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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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SOLOPOINT, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SOLOPOINT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
SoloPoint, Inc., a California corporation (the "Company"), will be held on
Wednesday, May 21, 1997 at 11:00 a.m., local time, at the Company's offices
located at 130-B Knowles Drive, Los Gatos, California 95030 for the following
purposes:
1. To elect five directors for a term of one year to expire at the
Company's Annual Meeting of Shareholders in 1998;
2. To approve the adoption of amendments to the Company's 1993 Incentive
Stock Plan;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1997; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
These items of business are more fully described in the Proxy Statement
accompanying this notice.
Only shareholders of record at the close of business on April 11, 1997 are
entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign
and return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any shareholder attending the meeting may
vote in person even if the shareholder has returned a proxy.
By order of the Board of Directors
/s/ MICHAEL O'DONNELL
Michael O'Donnell
Secretary
Los Gatos, California
April 25, 1997
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
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SOLOPOINT, INC.
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
SoloPoint, Inc., a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held on Wednesday, May 21, 1997, at 11:00
a.m., local time, or at any adjournment thereof, for the purposes set forth in
this Proxy Statement and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the Company's principal
executive offices located at 130-B Knowles Dr., Los Gatos, California 95030.
The Company's telephone number at that address is (408) 364-8850.
These proxy solicitation materials were mailed on or about April 25, 1997 to
all shareholders entitled to vote at the Meeting. The Company's Board of
Directors has unanimously approved the matters being submitted for shareholder
approval at the Meeting. A copy of the Company's form 10-KSB filed with
Securities and Exchange Commission on March 31, 1997 will be furnished by the
Company to any shareholder upon written request to the Company. Request should
be addressed to Ronald J. Tchorzewski 130 B Krowles Drive, Los Gatos,
California 95030.
RECORD DATE; OUTSTANDING SHARES
Shareholders of record at the close of business on April 11, 1997 (the
"Record Date") are entitled to notice of and to vote at the Meeting. As of the
Record Date, 3,499,780 shares of Common Stock were issued and outstanding held
of record by approximately 110 shareholders.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Meeting and voting in person.
VOTING AND SOLICITATION
Except as provided below with respect to cumulative voting, each share of
Common Stock is entitled to one vote with respect to the matters set forth
herein. Every shareholder voting in the election of directors may cumulate
such shareholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which
the shareholder's shares are entitled, or distribute the shareholder's votes
on the same principle among as many candidates as the shareholder thinks fit,
provided that votes cannot be cast for more than the number of directors to be
elected. However, no shareholder shall be entitled to cumulate votes unless
the candidate's name has been placed in nomination prior to the voting, and
the shareholder, or any other shareholder, has given notice at the Meeting
prior to the voting of the intention to cumulate such shareholder's votes. In
addition, the Company has agreed to grant to each of 4C Ventures L.P. ("4C
Ventures") and Ameritech Development Corporation ("Ameritech") the right to
nominate one member of the Board of Directors as long as they respectively own
more than 3% of the outstanding Common Stock of the Company. Certain principal
shareholders of the Company have agreed to vote in favor of such nominees. The
Company has also agreed (for a period of 24 months from the closing of the
Company's Initial Public Offering which occurred in August 1996) to grant to
H.J. Meyers & Co., Inc. the right to nominate one member of the Board of
Directors. See "Certain Relationships and Related Transactions".
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by certain of the Company's officers, directors and regular
employees, without compensation, personally or by telephone or telecopy.
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DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals which are intended to be presented by shareholders at the
Company's next Annual Meeting, which is proposed to be held in May 1998, must
be received by the Company no later than December 31, 1997 in order that they
may be included in the proxy statement and form of proxy relating to that
meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, five nominees are to be elected. The persons named in the
accompanying proxy have been designated by the Board of Directors, and, unless
authority is withheld, the persons named in the proxy intend to elect the
nominees named below to the Board of Directors. In the event that additional
persons are nominated for election as directors and cumulative voting is
properly invoked, the proxy holders intend to cumulate their votes and to vote
all proxies received by them in accordance with cumulative voting procedures
in such a manner as they believe will ensure the election of as many of the
nominees listed below as possible. In such event, the specific nominees for
whom such votes will be cast will be determined by the proxy holders.
If a nominee should become unavailable for election, the proxy may be voted
for a substitute nominee selected by the persons named in the proxy; however,
the Board of Directors is not aware of any circumstances likely to render any
nominee unavailable.
The nominees, and certain information about them as of December 31, 1996,
are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE COMPANY POSITIONS SINCE
--------------- --- ----------------- --------
<C> <C> <S> <C>
Charlie Bass(1)............. 55 Chairman of the Board of 1993
Directors
Edward M. Esber Jr. ........ 45 Chief Executive Officer, 1995
President, Chief Financial
Officer and Director
Patrick Grady(2)............ 29 Director 1996
Giuliano Raviola(1)......... 64 Director 1996
Charles Ross(2)............. 33 Director 1996
</TABLE>
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(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Charlie Bass has served as Director and Chairman of the Board since he co-
founded the Company in March 1993. Dr. Bass served as Chief Executive Officer
of the Company from March 1995 until October 1995. Dr. Bass is the general
partner of Bass Associates, a venture capital firm and has served in that
capacity since September 1989. Dr. Bass also currently serves as a Director of
Meridian Data, Inc., and Socket Communications, Inc. Dr. Bass is also a
consulting professor of electrical engineering at Stanford University. Dr.
Bass holds a Ph.D. in electrical engineering from the University of Hawaii.
Edward M. Esber, Jr. joined the Company as President, Chief Executive
Officer, and Director in October 1995 and assumed the position of Chief
Financial Officer in May 1996. From May 1994 to June 1995, Mr. Esber was
Chairman, Chief Executive Officer and President of Creative Insights, Inc., a
computer toys company. From May 1993 to June 1994, Mr. Esber was President and
Chief Operating Officer of Creative Labs, Inc., the US subsidiary of Creative
Technology Ltd. From 1985 to 1990, Mr. Esber was Chairman, President, Chief
Executive Officer and Director of Ashton-Tate, a database software company and
maker of dBase. Mr. Esber has served as a director of Quantum Corp. since
1988. Mr. Esber holds a bachelor's degree in computer engineering from Case
Western Reserve University, a master's degree in electrical engineering from
Syracuse University and a M.B.A. in general management from Harvard Business
School.
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Patrick Grady has served as a Director of the Company since September 1996.
Mr. Grady has been a Managing Director, Venture Capital for H.J. Meyers & Co.,
Inc., an investment bank, since June 1993. From June 1993 to March 1996 Mr.
Grady was Senior Vice President of Corporate Finance at H.J. Meyers & Co.,
Inc. From March 1991 to May 1993, Mr. Grady was Vice President of Corporate
Finance at Josephthal Lyon & Ross, an investment bank. Mr. Grady also
currently serves as a Director of Deltapoint, Inc., and Borealis Technology
Corp. Mr. Grady attended Pace University in New York.
Giuliano Raviola has served as a Director of the Company since September
1996. Mr. Raviola has been a Managing Director of the corporate general
partner of 4C Ventures, L.P., a Venture Capital limited partnership, since
March 1995. Prior to that time, Mr. Raviola was self-employed as a consultant
from January 1993 to February 1995. From January 1991 to December 1992, Mr.
Raviola was President of Olivetti ATC Inc., a developer of computers and
information systems. From September 1990 to December 1992, Mr. Raviola was
President of International Technology Ventures, Inc., a venture capital firm.
Mr. Raviola also currently serves as director of several private companies.
Mr. Raviola holds degrees in engineering from Politecnico in Turin, Italy, and
from Columbia University in New York.
Charles Ross has served as a Director of the Company since September 1996.
Mr. Ross has been a Director of Venture Capital for Ameritech Development
Corporation, a subsidiary of Ameritech Corporation, since May 1993. Prior to
that time, Mr. Ross was a Manager of General Electric Medical Systems, a
manufacturer of diagnostic imaging systems from May 1992 to May 1993. Mr. Ross
holds a bachelor's degree in Electrical Engineering from Marquette University
and a M.B.A. from Indiana University.
All of the foregoing individuals are currently serving as directors of the
Company.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held eleven meetings and took action by written
consent three times during fiscal 1996. No incumbent director during the last
fiscal year attended fewer than 75% of the aggregate of (i) the total number
of meetings of the Board of Directors held which such person was a director
and (ii) the total number of meetings held by all committees on which such
director served while a member of the Board of Directors.
The Board of Directors has two standing committees: the Compensation
Committee and the Audit Committee. The Board of Directors has no nominating
committee or any other committee performing a similar function.
Directors Charlie Bass and Giuliano Raviola serve on the Compensation
Committee, which establishes salaries and incentive compensation for employees
of the Company other than executive officers, and makes recommendations to the
Board of Directors with regard to salaries and incentive compensation for
executive officers of the Company. The Compensation Committee held one meeting
during fiscal 1996. Messrs. Bass and Raviola each attended the committee
meeting.
Directors Charles Ross and Patrick Grady serve on the Audit Committee, which
reviews the results and scope of the audit and other services provided by the
Company's independent auditors. The Audit Committee held one meeting during
fiscal 1996. Messrs. Ross and Grady each attended the committee meeting.
COMPENSATION OF DIRECTORS
The Company's directors do not currently receive any cash compensation for
service on the Board of Directors, but directors may be reimbursed for
reasonable expenses incurred in connection with attendance at Board committee
meetings.
Subject to shareholder approval of Proposal No. 2 herein, non-employee
directors will be entitled to participate in the Company's 1993 Incentive
Stock Plan. During fiscal year 1996 and subject to shareholder approval of
Proposal No. 2 herein, Messrs. Jean-Claude Asscher and Martin Mazner, former
directors of the
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Company, were each granted options to purchase 1,200 shares of Common Stock of
the Company pursuant to the 1993 Incentive Stock Plan. Option grants under the
1993 Incentive Stock Plan are determined by the Board of Directors or by a
committee appointed by the Board of Directors.
REQUIRED VOTE
The five nominees receiving the highest number of affirmative votes of the
shares present or represented by proxy and entitled to vote will be elected as
directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES.
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PROPOSAL NO. 2
AMENDMENT OF 1993 INCENTIVE STOCK PLAN
GENERAL
The Company's 1993 Incentive Stock Plan (the "Incentive Plan"), was
originally adopted by the Board of Directors and approved by the shareholders
in March 1993. The Incentive Plan provides for grants of incentive stock
options, nonstatutory stock options, and stock purchase rights to employees
(including employees who are officers) of the Company and its subsidiaries.
The Incentive Plan also provides for grants of nonstatutory stock options and
stock purchase rights to consultants. There are currently 397,000 shares of
Common Stock reserved for issuance under the Incentive Plan. As of March 31,
1997, options to purchase 216,213 shares were outstanding under the Incentive
Plan and 58,957 shares remained available for future grant. The Incentive Plan
may be administered by the Board of Directors or by a committee appointed by
the Board. The Incentive Plan is currently administered by the Board of
Directors.
PROPOSAL
The principal changes in the Company's Incentive Plan that the shareholders
are being asked to approve at the 1997 Annual Meeting are summarized below and
set forth in more detail under "Summary of the Incentive Plan, as amended". A
copy of the amended Incentive Plan will be furnished by the Company to any
shareholder upon written request to the Company addressed to Ronald J.
Tchorzewski 130-B Knowles Dr., Los Gatos, California 95030.
1. In April 1997, the Board of Directors approved an increase in the number
of shares reserved for issuance under the Incentive Plan by 500,000 shares.
The Board of Directors believes the proposed increase in the number of shares
reserved for issuance under the Plan is in the best interest of the Company.
In particular, the Board of Directors has determined that the proposed
increase will provide an adequate reserve of shares for issuance under the
Plan and thus enable the Company to attract and retain valuable employees.
2. In September 1996, the Board of Directors approved an amendment to the
Incentive Plan to provide for grants of nonstatutory stock options pursuant to
the Incentive Plan to non-employee directors of the Company. The Company does
not currently have a separate director option plan and therefore does not have
the requisite mechanism by which to grant stock options to non-employee
directors of the Company. The Board of Directors believes that such grants are
advisable for attracting and retaining the best available personnel for
service as non-employee directors of the Company as well as rewarding and
encouraging the continued service of the current non-employee directors. The
Board of Directors believes that the ability to grant options to non-employee
directors will be important to the future success of the Company by allowing
it to accomplish these objectives. As of March 31, 1997 and subject to
shareholder approval of this Proposal No.2, two former non-employee directors
of the Company, Messrs. Asscher and Mazner were granted nonstatutory stock
options to each purchase 1,200 shares of the Common Stock of the Company.
3. In July, 1996, the Board of Directors approved an amendment conforming
the Incentive Plan to Internal Revenue Code Section 162(m) to preserve the
Company's ability to deduct related compensation expenses for federal tax
purposes under Section 162(m). In particular, no employee shall be granted, in
any fiscal year of the Company, options to acquire in the aggregate more than
75,000 shares of Common Stock. The Company may, however, make an additional
one-time grant to newly hired employees of up to an additional 75,000 shares
of Common Stock. This limitation shall adjust proportionately in connection
with any change in recapitalization.
Section 162(m) was added in 1993 to the Internal Revenue Code of 1986.
Section 162(m) limits the deduction for compensation to the chief executive
officer and each of the four other most highly compensated employees to no
more than $1,000,000 per fiscal year. This limitation does not apply to
compensation attributable to stock options if, among other things, the option
plan includes limits on option grants such as the limitation
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described above. Approval of the Incentive Plan by the Shareholders is
required in order for stock options to qualify as "performance-based"
compensation under Section 162(m) of the Code.
SUMMARY OF THE INCENTIVE PLAN, AS AMENDED
The essential features of the Incentive Plan, as amended and restated, are
summarized below. This summary does not purport to be complete and is subject
to, and qualified by reference to, all provisions of the Incentive Plan, as
amended and restated, a copy of which is available from the Company upon
request.
General. The purpose of the Incentive Plan is to attract and retain the best
available personnel, to provide additional incentive to the employees and
consultants of the Company and to promote the success of the Company's
business. Options and stock purchase rights may be granted under the Incentive
Plan. Options granted under the Incentive Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory stock
options.
Administration. The Incentive Plan may generally be administered by the
Board or a committee appointed by the Board. The administrators of the
Incentive Plan are referred to herein as the "Administrator."
Eligibility; Limitations. Nonstatutory stock options and stock purchase
rights may be granted under the Incentive Plan to employees, consultants and
directors of the Company. Incentive stock options may be granted only to
employees. The Administrator, in its discretion, selects the employees,
consultants and directors to whom options and stock purchase rights may be
granted, the time or times at which such options and stock purchase rights
shall be granted, and the number of shares subject to each such grant.
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 purchase rights granted to such
persons, the Incentive Plan provides that no employee may be granted, in any
fiscal year of the Company, options and stock purchase rights to purchase more
than 75,000 shares of Common Stock. Notwithstanding this limit, however, in
connection with an employee's initial employment, he or she may be granted
options or stock purchase rights to purchase up to an additional 75,000 shares
of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value
of the Common Stock on the date such option is granted; provided, however,
the exercise price of an incentive stock option granted to a 10%
shareholder may not be less than 110% of the fair market value of the
Common Stock on the date such option is granted. The exercise price of a
nonstatutory stock option shall be determined by the Administrator. The
fair market value of the Common Stock is generally determined with
reference to the mean of the bid and asked prices of the Common Stock for
the date of grant as reported by the Wall Street Journal or the NASDAQ
National Market System.
(b) Exercise of Option; Form of Consideration. The Administrator
specifies in the option agreement when options become exercisable. The
means of payment for shares issued upon exercise of an option is specified
in each option agreement. The Incentive Plan permits payment to be made by
cash, check, promissory note, other shares of Common Stock of the Company
(with some restrictions), cashless exercise, any combination thereof,
reduction of any liability to optionee, or any other legal form of
consideration.
(c) Term of Option. The term of option may be no more than ten (10) years
from the date of grant; provided that in the case of an incentive stock
option granted to a 10% shareholder, the term of the option may be no more
than five (5) years from the date of grant. No option may be exercised
after the expiration of its term.
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(d) Termination of Employment. If an optionee's employment or consulting
relationship terminates for any reason (other than death or disability),
then all options held by the optionee under the Incentive Plan expire on
the earlier of (i) the date set forth in his or her notice of grant (which
date in the case of an incentive stock option may not be more than three
(3) months after the date of such termination, and in the case of a
nonstatutory stock option, may not be more than six (6) months after the
date of such termination), or (ii) the expiration date of such option. To
the extent the option is exercisable at the time of the optionee's
termination, the optionee may exercise all or part of his or her option at
any time before it terminates.
(e) Disability. If an optionee's employment or consulting relationship
terminates as a result of disability, then all options held by such
optionee under the Incentive Plan expire (i) 6 months from the date of such
termination (or such longer period of time not exceeding 12 months as
determined by the Administrator), but only to the extent that the optionee
is entitled to exercise it on the date of termination (and in no event
later than the expiration of the term of the option as set forth in the
notice of grant). The optionee (or the optionee's estate or a person who
has acquired 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 exercisable at the time of such
termination.
(f) Death. In the event of an optionee's death: (i) during the optionee's
employment or consulting relationship with the Company where the optionee
has been in continuous status as an employee or consultant of the Company
since the date of the grant of the option, the option may be exercised, at
any time within 6 months of the date of death (but no later than the
expiration date of such option) by the optionee's estate or a person who
has acquired the right to exercise the option by bequest or inheritance,
but only to the extent that the optionee's right to exercise the option
would have accrued if he or she had remained an employee or consultant of
the Company 6 months after the date of death; or (ii) within 30 days (or
such other period of time not exceeding 3 months as determined by the
Administrator) after the optionee's employment or consulting relationship
with the Company terminates, the option may be exercised at anytime within
6 months (or such other period of time as determined by the Administrator)
following the date of death (but in no event later than the expiration date
of the option) by the optionee's estate or a person who has acquired the
right to exercise the option by bequest or inheritance, but only to the
extent of the optionee's right to exercise the option at the date of
termination.
(g) Nontransferability of Options: Options granted under the Incentive
Plan are not transferable other than by will or the laws of descent and
distribution, and may be exercisable during the optionee's lifetime only by
the optionee.
(h) Other Provisions: The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the Incentive Plan as may
be determined by the Administrator.
Stock Purchase Rights. A stock purchase right gives the purchaser a period
of no longer than 6 months from the date of grant to purchase Common Stock.
The purchase price of Common Stock purchased pursuant to a stock purchase
right is determined in the same manner as for nonstatutory stock options. A
stock purchase right is accepted by the execution of a restricted stock
purchase agreement between the Company and the purchaser, accompanied by the
payment of the purchase price for the shares. Unless the Administrator
determines otherwise, the restricted stock purchase agreement shall give the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment or consulting relationship with the
Company for any reason (including death and disability). The purchase price
for any shares repurchased by the Company shall be the original price paid by
the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option lapses at a rate determined by
the Administrator. A stock purchase right is nontransferable other than by
will or the laws of descent and distribution, and may be exercisable during
the optionee's lifetime only by the optionee.
Adjustments Upon Changes in Capitalization. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be
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made in the number and class of shares of stock subject to the Incentive Plan,
the number and class of shares of stock subject to any option or stock
purchase right outstanding under the Incentive Plan, and the exercise price of
any such outstanding option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate. The Administrator may allow the
optionees to exercise their options as to all the stock covered by such
options fifteen (15) days prior to the consummation of the liquidation or
dissolution.
In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option or stock purchase
right shall be assumed or an equivalent option or right may be substituted by
the successor corporation. If the successor corporation refuses to assume an
option or stock purchase rights, or to substitute substantially equivalent
options or rights, then the optionee shall fully vest in and have the right to
exercise the option or stock purchase right as to all of the stock subject to
such option or stock purchase right, including shares as to which it would not
otherwise be vested or exercisable.
Amendment and Termination of the Incentive Plan. The Board may amend, alter,
suspend or terminate the Incentive Plan, or any part thereof, at any time and
for any reason. However, the Company shall obtain shareholder approval for any
amendment to the Incentive Plan to the extent necessary to comply with
Section 162(m) of the Code and Section 422 of the Code, or any other
applicable rule or statute. No such action by the Board or shareholders may
alter or impair any option or stock purchase right previously granted under
the Incentive Plan without the consent of the optionee.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain
or loss is treated as long-term capital gain or loss. If these holding periods
are not satisfied, the optionee recognizes ordinary income at the time of
disposition equal to the difference between the exercise price and the lower
of (i) the fair market value of the shares at the date of the option exercise
or (ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. A different rule for measuring ordinary
income upon such a premature disposition may apply if the optionee is also an
officer, director, or 10% shareholder of the Company. The Company is entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price.
Any taxable income recognized in connection with an option exercise by an
employee of the Company is subject to tax withholding by the Company. The
Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Upon a disposition of such shares by the optionee,
any difference between the sale price and the optionee's exercise price, to
the extent not recognized as taxable income as provided above, is treated as
long-term or short-term capital gain or loss, depending on the holding period.
Stock Purchase Rights. Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time
of purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject
to a substantial risk of forfeiture. The stock will generally cease to be
subject to a substantial risk of forfeiture when it is no longer subject to
the Company's right to repurchase the stock upon the purchaser's termination
of employment with the Company. At such times, the purchaser will recognize
ordinary income measured as the
8
<PAGE>
difference between the purchase price and the fair market value of the stock
on the date the stock is no longer subject to a substantial risk of
forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding
period by timely filing an election pursuant to Section 83(b) of the Code. In
such event, the ordinary income recognized, if any, is measured as the
difference between the purchase price and the fair market value of the stock
on the date of purchase, and the capital gain holding period commences on such
date. The ordinary income recognized by a purchaser who is an employee will be
subject to tax withholding by the Company. Different rules may apply if the
purchaser is also an officer, director, or 10% shareholder of the Company.
The foregoing is only a summary of the effect of federal income taxation
upon optionees, holders of stock purchase rights, and the Company with respect
to the grant and exercise of options and stock purchase rights under the
Incentive 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.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Annual Meeting is required to approve and ratify
the amendment to the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE AMENDMENT TO THE 1993 INCENTIVE STOCK PLAN
9
<PAGE>
PROPOSAL NO. 3
CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP to audit the financial
statements of the Company for the year ending December 31, 1997, and
recommends that the shareholders confirm the selection. In the event of a
negative vote, the Board will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements since March
1993. Representatives of Ernst & Young LLP are expected to be present at the
meeting, will have the opportunity to make a statement if they so desire, and
are expected to be available to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Annual Meeting is required to approve the
selection of Ernst & Young LLP as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE CONFIRMATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS FOR FISCAL YEAR ENDING DECEMBER 31, 1997.
10
<PAGE>
BENEFICIAL SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of March 31,
1997 by (i) each shareholder known by the Company to be the beneficial owner
of more than 5% of the Company's Common Stock, (ii) each director, (iii) the
Company's Chief Executive Officer and each of the other executive officers of
the Company other than the Chief Executive Officer whose total salary and
bonus for fiscal year 1996 exceeded $100,000 (together, the "Named Officers")
and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
FIVE PERCENT SHAREHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS(1) NUMBER PERCENT
- ----------------------------------- ------- -------
<S> <C> <C>
Bass Associates(2)(3).......................................... 404,633 11.5%
435 Tasso Street
Suite 325
Palo Alto, CA 94301
4C Ventures, L.P.(3)(4)........................................ 241,856 6.8%
c/o Queensgate Bank and Trust Company, Ltd.
P.O. Box 30646, Seven Mile Beach
George Town, Grand Cayman
Cayman Islands
Ameritech Development Corporation(3)(5)........................ 240,807 6.8%
30 South Wacker Drive
Chicago, IL 60606
Edward M. Esber, Jr.(3)(6)..................................... 200,010 5.7%
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
Arthur G. Chang(3)(7).......................................... 115,000 3.3%
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
Giuliano Raviola(8)(4)......................................... 241,856 6.8%
4C Ventures, Inc.
10261 Bubb Road
Cupertino, CA 95014
Charles Ross(9)................................................ 0 *
Ameritech Development Corporation
30 South Wacker Drive
Chicago, IL 60606
Ronald J. Tchorzewski.......................................... 0 *
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
Patrick Grady(10).............................................. 10,000 *
H.J. Meyers & Co., Inc.
433 California Street
Suite 300
San Francisco, CA 94104
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
FIVE PERCENT SHAREHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS(1) NUMBER PERCENT
- ----------------------------------- ------- -------
<S> <C> <C>
Charlie Bass(11)................................................ 404,633 11.5%
435 Tasso Street
Suite 325
Palo Alto, CA 94301
Bryan Kerr...................................................... 3,000 *
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
All directors and officers as a group (8 persons)(12)........... 974,499 27.6%
</TABLE>
- --------
* Less than 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 as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to this
table.
(2) Includes warrants to purchase 30,628 shares of Common Stock.
(3) In connection with the issuance of the certain convertible notes (see
"Certain Relationships and Related Transactions"), the Company has agreed
to grant to each of 4C Ventures and Ameritech the right to nominate one
member of the Board of Directors so long as they respectively own more
than 3% of the outstanding Common Stock of the Company. These
shareholders by a Voting Agreement dated July 14, 1996 have agreed to
vote in favor of such nominees.
(4) Includes 40,000 shares subject to warrants exercisable within 60 days
from April 11, 1997.
(5) Includes 36,000 shares subject to warrants exercisable within 60 days
from April 11, 1997. Ameritech Development Corporation is a subsidiary of
Ameritech Corporation.
(6) 200,000 of Mr. Esber's shares are subject to repurchase options granted
to the Company under two separate agreements. The first agreement grants
the Company an option to repurchase 140,000 of Mr. Esber's shares within
90 days following the termination of Mr. Esber's employment with the
Company. Under the agreement, one-fourth (35,000) of the shares were
released from the repurchase option on November 26, 1996, and one-forty-
eighth (approximately 2,917) of the shares were released from the
repurchase option on October 26, 1996 and one-forty-eighth of the share
will be released on the twenty-sixth day of each month thereafter until
all of the shares have been released. In the event of a Change of Control
of the Company (as defined in the agreement), an additional number of
shares equal to one-half of the number of shares that have not been
released from the Company's repurchase option as of the closing of such
Change in Control shall become immediately exercisable on the
consummation of such Change in Control. The second agreement grants the
Company an option to repurchase the remaining 60,000 shares within 90
days following the termination of Mr. Esber's employment with the
Company. Under the agreement, one-forty-eighth (1,250) of the shares were
released on June 1, 1996, and an additional one-forty-eighth of the
shares are to be released on the first day of each month thereafter until
all of the shares have been released. The second agreement contains
identical Change of Control provisions as the agreement governing the
aforementioned 140,000 shares.
(7) Mr. Chang's shares are subject to repurchase options granted to the
Company under two separate agreements. The first agreement grants the
Company an option to repurchase 75,000 of Mr. Chang's shares within 90
days following the termination of Mr. Chang's employment with the
Company. Under the agreement, one-fourth (18,750) of the shares were
released from the repurchase option on January 1, 1997. One-forty-eighth
(approximately 1,563) of the shares were released from the repurchase
option on February 1, 1997 and on the first day of each month thereafter
until all of the shares have been released. In the event of a Change of
Control of the Company (as defined in the agreement), an additional
number of shares equal to one-half of the number of shares that have not
been released from the Company's
12
<PAGE>
repurchase option as of the closing of such Change in Control shall become
immediately exercisable on the consummation of such Change in Control. The
second agreement grants the Company an option to repurchase the remaining
40,000 shares within 90 days following the termination of Mr. Chang's
employment with the Company. Under the agreement, one-forty-eighth
(approximately 833) of the shares were released on June 1, 1996, and an
additional one-forty-eighth of the shares will be released on the first
day of each month thereafter until all shares have been released. The
second agreement contains identical Change of Control provisions as the
agreement governing the aforementioned 75,000 shares.
(8) Mr. Raviola, a director of the Company, is a Limited Partner of 4C
Associates, L.P., which is the General Partner of 4C Ventures, L.P. Mr.
Raviola may be deemed to be the beneficial owner of shares owned by
4C Ventures, L.P. Mr. Raviola is 4C Ventures' nominee to the Board of
Directors pursuant to an agreement with the Company. See "Certain
Relationships and Related Transactions."
(9) Mr. Ross, a director of the Company, is Ameritech's nominee to the Board
of Directors pursuant to an agreement with the Company. See "Certain
Relationships and Related Transactions."
(10) Mr. Grady, a director of the Company, is H.J. Meyers & Co., Inc's.
nominee to the Board of Directors pursuant to an agreement with the
Company. See "Certain Relationships and Related Transactions."
(11) Dr. Bass, a director of the Company, is the controlling General Partner
of Bass Associates and may be deemed to share voting and investment power
with respect to those shares. However, Dr. Bass disclaims beneficial
ownership of shares owned by Bass Associates except to the extent of his
pecuniary interest therein.
(12) Includes 30,628 shares subject to warrants exercisable within 60 days
from April 11, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the Company's inception in March 1993, the Company issued, in private
placement transactions (collectively, the "Private Placement Transactions"),
shares of Preferred Stock and warrants to purchase Preferred Stock as follows:
an aggregate of 25,013 shares of Series A-1 Preferred Stock at $10.00 per
share in January 1994; an aggregate of 7,500 shares of Series A-1 Preferred
Stock was exchanged for 300,000 shares of Common Stock in a recapitalization--
the Company received no cash as a result of this recapitalization; an
aggregate of 79,527 shares of Series A-2 Preferred Stock at $3.50 per share
and warrants to purchase 8,570 shares of Series A-2 Preferred Stock at $3.50
per share in May 1994; an aggregate of 143,750 shares of Series A-3 Preferred
Stock at $4.00 per share in July and August 1994; an aggregate of 100,795
shares of Series A-4 Preferred Stock at $4.50 per share in December 1994 and
January 1995; an aggregate of 154,000 shares of Series A-5 Preferred Stock at
$5.00 per share in March and April 1995; an aggregate of 85,000 shares of
Series A-6 Preferred Stock at $6.00 per share in June 1995; warrants to
purchase an aggregate of 57,320 shares of Series A-7 Preferred Stock at $5.00
per share in September and October 1995; an aggregate of 532,853 shares of
Series A-7 Preferred Stock and warrants to purchase 186,950 shares of Series
A-7 Preferred Stock at $5.00 per share in February and March 1996, in exchange
for cash of $1,200,500 and cancellation of $1,433,000 of convertible notes
payable plus $30,770 of accrued interest. Investors purchasing Series A-7
Preferred Stock for cash were issued a warrant to purchase 50% of the number
of shares they purchased resulting in the issuance of warrants for 120,050
shares of Series A-7 Preferred Stock at an exercise price of $5.00 per share.
Holders of convertible notes payable who converted their notes into Series A-7
Preferred Stock and purchased shares of Series A-7 Preferred Stock for cash as
requested by the Company, were issued additional warrants to purchase the
number of shares of Series A-7 Preferred Stock that, when combined with the
warrants previously issued in connection with the convertible promissory
notes, equaled 50% of the number of shares of Series A-7 Preferred Stock
purchased in the financing by cash or cancellation of indebtedness. This
resulted in the issuance of warrants to purchase an additional 66,900 shares
of Series A-7 Preferred Stock at $5.00 per share. As part of the Series A-7
financing, approximately 76,667 shares of Series A-6 Preferred Stock were
converted into 92,000 shares of Series A-7 Preferred Stock. Additionally,
after the closing of the Series A-7 financing, a consultant of the Company was
issued 8,000 shares of Series A-7 Preferred Stock in exchange for services
rendered to the Company.
13
<PAGE>
Participants in the Private Placement Transactions included the following
directors, executive officers and holders of more than 5% of the outstanding
shares of Common Stock:
<TABLE>
<CAPTION>
WARRANTS WARRANTS
FOR FOR
SERIES SERIES SERIES A- SERIES SERIES SERIES SERIES SERIES
A-1 A-2 2 A-3 A-4 A-5 A-7 A-7
PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED
INVESTOR STOCK STOCK STOCK STOCK STOCK STOCK STOCK STOCK
-------- --------- --------- --------- --------- --------- --------- --------- ---------
NUMBER OF SHARES
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bass Associates......... 27,500 14,521 2,428 12,500 14,210 10,000 66,774 28,200
Ameritech Development
Corporation............ 104,119 16,000
Hambrecht & Quist Group. 35,000 24,624 12,200
H&Q
London Ventures........ 35,000 21,974 10,900
Charles Simonyi......... 71,166 35,000
New Jersey Wolfson
Trust................... 68,790 33,800
J.F. Shea Co., Inc...... 100,748 50,000
</TABLE>
Upon the closing of the Company's Initial Public Offering on August 6, 1996,
all outstanding shares of Preferred Stock automatically converted into an
aggregate of 1,145,438 shares of Common Stock and all warrants to purchase
Preferred Stock became exercisable for an equivalent number of shares of
Common Stock at an identical per share exercise price.
In February 1996, Edward M. Esber, Jr., Chief Executive Officer, President,
Chief Financial Officer and Director, and the Company, entered into a
Restricted Stock Purchase Agreement pursuant to which Mr. Esber bought 140,000
shares of the Company's Common Stock, at a price of $0.50 per share. These
shares are subject to repurchase by the Company, at the original $0.50
purchase price per share, upon Mr. Esber's cessation of service prior to
vesting in those shares. In conjunction with the share purchase, the Company
loaned $70,000 to Mr. Esber pursuant to a promissory note secured by the
140,000 shares of restricted Common Stock purchased by Mr. Esber. Mr. Esber
serves pursuant to an employment agreement under which he is entitled to
severance payments. See "Beneficial Security Ownership of Management & Certain
Beneficial Owners" and "Executive Compensation."
In February 1996, Bass Associates and the Company, entered into a Restricted
Stock Purchase Agreement pursuant to which Bass Associates bought 11,000
shares of the Company's Common Stock, at a price of $0.50 per share. Charlie
Bass, the Chairman of the Board of Directors, is the General Partner of Bass
Associates. These shares are subject to repurchase by the Company, at the
original $0.50 price per share, upon Dr. Bass's cessation of service prior to
vesting in these shares.
In February 1996, Arthur G. Chang, Chief Operating Officer, and the Company,
entered into a Restricted Stock Purchase Agreement pursuant to which Mr. Chang
bought 75,000 shares of the Company's Common Stock, at a price of $0.50 per
share, pursuant to the Incentive Plan. These shares are subject to repurchase
by the Company, at the original $0.50 purchase price per share, upon Mr.
Chang's cessation of service prior to vesting in those shares. In conjunction
with the share purchase, the Company loaned $37,500 to Mr. Chang pursuant to a
promissory note secured by the 75,000 shares of restricted Common Stock
purchased by Mr. Chang. In addition, Mr. Chang serves pursuant to an
employment arrangement at a current annual salary of $85,000.
In April 1996, the Board of Directors approved a sale of 60,000 shares of
the Company's Common Stock at a price of $0.50 per share to Mr. Esber pursuant
to a Restricted Stock Purchase Agreement. In May 1996, Mr. Esber executed the
Restricted Stock Purchase Agreement pursuant to which the shares are subject
to repurchase by the Company, at the original $0.50 purchase price per share,
upon Mr. Esber's cessation of service prior to vesting in those shares. In
conjunction with the share purchase, the Company loaned $30,000 to Mr. Esber
pursuant to a promissory note secured by the 60,000 shares of restricted
Common Stock purchased by Mr. Esber.
14
<PAGE>
In April 1996, the Board of Directors approved the sale of 40,000 shares of
the Company's Common Stock at a price of $0.50 per share to Mr. Chang pursuant
to a Restricted Stock Purchase Agreement. In May 1996, Mr. Chang executed the
Restricted Stock Purchase Agreement pursuant to which the shares are subject
to repurchase by the Company, at the original $0.50 purchase price per share,
upon Mr. Chang's cessation of service prior to vesting in those shares. In
conjunction with the share purchase, the Company loaned $20,000 to Mr. Chang
pursuant to a promissory note secured by the 40,000 shares of restricted
Common Stock purchased by Mr. Chang.
In June 1996, the Company issued $1,000,000 and $500,000 in principal amount
of the Convertible Notes to 4C Ventures and Ameritech, respectively. The
Convertible Notes were automatically converted into 302,544 shares of Common
Stock upon the closing of the Company's IPO. In connection therewith, the
Company granted such parties warrants to purchase an aggregate of 60,000
shares of Common Stock at a per share exercise price of $5.00. In addition,
the Company has agreed to grant to each of 4C Ventures and Ameritech the right
to nominate one member of the Board of Directors as long as they respectively
own more than 3% of the outstanding Common Stock of the Company. Certain
principal shareholders of the Company have agreed to vote in favor of such
nominees.
In August 1996, as part of its underwriting agreement with H.J. Meyers &
Co., Inc. (the underwriters for the Company's Initial Public Offering), the
Company agreed (for a period of 24 months from the closing of the Initial
Public Offering in August 1996) to grant to H.J. Meyers & Co., Inc. the right
to nominate one member of the Board of Directors.
Unless otherwise indicated, transactions with affiliates have been made on
terms no less favorable to the Company than those available from unaffiliated
parties. In the future, the Company will continue to seek the most favorable
terms available from both affiliates and nonaffiliates.
EXECUTIVE COMPENSATION
COMPENSATION TABLES
Summary Compensation Table. The following table sets forth the compensation
paid by the Company to the Chief Executive Officer and each of the other
executive officers of the Company whose total salary and bonus for fiscal year
1996 exceeded $100,000 (collectively the "Named Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
NAME OF PRINCIPAL FISCAL -------------------- COMPENSATION ALL OTHER
POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS# COMPENSATION($)
- ----------------- ------ --------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Edward M. Esber, Jr.,... 1996 $180,000 $45,000(2) -- $4,496(3)
Chief Executive 1995 32,637 -- --
Officer,
President, Chief
Financial Officer
and Director(1)
Arthur G. Chang,........ 1996 104,583 -- -- 4,197(3)
Chief Operating
Officer(4)
</TABLE>
- --------
(1) Mr. Esber joined the Company in October 1995.
(2) Represents bonus earned by the Named Officer based upon his performance in
the year noted but credited in the subsequent year against the Named
Officer's indebtedness to the Company. See "Certain Relationships and
Related Transaction."
(3) Consists of life and health insurance premiums paid by the Company.
(4) Mr. Chang joined the Company in February 1996.
Employment Contracts. In October 1995, The Company entered into an
employment agreement with Edward M. Esber, Jr., President and Chief Executive
Officer of the Company. Pursuant to such agreement,
15
<PAGE>
Mr. Esber receives an annual base salary of $180,000 plus a performance bonus
of up to $45,000 for fiscal 1996. If Mr. Esber's employment is involuntarily
terminated without cause prior to November 1, 1999, Mr. Esber will continue to
receive his base salary and benefits for a period of six months from the date
of termination. See "Certain Relationships and Related Transactions."
In February 1996, the Company entered into an employment agreement with
Arthur G. Chang, the Chief Operating Officer of the Company. Pursuant to such
agreement, Mr. Chang received an annual salary of $85,000. In July 1996, Mr.
Chang's annual salary was increased to $132,000. See "Certain Relationships
and Related Transactions."
The Company currently has no other compensatory plan or arrangement with any
of the Named Officers where the amounts to be paid exceed $100,000 and which
are activated upon resignation, termination or retirement of any such
executive officer upon a change in control of the Company.
STOCK OPTION INFORMATION
During the fiscal year ended December 31, 1996, there were no grants of
stock options to, nor any exercise of stock options by the Named Officers.
RECENT SALES OF UNREGISTERED SECURITIES
In February 1996, a total of 642,855 shares of Series A-7 Preferred Stock
were issued to accredited investors at a price of $5.00 per share for a total
value of $3,214,275. Consideration for the shares consisted of cash
($1,200,500), cancellation of convertible promissory notes ($1,463,770), and
exchange of shares of Series A-6 Preferred Stock. In connection with the
financing, the Company also issued warrants exercisable for a total of
2,442,700 shares of Series A-7 Preferred Stock. The Company relied upon
Section 4(2) as the exemption from the registration requirements of the
Securities Act of 1933, as amended. No underwriters were used and no
commission was paid. See "Certain Relationships and Related Transactions".
In June 1996, pursuant to a bridge loan financing, the Company issued
convertible promissory notes totaling $1,500,000 to Ameritech and 4C Ventures
which automatically converted into shares of Common Stock upon the Company's
IPO. The Company also issued warrants exercisable for a total of 30,000 shares
of common stock at $5.00 per share. The Company relied upon Section 4(2) as
the exemption from the registration requirements of the Securities Act of
1933, as amended. No underwriters were used and no commission was paid. See
"Certain Relationships and Related Transactions".
LEGAL PROCEEDINGS
The Company is not a party to any legal proceeding.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers,
directors and 10% shareholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors and 10% shareholders were
complied with.
16
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are, therefore, urged to execute
and return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.
17
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SOLOPOINT, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
The undersigned shareholder of SOLOPOINT, INC., a California corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders
and Proxy Statement, each dated April 25, 1997 and hereby appoints Edward M.
Esber, Jr. and Ronald J. Tchorzewski, and each of them, proxies and attorneys-
in-fact, with full power to each of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the 1997 Annual Meeting of
Shareholders of SOLOPOINT, INC. to be held on May 21, 1997 at 11:00 a.m. local
time, at 130-B Knowles, Los Gatos, California and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below, and in their discretion, upon such other matter
or matters which may properly come before the meeting or any adjournment or
adjournments thereof.
- -------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
FOLD AND DETACH HERE
<PAGE>
[X] Please mark
your votes
as indicated
This Proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of Directors, FOR the amendment of
the 1993 Incentive Stock Plan, FOR the ratification of the appointment of
Ernst & Young LLP as Independent Auditors and as said proxies deem advisable
on such other matters as may properly come before the meeting.
FOR WITHHELD FOR ALL
Item 1-Election of directors: [_] [_]
Charlie Bass, Edward M. Esber, Jr., Patrick Grady,
Giuliano Raviola and Charles Ross.
WITHHELD FOR: (To withhold authority to vote
for one nominee write his name on the line below.
- -------------------------------------------------
FOR AGAINST ABSTAIN
Item 2-Proposal to approve the amendment to the [_] [_] [_]
Company's 1993 Incentive Stock Plan (the "Incentive
Plan") to provide for grants of options to
non-employee directors and to increase the number
of shares reserved for issuance under the
Incentive Plan from 397,000 to 897,000 shares:
FOR AGAINST ABSTAIN
Item 3-Proposal to ratify the appointment of [_] [_] [_]
Ernst & Young LLP as Independent Auditors of
the Company for the fiscal period ending
December 31, 1997:
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s) ___________________________ Date _________________________, 1997
(This Proxy should be marked, dated and signed by the shareholder(s) exactly
as his or her name appears on the stock certificate(s), and returned promptly
in the enclosed envelope. A corporation is requested to sign its name by its
authorized officer, with the office held designated. Persons signing in a
fiduciary capacity should so indicate. If shares are held by joint tenants or
as community property, both should sign.)
FOLD AND DETACH HERE
