Brad, Kill (or renegotiate) the deal. I've heard of blank checks, but this is ridiculous:
<<As of May 8, 1998, there were 4,513,550 shares of go2net
Common Stock issued and outstanding, all of which are entitled to vote. >>
With that base they are asking:
2. To consider and act upon a proposal to ratify, confirm and approve an amendment to the go2net, Inc. Restated Certificate of Incorporation to increase the number of authorized shares of go2net Common Stock $.01 par value per share from 9,000,000 to 50,000,000.
3. To consider and act upon a proposal to ratify, confirm and approve an amendment to the go2net, Inc. 1996 Stock Option Plan to increase the number of shares reserved for grant thereunder from 1,500,000 to
2,500,000.
Forget Proposal #2. From Prop #3 they are asking for potential dilution from options alone of 2,500,000/5,763,550 or 43.37%. To an investor that's intolerable.
And it's after planning to just double the shares available for option grants:
8. SUBSEQUENT EVENTS
Subsequent to September 30, 1997, the Board of Directors approved an amendment to the Company's 1996 Stock Option Plan to increase the number of shares available for the grant of options thereunder from 750,000 to 1,500,000, which is subject to stockholder approval, and the Company granted options to acquire an additional 218,000 shares of the Company's common stock. Those options generally vest over periods ranging from one to four years. The weighted average exercise price for all such option grants was $7.90 per share.
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