<PAGE> 1
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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing is
calculated and state how it was determined):
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
(3) Filing Party:
________________________________________________________________________________
(4) Date Filed:
________________________________________________________________________________
<PAGE> 2
INDENET, INC.
Telephone: (248) 380-6070
____________________, 1998
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend a Special
Meeting of the Stockholders of IndeNet, Inc. (the "Company"). The Special
Meeting will be held at [ ] [ ].m., on [ ], 1998, at the offices
of the Company, 38705 Seven Mile Road, Suite 435, Livonia, Michigan 48152. We
hope that you will be able to attend the meeting.
The matters expected to be acted upon at the meeting are described in the
attached Notice of Special Meeting and Proxy Statement. During the meeting,
stockholders who are present at the meeting will have the opportunity to ask
questions.
It is important that your views be represented at the Special Meeting whether or
not you are able to be present. Please complete, sign and date the enclosed
proxy card and promptly return it to us in the postpaid envelope also enclosed.
Sincerely,
/s/ Andre A. Blay
Andre A. Blay
Chairman of the Board and Chief
Executive Officer
<PAGE> 3
INDENET, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Livonia, Michigan
[ ], 1998
A Special Meeting of Stockholders of IndeNet, Inc., a Delaware corporation (the
"Company"), will be held at the offices of the Company, 38705 Seven Mile Road,
Suite 435, Livonia, Michigan 48152, on [ ], 1998 at [ ] [ ].m., eastern
time, to consider and act upon proposals to (a) amend the Company's Certificate
of Incorporation to (i) effect a reverse stock split of the outstanding shares
of the Company's Common Stock, par value $.001 per share (the "Common Stock") in
which each four shares of outstanding Common Stock would be combined into one
share of new Common Stock, par value $.001 per share; (ii) change the name of
the Company to "Enterprise Software, Inc."; and (b) approve the IndeNet,
Inc. 1998 Stock Option Plan.
Only those holders of record of Common Stock as of the close of business on
[ ], 1998, will be entitled to vote at, the Special Meeting and any
adjournments or postponements thereof. All stockholders of the Company are
cordially invited to attend the Special Meeting.
By order of the Board of Directors,
/s/ H. Bradley Eden
H. Bradley Eden
Corporate Secretary
YOUR VOTE IS IMPORTANT WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED FOR THAT PURPOSE.
1
<PAGE> 4
PROXY STATEMENT
INDENET, INC.
SPECIAL MEETING OF STOCKHOLDERS
[ ], 1998
This Proxy Statement is being furnished to the stockholders of IndeNet, Inc., a
Delaware corporation (the "Company"), in connection with the Special Meeting of
Stockholders (the "Special Meeting") to be held at [ ] [ ].m., eastern time, on
[ ], 1998, at the offices of the Company, 38705 Seven Mile Road, Suite 435,
Livonia, Michigan 48152, and at any adjournment thereof. The IndeNet, Inc. Board
of Directors is soliciting proxies to be voted at the Special Meeting.
This Proxy Statement and Notice of Special Meeting, and the proxy card are
expected to be sent to stockholders on or about [ ], 1998.
PROXY PROCEDURE
Only record holders of Common Stock at the close of business on [ ],
1998 (the "Record Date") are entitled to vote in person or by proxy at the
Special Meeting. The presence at the Special Meeting, in person or by proxy, of
the holders of Common Stock entitled to vote a majority of the maximum number of
votes which may be cast at the Special Meeting will constitute a quorum for the
transaction of any business.
The proposals to effect a reverse stock split, change the name of the
Company and approve the IndeNet, Inc. 1998 Stock Option Plan (the "Stock Option
Plan") require the affirmative vote of a majority of the votes represented by
all shares of Common Stock outstanding on the Record Date. Stockholders who do
not vote or who vote to abstain will in effect be voting against such proposals.
When a proxy card is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions marked on the proxy
card. If a stockholder does not return a signed proxy card or does not attend
the Special Meeting and vote in person, his or her shares will not be voted. If
a stockholder attends the Special Meeting, he or she may vote by ballot.
Stockholders are urged to mark the box on the enclosed proxy card to
indicate how their shares are to be voted. If a stockholder returns a signed and
dated proxy card but does not mark the box, the shares represented by that proxy
card will be voted for the proposals to: (i) effect the reverse stock split,
(ii) to change the name of the Company, and (iii) adopt the Stock Option Plan. A
stockholder may revoke his or her proxy at any time before it is voted by (a)
giving notice in writing to the Secretary of the Company; (b) granting a proxy
bearing a later date; or (c) appearing in person and voting at the Special
Meeting.
COST OF SOLICITATION
The cost of soliciting proxies in the enclosed form will be borne by
the Company. Proxies may be solicited by telephone or other means by directors,
officers or employees of the Company, who will not be specially compensated
thereto. The Company has engaged [NAME AND ADDRESS OF PROXY AGENT], to solicit
proxies, and anticipates paying compensation to the solicitor for such services
in an amount of approximately [$ ], plus expenses. The Company will reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
expenses in accordance with the regulations of the Securities and Exchange
Commission concerning the forwarding of proxies and proxy material to the
beneficial owners of stock.
QUORUM AND VOTING
The outstanding voting stock of the Company as of the Record Date
consisted of 18,501,016 shares of common stock, par value $.001 per share (the
"Common Stock").
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<PAGE> 5
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of the Record
Date regarding each person known by the Company to beneficially own, as of the
Record Date, more than five percent of the Company's Common Stock.
<TABLE>
<CAPTION>
Nature and Amount of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent of Class
- ------------------------------------- ------------------------ ----------------
<S> <C> <C>
Andre A. Blay 1,557,732 (2) 8.42
38705 Seven Mile Road, Suite 435
Livonia, Michigan 48152
Killer Barn, Inc.(3) 1,530,000 8.27
821 Tavern Road
Alpine, California 91901
AWM Investment Company, Inc. 1,304,000 7.05
153 East 53rd Street, 51st Floor
New York, New York 10222
Thomas H. Bauer 1,187,030 (4) 5.87
38705 Seven Mile Road, Suite 435
Livonia, Michigan 48152
TCW Asset Management 926,400 5.01
865 South Figueroa Street
Suite 1800
Los Angeles, California 90017
</TABLE>
__________________
(1) Calculated pursuant to Rule 13d-3 promulgated under the Exchange Act.
Accordingly, with respect to each particular beneficial owner, the
number of shares gives effect to the deemed exercise of such owner's
options and warrants (which are currently exercisable or exercisable
within 60 days). Except as otherwise disclosed in the footnotes below,
the shares listed in this column for a person named in this table are
directly held by such person, with sole voting and dispositive power.
(2) Includes shares owned by the Andre A. Blay Trust and 495,833 shares
which are not outstanding but are subject to currently exercisable
options.
(3) Killer Barn, Inc. is owned and controlled by Mr. William D. Killion who
served as a director of IndeNet, Inc. from November 1995 until January
30, 1997.
(4) Includes 100,000 shares which are not outstanding but are subject to
currently exercisable options.
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<PAGE> 6
OFFICERS AND DIRECTORS
The following table sets forth certain information as of the Record
Date regarding the beneficial ownership of the Company's Common Stock by each
executive officer and director, and by the Company's executive officers and
directors as a group:
<TABLE>
<CAPTION>
Nature and Amount of
Name(1) Beneficial Ownership (2) Percent of Class (2)
- ------- ------------------------ --------------------
<S> <C> <C>
Andre A. Blay(3) 1,557,732 (3) 8.42
Thomas H. Bauer 1,187,030 (4) 8.27
Richard L. Schleufer 200,189 (5) 1.08
Robert Beauregard 75,000 *
Robert A. Blay 30,000 (6) *
H. Bradley Eden 5,366 *
All Executive Officers and Directors as a group 4,346,172 (7) 23.49
(7 persons)
</TABLE>
(1) The business address for all the officers and directors is 38705 Seven
Mile Road, Suite 435, Livonia, Michigan 48152.
(2) Calculated pursuant to Rule 13d-3 promulgated under the Exchange Act.
Accordingly, with respect to each particular beneficial owner, the
number of shares gives effect to the deemed exercise of such owner's
options and warrants (which are currently exercisable or exercisable
within 60 days). Except as otherwise disclosed in the footnotes below,
the shares listed in this column for a person named in this table are
directly held by such person, with sole voting and dispositive power.
(3) Includes shares owned by the Andre A. Blay Trust and 495,833 shares
which are not outstanding but are subject to currently exercisable
options.
(4) Includes 100,000 shares which are not outstanding but are subject to
currently exercisable options.
(5) Includes 125,000 shares which are not outstanding but are subject to
currently exercisable options.
(6) Represents shares which are not outstanding but are subject to
currently exercisable options.
(7) Includes 750,833 shares which are not outstanding but are subject to
currently exercisable options.
* Less than 1%.
4
<PAGE> 7
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
EFFECT A FOUR TO ONE REVERSE SPLIT OF COMMON STOCK
INTRODUCTION
The Board of Directors believes that it would be in the best interests
of the Company and its stockholders to adopt an amendment to the Company's
Certificate of Incorporation (the "Reverse Split Amendment"), which will effect
a reverse stock split (the "Reverse Split") of one new share of Common Stock for
each four issued and outstanding shares of Common Stock. No change would occur
in the status of the Company's preferred stock.
Following the filing with the Secretary of State of Delaware of the
Reverse Split Amendment thereby completing the Reverse Split (the "Effective
Date"), the Board will notify the stockholders that the Reverse Split has been
effected. The full text of the Reverse Split Amendment is set forth in the
proposed Certificate of Amendment to the Company's Certificate of Incorporation
(the "Certificate of Amendment"), which is attached as Appendix A to this Proxy
Statement. The discussion of the Reverse Split and the Reverse Split Amendment
is qualified in its entirety by reference to the Certificate of Amendment, which
is incorporated herein by reference as if fully set forth herein.
Pursuant to Section 242(c) of the Delaware General Corporation Law, the
Board of Directors has reserved the right, notwithstanding stockholder
authorization of the Reverse Split Amendment, to cancel the filing of the
Reverse Split Amendment without further action by the stockholders, if, at any
time prior to the Certificate of Amendment being filed with the Secretary of
State of the State of Delaware, the Board of Directors, in its sole discretion,
determines that the Reverse Split Amendment is no longer in the best interests
of the Company and its stockholders. The Board of Directors may consider a
variety of factors in determining whether or not to proceed with the Reverse
Split Amendment, including, but not limited to, overall trends in the stock
market, recent changes and anticipated trends in the per share market price of
the Common Stock, business developments and the Company's actual and projected
financial performance.
The Board of Directors of the Company unanimously approved the Reverse
Split Amendment as described herein on March 25, 1998, subject to the adoption
thereof by the stockholders of the Company, and recommends that stockholders
vote "FOR" the Reverse Split Amendment.
PURPOSE AND BACKGROUND OF THE REVERSE SPLIT AMENDMENT
The Board of Directors believes that certain securities firms fail to
follow and research companies having lower-priced securities. Such securities
firms may also discourage their registered representatives from recommending the
purchase of lower-priced corporate securities. Additionally, the policies and
practices of a number of brokerage houses tend to discourage individual brokers
within those firms from dealing in lower-priced stocks. Some of these policies
and practices relate to the payment of brokers' commissions and to
time-consuming procedures that operate to make the handling of lower-priced
stocks economically unattractive to brokers. Consequently, the Board of
Directors believes that this limits the marketability of the Common Stock at its
current per share price. For instance, the Board of Directors believes that the
low per share market price of the Common Stock impairs the marketability and
acceptance of the Common Stock to institutional investors and other members of
the investing public and creates a negative impression with respect to the
Company. Theoretically, the number of shares outstanding should not, by itself,
affect the marketability of such shares, the type of investor who acquires them
or the Company's reputation in the financial community. In practice, however,
many investors and market makers consider low-priced stock as unduly speculative
in nature and, as a matter of policy, avoid investment and trading in such
stocks. The foregoing factors may adversely affect not only the pricing of the
Common Stock but also the liquidity of the Common Stock and the Company's
ability to raise additional capital through the sale of equity securities.
The Board of Directors is hopeful that the decrease in the number of
shares of Common Stock outstanding as a consequence of the proposed Reverse
Split and the anticipated increase in the price per share will encourage greater
interest in the Common Stock by the financial community and the investing public
and possibly promote greater liquidity for the Company's stockholders with
respect to those shares presently held by them. However,
5
<PAGE> 8
the possibility does exist that such liquidity may be adversely affected by the
reduced number of shares which would be outstanding if the proposed Reverse
Split is effected.
The Board of Directors is also hopeful that the proposed Reverse Split
will increase the liquidity and marketability of the Common Stock. However,
there can be no assurance that the proposed Reverse Split will achieve any of
these desired results. There can also be no assurance that the price per share
of the Common Stock immediately after the proposed Reverse Split will increase
proportionately with the Reverse Split, or that any increase can be sustained
for any period of time. In addition, the market price of the Common Stock may
neither exceed nor remain in excess of the current market price.
The Board's primary objective in proposing the Reverse Split Amendment
is to raise the per share price of the Common Stock in an effort to ensure the
listing of the Company's Common Stock on the Nasdaq National Market. The Nasdaq
National Market requires, among other criteria, that for the Company to maintain
its listing that the Company's shares have a minimum bid price per share of
$1.00, provided that the Company maintains a market value of public float of at
least $5 million. As of the date hereof, the Company is in compliance with the
Nasdaq National Market's minimum bid price per share requirement and with the
public float requirements. Effecting the Reverse Split is expected to place the
Company in a position further above the Nasdaq minimum standards for maintenance
of its listing on the Nasdaq National Market. No assurances can be given,
however, that effecting the Reverse Split will enable the Company at all times
to maintain the listing of the Company's Common Stock on the Nasdaq National
Market.
The Board of Directors of the Company is not aware of any present
efforts by any persons to accumulate additional shares of Common Stock, and the
proposed Reverse Split is not intended to be an anti-takeover device.
EFFECT ON MARKET FOR COMMON STOCK
On [ ], 1998, the closing bid and asked prices of the Common
Stock on the Nasdaq Bulletin Board were [$ ] and [$ ] per share,
respectively. By decreasing the number of shares of Common Stock outstanding
without altering the aggregate economic interest in the Company represented by
such shares, the Board of Directors believes that the market price will be
increased. The farther that the market price of the Common Stock rises above
$1.00 per share, the less risk that the Company will fail to meet or exceed the
applicable criteria for maintenance of its listing on the Nasdaq National
Market. There can be no assurance that the market price of the Common Stock
will be so increased or that the Company will at all times be able to meet or
exceed the requirements for maintaining its listing on the Nasdaq National
Market.
EFFECTS OF THE REVERSE SPLIT ON COMMON STOCK
If approved by the stockholders, the principal effect of the Reverse
Split will be to decrease the number of issued and outstanding shares of Common
Stock from 18,501,016 shares of Common Stock to approximately 4,625,254 shares
of Common Stock based on the number of shares of Common Stock outstanding on the
Record Date. The total number of shares of Common Stock held by each stockholder
would be reclassified automatically into the number of shares equal to the
number of shares of Common Stock owned immediately prior to the Reverse Split
divided by four, provided that no fractional shares are issued in connection
with the Reverse Split.
EFFECT ON OUTSTANDING OPTIONS AND WARRANTS OF THE COMPANY
As of the Record Date, the Company had outstanding employee stock
options to purchase an aggregate 1,217,833 shares of Common Stock with exercise
prices per share ranging from $1.38 to $6.44 per share and warrants to purchase
an aggregate of 741,056 shares of Common Stock with exercise prices per share
ranging from $2.25 to $7.00. Upon the effectiveness of the Reverse Split, these
options and warrants provide for a proportional downward adjustment to the
number of shares subject to outstanding options and warrants, and a
corresponding upward adjustment in the per share exercise prices to reflect the
Reverse Split.
6
<PAGE> 9
EFFECT ON PREFERRED STOCK
As of the Record Date, the Company had no outstanding preferred stock.
The Company's Certificate of Incorporation authorizes the issuance of up to (i)
1,200 shares of Series A Preferred Stock, par value $.0001 per share (the
"Series A Shares"), (ii) 250,000 shares of Series B Preferred Stock par value
$.0001 per share (the "Series B Shares"), and (iii) 1,200 shares of Series C
Preferred Stock, par value $.0001 per share (the "Series C Shares"). If the
Company issued preferred stock in the future, the principal effect of the
Reverse Stock Split would, according to the terms and conditions of the Series A
Shares and the Series C Shares, be a proportional upward adjustment to the fixed
conversion price of the Series A Shares and the Series C Shares and a
proportional downward adjustment to the number of shares of Common Stock
received upon conversion of Series A Shares and the Series C Shares to Common
Shares. At any time when the Common Shares are trading at less than $3.00 per
share, as is currently the case, the Reverse Stock Split may raise the
conversion price of the Series B Shares for any future holders of Series B
shares choosing to exercise the option to convert their Series B Shares into
Common Stock of the Company. At any time when the Common Stock trades at $3.00
per share or greater, the Reverse Stock Split should have no effect on the
conversion price of the Series B Shares for any future holders of Series B
Shares choosing to exercise the option to convert their Series B Shares into
Common Stock of the Company. If the Reverse Stock Split causes the Common Stock
to trade for $5.00 or great per share on the Nasdaq National Market, then one of
the conditions precedent to the Company having the option to convert all or part
of the Series B Shares into Common Stock of the Company will be fulfilled.
EFFECT ON LEGAL ABILITY TO PAY DIVIDENDS
The holders of shares of Common Stock are entitled, on a pari passu
basis, to receive distributions of cash or other property, if any, that may be
declared from time to time by the Board of Directors in its discretion from
funds legally available therefor. Therefore, the Reverse Split will not affect
potential distributions to the Company's stockholders. The Company has never
paid cash dividends on the Common Stock and has no plans to pay cash dividends
in the foreseeable future. The current policy of the Board of Directors is to
retain all available earnings for use in the operation and growth of the
Company's business. Any future cash dividends will depend upon the Company's
earnings, capital requirements, financial condition and other relevant factors.
EXCHANGE OF SHARES; NO FRACTIONAL SHARES
No fractional shares of Common Stock will be issued in connection with
the proposed Reverse Split. Assuming the approval of the Reverse Split
Amendment, a stockholder who would otherwise be entitled to receive a fractional
share of Common Stock will receive, in lieu thereof, cash for the resulting
fractional share interest in an amount equal to such fractional interest
multiplied by the average of the closing bid and closing asked prices of the
Common Stock as reported on the Nasdaq Bulletin Board on the effective date of
the Reverse Split (the "Effective Date").
The Company will appoint United Stock Transfer, 13275 East Freemont
Place, Suite 302, Englewood, Colorado 80112 (303) 792-3650 (the "Exchange
Agent") to act as Exchange Agent for the holders of the Common Stock in
connection with the Reverse Split Amendment. The Company will deposit with the
Exchange Agent, as soon as practicable after the Effective Date, cash in an
amount equal to the value of the estimated aggregate number of fractional shares
that will result from the Reverse Split. Any portion of cash deposited with the
Exchange Agent to pay fractional share interests that is held by the Exchange
Agent six months after the Effective Date will be returned to the Company on
demand. The funds required to purchase the fractional share interests are
available and will be paid from the Company's current cash reserves. The
Company's stockholder list indicates that a portion of the outstanding Common
Stock is registered in the names of clearing agencies and broker nominees. It
is, therefore, not possible to predict with certainty the number of fractional
shares and the total amount that the Company will be required to pay for
fractional share interests. However, it is not anticipated that the funds
necessary to effect the cancellation of fractional shares will be material.
7
<PAGE> 10
As of the Record Date, approximately [ ] persons were holders of record
of Common Stock. The Company does not anticipate that the Reverse Split and the
payment of cash in lieu of fractional shares will result in a significant
reduction in the number of holders of the Common Stock. The Company does not
presently intend to seek, either before or after the Reverse Split, any change
in the Company's status as a reporting company for federal securities law
purposes.
On or after the Effective Date, the Company will mail to each
stockholder a letter of transmittal. A stockholder will receive a certificate
evidencing his post-Reverse Split shares and, if applicable, cash in lieu of a
fractional share only by transmittal to the Exchange Agent of such stockholder's
stock certificate(s) for shares of Common Stock that were issued prior to the
Effective Date, together with the properly executed and completed letter of
transmittal and such evidence of ownership of such shares as the Company may
require. Stockholders will not receive certificates for post-Reverse Split
shares unless and until the certificates representing their shares of Common
Stock that were issued prior to the Effective Date are surrendered. Stockholders
should not forward their certificates to the Exchange Agent until the letter of
transmittal is received and should surrender their certificates only with such
letter of transmittal. A payment in lieu of any fractional share interest will
be made to a stockholder promptly after receipt of a properly completed letter
of transmittal and stock certificate(s) for all of his shares of Common Stock
outstanding prior to the Effective Date.
There will be no service charges payable by the stockholders of the
Company in connection with the exchange of their certificates or in connection
with the payment of cash in lieu of the issuance of fractional shares.
These costs will be borne by the Company.
The Board of Directors recommends a vote FOR the adoption of the
Reverse Stock Split.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY NAME
The Company has decided to concentrate its efforts on the sale of
computer software and has therefore decided that the name "Enterprise Software,
Inc." more accurately conveys the Company's core operations. The Company
therefore proposes to amend its Certificate of Incorporation to change the
Company name to "Enterprise Software, Inc."
The Board of Directors recommends a vote FOR the adoption of the
Company name change to "Enterprise Software, Inc."
PROPOSAL TO ADOPT AND APPROVE THE INDENT, INC.
1998 STOCK OPTION PLAN
In order to provide an opportunity for certain employees and directors
of the Company and its subsidiaries to purchase shares of Common Stock in the
Company, on March 25, 1998, the Board of Directors of the Company adopted the
Stock Option Plan. A complete copy of the Stock Option Plan is included as
Appendix B to this Proxy Statement and all descriptions of the Stock Option
Plan contained herein are qualified in their entirety by such complete copy.
The Stock Option Plan provides for the grant of options to purchase
only Common Stock of the Company and will be administered by the Stock Option
Committee of the Company's Board of Directors (the "Committee"). Under the Stock
Option Plan, the Committee will have the authority to issue options to purchase
up to 5,000,000 shares of Company Common Stock to employees (including employee
directors) and non-employee directors of the Company and any of its
subsidiaries. The Stock Option Plan provides that options granted to employees
of the Company may be "incentive stock options" which meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Incentive stock options are neither taxable to an employee upon grant or
exercise nor deductible by the Company. In order to qualify for this treatment,
the Stock Option Plan must be approved by the Company's stockholders within 12
months of its adoption by the Company's Board of Directors.
8
<PAGE> 11
Incentive stock options which qualify as such under Code Section 422
may not have an exercise price less than the fair market value of the Common
Stock as of the time of the grant of those options. Any employee who owns more
than 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary may not receive incentive stock options under the
Stock Option Plan unless the exercise price at the time of grant is at least
110% of such fair market value. For purposes of the Stock Option Plan, "fair
market value" means the median of the high and low sale prices of Common Stock
published on the day on which the particular option is granted or, if the price
of the Common Stock is not published for that day, then "fair market value"
means the price reasonably determined by the Committee in good faith.
Options granted under the Stock Option Plan may not be exercised sooner
than 6 months, nor more than 10 years, after they are granted. The Committee has
the authority under the Stock Option Plan to determine which employees receive
options, whether they will be qualified incentive stock options, the number of
options granted and the terms of exercise of each option. The Stock Option Plan
does, however, specify that each non-employee director will receive options for
a minimum of 50,000 shares of Common Stock at an exercise price equal to 100% of
the market value within one month after completing one year's service on the
Board of Directors of the Company. The value of shares that can be exercised for
the first time by any employee receiving incentive stock options cannot exceed
$100,000 per year, based on the fair market value of Company common stock on the
date of grant.
Under the Stock Option Plan, options and Common Stock issuable upon
exercise of options are not freely transferable. The Committee may also grant
options subject to termination upon certain events, including, for example,
death, disability, termination of employment of the optionee, and upon a merger
or sale of assets by the Company.
The Board of Directors has adopted the Stock Option Plan and believes
the ability to grant incentive stock options and non-qualified stock options
will give employees an incentive to contribute to the success of the Company.
Upon approval by the stockholders of the Company of the Stock Option Plan, the
Board of Directors plans to terminate the IndeNet, Inc. Qualified Stock Option
Plan.
The Board of Directors of the Company recommends a vote FOR the
adoption of the Stock Option Plan.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Special Meeting other than those specifically set forth in the Notice of the
Special Meeting and knows of no matters to be brought before the Special Meeting
by others. If any other matters properly come before the Special Meeting, it is
the intention of the persons named in the accompanying proxy to vote such proxy
in accordance with the judgment of the Board of Directors.
By Order of the Board of Directors,
/s/ Andre A. Blay
Andre A. Blay
Chairman of the Board
Dated: [ ], 1998
9
<PAGE> 12
APPENDIX A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
INDENET, INC.
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
IndeNet, Inc. (the "Corporation"), a corporation organized and existing by
virtue of the General Corporation Law of the State of Delaware, as amended (the
"Delaware GCL"), by its duly authorized officers, hereby certifies as follows:
FIRST: That the Board of Directors of the Corporation, acting pursuant to
Section 141(f) of the Delaware GCL, has duly adopted a resolution authorizing
the Corporation to reclassify, change and convert each four (4) outstanding
shares of the Corporation's Common Stock, par value $.001 per share, into one
(1) share of Common Stock, par value $.001 per share.
SECOND: That the Board of Directors of the Corporation, acting pursuant to
Section 141(f) of the Delaware GCL, has duly adopted a resolution authorizing
the Corporation to change the name of the Corporation to "Enterprise Software,
Inc."
THIRD: That, pursuant to authorization by the affirmative vote, in accordance
with the provisions of the Delaware GCL, of the holders of a majority of the
outstanding Common Stock of the Corporation entitled to vote thereon at a
special meeting of stockholders of the Corporation held on [ ], 1998, the
Certificate of Incorporation of the Corporation be amended as follows:
1. By striking out the title and Article I and inserting a new title
and new Article I to read as follows: "Certificate of Incorporation of
Enterprise Software, Inc." and Article I to read: "The name of the
Corporation shall be Enterprise Software, Inc."
2. By adding a new paragraph to Article IV to read as follows:
"(d) Each four shares of the Common Stock, par value $.001 per share,
of the Corporation issued and outstanding or held in treasury as of [ ]
p.m. New York time on the date on which this Certificate of Amendment
is filed by the Secretary of State of the State of Delaware (the
"Effective Time") shall be reclassified as and changed into one (1)
share of Common Stock, par value $.001 per share, of the Corporation,
without any action by the holders thereof. Each stockholder who,
immediately prior to the Effective Time, owns a number of shares of
Common Stock which is not evenly divisible by four shall, with respect
to such fractional interest, be entitled to receive from the
Corporation cash in an amount equal to such fractional interest
multiplied by the average of the closing bid and closing asked prices
of the Common Stock as reported on the Nasdaq Bulletin Board at the
Effective Time."
FOURTH: That the amendments to the Corporation's Certificate of Incorporation
set forth herein have been duly adopted in accordance with the provisions of
Section 242 of the Delaware GCL.
Appendix A - 1
<PAGE> 13
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed on its behalf by Andre A. Blay, its Chief Executive Officer, on
[ ], 1998, hereby declaring and certifying that this is the act and deed
of the Corporation and that the facts herein stated are true.
Name: Andre A. Blay
Title: Chief Executive Officer
ATTEST:
Name: H. Bradley Eden
Title: Secretary
Appendix A - 2
<PAGE> 14
APPENDIX B
INDENET, INC.
1998 STOCK OPTION PLAN
_______________________________
1. PURPOSE. The purpose of this plan is to provide an opportunity for
certain Corporation and thereby have an additional incentive to contribute to
the prosperity of the Corporation and its Subsidiaries.
2. DEFINITIONS. The following terms are defined for use herein as follows:
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock (par value $.001 per share) of
the Corporation.
"COMMITTEE" means the Stock Option Committee appointed pursuant to
Paragraph 4 to administer the Plan.
"CORPORATION" means IndeNet, Inc.
"EFFECTIVE DATE" means the effective date of the Plan.
"EMPLOYEE" means a key salaried employee of the Corporation or
Subsidiary, who has an "employment relationship" with the Corporation
or a Subsidiary, as defined in Treas. Reg. ss. 1.421-7(h), and the term
"employment" means employment with the Corporation or a Subsidiary of
the Corporation.
"INCENTIVE STOCK OPTION" means an Option that is intended to meet the
requirements of Code Section 422.
"MARKET VALUE" means the median of the high and low sale prices of
Common Stock as published for the day on which the particular Option is
granted, or, if prices of shares of Common Stock are not so published
for that date, then a fair market value determined by the Committee by
any reasonable method selected by it in good faith.
"NONQUALIFIED STOCK OPTION" means an Option that is not intended to
constitute an Incentive Stock Option.
"OPTION" means either an Incentive Stock Option or a Nonqualified Stock
Option.
"OPTIONEE" means any Employee or Director of the Corporation or its
Subsidiaries to whom an Option has been granted under Paragraph 4 of
the Plan.
"OPTION AGREEMENT" means an agreement evidencing Options as provided in
paragraph 8 of this Plan.
"OPTION PRICE" means the purchase price for Common Stock under an
Option, as determined under Paragraph 6 or 8 of this Plan.
"PLAN" means this Qualified Stock Option Plan as in effect from time to
time.
"SUBSIDIARY" means a subsidiary corporation to the Company as defined
in Code Section 424(f).
Appendix B - 1
<PAGE> 15
3. SHARES.
The total number of shares of Common Stock which may be sold under the
Plan shall not exceed five million (5,000,000) shares, except that the total
number of shares which may be sold under the Plan may be increased or decreased
to the extent of adjustments authorized by Paragraph 11. Such shares shall be
authorized shares and may be either unissued or treasury shares. Replenishment,
reload granting, cashless exercise and stock appreciation rights are expressly
contemplated as being acceptable aspects of this Plan and the implementation
hereof.
If an Option granted under the Plan shall expire or terminate for any
reason without having been exercised in full, the shares not delivered under
such Option shall be available for Options subsequently granted.
4. ADMINISTRATION.
The Plan shall be administered by the Stock Option Committee, the
members of which shall be appointed by the Board, and which shall consist of two
(2) or more members. The members of the Committee may be changed at any time and
from time to time at the discretion of the Board. All members of the Committee
shall be non-employee directors who are "Disinterested Persons" with regard to
Plan administration, within the meaning of Rule 16b-3 as promulgated, and
amended from time to time, by the Securities and Exchange Commission; however,
the mere fact that a Committee member shall fail to qualify under this
requirement shall not invalidate any award of Options made by the Committee if
the award is otherwise validly made under the Plan. The Committee shall
determine the Employee, and the terms of the Options to be granted. The
Committee shall have full power and authority to interpret the provisions of the
Plan, to supervise the administration of the Plan and to adopt forms and
procedures for the administration of the Plan. All determinations made by the
Committee shall be final and conclusive. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any grant or award of Options hereunder.
The granting of any Option pursuant to this Plan shall be entirely
within the discretion of the Committee. Nothing herein contained shall be
construed to give any officer or employee of the Corporation or its subsidiaries
any right to participate under this Plan.
Each person who is or shall have been a member of the Committee shall
be indemnified and held harmless by the Corporation from and against any cost,
liability or expense imposed or incurred in connection with such person's or the
Committee's taking or failing to take any action under the Plan. Each such
person may rely on information furnished in connection with the Plan's
administration by any appropriate person or persons.
Nonqualified Stock Options shall be granted to non-Employee directors
(i.e., "Disinterested Persons") according to the following formula:
(i) Nonqualified Stock Options for Fifty thousand
(50,000) shares of Common Stock within one (1) month
following the first year as a member of the Board.
(ii) The purchase price of the Common Stock covered by
each Nonqualified Stock Option granted pursuant to
this Section 4 d. shall be one hundred percent (100%)
of Market value.
(iii) This Section 4 d. shall not be amended more than once
every six months (plus two additional days, pursuant
to Rule 16b-3(c)(2)(ii)(e)), other than to comport
with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, the
Securities Exchange Act of 1934, or the rules
thereunder.
Additional Nonqualified Stock Options may be granted to non-employee
directors at the discretion of the Committee, provided that no director may
receive additional Nonqualified Stock Options while serving on the
Appendix B - 2
<PAGE> 16
Committee or if the receipt of such Nonqualified Stock Options would cause him
to cease to be a Disinterested Person.
5. PARTICIPANTS.
Participants in the Plan shall be (i) such Employees (including
Employees who are Directors) of the Corporation and its Subsidiaries as the
Committee in its sole discretion may select from time to time and (ii) non-
Employee Directors to the extent provided in Section 4 d. above. An Employee of
the Corporation or its subsidiaries who has been granted an Option under this
Plan or any other stock option plan of the Corporation may be granted additional
Options.
6. INCENTIVE STOCK OPTIONS.
Any Option intended to constitute an Incentive Stock Option shall
comply with the requirements of this Section. No Incentive Stock Option shall be
granted with an exercise price below its Market Value on the date the Option is
granted or with an exercise term that extends beyond 10 years from the date the
Option is granted. An Incentive Stock Option shall be granted only to Employees
of the Corporation or its Subsidiaries and shall not be granted to any Employee
who owns (within the meaning of Code Section 424(d)) stock of the Corporation or
any Subsidiary possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or a Subsidiary unless, on the date such
Option is granted, the exercise price for the Option is at least 110% of the
Market Value of the shares subject to the Option and the Option, by its terms,
is not exercisable more than 5 years after the date it is granted. The aggregate
Market Value of the underlying Common Stock (determined on the date the Option
is granted) as to which Incentive Stock Options granted under the Plan
(including any Plan of any Subsidiary) may first be exercised by an Employee in
any one calendar year shall not exceed $100,000. To the extent that an Option
intended to constitute an Incentive Stock Option shall violate the foregoing
$100,000 limitation (or any other limitation set forth in Code Section 422), the
portion of the Option that exceeds the limitation (or violates any other Code
Section 422 limitation) shall be deemed to constitute a Nonqualified Stock
Option.
7. EXERCISE PRICE.
The per share exercise price of each Option granted under the Plan
shall be any lawful consideration as determined, or made determinable, by the
Committee on the date of the grant. The Committee, at its discretion, may grant
Nonqualified Stock Options with an exercise price below 100% of the Market Value
of Common Stock on the date of the grant.
8. TERMS OF OPTIONS. Each Option shall be evidenced by a written agreement
containing such terms and conditions as are set by the Board or the Committee,
including without limitation the following:
a. NUMBER OF SHARES. Each Option Agreement shall state the number
of shares to which it pertains.
b. EXERCISE PRICE. Each Option agreement shall state the exercise
price.
c. MEDIUM AND TIME OF PAYMENT. The exercise price for each share
purchased pursuant to an Option granted under the Plan shall
be payable in full upon exercise, and may be paid in cash or,
in full or in part, by the surrender of Common Stock owned by
the Optionee valued at fair market value or by the surrender
of Option rights hereunder valued at the difference between
Option Price and fair market value. Promptly after the
exercise of an Option and the payment of the full Option
Price, the Optionee shall be entitled to the issuance of a
stock certificate evidencing ownership of such Common Stock.
However, an Optionee shall have none of the rights of a
shareholder until a certificate for those shares is issued to
the Optionee, and no adjustment will be made for dividends or
other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in
Paragraph 11 of this Plan.
Appendix B - 3
<PAGE> 17
d. TERM AND EXERCISE OF OPTIONS. Each Option shall be exercisable
in whole or in part in such amounts and at or after such dates
as may be specified in the Option agreement. In no event,
however, shall any Option be exercisable in less than six (6)
months or more than ten (10) years from the date of the grant.
e. ADMINISTRATION DISCRETION. The Committee may in its discretion
vary, among Employees and among Options granted to the same
Employee, any and all of the terms and conditions of Options
granted under the Plan, including the term during which and
the amounts in which and dates at or after which such Options
may be exercised.
9. TRANSFERABILITY OF OPTIONS AND COMMON STOCK.
Options under this Plan may not be transferred except by will or
according to the laws of descent and distribution,. During the lifetime of the
Optionee, an Option may be exercised only by the Optionee or his guardian or
legal representative. The Corporation may, in the event it deems the same
desirable to assure compliance with applicable federal and state securities
laws, legend any certificate representing shares issued pursuant to the exercise
of an Option with an appropriate restrictive legend, and may also issue
appropriate stop transfer instructions to its transfer agent with respect to
such shares.
10. TERMINATION OF OPTIONS.
Each Option agreement shall contain such provisions as the Committee
may deem advisable for termination of the Option in the event of, and/or
exercise of the Option after the Optionee's death, disability, or termination of
employment by the Corporation or its subsidiaries.
Option agreements may also contain, in the discretion of the Committee,
provisions for termination of Options and/or acceleration of exercise rights in
the event of any merger or consolidation of the Corporation with, or acquisition
of the Corporation or substantially all of its assets by, any other corporation.
Nothing in the Plan or in any Option shall limit or affect in any way
the right of the Corporation or its subsidiaries to terminate an Optionee's
employment at any time nor be deemed to confer upon any Optionee any right to
continue in the employ of the Corporation.
11. ADJUSTMENT PROVISION.
If the number of shares of Common Stock outstanding changes by reason
of a stock dividend, stock split, reverse stock split, recapitalization, merger,
consolidation, split-up, combination or exchange of shares, the aggregate number
and class of shares available under this Plan and the number of shares subject
to each outstanding Option, together with the Option prices, shall be
appropriately increased or decreased by the Board or Committee.
12. EFFECTIVE DATE OF PLAN, TERMINATION AND AMENDMENT.
The Plan shall take effect only upon and as of the date of approval of
the Plan by the Corporation's shareholders. Unless earlier terminated by the
Board, the Plan shall terminate on the date ten (10) years subsequent to the
date of the adoption of the Plan by the Corporation's shareholders, after which
date no Options may be granted under this Plan. The Board may terminate the Plan
at any time, or may from time to time amend the Plan as it deems proper and in
the best interest of the Corporation, provided that shareholder approval shall
be obtained for any amendment that would (i) materially increase the benefits
accruing to participants under this plan; (ii) materially increase the number of
securities which may be issued under this plan; or, (iii) materially modify the
requirements as to eligibility for participation in this plan set forth in
Paragraph 5.
Appendix B - 4
<PAGE> 18
13. RULE 16B-3 REQUIREMENTS.
Notwithstanding any other provision of the Plan, the Committee may
impose such conditions on the exercise of an Option as may be required to
satisfy the requirements of Rule 16b-3 of the Exchange Act.
14. WITHHOLDING.
The Corporation shall have the right to withhold from an Optionee's
compensation or require an Optionee to remit sufficient funds to satisfy
applicable withholding for income and employment taxes upon the exercise of an
Option. An Optionee may make a written election to tender previously-acquired
shares of Common Stock or have shares of stock withheld from the exercise,
provided that the shares have an aggregate Market Value sufficient to satisfy in
whole or in part the applicable withholding taxes.
Appendix B - 5
<PAGE> 19
APPENDIX C
INDENET, INC.
38705 Seven Mile Road, Suite 435
Livonia, Michigan 48152
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of common stock acknowledges receipt of the Notice of
Special Meeting of Stockholders of IndeNet, Inc. (the "Company") and the
accompanying Proxy Statement dated [ ], 1998, hereby appoint(s) Andre A. Blay
and [ ], and each of them, attorneys or attorney of the undersigned, for and
in the name(s) of the undersigned, with power of substitution and
revocation in each to vote any and all shares of Common Stock, par value $.001
per share, of the Company, which the undersigned would be entitled to vote as
fully as the undersigned could if personally present at the Special Meeting of
Stockholders of the Company to be held on [ ], 1998 at [ ] at the Company's
offices at 38705 Seven Mile Road, Suite 435, Livonia, Michigan 48152, and at
any adjournment or adjournments thereof, and hereby revoking any prior proxies
to vote said shares, upon the following item of business more fully described
in the notice of and proxy statement for such Special Meeting.
TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A FOUR TO ONE REVERSE SPLIT
OF THE COMPANY'S COMMON STOCK AND REDUCE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM [ ] TO [ ].
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO
"ENTERPRISE SOFTWARE, INC."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TO ADOPT THE INDENET, INC. 1998 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE. IN THE ABSENCE OF SUCH
SPECIFICATION, THE SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED TO AMEND
THE CERTIFICATE OF INCORPORATION TO EFFECT A FOUR TO ONE REVERSE STOCK SPLIT OF
THE COMPANY'S COMMON STOCK, CHANGE THE NAME OF THE CORPORATION TO "ENTERPRISE
SOFTWARE CORPORATION", AND ADOPT THE INDENET, INC. 1998 STOCK OPTION PLAN.
Dated _________________________, 1998
_________________________________
Signature
_________________________________
Signature (if held jointly)
(Please sign exactly as name(s)
appear(s) to the left. When
signing as attorney, executor,
administrator, trustee, guardian,
or as an officer signing for a
corporation, please give full
title as such, and if more than
one trustee, all should sign. If
an entity, please sign in the
full name of the entity by the
person(s) authorized to do so.)
Appendix C - 1
<PAGE> 20
STOCKHOLDERS ARE URGED TO MARK,
DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED
STATES.
Appendix C - 2
