Dear Shareholder,
On June 24, 2001, iBEAM Broadcasting Corporation entered into an agreement
whereby a group of investors led by Xxxxxxxx Communications, LLC will acquire
preferred stock of the company initially convertible into 240,093,900 shares, or
approximately 65% after the investment, of iBEAM's outstanding common stock at a
conversion price substantially below the current market value of iBEAM common
stock. The number of shares of common stock into which the preferred stock is
convertible is subject to adjustment for antidilution protection and standard
protections for dividends, recapitalizations and stock splits. iBEAM currently
has outstanding approximately 127,400,000 shares of common stock. Under the
terms of this investment, Xxxxxxxx Communications, LLC will purchase 1,800,704
shares of Series A preferred stock for $20 million in cash and $10 million in
in-kind services. In addition, Xxxxx & Company Incorporated will purchase
480,188 shares of Series A preferred Stock for $8 million in cash, and Xxxx
iBEAM, LLC will purchase 120,047 shares of Series A preferred Stock for $2
million in cash. The proposed investment also contemplates that nominees of
Xxxxxxxx will hold four of the nine seats on iBEAM's Board of Directors. This
investment may be deemed a change of control of iBEAM under the Nasdaq
Marketplace Rules.
Under Nasdaq Marketplace Rules 4350(i)(1)(B) and 4350(i)(1)(D)(ii), shareholder
approval is normally required for investments similar to the one described
above. However, we have requested from Nasdaq an exception to this shareholder
approval requirement pursuant to Nasdaq Marketplace Rule 4350(i)(2) and a waiver
of the voting rights rules of Nasdaq Marketplace Rule 4351. Rule 4350(i)(2)
provides that "exceptions may be made upon application to Nasdaq when: (A) the
delay in securing shareholder approval would seriously jeopardize the financial
viability of the enterprise; and (B) reliance by the company on this exception
is expressly approved by the Audit Committee or a comparable body of the Board
of Directors."
iBEAM has retained the investment banking firms of Xxxxxx Xxxxxxx and Dresdner
Kleinwort Xxxxxxxxxxx to assist in raising financing, and they have extensively
tested the market and have found that it is currently impossible for iBEAM to
raise funds at or above current trading prices. iBEAM is currently experiencing
a severe cash shortage and requires funds on an urgent basis to meet its payroll
and other normal operating obligations. It would not be possible to prepare and
file a proxy statement with the Securities and Exchange Commission and hold a
shareholders' meeting to approve the investment before iBEAM runs out of cash
and is forced to discontinue operations. For these reasons, our Audit Committee
has unanimously made a determination that an immediate sale of equity is
necessary to preserve the financial viability of our enterprise and has
expressly approved our reliance on this exception to the shareholder approval
requirement and the request for a waiver of the voting rights rules.
Nasdaq Marketplace Rule 4350(i)(2) requires us to inform you not later than ten
days before the issuance of the preferred stocks of our omission to seek
shareholder approval that would otherwise be required for the transaction
described above.
Very truly yours,
June 29, 2001 Xxxxx Xxxxxxx
Chairman and Chief Executive Officer
