<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DELTAPOINT, INC.
----------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY COPIES
------------------
DELTAPOINT, INC.
380 EL PUEBLO ROAD
SUITE 100
SCOTTS VALLEY, CALIFORNIA 95066
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 16, 1998
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
DeltaPoint, Inc., a California corporation (the "Company"), will be held on
January __, 1998 at 10:00 a.m., local time, at the offices of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto,
California 94304, for the following purposes:
1. To approve an amendment to the Company's Articles of Incorporation to
change the Company's name to "Site Technologies, Inc."
2. To approve five amendments to the Company's 1995 Stock Option Plan
("Option Plan") to (a) increase the number of shares of Common Stock
available for issuance under the Option Plan by 1,200,000 shares to a
total of 2,400,000 shares of Common Stock; (b) provide that the
maximum number of shares subject to option or stock appreciation
rights that may be granted annually to a single employee under the
Option Plan be 500,000 shares of Common Stock and that, in the first
year of employment, an employee may receive an additional grant of up
to a maximum of 400,000 shares of Common Stock subject to option or
stock appreciation rights (instead of the present Option Plan
provision which provides that the maximum number of shares subject to
option or stock appreciation rights that may be granted to a person
participating in the Option Plan over the term of the Option Plan is
fifty percent (50%) of the shares reserved for issuance under the
Option Plan); (c) increase the number of shares of Common Stock
subject to option or stock appreciation rights that will be granted to
new members of the Company's Board of Directors from a one-time grant
of 20,000 shares of Common Stock to a one-time grant of 50,000 shares
of Common Stock; (d) increase the number of shares of Common Stock
subject to option or stock appreciation rights that are granted
annually to each non-employee member of the Board of Directors under
the automatic grant portion of the Option Plan by 1,500 shares to
2,500 shares of Common Stock; and (e) allow discretionary grants of
stock options to be made to all non-employee members of the Board of
Directors of the Company.
3. To transact such other business as may properly come before the
Special Meeting and any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on December 10, 1997
are entitled to notice of and to vote at the Special Meeting.
All shareholders are cordially invited to attend the Special Meeting in
person. However, to assure your representation at the Special Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
shareholder attending the Special Meeting may vote in person even if he or she
has returned a proxy.
By Order of the Board of Directors
Jeffrey F. Ait
CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
Scotts Valley, California
December __, 1997
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, YOU ARE REQUESTED
TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
<PAGE>
DELTAPOINT, INC.
----------------
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
The enclosed Proxy is solicited on behalf of DeltaPoint, Inc. (the
"Company") for use at the Special Meeting of Shareholders (the "Special
Meeting") to be held on January 16, 1998 at 10:00 a.m., local time, and at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Special Meeting of Shareholders. The Special Meeting will be held at
the at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, 650 Page Mill Road, Palo Alto, California 94304.
These proxy solicitation materials were mailed on or about December __,
1997 to all shareholders entitled to vote at the Special Meeting.
INFORMATION CONCERNING VOTING AND SOLICITATION
RECORD DATE AND SHARES OUTSTANDING
Only shareholders of record at the close of business on December 10, 1997
(the "Record Date") are entitled to notice of and to vote at the Special
Meeting. As of the Record Date, 8,516,380 shares of the Company's Common Stock
were issued and outstanding. No shares of Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time prior to its use by delivering to the Secretary of the
Company a written instrument revoking the proxy or a duly executed proxy bearing
a later date or by attending the Special Meeting and voting in person.
VOTING AND SOLICITATION
Each shareholder is entitled to one vote for each share of Common Stock
on all matters to be voted on by the shareholders. The following two matters
(the "Proposals") are scheduled to be voted on at the Special Meeting: (i)
the amendment of the Company's Articles of Incorporation to change the
Company's name to "Site Technologies, Inc." ("Proposal 1") and (ii) the
amendment to the Company's 1995 Stock Option Plan ("Option Plan") to (a)
increase the number of shares of Common Stock available for issuance under
the Option Plan by 1,200,000 shares to a total of 2,400,000 shares of Common
Stock; (b) provide that the maximum number of shares subject to option or
stock appreciation rights that may be granted annually to a single employee
under the Option Plan in a single year be 500,000 shares of Common Stock and
that, in the first year of employment, an employee may receive an additional
grant of up to a maximum of 400,000 shares of Common Stock subject to option
or stock appreciation rights (instead of the present Option Plan provision
which provides that the maximum number of shares subject to option or stock
appreciation rights that may be granted to a person participating in the
Option Plan over the term of the Option Plan is fifty percent (50%) of the
shares reserved for issuance under the Option Plan); (c) increase the number
of shares of Common Stock subject to option or stock appreciation rights that
will be granted to new members of the Company's Board of Directors from a
one-time grant of 20,000 shares of Common Stock to a one-time grant of 50,000
shares of Common Stock; (d) increase the number of shares of Common Stock
subject to option or stock appreciation rights that are granted annually to
each non-employee member of the Board of Directors under the automatic grant
portion of the Option Plan by 1,500 shares to 2,500 shares of Common Stock;
and (e) allow discretionary grants of stock options to be made to all
non-employee members of the Board of Directors of the Company ("Proposal 2").
Proposal 1 requires the affirmative vote of a majority of the outstanding
shares of Common Stock to approve. Proposal 2 requires the affirmative vote
of a majority of the shares of Common Stock present or represented by proxy
at the Special Meeting to approve. Votes cast by proxy will be tabulated by
U.S. Stock Transfer Corporation, the Company's transfer agent. Votes cast in
person will be tabulated by the Inspector of Elections at the Special Meeting
and added to the proxy tabulation.
Upon the execution and return of the enclosed form of proxy, the shares
represented thereby will be voted in accordance with the terms of the proxy,
unless the proxy is revoked. If no directions are indicated in such proxy,
the shares represented thereby will be voted "FOR" the approval of the
Proposals. For purposes of the approval of Proposal 1, both abstentions and
broker non-votes will have the same effect as votes against the Proposals.
For purposes of approval of Proposal 2, abstentions are counted
<PAGE>
as votes cast and, accordingly, have the same effect as votes against the
proposal, whereas broker non-votes are not counted as votes cast and
therefore once a quorum is present, will have no effect on the proposal.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies may also be solicited by certain of
the Company's directors, officers and employees, without additional
compensation, personally or by telephone, telegram, letter or facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
A majority of the outstanding shares of Common Stock entitled to vote on
the Record Date, whether present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the Special Meeting or
any adjournment thereof. The Company intends to include abstentions and broker
non-votes as present or represented for purposes of establishing a quorum for
the transaction of business.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of the Company's shareholders intended to be presented at the
1998 Annual Meeting of Stockholders must be received by the Company at its
offices at 380 El Pueblo Road, Scotts Valley, California 95066, no later than
January 9, 1998, and must satisfy the conditions established by the Securities
and Exchange Commission for shareholder proposals to be included in the
Company's proxy statement for that meeting.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of November 30, 1997 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each director of the Company, (iii) two of the
Company's former Chief Executive Officers and two other executive officers as of
December 31, 1996 and (iv) all directors and executive officers as a group.
Except as otherwise indicated, the Company believes that the beneficial owners
of the Common Stock listed below, based on information furnished by such owners,
have investment and voting power with respect to such shares, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED BENEFICIALLY OWNED(2)
- ------------------------------------------------------------- ------------------ ---------------------
<S> <C> <C>
Entities affiliated with Oak Investment Partners V, L.P. (3) 332,601 3.9%
One Gorham Island
Westport, CT 06880
Ray Kingman 0 *
John Ambrose 0 *
Jeffrey F. Ait (4) 244,000 2.8%
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
William G. Pryor (5) 166,835 1.9%
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
Donald B. Witmer (6) 203,750 2.3%
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
Patrick W. Grady (7) 147,538 1.7%
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED BENEFICIALLY OWNED(2)
- ------------------------------------------------------------- ------------------ ---------------------
<S> <C> <C>
Joseph Marengi (8) 52,000 *
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
Stephen Mendel (9) 143,713 1.7%
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
Thomas Holt (10) 30,000 *
c/o DeltaPoint, Inc.
380 El Pueblo Road
Scotts Valley, CA 93940
All directors and executive officers as a group (5 persons) (12) 773,572 6.9%
- ------------------------
</TABLE>
* Less than one percent (1%).
(1) To the Company's knowledge, the persons named in the table
have sole voting and investment power with respect to all shares
of Common Stock shown beneficially owned by them, subject to
community property laws where applicable and the information
contained in the footnotes to this table.
(2) Percentage ownership is based on: 8,516,380 shares of Common
Stock outstanding as of November 30, 1997 and any shares issuable
pursuant to securities convertible into or exercisable for shares
of Common Stock by the person or group in question on November
30, 1997 or within 60 days thereafter.
(3) Consists of 325,289 shares of Common Stock held by Oak
Investment Partners V, L.P. ("Oak Investment") and 7,312 shares
of Common Stock held by Oak V Affiliates Fund, L.P. ("Oak
Affiliates"). Edward F. Glassmeyer is a general partner of Oak
Investment and Oak Affiliates. Mr. Glassmeyer disclaims
beneficial ownership of the securities held by these entities,
except to the extent of his pecuniary interest therein arising
from his general partnership in Oak Investment. Oak Affiliates
is an affiliate of Oak Investment.
(4) Includes 225,000 shares of Common Stock subject to a stock
option granted in March 1997 which is currently exercisable or
exercisable within sixty (60) days after November 30, 1997.
(5) Includes 101,894 shares of Common Stock subject to stock
options currently exercisable or exercisable within sixty (60)
days after November 30, 1997, including an option to purchase
100,000 shares of Common Stock granted on November 10, 1995 that
is immediately exercisable but subject to a right of repurchase
upon termination of employment that lapses in equal monthly
installments over 36 months and lapses in full upon a specified
change in control.
(6) Consists of 12,500 shares of Common Stock, an immediately
exercisable Warrant to purchase 6,250 shares of Common Stock and
an option to purchase 135,000, 10,000 and 40,000 shares of Common
Stock, respectively granted on November 10, 1995, April 22, 1996
and November 4, 1996, respectively, that is immediately
exercisable but subject to a right of repurchase upon termination
of employment that lapses in equal monthly installments over 36
months and lapses in full upon a specified change in control.
(7) Includes an option to purchase 20,000 shares of Common Stock
granted on August 13, 1996 and 1,000 shares of Common Stock
granted on June 20, 1997 that is immediately exercisable but
subject to a right of repurchase upon termination of service as a
director that lapses in equal annual installments over three
years and lapses in full on a specified change in control.
(8) Consists of 50,000 shares of Common Stock subject to a stock
option granted in July 1997 which is currently exercisable or
exercisable within sixty (60) days after November 30, 1997 but
subject to a right of repurchase upon termination of service as a
director that lapses in equal annual installments over three
years and lapses in full on a specified change in control.
(9) Includes an option to purchase 20,000 shares of Common Stock
granted in July 1997 that is immediately exercisable but subject
to a right of repurchase upon termination of service as a
director that lapses in equal annual installments over three
years and lapses in full on a specified change in control. Also
includes 123,713 shares of Common Stock held by SLF Partners II,
L.P. and SLF Partners III, L.P. Mr. Mendel, a director of the
Company, is a special limited partner in each of SLF Partners II,
L.P. and SLF Partners III, L.P. Mr. Mendel disclaims beneficial
ownership of the securities held by these entities except to the
extent of his pecuniary interest therein arising from his limited
partnership interest in SLF Partners II, L.P. and SLF Partners
III, L.P.
-3-
<PAGE>
(10) Consists of 30,000 shares of Common Stock subject to a Stock
Option granted in October 1997.
(11) Consists of 144,713 shares of Common Stock, immediately
exercisable warrants to purchase 126,538 shares of Common Stock
and 346,000 shares of Common Stock subject to stock options
currently exercisable or exercisable within sixty (60) days of
November 30, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed
on December 1, 1995, and the current members of the Compensation Committee are
Messrs. Mendel, Marengi and Grady. None of these individuals was at any time
during 1996 or at any other time, an officer or employee of the Company. No
executive officer of the Company serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth the compensation earned by the Company's two
former Chief Executive Officers and two other executive officers who earned (or
would have earned) salary and bonus for the 1996 fiscal year in excess of
$100,000 (collectively, the "Named Officers") for services rendered in all
capacities to the Company and its subsidiaries for that fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------ -------------------------------
NAME AND PRINCIPAL YEAR SALARY($) BONUS($) OTHER ANNUAL NUMBER OF ALL OTHER
POSITION ---- --------- -------- COMPENSATION($) SECURITIES COMPENSATION($)
- ------------------ --------------- UNDERLYING ---------------
OPTIONS(#)
AWARDS
-----------
<S> <C> <C> <C> <C> <C> <C>
John J. Ambrose (1) 1996 $78,461 $25,000(2) $4,500(3) 145,000 $ 26(4)
Chief Executive
Officer and
Director
Raymond R.
Kingman, Jr. (5) 1996 32,000 0 900(6) 0 141,253(7)
Chairman of the 1995 108,000 0 4,708(6) 100,000 66(4)
Board, President
and Chief
Executive Officer
Donald B. Witmer (8) 1996 120,000 0 30,000(9) 50,000 251(4)
Chief Operating 1995 19,845(9) 0 5,000(9) 135,000 0
Officer, Chief
Financial Officer,
Secretary and
Director
William G. Pryor 1996 104,950 0 0 0 87(4)
Vice President 1995 92,500 0 0 100,000 87(4)
of Development
- --------------------
</TABLE>
(1) Mr. Ambrose served as the Company's Chief Executive Officer
from April 22, 1996 through March 25, 1997.
(2) Represents a signing bonus of $25,000.
(3) Represents a $500 per month car allowance.
(4) Represents life insurance premiums paid by the Company with
respect to insurance policies on the lives of Messrs. Ambrose,
Kingman, Witmer and Pryor.
-4-
<PAGE>
(5) Mr. Kingman resigned as President and Chief Executive
Officer and a director of the Company, effective April 5, 1996.
(6) Represents a $300 per month car allowance.
(7) Represents a $22 life insurance premium and a severance
payment of $141,231.
(8) Mr. Witmer joined the Company in November 1995 and resigned
as Chief Financial Officer in June 1997 and resigned as director
of the Company in July 1997.
(9) Represents a $2,000 per month housing allowance and a $500
per month car allowance.
(10) Mr. Pryor resigned as Vice President of Development in October 1997.
STOCK OPTION INFORMATION
The following table contains information concerning stock option grants
made to the Named Officers during the fiscal year ended December 31, 1996.
No stock appreciation rights were granted to these individuals during such
year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING EXERCISE
OPTIONS % OF TOTAL OPTIONS GRANTED PRICE EXPIRATION
NAME GRANTED(#) TO EMPLOYEES IN FISCAL YEAR ($/SH)(2) DATE
- ---- ---------- INDIVIDUAL GRANTS(1) --------- ----------
----------------------------
<S> <C> <C> <C> <C>
John J. Ambrose 145,000 35.3% $9.50 04/21/06
Raymond R. Kingman, Jr _ 0% _ _
Donald B. Witmer 10,000 2.4% 9.50 04/21/06
40,000 9.7% 7.50 11/03/06
William G. Pryor _ 0% _ _
- -------------------
</TABLE>
(1) Each of the options listed in the table is immediately exercisable. The
shares purchasable thereunder are subject to repurchase by the Company
at the original exercise price paid per share upon the optionee's
cessation of service prior to vesting in such shares. The repurchase
right lapses and the optionee vests in a series of equal monthly
installments over thirty-six months of service commencing on the date
of grant of the option. These options were granted at an exercise price
equal to the fair market value of the Company's Common Stock as
determined by the Board of Directors of the Company on the date of
grant. Each option has a maximum term of ten (10) years, subject to
earlier termination in the event of the optionee's cessation of service
with the Company. Upon optionee's cessation of service with the
Company, all unvested options immediately terminate.
(2) In March 1997, the Board of Directors approved a repricing of all
options granted under the Company's stock option plans that were
outstanding on such date and had an exercise price in excess of the
fair market value on such date of $2.25 per share. This option
repricing resulted in the cancellation of all the options granted in
the last fiscal year to the Named Officers and a regrant of options for
the same number of shares at an exercise price of $2.25 per share.
(3) The exercise price may be paid in cash, in shares of the Company's
Common Stock valued at fair market value on the exercise date or
through a cashless exercise procedure involving a same-day sale of the
purchased shares. The Company may also finance the option exercise by
loaning the optionee sufficient funds to pay the exercise price for the
purchased shares, together with any federal and state income tax
liability incurred by the optionee in connection with such exercise.
-5-
<PAGE>
The following table sets forth information concerning option
holdings for the fiscal year ended December 31, 1996 with respect to each of
the Named Officers. No stock appreciation rights were exercised during such
year or were outstanding at the end of that year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- ----------- ------------- ----------- -------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
END(#)(1) AT FISCAL YEAR END(2)
---------------------- ---------------------
<S> <C> <C> <C> <C> <C>
John J. Ambrose 0 0 145,000 0 0 0
Raymond R. Kingman, Jr. 72,000 379,517 5,894 0 4,028 0
Donald B. Witmer 0 0 185,000 0 337,500 0
William G. Pryor 0 0 101,894 0 250,000 0
- --------------------
</TABLE>
(1) Each of the options listed in the table is immediately
exercisable. The shares purchasable thereunder are subject to
repurchase by the Company at the original exercise price paid per
share upon the optionee's cessation of service prior to vesting
in such shares. The repurchase right lapses and the optionee
vests in a series of equal monthly installments over thirty-six
months of service commencing on the date of grant of the option.
These options were granted at an exercise price equal to the fair
market value of the Company's Common Stock as determined by the
Board of Directors of the Company on the date of grant. Each
option has a maximum term of ten (10) years, subject to earlier
termination in the event of the optionee's cessation of service
with the Company.
(2) Based on the closing price per share of the Company's Common
Stock as listed on the Nasdaq National Market as of December 31,
1996 of $6.00, less the per share exercise price.
-6-
<PAGE>
PROPOSAL 1: TO AMEND THE COMPANY'S ARTICLES OF
INCORPORATION TO CHANGE THE COMPANY'S NAME
In October 1997, the Board of Directors of the Company (the "Board")
unanimously adopted a resolution approving an amendment of the Company's
Articles of Incorporation to change the Company's name to "Site Technologies,
Inc." Pursuant to the proposed amendment, Article I of the Company's
Articles of Incorporation would be amended and restated to read as follows:
"The name of this corporation is Site Technologies, Inc."
The Company's shareholders are being asked to approve such amendment.
The Board believes it is in the best interest of the Company to change its
name to reflect the Company's new business objective of becoming a leading
provider of scalable World Wide Web ("Web") site development and management
solutions for Web based business environments. In light of the foregoing,
the Company has been doing business as Site Technologies, Inc. since October
1997.
REQUIREMENT FOR SHAREHOLDER APPROVAL; RECOMMENDATION OF THE BOARD OF DIRECTORS
At the Special Meeting, the Shareholders are being asked to approve the
amendment to the Company's Articles of Incorporation to change the Company's
name to "Site Technologies, Inc." The approval of the holders of a majority
of the shares of Common Stock entitled to vote at the special meeting will be
required to approve the adoption of the amendment. Both abstentions and
broker non-votes will have the same effect as votes against this proposal.
Upon majority approval, the amendment of the Company's Articles of
Incorporation is expected to become effective on or about January 1, 1998,
upon the filing of the amendment with the Secretary of State of California.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF PROPOSAL 1
PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE 1995 STOCK PLAN
(AS AMENDED DECEMBER, 1997)
The shareholders are being asked to vote on a proposal to approve five
amendments to the DeltaPoint, Inc. 1995 Stock Option Plan (the "Option
Plan"). The first amendment increases the number of shares of Common Stock
available for issuance under the Option Plan by 1,200,000 shares to a total
of 2,400,000 shares of Common Stock. The second amendment will provide a
limit on the maximum number of shares of Common Stock that may be granted
annually as an option or stock appreciation right ("SAR") to a single
employee under the Option Plan of 500,000 shares of Common Stock and that in
the first year of employment an employee may also be granted an option of SAR
for an additional 400,000 shares of Common Stock (the "Share Limit").
Presently, the Option Plan provides that no individual participating in the
Option Plan may receive options or SARs for more than fifty percent of the
shres reserved for issuance under the Option Plan over the term of the Option
Plan (the "Term Share Limit"). Prior to the proposed amendments, the Term
Share Limit would be 600,000 shares of Common Stock. If the amendments are
approved, the Share Limit will replace the Term Share Limit. The third
amendment will increase the number of shares of Common Stock subject to
option or stock appreciation rights that will be granted to new members of
the Company's Board of Directors from a one-time grant of 20,000 shares of
Common Stock to a one-time grant of 50,000 shares of Common Stock. The fourth
amendment will increase the number of shares of Common Stock subject to
option or stock appreciation rights that are granted annually to each
non-employee member of the Board of Directors under the automatic grant
portion of the Option Plan by 1,500 shares to 2,500 shares of Common Stock.
The fifth amendment will allow discretionary grants of stock options to be
made to all non-employee members of the Board of Directors of the Company.
The Board adopted the amendments on December 5, 1997, subject to shareholder
approval at the Special Meeting.
The Board of Directors believes that the increase in the number of
shares reserved under the Option Plan and the increase in the Share Limit are
necessary in order to enhance the Company's ability to attract the best
available talent for key positions in the Company. Allowing for
discretionary grants to non-employee directors updates the Option Plan for
recent changes made in the securities laws and provides the Company with
greater flexibility with respect to director compensation. The increase in
the option grants to non-employee directors is intended to adjust these
grants for the increase in the Company's capitalization. The original
automatic initial stock option grants constituted approximately 1% of the
Company's outstanding Common Stock at the time of adoption. The increase in
the automatic initial stock option grants will restore the grants to
approximately 0.60% of the Company's outstanding capitalization.
-7-
<PAGE>
SUMMARY OF THE 1995 OPTION PLAN (AS AMENDED)
GENERAL. The Company established the Option Plan to provide a means
whereby employees, officers, directors, consultants and independent advisers
of the Company or parent or subsidiary corporations may be given an
opportunity to purchase shares of Common Stock. The Option Plan was adopted
by the Board of Directors (the "Board") on November 8, 1995 and approved by
the shareholders in December 1995. The Board believes that option grants
under the Option Plan play an important role in the Company's efforts to
attract, employ, and retain employees, directors and consultants of
outstanding ability.
The principal terms and provisions of the Option Plan, as amended,
(including the proposed amendments above) are summarized below. The summary,
however, is not intended to be a complete description of all the terms of the
Option Plan. A copy of the Option Plan will be furnished by the Company to
any shareholder upon written request to the Chief Executive Officer at the
executive offices in Scotts Valley, California.
STRUCTURE. The Option Plan is divided into two separate components: (i)
the Discretionary Option Grant Program under which employees, non-employee
directors and consultants may, at the discretion of the Compensation
Committee, be granted options to purchase shares of Common Stock, and (ii)
the Automatic Option Grant Program under which option grants will
automatically be made at periodic intervals to eligible non-employee
directors to purchase shares of Common Stock.
ADMINISTRATION. The Compensation Committee of the Board, which is
comprised of two (2) or more Board members ("Committee"), administers the
Option Plan. Committee members serve for such period of time as the Board
may determine. No Board member may serve on the Committee if he or she has
received an option grant or stock award under the Option Plan or under any
other stock plan of the Company or its parent or subsidiary corporations
within the twelve (12) month period preceding his or her appointment to the
Committee, other than grants under the Automatic Option Grant Program. The
Option Plan may also be administered with respect to optionees who are not
executive officers subject to the short-swing profit rules of federal
securities laws by the Board or a secondary committee comprised of one or
more Board members.
The Committee (or Board or secondary committee to the extent acting as
plan administrator) has full authority (subject to the express provisions of
the Option Plan) to determine the eligible individuals who are to receive
grants under the Option Plan, the number of shares to be covered by each
granted option, the date or dates on which the option is to become
exercisable, the maximum term for which the Option is to remain outstanding,
whether the granted option will be an incentive stock option ("Incentive
Option") which satisfies the requirements of Section 422 of the Internal
Revenue Code ("Code") or a non-statutory option not intended to meet such
requirements and the remaining provisions of the option grant.
ELIGIBILITY. Employees (including officers), consultants and
independent contractors who render services to the Company or its subsidiary
corporations (whether now existing or subsequently established) are eligible
to receive option grants under the Discretionary Option Grant Program. A
non-employee member of the Board or the board of any parent or subsidiary
corporation is also eligible for option grants under the Discretionary Option
Grant Program.
SECURITIES SUBJECT TO OPTION PLAN. The maximum number of shares of
Common Stock which may be issued over the term of the Option Plan shall not
exceed 2,400,000 shares. Such authorized share reserve is comprised of (i)
the 1,200,000 shares authorized by the Board under the Option Plan, and
subsequently approved by the shareholders, plus (ii) an additional increase
of 1,200,000 shares which is the subject of this Proposal 2.
Section 162(m) of the Code places limits on the deductibility for
federal income tax purposes of compensation paid to certain executive
officers of the Company. In order to preserve the Company's ability to
deduct the compensation income associated with options and stock appreciation
rights granted to such persons, the Option Plan provides that no eligible
person may be granted options and separately exercisable SARs to purchase
more than 500,000 shares of Common Stock under the Option Plan. In addition,
notwithstanding this limit, in connection with an eligible person's initial
employment with the Company, he or she may be granted options or separately
exercisable SARs to purchase up to an additional 400,000 shares of Common
Stock.
Should an option expire or terminate for any reason prior to exercise in
full, the shares subject to the portion of the option not so exercised will
be available for subsequent option grants under the Option Plan.
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<PAGE>
DISCRETIONARY OPTION GRANT PROGRAM
PRICE AND EXERCISABILITY. The option exercise price per share in the
case of an Incentive Option may not be less than one hundred percent (100%)
of the fair market value of the Common Stock on the grant date and, in the
case of a non-statutory option, eighty-five percent (85%) of the fair market
value of the Common Stock on the grant date. The exercise price of an
Incentive Option granted to a 10% shareholder may not be less than 110% of
the fair market value of the Common Stock on the date of the option grant.
Options granted under the Discretionary Option Grant Program become
exercisable at such time or times and during such period as the Committee may
determine and set forth in the instrument evidencing the option grant.
The means of payment for shares issued upon exercise of an option is
specified in each option agreement. The Plan permits payment to be made by
cash, check, promissory note (upon such terms and conditions as established
by the Committee), other shares of Common Stock of the Company (with some
restrictions), or a "cashless" exercise.
No optionee is to have any shareholder rights with respect to the option
shares until the optionee has exercised the option, paid the exercise price
and become a holder of record of the shares. Options are not assignable or
transferable other than by a qualified domestic relations order or by will or
the laws of descent and distribution, and during the optionee's lifetime, the
option may be exercised only by the optionee.
TERMINATION OF SERVICE. If an optionee's employment or consulting
relationship terminates for any reason (other than death), then all options
held by the optionee under the Plan expire on the earlier of (i) the date set
forth in his or her option agreement or (ii) the expiration date of such
option. To the extent the option is vested and exercisable at the time of
such termination, the optionee may exercise all or part of his or her option
at any time before termination. Each such option will normally, during such
limited period, be exercisable only to the extent of the number of shares of
Common Stock in which the optionee is vested at the time of cessation of
service. The Committee has complete discretion to extend the period of time
that outstanding options may be exercised or to accelerate the exercisability
of such options in whole or in part. Such discretion may be exercised at any
time while the options remain outstanding, whether before or after the
optionee's actual cessation of service.
The shares of Common Stock acquired upon the exercise of one or more
options may be subject to repurchase by the Company at the original exercise
price paid per share upon the optionee's cessation of service prior to
vesting of such shares. The Committee has complete discretion in
establishing the vesting schedule to be in effect for any such unvested
shares and may cancel the Company's outstanding repurchase rights with
respect to those shares at any time, thereby accelerating the vesting of the
shares subject to the canceled rights.
If an optionee's service terminates as a result of death, then the
optionee's estate or the person who acquires the right to exercise the option
by bequest or inheritance may exercise all or part of the option at any time
before such expiration to the extent that the option was vested and
exercisable at the time of such termination.
If an optionee's service terminates for misconduct, then all options
held by the optionee shall terminate immediately.
INCENTIVE OPTIONS. Incentive Options may only be granted to individuals
who are employees of the Company or its parent or subsidiary corporations.
During any calendar year, the aggregate fair market value (determined as of
the grant date(s)) of the Common Stock for which one or more options granted
to any employee under the Option Plan (or any other option plan of the
Company or its parent or subsidiary corporations) may for the first time
become exercisable as Incentive Options shall not exceed one hundred thousand
dollars ($100,000).
LIMITED STOCK APPRECIATION RIGHTS. One or more officers of the Company
subject to the short-swing profit restrictions of the federal securities laws
may, at the discretion of the Committee, be granted limited stock
appreciation rights in connection with their option grants under the Option
Plan. Any option with such a limited stock appreciation right in effect for
at least six (6) months may be unconditionally surrendered, to the extent
exercisable for one or more vested option shares, upon the successful
completion of a hostile tender offer for more than 50% of the Company's
outstanding voting stock. In return, the officer will be entitled to a cash
distribution from the Company in an amount per canceled option share equal to
the excess of (i) the highest price per share of Common Stock paid in the
tender offer over (ii) the option exercise price.
TANDEM STOCK APPRECIATION RIGHTS. The Committee is authorized to issue
tandem stock appreciation rights in connection with option grants under the
Discretionary Option Grant Program. Tandem stock appreciation rights provide
the holders with the right to surrender their options for an appreciation
distribution from the Company equal in amount to the excess
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of (a) the fair market value of the vested shares of Common Stock subject to
the surrendered option on the surrender date over (b) the aggregate exercise
price payable for such shares. Such appreciation distribution may, at the
discretion of the Committee, be made in cash or in shares of Common Stock.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, non-employee Board members
will receive option grants at specified intervals over their period of Board
service. These special grants may be summarized as follows:
- Each individual who is a non-employee Board member on the date of
the Company's initial public offering and each individual who first becomes a
non-employee Board member after the date of such initial public offering,
whether through election by the shareholders or appointment by the Board,
will automatically be granted, at the time of the offering or at the time of
such initial election or appointment, a nonstatutory stock option to purchase
50,000 shares of Common Stock. In no event may a non-employee Board member
receive more than one initial 50,000 share option grant.
- On the date of each Annual Shareholders Meeting beginning with the
1997 Annual Meeting, each individual who continues to serve as a director,
whether or not such individual is standing for re-election, will receive an
additional grant of a nonstatutory stock option under the Option Plan to
purchase 2,500 shares of Common Stock, provided such individual has been a
member of the Board for at least six months.
TERMS AND CONDITIONS. Each option grant under the Automatic Option
Grant Program will be subject to the following terms and conditions:
1. The option price per share will be equal to the fair market value per
share of Common Stock on the automatic grant date and each option is to have a
maximum term of ten years from the grant date.
2. Each automatic option grant will be immediately exercisable for all
of the option shares; the shares purchasable under the option shall be
subject to repurchase at the original exercise price in the event the
optionee's Board service should cease prior to full vesting. With respect to
each grant, the repurchase right shall lapse and the optionee vest in a
series of three (3) equal and successive annual installments over the
optionee's period of continued service as a Board member, with the first such
installment to vest upon the optionee's completion of one (1) year of Board
service, measured from the option grant date.
3. The option will remain exercisable for a 12-month period following
the optionee's termination of service as a Board member for any reason and
may be exercised following the Board member's death by the personal
representatives of the optionee's estate or the person to whom the grant is
transferred by the optionee's will or the laws of inheritance. In no event,
however, may the option be exercised after the expiration date of the option
term. During the applicable exercise period, the option may not be exercised
for more than the number of shares (if any) for which it is vested and
exercisable at the time of the optionee's cessation of Board service.
4. The option shares will become fully vested in the event of a
Corporate Transaction (as defined below) or a Change in Control (as defined
below). The option shares will become fully vested in the event of the
optionee's cessation of Board service by reason of death or permanent
disability.
5. Upon the occurrence of a hostile tender offer, the optionee shall
have a thirty (30) day period in which to surrender to the Company each
automatic option which has been in effect for at least six (6) months and the
optionee will in return be entitled to a cash distribution from the Company
in an amount per canceled option share (whether or not the optionee is
otherwise vested in those shares) equal to the excess of (i) the highest
reported price per share of Common Stock paid in the tender offer over (ii)
the option exercise price payable per share.
6. Option grants under the Automatic Option Grant Program will be made
in strict compliance with the express provisions of that program. The
remaining terms and conditions of the option will in general conform to the
terms described below for option grants under the Discretionary Option Grant
Program and will be incorporated into the option agreement evidencing the
automatic grant.
-10-
<PAGE>
GENERAL PROVISIONS
ACCELERATION OF OPTIONS/ TERMINATION OF REPURCHASE RIGHTS. Upon the
occurrence of either of the following transactions (a "Corporate
Transaction"):
(i) the sale, transfer or other disposition of all or substantially
all of the Company's assets in complete liquidation or dissolution of the
Company, or
(ii) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or persons
different from the persons holding those immediately prior to such
transaction,
each outstanding option under the Option Plan will, immediately prior to the
effective date of the Corporate Transaction, become fully exercisable for all
of the shares at the time subject to such option. However, an outstanding
option shall not accelerate if and to the extent: (a) such option is, in
connection with the Corporate Transaction, either to be assumed by the
successor corporation (or parent) or to be replaced with a comparable option
to purchase shares of the capital stock of the successor corporation (or
parent), (b) such option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
option shares at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option or (c) the acceleration of such option is subject to other
limitations imposed by the Committee at the time of the option grant.
Immediately following the consummation of the Corporate Transaction, all
outstanding options will terminate and cease to be exercisable, except to the
extent assumed by the successor corporation.
Also upon a Corporate Transaction, the Company's outstanding repurchase
rights applicable to options granted under the Discretionary Option Grant
Program will terminate automatically unless assigned to the successor
corporation.
Any options which are assumed or replaced in the Corporate Transaction
and do not otherwise accelerate at that time shall automatically accelerate
(and any of the Company's outstanding repurchase rights which do not
otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the optionee's
service should subsequently terminate by reason of an involuntary termination
within twelve (12) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option
term or (ii) the expiration of the one (1)-year period measured from the
effective date of the involuntary termination.
Upon the occurrence of the following transactions ("Change in Control"):
(i) any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is
under common control with, the Company) acquires beneficial ownership of
more than fifty percent (50%) of the Company's outstanding voting stock
without the Board's recommendation, or
(ii) there is a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases by reason of a proxy contest, to be comprised of
individuals who (a) have been Board members continuously since the
beginning of such period or (b) have been elected or nominated for
selection as Board members by a majority of the Board in (a) who were still
in office at the time such election or nomination was approved by the
Board,
the Committee has the discretion to accelerate outstanding options and
terminate the Company's outstanding repurchase rights. The Committee also
has the discretion to accelerate outstanding options and terminate the
Company's outstanding repurchase rights upon the subsequent termination of
the optionee's service within a specified period following the Change in
Control.
The acceleration of options in the event of a Corporate Transaction or
Change in Control may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt or other efforts
to gain control of the Company.
VALUATION. For purposes of establishing the option price and for all
other valuation purposes under the Option Plan, the fair market value of a
share of Common Stock on any relevant date will be the closing price per
share of Common Stock on that date, as such price is reported on Nasdaq.
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<PAGE>
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event any change is
made to the Common Stock issuable under the Option Plan by reason of any
stock split, stock dividend, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Company's receipt of consideration, appropriate adjustments will be made to
(i) the maximum number and class of securities issuable under the Option
Plan, (ii) the maximum number and class of securities for which any one
person may be granted options and separately exercisable stock appreciation
rights per calendar year, (iii) the number and class of securities for which
automatic option grants are to be subsequently made per director under the
Automatic Option Grant Program and (iv) the number and class of securities
and the exercise price per share in effect under each outstanding option in
order to prevent the dilution or enlargement of benefits thereunder.
Each outstanding option which is assumed in connection with a Corporate
Transaction will be appropriately adjusted to apply and pertain to the number
and class of securities which would otherwise have been issued, in
consummation of such Corporate Transaction, to the option holder had the
option been exercised immediately prior to the Corporate Transaction.
Appropriate adjustments will also be made to the option price payable per
share and to the class and number of securities available for future issuance
under the Option Plan on both an aggregate and a per-participant basis.
AMENDMENT AND TERMINATION OF PLAN. The Board may amend or modify the
Option Plan in any and all respects whatsoever. However, the Board may not,
without the approval of the Company's shareholders, (i) materially increase
the maximum number of shares issuable under the Option Plan (except in
connection with certain changes in capitalization), (ii) materially modify
the eligibility requirements for option grants, or (iii) otherwise materially
increase the benefits accruing to participants under the Option Plan.
Unless sooner terminated by the Board, the Option Plan will in all events
terminate in 2005. Any options outstanding at the time of such termination
will remain in force in accordance with the provisions of the instruments
evidencing such grants.
NEW PLAN BENEFITS AND OPTION GRANT TABLE
Because the Option Plan is discretionary, benefits to be received by
individual optionees are not determinable. The table below shows, as to each
of the executive officers named in the Summary Compensation Table and the
various indicated groups, (i) the number of shares of Common Stock for which
options have been granted under the Option Plan for the one (1)-year period
ending December 31, 1996 and (ii) the weighted average exercise price per
share.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE EXERCISE
NUMBER OF PRICE OF
NAME AND POSITION OPTION SHARES GRANTED OPTIONS
- ----------------- ------------- -----------------
<S> <C> <C>
Raymond R. Kingman, Jr.(1)............................... 0 0
President and Chief Executive Officer
John J. Ambrose(2)....................................... 145,000 $2.25
Chief Executive Officer
William G. Pryor (3)..................................... 0 0
Vice President of Development
Donald B. Witmer (4)..................................... 50,000 2.25
Chief Operating Officer and Chief Financial Officer
All current executive officers as a group 4 persons...... 420,000 2.25
All current directors (other than executive officers)
as a group 2 persons.................................. 30,000 7.50
All employees, including current officers who are not
executive officers, as a group 47 persons............. 410,344 2.25
</TABLE>
- ------------------
(1) Mr. Kingman terminated from employment with the Company, effective April
5, 1996.
(2) Mr. Ambrose terminated employment with the Company, effective March 25,
1997.
(3) Mr. Pryor terminated employment with the Company, effective October 9,
1997.
(4) Mr. Witmer terminated employment with the Company, effective June 16,
1997.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Option Plan may be either incentive stock
options that satisfy the requirements of Section 422 of the Code or
non-statutory options that are not intended to meet such requirements. The
federal income tax treatment for the two types of options differs as follows:
INCENTIVE STOCK OPTIONS. No taxable income is recognized by the optionee
at the time of the option grant, and no taxable income is generally
recognized at the time the option is exercised. However, the spread on an
Incentive Stock Option (the excess of the fair market value of the purchased
shares at the time of exercise over the exercise price paid for those shares)
is normally included in the optionee's alternative minimum taxable income at
the time of exercise and may be subject to the alternative minimum tax. In
addition, the optionee will recognize taxable income in the year in which the
purchased shares are sold or otherwise made the subject of disposition.
For federal tax purposes, dispositions are divided into two categories:
(i) qualifying and (ii) disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other disposition of such
shares is made after the optionee has held the shares for more than two (2)
years after the grant date of the option and more than one (1) year after the
exercise date. If the optionee fails to satisfy either of these two holding
periods prior to the sale or other disposition of the purchased shares, then
a disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
either long-term capital gain or loss. If there is a disqualifying
disposition of the shares, then the excess of (i) the lesser of the sales
price or the fair market value of those shares on the date the option was
exercised over (ii) the exercise price paid for the shares will be taxable as
ordinary income. Any additional gain recognized upon the disposition will be
a capital gain. Any loss on a disqualifying disposition will be a capital
loss. Presently there is no withholding requirement for an Incentive Stock
Option.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction for the
taxable year in which such disposition occurs equal to the amount of ordinary
income the optionee recognizes. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the
purchased shares. The Company anticipates that any compensation deemed paid
by the Company upon one or more disqualifying dispositions of incentive stock
option shares by the Company's executive officers will remain deductible by
the Company and will not have to be taken into account for purposes of the $1
million deduction limitation which covers certain executive officers of the
Company.
NON-STATUTORY STOCK OPTIONS. No taxable income is recognized by an
optionee upon the grant of a non-statutory option. The optionee will in
general recognize ordinary income in the year in which the option is
exercised equal to the excess of the fair market value of the purchased
shares on the exercise date over the exercise price paid for the shares, and
if the optionee is an employee the optionee will be required to satisfy the
tax withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition
of Common Stock under a non-statutory option if the purchased shares are
subject to repurchase by the Company. These special provisions may be
summarized as follows:
(i) If the shares acquired upon exercise of the non-statutory option
are subject to repurchase by the Company at the original exercise price in
the event of the optionee's termination of service prior to vesting in such
shares, the optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income, as and when the
Company's repurchase right lapses, an amount equal to the excess of (a) the
fair market value of the shares on the date such repurchase right lapses
with respect to such shares over (b) the exercise price paid for the
shares.
(ii) The optionee may, however, elect under Section 83(b) of the
Internal Revenue Code to include as ordinary income in the year of exercise
of the non-statutory option an amount equal to the excess of (a) the fair
market value of the purchased shares on the exercise date (determined as if
the shares were not subject to the Company's repurchase right) over (b) the
exercise price paid for such shares. If the Section 83(b) election is
made, the optionee will not recognize any additional income as and when the
repurchase right lapses.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for
the taxable year of the Company in which such ordinary income is recognized
by the optionee. The Company anticipates that the compensation deemed paid
by the Company upon the exercise of non-statutory options with exercise
prices equal to the fair market value of
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<PAGE>
the option shares on the grant date will remain deductible by the Company and
will not have to be taken into account for purposes of the $1 million
deduction limitation which covers certain executive officers of the Company.
STOCK APPRECIATION RIGHTS. No income will be recognized by a recipient
in connection with the grant of an SAR. When the SAR is exercised, the
recipient generally will be required to include as taxable ordinary income in
the year of exercise an amount equal to the sum of the amount of cash
received and the fair market value of any Common Stock received on the
exercise. In the case of a recipient who is also an employee, any income
recognized on exercise of a SAR will constitute wages for which withholding
will be required. The Company will be entitled to a tax deduction in the
same amount. If the optionee receives Common Stock upon the exercise of a
SAR, any gain or loss on the subsequent sale of such stock will be treated in
the same manner as discussed above under "Nonstatutory Stock Options."
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, HOLDERS OF STOCK APPRECIATION RIGHTS, AND THE COMPANY WITH
RESPECT TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS
UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE
TAX CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF
THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH
THE EMPLOYEE OR CONSULTANT MAY RESIDE.
REQUIREMENT FOR SHAREHOLDER APPROVAL; RECOMMENDATION OF THE BOARD OF DIRECTORS
At the Special Meeting, the shareholders are being asked to approve the
amendments to the Option Plan. The affirmative vote of the holders of a
majority of the shares present or represented by proxy at the Special Meeting
will be required to approve the amendments to the Option Plan. Abstentions
are counted as votes cast and, accordingly, have the same effect as votes
against the proposal, whereas broker non-votes are not counted as votes cast
and therefore once a quorum is present, will have no effect on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF PROPOSAL 2
TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company knows of no other matters which may
be brought before the Special Meeting. If any other matters properly come
before the Special Meeting, or any adjournment thereof, it is the intention
of the persons named in the accompanying form of Proxy to vote the Proxy on
such matters in accordance with their best judgment.
THE BOARD OF DIRECTORS
Scotts Valley, California
December __, 1997
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<PAGE>
DELTAPOINT, INC.
PROXY for Annual Meeting of Shareholders
To Be Held January __, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of DELTAPOINT, INC., a California corporation
(the "Company"), hereby acknowledges receipt of the Notice of Special Meeting
of Shareholders and Proxy Statement, each dated December 19, 1997, and hereby
appoints Jeffrey F. Ait and Patrick Grady as proxy attorneys-in-fact, with
full power to each of substitution, on behalf of the undersigned, to
represent the undersigned at the Special Meeting of Shareholders of
DELTAPOINT, INC. to be held at the offices of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California
94304 on Friday, January __, 1998 at 10:00 a.m., local time, and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
that the undersigned would be entitled to vote if then and there personally
present, on all matters set forth on the reverse side hereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE HEREIN. IF NO SPECIFICATION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS ON THE
REVERSE SIDE HEREOF AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING AS THE PROXY HOLDERS DEEM ADVISABLE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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<PAGE>
1. To approve an amendment to the Company's Articles of Incorporation to
change the Company's name to "Site Technologies, Inc."
For Withheld
/ / / /
2. To approve five amendments to the Company's 1995 Stock Option Plan
("Option Plan") to (a) increase the number of shares of Common Stock
available for issuance under the Option Plan by 1,200,000 shares to a
total of 2,400,000 shares of Common Stock; (b) provide that the maximum
number of shares subject to option or stock appreciation rights that may
be granted annually to a single employee under the Option Plan be
500,000 shares of Common Stock and that, in the first year of
employment, an employee may receive an additional grant of up to a
maximum of 400,000 shares of Common Stock subject to option or stock
appreciation rights (instead of the present Option Plan provision which
provides that the maximum number of shares subject to option or stock
appreciation rights that may be granted to a person participating in the
Option Plan over the term of the Option Plan is fifty percent (50%) of
the shares reserved for issuance under the Option Plan); (c) increase
the number of shares of Common Stock subject to option or stock
appreciation rights that will be granted to new members of the Company's
Board of Directors from a one-time grant of 20,000 shares of Common
Stock to a one-time grant of 50,000 shares of Common Stock; (d) increase
the number of shares of Common Stock subject to option or stock
appreciation rights that are granted annually to each non-employee
member of the Board of Directors under the automatic grant portion of
the Option Plan by 1,500 shares to 2,500 shares of Common Stock; and (e)
allow discretionary grants of stock options to be made to all
non-employee members of the Board of Directors of the Company.
For Withheld
/ / / /
3. To transact such other business as may properly come before the Special
Meeting and any adjournment thereof.
For Withheld
/ / / /
MARK HERE FOR ADDRESS CHANGE AND / /
NOTE NEW ADDRESS IN SPACE TO THE LEFT.
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
NOTE: Please sign exactly as name appears on your stock certificate. If
the stock is registered in the names of two or more persons, each
should sign. Executors, administrators, trustees, guardians,
attorneys and corporate officers should insert their titles.
SIGNATURE(S) ____________________________________________ DATE ________________
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