.25 August 23, 2001
</TABLE>
6.
<PAGE> 9
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 1997
AND FISCAL YEAR END OPTION VALUES
The following table contains information on stock options exercised by
the Named Executive Officers in the last fiscal year and stock options
remaining unexercised on March 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END (1)
------------------- ----------------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- -------------------- ----------------------
<S> <C> <C> <C> <C>
Robert W. Lautz, Jr....... 110,345 $800,001 100,000/-0- $-0-/-0-
Richard J. Parent ........ 30,345 220,001 80,000/-0- $-0-/-0-
Graeme R. Jenner ......... -0- -0- 200,000/-0- $-0-/-0-
Richard L. Schleufer...... -0- -0- 125,000/-0- $-0-/-0-
Robert E. Derham ......... -0- -0- 235,000/-0- $-0-/-0-
</TABLE>
- ---------
(1) The value of options is determined by the excess of the market price of
the Common Stock on March 31, 1997 over the exercise price of the
options. At March 31, 1997, the market price of the Common Stock was
lower than the exercise price of the options.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not officers of the Company are
granted options to purchase 25,000 shares of Common Stock at a price equal to
the closing price of the Common Stock on the first trading day of the calendar
year. The options vest at a rate of 1/12 th per month from the date of grant
until the earlier of the date the Director ceases being a Director or the
anniversary of the grant. Outside Directors are also reimbursed for travel
expenses incurred to attend such meetings.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN CONTROL
ARRANGEMENTS
During fiscal 1997, Robert W. Lautz, Jr. was employed by the Company
pursuant to a three-year employment agreement under which he had agreed to
serve as President and Chief Executive Officer until March 31, 1998. The
employment agreement and Mr. Lautz's employment with the Company were
terminated in March 1997. The employment agreement could be terminated at any
time without cause by the Company upon 30 days written notice. Upon such
termination, the Company became obligated to pay Mr. Lautz a severance payment
equal to one year of service at his then effective salary plus any bonus to
which he is then entitled. Under his employment agreement, upon the
termination of the employment agreement, Mr. Lautz also was entitled to the
$45,000 of compensation due him under a previous employment agreement.
In connection with the Company's acquisition of Enterprise in May 1996,
the Company entered into a three-year employment agreement with Graeme R.
Jenner pursuant to which Mr. Jenner agreed to act as the Chief Executive
Officer of Enterprise. The employment agreement and Mr. Jenner's employment
with the Company were terminated in July 1997. Mr. Jenner's salary during the
first year of the employment agreement was $234,555. The employment agreement
provided that it could be terminated at any time without cause by the Company
upon 30 days written notice. In the event of such termination, Mr. Jenner
would be entitled to receive a severance payment equal to one-year's salary
plus any bonus due for such period.
In connection with the Company's acquisition of Enterprise in May 1996,
the Company also entered into a three-year employment agreement with Richard L.
Schleufer pursuant to which Mr. Schleufer agreed to serve as the President and
Chief Executive Officer of Enterprise Systems Group, Inc., the North American
subsidiary of Enterprise. During the first year of the employment agreement,
Mr. Schleufer's annual salary was $160,000.
7.
<PAGE> 10
Mr. Schleufer's annual salary is subject to annual increases of 5% to 20%, in
an amount to be determined in the sole discretion of the Board of Directors of
the Company. Mr. Schleufer also is entitled to up to $80,000 additional
compensation and 5% of "over-target" profits of Enterprise Systems Group, Inc.
Mr. Schleufer's employment agreement has been amended to reflect his recent
appointment as the Chief Executive Officer of Enterprise. The employment
agreement may be terminated by the Company at any time upon 30 days' written
notice, provided that Mr. Schleufer shall, upon such termination, be entitled
to a severance payment equal to one year's salary, plus any bonus due for such
period. In connection with his employment by the Company, Mr. Schleufer was
granted an option to purchase 75,000 shares of the Company's Common Stock at an
exercise price of $6.37 per share, equal to the closing sales price of the
Common Stock on Nasdaq on the date of grant. The option is exercisable at any
time through March 23, 1999.
On August 1, 1996, the Company entered into a three-year employment
agreement with Richard J. Parent pursuant to which Mr. Parent agreed to be
employed as the Company's Chief Financial Officer. Mr. Parent's current annual
salary is $126,000. The Company and Mr. Parent have agreed that Mr. Parent's
employment with the Company will terminate on January 31, 1998. In connection
with the early termination of Mr. Parent's employment agreement with the
Company, the Company has agreed to pay Mr. Parent $63,000 on January 31, 1998
and $10,500 per month for each of the six months following Mr. Parent's
termination.
STOCK OPTION PLAN
On December 14, 1992, the Company implemented its 1992 Stock Option Plan,
as amended (the "Plan"), which was subsequently approved by the Company's
shareholders in June 1993. An aggregate of 1,000,000 shares of Common Stock
was reserved by the Board of Directors for issuance under the Plan which was
approved at the annual meeting held in July 1993. As of March 31, 1997,
options to issue up to 1,676,459 shares were outstanding under the Plan.
The Plan is to be administered by the Board of Directors, or a committee
of the Board, which has discretion to select optionees and to establish the
terms and conditions of each option, subject to the provisions of the Plan.
Options granted under the Plan may be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonqualified options.
The exercise price of incentive stock options may not be less than 100%
of the fair market value of Common Stock as of the date of grant (110% of the
fair market value if the grant is to an employee who owns more than 10.0% of
the total combined voting power of all classes of capital stock of the
Company). The Code currently limits to $100,000 the aggregate value of Common
Stock that may be acquired in any one year pursuant to incentive stock options
under the Plan or any other option plan adopted by the Company. Nonqualified
options may be granted without regard to any restriction on the amount of
Common Stock that may be acquired pursuant to such options in any one year.
Options may not be exercised more than ten years after the date of grant (five
years after the date of grant if the grant is an incentive stock option to an
employee who owns more than 10.0% of the total combined voting power of all
classes of capital stock of the Company). Options granted under the Plan
generally are nontransferable, but transfers may be permitted under certain
circumstances in the discretion of the administrator. Shares subject to
options that expire unexercised under the Plan will once again become available
for future grant under the Plan. The number of options outstanding and the
exercise price thereof are subject to adjustment in the case of certain
transactions such as mergers, recapitalizations, stock splits or stock
dividends. The Plan is effective for ten years, unless sooner terminated or
suspended.
During fiscal 1997, the Board of Directors of the Company authorized
grants of options to purchase 1,725,050 shares of Common Stock under the Plan
to certain directors, officers and employees of the Company in the following
amounts and at the following exercise prices: 160,000 at $6.44 per share;
250,000 at $6.37 per share; 200,000 at $6.00 per share; 611,300 at $2.25 per
share; 53,750 at $2.00 per share; and 450,000 at $1.63 per share.
8.
<PAGE> 11
In general, upon termination of employment of an optionee, all options
granted to such person which were not exercisable on the date of such
termination will immediately terminate, and any options that are exercisable
will terminate not less than three months (six months in the case of
termination by reason of death or disability) following termination of
employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 3, 1995, the Company acquired 96.33% of the issued and
outstanding capital stock of Mediatech, Inc. from Thomas H. Baur for aggregate
consideration of approximately $8,700,000. At the time of the acquisition, Mr.
Baur was not affiliated with the Company. In connection with the acquisition,
Mr. Baur was elected as a Director of the Company and was hired to be the
President and Chief Executive Officer of Mediatech, Inc. The purchase price
paid by the Company consisted of 866,970 shares of the Company's Common Stock,
$2,889,900 in cash, and an unsecured promissory note (the "Baur Note"), the
principal amount of which was subject to adjustment based on the average
trading price of the Common Stock during a specified 60-day trading period.
After the required adjustments, the principal balance of the Baur Note was
reduced to $4,332,000. At the time of the acquisition, Mediatech, Inc. owed
approximately $3,900,000 principal amount of indebtedness outstanding to its
primary bank, the repayment of which indebtedness was personally guaranteed by
Mr. Baur. In addition to the payment of the purchase price, the Company also
agreed to cause Mr. Baur to be released from the personal guaranty of
Mediatech's indebtedness. Mr. Baur's guarantees of Mediatech's bank
indebtedness were released on February 1, 1996. In July 1997 the Company sold
its entire interest in Mediatech, Inc. to an unaffiliated third party. In
connection with the sale, the Baur Note was cancelled, and the buyer of
Mediatech assumed the obligations to Mr. Baur pursuant to a new promissory note
issued to Mr. Baur by the buyer of Mediatech, Inc. Notwithstanding the sale of
Mediatech, Inc., Mr. Baur continues to be a Director and principal stockholder
of the Company.
On June 30, 1995, Mr. Baur converted $2,250,000 of the principal amount
of the Baur Note into an aggregate of 750,000 shares of the Company's Common
Stock valued at $3.00 per share. The closing price of the Common Stock on the
date of conversion was $2.50 per share.
During the past two fiscal years, Mediatech, Inc. leased certain of its
office and warehouse facilities from companies that are owned, wholly or in
part, by Mr. Baur. During the fiscal years ended March 31, 1996 and March 31,
1997, Mediatech, Inc. paid an aggregate of $868,000 and $773,000, respectively,
to the affiliates of Mr. Baur under the foregoing leases.
In November 1995, the Company acquired 66.67% of the issued and
outstanding capital stock of Channelmatic from Killer Barn, Inc., a company
owned and controlled by Mr. William Killion. At the time of the acquisition,
Mr. Killion was not affiliated with the Company. However, as part of the
acquisition, Mr. Killion was elected as a Director of the Company in November
1995, a position he continued to hold until his resignation in January 1997.
The purchase price paid by the Company consisted of a $5,602,500 secured,
five-year promissory note, and 1,530,000 shares of Common Stock. In addition,
in connection with the acquisition, Channelmatic entered into an employment
agreement with Mr. Killion pursuant to which Channelmatic is obligated to pay
Mr. Killion $90,000 per year. In March 1997, the five-year secured note was
repaid in full in March 1997 in connection with the Company's sale of its
entire interest in Channelmatic.
During the past two fiscal years, Channelmatic leased two of its
facilities from Mr. and Mrs. Killion. Pursuant to the leases for these
facilities, Channelmatic paid Mr. and Mrs. Killion aggregate lease payments of
$78,000 and $26,000, during the fiscal years ended March 31, 1997 and March 31,
1996, respectively.
The Company acquired Starcom in January 1996 from certain unaffiliated
stockholders, including the Andre A. Blay Trust, a trust affiliated with Mr.
Blay. Mr. Blay is the Chairman of the Company's Board of Directors and the
Company's Chief Executive Officer. In connection with the acquisition, the
Company issued a total of 188,195 shares of Common Stock to Andrew Blay and the
Andre A. Blay Trust.
9.
<PAGE> 12
The Company acquired all of the issued and outstanding capital stock of
Enterprise in May 1996 from the unaffiliated stockholders of Enterprise,
including Mr. Graeme R. Jenner and Mr. Richard Schleufer. The amount of
consideration paid to Mr. Jenner for his shares of Enterprise consisted of
$276,224 cash consideration, a $142,500 promissory note and 353,010 shares of
the Company's Common Stock. The amount of consideration paid to Mr. Schleufer
for his shares of Enterprise consisted of $206,283 cash consideration, a
$106,456 promissory note and 263,627 shares of the Company's Common Stock. In
addition, in connection with the acquisition of Enterprise, the Company also
entered into three-year employment agreements with each of Mr. Jenner and Mr.
Schleufer, pursuant to which agreements the Company agreed to pay Mr. Jenner
and Mr. Schleufer salaries of at least $234,555 and $160,000 per year,
respectively.
In July 1997, the Company terminated Mr. Jenner's employment agreement
and, in accordance therewith, paid Mr. Jenner a severance payment of $375,000.
In addition, in connection with the termination of Mr. Jenner's employment, the
Company paid Mr. Jenner (i) $100,000 to redeem the 200,000 stock options then
owned by Mr. Jenner, (ii) $21,000 salary due under the agreement, and (iii)
$348,310 as payment in full of the $409,777 promissory note payable by the
Company to Mr. Jenner.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, as
well any beneficial owner of more than ten percent of the Company's Common
Stock, to file with the Securities and Exchange Commission (the "SEC") initial
reports of beneficial ownership and reports of changes in beneficial ownership
of the Common Stock. SEC regulations require directors, executive officers and
principal shareholders to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on a review of Forms 3, 4 and 5, and amendments thereto,
filed with the SEC and submitted to the Company, the Company believes that all
of the Company's directors, executive officers and beneficial owners of more
than 10% of the Company's Common Stock filed all required reports on a timely
basis during the past fiscal year other than as follows: Messrs. Lautz,
Jenner, Parent, Schleufer and Derham each failed to timely file the required
form in connection with the grant to them of the options listed below under the
caption "Executive Compensation--Option Grants During the Fiscal Year Ended
March 31, 1997."
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of BDO Seidman as the
Company's independent auditors for the year ending March 31, 1998, subject to
ratification by the stockholders. A representative of BDO Seidman is expected
to attend the Company's Annual Meeting. He or she will have an opportunity to
make a statement, if he or she desires to do so, and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of BDO Seidman as the Company's
independent public accountants is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of BDO Seidman to
the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Board will reconsider
whether or not to retain that firm. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if it determines that such a change
would be in the best interests of the Company and its stockholders.
10.
<PAGE> 13
STOCKHOLDER PROPOSALS AT THE NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholders of the Company who intend to submit proposals to the
Company's stockholders at the next annual meeting of stockholders must submit
such proposals to the Company no later than June 22, 1998 in order for such
proposals to be included in the proxy materials. Stockholder proposals should
be submitted to Richard J. Parent, Secretary, IndeNet, Inc., 16000 Ventura
Blvd., Suite 700, Encino, California 91436.
OTHER MATTERS
If any matters not referred to in this Proxy Statement should properly
come before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgment. Management is not aware
of any such matters that may be presented for action at the meeting. Matters
incident to the conduct of the meeting may be voted upon pursuant to the
proxies.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1997 as filed with the
Securities and Exchange Commission to any stockholder desiring a copy.
Stockholders may write to the Company at:
IndeNet, Inc.
16000 Ventura Blvd., Suite 700
Encino, California 91436
Attention: Richard J. Parent
By Order of the Board of Directors
Andre A. Blay
Chairman of the Board
October 22, 1997
11.
<PAGE> 14
INDENET, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, DECEMBER 4, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INDENET, INC.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement, each dated October 22, 1997, and does
hereby appoint Andre A. Blay and Richard J. Parent (the "Proxies"), and each of
them, with full power of substitution, as the proxy of the undersigned to
represent the undersigned and to vote all shares of Common Stock, $.001 par
value, of IndeNet, Inc. which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders, to be held on December
4, 1997, at 10:00 A.M., and at any adjournments thereof.
1.ELECTION OF DIRECTORS: [ ] FOR all nominees as listed below (except as
marked to the contrary)
(INSTRUCTIONS:)To withhold authority to vote for any individual nominee,
write that nominee's name on the line that follows:
- -----------------------------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Andre A. Blay, Thomas H. Baur, H. Bradley Eden, Richard L. Schleufer, Robert
Beauregard
PROXIES NOT MARKED TO WITHHOLD AUTHORITY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES WHOSE NAMES ARE NOT WRITTEN ON THE ABOVE LINE.
2. Ratification of the appointment of BDO Seidman as the Company's
independent auditors for the fiscal year ending March 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE> 15
The shares represented hereby will be voted as directed. Where no direction
is made, the shares will be voted FOR proposals 1 and 2.
- --------------------------------- --------------------------------------
(Signature) (Signature, if held jointly)
Dated:............., 1997
Please sign exactly as
your name or names appear
hereon, and when signing
as attorney, executor,
administrator, trustee or
guardian, give your full
title as such. If the
signatory is a
corporation, sign the
full corporate name by a
duly authorized officer.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
