SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as Permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
Netgateway, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box).
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Set for the amount on which the
filing fee is calculated and state how it was determined,
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid: ____________________________________________________
[ ] 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 filing.
1) Amount Previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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Notes:
[LOGO]
May 31, 2002
To Our Stockholders:
A Special Meeting of Stockholders of Netgateway, Inc. will be held on Friday,
June 28, 2002 at 10:00 a.m., Mountain time, at Netgateway's offices located at
754 E. Technology Avenue, Orem Utah, to approve amendments to our Certificate of
Incorporation effecting a one-for-ten reverse split of our common stock, a
reduction in the number of authorized shares of our common stock from
250,000,000 shares to 100,000,000 shares and a change of our name to "Imergent,
Inc."
In order to assure proper representation of your shares at the special meeting,
if you are unable to attend in person, please take a moment at your earliest
convenience to vote on these amendments by completing and mailing the enclosed
proxy card.
Thank you for your ongoing support and continued interest in Netgateway, Inc.
Sincerely yours,
Donald L. Danks
Chairman
Netgateway, Inc.
754 East Technology Avenue
Orem, Utah 84097
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held on Friday, June 28, 2002
A special meeting of the stockholders of Netgateway, Inc. will be held
at Netgateway's offices located at 754 E. Technology Ave., Orem, Utah on Friday,
June 28, 2002 at 10:00 a.m. local Time.
The purpose of the meeting is to consider, discuss, vote and act upon
the following proposals:
o To approve an amendment to Netgateway's Certificate of
Incorporation effecting a one-for-ten (1:10) reverse split of
Netgateway's common stock and to reduce the number of shares of
authorized common stock from 250,000,000 shares to 100,000,000
shares;
o To approve an amendment to Netgateway's Certificate of
Incorporation to change its corporate name from "Netgateway,
Inc." to "Imergent, Inc;" and
o To transact such other business as may properly come before the
meeting, or any postponement or adjournment thereof.
The items of business are more fully described in the proxy statement
accompanying this notice. Only stockholders of record at the close of business
on May 29, 2002 may vote at the meeting or any adjournment or postponement of
the meeting.
Your vote is important. Please complete, sign, date and return your
proxy card in the enclosed envelope promptly.
By order of the Board of Directors,
By:
Frank C. Heyman
Secretary
Orem, Utah
May 31, 2002
THIS PROXY STATEMENT AND THE ACCOMPANYING MATERIALS ARE SOLELY FOR THE
INFORMATION OF OUR PRESENT STOCKHOLDERS. NO ONE SHOULD BUY OR SELL ANY SECURITY
IN RELIANCE ON ANY STATEMENT HEREIN. THIS PROXY STATEMENT AND THE ACCOMPANYING
MATERIALS ARE NEITHER AN OFFER TO BUY OR SELL NOR A SOLICITATION OF OFFERS TO
BUY OR SELL ANY SECURITY.
Netgateway, Inc.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
To be held June 28, 2002
SOLICITATION OF PROXY ON BEHALF OF BOARD OF DIRECTORS
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GENERAL INFORMATION
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We are furnishing you this statement in connection with the
solicitation by our Board of Directors of proxies to be voted at a special
meeting of stockholders that our Board of Directors has called for June 28, 2002
at our corporate offices at 754 E. Technology Ave., Orem, Utah at 10:00 a.m.
local time, and at any and all postponements or adjournments thereof. This proxy
statement and the enclosed form of proxy card are first being sent to
stockholders on or about May 31, 2002.
The purpose of the meeting is to consider, discuss and vote and act on
a number of proposals, as follows:
o To approve an amendment to our Certificate of Incorporation
effecting a one-for-ten (1:10) reverse split in the outstanding
shares of our common stock and to reduce the number of shares of
authorized common stock from 250,000,000 shares to 100,000,000
shares;
o To approve an amendment to our Certificate of Incorporation to
change our corporate name from "Netgateway, Inc." to "Imergent,
Inc."; and
o To transact such other business as may properly come before the
meeting, or any postponement or adjournment thereof.
Our Board of Directors of believes that the approval of the proposals
listed on the proxy are advisable and in the best interests of Netgateway, Inc.
and its stockholders and recommends to its stockholders that they approve each
of the proposals contained in the proxy.
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VOTING
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VOTING AND REVOCABILITY OF PROXIES
You may vote by completing and returning the enclosed proxy or by
voting in person at the special meeting. Our Board of Directors is soliciting
the accompanying proxy for use at the meeting. The proxy may be revoked at any
time prior to its use by: (1) delivering to our secretary a signed notice of
revocation or a later dated proxy, (2) attending the special meeting and voting
in person or (3) giving notice of revocation of the proxy at the special
meeting. Attendance at the meeting will not in itself constitute the revocation
of a proxy. Prior to the meeting, any written notice of revocation should be
sent to Netgateway, Inc., 754 East Technology Avenue, Orem, Utah, 84097,
Attention: Corporate Secretary. Any notice of revocation that is delivered at
the meeting should be hand delivered to our secretary at or before the time a
vote is taken. A stockholder may be requested to present identification
documents for the purpose of establishing such stockholder's identity.
Our shares of common stock, par value $.001, represented by properly
executed proxies, will be voted in accordance with the instructions indicated on
such proxies. If no specific instructions are given, the shares will be voted
FOR approval of the proposals listed in the proxy. In addition, if other matters
properly come before the special meeting, the persons named in the accompanying
form of proxy will vote in accordance with their best judgment with respect to
such matters.
One or more inspectors of election, duly appointed for that purpose,
will count and tabulate the votes cast and report the results of the votes at
the meeting to our management. Your vote at the meeting will not be disclosed
except as needed to permit the inspector to tabulate and certify the votes or as
is required by law.
Please fill in, sign and date the enclosed Proxy and return it promptly
in the enclosed envelope. No postage will be required for you to return the
Proxy in the enclosed envelope if you mail it in the United States. You will be
able to revoke your Proxy and vote in person if you decide to attend the
meeting. The last valid vote you submit chronologically (by any means) will
supersede your prior vote(s).
RECORD DATE, VOTING RIGHTS AND OUTSTANDING SHARES
Our Board of Directors has fixed the close of business on May 29, 2002
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the meeting and any adjournment or postponement of the
meeting. Only holders of record of our common stock on the record date are
entitled to vote at the meeting. If your shares are owned of record in the name
of a broker or other nominee, you should follow the voting instructions provided
by your nominee. Each holder of record of common stock at the close of business
on the record date is entitled to one vote per share on each matter to be voted
upon by the stockholders at the meeting. As of May 28, 2002, there were
107,772,045 shares of our common stock issued, outstanding and entitled to vote.
QUORUM, VOTING REQUIREMENTS
AND EFFECT OF ABSTENTIONS AND NON-VOTES
At the meeting, the inspector of election will determine the presence
of a quorum and tabulate the results of the voting by stockholders. The holders
of a majority of the total number of issued and outstanding shares of stock that
are entitled to vote at the meeting, at least 53,886,023 shares, must be present
in person or by proxy in order to have the quorum that is necessary for the
transaction of business at the special meeting. The inspector will treat
properly executed proxies marked "ABSTAIN," or required to be treated as
"non-votes," as present for purposes of determining whether there is a quorum at
the special meeting. A "non-vote" occurs, with respect to a proposal, when a
broker or nominee holding shares for a beneficial owner does not have
discretionary voting power and has not received voting instructions from the
beneficial owner concerning that proposal.
The affirmative vote of the holders of a majority of the common shares
issued and outstanding on the record date is required to approve the proposals
listed on the proxy. An abstention is counted as a vote against a proposal. A
broker "non-vote" is not counted for purposes of approving a proposal.
Accordingly, abstentions and broker non-votes will have the same effect as a
vote against the proposed amendments to our Certificate of Incorporation.
Stockholders have no dissenters' or appraisal rights in connection with the
proposals to be presented at the meeting.
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THE PROPOSALS
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Our Board of Directors is making the following two proposals for
discussion, and vote on, at our meeting:
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PROPOSAL I
Amendment to Our Certificate of Incorporation
To Effect a One-for-Ten Reverse Split
of the Outstanding Shares of our Common Stock and
To Reduce the number of our Authorized Shares of Common Stock
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Our Board of Directors has unanimously adopted a resolution approving,
and recommending to our stockholders for their approval, a proposal to amend our
Certificate of Incorporation to effect a one-for-ten reverse stock split of our
outstanding shares of common stock and to reduce the number of shares of
authorized common stock from 250,000,000 shares to 100,000,000 shares.
If the reverse stock split is approved by our stockholders and
implemented, each ten (10) shares of our common stock outstanding (including
treasury stock) on the effective date of the reverse stock split will be
automatically changed into and become one (1) share of our new common stock. We
will not issue fractional shares in connection with the reverse stock split. Any
stockholder who otherwise would be entitled to receive fractional shares because
the number of shares of common stock they hold is not evenly divisible by ten
will be entitled, upon surrender to our transfer agent of certificates
representing such shares, to cash payments (without interest) in lieu of the
fractional shares to which the stockholder would otherwise be entitled. The
amount of cash to be paid in lieu of issuing fractional shares of common stock
will be based on the average of the high and low trading prices of our common
stock during regular trading hours during the five trading days immediately
preceding the effective date of the reverse stock split. The Board has
determined that such average will represent the fair market value of our common
stock as of the date the reverse split becomes effective. Except for the right
to receive the cash payment in lieu of fractional shares, stockholders will not
have any voting, dividend or other rights with respect to the fractional shares
they would otherwise be entitled to receive.
The reverse stock split will not change the current per share par value
of our common stock or, by itself, change the current number of authorized
shares of common stock. The effective date of the reverse stock split and the
reduction of the authorized number of shares of common stock will be selected by
the Board of Directors and is currently expected to be at the close of business
on our about July 3, 2002.
Reasons for the Reverse Stock Split and Reduction in Number of Authorized Shares
of Common Stock
At a meeting held in May 2002, our Board of Directors reviewed our
current business and financial performance and the recent trading range of our
common stock. The Board determined that a reverse stock split was desirable in
order to (i) encourage greater investor interest in our common stock and (ii) to
reduce trading fees and commissions incurred by stockholders, since these costs
are based to a significant extent on the number of shares traded.
Our Board of Directors believes that the current market price of our
common stock may impair its acceptability to many investors, including
institutional investors, professional investors and other members of the
investing public and that the reverse stock split will encourage greater
interest in our common stock by the investment community. Many institutional and
other investors look upon stock trading at low prices as unduly speculative in
nature and, as a matter of policy, avoid investing in such stocks. Further,
various brokerage house policies and practices tend to discourage individual
brokers from dealing in low-priced stocks. If effected, the reverse stock split
would reduce the number of outstanding shares of our common stock, and our Board
believes that the reverse split would increase the trading price of the stock,
increase the attractiveness of our common stock to the investment community and
possibly promote greater liquidity for our existing stockholders.
Because broker commissions on low-priced stocks generally represent a
higher percentage of the stock price than commissions on higher priced stocks,
the current share price of our common stock, in the absence of the reverse stock
split, may continue to result in individual stockholders paying transaction
costs (commissions, markups or markdowns) which are a higher percentage of their
total share value than would be the case if the share price was substantially
higher. This factor may further limit the willingness of investors to purchase
our common stock at its current market price.
Our Board of Directors also took into consideration a number of
negative factors associated with reverse stock splits, including: the negative
perception of reverse stock splits held by many investors, analysts and other
stock market participants; the fact that the stock price of some companies that
have recently effected reverse stock splits has subsequently declined back to
pre-reverse split levels; the fact that having a greater number of outstanding
shares aids employee retention and recruitment by allowing a company to offer
option grants for a larger absolute number of shares; and the costs associated
with implementing the reverse stock split. The Board, however, determined that
these negative factors were outweighed by the intended benefits described above.
There can be no assurance that the reverse stock split will result in
the benefits described above. Specifically, there can be no assurance that the
market price of our common stock immediately after the effective date of the
proposed reverse stock split would be maintained for any period of time or that
such market price would approximate ten (10) times the market price of our
common stock before the reverse stock split. There can also be no assurance that
the reverse stock split will not further adversely impact the market price of
our common stock. In addition, it is possible that the liquidity of our common
stock will be adversely affected by the reduced number of shares outstanding
after the reverse stock split.
Our Board of Directors also determined that a reduction in the
authorized number of shares of our common stock would be desirable in connection
with the reverse stock split. The existing authorized number of shares would
exceed our presently anticipated needs following the reverse split, and the
Board of Directors also took into consideration that the contemplated reduction
would reduce the amount payable by us for Delaware state franchise taxes.
Implementation and Effects of the Reverse Stock Split and Reduction in the
Number of Authorized Shares of Common Stock
If the stockholders approve the reverse stock split at the meeting and
the reverse stock split is implemented, paragraph "A" of Article FOURTH of our
Certificate of Incorporation will be amended by filing a Certificate of
Amendment which adds the following new first paragraph to Article FOURTH,
Paragraph A:
"FOURTH. A. (1) That, effective as of 5:00 p.m., eastern time, on the
filing date of this Certificate of Amendment of this Certificate of
Incorporation (the "Effective Time"), a one-for-ten reverse stock split
of the Corporation's common stock shall become effective, pursuant to
which each ten shares of common stock outstanding and held of record by
each stockholder of the Corporation (including treasury shares)
immediately prior to the Effective Time shall be reclassified and
combined into one share of common stock automatically and without any
action by the holder thereof upon the Effective Time and shall
represent one share of common stock from and after the Effective Time.
No fractional shares of common stock shall be issued as a result of
such reclassification and combination. In lieu of any fractional shares
to which the stockholder would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the then fair
market value of the common stock as determined by the Board of
Directors of the Corporation."
The existing paragraph A of Article FOURTH would become the second
sub-paragraph of Article FOURTH, Paragraph A, and would be changed to read as
follows:
"(2) The aggregate number of shares which the Corporation shall have
authority to issue is 105,000,000, par value $.001 per share, of which
100,000,000 shall be designated Common Shares and 5,000,000 shares
shall be designated Preferred Shares."
As a result of the reverse stock split, each ten shares of our common
stock (including treasury stock) outstanding on the effective date of the
reverse stock split (the "old common stock") will be automatically changed into
and become one share of our common stock (the "new common stock").
We will not issue fractional shares in connection with the reverse
stock split. Any stockholder who otherwise would be entitled to receive
fractional shares because the number of shares of common stock they hold is not
evenly divisible by ten will be entitled, upon surrender to our transfer agent
of certificates representing such shares, to cash payments (without interest) in
lieu of the fractional shares to which the stockholder would otherwise be
entitled. The amount of cash to be paid in lieu of issuing fractional shares of
common stock will be based on the average of the high and low trading prices of
our common stock during regular trading hours during the five trading days
immediately preceding the effective date of the reverse stock split. The Board
has determined that such average will represent the fair market value of our
common stock as of the date the reverse split becomes effective. Except for the
right to receive the cash payment in lieu of fractional shares, stockholders
will not have any voting, dividend or other rights with respect to the
fractional shares they would otherwise be entitled to receive.
The old common stock is currently registered under the Securities
Exchange Act of 1934, and we are subject to the periodic reporting and other
requirements of the Exchange Act. The reverse stock split will not affect the
registration of our common stock under the Exchange Act or the quotation of our
common stock on the NASD Over-the-Counter Bulletin Board system. Following the
reverse stock split, our common stock will continue to be registered under the
Exchange Act and will continue to be quoted on the NASD Over-the-Counter
Bulletin Board system, but a new trading symbol will be assigned to our common
stock if our name is changed to "Imergent, Inc." See Proposal II - Change of
Corporate Name.
The number of authorized shares of our common stock, which currently is
250,000,000, will be reduced to 100,000,000 in connection with, but not as a
result of, the reverse stock split. The reduction in authorized capital is not
proportionate to the reduction in outstanding common shares. Consequently, the
number of authorized but unissued shares of common stock will increase
proportionately as a result of the reverse stock split and reduction in
authorized capital. The issuance of such authorized but unissued shares may have
the effect of diluting the earnings per share and book value per share, as well
as the stock ownership and voting rights, of outstanding common stock. Although
not a factor in the decision of the Board of Directors to propose the reverse
stock split and reduction in the number of authorized shares of common stock,
the increased number of authorized and unissued shares of common stock could be
used by the Board of Directors as an anti-takeover defense
The par value of our common stock will remain at $0.001 per share
following the reverse stock split. Consequently, the aggregate par value of the
issued and outstanding common stock will be reduced.
The rights and privileges of the holders of shares of common stock will
be unaffected by the reverse stock split. The reverse stock split will not
affect proportionate voting rights and other rights of holders of our common
stock, other than as a result of the elimination of fractional shares. For
example, a holder of 2.0% of the voting power of the outstanding shares of old
common stock immediately prior to the effective date of the reverse stock split
will continue to hold approximately 2.0% of the voting power of the outstanding
shares of new common stock after the reverse stock split.
If approved, the reverse stock split may result in some stockholders
owning "odd lots" of less than 100 shares of new common stock. Odd lot shares
may be more difficult to sell, and brokerage commissions and other costs of
transactions in odd lots are generally somewhat higher than the costs of
transactions in "round lots" of even multiples of 100 shares.
As of May 28, 2002, we had 107,772,045 shares of common stock issued
and outstanding. If the reverse stock split is approved and implemented, we
would have approximately 10,777,204 shares of common stock issued and
outstanding. We expect that the actual number of shares outstanding after the
reverse split will be less than the number determined by dividing the number of
outstanding shares prior to the reverse split by ten due to the cash out of
fractional shares.
If the reverse stock split is approved and implemented, adjustments
will be made under our outstanding stock options, warrants and stock option
plans in accordance with the terms thereof.
Notwithstanding the receipt of stockholder approval for the reverse
stock split, the Board of Directors retains the authority, at any time prior to
the filing of the Certificate of Amendment with the Secretary of State of the
State of Delaware, to abandon the proposed Certificate of Amendment and not
effect the reverse stock split.
If stockholders approve the reverse stock split at the meeting, unless
the Board elects to abandon the reverse stock split, the reverse stock split
will become effective on the date the Certificate of Amendment is filed with the
Secretary of State of the State of Delaware. The Board currently expects that
the reverse stock split will be effective at 5:00 p.m. on Wednesday, July 3,
2002 and that Friday, July 5, 2002 will be the first day of trading for the new
common stock. Unless the Board elects to abandon the reverse stock split, the
reverse stock split will be effected no later than July 31, 2002.
Under Delaware law, stockholders are not entitled to dissenter's rights
with respect to the reverse stock split.
Exchange of Stock Certificates Following Implementation of the Reverse Stock
Split
If the reverse stock split is approved and implemented, stockholders
will be required to exchange their stock certificates representing old common
stock for new certificates representing new common stock. Stockholders of record
on the effective date of the reverse stock split will be furnished the necessary
materials and instructions for the surrender and exchange of share certificates
at the appropriate time by Colonial Stock Transfer, our transfer agent.
Stockholders will not have to pay a transfer fee or other fee in connection with
the exchange of certificates. As soon as practicable after the effective date,
the transfer agent will send a letter of transmittal to each stockholder
advising of the procedure for surrendering certificates representing shares of
old common stock in exchange for new certificates representing ownership of new
common stock, and, as applicable, obtaining payment for fractional shares.
YOU SHOULD NOT SEND YOUR STOCK CERTIFICATES NOW. YOU SHOULD SEND THEM
ONLY AFTER YOU RECEIVE THE LETTER OF TRANSMITTAL FROM THE TRANSFER AGENT.
As soon as practicable after the surrender to the transfer agent of any
certificate which represents shares of old common stock, together with a duly
executed letter of transmittal and any other documents the transfer agent may
require you to provide, the transfer agent shall deliver to the person in whose
name the certificate for old common stock had been issued, (i) certificates
registered in the name of such person representing the appropriate number of
shares of new common stock and (ii) a check for any amount to be paid in lieu of
a fractional share. Each certificate representing shares of new common stock
will continue to bear any legends restricting the transfer of such shares that
were borne by the surrendered certificates representing the shares of old common
stock held prior to the reverse stock split.
Any certificate held by you prior to the reverse stock split which
represented shares of old common stock shall be deemed at and after the
effective date of the reverse stock split to represent the number of full shares
of new common. Until you have surrendered your stock certificates for exchange,
you will not be entitled to receive any dividends or other distributions that
may be declared and payable by us to holders of record of common stock.
If your certificate for old common stock has been lost, destroyed or
stolen, you will be entitled to receive a certificate representing the shares of
new common stock into which your shares of old common stock are to be converted
upon compliance with our and the transfer agent's procedures for issuing
replacement certificates when original certificates are lost, stolen or
destroyed.
Federal Income Tax Consequences
The following description of the material United States federal income
tax consequences of the reverse stock split is based upon the Internal Revenue
Code, the applicable Treasury Regulations promulgated thereunder, judicial
authority and current administrative rulings and practices all as in effect on
the date of this proxy statement. Changes to these laws could alter the tax
consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the reverse
stock split. This discussion is for general information only and does not
discuss consequences that may apply to special classes of taxpayers (for
example, non-resident aliens, broker-dealers or insurance companies) and does
not discuss the tax consequences under the laws of any foreign, state or local
jurisdictions. Stockholders are urged to consult their own tax advisors to
determine the particular consequences to them.
In general, we believe that because the reverse stock split is not part
of a plan to increase periodically a stockholder's proportionate interest in our
assets or earnings and profits, a stockholder who receives solely new common
stock will not recognize gain or loss on the exchange. In the aggregate, such a
stockholder's basis in the new common stock will equal the stockholder's basis
in the old common stock. A stockholder who receives cash in lieu of a fractional
share as a result of the reverse stock split will generally be treated as having
received the payment as a distribution in redemption of the fractional share, as
provided in Section 302(a) of the Internal Revenue Code, which distribution will
be taxed as either a dividend or exchange to each stockholder, depending on that
stockholder's particular facts and circumstances. We will not recognize any gain
or loss as a result of the reverse stock split.
The affirmative vote of the holders of a majority of the common shares
outstanding on the record date is required to approve the
reverse stock split and reduction in the number of authorized
shares of common stock. Our Board of Directors believes the adoption
of the proposed amendment is in the best interests of our company
and its stockholders and recommends that you vote FOR this proposal.
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PROPOSAL II
Change of Corporate Name
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Our Board of Directors has unanimously adopted a resolution approving,
and recommending to our stockholders for their approval, a proposal to amend our
Certificate of Incorporation to change our corporate name from "Netgateway,
Inc." to "Imergent, Inc." The primary purpose of this amendment is to effect a
name change to better reflect the scope and type of our current business
activities.
Our Board has considered a change of our corporate name for some time,
due in part to claims by a holder of a registered trademark that our name,
"Netgateway, Inc.", infringed one or more of their registered trademarks.
Resolution of the matter will require us to change our corporate name.
Our Board has chosen a name that it believes reflects the scope and
direction of our current business activities. The Board selected "Imergent,
Inc.," to reflect our commitment to assisting and providing web-based technology
solutions to small emerging companies and entrepreneurs who are seeking to
establish a viable e-commerce presence on the Internet.
The change in our corporate name by itself will not affect the rights
of any stockholder or the validity or transferability of stock certificates
currently outstanding. Stockholders will not be required to surrender or
exchange any of our stock certificates that they currently hold as a result of
the name change, but will be required to exchange their stock certificates as a
result of the reverse stock split. See "Exchange of Stock Certificates Following
Implementation of the Reverse Stock Split." If the name change is approved, we
will be assigned a new trading symbol which will be announced prior to the name
change becoming effective.
If the stockholders approve the change in our corporate name at the
meeting Article FIRST of our Certificate of Incorporation would be amended to
read as follows:
"FIRST. The name of the corporation is Imergent, Inc. (the
"Corporation")."
In accordance with the Delaware General Corporation Law and our
Certificate of Incorporation, approval of the amendment to the Certificate of
Incorporation to change our corporate name requires the affirmative vote of a
majority of the outstanding shares of common stock entitled to vote on this
proposal. If approved, we will amend our Certificate of Incorporation as
provided above, which amendment will be effective upon filing with the Delaware
Secretary of State.
The affirmative vote of the holders of a majority of the common shares
outstanding on the record date is required to approve the name change.
Our Board of Directors believes the adoption of the proposed amendment
is in the best interests of our company and its stockholders
and recommends that you vote FOR this proposal.
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DISSENTERS' RIGHTS
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The proposals described in this Proxy Statement do not provide our
stockholders the opportunity or right to dissent from the actions to be taken if
any or all of the proposals are approved, or to receive any agreed upon or
judicially determined value for their shares of our capital stock.
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STOCK OWNERSHIP INFORMATION
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The following table sets forth, as of May 28, 2002, the number of
shares of common stock beneficially owned by each of the following persons and
groups and the percentage of the outstanding shares owned by each person and
group, based on 107,772,045 shares issued and outstanding as of such date: (i)
each of our directors and named executive officers, which includes certain of
our former officers; and (ii) all of our current directors and executive
officers as a group. There are no persons known by us to be the owner of record
or beneficial owner of more than 5% of our outstanding common stock.
With respect to certain of the individuals listed below, we have relied
upon information set forth in statements filed with the Securities and Exchange
Commission.
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Additional Shares Total Percent of Class
Shares Acquirable Within 60 Beneficial Beneficially
Name of Beneficial Owner Owned Days (1) Ownership(2) Owned
------------------------ ----- --------------------- ------------ -----
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Donald L. Danks.......................... 4,757,510 - 4,757,510 4.4
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John J. "Jay" Poelman.................... 3,524,295 308,394 3,832,689 3.5
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Brandon Lewis............................ 2,409,694 327,546 2,737,240 2.5
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David Rosenvall.......................... 1,094,716 218,400 1,313,116 1.2
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David Wise............................... 1,262,718 132,054 1,394,772 1.3
--------------------------------------------------------------------------------------------------------------------
Keith D. Freadhoff (3) .................. 0 - 0 *
--------------------------------------------------------------------------------------------------------------------
Roy W. Camblin III (3) ................. 500,000 - 500,000 *
--------------------------------------------------------------------------------------------------------------------
Donald Corliss (3) ..................... 400,000 - 400,000 *
--------------------------------------------------------------------------------------------------------------------
All current directors and executive 14,391,540 1,207,422 15,598,962 14.31
officers as a group (6 persons).......
--------------------------------------------------------------------------------------------------------------------
----------
* Less than 1 percent.
(1) Reflects warrants or options that will be exercisable or vested, as the
case may be, as of May 28, 2002 or within 60 days thereafter.
(2) Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to
options held by that person that are currently exercisable or become
exercisable within 60 days following May 28, 2002 are deemed outstanding.
These shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person. Unless otherwise
indicated in the footnotes to this table, the persons and entities named in
the table have sole voting and sole investment power with respect to the
shares set forth opposite such stockholder's name.
(3) Messrs. Freadhoff, Camblin, and Corliss are all former officers.
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Expense of Solicitation of Proxies
We will pay the cost of soliciting proxies for the Special Meeting. In
addition to solicitation by mail, our directors, officers and employees, without
additional pay, may solicit proxies by telephone, telecopy or in person. We
reserve the right to retain other outside agencies for the purpose of soliciting
proxies. Arrangements will be made with brokerage hoses and other custodians,
nominees and fiduciaries to send proxies and proxy material to their principals,
and we will reimburse them for their out-of-pocket expenses in this regard.
Stockholder Proposals for Action at Our Next Annual Meeting
We anticipate holding our next annual meeting of stockholders in
November 2002. Any stockholder who wishes to present any proposal for
stockholder action at this meeting must deliver such proposal to us not later
than June 30, 2002, in order for such proposal to be included in our proxy
statement and proxy card for that meeting. Proposals should be addressed to the
Corporate Secretary, Netgateway, Inc., 754 East Technology Avenue, Orem, Utah
84097. If a stockholder proposal is introduced at the 2002 annual meeting
without any discussion of the proposal in our proxy statement, and the
shareholder has not notified us on or before September 15, 2002, as required by
SEC Rule 14(a)-4(c)(1), of the intent to raise such proposal at the meeting,
then proxies received by us for the 2002 annual meeting will be voted by the
persons named in such proxies in their discretion with respect to such proposal.
Notice of such proposal is to be sent to the above address.
Our bylaws require stockholders to give advance notice of any matter
stockholders wish to present for action at an annual meeting of stockholders
(other than matters to be included in our proxy statement, which are discussed
in the previous paragraph). The required notice must be received at our
principal executive offices not less than 30 days nor more than 60 days prior to
the annual meeting, unless less than 40 days' notice of the date of the annual
meeting is given to stockholders, in which case the required stockholder notice
must be given no later than ten days following the date notice is given of the
annual meeting. The chairman of the meeting has the discretion to determine and
declare any matter not complying with the foregoing notice provisions to be not
properly brought before the meeting.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
As of the date of this statement, our Board of Directors does not
intend to present and has not been informed that any other person intends to
present a matter for action at the meeting other than as set forth herein and in
the Notice of Meeting. If any other matter properly comes before the meeting,
the holders of proxies will vote the shares represented by them in accordance
with their best judgment.
Our Board of Directors does not know of any other matters which may
come before the meeting. Delaware law and our bylaws impose limitations on the
ability to present business items at a special meeting if those items were not
included in the notice of special meeting. Accordingly, except for procedural
matters incidental to the conduct of the special meeting, it is not expected
that any other matters will come before the meeting. If any other matters are
properly presented at the meeting, it is the intention of the persons named in
the accompanying proxy to vote, or otherwise act, in accordance with their
judgment.
* * *
By Order of the Board of Directors
/s/ Frank C. Heyman
Frank C. Heyman, Secretary
Dated: May 31, 2002
FRONT OF PROXY CARD
NETGATEWAY, INC.
Proxy for the Special Meeting of Stockholders to be held on June 28, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NETGATEWAY, INC.
PROXY The undersigned stockholder of NETGATEWAY, INC. hereby appoints Jay
Poelman and Frank Heyman, and each of them, proxies with full power of
substitution to act for and on behalf of the undersigned and to vote all
stock standing in the name of the undersigned as of the close of
business on May 29, 2002, which the undersigned would be entitled to
vote if personally present at the Special Meeting of Stockholders
("Meeting") to be held on Friday, June 28, 2002, at 754 E. Technology
Ave., Orem, Utah, commencing at 10:00 A.M. (local time), and at any and
all adjournments thereof, upon all matters properly coming before the
Meeting.
COMMENTS: CHANGE OF ADDRESS:
__________________________________________ ____________________________
__________________________________________ ____________________________
__________________________________________ ____________________________
(If you have written in the above space, please mark the corresponding box
on the reverse side of this card)
You are encouraged to specify your choices by marking the appropriate
boxes (see reverse side) but you need not mark any boxes if you wish to
vote in accordance with our Board of Directors' recommendations. The
proxies named above cannot vote your shares unless you sign and return
this card.
---------------------
SEE REVERSE SIDE
---------------------
BACK OF PROXY CARD
Preliminary Copies---Confidential
|X| Please mark
your votes as
in this
example.
------------------------------------------------------------------------------------------ ------- --------------- -----------
1. APPROVE ONE-FOR-TEN REVERSE STOCK SPLIT AND REDUCTION IN NUMBER OF AUTHORIZED SHARES FOR WITHHELD ABSTAIN
OF COMMON STOCK FROM 250,000,000 TO 100,000,000 SHARES |_| |_| |_|
Our Board recommends a vote "FOR" this proposal.
------------------------------------------------------------------------------------------ ------- --------------- -----------
2. APPROVE CHANGE OF CORPORATE NAME TO "IMERGENT, INC." FOR WITHHELD ABSTAIN
Our Board recommends a vote "FOR" this proposal. |_| |_| |_|
------------------------------------------------------------------------------------------ ------- --------------- -----------
This proxy, when properly executed, will be voted in the manner directed herein.
If no designation (i.e. "For," "Withheld," "Against," "Abstain") is made, the
proxies named on the reverse side hereof intend to vote the shares to which this
proxy relates "For" items 1 and 2. The proxies will vote in their discretion on
any other matters properly coming before the Meeting. The signer hereby revokes
all proxies heretofore given by the signer to vote at the Meeting or any
adjournment thereof.
SIGNATURE(S)______________________________________________Date__________________
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, or guardian,
please give full title as such.