Edgar Filing: IMERGENT INC

SCHEDULE 14A INFORMATION
(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )

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Imergent, Inc.
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Notes:

Imergent, Inc.
754 East Technology Avenue
Orem, Utah 84097

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on December 3, 2003

The annual meeting of the stockholders of Imergent, Inc. will be held
at 754 East Technology Avenue, Orem, Utah on December 3, 2003 at 12:00 p.m.,
local time.

The purpose of the meeting is to consider, discuss, vote and act upon
the following proposals:

o To elect three (3) Class II directors for a term of two years,
expiring at our annual meeting of stockholders to be held for our
fiscal year 2005 or until each of their respective successors has been
duly elected and qualified;

o To consider and act upon a proposal to ratify an amendment to our 1998
Stock Option Plan for Senior Executives;

o To consider and act upon a proposal to ratify an amendment to our 1999
Stock Option Plan For Non-Executives;

o To consider and act upon our 2003 Equity Incentive Plan;

o To consider and act upon a proposal to ratify the appointment of Grant
Thornton LLP as our independent auditors for our fiscal year ending
June 30, 2004; and

o To transact such other business as may properly come before the
meeting, or any postponement of the meeting.

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 October 27, 2003 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: /s/ Frank C. Heyman
Frank C. Heyman, Secretary

October 29, 2003

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.

Imergent, Inc.
754 East Technology Avenue
Orem, Utah 84097
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be held December 3, 2003
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SOLICITATION AND REVOCABILITY OF PROXY

General

We are furnishing you this statement in connection with the
solicitation by our Board of Directors of proxies to be voted at an annual
meeting of stockholders that our Board of Directors has called for December 3,
2003 at 754 East Technology Avenue, Orem, Utah at 12:00 p.m. local time, and at
any and all postponements or adjournments thereof. This proxy statement and the
enclosed form of proxy card are being sent to stockholders on or about November
3, 2003.

The purpose of the meeting is to consider, discuss and vote and act on
a number of proposals, as follows:

o To elect three (3) Class II directors for a term of two years,
expiring at our annual meeting of stockholders to be held for our
fiscal year 2004, or until each of their respective successors has
been duly elected and qualified;

o To consider and act upon a proposal to ratify an amendment to our 1998
Stock Option Plan for Senior Executives;

o To consider and act upon a proposal to ratify an amendment to our 1999
Stock Option Plan For Non-Executives;

o To consider and act upon our 2003 Equity Incentive Plan;

o To consider and act upon a proposal to ratify the appointment of Grant
Thornton LLP as our independent auditors for our fiscal year ending
June 30, 2004; and

o To transact such other business as may properly come before the
meeting, or any postponement of the meeting.

We use several abbreviations in this statement. We may refer to our
company as "us," "we," "Imergent" or the "Company." The terms "meeting," and
"annual meeting," refer to our 2003 Annual Meeting of Stockholders.

The enclosed annual report to stockholders is not to be regarded as
proxy soliciting material. If you would like an additional copy of the report,
please contact us at 754 E. Technology Avenue, Orem, Utah 84097, Attn: Investor
Relations, telephone: (801) 227-0004.

Record Date and Voting Securities

Our Board of Directors has fixed the close of business on October 27,
2003 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 October 27, 2003
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 October 27, 2003, there
were 11,309,719 shares of our common stock issued and outstanding.

Voting and Revocability of Proxies

You may vote by completing and returning the enclosed proxy or by
voting in person at the annual 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 annual meeting and voting
in person, or (3) giving notice of revocation of the proxy at the annual
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 Imergent, 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 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, 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 the election of
the nominees for director set forth herein and FOR approval of the other
proposals listed in the proxy. In addition, if other matters come before the
annual 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 will supercede your
prior vote(s).

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 outstanding shares of stock that are
entitled to vote at the meeting, at least 5,654,860 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 annual meeting. Shares of common stock
represented in person or by proxy (including shares that abstain or do not vote
with respect to one or more of the matters to be voted upon) will be counted for
purposes of determining whether a quorum exists. If a quorum is not present, the
meeting will be adjourned until a quorum is obtained.

The nominees for director who receive a plurality of the votes cast by
the holders of our common stock, in person or by proxy at the meeting, will be
elected. Broker "non- votes" are not counted for purposes of the election of
directors. 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 instructions from the beneficial owner. The
affirmative vote of the holders of a majority of the common shares present in
person or represented by proxy and entitled to vote is required to approve the
other proposals. An abstention is counted as a vote against a proposal. A broker
"non-vote" is not counted for purposes of approving a proposal. Stockholders
have no dissenters' or appraisal rights in connection with the proposals to be
presented at the meeting.

Expense of Solicitation of Proxies

We will pay the cost of soliciting proxies for our annual meeting. In
addition to solicitation by mail, our directors, officers and employees, without
additional pay, may solicit proxies by telephone, telecopy or in person.
Arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to their principals, and we
will reimburse them for their expenses in so doing.

BENEFICIAL OWNERSHIP OF SHARES

The following table sets forth, as of October 27, 2003, 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: (i) each person who is known by us to be the owner of record or
beneficial owner of more than 5% of the outstanding common stock; (ii) all of
our current directors and executive officers as a group.

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 pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of
1934. Except as otherwise noted below, the address of each of the persons in the
table is c/o Imergent, Inc., 754 East Technology Ave., Orem, Utah 84097.

Name of Beneficial Owner Shares Owned Number of Warrants and Total Percent of
Option Grants Under Class
Imergent Stock Option Beneficial Beneficially
Plans (1) Ownership (2) Owned
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Donald L. Danks 506,751 - 506,751 4.3%
Brandon Lewis 243,968 125,180 369,148 3.2%
David Rosenvall 109,470 56,250 165,720 1.4%
David Wise 126,271 56,828 183,099 1.6%
Frank C. Heyman 139,260 80,960 220,220 1.9%
Gary S. Gladstein 29,500 12,500 42,000 0.4%
Thomas Scheiner - 4,167 4,167 0.0%
Peter Fredericks 83,500 10,000 93,500 0.8%

All current directors and executive 1,238,720 345,885 1,584,605 12.3%
officers as a group (8 persons)

(1) Reflects warrants or options that will be exercisable or vested, as
the case may be, as of October 27, 2003, 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 October 27, 2003 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.

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PROPOSAL I
Election of Directors
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At the meeting, three (3) Class II directors are to be elected for a
term ending at the annual meeting of our stockholders for fiscal year 2005, or
until each of their respective successors has been duly elected and qualified.
In May 2000, our stockholders approved an amendment to our Bylaws that provided
for a classified board and two-year staggered terms of the members of our board
of directors. The amendment contemplates the election of one-half of the
directors at each annual meeting and was originally intended to significantly
extend the time required to effect a change in control of our Board of
Directors. Since our last annual meeting, one of our Class I directors resigned,
and Mr. Thomas Scheiner was appointed by the Board of Directors to fill this
vacancy. Also since our last annual meeting, our Board of Directors appointed
two additional directors, each of whom were designated as Class II directors.
These two directors, Messrs. Fredericks and Gladstein, along with Mr. Brandon
Lewis, constitute our Class II directors and have been nominated by the Board of
Directors to stand for election at this annual meeting.

It is intended that valid proxies received will be voted, unless
contrary instructions are given, to elect the three (3) nominees named in the
following table to serve as Class II directors. Should any nominee decline or be
unable to accept such nomination to serve as a director, an event that we do not
currently anticipate, the persons named in the enclosed proxy reserve the right,
in their discretion, to vote for a lesser number of or for substitute nominees
designated by the board of directors, to the extent consistent with our
certificate of incorporation and our bylaws.

Nominees of the Board

Our Board of Directors has nominated the following individuals to serve
on our Board of Directors until our next annual meeting or until their
respective successors are elected. Each of the nominees has agreed to be named
in this Proxy Statement and to serve if elected.

Director Name Age Position Class/Term
------------- --- -------- ----------
Gary S. Gladstein 59 Director II/2005
Peter Fredericks 45 Director II/2005
Brandon Lewis 33 Director II/2005

The Board of Directors recommends a vote "FOR"
all of the incumbent directors identified above.

Information Concerning Directors and Officers

Set forth in the table below are the names, ages and positions of each
person nominated by the Board for election as a director, each person whose term
of office as a Director will continue after the Annual Meeting and each of our
current executive officers. None of our directors or executive officers has any
family relationship to any other director or executive officer.

Name Age Position
------------------------------ ------------- -----------------------------------
Donald L. Danks................ 46 Chairman of the Board of Directors
and Chief Executive Officer
Peter Fredericks............... 45 Director
Gary S. Gladstein.............. 59 Director
Thomas Scheiner................ 47 Director
Brandon Lewis.................. 33 Director, Chief Operating Officer
and President
Frank C. Heyman................ 66 Chief Financial Officer
David Rosenvall................ 37 Chief Technology Officer
David Wise..................... 43 Vice-President, Operations

Set forth below is a brief description of the business experience for
the previous five years of our nominees for director, our incumbent directors
and of our other executive officers.

Directors Standing for Election

Gary S. Gladstein

Mr. Gladstein has been with Soros Fund Management for over 17 years.
Mr. Gladstein is currently a Senior Consultant to Soros Fund Management, LLC, an
investment advisory firm. He served as a Managing Director and Chief Operating
Officer of Soros Fund Management LLC from from 1985 thought 1999. Mr. Gladstein
served as Chief Financial Officer of Kohlberg Kravis Roberts & Co. from 1983
through 1985. He was a Principal at Ernst & Young from 1970 through 1983 and is
a CPA. Mr. Gladstein has a Bachelor of Arts degree in economics from the
University of Connecticut and a Masters in Business Administration from Columbia
University. Mr. Gladstein is also a director of Mueller Industries, Inc., Jos.
A. Bank Clothiers, Inc. and Cresud Inc., an Argentinean company.

Peter Fredericks

Mr. Fredericks is a private equity investor, who has worked with
numerous technology companies since 1982, with particular focus on software and
Internet infrastructure. Mr. Fredericks' experience also includes working as a
strategy consultant with the Boston Consulting Group. Mr. Fredericks received
his Bachelor of Arts degree in Economics with distinction from Stanford
University, his Master in Business Administration from Harvard University, where
he was a Baker Scholar, and his Ph.D. from the Vienna University of Economics
and Business Administration. Mr. Fredericks is also a director of Flanders
Corporation.

Brandon Lewis

Mr. Lewis has served as our Chief Operating Officer since June 2003, as
our President since May 2002, and prior thereto, since January 2001, he served
as our Executive Vice-President for sales and marketing. He has served as a
director since May 2002. He was Vice-President of sales and marketing and Chief
Operating Officer of Galaxy Enterprises, Inc. from 1997 until he joined our
company after our merger with Galaxy. Prior to Galaxy, Mr. Lewis was
Vice-President of sales and marketing for Profit Education Systems, Inc. a
worldwide marketing and sales organization. Mr. Lewis earned his B.A. degree
from Brigham Young University.

Incumbent Directors

Donald L. Danks

Mr. Danks has served as our Chairman since January 2001. He also served
as our Chief Executive Officer from January 5, 2001 to May 7, 2002 and has
served in this position from July 1, 2003 until the present. He was one of our
original investors and is currently one of our largest stockholders. During the
five years previous to joining us as our CEO, Mr. Danks was involved in the
creation, funding and business development of early-stage technology companies.
In addition to attracting inceptive capital for client companies, Mr. Danks
assisted in the development of their business plans, helped in the recruitment
of senior management, supported the development of the public market for their
securities by introducing them to institutional investors and market makers and
oversaw ongoing corporate finance needs. Previously, Mr. Danks was the
co-founder and President of Prosoft Training.com, (Nasdaq: POSO), a company
involved in Internet technology training, education and certification. Mr. Danks
holds a B.S. from UCLA.

Thomas Scheiner

Mr. Scheiner has spent over 20 years founding, managing, investing in,
and advising technology companies both in Europe and the United States. He has
been a partner at Apax, a large international private equity firm located in
Munich, Germany, as well as a business strategy consultant at the Boston
Consulting Group. His experience includes such technology sectors as software
and telecommunications. Mr. Scheiner holds an MBA with distinction from the
Harvard Business School and a Ph.D. from the Vienna University of Economics and
Business Administration.

Other Executive Officers

Frank C. Heyman

Mr. Heyman has served as our Chief Financial Officer since September
2000. Prior to that, he served from 1997-2000 as vice president, secretary,
treasurer and chief financial officer of Galaxy. From June 1992 to May 1996 he
also served as financial vice president and chief financial officer and a
director of NYB Corporation, a manufacturer of women's sport clothing, and from
June 1996 to April 1997 he was employed as controller of Provider Solutions,
Inc., a business consulting firm. Prior to that, from 1986 to 1992, Mr. Heyman
served as vice president and chief financial officer of GC Industries, Inc., a
manufacturer of calibration systems for toxic gas monitors. Mr. Heyman is a
graduate of the University of Utah with a B.S. degree in accounting.

David Rosenvall

Mr. Rosenvall was appointed as our Chief Technology Officer in February
2001. Prior thereto, he served as our Chief Architect from September 1999. He
initially joined us in November 1998 as part of our acquisition of
StoresOnline.com. From September 1997-December 1998, Mr. Rosenvall was president
of Spartan Multimedia in Calgary, Alberta, Canada, and from January 1995 to
August 1997, he was Vice-President for Research and Development at Xentel,
another Calgary company. Mr. Rosenvall holds a B.S. in Mechanical Engineering
from the University of Calgary and an M.B.A. from Brigham Young University.

David Wise

Mr. Wise was Chief Operating Officer of Galaxy Mall prior to becoming
our Vice President-Operations in July 2000. Prior to joining Galaxy Mall, Mr.
Wise was, from 1998-1999, president of Wise Business Solutions. From 1992 to
1999, he was chief financial officer and chief operating officer of Capsoft
Development Corp. He served as COO of Medcare Operating Solutions from 1988 to
1989. Mr. Wise graduated cum laud from Brigham Young University with his Masters
in Business Administration in 1991.

Director Compensation

None of our current directors are given cash compensation in their
capacity as directors. Non-employee directors are awarded stock options. Mr.
Lewis and, since his appointment as our Chief Executive Officer in July 2003,
Mr. Danks are compensated in their capacities as officers. In addition, Mr.
Lewis has been granted stock options in his capacity as an officer and Mr. Danks
received consulting fees from the Company during fiscal 2003 totaling $41,329.
All directors are reimbursed for reasonable expenses incurred in connection with
attending meetings of the board of directors.

Information About Board and Committee Meetings

During fiscal year 2003, our Board of Directors held thirteen (13)
scheduled meetings.. Each of our incumbent directors attended no fewer than 75%
of our board's meetings in fiscal year 2003 during the period in which he served
as a director. In addition to attending meetings, directors also discharge their
responsibilities by review of company reports to directors, by visits to our
facilities, through correspondence and via telephone conferences with our
executive officers and others.

During fiscal year 2003 the board of directors had no standing audit,
compensation or other committees. On August 12, 2003 our Board of Directors
established an Audit Committee comprised of Messrs. Gladstein, Fredericks and
Scheiner, with Mr. Gladstein as chairman. On September 19, 2003, our Board of
Directors established a Compensation Committee comprised of Messrs. Fredericks,
Scheiner and Gladstein, with Mr. Fredericks as chairman.

Section 16(a) Beneficial Ownership Reporting Compliance

Based on a review of reports and representations submitted to us, all
reports regarding beneficial ownership of our securities required to be filed
under Section 16(a) of the Exchange Act for the 2003 fiscal year were timely
filed.

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PROPOSAL II
Ratification of Amendment to our 1998 Stock Option Plan for Senior Executives
-----------

In December 1998, our Board of Directors adopted, and our stockholders
approved, the 1998 Stock Option Plan for Senior Executives. This plan provided
for the grant of options to purchase up to 500,000 shares of common stock. In
April 2003 our Board of Directors approved an increase of 500,000 in the number
of shares available for grant under the plan, bringing the total to 1,000,000.
Since this amendment was approved, options covering a total of 190,625 shares
have been granted out of the 500,000 additional shares. These option grants are
not conditioned on the approval of this proposal. Shareholder ratification of
this action is being sought at the annual meeting.

The increase in the number of authorized shares under the 1998 Stock
Option Plan for Senior Executives was necessary to enable us to continue to
issue options under the plan. The Board of Directors believes that stock option
grants are an important element in attracting and retaining highly qualified
individuals and, therefore, believes that it is in the best interest of our
company for the stockholders to ratify the authorization of additional shares
under the 1998 Stock Option Plan for Senior Executives. There are no
requirements under this plan concerning how the 500,000 additional shares are to
be allocated among qualified individuals. The affirmative vote of the holders of
a majority of the shares of our common stock present or represented and voting
at the annual meeting will be required to approve this proposal. If the
stockholders do not approve this proposal and do not approve Proposal IV
concerning the 2003 Equity Incentive Plan then the Board will reconsider whether
it will continue to make grants under this plan.

Description of Plan

This plan is now administered by the Compensation Committee of the
Board of Directors. The Compensation Committee determines, among other things,
the individuals who will receive options, the time period during which the
options may be partially or fully vested and exercisable, the number of shares
of common stock issuable upon the exercise of each option and the option
exercise price. Options may be either incentive stock options or non-qualified
stock options under Federal tax laws except that none of the options granted out
of the 500,000 share increase may be incentive stock options.

The exercise price per share of common stock subject to an incentive
option may not be less than the fair market value per share of common stock on
the date the option is granted. The per share exercise price of the common stock
subject to a non qualified option may be established by the compensation
committee, but shall not be less than 50% of the fair market value per share of
common stock on the date the option is granted. The aggregate fair market value
of common stock for which any person may be granted incentive stock options
which first become exercisable in any calendar year may not exceed $100,000 on
the date of grant.

No stock option may be transferred by an optionee other than by will or
the laws of descent and distribution or, if permitted, pursuant to a qualified
domestic relations order and, during the lifetime of the optionee, the option
will be exercisable only by the optionee. In the event of termination of
employment by reason of death, disability or by us for cause, as defined in each
optionee's employment agreement, the optionee will have no more than 365 days
after such termination during which the optionee shall be entitled to exercise
the vested options, unless otherwise determined by the board of directors. Upon
termination of employment by us without cause or by the optionee for good
reason, the optionee's options remain exercisable to the extent the options were
exercisable on the date of such termination until the expiration date of the
options pursuant to the option agreement.

We may grant options under this plan within ten years from the
effective date of the plan. The effective date of this plan is December 31,
1998. Holders of incentive stock options granted under this plan cannot exercise
these options more than ten years from the date of grant. Payment of the
exercise price may be made by (1) delivery of cash or a check, bank draft or
money order, in United States dollars, payable to our order, (2) through
delivery to us of shares of common stock already owned by the optionee with an
aggregate fair market value on the date of exercise equal to the total exercise
price, (3) by having shares with an aggregate fair market value on the date of
exercise equal to the total exercise price (A) withheld by us or (B) sold by a
broker dealer under the circumstances meeting the requirements of 12 C.F.R. ss.
220 or any successor thereof, (4) by any combination of the above methods of
payment or (5) by any other means determined by the board of directors.
Therefore, if it is provided in an optionee's option agreement, the optionee may
be able to tender shares of common stock to purchase additional shares of common
stock and may theoretically exercise all of his stock options with no additional
investment other than the purchase of his original shares.

Any unexercised options that expire or terminate upon an optionee's
ceasing to be employed by us become available again for reissuance under this
plan. As of October 27, 2003, options exercisable for an aggregate of 257,570
shares of common stock were outstanding pursuant to this plan at a weighted
average exercise price of $11.95 per share. As of October 27, 2003 the per share
market value of our common stock was $5.90.

If Proposal IV is adopted then no additional awards will be made under
the 1998 Stock Option Plan for Senior Executives.

The Board of Directors recommends a vote "FOR" the proposal
to ratify the amendment of the 1998 Stock Option Plan for Senior Executives.

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PROPOSAL III
Ratification of Amendment to our 1999 Stock Option Plan for Non-Executives
-----------

In July 1999, our Board of Directors adopted the 1999 Stock Option Plan
for Non-Executives. This Plan was approved by our stockholders in May 2000. This
plan had provided for the grant of options to purchase up to 500,000 shares of
common stock. In April 2003 our Board of Directors approved an increase of
500,000 in the number of shares available for grant under the plan, bringing the
total to 1,000,000. Since this amendment was approved a total of 5,726 options
have been granted out of the 500,000 additional shares. These option grants are
not conditioned on the approval of this proposal. Shareholder approval of this
action is being sought at the annual meeting.

The increase in the number of authorized shares under the 1999 Stock
Option Plan for Non-Executives was necessary to enable us to continue to issue
options under this plan. The Board of Directors believes that stock option
grants are an important element in attracting and retaining highly qualified
individuals and, therefore, believes that it is in the best interest of our
company for the stockholders to ratify the authorization of additional shares
under the 1999 Stock Option Plan for Non-Executives. There are no requirements
concerning how the 500,000 additional shares are to be allocated among qualified
individuals. The affirmative vote of the holders of a majority of the shares of
our common stock present or represented and voting at the annual meeting will be
required to approve this proposal. If the stockholders do not approve this
proposal and do not approve Proposal IV concerning the 2003 Equity Incentive
Plan then the Board will reconsider whether it will continue to make grants
under this plan.

Description of Plan

The exercise price per share of common stock subject to an option is
determined on the date of grant, and is generally fixed at 100% of the fair
market value per share at the time of grant. The exercise price of any option
granted to an optionee who owns stock possessing more than 10% of the voting
power of our outstanding capital stock must equal at least 110% of the fair
market value of the common stock on the date of grant. Payment of the exercise
price may be made by (1) delivery of cash or a check, bank draft or money order
in United States dollars, payable to our order, (2) through delivery to us of
shares of common stock already owned by the optionee with an aggregate fair
market value on the date of exercise equal to the total exercise price (3) by
having shares with an aggregate fair market value on the date of exercise equal
to the total exercise price (A) withheld by us or (B) sold by a broker-dealer
under circumstances meeting the requirements of 12 C.F.R. ss. 220 or any
successor thereof, (4) by any combination of the above methods of payment or (5)
by any other means determined by the board of directors.

Options granted to employees under this plan generally become
exercisable in increments, based on the optionee's continued employment with us,
over a period of up to three years. The form of option agreement generally
provides that options granted under the plan are not transferable by the
optionee, other than by will or the laws of descent and distribution, and are
exercisable during the optionee's lifetime only by the optionee. In the event of
termination of employment for reasons other than the death or disability of the
optionee, the option shall terminate immediately; provided, however, that the
board of directors may, in its sole discretion, allow the option to be
exercised, to the extent exercisable on the date of termination of employment or
service, at anytime within 60 days from the date of termination of employment or
service. In the event of termination of employment by reason of the death or
disability of the optionee, the option may be exercised, to the extent
exercisable on the date of death or disability, within one year from such date.
Generally, in the event of our merger with or into another corporation or a sale
of all or substantially all of our assets, all outstanding options under the
plan shall accelerate and become fully exercisable upon consummation of such
merger or sale of assets. The Board may accelerate the exercisability of any
option or waive any condition or restriction pertaining to such option at any
time.

Any unexercised options that expire or that terminate upon an
optionee's ceasing to be employed by us become available for reissuance under
this plan. As of October 27, 2003, options exercisable for an aggregate of
154,851 shares of common stock were outstanding pursuant to this plan at a
weighted average exercise price of $16.66.

If Proposal IV is adopted then no additional awards will be made under
the 1999 Stock Option Plan for Non-Executives.

The Board of Directors recommends a vote "FOR" the proposal
to ratify the amendment of the 1999 Stock Option Plan for Non-Executives.

-----------
PROPOSAL IV
Approval of 2003 Equity Incentive Plan
-----------

On October 21, 2003, our Board of Directors adopted our 2003 Equity
Incentive Plan (the "Plan"), subject to approval by our stockholders. This plan
provides for the issuance of a maximum of 1,000,000 shares of our common stock
pursuant to the exercise of stock options granted under the plan to employees,
directors and consultants. The number of shares potentially awardable to
employees, directors, consultants or to any group thereof is not limited under
the except that no employee the Company shall receive an award in excess of
500,000 shares in any year. The purposes of this plan are to are to advance the
interests of the Company, further our long-term growth by providing incentives
to directors, officers and other key employees and consultants who are or will
be responsible for such interests and growth, and to assist us in attracting and
retaining directors, officers, employees and consultants with experience and
ability.

The Board of Directors believes that adoption of this plan will be an
important element in attracting and retaining highly qualified executives,
directors and consultants and, therefore, believes that it is in the best
interest of our company for the stockholders to approve the adoption of this
plan. The affirmative vote of the holders of a majority of the shares of our
common stock present or represented and voting at the annual meeting will be
required to approve this proposal.

The following summary of this plan is subject to the specific
provisions contained in the complete text of the plan attached as Appendix A to
this Proxy Statement.

The plan provides for the issuance of both nonqualified and incentive
stock options as well as other stock-based awards, which may include shares of
common stock and stock appreciation rights. This plan shall be administered by a
Committee made up of at least two non-employee members of our Board of
Directors. The Committee may delegate its authority to make grants under the
Plan, other than to officers, subject to such conditions as may be determined by
the Committee.

This plan authorizes the Committee to grant awards under the plan to
employees, directors and consultants of the Company and its affiliates. In
granting awards, the Committee has discretion to consider the nature of the
services rendered by such persons, their present and potential contribution to
our success in relation to certain predetermined performance goals, and such
other factors as the Committee may deem relevant. Awards will become exercisable
at the times, at the prices and times and upon the conditions that the Committee
may determine, as reflected in the applicable agreement. The exercise period
will be determined by the Committee but may not exceed 10 years from the date of
grant. The amount of consideration, if any, to be received by us in connection
with any award shall be determined by the Committee. The Committee has the
authority to accelerate the vesting and/or exercisability of any outstanding
Awards at such times and under such circumstances as it, in its sole discretion,
deems appropriate. In the event of a Change in Control, as that term is defined
in the plan, any options not assumed by an acquiring or successor corporation
would become immediately vested and exercisable.

This plan has a term of ten years, and the number of shares available
for issuance under the plan is subject to adjustment in the event of a stock
split, reclassification, merger, consolidation, etc. Unless otherwise provided
in the Award, in the event of a change of control of the Company, any
outstanding awards under this plan that are not assumed by the entity that has
acquired control of the Company will become immediately vested and exercisable.

The Board of Directors may at any time and from time to time alter,
amend, suspend or terminate the Plan in whole or in part. However, any such
amendment will be subject to shareholder approval if and to the extent such
shareholder approval is required in order to comply with Section 162(m) of the
Internal Revenue Code of 1986, by applicable law or regulation or the rules of
any securities exchange on which the common stock is principally traded.
Notwithstanding the foregoing, no amendment, suspension or termination may
affect adversely any of the rights of any person who has received an award under
the Plan, without such person's consent. Unless earlier terminated by the Board
pursuant to the provisions of the Plan, the Plan will terminate on the tenth
anniversary of the effective date. No awards may be granted under the Plan after
such termination date. Since the 2003 Equity Incentive Plan has not been
approved by stockholders, no grants have been made under it.

If this proposal is adopted then no additional awards will be made
under the 1998 Stock Option Plan for Senior Executives or the 1999 Stock Option
Plan or Non-Executives.

The Board of Directors recommends a vote "FOR" the proposal to
approve the 2003 Equity Incentive Plan.

-----------
PROPOSAL V
Ratification of Appointment of Auditors
-----------

At the meeting we will ask the stockholders to ratify the appointment
of the firm Grant Thornton LLP as independent auditors to audit our consolidated
financial statements for the fiscal year ending June 30, 2004. A representative
of Grant Thornton is not expected to be present at the Annual Meeting.

Stockholder ratification of the selection of Grant Thornton LLP as our
independent auditors is not required by our Bylaws or other applicable legal
requirement. However, our Board of Directors is submitting the selection of
Grant Thornton LLP to the stockholders for ratification as a matter of good
corporate practice. If the stockholders fail to ratify the selection, the Audit
Committee and the Board of Directors will reconsider whether or not to retain
that firm. Even if the selection is ratified, the Board of Directors at its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if it determines that such a change would be in our
best interests and in the best interests of our stockholders.

The affirmative vote of the holders of a majority of the shares of our
common stock present or represented and voting at the 2003 Annual Meeting will
be required to approve this proposal.

The Board of Directors recommends a vote "FOR" the proposal
to ratify the appointment of Grant Thornton LLP as our independent auditors
for the fiscal year ending June 30, 2004.

Disclosure of Audit and Non-Audit Fees

Audit Fees

The aggregate fees billed by Grant Thornton, LLP for professional
services rendered for the audit of our annual financial statements for the
fiscal year ended June 30, 2003 and for the review of financial statements
included in our quarterly reports on Form 10-Q for the fiscal year were
$132,000. In addition, we incurred aggregate fees of $11,500 during the fiscal
year ended June 30, 2003 from Eisner, LLP (formerly Richard A. Eisner, LLP) for
their review and consent to our audited financial statements for the fiscal year
ended June 30, 2001 included in our report on form 10-K for the fiscal year
ended June 30, 2003.

Financial Information Systems Design and Implementation Fees

During fiscal 2003, we did not engage our independent public
accountants to perform financial information systems design and implementation.

All Other Fees of Independent Public Accountants

During fiscal 2003, all other fees of our independent public
accountants amounted to $64,000, which primarily consisted of accounting and tax
consultation services. The Board of Directors considered whether the provision
of non-audit services is consistent with maintaining the auditor's independence.

Recent Changes in Accountants

On February 4, 2002, we engaged Grant Thornton LLP as our independent
auditor following our dismissal, effective January 31, 2002, of Eisner LLP
(formerly known as Richard A. Eisner & Company, LLP) ("Eisner"). Our board of
directors approved the engagement of Grant Thornton LLP and the dismissal of
Eisner.

Eisner had served as our independent accountants since April 4, 2001.
Eisner's auditors' report on our consolidated financial statements as of and for
the year ended June 30, 2001 contained a separate paragraph stating that it had
substantial doubt about our ability to continue as a going concern. Our
financial statements did not include any adjustments that might result from the
outcome of this uncertainty. Except as noted above, Eisner's report on our
financial statements for the fiscal year ended June 30, 2001 contained no
adverse opinions or disclaimer of opinions, and were not qualified as to audit
scope, accounting principles, or uncertainties.

We notified Eisner that during the most recent fiscal year and the
interim period from July 1, 2001 through January 31, 2002, we were unaware of
any disputes between us and Eisner as to matters of accounting principles or
practices, financial statement disclosure, or audit scope or procedure, which
disagreements, if not resolved to the satisfaction of Eisner, would have caused
it to make a reference to the subject matter of the disagreements in connection
with its reports.

Effective February 4, 2002, we engaged Grant Thornton LLP as our
independent auditors with respect to our fiscal year ending June 30, 2002. We
had previously retained Grant Thornton LLP on an interim basis during our
previous fiscal year, from January 22, 2001 to April 4, 2001. Grant Thornton LLP
had reviewed our interim financial statements for the quarter ended December 31,
2000, but did not issue any reports thereon. Other than this limited engagement,
during our most recent fiscal year and through February 4, 2002, we had not
consulted with Grant Thornton LLP regarding either: (i) the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on our financial statements,
and neither a written report was provided to us nor was oral advice provided
that Grant Thornton LLP concluded was an important factor considered by us in
reaching a decision as to the accounting, auditing or reporting issue; or (ii)
any matter that was either the subject of a disagreement, as that term is
defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to
Item 304 of Regulation S-K, or a reportable event, as that term is defined in
Item 304 (a)(1)(v) of Regulation S-K.

EXECUTIVE COMPENSATION

On June 28, 2002, our stockholders approved amendments to our
Certificate of Incorporation to change our corporate name to "Imergent, Inc."
and to effect a one-for-ten reverse split of the issued and outstanding shares
of our common stock and reduce the authorized number of shares of common stock
from 250,000,000 to 100,000,000. These changes were effected July 2, 2002.
References herein to numbers of shares and prices of shares have been adjusted
to reflect the reverse stock split.

Summary Compensation Table

The following table contains information concerning our chief executive
officer during fiscal year 2003 and our four most highly-compensated executive
officers during fiscal year 2003 who were serving as executive officers at the
end of fiscal year 2003 (as a group, the "named executive officers").

Annual Compensation Long-Term Compensation Awards
All Other
Salary Bonus Restricted Stock Stock Options Compensation
Name and Principal Position Year ($) ($) Awards ($) (#) $
---------------------------------------------------------------------------------------------------------------------

John J. "Jay" Poelman (1) 2003 125,512 73,429 - 200,000 -
Chief Executive Officer 2002 119,274 148,591 - -
2001 134,200 86,339 - 27,500 -

Brandon Lewis(2) 2003 118,957 67,159 150,000
President 2002 104,787 124,565 - - -
2001 106,542 69,154 - 27,500 -

Frank C. Heyman 2003 89,136 34,564 100,000
Chief Financial Officer 2002 86,513 78,089 - - -
2001 71,165 58,799 - 15,000 -

David Rosenvall 2003 123,396 11,735 65,000
Chief Technology Officer 2002 111,539 20,760 - - -
2001 117,343 - - 15,000 -

David Wise 2003 94,176 19,708 85,000
Vice President - Operations 2002 102,139 53,852 - - -
2001 103,841 61,792 - 12,500 -

All Officers and Directors
as a Group 2003 551,177 206,595 - 600,000 -
2002 524,252 425,857 - - -
2001 533,091 276,084 - 97,500 -

(1) Mr. Poelman was appointed as chief executive officer on May 7, 2002.
Prior to this appointment, he served as our president and chief
operating officer from January 5, 2001. Immediately following the end
of our fiscal year ending June 30, 2003, Mr. Poelman retired and
resigned his positions as Chief Executive Officer and Director

(2) Mr. Lewis was appointed as our President on May 7, 2002. Prior to this
appointment, he served as our Executive Vice-President, Sales and
Marketing.

Employment Agreements

We currently do not have, nor did we have during fiscal 2003,
employment agreements with any of our executive officers.

Stock Option Grants in Last Fiscal Year

The following table sets forth certain information concerning options
to purchase our common stock that were granted in fiscal year 2003 to the named
executive officers. We did not grant SARs in fiscal year 2003.

Individual Grants
-----------------------------------------
Percent of Total Potential Realizable Value
Number of Options At Assumed Annual Rates of
Name Securities Granted to Exercise or Stock Price Appreciation For
Underlying Employees Base Price Option Term
Options Granted in Fiscal Year $ Expiration Date $
------------------------------
5% 10% 0% (1)
--------------------------------------------------------------------------------------------------------------------

Donald Danks - - - - - - -

Jay Poelman 100,000 11.0% 1.50 12/20/2012 456,090 726,248 -
100,000 11.0% 2.03 4/9/2013 369,759 588,780 -

Brandon Lewis 100,000 11.0% 1.50 12/20/2012 456,090 726,248 -
50,000 5.5% 2.03 4/9/2013 184,880 294,390 -

Frank Heyman 50,000 5.5% 1.50 12/20/2012 228,045 363,124 -
50,000 5.5% 2.03 4/9/2013 184,880 294,390 -

David Wise 60,000 6.6% 1.50 12/20/2012 273,654 435,749 -
25,000 2.7% 2.03 4/9/2013 92,440 147,195 -

David Rosenvall 40,000 4.4% 1.50 12/20/2012 182,436 290,499 -
25,000 2.7% 2.03 4/9/2013 92,440 147,195 -

Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

The following table sets forth information concerning the year-end
number and value of unexercised options with respect to each of the named
executive officers. None of these individuals exercised any options during
fiscal year 2003.

Numbers of Securities Underlying
Unexercised Options at Fiscal
Year End Value of Unexercised In-The-Money
(#) Options at Fiscal Year End ($) (1)
----------------------------------- -----------------------------------
Name Exercisable Unexerciseable Exercisable Unexerciseable
------------------------- ----------------------------------- -----------------------------------

Donald Danks - - - -

Jay Poelman 73,601 166,667 $ 76,020 $ 294,168

Brandon Lewis 68,780 129,468 $ 59,104 $ 209,584

David Rosenvall 37,084 54,166 $ 27,835 $ 92,290

David Wise 32,413 74,663 $ 31,272 $ 117,291

Frank Heyman 46,030 86,526 $ 38,790 $ 147,085

(1) Based on the closing sale price of our common stock on the OTC
bulletin board at fiscal year end of $4.30 per share less the exercise price
payable for the shares. The fair market value of our common stock at June 30,
2003 was determined on the basis of the closing sale price of our common stock
on June 30, 2003, the last trading day prior to fiscal year-end.

Stock Option Plans

In addition to the 1999 Stock Option Plan for Non-Executives and the
1998 Stock Option Plan for Executives, described elsewhere in this proxy
statement, shares of our common stock are issuable pursuant to the 1998 Stock
Compensation Program and pursuant to our merger in 2000 with Galaxy Enterprises,
Inc. under the Galaxy Enterprises 1997 Employee Stock Option Program.

In July 1998, our Board of Directors adopted the 1998 Stock
Compensation Program. Our stockholders approved the program in December 1998.
This program provides for the grant of options to purchase up to 100,000 shares
of common stock to officers, employees, directors and independent contractors
and agents. Options may be either incentive stock options or non-qualified stock
options under Federal tax laws.

The Compensation Committee now administers this program. The
Compensation Committee determines, among other things, the individuals who will
receive options, the time period during which the options may be partially or
fully vested and exercisable, the number of shares of common stock issuable upon
the exercise of each option and the option exercise price.

The exercise price per share of common stock subject to an incentive
option may not be less than the fair market value per share of common stock on
the date the option is granted. The aggregate fair market value of common stock
for which any person may be granted incentive stock options which first become
exercisable in any calendar year may not exceed $100,000 on the date of grant.

No stock option may be transferred by an optionee other than by will or
the laws of descent and distribution or, if permitted, pursuant to a qualified
domestic relations order and, during the lifetime of the optionee, the option
will be exercisable only by the optionee. In the event of termination of
employment for reasons other than the death or disability of the optionee, the
option shall terminate immediately; provided, however, that the Board of
Directors may, in its sole discretion, allow the option to be exercised, to the
extent exercisable on the date of termination of employment or service, at
anytime within 60 days from the date of termination of employment or service. In
the event of termination of employment by reason of the death or disability of
the optionee, the option may be exercised, to the extent exercisable on the date
of death or disability, within one year from such date.

We may grant options under this program within ten years from the
effective date of the plan. The effective date of this program is July 31, 1998.
Holders of incentive stock options granted under this program cannot exercise
these options more than ten years from the date of grant. Payment of the
exercise price may be made by (1) delivery of cash or a check, bank draft or
money order, in United States dollars, payable to our order, (2) through
delivery to us of shares of common stock already owned by the optionee with an
aggregate fair market value on the date of exercise equal to the total exercise
price, (3) by having shares with an aggregate fair market value on the date of
exercise equal to the total exercise price (A) withheld by us or (B) sold by a
broker dealer under the circumstances meeting the requirements of 12 C.F.R. ss.
220 or any successor thereof, (4) by any combination of the above methods of
payment or (5) by any other means determined by the board of directors.
Therefore, if it is provided in an optionee's option agreement, the optionee may
be able to tender shares of common stock to purchase additional shares of common
stock and may theoretically exercise all of his stock options with no additional
investment other than the purchase of his original shares.

This program permits us to grant, in addition to incentive stock
options and non-qualified stock options: (i) rights to purchase shares of our
common stock to employees; (ii) restricted shares of our common stock; (iii)
stock appreciation rights; and (iv) performance shares of common stock. However,
we have not issued any other type of compensation under this program other than
non-qualified stock options and have agreed not to do so in the future.

Any unexercised options that expire or that terminate upon an
optionee's ceasing to be employed by us become available again for reissuance
under this program. As of June 30, 2003, options exercisable for an aggregate of
8,432 shares of common stock were outstanding pursuant to this program at a
weighted average exercise price of $33.19 per share.

Pursuant to the terms of the merger with Galaxy Enterprises, Inc., each
outstanding option to purchase shares of Galaxy Enterprises common stock under
Galaxy Enterprises' 1997 Employee Stock Option Plan was assumed by us, whether
or not vested and exercisable. We assumed options exercisable for an aggregate
of 166,582 shares of common stock of Galaxy Enterprises. As at June 30, 2003,
outstanding options assumed in the Galaxy merger were exercisable for 57,239
shares of our common stock at a weighted average exercise price of $16.20.

Equity Compensation Plan Information

The following table and note provide information about shares of our
common stock that were issuable as of October 27, 2003 pursuant to exercise of
options under all of our existing equity compensation plans other than our 2003
Equity Incentive Plan which is subject to stockholder approval.

--------------------------------------------- ------------------------- ----------------------- ----------------------
Number of securities
remaining available
for future issuance
Number of securities Weighted-average under equity
to be issued upon exercise price compensation plans
Plan Category exercise of outstanding of outstanding (excluding securities
options options reflected in column (a))
--------------------------------------------- ------------------------- ----------------------- ----------------------
(a) (b) (c)
--------------------------------------------- ------------------------- ----------------------- ----------------------

Equity compensation plans approved (1), (3) 498,750 (1) $ 7.24 -
by security holders 8,432 (2) $33.20 65,617
437,551 (3) $ 6.85 528,607
--------------------------------------------- ------------------------- ----------------------- ----------------------
Equity compensation plans not approved 179,375(1) $2.03 320,625
by security holders -(3) - 500,000
69,420 (4) $17.66 -
--------------------------------------------- ------------------------- ----------------------- ----------------------
Total 1,193,528 $ 7.04 914,849
--------------------------------------------- ------------------------- ----------------------- ----------------------
--------------------

(1) To be issued under our Amended and Restated 1998 Stock Option Plan for
Senior Executives. This plan provides for the grant of options to
purchase up to 1,000,000 shares of common stock to our senior
executives. Options may be either incentive stock options or
non-qualified stock options under Federal tax laws. This plan formerly
provided for the issuance of up to 500,000 shares and was amended by
our Board of Directors on April 9, 2003 to increase by 500,000 shares
the number of shares of common stock issuable thereunder as
non-qualified stock options. The amendment has not been approved by
our stockholders but is the subject of Proposal II. If Proposal IV is
approved no additional grants will be made under the 1998 Stock Option
Plan for Senior Executives.

(2) To be issued under our 1998 Stock Compensation Program. This program
provided for the grant of options to purchase up to 100,000 shares of
common to officers, employees, directors and independent contractors
and agents. Options may be either incentive stock options or
non-qualified stock options under Federal tax laws.

(3) To be issued under our 1999 Amended and Restated Stock Option Plan for
Non-Executives. This plan provides for the grant of options to
purchase up to 1,000,000 shares of our common stock. Options granted
under this plan generally become exercisable in increments over a
period of up to four years. This plan formerly provided for the
issuance of up to 500,000 shares and was amended by our Board of
Directors on April 9, 2003 to increase by 500,000 shares the number of
shares of common stock issuable thereunder as non-qualified stock
options. The amendment has not been approved by our stockholders but
is the subject of Proposal III. If Proposal IV is approved no
additional grants will be made under the 1999 Stock Option Plan for
Non-Executives.

(4) To be issued under the 1997 Employee Stock Option Plan of Galaxy
Enterprises, Inc. This plan was assumed by us pursuant to the terms of
our merger with Galaxy Enterprises in June 2000. No additional shares
of stock are available for grant under this plan.

Federal Tax Consequences of Equity Incentive Plans

The following general summary describes the typical U.S. federal income
tax consequences of awards granted under our various equity incentive plans
based upon provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), as in effect on the date hereof, current regulations promulgated and
proposed thereunder, and existing public and private administrative rulings of
the Code, all of which are subject to change (possibly with retroactive effect).
This is not intended to be a complete analysis and discussion of the federal
income tax treatment of Awards, and does not discuss estate or gift taxes or the
income tax laws of any municipality, state, or foreign country. We generally
will be entitled to withhold any required taxes in connection with the exercise
or payment of an award, and may require the participant to pay such taxes as a
condition to exercise of an award.

Stock Options. ISOs and non-qualified stock options ("NQSOs") are
treated differently for federal income tax purposes. ISOs are intended to
satisfy the requirements of Section 422 of the Code. NQSOs need not satisfy such
requirements.

A participant is not taxed on the grant or, except as described in the
next sentence, the exercise of an ISO. The difference between the exercise price
and the fair market value of the shares on the exercise date, however, will be a
preference item for purposes of the alternative minimum tax, and thus a
participant could be subject to the alternative minimum tax as a result of the
exercise of an ISO. If a participant holds the shares acquired upon exercise of
an ISO for at least two years following the option grant date and at least one
year following exercise, the participant's gain, if any, upon a subsequent
disposition of such shares is long-term capital gain. The measure of the gain is
the difference between the proceeds received on disposition and the
participant's basis in the shares (which generally equals the exercise price).

If a participant disposes of shares acquired pursuant to exercise of an
ISO before satisfying the one and two-year holding periods described above,
then: (i) if the proceeds received exceed the exercise price of the ISO, the
participant will recognize capital gain equal to the excess, if any, of the
proceeds received over the fair market value of the shares on the date of
exercise, and will recognize ordinary income equal to the excess, if any, of the
lesser of the proceeds received or the fair market value of the shares on the
date of exercise over the exercise price of the ISO; or (ii) if the proceeds
received are less than the exercise price of the ISO, the participant will
recognize a capital loss equal to the excess of the exercise price of the ISO
over the proceeds received. Capital gains (or losses) recognized upon a
disqualifying disposition will be taxable as long term capital gains (or losses)
if the participant held the shares for more than one year after the exercise of
the ISO, or otherwise as short-term capital gains (or losses).

We are is not entitled to an income tax deduction on the grant or
exercise of an ISO or on the participant's disposition of the shares after
satisfying the holding period requirements described above. If the holding
periods are not satisfied, we will be entitled to a deduction in the year the
participant disposes of the shares in an amount equal to the ordinary income
recognized by the participant.

The recipient of an NQSO will not realize any taxable income upon the
grant of the option. Upon exercise of such option, the participant will realize
ordinary income in an amount generally measured by the excess, if any, of the
fair market value of the shares on the date of exercise over the option exercise
price. We will generally be entitled to a deduction in the same amount as the
ordinary income realized by the participant. Upon the sale of such shares, the
participant will realize short-term or long-term capital gain or loss, depending
upon the length of time the shares are held. Such gain or loss will be measured
by the difference between the sale price of the shares and the fair market value
on the date of exercise.

Special rules will apply in cases where a recipient of an award pays
the exercise or purchase price of the award or applicable withholding tax
obligations by delivering previously owned shares or by reducing the number of
shares otherwise issuable pursuant to the award. The surrender or withholding of
such shares will in certain circumstances result in the recognition of income
with respect to such shares or a carryover basis in the shares acquired, and may
constitute a disposition for purposes of applying the ISO holding periods
discussed above.

Stock Appreciation Rights. There will be no federal income tax
consequences to either the participant or us on the grant of a stock
appreciation right or while the right remains outstanding. Upon the exercise of
such right, the participant will recognize ordinary income in an amount equal to
the amount of cash and/or the fair market value, at the date of such exercise,
of the shares received by such participant as a result of such exercise. We will
generally be entitled to a corresponding tax deduction.

Restricted Stock. The federal income tax consequences of a grant of
restricted stock depend upon whether or not a participant elects to be taxed at
the time of the grant of such shares under Section 83(b) of the Code (an "83(b)
election"). If no 83(b) election is made, the participant will not recognize
taxable income at the time of the grant of the restricted stock. When the
restrictions on the shares lapse, the participant will recognize ordinary
taxable income in an amount equal to the fair market value of the restricted
stock at that time. If the 83(b) election is made, the participant will
recognize taxable income at the time of the grant of the restricted stock in an
amount equal to the fair market value of such shares at that time, determined
without regard to any of the restrictions. If the shares are forfeited before
the restrictions lapse, the participant will be entitled to no deduction on
account thereof.

The participant's tax basis in the restricted stock is the amount
recognized by him or her as income attributable to such shares. Gain or loss
recognized by the participant on a subsequent disposition of any such shares is
capital gain or loss if the shares are otherwise capital assets.

We will be entitled to a tax deduction in the same amount as the income
recognized by the participant as a result of the grant of restricted stock or
lapse of restrictions in the taxable year in which the participant recognizes
such income.

Restricted Stock Units/ Other Stock Unit Awards. Participants will not
have taxable income upon the grant of restricted stock units or other stock unit
awards. Recognition of taxable income is postponed until the restrictions on the
units lapse. At that time, the participant will recognize taxable income equal
to the then fair market value of the shares or other property issuable in
payment of such restricted stock units or other stock unit awards, and such
amount will be the tax basis for such shares. We will be entitled to a tax
deduction in the same amount as the income recognized by the participant as a
result of the lapse of restrictions in the taxable year in which the participant
recognizes such income.

Deferred Awards. If a participants defers payment of any awards, the
participant generally will be taxed at the time of actual payment on the amount
of cash and the fair market value of any other property received. We generally
will be entitled to a corresponding tax deduction at that time.

Transfers of Awards. Transferring an award to a family member or
another permitted transferee does not change the federal income tax consequences
of the award. Rather, the participant is taxed at the same time he or she would
have been taxed if he or she held the property directly (e.g., upon exercise of
an NQSO). The family member's tax basis in any shares received will be increased
by the amount the employee or his or her estate recognizes as income, and we
will be entitled to a corresponding tax deduction.

Other Tax Issues. Awards under our plans may qualify as
"performance-based compensation" under Section 162(m) of the Code in order to
preserve federal income tax deductions by us with respect to any compensation
required to be taken into account under Section 162 of the Code that is in
excess of $1,000,000 and paid to a Covered Employee (as defined in Section 162).
Compensation for any year that is attributable to an award granted to a Covered
Employee and that does not so qualify may not be deductible by us to the extent
such compensation, when combined with other compensation paid to such employee
for the year, exceeds $1,000,000.

As noted above, the Committee or the Board of Directors, in its sole
discretion, may accelerate the payment or vesting or release any restrictions on
any awards in the event of a change in control (as defined in the relevant
plan). If a participant's award vests as a result of certain changes in control
and the participant is an officer, shareholder or highly-compensated employee,
such acceleration could be subject to the "golden parachute" provisions of
Sections 280G and 4999 of the Code. In that event, we could be denied all or
part of our tax deduction and the participant could be subject to excise tax.

Compensation Committee Interlocks and Insider Participation

During fiscal 2003, the Compensation Committee of the Board of
Directors comprised the entire Board. On September 19, 2003 the Board of
Directors appointed a Compensation Committee of independent directors consisting
of Pete Fredericks, Chairman, Gary S. Gladstein and Thomas Scheiner. No
interlocking relationships existed between our Compensation Committee and the
board of directors or compensation committee of any other company, nor has any
such interlocking relationship existed in the past. There are no interlocking
relationships between us and other entities that might affect the determination
of the compensation of our directors and executive officers.

Board Compensation Committee Report on Executive Compensation

The Compensation Committee of our Board of Directors believes that the
compensation levels of our executive officers should consist of (i) base
salaries that are commensurate with executives of other comparable e-commerce
companies and (ii) cash bonus opportunities based on achievement of objectives
set by the compensation committee with respect to the chief executive officer
and the president, and by the chief executive officer and the president, in
consultation with the Compensation Committee, with respect to our other
executive officers. The Compensation Committee also believes that it is
important to provide our executive officers with significant stock-based
incentive compensation that increases in value in direct correlation with
improvement in the performance of our common stock, thereby aligning
management's interest with that of our stockholders.

The Compensation Committee considered the following factors (ranked in
order of importance) when determining compensation of our executive officers:
(i) our performance measured by attainment of specific strategic objectives,
stock price performance and operating results; (ii) the individual performance
of each executive officer, including the achievement by the executive (or the
executive's functional group) of identified goals; and (iii) historical cash and
equity compensation levels.

The salaries of some of our executive officers were initially set by
their respective employment agreements. As stated above, the compensation of
executive officers is now based upon individual performance and comparative
industry compensation levels. Typically, early in each year, a performance plan
is established. Each plan sets forth overall goals to be achieved by us, as well
as specific performance goals to be achieved by each of our executive officers
according to his or her duties and responsibilities, for the relevant year.
These overall compensation goals include: (i) the meeting of targets relating to
the gross revenues from operations; (ii) the meeting of targets relating to new
customers in each of our targeted markets and to additional sales to existing
customers in each of those markets; (iii) the acquisition of technologies and
businesses consistent with our business and product goals and the successful
integration of the acquired businesses and technologies; (iv) the enhancement of
strategic relationships; (v) the meeting of cash flow, expense and other
budgetary targets; and (vi) the achievement of appreciation in our stock price.

Bonus compensation for each executive, when awarded, was determined
based on the executive's achievement of overall corporate goals and individual
and functional area goals. Other executive officers received salary increases
and bonuses based on their achievement of overall corporate goals and individual
and functional area goals. On average, the compensation committee believes the
cash compensation for our executive officers is comparable to industry salary
and bonus levels.

The full Board of Directors and, upon formation of the Compensation
Committee, the Compensation Committee, administer and authorize all grants and
awards made under the 1998 Stock Compensation Program, the 1998 Stock Option
Plan for Senior Executives and the 1999 Stock Option Plan for Non-Executives. In
some instances, awards have been authorized for new employees as incentives to
join us. In determining whether and in what amount to grant stock options or
other equity compensation to executive officers, the Board of Directors or the
non-employee members of the Compensation Committee have considered the amount
and date of vesting of then-currently outstanding incentive equity compensation
granted previously to each executive officer. The Compensation Committee
believes that continued grants of equity compensation to key executives are
necessary to retain and motivate exceptionally talented executives who are
necessary to achieve our long-term goals, especially at a time of significant
growth and competition in our industry.

During recent fiscal years, the Board of Directors or non-employee
members of the Compensation Committee have approved grants of equity
compensation to all the executive officers named in the Summary Compensation
Table above and approved grants of equity compensation to certain of the other
executive officers, consistent with the overarching policy of the Board and
Compensation Committee of granting equity compensation to key executives and to
our employees in general.

Respectfully submitted,

Peter Fredericks, Chairman
Thomas Schneiner
Gary S. Gladstein

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

John J. Poelman, our former Chief Executive Officer and a former
director, was the sole owner of Electronic Commerce International, Inc. ("ECI")
during the fiscal years ended June 30, 2002 and 2001 and during the three months
ended September 30, 2002. During this period, we purchased a merchant account
solutions product from ECI that provided on-line, real-time processing of credit
card transactions and resold this product to our customers. We also formerly
utilized the services of ECI to provide a leasing opportunity to customers who
purchased our products at our Internet training workshops. Effective October 1,
2002, Mr. Poelman sold certain assets and liabilities of ECI, including ECI's
corporate name and its relationship with us, to an unrelated third party. Total
revenue generated by us from the sale of ECI's merchant account solutions
product, while ECI's business was owned by Mr. Poelman, was $1,453,612,
$5,106,494 and $6,403,478 for the years ended June 30, 2003, 2002 and 2001,
respectively. The cost to us for these products and services totaled $223,716,
$994,043 and $975,257 for the years ended June 30, 2003, 2002 and 2001,
respectively. During the years ended June 30, 2003, 2002 and 2001, we processed
leasing transactions for our customers through ECI in the amounts of $0,
$1,090,520 and $3,386,231, respectively. As of June 30, 2003 and 2002, we had no
receivable balance due from ECI for leases in process. In addition, we had $0
and $26,702 as of June 30, 2003 and 2002, respectively, recorded in accounts
payable relating to the amounts owed to ECI for the purchase of the merchant
account software while owned by Mr. Poelman.

We utilize Electronic Marketing Services, LLC. ("EMS") to provide a
live chat capability for our customers. Ryan Poelman, who owns EMS, is the son
of John J. Poelman, our former Chief Executive Officer and a director. Our
revenues generated from EMS' products and services were $6,330,343, 4,806,497
and $1,263,793 for the years ended June 30, 2003, 2002 and 2001, respectively.
The cost to us for these products and services totaled $994,827, $479,984 and
$78,435 during the years ended June 30, 2003, 2002 and 2001, respectively. In
addition, we had $92,094 and $53,023 as of June 30, 2003 and 2002, respectively,
recorded in accounts payable relating to the amounts owed to EMS for product and
services.

We send complimentary gift packages to our customers who register to
attend our workshop training sessions. An additional gift is sent to workshop
attendees who purchase products at the conclusion of the workshop. We utilize
Simply Splendid, LLC ("Simply Splendid") to provide these gift packages to our
customers. Aftyn Morrison, who owns Simply Splendid, is the daughter of John J.
Poelman, who was formerly our Chief Executive Officer and a director. We paid
Simply Splendid $421,265, 0, and $0 to provide these products during the years
ended June 30, 2003, 2002 and 2001, respectively. In addition, we had $22,831
and $0 as of June 30, 2003 and 2002, respectively, recorded in accounts payable
relating to the amounts owed to Simply Splendid for gift packages.

PERFORMANCE GRAPH

The graph below shows the cumulative total stockholder return assuming
the investment of $100.00 on the date specified in the graph (and, if paid, in
the reinvestment of dividends thereafter) in each of our common stock, the S&P
500 Index, the Nasdaq Composite Index, the peer group for our common stock (the
"New Peer Group") and the peer group reported in our proxy statement from last
year (the "Old Peer Group"). We changed the peer group used in this comparative
graph in order to delete companies no longer deemed to be appropriate for
comparative purposes. The New Peer Group is composed of those companies with
whom we compete and are as follows: ART Technology Group, Inc., Broadvision,
Inc., Viant Corporation, Vignette Corporation, and Cybersource Corporation.
Viant Corporation merged with divine, inc. in 2002 and has not been included in
a calculation of the New Peer Group average for 2003. The Old Peer Group
includes those companies set forth above as well as Corel Corporation,
Interwoven, Inc., Cybersource Corporation, National Processing Inc., Sungard
Data Systems Inc., and Total System Services, Inc.

[GRAPHIC OMITTED][GRAPHIC OMITTED]

* $100 invested on 11/18/99 in stock or index - including reinvestment of
dividends. Fiscal year ending June 30th.

AUDIT COMMITTEE REPORT

In accordance with its written charter adopted by the Board of
Directors on May 24, 2000, a copy of which is set out in Appendix B to this
proxy statement, the Audit Committee is responsible for reviewing and discussing
the Company's audited financial statements with management, discussing
information with the Company's auditors relating to the auditors' judgments
about the quality of our accounting principles, recommending to the Board of
Directors that the audited financials be included in the Company's Annual Report
on Form 10-K and overseeing compliance with the Securities and Exchange
Commission requirements for disclosure of auditors' services and activities.
During fiscal year 2003 and until August 12, 2003, the Audit Committee consisted
of our Board of Directors. On August 12, 2003 an Audit Committee consisting of
Gary S. Gladstein (Chairman), Thomas Scheiner and Peter Fredericks was
appointed. The Board of Directors has determined that each of these persons is
independent. The Audit Committee is currently evaluating our Audit Committee
Charter with a view to revising and restating it in light of recent corporate
governance initiatives. In the event the Audit Committee adopts a new charter,
this charter will be published on our website.

The Company's management has the primary responsibility for the
Company's financial statements as well as its financial reporting process,
principles and internal controls. The Company's independent auditors are
responsible for performing an audit of our financial statements and expressing
an opinion as to the conformity of such financial statements with generally
accepted accounting principles. The Audit Committee is responsible for, among
other things, reviewing the results of the audit engagement with our independent
auditors; reviewing the adequacy, scope and results of the internal accounting
controls and procedures; reviewing the degree of independence of the auditors;
reviewing the auditors' fees; and recommending the engagement of auditors to the
full board of directors.

In this context, the Audit Committee reviewed and discussed the audited
financial statements of the Company as of and for the year ended June 30, 2003
with management and the independent auditors. The Audit Committee discussed with
the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), as currently in
effect. In addition, the Audit Committee received the written Standard No. 1
(Independence Discussions with Audit Committees), as currently in effect, and
discussed with the auditors their independence from the Company. The Audit
Committee has also considered whether the independent auditor's provisions of
non-audit services to us is compatible with maintaining the auditor's
independence.

The members of the Audit Committee are not engaged in the accounting or
auditing profession. In the performance of their oversight function, the members
of the Audit Committee necessarily relied upon the information, opinions,
reports and statements presented to them by management of the Company and by the
independent auditors. As a result, the Audit Committee's oversight and the
review and discussions referred to above do not assure that management has
maintained adequate financial reporting processes, principles and internal
controls, that our financial statements are accurate, that the audit of such
financial statements has been conducted in accordance with generally accepted
auditing standards or that our auditors meet the applicable standards for
auditor independence.

Based on the reports and discussions above, the Audit Committee
recommended that the audited financial statements be included in our Annual
Report on Form 10-K for the year ended June 30, 2003.

Members of the Audit Committee of the Board of Directors

Gary S. Gladstein, Chairman
Peter Fredericks
Thomas Scheiner

The above report of the Audit Committee will not be deemed to
be incorporated by reference to any filing by us under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that we specifically incorporate the same by reference.

ADDITIONAL INFORMATION

Annual Report

Our Annual Report on Form 10-K for the fiscal year ended June 30, 2003
is enclosed herewith. Additional copies of such report are available upon
request.

Stockholder Proposals for Action at Our Next Annual Meeting

Any stockholder who wishes to present any proposal for stockholder
action at the next Annual Meeting of Stockholders to be held in 2004, must be
received by our Secretary, at our offices, not later than June 30, 2004, in
order to be included in our proxy statement and form of proxy for that meeting.
Such proposals should be addressed to the Corporate Secretary, Imergent, Inc.,
754 East Technology Avenue, Orem, Utah 84097. If a stockholder proposal is
introduced at the 2004 Annual Meeting of Stockholders without any discussion of
the proposal in our proxy statement, and the stockholder does not notify us on
or before August 14, 2004, as required by SEC Rule 14(a)-4(c)(1), of the intent
to raise such proposal at the Annual Meeting of Stockholders, then proxies
received by us for the 2004 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.

In addition to the solicitation of proxies by mail, certain of our
officers and employees, without extra compensation, may solicit proxies
personally or by telephone, telegraph, or cable. We will also request brokerage
houses, nominees, custodians, and fiduciaries to forward soliciting materials to
the beneficial owners of our common stock held of record and will reimburse such
persons for forwarding such material. We will pay the costs of this solicitation
of proxies.

* * *

By Order of the Directors

/s/ Frank C. Heyman
Frank C. Heyman, Secretary

Dated: October 29, 2003

Appendix "A"

IMERGENT, INC.

2003 EQUITY INCENTIVE PLAN

1. Purpose.

Imergent, Inc. (the "Company") has adopted this 2003 Equity Incentive
Plan (the "Plan") as of October 21, 2003, subject to the approval of
the Plan by the Company's stockholders. The purposes of the Plan are to
advance the interests of the Company, further the long-term growth of
the Company by providing incentives to those directors, officers and
other employees and consultants of the Company and its Affiliates (as
defined below) who are or will be responsible for such interests and
growth, thereby increasing the identity of their interest with those of
the Company's stockholders; and to assist the Company in attracting and
retaining directors, officers, employees and consultants with
experience and ability.

2. Definitions. As used in the Plan, the following terms shall have the
meanings set forth below:

"Affiliate" shall mean (1) any entity that, directly or indirectly, is
controlled by the Company and (2) any entity in which the Company has a
significant equity interest, in either case as determined by the
Committee.

"Award" shall mean any Option or Other Stock-Based Award granted under
the Plan.

"Board" shall mean the Board of Directors of the Company.

"Change in Control" shall mean, except as otherwise provided in an
Award, the happening of any of the following:

(i) the acquisition, by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) of 50% or more of either
(A) the then outstanding shares of Common Stock of the
Company or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors; or

(ii) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company or the sale or
other disposition of all or substantially all of the assets
of the Company.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Committee" shall mean the Compensation Committee of the Board or any
successor committee or the entire Board if there shall be no such
committee.

"Common Stock" shall mean the common stock of the Company, par value
$.001 per share.

"Company" shall mean Imergent, Inc., a Delaware corporation, including
any successor thereto.

"Effective Date" shall mean October 21, 2003.

"Employee" shall mean any employee of the Company or an Affiliate
(whether or not incorporated) of the Company.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

"Fair Market Value" of a share of Common Stock as of a particular date
shall mean (i) the closing sales price per share of Common Stock on
such date on the national securities exchange on which the Common Stock
is principally traded or, if there were no sales of such Common Stock
on such exchange on such date, on the last preceding date on which
there was a sale of such Common Stock on such exchange, (ii) if the
shares of Common Stock are not then listed on a national securities
exchange, but are traded in an over-the-counter market, the average of
the closing bid and asked prices for the shares of Common Stock in such
over-the-counter market for the last preceding date on which there was
a sale of such Common Stock in such market or (iii) if the shares of
Common Stock are not then listed on a national securities exchange or
traded on an over-the-counter market, such value as the Committee, in
its sole discretion, shall determine.

"Incentive Stock Option" shall mean an Option intended to qualify as an
"incentive stock option" under Section 422 of the Code.

"Nonqualified Stock Option" shall mean an Option not intended to be an
Incentive Stock Option.

"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.

"Other Stock-Based Award" shall have the meaning set forth in Section
7.

"Participant" shall mean an individual who has been granted an Award
under the Plan.

"Performance Goal" shall mean one or more of the following
pre-established criteria, determined in accordance with generally
accepted accounting principles, where applicable: (1) net earnings; (2)
earnings per share; (3) net sales growth; (4) net income (before
taxes); (5) net operating profit; (6) return measures (including, but
not limited to, return on assets, capital, equity or sales); (7) cash
flow (including, but not limited to, operating cash flow and free cash
flow); (8) earnings before or after taxes, interest, depreciation,
and/or amortization; (9) productivity ratios; (10) share price
(including, but not limited to, growth measures and total stockholder
return); (11) expense targets; (12) operating efficiency; (13) customer
satisfaction; (14) working capital targets; (15) any combination of, or
a specified increase in, any of the foregoing; or (16) the formation of
joint ventures, or the completion of other corporate transactions.
Without limiting the generality of the foregoing, the Committee shall
have the authority to make equitable adjustments in the Performance
Goals in recognition of unusual or non-recurring events affecting the
Company, in response to changes in applicable laws or regulations, or
to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent occurrence or related
to the disposal of a segment of a business or related to a change in
accounting principles.

"Plan" shall mean the Imergent 2003 Equity Incentive Plan.

"Subsidiary" shall mean any company of which the Company owns, directly
or indirectly, fifty percent (50%) or more of the stock.

3. Administration.

The Plan shall be administered and interpreted by the Committee, as
designated by the Board, of not less than two members of the Board as
appointed from time to time by the Board. Unless otherwise determined
by the Board, the Committee shall consist solely of members who are
"nonemployee directors" within the meaning of Rule 16b-3, as from time
to time amended, promulgated under Section 16 of the Exchange Act and
"outside directors" within the meaning of Section 162(m) of the Code
and shall be constituted to satisfy any applicable corporate governance
or national securities exchange requirements or regulations, the rules
and regulations of any governing governmental agencies and any other
applicable law. The Committee may delegate its authority to make grants
under the Plan, subject to conditions determined by the Committee, to
such person(s) as the Committee shall determine, provided that in no
event shall the Committee delegate the authority to make or approve
Awards to Employees who are officers of the Company.

Subject to the express provisions of the Plan, the Committee shall have
the authority to (1) designate Participants; (2) determine the type or
types of Awards to be granted to a Participant; (3) determine the
number of shares of Common Stock to be covered by Awards; (4) determine
the terms and conditions of any Award, including but not limited to
whether the vesting or payment of all or any portion of any Award may
be made subject to one or more Performance Goals; (5) determine
whether, to what extent, and under what circumstances Awards may be
settled or exercised in cash, Common Stock, other securities, other
Awards or other property, or cancelled, forfeited, or suspended and the
method or methods by which Awards may be settled, exercised, cancelled,
forfeited, or suspended; (6) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (7)
establish, amend, suspend, or waive such guidelines, rules and
regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (8) make any other
determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
Notwithstanding the foregoing, neither the Committee nor its delegate
shall have the authority to price (or cancel and regrant) any Option
or, if applicable, other Award at a lower exercise, base or purchase
price without first obtaining the approval of the Company's
stockholders. The terms of Awards need not be consistent with one
another. The granting of Awards by the Committee shall be entirely
discretionary and nothing in this Plan shall be deemed to give any
Employee any right to receive awards. The Committee's determinations
with respect to the Plan and any Award shall be binding and conclusive
on all parties.

The Committee is also specifically authorized, in the event of a public
solicitation, by any person, firm or corporation other than the
Company, of tenders of 50% or more of the then outstanding Common Stock
(known conventionally as a "tender offer"), to accelerate
exercisability of and lift any restrictions with respect to some or all
Awards held by Participants so that such Award will immediately become
exercisable, vested, and transferable in full; provided that such
accelerated exercisability and lifting of restrictions shall continue
in effect only until expiration, termination or withdrawal of such
tender offer, whereupon such Awards will be (and continue thereafter to
be) exercisable, vested, and transferable only to the extent that they
would have been if no such acceleration of exercisability and lifting
of restrictions had been authorized.

4. Eligibility.

Any Employee, consultant to the Company or member of the Board who is
determined by the Committee to be making or to be expected to make a
contribution to the success of the Company shall be eligible to receive
Awards under the Plan.

5. Stock.

Authorized Shares. A maximum of 1,000,000 shares of Common Stock shall
be reserved for issuance in accordance with the terms of the Plan. Such
reserved shares may be authorized but unissued shares or any issued
shares which have been acquired by the Company and are held in its
treasury, as the Board may from time to time determine.

Individual Limits. No Employee may be granted Awards covering more than
300,000 shares of Common Stock during any fiscal year of the Company.

Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Common
Stock, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Common
Stock or other securities of the Company, issuance of warrants or other
rights to purchase Common Stock or other securities of the Company, or
other similar corporate transaction or event affects the Common Stock
such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable,
adjust the number and kind of shares reserved for Awards, the
individual limit set forth above, the number and kind of shares subject
to outstanding Awards and the exercise, base or purchase price, as
appropriate, of such shares, or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award.

Reuse of Shares. Unless the Committee determines otherwise, if an Award
granted under the Plan is forfeited, expires, lapses or for any other
reason ceases to be vested or exercisable in whole or in part, the
shares which were subject to any such Award, but as to which the Award
ceases to be vested or exercisable, shall again be available for the
purposes of this Plan.

6. Options. The Committee may grant Options as follows:

General. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the persons to whom and
the time or times at which Options shall be granted, the number of
shares of Common Stock to be subject to such Options and all other
conditions of such Awards, including whether the vesting of such
Options may be based on the attainment of one or more Performance
Goals. Notwithstanding the generality of the foregoing, unless
otherwise determined by the Committee, the exercise price per share for
each Option granted shall not be less than the Fair Market Value of the
shares on the date the Option is granted. No shares subject to an
Option shall be issued or transferred to a Participant until such
Option is exercised in accordance with its terms and such shares have
been purchased, and a Participant shall have none of the rights of a
stockholder with respect to such shares until the certificates therefor
are registered in the name of such Participant upon exercise of the
Option. Options shall be exercised by a Participant in accordance with
the methods approved by the Committee.

Nonqualified or Incentive Stock Options. With respect to any grant of
an Option, the Option agreement entered into by the Participant shall
identify the grant as an Incentive Stock Option or a Nonqualified Stock
Option. Incentive Stock Options may be granted only to persons who are
employed by the Company or one of its Subsidiaries. Incentive Stock
Options shall be subject to such additional terms and conditions as are
necessary to preserve their status as Incentive Stock Options. To the
extent that an Option intended to be an Incentive Stock Option does not
comply with the applicable rules of the Code, it shall be treated as a
Nonqualified Stock Option.

7. Other Stock-Based Awards.

The Committee may, in its discretion, grant other forms of Awards
("Other Stock-Based Awards") valued in whole or in part by reference
to, or otherwise based on, Common Stock, either alone or in addition to
other Awards under the Plan. Other Stock-Based Awards may include, but
are not limited to, restricted shares of Common Stock, Stock
Appreciation Rights, unit awards having a value based on the value of
Common Stock and any other securities that are payable in, valued in
whole or in part by reference to, or otherwise based on Common Stock.
Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the persons to whom and the time or
times at which such Awards shall be granted, the number of shares of
Common Stock to be subject to such Awards and all other conditions of
such Awards, including whether the vesting and/or payment of such
Awards may be based on the attainment of one or more Performance Goals.
If the Committee shall designate any Award granted under this Section 7
as an Award intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Code, such Award shall be
designed and administered by the Committee so to qualify, including,
but not limited, to conditioning the vesting and/or payment of such
Award upon the achievement of one or more Performance Goals and
certifying in writing that such conditions have been satisfied prior to
the payment of, or vesting with respect to, such Award.

8. Termination of Employment or Service.

The terms and conditions applicable to Awards with respect to the
termination for any reason of a Participant's employment or service
with the Company and its Affiliates shall be determined by the
Committee in its discretion and shall be set forth in the agreement
evidencing such Award.

9. Transferability of Awards.

Except to the extent permitted by the Committee, no Award shall be
transferable other than by will or the laws of descent and
distribution, and each Option shall be exercisable during the
Participant's lifetime only by the Participant or by the Participant's
guardian or legal representative.

10. Laws and Regulations.

No shares of Common Stock shall be issued under this Plan unless and
until all legal requirements applicable to the issuance of such shares
have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any issuance of shares to
any Employee hereunder on such Employee's undertaking in writing to
comply with such restrictions on the subsequent disposition of such
shares as the Committee shall deem necessary or advisable as a result
of any applicable law or regulation.

11. Withholding.

The Company or an Affiliate, if applicable, shall have the right to
deduct from all Awards hereunder paid in cash any federal, state or
local taxes required by law to be withheld with respect to such cash
awards. Unless otherwise specified by the Committee in the Award
agreement, in the case of Common Stock issued upon the vesting or
exercise of an Award payable in shares or in the case of any other
applicable tax withholding requirement, the Participant shall be
required to pay to the Company or its Affiliate the amount of any such
taxes which the Company or its Affiliate is required to withhold with
respect to such stock. The Committee may provide, in the Award
agreement or otherwise, that in the event that a Participant is
required to pay to the Company any amount to be withheld in connection
with the vesting or exercise of an Award that is payable in shares of
Common Stock, the Participant may satisfy such obligation (in whole or
in part) by electing to have the Company withhold a portion of the
shares to be received upon the vesting or exercise of the Award equal
in value to the minimum amount required to be withheld. The value of
the shares to be withheld shall be their Fair Market Value on the date
that the amount of tax to be withheld is determined. Any election by a
Participant to have shares withheld under this Section 11 shall be
subject to such terms and conditions as the Committee may specify.

12. Amendment or Termination of the Plan.

The Board may at any time, and from time to time, terminate, modify,
amend or interpret the Plan in any respect; provided, however, that
unless otherwise determined by the Board, an amendment that requires
stockholder approval in order for the Plan to continue to comply with
Section 162(m) or any other law, regulation or stock exchange
requirement shall not be effective unless approved by the requisite
vote of stockholders.

The termination or any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect such
Participant's rights under an Award previously granted to such
Participant.

13. Miscellaneous.

Date of Grant. The date on which the Committee approves the granting of
any Award, or approves the modification of any Award, shall for
purposes of the Plan be deemed the date on which such Award is granted
or modified, regardless of the date on which the Agreement evidencing
the same is executed.

Governing Law; Interpretation. The Plan and Award agreements issued
under the Plan shall be construed, administered, and governed in all
respects under the laws of the State of Delaware, without giving effect
to the principles of conflicts of laws thereof. The provisions of this
Plan shall be interpreted so as to comply with the conditions and
requirements of Rule 16b-3 under the Exchange Act, and, if the Award is
an Incentive Stock Option, with Section 422 of the Code, unless the
Committee determines otherwise.

Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Participant or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee,
such provisions shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provisions shall be stricken as
to such jurisdiction, Participant or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.

No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ or service
of the Company or any of its Affiliates. Further, the Company or any of
its Affiliates may at any time dismiss a Participant from employment or
service, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award agreement.

14. Change in Control.

Upon the occurrence of a Change in Control, unless otherwise
specifically prohibited under applicable laws, or by the rules and
regulations of any governing governmental agencies or national
securities exchanges or unless otherwise provided in an Award agreement
and except to the extent Awards are assumed by the acquiring or
successor corporation (or parent corporation) in connection with such
change in control:

(a) Any and all Options granted hereunder shall become
immediately vested and exercisable, and shall remain vested
and exercisable throughout their entire term; and any Option
which is assumed in connection with a Change in Control
shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of
securities which would have been issuable in the
consummation of such Change in Control, had the Option been
exercised immediately prior to such Change in Control;

(b) Any restriction periods and restrictions imposed on Other
Stock-Based Awards that are not performance-based shall
lapse;

(c) The target payout opportunities attainable under all
outstanding Awards that are performance-based shall be
deemed to have been fully earned for the entire applicable
performance period(s) as of the effective date of the Change
in Control. The vesting of all Awards denominated in shares
shall be accelerated as of the effective date of the Change
in Control, and there shall be paid out to Participants
within thirty (30) days following the effective date of the
Change in Control a pro rata number of shares based upon an
assumed achievement of all relevant targeted performance
goals and upon the length of time within the applicable
performance period that has elapsed prior to the Change in
Control. Awards denominated in cash shall be paid pro rata
to participants in cash within thirty (30) days following
the effective date of the Change in Control, with the
proration determined as a function of the length of time
within the applicable performance period that has elapsed
prior to the Change in Control, and based on an assumed
achievement of all relevant targeted Performance Goals.

15. Effectiveness of Plan; Term of the Plan.

The effectiveness of the Plan is subject to the Company's having
obtained stockholder approval of the Plan within 12 months of the
Effective Date. No Award shall be granted pursuant to this Plan later
than the tenth anniversary of the Effective Date, but Awards
theretofore granted may extend beyond that date in accordance with
their terms.

Appendix "B"

IMERGENT, INC.

Charter
of the Audit Review Committee
of the Board of Directors

I. Audit Review Committee Purpose

The Audit Review Committee (the "Committee") is appointed by the Board
of Directors (the "Board") of Imergent, Inc., a Delaware corporation
(the "Company"), to assist the Board in fulfilling its oversight
responsibilities. The Committee's primary duties and responsibilities
are to:

o Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting and legal
compliance.

o Monitor the independence and performance of the Company's independent
auditors and internal auditing department.

o Provide an avenue of communication among the independent auditors,
management, the internal auditing department and the Board.

o Review such other matters as may be specifically delegated to the
Committee by the Board.

The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has full access
to the books, records, facilities and personnel of the Company, as well
as the Company's independent auditors. The Committee has the authority
to retain, at the Company's expense, special legal counsel, or
accounting or other experts it deems necessary in the performance of
its duties.

While the Committee has the powers and responsibilities set forth in
this Charter and the Company's Certificate of Incorporation, it is not
the responsibility of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and
accurate or are in compliance with generally accepted accounting
principles, which is the responsibility of management and the outside
auditor. Likewise, it is not the responsibility of the Committee to
resolve disputes, if any, between management and the outside auditor or
to assure compliance with laws or the Company's corporate compliance
program or Code of Business Conduct.

II. Committee Composition and Meetings

The Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent
non-executive directors, free from any relationship that would
interfere with the exercise of his or her independent judgment. In
determining independence, the Board will observe the requirements of
Rule 4200(a)(14) and Rule 4350 of the NASD Manual.

Each member of the Committee shall have a basic understanding of
finance and accounting and shall be able to read and understand
fundamental financial statements. At least one member of the Committee
shall have accounting or related financial management expertise. Such
experience may include being or having been a chief executive officer,
chief financial officer or other senior officer with financial
oversight responsibilities.

The Board will appoint the members of the Committee. The Board will, or
will delegate to the members of the Committee the responsibility to,
appoint a Chairman of the Committee. The Chairman of the Committee
will, in consultation with other members of the Committee, be
responsible for calling meetings of the Committee establishing agenda
therefore and supervising the conduct thereof.

The Committee shall meet at least four times annually, or more
frequently as the Committee may deem necessary or circumstances dictate
to comply with its responsibilities set forth herein. The Committee may
request any officer or employee of the Company or the Company's outside
legal counsel or outside auditors to attend a meeting of the Committee
or to meet with any members of, or consultants to, the Committee. The
Committee shall meet privately in executive session at least annually
with management, the director of the internal auditing department and
the independent auditors, and as a committee to address any matters
that the Committee or any of these groups believes should be addressed.
In addition, the Committee, or at least its Chairperson, should
communicate with management and the independent auditors on a quarterly
basis to review the Company's financial statements and significant
findings based upon the auditors' review procedures.

III. Committee Responsibilities and Duties

The Committee will:

Review Procedures

1. Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board for approval and have the document
published at least every three years in accordance with Securities and
Exchange Commission ("SEC") regulations.

2. Review the Company's annual audited financial statements prior to
filing or distribution. Such review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices and judgments.

3. In consultation with the Company's management, independent auditors
and internal auditors, if any, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant
financial risk exposures and the steps management has taken to
monitor, control and report such risks. Review significant findings
prepared by the independent auditors and the internal auditing
department together with management's responses.

4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to the
Company filing its Quarterly Report on Form 10-Q. Discuss any
significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in
accordance with the American Institute of Certified Public Accountants
Statement on Auditing Standards No. 61 ("SAS No. 61"). The Chairperson
of the Committee may represent the entire Committee for purposes of
this review.

Independent Auditors

5. Review the independence and performance of the auditors and annually
recommend to the Board the appointment of the independent auditors or
approve any discharge of auditors when circumstances warrant. The
Company's independent auditors are ultimately accountable to the
Committee and the Board.

6. Approve the fees and other significant compensation to be paid to the
independent auditors.

7. On an annual basis, the Committee shall review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence and obtain a
written statement from the auditors as required by the Independence
Standards Board.

8. Review the independent auditors' audit plan, including discussing
scope, staffing, locations, reliance upon management and internal
audit and general audit approach.

9. Prior to releasing year-end earnings, discuss the results of the audit
with the independent auditors. Discuss certain matters required to be
communicated to audit committees in accordance with SAS No. 61.

10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.

Internal Audit Department and Legal Compliance

11. Review the budget, plan, changes in plan, activities, organizational
structure and qualifications of any internal audit department, as
needed.

12. Review the appointment, performance and replacement of any senior
internal audit executive(s).

13. Review significant reports prepared by any internal audit department
together with management's response and follow-up to these reports.

14. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations and inquiries received from regulators
or governmental agencies.

Other Committee Responsibilities

15. Annually prepare a report to stockholders to be included in the
Company's annual proxy statement, as required by the SEC.

16. Perform any other activities consistent with this Charter, the
Company's bylaws and applicable law, as the Committee or the Board
deems necessary or appropriate.

17. Maintain minutes of Committee meetings and periodically report to the
Board on significant results of the foregoing activities.

IV. Outside Auditor

The outside auditor for the Company is ultimately accountable to the
Board and the Committee. The Committee and the Board have the ultimate authority
and responsibility to select, evaluate and, where appropriate, replace the
outside auditor. Alternatively, the Committee and the Board may nominate the
outside auditor to be proposed for stockholder approval in any proxy statement.

FRONT OF PROXY CARD

IMERGENT, INC.
Proxy for the Annual Meeting of Stockholders to be held on December 3, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
IMERGENT, INC.

p The undersigned stockholder of IMERGENT, INC. hereby appoints Donald L.
Danks and Frank C. Heyman, and each of them, proxies with full power of
R 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
O business on October 27, 2003, which the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders
X ("Meeting") to be held Wednesday, December 3, 2003, at 754 East
Technology Avenue, Orem, Utah, commencing at 12:00 p.m. (local time),
Y 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.

--------------------------------------------------------------------------------
The Board of Directors recommends a vote "For"Item 1: FOR WITHHELD
|_| |_|
1.ELECTION OF THE FOLLOWING PERSONS TO SERVE AS DIRECTORS OF THE COMPANY, TO
SERVE FOR TWO YEARS OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED:

(1) Gary Gladstein - Class II - 2005 (2) Peter Fredericks - Class II - 2005
(3) Brandon Lewis - Class II - 2005

(To withhold authority to vote FOR any individual nominee, strike a line through
the nominee's namein the list above, in which case your shares will be voted for
all remaining nominees.)

------------------------------------------------------------------------------------------- --------- ------------ -----------

The Board of Directors recommends a vote "For" Item 2: FOR AGAINST ABSTAIN
2. RATIFICATION OF THE AMENDMENT TO THE 1998 STOCK OPTION PLAN FOR SENIOR EXECUTIVES |_| |_| |_|
------------------------------------------------------------------------------------------- --------- ------------ -----------
The Board of Directors recommends a vote "For" Item 3: FOR AGAINST ABSTAIN
3. RATIFICATION OF THE AMENDMENT TO THE 1999 STOCK OPTION PLAN FOR NON-EXECUTIVES |_| |_| |_|
------------------------------------------------------------------------------------------- --------- ------------ -----------
The Board of Directors recommends a vote "For" Item 4: FOR AGAINST ABSTAIN
4. APPROVAL OF THE 2003 EQUITY INCENTIVE PLAN |_| |_| |_|
------------------------------------------------------------------------------------------- --------- ------------ -----------
The Board of Directors recommends a vote "For" Item 5: FOR AGAINST ABSTAIN
5. RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR AUDITORS FOR THE FISCAL |_| |_| |_|
YEAR ENDED JUNE 30, 2003
------------------------------------------------------------------------------------------- --------- ------------ -----------

This proxy, when properly executed, will be voted in the manner directed herein.
If no designation (i.e. "For," "Withheld," "Against" or "Abstain") is made, the
proxies named on the reverse side hereof intend to vote the shares to which this
proxy relates "For" Items 1, 2, 3, 4 and 5. 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.