<PAGE>
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 ss.240.14a-11(c) or ss.240.14a-12
IJNT.NET, 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 fee is calculated and state how it was determined):
____________________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________________
5) Total fee paid:
____________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________________
2) Form, Schedule or Registration Statement No.:
____________________________________________________________________
3) Filing Party:
____________________________________________________________________
4) Date Filed:
____________________________________________________________________
<PAGE>
IJNT.NET, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF IJNT.NET, INC.:
The Annual Meeting of Stockholders of IJNT.net, Inc. (the "Company")
will be held at the Country Inn and Suites located at 325 Bristol Street, Costa
Mesa, California, 92626, on July 25, 2000 at 10:00 a.m. for the purpose of
considering and acting upon the following proposals:
(1) To elect six (6) members of the Board of Directors and,
subject to adoption of Proposal No. 2, to divide the Board of Directors
into three classes;
(2) To approve the Amended and Restated Certificate of
Incorporation of the Company and the Amended and Restated By-laws of
the Company;
(3) To approve the Company's 2000 Equity Incentive Plan and
the Company's 2000 Management Equity Incentive Plan;
(4) To ratify the designation of BDO Seidman, LLP as the
Company's independent accountants for the period ending March 31, 2000;
and
(5) To transact such other business as may properly come
before the meeting or any postponement or adjournment thereof.
The Board of Directors has fixed the close of business on June 13, 2000
as the record date for determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any postponements or adjournments thereof.
A list of stockholders entitled to vote will be available at 2030 So. Main,
Suite 550 , Irvine, California 92612 for ten days prior to the Annual Meeting.
The Company's March 31, 2000 Annual Report on Form 10-K accompanies
this Notice of Annual Meeting of Stockholders and Proxy Statement.
By Order of the Board of Directors
Jeffrey R. Matsen
Secretary
Irvine, California
May 30, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED ENVELOPE.
<PAGE>
IJNT.NET, INC.
2030 Main, Suite 550
Irvine, CA 92614
(949) 260-8100
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of IJNT.net, Inc. (the "Company") of proxies for use
at the Annual Meeting of Stockholders of the Company to be held on July 25, 2000
at the Country Inn and Suites located at 325 Bristol Street, Costa Mesa,
California, 92626. This proxy statement and the accompanying form of proxy are
being mailed to stockholders on or about July 5, 2000.
VOTING RIGHTS
RECORD DATE; OUTSTANDING SHARES. Stockholders of record of the Company
as of the close of business on June 13, 2000 have the right to receive notice of
and to vote at the Annual Meeting. On May 15, 2000, the Company had issued and
outstanding 20,712,239 shares of Common Stock. Each share of Common Stock is
entitled to one vote for as many separate nominees as there are directors to be
elected and for or against all other matters presented.
QUORUM; VOTE REQUIRED. For action to be taken at the Annual Meeting,
the majority of the shares entitled to vote must be represented at the meeting
in person or by proxy. Director nominees receiving the highest number of
affirmative votes up to the number of directors to be elected will be elected as
directors of the Company for the succeeding year. Votes withheld with respect to
director nominees have no legal effect.
The affirmative vote of a majority of the shares voting and a majority
of the required quorum is the minimum approval necessary and is required to
ratify the Amendment to the Certificate of Incorporation and to approve the
Amended and Restated Certificate of Incorporation and the Amended and Restated
By-laws of the Company, the Company's 1999 Equity Incentive Plan and the
Company's 2000 Stock Bonus Plan, and to ratify the appointment of BDO Seidman,
LLP as the Company's independent accountants. Because abstentions with respect
to any matter are treated as shares present or represented and entitled to vote
for the purposes of determining whether that matter has been approved by the
stockholders, abstentions have the same effect as negative votes. If the number
of abstentions is such that the affirmative votes do not constitute the
requisite vote, the proposal will be defeated. Broker non-votes and shares as to
which proxy authority has been withheld with respect to any matter are not
deemed to be present or represented for purposes of determining whether
stockholder approval of that matter has been obtained.
PROXIES
SOLICITATION OF PROXIES; EXPENSES. Proxies for use at the Annual
Meeting are being solicited by the Board of Directors of the Company from its
stockholders. The Company will bear the cost of the solicitation of proxies from
its stockholders in the enclosed form. The directors, officers and employees of
the Company may solicit proxies by mail, telephone, letter, facsimile,
electronically or in person. Following the original mailing of the proxies and
other soliciting materials, the Company will request that brokers, custodians,
nominees and other record holders forward copies of the proxy and other
soliciting materials to persons for whom they hold shares of Common Stock and
request authority for the exercise of proxies. In such cases, the Company will
reimburse such record holders for their reasonable expenses.
-1-
<PAGE>
VOTING OF PROXIES; REVOCATION OF PROXIES. Shares represented by
properly executed proxies received by the Company will be voted at the Annual
Meeting in accordance with the instructions thereon. It is intended that shares
represented by proxies received by the Company with no instructions will be
voted in favor of all proposals set forth in the Notice of Meeting and for the
nominees for director as described below.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise by (i) filing with
the Secretary of the Company a signed written statement revoking his or her
proxy or (ii) submitting an executed proxy bearing a date later than that of the
proxy being revoked. A proxy may also be revoked by attending the Annual Meeting
and voting in person at the Annual Meeting. Attendance at the Annual Meeting
will not by itself constitute the revocation of a proxy.
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<PAGE>
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
(ITEM NO. 1 ON THE PROXY CARD)
At the Annual Meeting, six (6) directors will be elected, leaving one
vacancy. All six (6) of the nominees are presently directors of the Company.
The Company's Board of Directors is currently comprised of six members
and one vacancy. On May 5, 2000, Robert Santore, an executive officer of Man
Rabbit House Multimedia, Inc., a subsidiary of the Company, resigned from the
Board of Directors and on May 19, 2000, Jeffrey R. Matsen, Vice President and
General Counsel of the Company, resigned, resulting in two vacancies.
Subsequently, on May 19, 2000, the Board of Directors appointed Richard R.
Nelson, Chief Financial Officer, to fill one vacancy. One vacancy remains, and
will remain after the Annual Meeting. The Company is currently seeking qualified
independent candidates for directors. The Board of Directors intends to appoint
an independent director to fill the remaining vacancy as soon as practicable.
Such director will also be placed in Class I, whose initial term will expire in
2001.
The Company's Board of Directors is not currently classified; all
directors are elected annually for a term of one year. However, the Company's
Amended and Restated Certificate of Incorporation and Amended and Restated
By-Laws submitted for stockholder approval in Proposal No. 2 of this Proxy
Statement will, if adopted, divide the Board of Directors into three classes.
Except for the initial term, which will vary by class, directors of will be
re-elected for a term of three years. One class of directors will be submitted
for election by the stockholders at each annual meeting.
The election of directors will be determined by the six nominees
receiving the greatest number of votes from shares eligible to vote. Unless a
stockholder signing a proxy withholds authority to vote for one or more of the
Board's nominees in the manner described in the proxy, each proxy received will
be voted in favor of the Board's nominees. Although it is not contemplated that
any nominee will decline or be unable to serve as a director, in the event any
director declines or is unable to serve as a director, the proxies will be votes
by the proxy holders as directed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE SIX NOMINEES AS DRIECTORS OF THE COMPANY.
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<PAGE>
INFORMATION REGARDING THE NOMINEES FOR DIRECTOR
The following table lists the nominees for the Board of Directors,
their ages their proposed class, if Proposal No. 2 is adopted, and their initial
term of office. Biographical information regarding each nominee is provided
below.
<TABLE>
<CAPTION>
CLASS OF COMMITTEE
NAME AGE POSITION DIRECTOR MEMBERSHIP
---- --- -------- -------- ----------
<S> <C> <C> <C> <C>
Jon H. Marple 60 Chairman of the Board III Compensation
Richard R. Nelson 52 Chief Financial Officer and I Executive
Director
Richard W. Torney 60 Director III Audit and
Compensation
Richard F. Charles 59 Director I Audit and
Compensation
H. Dean Cubley 58 Director II Audit
Mary E. Blake 46 Director II
</TABLE>
JON H. MARPLE has served as Chairman of the Board since January 1997.
From January 1997 to May 5, 2000, Mr. Marple served as the Chief Executive
Officer, and from January 1999 to October 1999, Mr. Marple also served as the
Company's President. From 1991 to 1997, Mr. Marple was the Chief Executive
Officer of Micro-Lite Television, Inc. (formerly Marrco Communications, Inc.),
which acquired and resold spectrum licenses allocated by the Federal
Communications Commission. Mr. Marple holds a B.A. degree from Brigham Young
University and a J.D. degree from the University of Washington College of Law.
RICHARD R. NELSON has served as the Chief Financial Officer of the
Company since February 2000 and a Director since May 2000. From 1997 to 1998,
Mr. Nelson served as the Operations Controller at Pacific Bell, where he was
responsible for the budgets and financial planning and the Pacific Bell/SBC
finance organization merger transition. From 1995 to 1997, Mr. Nelson served as
the Executive Director of Finance in Network Services at Pacific Bell where he
was responsible for the budgets, results and internal controls for several
departments including Telephone Operations, Engineering, the Real Estate
Department and the Procurement Department. From 1991 to 1995, Mr. Nelson served
as the Chief Financial Officer with the California Markets Group at Pacific Bell
where he was responsible for the management of public offices in 23 California
cities. Mr. Nelson received his B.S. degree in Mathematics from the University
of California at Davis and attended the Program for Management Development at
Harvard Business School.
RICHARD W. TORNEY has served as a Director of the Company since
September 1997. From 1991 to the present, Mr. Torney has been the President and
CEO of Imaging System, Inc., an international sales and marketing organization.
During the concurrent period from 1994 to 1996, Mr. Torney served as the Vice
President of Sales and Marketing and Chief Financial Officer at International
Separation Technology, Inc., a manufacturer of oil and water separation
equipment, where he presently serves as a Director. From 1988 to 1991, Mr.
Torney served as the CEO of VistaGraphics, a producer of highly stylized, large
format graphic images with a computerized air brush process. Mr. Torney holds a
B.A. degree in Accounting from Brigham Young University.
-4-
<PAGE>
RICHARD F. CHARLES has been a Director of the Company since December
1999. From 1985 to 1992, while serving as Dean and Vice President of Foothill
Community College in San Jose, California, Dr. Charles managed a budget in
excess of $15.0 million and oversaw 700 full time and part time staff members.
Dr. Charles also has served as a consultant for private and public corporations
in the area of management and leadership. From 1996 to 1999, Dr. Charles taught
at Hood River Valley High School. From 1994 to 1996, Dr. Charles taught at
Republic High School. Dr. Charles obtained his B.A. degree in Spanish and
History from Brigham Young University, his M.A. degree in Spanish from the
University of Washington and his E.D.D. degree in Organization and Leadership at
the University of San Francisco. Dr. Charles also has completed post doctoral
research at the University of Madrid and the University of Salamanca.
H. DEAN CUBLEY has been a Director of the Company since March 2000. In
addition, Dr. Cubley currently is, and has been since March 1996, the Chairman
of the Board and Chief Executive Officer of Eagle Wireless International (AMEX:
EAG). Dr. Cubley has served in various electrical engineering capacities with
NASA from 1965 until 1984. Since that time, Dr. Cubley has been actively
involved in the establishment and development of several private companies. Dr.
Cubley is one of the world's leading authorities in mobile radio, radio paging
and personal communications systems. Dr. Cubley holds a B.S. degree in
Electrical Engineering from the University of Texas, a M.S. degree from the
University of Texas and a Ph.D. in Electrical Engineering from the University of
Houston. He has authored a myriad of technical articles and reports. He also
holds several patents and is the inventor of other patents for which patent
applications are pending.
MARY E. BLAKE served as the Company's President from October 1999 to
May 5, 2000 and as Vice President from January 1997 to October 1999. Ms. Blake
has served as a Director of the Company or its predecessor since January 1997.
From 1994 to 1997, Ms. Blake served as the Vice President and Secretary of
Micro-Lite Television, Inc. (formerly Marrco Communications, Inc.). Ms. Blake
attended Texas A&M University in College Station, Texas and majored in Economics
with minors in Marketing and Management.
DIRECTORS' TERMS
Members of the Board of Directors currently hold office and serve until
our next annual meeting of stockholders, or until their respective successors
have been elected. The Board of Directors currently is comprised of six
directors and one vacancy. Subject to the approval of Proposal No. 2, the Board
of Directors will be divided into three classes designated as Class I, Class II
and Class III, with each class to be as nearly equal in number of directors as
possible. Messrs. Charles and Nelson will be Class I directors and Ms. Blake and
Mr. Cubley will be Class II directors. Mr. Marple and Mr. Torney will be Class
III directors. Class I, Class II and Class III directors will stand for
reelection at the annual meetings of stockholders held in 2001, 2002 and 2003,
respectively. Directors may be removed, with or without cause, by the
affirmative vote of the holders of a majority of the shares entitled to vote at
an election of directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has created four committees: an interim
Executive Committee, the Audit Committee, the Compensation Committee and the
Nominations Committee.
EXECUTIVE COMMITTEE. On May 5, 2000, in connection with Mr. Jon
Marple's resignation as Chief Executive Officer and Ms. Mary Blake's resignation
as President, the Board of Directors created a three-member Executive Committee
to perform the functions of CEO pending appointment of a new CEO by the Board of
Directors. The three members of the Executive Committee are Mr. Richard Nelson,
Chief Financial Officer, who will serve as the Committee's chairman, Mr. Jeffrey
Matsen, Vice President and General Counsel, and Mr. Jerral Pulley, Vice
President of Marketing. All actions by the Committee will be adopted and
approved by a majority of its members. The Company is currently identifying and
interviewing CEO candidates. Upon appointment of a new CEO, the Executive
Committee will be dissolved.
AUDIT COMMITTEE. The Audit Committee of the Board of Directors was
established in March 2000 and reviews, acts on and reports to our Board of
Directors with respect to various auditing and accounting matters, including the
recommendation of our independent auditors, the scope of the annual audits, fees
to be paid to the independent auditors, the performance of our independent
auditors and our accounting practices. The members of the Audit Committee are
Messrs. Cubley, Charles and Torney. The Audit Committee Charter is attached as
Appendix A.
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<PAGE>
COMPENSATION COMMITTEE. The Compensation Committee of our Board of
Directors was established December 1999 and determines the salaries, benefits
and stock option grants for our employees, consultants and directors. The
members of the Compensation Committee are Messrs. Torney and Charles. The
members of the Compensation Committee oversee the administration of our employee
stock option plans.
NOMINATIONS COMMITTEE. The Nominating Committee of the Board of
Directors, which presently consists of Messrs. Marple and Torney and Ms. Blake
met one time during the last fiscal year. The Nominating Committee recommends to
the Board of Directors persons for nomination to the Board. The Nominating
Committee will consider recommendations from stockholders which should be
addressed to the attention of the Secretary, IJNT.net, Inc., 2030 So. Main,
Suite 550, Irvine, California 92614.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
The compensation of the Company's executive officers is determined by
the Compensation Committee of the Board of Directors (the "Compensation
Committee") on an annual basis. The Chief Executive Officer's recommendations of
compensation to be paid to other executive officers of the Company are
considered by the Compensation Committee in its decision-making process. The
Compensation Committee is currently composed of two non-employee directors.
The Stock Option Committee of the Board of Directors administers the
Company's 1994 Plan and determines grants to executive officers. The Stock
Option Committee is composed of two non-employee directors, as defined by Rule
16b-3 under the Exchange Act.
The Compensation Committee's policy on executive compensation is to
attract and retain highly qualified personnel while tying compensation to
performance. Consequently, the Compensation Committee seeks to establish
compensation that will reward individuals for Company performance as well as
individual performance and motivate and reward executives for achievement of
strategic business objectives.
The Committee believes that the compensation of the Executive Officers
including that of the Chief Executive Officer (collectively the "Executive
Officers") should be influenced by the Company's performance. However, with a
young start up company which has not realized all of its revenue and profit
potential, performance is measured by more intangible factors relating to the
growth and development of the Company. The Committee establishes the salaries
and bonuses of all of the Executive Officers by considering:
(1) The Company's financial performance for the past year;
(2) The Company's growth and development for the past year;
(3) The achievement of certain objectives related to the
particular Executive Officers' area of responsibility; and
(4) The salaries and bonuses of Executive Officers in similar
positions of comparably sized companies.
The Committee believes that the Company's Executive Officers' salaries
and bonuses in the fiscal year ending March 31, 2000 will be comparable in the
industry for similarly sized businesses.
In addition to salary and bonus, the Committee from time to time
recommends grants of options to Executive Officers and other employees. The
Committee thus views option grants as an important component of its long term
performance based compensation philosophy. Since the value of an option bears a
direct relationship to the Company's stock price, the Committee believes that
options motivate Executive Officers and other employees to manage the Company
and perform in a manner which will also benefit shareholders. As such, options
are granted at a discount for the current market price or, as an incentive to
become an employee of the Company, at a more substantial discount from the
market price at the time the employee began his/her employment. One of the
principal factors considered in granting options to an Executive Officer is the
Executive Officer's ability to influence the Company's long term growth and
profitability.
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<PAGE>
AUDIT COMMITTEE REPORT
THE FOLLOWING INFORMATION SHALL NOT BE DEEMED TO BE "SOLICITING
INFORMATION" OR TO BE "FILED" WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH
INFORMATION SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY
SUBSEQUENT FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE
ACT OF 1934.
The Audit Committee receives draft audited financial statements
prepared by the independent auditors and discusses such draft financials with
management. The Audit Committee includes in its review and discussion the scope
of the audit performed by the independent auditors, the adequacy of the internal
audit procedures and controls, and the independent auditors' opinion as to the
adequacy of the financial disclosures contained therein. The Audit Committee has
received from the independent auditors the written disclosures and letter
required by the Independent Standards Board Standard No. 1 and has discussed the
independent auditors' independence. Based on its review of the financial
statements and the discussion with the independent auditors, the Audit Committee
recommends to the Board of Directors that the financial statements be included
in the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2000 to be filed with the Securities and Exchange Commission.
Richard F. Charles
Richard W. Torney
H. Dean Cubley
BOARD OF DIRECTORS MEETINGS
The total number of regular and special meetings of the Board of
Directors held in the last fiscal year was one. All Directors but Mr. Torney
attended the Board meeting, and the meetings of the committees of the Board on
which each Director served were unanimously attended. The number of Resolutions
passed by Unanimous Written Consent of the Directors totaled thirty-two.
DIRECTORS COMPENSATION
Directors who are not employees of the Company receive compensation for
serving on the Company Board. Richard W. Torney and Richard F. Charles receive
$5,000 per year for serving on the Board. H. Dean Cubley receives a fee of
$2,500 per meeting. An additional $1,000 per meeting is paid to any non-employee
director who serves on the Compensation Committee or the Audit Committee. No
fees are paid for meetings of the Nominating Committee or Executive Committee.
The Company also reimburses non-employee directors for travel and related
expenses incurred in attending meetings of the Board and its Committees. Richard
F. Charles and H. Dean Cubley each received 2,500 shares of the Company's common
stock as partial consideration for accepting the appointment of director. It is
the Company's intention to grant to each non-employee director options to
purchase 10,000 shares of common stock at the closing bid price on July 25, 2000
and 2,000 shares of common stock annually thereafter on the date of each Annual
Meeting of the Stockholders provided that the Director has been a member of the
Board for at least six (6) months.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between the Company's Board of
Directors or Compensation Committee and the Board of Directors or Compensation
Committee of any other Company. Nor has any such interlocking relationship
existed in the past.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules of the Securities and Exchange Commission (the
"Commission") thereunder require the Company's executive officers, directors and
greater than 10% stockholders to file reports of ownership and changes in
ownership of the Common Stock with the Commission. Based upon a review of such
reports, the Company has determined that the following persons have filed late
reports:
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<PAGE>
Mary E. Blake has been late filing Form 4 on seven different occasions
and Form 5 on one occasion. The number of months of late filing for Form 4 are
12, 9, 8, 7, 6, 5 and 4, respectively and the number of transactions for Form 4
are 7, 2, 12, 3, 3, 4 and 1, respectively. With respect to the late filing of
Form 5 for Ms. Blake, the number of months late filing is one and the number of
transactions is one. Jon R. Marple has been late filing Form 5 by one month for
one transaction.
Jeffrey R. Matsen has been late filing Form 3 for 17 months with no
transactions involved. Mr. Matsen has been late filing Form 4 on five occasions
for 9, 8, 7, 6 and 2 months, respectively, and for 1, 1, 3, 3, and 1
transactions, respectively. Mr. Matsen has been late filing Form 5 for one month
involving one transaction.
Robert Santore has been late filing Form 3 for 26 months with respect
to one transaction. Mr. Santore was late filing Form 4 on eight different
occasions for 20, 18, 14, 13, 12, 10, 5 and 4 months, respectively, involving 3,
3, 1, 2, 2, 7, 1 and 3 transactions, respectively. He has been late filing Form
5 for one month involving one transaction.
Richard F. Charles has been late filing Form 3 for 6 months for no
transactions, Form 4 for one month for one transaction, and Form 5 for one
transaction. Richard Torney has been late filing Form 3 for 30 months involving
no transactions. He has been late filing Form 4 on four different occasions for
15, 14, 11 and 5 months, respectively and 1, 1, 1 and 2 transactions,
respectively. He has been late filing Form 5 on one occasion for one month
involving one transaction. Jerral R. Pulley has been late filing Form 3 for one
month involving no transactions. H. Dean Cubley has been late filing Form 3 for
13 months for no transactions and Form 5 for one month for one transaction.
Richard R. Nelson has been late filing Form 3 for 3 months for no transactions
and Form 5 for one month for one transaction.
The following gains by the following Officers and Directors for Short
Sales under Rule 16b have been paid back to the Company by the Officers and
Directors involved:
Mary E. Blake $8,710.37
Jeffrey R. Matsen $5,840.50
Robert Santore $14,471.86
THE COMPANY HAS DETERMINED THAT ITS OFFICERS AND DIRECTORS HAVE
SUBSTANTIALLY FAILED TO COMPLY WITH THE REPORTING REQUIREMENTS OF FORMS 3, 4 AND
5 IN THE PAST. AS A RESULT, THE COMPANY HAS IMPLEMENTED WITH ITS OUTSIDE LEGAL
COUNSEL A PROGRAM TO ASSIST ITS OFFICERS AND DIRECTORS IN COMPLETING AND FILING
THE MONTHLY AND ANNUAL REPORTS ON FORMS 4 AND 5.
CERTAIN LEGAL PROCEEDINGS
On December 5, 1994, Jon H. Marple and Mary E. Blake, officers and
directors of the Company, voluntarily consented to the entry of a Judgment and
Order of Permanent Injunction and Ancillary Relief on by the Superior Court of
the State of California (the "California Consent"), in connection with legal
proceedings initiated by the California Department of Corporations. The
California Consent relates to the offer and sale of securities by Micro-Lite
Television, Inc., a Nevada corporation and formerly known as Marrco
Communications, Inc. ("MLTV"), and several related partnerships and
corporations, all of which were owned and controlled by Mr. Marple and Ms.
Blake.
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<PAGE>
The California Consent resulted from an investigation by the California
Department of Corporations commenced in June 1994. On December 4, 1994, the
California Department of Corporations filed a complaint against MLTV, Mr. Marple
and Ms. Blake (collectively the "defendants") alleging violations of state
securities laws and simultaneously entered into the California Consent. Pursuant
to the California Consent, the allegations against each of the defendants were
dismissed and settled. Neither Mr. Marple nor Ms. Blake, nor any affiliated
entity, admitted or denied any of the allegations or assertions in the Consent
Decree. The California Department of Corporations did not impose any fines,
penalties or sanctions against any of the defendants.
The California Consent provided that the Parties would not offer or
sell securities in violation of the registration requirements of the California
Corporations Code and would not offer or sell any security by means of any
untrue statement or omission of a material fact. The Consent Decree also
required that the defendants either sell the assets of one affiliated entity
with the consent of the limited partners or offer to repurchase the limited
partnership interests. Mr. Marple and Ms. Blake believe that they have complied
in all material respects with the California Consent.
Mr. Marple also voluntarily entered into similar consent decrees in the
State of Wisconsin on August 10, 1993 and the State of Maine on March 15, 1994
in connection with the same or related matters involving MLTV and several
related entities.
FAMILY RELATIONSHIPS
Mr. Santore, a director until May 2000 and an executive officer of Man
Rabbit House Multimedia, Inc., a subsidiary of the Company, is the nephew of
Mary E. Blake, a Director. Mr. Marple and Ms. Blake, both Directors of the
Company, are spouses. No other family relationship exists among the directors
and executive officers. See "Related Party Transactions."
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<PAGE>
EXECUTIVE OFFICERS AND KEY EMPLOYEES
<TABLE>
<CAPTION>
COMMITTEE
NAME AGE POSITION MEMBERSHIP
---- --- -------- ----------
<S> <C> <C> <C>
Jeffrey R. Matsen 60 Vice President and Executive
General Counsel
Jerral R. Pulley 66 Vice President of Marketing Executive
Joseph M. Bradley 29 Vice President of Operations
Michael E. Phillips 44 Vice President of Network Operations
Louis M. DiGregorio 43 Vice President of Network Architecture
Mark C. Icenhower 43 Vice President of Sales
</TABLE>
JEFFREY R. MATSEN has served as the Company's Vice President and
General Counsel since October 1, 1999. Mr. Matsen also served as a Director from
December 1998 until May 5, 2000. From 1971 to 1999, Mr. Matsen practiced
corporate and business law with various law firms, most recently with the Law
Offices of Jeffrey R. Matsen & Associates. Mr. Matsen holds a B.A. degree (MAGNA
CUM LAUDE) from Brigham Young University and a J.D. degree (Order of the Coif)
from UCLA School of Law.
JERRAL R. PULLEY has served as a director and Vice President of
Marketing at UBN since May 1999. Mr. Pulley brings to UBN his experience in
marketing at companies such as Procter & Gamble, PepsiCo, Hallmark and Squibb.
During the past five years, Mr. Pulley served in the following capacities. From
1997 to 1999, Mr. Pulley served as a partner with Client Synergy Group. From
1995 to 1997, Mr. Pulley served as a Vice President and General Manager with SC
Publishing. He also serves as a director of Sundog Technologies, Inc. and First
Scientific, Inc. Mr. Pulley received a B.S. degree from the University of Utah
and earned his M.B.A. from the Anderson School of Business at the University of
California at Los Angeles.
JOSEPH M. BRADLEY has served as Vice President of Operations of UBN
since December 1999. From 1998 to 1999, Mr. Bradley served as the General
Manager of the Data Communications Group at Pacific Bell where he was
responsible for all operations concerning high-end products within the State of
California encompassing, but not limited to, Pacific Bell DSL and ISDN. From
1997 to 1998, Mr. Bradley served as the Chief Financial Officer in Network
Services at Pacific Bell where he was responsible for all financial, strategic
and business planning functions associated with managing a budget of $1.4
billion for expenses and $900.0 million for capital expenditures in the Network
Services organization. From 1995 to 1997, Mr. Bradley served as the Director of
Finance in Network Operations at Pacific Bell where he was responsible for all
financial functions associated with managing a budget of $400.0 million in the
Network Operations group. Mr. Bradley graduated from the University of
California at Berkeley with a degree in economics. He also attended the
University of Pennsylvania Advanced Management Program.
MICHAEL E. PHILLIPS has served as the Vice President of Network
Operations of UBN since August 1999. Mr. Phillips specializes in interconnection
engineering for wireless and wireline networks. He has experience in deploying
worldwide systems and managing and coordinating all aspects of
telecommunications network development, including systems design and
engineering. From 1997 to 1999, Mr. Phillips served as Chief Technical
Consultant at Millicom International. While at Millicom International, Mr.
Phillips served as a Consultant for the East African project in Tanzania, where
he was responsible for all RF design, Microwave Backbone Design, Site
Acquisition, Network Construction, Equipment Installation, Network Operation and
all other engineering applications relating to the project. From 1996 to 1997,
Mr. Phillips served as the Managing Director of Comstar Cellular, which operates
the first GSM cellular network in West Africa and in the Ivory Coast. From 1994
to 1996, Mr. Phillips served as the Director of Project Planning at LLC, where
he was responsible for PCS business development and network design for all
phases of interconnect deployment. Mr. Phillips received a [B.S.] degree in
Telecommunications Engineering at the University of California at Los Angeles
and his Telecommunications Science at the United States Air Force.
-10-
<PAGE>
LOUIS M. DIGREGORIO has served as the Vice President of Network
Architecture at UBN since August 1999. From 1997 to 1999, Mr. DiGregorio served
as the Network Engineer at Teligent, a CLEC providing local dial-tone over a
microwave radio/ATM network utilizing cutting-edge telecommunications technology
including wireless access nodes, Northern Telecom's Magellan Passport ATM switch
and DMS-250 to transport and process voice and data over their network. During
his tenure at Teligent, Mr. DiGregorio served as the project manager of
telecommunications projects ranging from network engineering to design of voice
and data networks. From 1996 to 1997, Mr. DiGregorio served as the PCS
Interconnect Engineer at Sprint, where, among other things, he provided project
management for implementation of Transmission Networks and Network and Emergency
Disaster Planning. From 1995 to 1996, Mr. DiGregorio served as a Network
Engineer at Carolina Power & Light, where he provided project management of
telecommunications projects ranging from network engineering of fiber and
microwave networks to the design of the Battery Power Plant. Mr. DiGregorio
received an A.A. degree from the Radio Electronic Technical Schools.
MARK C. ICENHOWER has served as the Vice President of Sales at UBN
since November 1999. From February 1999 to November 1999, Mr. Icenhower served
as Senior Carrier Account Manager at GTE Telecom where he was responsible for
sales to ISP companies for network design and network layout at the DS3 Level
and above. From November 1997 to 1999, Mr. Icenhower served as an Agent Manager
at WinStar Communications where he established and trained new agents to sell
WinStar's wireless platform in the CLEC arena. From June 1997 to November 1997,
Mr. Icenhower worked at Frontier Communications, where he was responsible for
expanding Frontier's premier accounts. From 1995 to May 1997, Mr. Icenhower
served as the Vice President of Sales at the Institute of Telecommunications
where he was responsible for implementing policies for sales agents and
negotiating contracts with carriers. Mr. Icenhower received a B.S. degree in
International Business from Texas Tech University.
EMPLOYMENT, SEVERANCE AND OTHER AGREEMENTS
All of the Executive Officers are appointed annually and serve at the
discretion of the Board of Directors. Except as set forth below, the Company
does not have employment or severance agreements that provide for a fixed term
with any of the Executive Officers.
The Company formally engaged the services of Mr. Matsen as our
director, Executive Vice President and General Counsel under the terms of an
engagement letter executed on August 18, 1999. The engagement letter provides
for a three-year term commencing on October 1, 1999 and terminating on September
30, 2002. As compensation for services rendered to the Company, the Company
agreed to pay Mr. Matsen an annual salary of $150,000. As further compensation
and as consideration for his engagement, the Company issued to Mr. Matsen 50,000
shares of our common stock as a signing bonus, and the Company granted to Mr.
Matsen an option to purchase 200,000 shares common stock. The issuance of the
50,000 shares to Mr. Matsen was registered, and the shares were valued at
$142,150, based on the market price of our common stock on the date that the
shares were issued. In order to wind down his outside law practice, Mr. Matsen
is entitled to allocate up to 25.0% of his regular working hours to matters
involving his private law practice for Jeffrey R. Matsen & Associates of Newport
Beach, California. Mr. Matsen is responsible for 25.0% of the annual salaries of
two of his assistants, including staff attorney Julie Wahlstedt and a secretary,
both of whom the Company hired to support Mr. Matsen in our legal department as
part of this arrangement.
Additionally, our principal operating subsidiary, Urjet Backbone
Network, Inc., a Delaware corporation ("Urjet Backbone Network"), has in place
employment agreements with the following key employees. The Company is a party
to an employment agreement with Louis DiGregorio, the Vice President of Network
Architecture of Urjet Backbone Network. Mr. DiGregorio's employment agreement
provides for a fixed one-year term commencing on August 13, 1999, which will be
extended automatically for additional one-year terms unless terminated by signed
written notice of either party at least 30 days before the expiration of the
term. Under the terms of the employment agreement, the Company pays to Mr.
DiGregorio a base annual salary of $99,500, which the Company expects will
increase by 15.0% at the commencement of the initial public offering our common
stock to the public. Mr. DiGregorio is entitled to a performance bonus based on
a percentage reduction in the time for completion our network installation.
Under the terms of the employment agreement, the Company issued to Mr.
DiGregorio 2,370 shares of our common stock in September 1999. The Company also
granted to Mr. DiGregorio an option to purchase 40,000 shares of our common
stock. Urjet Backbone Network at its sole discretion is entitled to terminate
Mr. DiGregorio's employment for cause, including (without limitation) its
determination that Mr. DiGregorio's performance is unsatisfactory in relation to
the deployment of the network infrastructure. Upon termination of his
employment, Mr. DiGregorio will be entitled to base, stock option and other
compensation provided under the agreement that Mr. DiGregorio earns through the
date of termination.
-11-
<PAGE>
On September 26, 1999, Urjet Backbone Network hired Michael Phillips as
Vice President of Network Operations for a one-year initial term, under the
terms of an employment agreement similar to our agreement with Mr. DiGregorio.
The employment agreement with Mr. Phillips similarly provides that the initial
term shall be extended for additional one-year terms unless terminated by signed
written notice of either party at least 30 days before the expiration of the
term. Mr. Phillips is entitled to a base annual salary of $99,500, the Company
expects will increase by 20.0% at the commencement of the initial public
offering of our common stock. Mr. Phillips is entitled to a performance bonus
similar to the above-described bonus for Mr. DiGregorio. Under the employment
agreement, the Company issued to Mr. Phillips 2,807 shares of our common stock
in September of 1999. The Company also granted to Mr. Phillips an option to
purchase 40,000 shares of our common stock. The employment agreement with Mr.
Phillips is terminable for cause under conditions similar to those described
above for Mr. DiGregorio. Upon termination of his employment, Mr. Johnson will
be entitled to base, stock option and other compensation provided under the
agreement that Mr. Phillips earns through the date of termination.
The employment agreement between Urjet Backbone Network and Joseph
Bradley, the Vice President of Operations at Urjet Backbone Network, provides
that Mr. Bradley will receive a base monthly salary of $11,583 (or $138,996
annually) and additional benefits provided to full-time employees, including
insurance, vacation pay, participation in company-sponsored benefit plans and
other benefits. As additional compensation under the employment agreement, Mr.
Bradley received an option to purchase up to 150,000 shares of our common stock.
The Company agreed to pay Mr. Bradley a one-time fee of up to $21,000 to cover
his moving expenses. The Company also agreed to pay Mr. Bradley an additional
amount of up to $24,000 to cover the cost of real estate commissions associated
with the sale of his former home under certain conditions. Mr. Bradley's
employment agreement is terminable by either party at any time with or without
any cause or advance notice.
Urjet Backbone Network also is a party to a letter employment agreement
with Mark Icenhower, its Vice President of Premier Accounts. Under the terms of
the employment agreement, the Company agreed to pay Mr. Icenhower a base salary
of $105,000 and a quarterly performance bonus of up to $20,000 per annum. In
addition to the base salary and quarterly bonus, Mr. Icenhower will be entitled
to a commission equal to approximately 1.0% of the revenue generated through
product sales. Mr. Icenhower also received an option to purchase up to 40,000
shares of our common stock. Additionally, Mr. Icenhower is entitled to other
benefits available to other full-time employees. His employment is strictly at
will and may be terminated at any time with or without cause.
All options granted to the above-listed individuals are vested with
respect to 40.0% of the underlying shares. The currently vested portion of each
option is exercisable at an exercise price between $3.00 to $3.536 per share.
The options vest with respect to the remaining 60.0% of the underlying shares in
equal increments over the three-year period following the date on which they
were granted. Such unvested portions are exercisable at an exercise price of
$10.812 per share.
Urjet Backbone Networks has in place employment agreement with a number
of its other employees. The employment agreements contain varying terms but
generally provide for a fixed-term of employment and each such agreement further
provides that either party may terminate the agreement without notice and
without cause.
-12-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, earned by
or paid to (i) the individual who was serving as UBN's Chief Executive Officer
at the end of our last completed fiscal year ended March 31, 2000, (ii) four
other highly compensated executive officers whose annual salary and bonus
exceeded $100,000 for our last completed fiscal year and (iii) our next two most
highest paid employees whose annual salary and bonuses exceeded $100,000 for our
last completed fiscal year (collectively, the "Named Executive Officers"), for
services rendered to us in all capacities during our last completed fiscal year.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation (1) Compensation
---------------------------------------- ---------------
Fiscal Other Annual All Other
Name and Principal Position Year Salary($)(2) Bonus($) Compensation($) Options(#) Compensation($)
----------------------------------- ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jon H. Marple................. 2000 175,000 -0- -0- 350,000 -0-
Chief Executive Officer, 1999 180,126 -0- -0- -0- -0-
Chairman 1998 142,292 -0- -0- -0- -0-
Mary E. Blake................. 2000 175,000 -0- -0- 350,000 21,902 (3)
Vice Chairman, President 1999 159,027 -0- -0- -0- -0-
and Secretary 1998 108,775 -0- -0- -0- -0-
Jeffrey R. Matsen (4)......... 2000 150,000 -0- 142,150 200,000 -0-
Executive Vice President and 1999 -0- -0- -0- -0- -0-
General Counsel 1998 -0- -0- -0- -0- -0-
Richard R. Nelson (5)......... 2000 120,000 -0- 108,120 100,000 -0-
Chief Financial Officer and 1999 -0- -0- -0- -0- -0-
Director 1998 -0- -0- -0- -0- -0-
Jerral R. Pulley (6).......... 2000 -0- -0- 216,240 125,000 -0-
Vice President of Marketing 1999 -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0-
Joseph Bradley (7)............ 2000 138,996 -0- 108,120 150,000 -0-
Vice President of Operations 1999 -0- -0- -0- -0- -0-
of Urjet Backbone Networks, 1998 -0- -0- -0- -0- -0-
Inc.
----------------
</TABLE>
(1) Excludes compensation in the form of perquisites and other personal
benefits that constitutes the base of $50,000 or 10.0% of the total
annual salary and bonus of each of the Named Executive Officers.
(2) Represents annualized rates for the year ended March 31, 2000, and
amounts actually paid for prior years.
(3) Amount paid to Ms. Blake as consideration for company use of certain
premises owned by Ms. Blake.
(4) Mr. Jeffrey Matsen became an executive officer on October 1, 1999. Mr.
Jeffrey Matsen received a total of $75,000 in salary compensation for
the fiscal year ended March 31, 2000. He was a director of the Company
from December 18, 1998 to May 19, 2000. In addition, see "Related Party
Transactions." He received 50,000 shares of S-8 stock valued at
$142,150 as a signing bonus in October 1999.
(5) Mr. Nelson became an Executive Officer on February 16, 2000. Mr. Nelson
received a total of $15,000 in salary compensation for the fiscal year
ended March 31, 2000. He received 10,000 shares of S-8 stock valued at
$108,120 as a signing bonus in April 2000.
(6) Mr. Pulley became an Executive Officer on May 5, 2000. He received
20,000 shares of S-8 stock valued at $216,240 in April 2000.
(7) Mr. Bradley became an Executive Officer on December 1, 1999. Mr.
Bradley received a total of $46,332 in salary compensation for the
fiscal year ended March 31, 2000. He also received 10,000 shares of S-8
stock valued at $108,120 as a signing bonus in April 2000.
-13-
<PAGE>
OPTION GRANTS IN LAST YEAR
The following table sets forth certain information regarding options
granted during the fiscal year ended March 31, 2000 to the Named Executive
Officers and directors.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
Number of Percent of at Assumed Annual Rates of
Securities Total Options Exercise Stock Price Appreciation for
Underlying Granted to or Base Option Term($)
Options Employees in Price Expiration -------------------------
Name Granted(#) Fiscal Year ($/Share) Date 5% 10%
------------------------------ ------------- ---------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jon H. Marple................ 140,000 5.1% 3.00 3/1/2010 686,000 1,092,000
Chairman of the Board 210,000 7.6% 10.812 3,696,000 5,880,000
Mary E. Blake................ 140,000 5.1% 3.00 3/1/2010 686,000 1,092,000
Vice Chairman 210,000 7.6% 10.812 3,696,000 5,880,000
Jeffrey R. Matsen............ 80,000 2.9% 3.00 3/1/2010 392,000 624,000
Executive Vice President, 120,000 4.4% 10.812 2,112,000 3,360,000
Secretary and General
Counsel
Richard R. Nelson............ 40,000 1.5% 3.00 3/1/2010 196,000 312,000
Chief Financial Officer and 60,000 2.2% 10.812 1,056,000 1,680,000
Jerral R. Pulley............. 50,000 1.8% 3.00 3/1/2010 245,000 390,000
Vice President of Marketing 75,000 2.7% 10.812 1,320,000 2,100,000
Joseph M. Bradley............ 60,000 2.2% 3.00 3/1/2010 294,000 468,000
Vice President of 90,000 3.3% 10.812 1,584,000 2,520,000
Operations of Urjet
Backbone Networks, Inc.
Other employees.............. 1,479,500 53.6% ___ ___ ___
</TABLE>
-14-
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table shows the number of shares of our common stock
underlying outstanding stock options held by each of the Named Executive
Officers at May 31, 2000. None of the Company's Named Executive Officers
exercised any stock option in the fiscal year ended March 31, 2000.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<CAPTION>
Value of Unexercised
Total Number of In-the-Money Options
Unexercised Options held at Fiscal Year
Held at Fiscal Year End End(1)
----------------------------------------------------
Acquired on Value Unexercis- Unexercis-
Name Exercise Realized Exercisable able Exercisable Able
------------------------------ ------------- -------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jon H. Marple............... -- -- 140,000 210,000 $ 385,000 $ ______
Chairman
Mary E. Blake............... -- -- 140,000 210,000 $ 385,000 $ ______
Vice Chairman
Jeffrey R. Matsen........... -- -- 80,000 120,000 $ 220,000 $ ______
Executive Vice President,
Secretary and General
Counsel
Richard R. Nelson........... -- -- 40,000 60,000 $ 110,000 $ ______
Chief Financial Officer
Jerral R. Pulley............ -- -- 50,000 75,000 $ 137,500 $ ______
Vice President of Marketing
Joseph Bradley.............. -- -- 60,000 90,000 $ 165,000 $ ______
Vice President of
Operations of Urjet
Backbone Network, Inc.
</TABLE>
----------------
(1) Based on a per share price of $5.75, the closing price of our common
stock on May 15, 2000.
TRANSACTIONS WITH OFFICERS, DIRECTORS AND EMPLOYEES
TRANSACTIONS WITH JEFFREY MATSEN
Mr. Jeffrey R. Matsen is the Executive Vice President, Secretary and
General Counsel of the Company. During the year ended March 31, 1999, Mr. Matsen
and his law firm Jeffrey R. Matsen & Associates of Newport Beach, California,
provided various legal services to the Company and Mr. Matsen was compensated
for such services by the payment from the Company to Mr. Matsen of $57,394.67.
In addition, on August 5, 1999, Mr. Matsen received 5,000 shares of the
Company's common stock in exchange for legal services rendered at a value of
$4.218 per share or $21,090.00 total. See "Management -- Employment, Severance
and Other Agreements."
RELATIONSHIP WITH ROBERT SANTORE
In July 1998, the Company issued to Robert Santore 10,000 shares of the
Company's common stock as consideration for certain Web development services
rendered to the Company. The shares were valued at $98,000 based on the market
price of the common stock on the date of issuance. In August 1998, the Company
issued to Mr. Santore 25,000 additional shares of common stock in exchange for
the entire capital stock of Man Rabbit House Multimedia, Inc. These shares were
valued at $100,000 based on the market price of the Company's common stock on
the date of closing of the above-described acquisition.
-15-
<PAGE>
During the previous two fiscal years, the Company also made certain
payments to Parrot Design as consideration for graphic design and related
services rendered to the Company. Parrot Design is a graphic design firm owned
and managed by Stephanie Santore, who is the wife of Mr. Robert Santore. For the
years ended March 31, 2000 and 1999, the Company paid to Parrot Design a total
of $96,132 and $63,472, respectively. The Company has paid to Parrot Design an
additional $42,932 for services rendered during the current fiscal year through
the date of this Memorandum.
TRANSACTIONS WITH OTHER RELATED PARTIES
During the past three years, the Company was a party to several
transactions (as described below) involving Mr. Jon R. ("J.R.") Marple and
JustWebit.com, Inc., a Nevada corporation, managed by J.R. Marple. J.R. Marple
is the son of Jon H. Marple, the Company's Chairman.
In April and August of 1998, the Company issued to J.R. Marple 12,903
and 25,000 shares of common stock, respectively, as consideration for certain
accounting services rendered by J.R. Marple to the Company. In April 1999, the
Company issued to JustWebit 50,000 shares of common stock as consideration for
certain channel rights and licenses to provide wireless services in designated
locations. The shares issued to JustWebit were valued at $102,000 based on the
per share market price of the common stock on the date of the closing of the
related transactions.
The Company was also a party to a consulting services agreement with
JustWebit, under which the Company agreed to issue to JustWebit 25,000 shares of
common stock as consideration for services relating to the development of
e-commerce sites and the functionality of certain back-office support systems.
The shares were valued at $247,000 based on the per share market price of our
common stock in December 1999, the date of issuance.
EMPLOYEE BENEFIT PLANS
Effective on February 29, 2000, our Board of Directors adopted the 2000
Management Equity Incentive Plan and the 2000 Equity Incentive Plan
(collectively, the "Equity Incentive Plans"), subject to the approval of our
shareholders. The principal terms and provisions of the Equity Incentive Plans
are summarized under Proposal No. 3.
-16-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial
ownership of the capital stock of the Company as of May 15, 2000, by: (i) each
person known to the Company to beneficially own more than five percent (5%) of
the capital stock of the Company; (ii) each of the Company's directors; (iii)
each of the Company's Named Executive Officers; and (iv) all executive officers
and directors as a group.
<TABLE>
<CAPTION>
APPROXIMATE
NAME (1) NO. OF SHARES OWNED PERCENTAGE OWNED
<S> <C> <C>
Mary E. Blake (2)................................. 7,527,632 36.1%
Jon H. Marple (3)................................. 140,000 *
Jeffrey R. Matsen (4) ............................ 122,805 *
Richard W. Torney (5)............................. 37,000 *
Richard F. Charles................................ 2,500 *
H. Dean Cubley.................................... 2,500 *
Richard R. Nelson (6)............................. 50,000 *
Joseph M. Bradley (7)............................. 70,000 *
Jerral R. Pulley (8).............................. 70,000 *
All Executive Officers and Directors as a group... 8,022,437 37.8%
----------------
</TABLE>
* Less than one percent (1%)
(1) This table is based upon information supplied by officers, directors,
and principal stockholders and Schedules 13D and 13G, if any, filed
with the Commission with regard to IJNT Common Stock. Unless otherwise
indicated in the footnotes of this table and subject to community
property and marital property laws where applicable, each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 20,712,239 shares outstanding on May 15, 2000.
The information contained in this table reflects "beneficial ownership"
as defined in Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Shares not outstanding that
are subject to vested options, or options that vest and become
exercisable by the holder thereof within sixty (60) days of March 31,
2000 are deemed outstanding for the purposes of calculating the number
and percentage owned by such shareholder, but are not deemed
outstanding for the purposes of calculating the percentage owned by
each other shareholder listed. Unless otherwise noted, all shares
listed as beneficially owned by a shareholder are actually outstanding.
(2) Includes 140,000 shares issuable upon exercise of options to purchase
Common Stock and that will be exercisable within 60 days of May 15,
2000.
(3) Includes 140,000 shares issuable upon exercise of options to purchase
Common Stock and that will be exercisable within 60 days of May 15,
2000.
(4) Includes 1,000 shares owned by Mr. Matsen's minor son, Brett Richard
Matsen and 80,000 shares issuable upon exercise of options to purchase
Common Stock and that will be exercisable within 60 days of May 15,
2000.
(5) Includes 1,000 shares owned by Mr. Torney's wife, Lorie, and 31,000
shares owned by Image Systems Dividend Benefit Pension Trust of which
Mr. Torney is the principal participant and Trustee.
(6) Includes 40,000 shares issuable upon exercise of options to purchase
Common Stock and that will be exercisable within 60 days of May 15,
2000.
(7) Includes 60,000 shares issuable upon exercise of options to purchase
Common Stock and that will be exercisable within 60 days of May 15,
2000.
(8) Includes 50,000 shares issuable upon exercise of options to purchase
Common Stock and that will be exercisable within 60 days of May 15,
2000.
-17-
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the CRSP Total Return Index for The Nasdaq Stock
Market *U.S. and Foreign) (the "Nasdaq Composite Index") and the CRSP Total
Return Index for Nasdaq Telecommunications Stocks ("the Nasdaq
Telecommunications Index"). The comparisons in the graph are required by the
Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
[performance graph here]
<TABLE>
<CAPTION>
12/31/97 06/30/98 12/31/98 06/30/99 12/31/99
<S> <C> <C> <C> <C> <C>
IJNT.net 100.00 162.50 64.71 75.00 244.12
Nasdaq Composite 100.00 111.67 130.95 160.67 243.04
Nasdaq Telecommunications 100.00 134.61 165.56 220.81 293.46
</TABLE>
Assumes a $100 investment on December 31, 1997 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index and the
securities comprising the Nasdaq Telecommunications Index.
The Nasdaq Telecommunications Index includes all companies listed on
The Nasdaq Stock Market within SIC Code 48.
-18-
<PAGE>
PROPOSAL NUMBER 2
AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS
(ITEM NO. 2 ON THE PROXY CARD)
GENERAL
Our Board of Directors have approved proposals to amend our certificate
of incorporation, also called our charter, to include provisions available to
public companies under Delaware law that deter hostile take-over attempts, as
more particularly described below. Our Board of Directors has also approved
amendments to our bylaws consistent with the proposed amendments to our charter,
which are to become effective simultaneously with the effectiveness of the
proposed amendments to our charter. If the proposed amendments to our charter
and bylaws are approved by our stockholders, the charter and bylaws, as so
amended, will become the governing instruments of our company and will differ in
several respects from our existing charter and bylaws. Some of the changes will
be procedural in nature but others will result in material changes in
stockholders' rights and corporate procedures from those currently provided.
Our Board of Directors recommends that you carefully review the
proposed amendments to determine the nature and desirability of the proposed
changes. Upon your review, our Board of Directors recommends that you approve
and adopt the amended charter of IJNT.net attached as Appendix B to this proxy
statement and the amended bylaws of IJNT.net, Inc. attached as Appendix C to
this proxy statement.
The first significant amendment to our Certificate of Incorporation
involves the change of our name to Universal Broadband Networks, Inc. This name
change is in keeping with the Company's integrated broadband communications
vision and is much more descriptive of what the Company really does. The Board
of Directors believes that the name change will make the Company more easily
identifiable with the products and services it sells and delivers and the
abbreviated version, UBNetworks, will facilitate customer and investor
identification.
In considering the remaining proposals, you should be aware that the
overall effect of many of the proposed provisions is to make it more difficult
for holders of a majority of the outstanding shares of our common stock to
change the composition of our Board of Directors and to remove existing
management in circumstances where a majority of the stockholders may be
dissatisfied with the performance of the incumbent directors or otherwise desire
to make changes. These provisions, if included in our charter and bylaws, could
hinder or possibly prevent the use of a proxy contest as a means of removing or
replacing existing directors or could make it more difficult to make a change in
control of our company which is opposed by our Board of Directors. This
strengthened tenure and authority of the Board of Directors could enable it to
resist change and otherwise thwart the desires of a majority of the
stockholders. Because these provisions may have the effect of continuing the
tenure of the current directors, our Board of Directors has recognized that the
individual directors have a personal interest in these provisions that may
differ from those of our stockholders. However, our Board of Directors believes
that the primary purpose of these provisions is to ensure that it will have
sufficient time to consider fully any proposed takeover attempt in light of the
short-term and long-term benefits and other opportunities available to our
company and, to the extent our Board of Directors determines to proceed with any
takeover, to effectively negotiate terms that would maximize the benefits to our
company and to our stockholders.
A hostile takeover attempt may have a positive or negative effect on a
corporation and its stockholders, depending on the circumstances surrounding a
particular takeover attempt. Takeover attempts that have not been negotiated or
approved by the Board of Directors of a corporation can seriously disrupt the
business and management of a corporation and generally present to the
stockholders the risk of terms which may be less than favorable to all of the
stockholders than would be available in a board-approved transaction. Board
approved transactions may be carefully planned and undertaken at an opportune
time in order to obtain maximum value for the corporation and all of its
stockholders with due consideration to matters such as the recognition or
postponement of gain or loss for tax purposes, the management and business of
the acquiring corporation and the maximum strategic deployment of corporate
assets. In addition, in the case of a proposal which is presented to a Board of
Directors, there is a greater opportunity for the Board of Directors to analyze
the proposal thoroughly, to develop and evaluate alternatives, to negotiate for
improved terms and to present its recommendations to stockholders in the most
effective manner.
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<PAGE>
Our Board of Directors recognizes that hostile takeover attempts do not
always have the unfavorable consequences or effects described above and may
frequently be beneficial to stockholders, providing all stockholders with
considerable value for their shares. Our Board of Directors believes, however,
that the potential disadvantages of unapproved takeover attempts are
sufficiently great such that prudent steps to reduce the likelihood of such
takeover attempts are in the best interests of our company and our stockholders.
You should recognize, therefore, that one of the effects of the
proposed amendments may be to discourage a future attempt to acquire control of
our company which is not presented to and approved by our Board of Directors,
but which a substantial number, and perhaps even a majority, of our stockholders
might believe to be in their best interests or in which stockholders might
receive a substantial premium for their shares over the current market price. As
a result, stockholders who might desire to participate in such a transaction may
not have an opportunity to do so. In addition, by increasing the probability
that any person or group seeking control of our company would be forced to
negotiate directly with our Board of Directors, the proposed takeover defenses
could discourage takeover bids by means of a hostile tender offer, proxy contest
or otherwise without the approval of our Board of Directors. Thus, the principal
disadvantages to our stockholders which result from discouraging such hostile
takeover bids would be to:
o reduce the likelihood that any acquiror would make a hostile
tender offer for the outstanding shares of stock of our
company at a premium over the market price; and
o increase the difficulty of removing our existing Board of
Directors and management even if in a particular case removal
would be beneficial to stockholders generally.
You should note, however, that our Board of Directors has a fiduciary
duty to our stockholders to negotiate in the best interests of our stockholders
and not for its own interests. Further, while the proposed takeover defenses may
discourage hostile takeover attempts, these provisions would not prevent a
hostile acquisition of our company.
Our Board of Directors has considered the potential disadvantages of
the proposed amendments and believes that they are outweighed by the potential
benefits. In particular, our Board of Directors believes that the benefits
associated with enabling our Board of Directors to fully consider and negotiate
proposed takeover attempts make these proposals beneficial to our company and to
our stockholders.
The proposals to include these anti-takeover provisions in our charter
and bylaws do not reflect knowledge on the part of our Board of Directors or
management of any proposed takeover or other attempt to acquire control of our
company. Our Board of Directors may in the future propose or adopt other
measures designed to discourage takeovers apart from those proposed in this
Proxy Statement, if warranted, from time to time in the judgment of our Board of
Directors, although there is no intention to do so at the present time.
The anti-takeover proposals are summarized below. The following summary
does not purport to be an exhaustive discussion. It is qualified in its entirety
by reference to the Delaware General Corporation Law, our charter and bylaws, as
presently in effect, and our charter and bylaws as proposed to be amended.
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SUMMARY OF ANTI-TAKEOVER PROPOSALS
<TABLE>
AMENDMENTS TO CHARTER
ISSUE PRESENT CHARTER PROVISION PROPOSED AMENDED CHARTER
----- ------------------------- ------------------------
PROVISION
---------
<S> <C> <C>
STOCKHOLDER ACTION BY WRITTEN Stockholders may take action Stockholder action may be taken
CONSENT by written consent or at a only at a duly called annual or
meeting special meeting of stockholders
and may not be taken by written
consent.
SUPERMAJORITY REQUIRED FOR Amendments to the charter The approval of the holders of
SOME AMENDMENTS require the approval of least 66 2/3% of the outstanding
holders of at least 50% of the voting stock is required to amend
outstanding voting stock. the provisions in the charter that
(1) prohibit stockholders from
acting other than at an annual or
special meeting or (2) provide
for amendments to the charter.
BOARD DETERMINATION OF No current provision. Adds a provision granting the
RIGHTS AND PREFERENCES OF Board of Directors the power,
PREFERRED STOCK subject to the limitations
prescribed by law, to provide for
the issuance of our authorized
shares of preferred stock in
series and, by filing a certificate
pursuant to the applicable law of
the State of Delaware, to
establish from time to time the
number of shares to be included
in each such series and the
qualifications, limitations or
restrictions thereof
INDEMNIFICATION OF DIRECTORS, Provides that our directors Further provides that, to the
OFFICERS AND OTHER AGENTS will not be personally liable fullest extent permitted by
for monetary damages to us or Section 145 of the Delaware
our stockholders for breach General Corporation Law we will
of any fiduciary duty as a indemnify any and all persons
director, except for who we have the power to
liability (1) for any breach indemnify from and against any
of the director's duty of expenses, liabilities or other
loyalty to us or our matters referred to in or
stockholders; (2) for acts or covered by Section 145.
omissions not in good faith
or which involve intentional
misconduct or a knowing
violation of law; (3) under
Section 174 of the Delaware
General Corporation Law or
(4) for any transaction from
which the director derives an
improper personal benefit.
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<PAGE>
AMENDMENTS TO BYLAWS
ISSUE PRESENT BYLAW PROVISION BYLAW PROVISION AS PROPOSED TO
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BE AMENDED
----------
STOCKHOLDER ACTION BY WRITTEN Stockholders may take action Consistent with the proposed
CONSENT by written consent or at a amendment to our charter,
meeting. stockholder action may be taken
only at a duly called annual or
special meeting of stockholders
and may not be taken by written
consent.
AUTHORITY TO CALL AND ADJOURN Meetings of stockholders Meetings of stockholders may be
MEETINGS OF STOCKHOLDERS may be called by the Board called only by the chairman of
of Directors or by holders of the board or a majority of the
at least 20% of our Board of Directors
outstanding common stock.
Provides that a meeting of the
Provides that a meeting of the stockholders may be adjourned
stockholders may be at any time by the chairman of
adjourned only upon the the meeting and by the holders of
affirmative vote of the shares a majority of the voting power of
represented at such meeting, the shares represented at such
whether or not a quorum is meeting, whether or not a
present. quorum is present.
SUPERMAJORITY FOR Amendments to the bylaws may No amendment to the bylaws
AMENDMENT; REMOVAL OF currently be approved by the may be adopted without the
DIRECTORS holders of a majority of our approval of a majority of the
common stock and amendments authorized directors or the
that so provide may not be approval of the holders of at least
amended by our Board of 75% of the voting power of our
Directors. The Board of outstanding stock. The Board of
Directors may otherwise amend Directors will have the ability to
the bylaws, except that the amend or repeal any bylaw.
board does not have the power
to change the quorum for
meetings of stockholders or of
the Board of Directors, or to
change any provisions of the
bylaws with respect to the
removal of directors or the
filling of vacancies in the
board resulting from removal by
the stockholders.
Directors may be removed Subject to the rights, if any, of
with or without cause by a holders of preferred stock,
majority vote of the directors may be removed, with or
stockholders. without cause by the holders of 75%
of the shares then entitled to vote
at an election of directors, except
that (1) if we institute a
classified board, stockholders may
remove a director only for cause
and (2) if we have instituted
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<PAGE>
AMENDMENTS TO BYLAWS
ISSUE PRESENT BYLAW PROVISION BYLAW PROVISION AS PROPOSED TO
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BE AMENDED
----------
cumulative voting for the election
of directors, if less than the
entire board is removed, no
director may be removed without
cause if the votes cast against
removal of the director would be
sufficient to elect that person.
ADVANCE NOTICE REQUIREMENT No current provision Adds provisions for director
FOR STOCKHOLDERS' PROPOSALS pertaining to nominations to nominations and for the submission
the Board of Directors or of new business, including (1)
submission of business to be only such business or nominations
considered by stockholders at as are properly brought before a
any meeting. meeting of the stockholders may be
considered at such meeting; (2)
timely notice must be given prior
to any such meeting; (3) a
nomination for a director must set
forth the person proposed for
election; (4) the submission of new
business must set forth a brief
description of such business; and
(5) the chairman of the meeting may
determine whether a nomination or
submission of new business was made
in accordance with these procedures.
ELECTION OF DIRECTORS AND The approval of a majority of Except with respect to the rights
STOCKHOLDER APPROVAL OF the shares represented and of the holders of any other series
CORPORATE ACTION entitled to vote constitutes or class of stock to elect
action by the stockholders, directors, a plurality of the votes
unless the vote of a greater cast at a meeting of the
number is required by the stockholders shall elect
Delaware General directors. All other matters
Corporation Law or the submitted are to be decided by the
charter. approval of a majority of the
shares represented and entitled to
vote at a meeting of stockholders,
except as otherwise required by the
Delaware General Corporation Law,
the charter or specific provisions
of the bylaws.
FILLING OF VACANCIES ON BOARD Vacancies on the Board of A vacancy on the Board of Directors
OF DIRECTORS Directors may be filled by the may be filled only by the members
stockholders. of the board then remaining. If,
at the time of filling any vacancy
or any newly created directorship,
the directors then in office shall
constitute less than a majority of
the whole Board of Directors (as
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ISSUE PRESENT BYLAW PROVISION BYLAW PROVISION AS PROPOSED TO
----- ----------------------- ------------------------------
BE AMENDED
----------
constituted immediately prior to
any such increase), the Court of
Chancery may, upon application of
any stockholder or stockholders
holding at least ten percent of the
total number of the shares at the
time outstanding having the right
to vote for such directors,
summarily order an election to be
held to fill any such vacancies or
newly created directorships, or to
replace the directors chosen by the
directors then in office.
CHANGES IN CONDUCT OF BOARD Special meetings of the Board Special meetings of the Board of
AND EXERCISE OF POWER Board of Directors may be Directors may be called by the
called at any time by the chairman of the board and shall be
chairman of the board, the called upon the written request of
president, any vice-president, two directors, unless the board
the secretary or by any consists of one director.
director.
Special meetings are to be Special meetings may be held
held upon at least four days upon three days notice.
notice.
Requires that the Board of Removes this requirement.
Directors meet immediately
following each annual
meeting of the stockholdres.
Requires that if a meeting of Removes this requirement.
the Board of Directors is
adjourned for more than 24
hours, notice of the
adjournment be given prior to
the time of the adjourned
meeting to the directors who
were not present at the time of
the adjournment.
Provides that the Board of Provides that committees appointed
Directors may designate an by the Board of Directors may
executive and other consist of one, rather than two,
committees, each consisting directors and provides that the
of at least two directors to Board of Directors may designate
serve at the pleasure of the one or more directors as alternate
board. Any such committee members of any committee. Limits
may have all of the powers of the power of committees such that
the Board of Directors, they may not adopt amendments to
except as limited by the the certificate of incorporation,
Delaware General adopt any agreement and plan of
Corporation Law. merger or consolidation, recommend
to the stockholders the sale, lease
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<PAGE>
ISSUE PRESENT BYLAW PROVISION BYLAW PROVISION AS PROPOSED TO
----- ----------------------- ------------------------------
BE AMENDED
----------
or exchange of all or substantially
all of our assets, recommend our
dissolution or a revocation of our
dissolution or amend our bylaws.
FIXING OF RECORD DATE Provides that for purposes of Provides that our Board of
determining the stockholders Directors must, not less than 10
entitled to receive payment of nor more than 60 days prior to a
a dividend or other stockholders meeting nor more than
distribution, or entitled to 60 days prior to any other action,
exercise any rights in respect fix a record date so that we may
of any change or conversion determine who is entitled to notice
or exchange of stock, our of or to vote at such meeting of
Board of Directors may fix a stockholders, or who is entitled to
record date, which shall not payment of any dividend or other
be more than 60 days before distribution, or entitled to
any such action. exercise any rights in respect of
any change or conversion or
exchange of stock.
INSPECTION OF CORPORATE Provides that stockholders Deletes the reference to holders
RECORDS and holders of voting trust of voting trust certificates.
certificates may, at any
reasonable time, inspect the
accounting books, the minutes
of the Board of Directors,
committees of the Board of
Directors and similar records
of our subsidiaries for a
purpose reasonably related to
their interests as a
stockholder or holder of voting
trust certificates.
A stockholder or stockholders The secretary is required to
holding at least 5% in the prepare, at least ten days before
aggregate of our outstanding every meeting of stockholders, a
voting shares or who hold at complete list of the stockholders
least 1% of such voting shares entitled to vote at the meeting,
and have filed a Schedule 14A arranged in alphabetical order,
with the United States and showing the address of each
Securities and Exchange stockholder and the number of
Commission relating to the shares registered in the name of
election of directors have the each stockholder. Such list will
right to inspect and copy the be open to the examination of
record of stockholders' names any stockholder, for any purpose
and addresses and shareholdings germane to the meeting, during
during usual business hours ordinary business hours, for a
upon five business days' prior period of at least ten days prior
written demand and to obtain to the meeting.
from our the transfer agent,
upon written demand and upon
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<PAGE>
ISSUE PRESENT BYLAW PROVISION BYLAW PROVISION AS PROPOSED TO
----- ----------------------- ------------------------------
BE AMENDED
----------
the tender of its usual
charges, a list of the
stockholders' names and
addresses, who are entitled to
vote for the election of
directors, and their
shareholdings, and of the most
recent record date for which it
has been compiled or as of a
date specified by the
stockholder subsequent to the
date of demand. The list shall
be made available on or before
the later of five (5) business
days after the demand is
received or the date specified
therein as the date as of which
the list is to be compiled.
Provides that the directors Provides that members of the Board
have the right to inspect and of Directors shall have the right
copy all books, records and at any reasonable time to examine
documents of every kind and our stock ledger, a list of
to inspect the physical stockholders and our other books
properties of IJNT.net. and records for a purpose
reasonably related to that
director's position as a director.
NOTICES PROVISIONS No current provision. Clarifies that we may treat the
holder of record of any share or
shares of our stock as the holder
in fact if such shares.
No current provision. Provides that when any notice is to
be given to a stockholder or
director under the provisions of
the bylaws, personal notice is not
required and such notice may be
given in writing, by mail,
delivered to the address of the
recipient appearing on our records.
</TABLE>
The following is a more complete description of some of the more
material proposed amendments to our charter and our bylaw and the effect that
such amendments will have on your rights as a stockholder of IJNT.net:
AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION
REMOVAL OF ACTION BY WRITTEN CONSENT. Under the applicable provisions
of our current certificate of incorporation and bylaws, stockholders may take
any action which may be taken at a meeting of stockholders without a meeting,
without prior notice and without a vote, if:
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<PAGE>
o the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize
or take the action at a meeting at which all shares entitled
to vote thereon were present and voted, sign consents in
writing, setting forth the action; and
o deliver the consents to the corporation.
The proposed amendments to the certificate of incorporation and bylaws
remove the ability of stockholders to take action by written consent without a
meeting and require the approval of at least 66 2/3% of the outstanding voting
power of our stock to amend this new provision. These amendments may have the
effect of delaying consideration of a stockholder proposal until the next annual
meeting, and will prevent the holders of a majority of the voting power of our
stock from unilaterally using the written consent procedure to take stockholder
action. Additionally, it will require a supermajority of the outstanding voting
power of our stock to repeal this provision.
DESIGNATION OF SERIES OF PREFERRED STOCK BY BOARD OF DIRECTORS. Section
151 of the Delaware General Corporation Law provides that a corporation may
issue classes or series of stock having such voting powers, designations,
preferences and special rights as stated in its certificate of incorporation or
in resolutions providing for the issue of such stock adopted by its Board of
Directors pursuant to authority expressly vested in it by the provisions of its
certificate of incorporation. The proposed amendment to our certificate of
incorporation grants our Board of Directors the power, subject to the
limitations prescribed by law, to provide for the issuance of our authorized
shares of preferred stock in series and to establish the number of shares to be
included in each such series and the qualifications, limitations or restrictions
of such series. This power, which had previously been granted to our Board of
Directors, was inadvertently removed from the certificate of incorporation at
the time our certificate of incorporation was amended in November, 1999 to
increase the authorized number of shares of our capital stock.
INDEMNIFICATION OF OUR AGENTS. The proposed amendment to the charter
provides that, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law we will indemnify any and all persons who we have the
power to indemnify under Section 145 from and against any and all of the
expenses, liabilities or other matters referred to in or covered by Section 145,
and such indemnification shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any bylaw or otherwise, both as to
action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any person made a party or threatened to be made a
party to any type of proceeding (other than an action by or in the right of the
corporation) because he or she is or was an officer, director, employee or agent
of the corporation or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or entity, against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with such proceeding: (1) if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, or (2) in the case of a
criminal proceeding, he or she had no reasonable cause to believe that his or
her conduct was unlawful.
Section 145 of the Delaware General Corporation Law further provides
that a corporation may indemnify any person made a party or threatened to be
made a party to any threatened, pending or completed action or suit brought by
or in the right of the corporation because he or she was an officer, director,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
other entity, against expenses actually and reasonably incurred in connection
with such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation, except that there may be no such indemnification if the person is
found liable to the corporation unless, in such a case, the court determines the
person is fairly and reasonably entitled to such indemnification.
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Section 145 of the Delaware General Corporation Law also provides that
a corporation must indemnify a director, officer, employee or agent who
successfully defends himself in a proceeding to which he or she was a party
because he or she was a director, officer, employee or agent of the corporation
against expenses actually and reasonably incurred by him or her. Expenses
incurred by an officer or director (or other employees or agents as deemed
appropriate by the Board of Directors) in defending a civil or criminal
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding upon receipt of an undertaking by or on behalf of such director
or officer to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the corporation. Under Delaware law,
termination of any proceeding by conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that such person is
prohibited from being indemnified.
AMENDMENTS TO BYLAWS
Our bylaws currently provide that the Board of Directors may generally
amend the bylaws, except that the board does not have the power to change the
quorum for meetings of stockholders or of the Board of Directors, or to change
any provisions of the bylaws with respect to the removal of directors or the
filling of vacancies in the board resulting from the removal by the stockholders
or to amend or repeal a bylaw which the stockholders provided, when passing such
bylaw, was not subject to amendment or repeal by the Board of Directors. As a
result, several of the proposed amendments to the bylaws have already been
approved by our Board of Directors and do not require your approval. In the
discussion of the material amendments to the bylaws that follows, we have
indicated those amendments which are subject to stockholder approval. It is only
for those indicated amendments that we are seeking your approval in this
proposal.
REMOVAL OF DIRECTORS. The proposed amendments to our bylaws provide
that, subject to the rights, if any, of holders of preferred stock, directors
may be removed, with or without cause only by the holders of 75% of the shares
then entitled to vote at an election of directors, except that (1) if we
institute a classified board, stockholders may remove a director only for cause
and (2) if we have instituted cumulative voting for the election of directors,
if less than the entire board is removed, no director may be removed without
cause if the votes cast against removal of the director would be sufficient to
elect that person. As a result, it will be more difficult for a stockholder to
remove a member of the board and create a vacancy that may be filled with its
own nomination. This proposed amendment to the bylaws requires consent of our
stockholders before it may become effective.
FILLING OF VACANCIES ON THE BOARD OF DIRECTORS. Upon amendment, our
bylaws will provide that, subject to the rights of the holders of any series of
preferred stock and unless the board otherwise determines, newly created
directorships resulting from any increase in the number of directors and any
vacancies on the board resulting from death, resignation, disqualification,
removal or other cause will be filled by the affirmative vote of a majority of
the remaining directors then in office, even though less than a quorum of the
board, and not by the stockholders. Any director elected in accordance with the
preceding sentence will hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been duly elected and
qualified. No decrease in the number of directors constituting the board will
shorten the term of any incumbent director.
Consistent with the Delaware General Corporation Law, the amended
bylaws will provide that if, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole Board of Directors (as constituted immediately prior to
any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent of the total number of
the shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office.
These amendments may deter a stockholder from removing incumbent
directors and simultaneously gaining control of our Board of Directors by
filling the vacancies created by that removal with its own nominees. This
proposed amendment to the bylaws requires consent of our stockholders before it
may become effective.
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<PAGE>
REQUIREMENT OF SUPERMAJORITY FOR STOCKHOLDER AMENDMENTS TO BYLAWS. This
amendment requires the affirmative vote of at least 75% of the voting power of
our stock issued and outstanding for an amendment of the bylaws to be effected
by our stockholders. The Delaware General Corporation Law reserves the power to
amend or repeal a corporation's bylaws exclusively to its stockholders unless
the certificate of incorporation also confers such power upon the directors. If
the certificate of incorporation confers such power upon the directors, as does
ours, the stockholders nevertheless retain the power to adopt, amend, or repeal
the company's bylaws. This amendment, however, would make it easier for the
holders of a minority of our common stock to impede changes to the bylaws to
which they are opposed, and may also preclude a potential hostile acquirer from
amending the bylaws in a manner that would make a takeover of IJNT.net easier.
This proposed amendment to the bylaws requires consent of our stockholders
before it may become effective.
LIMITATION ON STOCKHOLDER ACTION. As do the proposed amendments to the
charter, the proposed amendments to the bylaws provide that stockholders may not
take action by written consent and may only act at a special or annual meeting
of stockholders. The amended and restated bylaws also provide that a meeting of
stockholders may be called only by the chairman of the board or a majority of
the Board of Directors, and may not be called by stockholders. As a result, it
may be difficult for stockholders to present proposed business to the
stockholders for their consideration, and stockholder proposals may be delayed
until the next annual meeting.
These provisions would also prevent the holders of a majority of the
voting power of our outstanding stock from unilaterally using the written
consent procedure to take stockholder action. Furthermore, a stockholder could
not force stockholder consideration of a proposal over the opposition of the our
board by calling a special meeting of stockholders prior to the time the board
believes such consideration to be appropriate.
PROCEDURES FOR STOCKHOLDER NOMINATIONS AND PROPOSALS. The bylaws as
amended establish an advance notice procedure for stockholders to nominate
candidates for election as directors or to bring other business before meetings
of stockholders (the "Stockholder Notice Procedure"). Only those stockholder
nominees who are nominated in accordance with the Stockholder Notice Procedure
will be eligible for election as directors of our company. Under the Stockholder
Notice Procedure, we must receive notice of stockholder nominations to be made
at an annual meeting (or of any other business to be brought before such
meeting) not less than 90 days nor more than 120 days prior to the first
anniversary of the previous year's annual meeting (or, if the date of the annual
meeting is more than 30 days before or more than 70 days after such anniversary
date, not earlier than the 120th day prior to such meeting and not later than
the later of (1) the 90th day prior to such meeting or (2) the 10th day after
public announcement of the date of such meeting is first made). Notwithstanding
the foregoing, in the event that the number of directors to be elected is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased board at least 80 days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice will be timely, but only with respect to nominees for any new positions
created by such increase, if we received it not later than the 10th day after we
make such public announcement. Our bylaws provide that only such business may be
conducted at a special meeting as is specified in the notice of meeting.
Nominations for election to the Board of Directors may be made at a special
meeting at which directors are to be elected by or at the board's direction or,
provided that the board has determined that directors will be elected at such
meeting, by a stockholder who has given timely notice of nomination. Under the
Stockholder Notice Procedure, we must receive such notice not earlier than the
120th day before such meeting and not later than the later of (1) the 90th day
prior to such meeting or (2) the 10th day after we first make public
announcement of the date of such meeting. Stockholders will not be able to bring
other business before special meetings of stockholders.
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<PAGE>
The Stockholder Notice Procedure provides that at an annual meeting
only such business may be conducted as has been brought before the meeting by or
at the direction of the board or by a stockholder who has given timely written
notice (as set forth above with respect to stockholder's nominations for
election of directors at annual meetings) to us of such stockholder's intention
to bring such business before such meeting. Under the Stockholder Notice
Procedure, a stockholder's notice to us proposing to nominate an individual for
election as a director must contain certain information, including the identity
and address of the nominating stockholder, the class and number of shares of
stock owned by such stockholder, and all information regarding the proposed
nominee that would be required to be included in a proxy statement soliciting
proxies for the proposed nominee. Under the Stockholder Notice Procedure, a
stockholder's notice relating to the conduct of business other than the
nomination of directors must contain information about such business and about
the proposing stockholder, including a brief description of the business the
stockholder proposes to bring before the meeting, the reasons for conducting
such business at such meeting, the name and address of such stockholder, the
class and number of shares of stock owned beneficially and of record by such
stockholder, and any material interest of such stockholder in the business so
proposed. If the chairman of the meeting determines that an individual was not
nominated, or other business was not brought before the meeting, in accordance
with the Stockholder Notice Procedure, such individual will not be eligible for
election as a director, or such business will not be conducted at such meeting,
as the case may be.
By requiring advance notice of nominations by stockholders, the
Stockholder Notice Procedure affords us the opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the board, to inform stockholders about such qualifications. By
requiring advance notice of other proposed business, the Stockholder Notice
Procedure provides a more orderly procedure for conducting annual meetings of
stockholders and, to the extent deemed necessary or desirable by the board,
provides us with an opportunity to inform stockholders, prior to such meetings,
of any business proposed to be conducted at such meetings, together with the
board's position regarding action to be taken with respect to such business, so
that stockholders can better decide whether to attend such a meeting or to grant
a proxy regarding the disposition of any such business.
Although our bylaws do not give the board any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, they may have the effect of precluding a contest for the election of
directors or the consideration of stockholder proposals if the proper procedures
are not followed, and of discouraging or deterring a third party from conducting
a solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to IJNT.net and its stockholders.
ELECTION OF DIRECTORS BY PLURALITY. Under the amended bylaws, a
plurality of the votes present in person or represented by proxy at an annual or
special meeting of stockholders will be is required to elect the nominees for
director at such meeting. "Plurality" means that the individuals who receive the
largest number of votes cast are elected as directors up to the maximum number
of directors to be chosen at the meeting. For example, if there are eight
nominees to be considered at a meeting at which six directors are to be elected,
the six directors receiving the highest number of votes will be elected.
Consequently, any shares not voted (whether by abstention, broker non-vote or
otherwise) will have no impact on the election of the director, except to the
extent that the failure to vote for an individual results in another individual
receiving a larger number of votes. Also, it is possible that a director could
be elected to office upon the approval of less than the holders of a majority of
the voting power of our outstanding stock.
Currently, directors are elected upon the approval of the holders of a
majority of the voting power of our outstanding stock represented in person or
by proxy at the meeting. As a result, a nominee must receive the affirmative
vote of greater than 50% of the shares represented at such meeting to be
elected. Any shares represented at the meeting that are not voted (whether by
abstention, broker non-vote or otherwise) will consequently have the effect of a
vote against such nominee.
SPECIAL STOCKHOLDERS' MEETINGS. Our bylaws provide that, subject to the
rights of holders of any series of preferred stock to elect additional
directors, a special meeting of stockholders may be called only by the chairman
of the board or upon the written request of a majority of the entire board.
Stockholders are not permitted to call, or to require that the board call, a
special meeting of stockholders.
STOCKHOLDER APPROVAL REQUIRED
Each of the proposed amendments to our charter and those amendments to
our bylaws that require stockholder approval described in this Proposal 3 are
conditioned upon stockholder approval of the other proposed amendments to our
charter and amendments to our bylaws that require stockholder approval. None of
the amendments to our charter or amendments to our bylaws that require
stockholder approval that are proposed will be adopted unless all are approved
by our stockholders.
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The affirmative vote of a majority of the outstanding shares of our
common stock is required for approval of the proposed amendments to our charter
and amendments to our bylaws that require stockholder approval. Abstentions and
broker non-votes will be counted towards the tabulation of votes cast on each
proposal and will have the same effect as negative votes. If all of the proposed
amendments to our charter and bylaws are approved at the annual meeting, we
intend to file an amendment to our certificate of incorporation shortly after
the meeting. The amendment to the certificate of incorporation will be effective
immediately upon its acceptance for filing by the Secretary of State of the
State of Delaware. The amendments to the bylaws that require stockholder
approval will be effective upon approval by the stockholders. The amendments to
our bylaws that do not require stockholder approval were approved by our Board
of Directors at a meeting on May 6, 2000 and, accordingly, are already
effective. A description of these bylaw amendments is included in this Proxy
Statement for informational purposes only.
OUR BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF PROPOSAL 2 IS IN THE
BEST INTERESTS OF OUR COMPANY AND OUR STOCKHOLDERS. OUR BOARD OF DIRECTORS,
THEREFORE, RECOMMENDS THAT YOU VOTE "FOR" SUCH PROPOSAL; AND IT IS INTENDED THAT
PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
PROPOSAL NUMBER 3
EMPLOYEE BENEFIT PLANS
(ITEM NO. 3 ON THE PROXY CARD)
The Board of Directors of the Company have approved the 2000 Management
Equity Incentive Plan and the 2000 Equity Incentive Plan. The principal terms
and provisions of both Plans are summarized below. The summary, however, is not
a complete description of all the terms of the 2000 Management Equity Incentive
Plan or the 2000 Equity Incentive Plan. Copies of each plan are attached as
Appendices D and E.
PURPOSE
The 2000 Management Equity Incentive Plan and the 2000 Equity Incentive
Plan are designed to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company's
business. Options granted under each Plan may be Incentive Stock Options or
Non-Qualified Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under each Plan.
STOCK SUBJECT TO EACH PLAN
Subject to the provisions of Section 13 of each Plan, the shares of
stock subject to Options or Stock Purchase Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.001 per share.
Subject to the provisions of Section 13 of the 2000 Management Equity Incentive
Plan, the maximum aggregate number of Shares which may be issued upon exercise
of such Options or Stock Purchase Rights is 2,382,500 Shares. Subject to the
provisions of Section 13 of the 2000 Equity Incentive Plan, the maximum
aggregate number of Shares which may be issued upon exercise of such Options or
Stock Purchase Rights is 1,500,000 Shares. Shares issued upon exercise of
Options or Stock Purchase Rights may be authorized but unissued, or reacquired
Common Stock. If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares
which were subject thereto shall become available for future grant or sale under
each Plan (unless either Plan has terminated). Shares which are delivered by the
Holder or withheld by the Company upon the exercise of an Option or Stock
Purchase Right under either Plan, in payment of the exercise price thereof or
tax withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 3 of each Plan. If Shares of Restricted
Stock are repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under either Plan.
Notwithstanding the provisions of Section 3 of each Plan, no Shares may again be
optioned, granted or awarded if such action would cause an Incentive Stock
Option to fail to qualify as an Incentive Stock Option under Code Section 422.
ADMINISTRATION OF EACH PLAN
Unless and until the Board delegates administration to a Committee,
each Plan shall be administered by the Board. Subject to the provisions of
either Plan and the specific duties delegated by the Board to such Committee,
and subject to the approval of any relevant authorities, the Administrator shall
have the authority in its discretion: (i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock Purchase Rights
may from time to time be granted hereunder; (iii) to determine the number of
Shares to be covered by each such award granted hereunder; (iv) to approve forms
of agreement for use under either Plan; (v) to determine the terms and
conditions of any Option or Stock Purchase Right granted hereunder (such terms
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and conditions include, but are not limited to, the exercise price, the time or
times when Options or Stock Purchase Rights may vest or be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the Common Stock relating thereto, based in each case
on such factors as the Administrator, in its sole discretion, shall determine);
(vi) to determine whether to offer to buyout a previously granted Option as
provided in either Plans subsection 10(i) and to determine the terms and
conditions of such offer and buyout (including whether payment is to be made in
cash or Shares); (vii) to prescribe, amend and rescind rules and regulations
relating to either Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws; (viii) to allow Holders to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld based on
the statutory withholding rates for federal and state tax purposes that apply to
supplemental taxable income. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined. All elections by Holders to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable; (ix) to amend either Plan or any Option or Stock
Purchase Right granted under either Plan as provided in Section 15 of either
Plan; (x) and to construe and interpret the terms of each Plan and awards
granted pursuant to each Plan and to exercise such powers and perform such acts
as the Administrator deems necessary or desirable to promote the best interests
of the Company which are not in conflict with the provisions of either Plan.
ELIGIBILITY
Non-Qualified Stock Options and Stock Purchase Rights may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option or
Stock Purchase Right may be granted additional Options or Stock Purchase Rights.
LIMITATIONS
Each Option shall be designated by the Administrator in the Option
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Shares subject to a Holder's Incentive Stock Options and
other incentive stock options granted by the Company, any Parent or Subsidiary,
which become exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options or other options shall be treated as Non-Qualified Stock Options.
Neither Plan, any Option nor any Stock Purchase Right shall confer upon a Holder
any right with respect to continuing the Holder's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Holder's right or the Company's right to terminate such employment or consulting
relationship at any time, with or without cause. No Service Provider shall be
granted, in any calendar year, Options or Stock Purchase Rights to purchase more
than 2,000,000 Shares under the 2000 Management Equity Incentive Plan or
1,000,000 under the 2000 Equity Incentive Plan; provided, however, that the
foregoing limitation shall not apply before the Public Trading Date and,
following the Public Trading Date, the foregoing limitation shall not apply
until the earliest of: (i) the first material modification of the each Plan
(including any increase in the number of shares reserved for issuance under
either Plan in accordance with Section 3); (ii) the issuance of all of the
shares of Common Stock reserved for issuance under each Plan; (iii) the
expiration of either Plan; (iv) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. For purposes of Section 6(c)
of each Plan, if an Option is canceled in the same calendar year it was granted
(other than in connection with a transaction described in Section 13 of either
plan), the canceled Option will be counted against the limit set forth in
Section 6(c) of each Plan. For this purpose, if the exercise price of an Option
is reduced, the transaction shall be treated as a cancellation of the Option and
the grant of a new Option.
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TERM OF PLANS
Each Plan shall become effective upon its initial adoption by the Board
and shall continue in effect until it is terminated under Section 15 of each
Plan. No Options or Stock Purchase Rights may be issued under each Plan after
the tenth (10th) anniversary of the earlier of (i) the date upon which each Plan
is adopted by the Board or (ii) the date each Plan is approved by the
stockholders.
TERM OF OPTIONS
The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from the
date of grant thereof. In the case of an Incentive Stock Option granted to a
Holder who, at the time the Option is granted, owns (or is treated as owning
under Code Section 424) stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
OPTION EXERCISE PRICE; PAYMENT OF EXERCISE PRICE
OPTION EXERCISE PRICE. The per share exercise price for the Shares to
be issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following: (i) In the case of an
Incentive Stock Option (A) granted to an Employee who, at the time of grant of
such Option, owns (or is treated as owning under Code Section 424) stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of grant. (B) granted to any other Employee, the per Share
exercise price shall be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant. (ii) Under the 2000 Management
Equity Incentive Plan in the case of a Non-Qualified Stock Option, the exercise
price shall be set by the Administrator; provided, however, such price shall be
no less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law. Under the 2000 Equity Incentive Plan, in the
case of a Non-Qualified Stock Option (A) granted to a Service Provider who, at
the time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the exercise price shall be no less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of the grant. (B) granted
to any other Service Provider, the per Share exercise price shall be no less
than eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant. (iii) Notwithstanding the foregoing, Options may be granted with a per
Share exercise price other than as required above pursuant to a merger or other
corporate transaction.
PAYMENT OF EXERCISE PRICE. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant). Such consideration may
consist of (1) cash, (2) check, (3) with the consent of the Administrator, a
full recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code) and payable upon
such terms as may be prescribed by the Administrator, (4) with the consent of
the Administrator, other Shares which (x) in the case of Shares acquired from
the Company, have been owned by the Holder for more than six (6) months on the
date of surrender, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option
shall be exercised, (5) with the consent of the Administrator, surrendered
Shares then issuable upon exercise of the Option having a Fair Market Value on
the date of exercise equal to the aggregate exercise price of the Option or
exercised portion thereof, (6) property of any kind which constitutes good and
valuable consideration, (7) with the consent of the Administrator, delivery of a
notice that the Holder has placed a market sell order with a broker with respect
to Shares then issuable upon exercise of the Options and that the broker has
been directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price, provided, that payment of
such proceeds is then made to the Company upon settlement of such sale, or (8)
with the consent of the Administrator, any combination of the foregoing methods
of payment.
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STOCK PURCHASE RIGHTS
RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with Options granted under each Plan and/or cash
awards made outside of each Plan. After the Administrator determines that it
will offer Stock Purchase Rights under each Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
REPURCHASE RIGHT. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 20 of each Plan, the purchase price for Shares repurchased by
the Company pursuant to such repurchase right and the rate at with such
repurchase right shall lapse shall be determined by the Administrator in its
sole discretion, and shall be set forth in the Restricted Stock purchase
agreement.
TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS
The date of grant of an Option or Stock Purchase Right shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option or Stock Purchase Right, or such other date as is
determined by the Administrator. Notice of the determination shall be given to
each Employee or Consultant to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.
AMENDMENT AND TERMINATION OF EACH PLAN
The Board may at any time wholly or partially amend, alter, suspend or
terminate either Plan. However, without approval of the Company's stockholders
given within twelve (12) months before or after the action by the Board, no
action of the Board may, except as provided in Section 13 of each Plan, increase
the limits imposed in Section 3 of each Plan on the maximum number of Shares
which may be issued under each Plan or extend the term of each Plan under
Section 7 of each Plan.
OUR BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF PROPOSAL NUMBER 3 IS
IN THE BEST INTEREST OF OUR COMPANY AND OUR STOCKHOLDERS. OUR BOARD OF
DIRECTORS, THEREFORE, RECOMMENDS THAT YOU VOTE "FOR" SUCH PROPOSAL AND IT IS
INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
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PROPOSAL NUMBER 4
RATIFICATION OF DESIGNATION OF INDEPENDENT ACCOUNTANTS
(ITEM NO. 4 ON THE PROXY CARD)
The Board of Directors has approved the retention of BDO Seidman, LLP
as independent accountants for the Company until revoked by further action. BDO
Seidman, LLP has been the Company's independent accountants since April 3, 2000.
The Company previously engaged Smith & Co. as its independent accountants.
The stockholders are being asked to ratify the designation of BDO
Seidman, LLP as independent accountants for the Company for the fiscal year
ending March 31, 2000. A representative of BDO Seidman, LLP is expected to be
present at the Annual Meeting to make a statement if he or she desires to do so,
and such representative is expected to be available to respond to appropriate
questions.
Should the stockholders fail to ratify the designation of BDO Seidman,
LLP as independent accountants, retention of the firm for the fiscal year ending
March 31, 2000 will be reconsidered by the Board of Directors.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of shares of capital
stock represented and voting at a duly held meeting at which a quorum is present
is required to approve the designation of BDO Seidman, LLP as independent
accountants for the Company for the fiscal year ending March 31, 2000. Unless
marked to the contrary, proxies received will be voted "FOR" ratification of the
designation of BDO Seidman, LLP. as independent accountants for the Company's
fiscal year ending March 31,2000.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
PROPOSALS INTENDED TO BE PRESENTED AT NEXT ANNUAL MEETING. Proposals of
security holders intended to be presented at the Company's 2001 Annual Meeting
of Stockholders must be received by the Company for inclusion in the Company's
proxy statement and form of proxy at least 90 days but not more than 120 days
prior to July 25, 2001. Next year's Annual Meeting of stockholders will be held
on or about July 25, 2001.
OTHER MATTERS. Management knows of no business that will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the shares represented thereby on such matters in accordance with their best
judgment.
PROXY SOLICITATION. The expense of solicitation of proxies will be
borne by the Company. In addition to solicitation of proxies by mail, certain
officers, directors and Company employees who will receive no additional
compensation for their services may solicit proxies by telephone, telegraph or
personal interview. The Company is required to request brokers and nominees who
hold stock in their name to furnish this proxy material to beneficial owners of
the stock and will reimburse such brokers and nominees for their reasonable
out-of-pocket expenses in so doing.
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ANNUAL REPORT. The Company will provide a copy of its Annual Report on
Form 10-K for the fiscal year ended March 31, 2000, without charge, to any
stockholder who makes a written request to Jeffrey R. Matsen, Executive Vice
President, IJNT.net, Inc., 2030 So. Main, Suite 520, Irvine, California 92612.
By Order of the Board of Directors
Jeffrey R. Matsen
Secretary
Irvine, CA
May 30, 2000
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INDEX TO APPENDICES
APPENDIX
--------
Audit Committee Charter...................................................A
Amended and Restated Certificate of Incorporation.........................B
Amended and Restated Bylaws...............................................C
2000 Management Equity Incentive Plan.....................................D
2000 Equity Incentive Plan................................................E
