<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:
[_] 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.
(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.
[_] $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.
[_] 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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<PAGE>
SOLOPOINT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on June 1, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
SoloPoint, Inc., a California corporation (the "Company"), will be held on
Tuesday, June 1, 1999 at 2:00 p.m., local time, at the Company's offices
located at 130-B Knowles Drive, Los Gatos, California 95032 for the following
purposes:
1. To elect four directors for a term of one year to expire at the
Company's Annual Meeting of Shareholders in 2000;
2. To increase the number of shares of Common Stock reserved for issuance
under the Company's 1993 Incentive Stock Plan from 349,250 to 949,250
shares;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1999; 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 15, 1999 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
Michael J. O'Donnell
Secretary
Los Gatos, California
April 30, 1999
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
<PAGE>
SOLOPOINT, INC.
PROXY STATEMENT FOR 1999
ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of Board of Directors of
SoloPoint, Inc., a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Tuesday,
June 1, 1999, at 2:00 p.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 95032. The Company's telephone number at that address is (408) 364-
8850.
These proxy solicitation materials will be mailed on or about May 10, 1999
to all shareholders entitled to vote at the Annual Meeting. The matters being
submitted for shareholder approval at the Annual Meeting were unanimously
approved by the directors present at the Company's Board of Directors meeting
at which such matters were considered. A copy of the Company's Form 10-KSB
filed with Securities and Exchange Commission on March 31, 1999 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 Knowles
Drive, Los Gatos, California 95032.
Record Date; Outstanding Shares
Shareholders of record at the close of business on April 15, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, 2,076,455 shares of Common Stock were issued and
outstanding held of record by approximately 100 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 Annual 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 Annual
Meeting prior to the voting of the intention to cumulate such shareholder's
votes.
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 of shareholders, which is proposed to be held in
June 2000, must be received by the Company no later than January 1, 2000 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
As set by the Board of Directors pursuant to the Bylaws of the Company, the
authorized number of directors is currently set at five. At the Annual
Meeting, four nominees are to be elected. Director Charles Bass has chosen not
to stand for re-election. Following the Annual Meeting, there will be one
vacancy on the Board of Directors. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the Company's nominees
named below. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. If a nomination is made to
elect an individual to the vacant position on the Board of Directors, the
proxy holders will propose a nominee to fill such position and vote all
proxies received by them in accordance with cumulative voting to assure the
election of as many of the Company's nominees as possible.
The nominees, and certain information about them as of December 31, 1998,
are set forth below.
<TABLE>
<CAPTION>
Director
Name of Nominee Age Company Positions Since
--------------- --- ----------------- --------
<S> <C> <C> <C>
Arthur G. Chang......... 40 President and Chief Executive Officer 1998
and Director
Edward M. Esber, Jr.(1). 46 Director, Chairman of the Board 1995
Patrick Grady........... 31 Director 1996
Murali Narayanan(2)..... 46 Director 1998
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Arthur G. Chang has served as a Director of the Company since July 1998. Mr.
Chang joined the Company as Chief Operating Officer and Vice President of
Research and Development in February 1996. Effective February 1998, Mr. Chang
serves as the Company's President and Chief Executive Officer. From November
1993 to April 1995, Mr. Chang was Chairman, President, Chief Executive Officer
and Director of CommVision Corporation, a wide area remote access company.
From February 1988 to April 1993, Mr. Chang was co-founder and Senior Vice
President of Product Development and Product Marketing for Parallan Computer,
Inc. (now Meridian Data, Inc.), a company that made fault-tolerant
superservers for PC networks. Mr. Chang holds a bachelors degree in electrical
engineering from Northwestern University and a master's degree in electrical
and computer science from the University of California at Berkeley.
Edward M. Esber, Jr. became the Chairman of the Board of the Company in
February 1998. Mr. Esber served as the Company's President, Chief Executive
Officer, and Director from October 1995 until February 1998 and served as the
Company's Chief Financial Officer from May 1996 until July 1997. 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 as served as a
director of Quantum Corp. since 1988, Borealis Technology Corporation since
1996 and Integrated Circuit Systems Technology since 1997. Mr. Esber holds a
bachelor's degree in computer
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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.
Patrick Grady has served as a Director of the Company since July 1996. Since
March 1998, Mr. Grady has served as the Chief Executive Officer and Chairman
of the Board of Directors of Portivity, Inc. (fka Borealis Technology Corp.)
From June 1993 to February 1998, Mr. Grady was a Managing Director, Venture
Capital for H.J. Meyers & Co., Inc., an investment bank. 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. Mr. Grady was
nominated by the underwriter of the Company's secondary public offering
completed on January 9, 1998 to serve on the Board of Directors.
Murali Narayanan has served as a Director of the Company since September
1998. Mr. Narayanan has served as Vice President, Program Management/Market
Readiness/Advanced Application for SkyTel Corp since August 1995. From March
1994 to July 1995 Mr. Narayanan was Director, Business Development for the
Wireless Services Messenging Division of AT&T. From December 1976 to March
1994, Mr. Narayanan held various technical and management positions at AT&T
and AT&T Bell Laboratories. Mr. Narayanan holds a bachelor's degree in physics
from the University of Madras in India, a bachelor's degree in electrical
communication engineering from the Indian Institute of Science in Bangalore,
India, a master's degree in Computer, Information Control Engineering from the
University of Michigan and a Master of Management from the Kellogg Graduate
School of Business.
Board Meetings and Committees
The Board of Directors held four meetings and took action by written consent
five times during fiscal 1998. Director Patrick Grady 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. No other 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.
Since September 1998, the Compensation Committee has consisted of directors
Charlie Bass and Edward M. Esber, Jr. Previously, directors Charlie Bass and
Giuliano Raviola served 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 1998.
Messrs. Bass and Raviola each attended the committee meeting. Mr. Raviola's
service as a Director of the Company ended at the Company's 1998 Annual
Meeting of Shareholders. Mr. Bass' service as a Director of the Company will
end at the 1999 Annual Meeting.
Since September 1998, the Audit Committee has consisted of directors Charlie
Bass and Murali Narayanan. Previously, directors Charles Ross and Patrick
Grady served 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 four meetings during fiscal 1998. Messrs. Ross and
Grady each attended the first three committee meetings and Messrs. Bass and
Narayanan each attended the fourth committee meeting. Mr. Ross' service as a
Director of the Company ended at the 1998 Annual Meeting of Shareholders.
3
<PAGE>
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.
Directors of the Company have in the past received a grant of an option to
purchase 12,000 shares of Common Stock of the Company each year on the day
immediately following the Company's annual shareholders' meeting. No such
grants were made in Fiscal 1998. Mr. Narayanan received a grant of an option
to purchase 6,000 shares of Common Stock in October 1998.
Required Vote
The four 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.
4
<PAGE>
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 349,250 shares of
Common Stock reserved for issuance under the Incentive Plan. As of March 31,
1999, options to purchase 271,500 shares were outstanding under the Incentive
Plan and 47,195 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.
The shareholders are now being requested to consider and approve an
amendment to the Incentive Plan to increase the number of shares of Common
Stock reserved for issuance thereunder by 600,000 to a new total of 949,250
shares.
Summary of the Incentive Plan
The essential features of the Incentive Plan 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, 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
5
<PAGE>
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.
(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.
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<PAGE>
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 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.
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<PAGE>
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 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 OF THE 1993 INCENTIVE STOCK PLAN.
8
<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, 1999, 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, 1999.
9
<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,
1999 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 1998 exceeded $100,000 (together, the "Named Officers")
and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
Percent
Five Percent Shareholders, Beneficially
Directors and Executive Officers(1) Number Owned (2)
----------------------------------- ------- ------------
<S> <C> <C>
Charlie Bass (3).......................................... 105,721 5.1%
575 Middlefield Road
Suite J
Palo Alto, CA 94301
Edward M. Esber, Jr. (4).................................. 78,128 3.7%
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Arthur G. Chang (5)....................................... 55,145 2.6%
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Donald Nanneman(6)........................................ 9,869 *
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Ronald J. Tchorzewski(7).................................. 7,369 *
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Patrick Grady(8).......................................... 1,438 *
Portivity, Inc.
9790 Gateway Blvd.
Reno, NV 89511
Murali Narayanan(9)....................................... 1,000 *
SkyTel Corp.
200 South Lamar Street, 7th Floor
Jackson, MS 39201
All directors and officers as a group (7 persons)(10)..... 258,670 12.0%
</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. All numbers in this table take into account the Company's 1998
one-for-four reverse stock split.
(2) Applicable percent ownership is based on 2,076,455 shares of Common Stock
outstanding as of March 31, 1999.
10
<PAGE>
(3) Includes 7,657 shares subject to warrants and 1,438 shares subject to
options exercisable within 60 days from March 31, 1999. An aggregate
93,501 shares are held by Bass Associates and 3,125 shares are held by
The Bass Trust, of which Dr. Bass is Trustee. 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.
(4) Includes 23,125 shares subject to options exercisable within 60 days of
March 31, 1999. An additional 50,000 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 35,000 of
Mr. Esber's shares within 90 days following the termination of Mr.
Esber's employment with the Company. Under the agreement, one-fourth
(8,750) of the shares were released from the repurchase option on
November 26, 1996, and one-forty-eighth (approximately 729) of the shares
were released from the repurchase option on October 26, 1996 and one-
forty-eighth of the shares will be released on the twenty-sixth day of
each month thereafter until all of the shares were released. As of April
30, 1999, approximately 31,354 of the shares originally subject to
repurchase by the Company had been released from the repurchase option.
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 15,000 shares within 90 days following the termination of
Mr. Esber's employment with the Company. Under the agreement, one-forty-
eighth (313) 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 35,000 shares. As of April 1,
1999, approximately 10,937 of the shares originally subject to repurchase
by the Company had been released from the repurchase option.
(5) Includes 24,070 shares subject to options exercisable within 60 days from
March 31, 1999. The remaining 28,750 of 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 18,750 of
Mr. Chang's shares within 90 days following the termination of Mr.
Chang's employment with the Company. Under the agreement, one-fourth
(approximately 4,688) of the shares were released from the repurchase
option on January 1, 1997. One-forty-eighth (approximately 599) of the
shares were released from the repurchase option on February 1, 1997 and
one-forty-eighth of the shares will be released 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 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 10,000
shares within 90 days following the termination of Mr. Chang's employment
with the Company. Under the agreement, one-forty-eighth (approximately
208) 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 18,750 shares.
(6) Includes 9,869 shares subject to options exercisable within 60 days from
March 31, 1999.
(7) Includes 7,369 shares subject to options exercisable within 60 days from
March 31, 1999.
(8) Includes 1,438 shares subject to options exercisable within 60 days from
March 31, 1999. Mr. Grady, a director of the Company, is H.J. Meyers &
Co., Inc's. nominee to the Board of Directors pursuant to agreement with
the Company. See "Certain Relationships and Related Transactions."
(9) Includes 1,000 shares subject to options exercisable within 60 days from
March 31, 1999.
(10) Includes 7,050 shares subject to warrants and 86,164 shares subject to
options exercisable within 60 days from March 31, 1999.
11
<PAGE>
EXECUTIVE COMPENSATION
Executive Officers
The executive officers of the Company and certain information about them as
of December 31, 1998 are listed below:
<TABLE>
<CAPTION>
Name Age Company Positions
---- --- -----------------
<S> <C> <C>
Edward M. Esber, Jr. (1).......... 46 Chairman of the Board of Directors
Arthur G. Chang (2)............... 40 President and Chief Executive Officer
Ronald J. Tchorzewski............. 48 Chief Financial Officer
Donald Nanneman................... 44 Vice President of Marketing
</TABLE>
- --------
(1) Mr. Esber resigned as President and Chief Executive Officer effective
February 4, 1998 and became Chairman of the Board of the Company as of
such date.
(2) Mr. Chang resigned as Chief Operating Officer effective February 4, 1998
in order to assume the position of President and Chief Executive Officer
of the Company.
Messrs. Esber's and Chang's backgrounds are summarized under "Proposal No.
1-- Election of Directors" above.
Ronald J. Tchorzewski joined the Company in October 1996 as Vice President
of Finance as was elected Chief Financial Officer in July 1997. From July 1996
to October 1996, Mr. Tchorzewski was an independent consultant. From September
1993 to July 1996, Mr. Tchorzewski served as Chief Financial Officer of
ULTRADATA Corporation. From July 1987 to September 1993, Mr. Tchorzewski held
various positions with Cadence Design Systems, Inc., most recently as Vice
President and Corporate Controller. Mr. Tchorzewski holds a bachelor's degree
in accounting from Seton Hall University and a master's degree in finance from
Seton Hall University.
Donald Nanneman joined the Company in January 1997 as Vice President of
Marketing. From March 1992 to December 1996, Mr. Nanneman was Group Marketing
Manager of Octel Communications. Prior to joining Octel, Mr. Nanneman was Vice
President of Sales and Marketing for MediaWorks, a workgroup software
publisher. Prior to Media Works, Mr. Nanneman held marketing management
positions with Apple Computer, Britton Lee and other technology companies.
12
<PAGE>
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
1998 exceeded $100,000 (collectively the "Named Officers"). All stock numbers
in the table reflect the Company's 1998 one-for-four reverse stock split.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation ------------
-------------------- Securities
Name of Principal Fiscal Underlying All Other
Position Year Salary Bonus Options# Compensation(2)
----------------- ------ -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Edward M. Esber, Jr.,... 1996 $180,000 $45,000(1) -- $4,496
Chairman of the Board 1997 180,000 72,000(1) 18,750(3) 5,299
1998 68,288(13) -- 41,250(4) 7,014
Arthur G. Chang,........ 1996 104,583 -- -- 4,197
President and 1997 156,000 18,000(5) 18,750(6) 4,764
Chief Executive Officer 1998 166,000 -- 65,125(7) 6,225
Ronald J. Tchorzewski... 1996 27,083 -- 6,250(9) --
Chief Financial 1997 130,000 -- 21,875(10) 5,254
Officer(8)
1998 130,000 -- -- 6,225
Donald Nanneman......... 1997 130,000 -- 22,500(12) 5,299
Vice President of 1998 140,000 -- -- 4,092
Marketing(11)
</TABLE>
- --------
(1) 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 Transactions."
(2) Consists of life and health insurance premiums paid by the Company.
(3) Pursuant to the Company's 1993 Incentive Stock Plan, an option to
purchase 18,750 shares of Common Stock at a price of $3.50 per share was
granted to Mr. Esber in December 1997. Such option vests on a monthly
basis over a four-year period commencing July 1, 1997. As of December 31,
1998, such option was vested with respect to 7,031 shares of Common
Stock.
(4) Pursuant to the Company's 1993 Incentive Stock Plan, options were granted
to Mr. Esber as follows: (a) 11,250 shares at a price of $3.50 per share
on January 5, 1998, vesting on a monthly basis over a four-year period
commencing June 1, 1997; and (b) 30,000 shares at a price of $1.25 per
share on June 16, 1998, vesting on a monthly basis over a four-year
period commencing on March 1, 1998. As of December 31, 1998 such options
were vested with as to (a) 4,219 shares and (b) 5,625 shares,
respectively.
(5) Represents bonus earned by the Named Officer based upon his performance
in the year noted but paid in the subsequent year.
(6) Pursuant to the Company's 1993 Incentive Stock Plan, an option to
purchase 18,750 shares of Common Stock at a price of $3.50 per share was
granted to Mr. Chang in December 1997. Such option vests on a monthly
basis over a four-year period commencing July 1, 1997. As of December 31,
1998, such option was vested with respect to 7,031 shares of Common
Stock.
(7) Pursuant to the Company's 1993 Incentive Stock Plan, options were granted
to Mr. Chang as follows: (a) 1,375 shares at a price of $3.50 per share
on January 5, 1998, vesting on a monthly basis over a four-year period
commencing June 1, 1997; (b) 38,750 shares at a price of $1.25 per share
on June 16, 1998, vesting on a monthly basis over a four-year period
commencing on March 1, 1998; and (c) 25,000 shares at a price of $0.2188
per share on October 22, 1998, vesting over a four-year period commencing
October 22, 1998. As of December 31, 1998 such options were vested with
as to (a) 516 shares, (b) 7,266 shares and (c) 521 shares, respectively.
13
<PAGE>
(8) Mr. Tchorzewski joined the Company in October 1996.
(9) Pursuant to the Company's 1993 Incentive Stock Plan, an option to
purchase 6,250 shares of Common Stock at a price of $12.00 per share was
granted to Mr. Tchorzewski in October 1996. Such option was canceled and
regranted at a price of $9.50 in January 1997 and was again canceled and
regranted at a price of $3.50 on December 31, 1997, pursuant to the
Company's stock option exchange program under the Company's 1993
Incentive Stock Plan (see description below). Such option vests on a
monthly basis over a four-year period commencing January 29, 1997. As of
December 31, 1998, such option was vested with respect to 3,125 shares of
Common Stock.
(10) Consists of options to purchase 5,625 shares of Common Stock as original
grants pursuant to the Company's 1993 Incentive Stock Plan and options to
purchase 16,250 shares of Common Stock as regrants of canceled stock
options pursuant to the Company's stock option exchange program. An
option to purchase 1,875 shares of Common Stock was originally granted to
Mr. Tchorzewski at a price of $8.50 per share in July 1997 and was
subsequently canceled and regranted at a price of $3.50 per share in
December 1997. Such option vests at the rate of 1/4th of the shares on
the first anniversary of the original grant date and vests on a monthly
basis over the subsequent three years. An option to purchase 5,625 shares
of Common Stock was granted to Mr. Tchorzewski at a price of $3.50 per
share in December 1997. Such option vests on a monthly basis over a four-
year period commencing July 1, 1997. As of December 31, 1998, both such
options were vested with respect to an aggregate 2,812 shares of Common
Stock.
(11) Mr. Nanneman joined the Company in January 1997.
(12) Consists of options to purchase 13,750 shares of Common Stock as original
grants pursuant to the Company's 1993 Incentive Stock Plan and options to
purchase 8,750 shares of Common Stock as regrants of canceled stock
options pursuant to the Company's stock option exchange program. An
option to purchase 8,750 shares of Common Stock was originally granted to
Mr. Nanneman at a price of $7.00 per share in January 1997 and was
subsequently canceled and regranted at a price of $3.50 per share in
December 1997. Such option vests at the rate of 1/4th of the shares on
the first anniversary of the original grant date and vests on a monthly
basis over the subsequent three years. An option to purchase 5,000 shares
of Common Stock was granted to Mr. Nanneman at a price of $3.50 per share
in December 1997. Such option vests on a monthly basis over a four-year
period commencing July 1, 1997. As of December 31, 1998, both such
options were vested with respect to an aggregate 6,250 shares of Common
Stock.
(13) In connection with Mr. Esber's transition from President and Chief
Executive Officer to Chairman of the Board, Mr. Esber received half of
his monthly salary from March 1998 through July 1998, and received no
salary after July 1998.
Employment Contracts. In October 1995, the Company entered into an
employment agreement with Edward M. Esber, Jr., former President and Chief
Executive Officer and current Chairman of the Board of the Company. Pursuant
to such agreement, Mr. Esber received a base salary at an annual rate of
$180,000 for fiscal 1998. In connection with Mr. Esber's transition from
President and Chief Executive Officer to Chairman of the Board, Mr. Esber has
received half of his monthly salary from March 1998 through July 1998, and
received no salary after July 1998. Mr. Esber's bonus for 1997 was credited in
1998 against Mr. Esber's indebtedness to the Company. See "Certain
Relationships and Related Transactions."
In February 1996, the Company entered into an employment agreement with
Arthur G. Chang, the former Chief Operating Officer and current President and
Chief Executive Officer of the Company. Pursuant to such agreement, Mr. Chang
received an annual salary of $85,000. Mr. Chang's annual salary was increased
(i) to $132,000, (ii) to $156,000 for 1997 and (iii) to $168,000 for 1998. See
"Certain Relationships and Related Transactions."
In October 1996, the Company entered into an employment agreement with
Ronald J. Tchorzewski, the Chief Financial Officer of the Company. Pursuant to
such agreement, Mr. Tchorzewski receives an annual salary of $130,000.
14
<PAGE>
In January 1997, the Company entered into an employment agreement with
Donald Nanneman, the Vice President of Marketing of the Company. Pursuant to
such agreement, Mr. Nanneman originally received an annual salary of $130,000.
Mr. Nanneman's salary has since been increased to $142,000.
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
Option Grants in Last Fiscal Year. The following table sets forth certain
information concerning grants of stock options to each of the Named Officers
during the fiscal year ended December 31, 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration
Name Granted(1) Year Per Share Date
---- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Edward M. Esber, Jr.,.............. 41,250(2) 26.1% $1.25 1/5/08
President, Chief Executive to $3.50 to 6/16/08
Officer and Director
Arthur G. Chang,................... 65,125(3) 41.2% $0.2188 1/5/08
Chief Operating Officer to $3.50 to 10/22/08
Donald Nanneman.................... 7,000(4) 4.4% $1.25 6/16/08
Vice President of Marketing
</TABLE>
- --------
(1) The options referenced in the foregoing table are intended to be incentive
stock options to the extent permitted by applicable law. The Company's
1993 Amended Incentive Stock Plan (the "Incentive Plan") also provides for
the grant of non-qualified stock options. Incentive stock options may be
granted under the Incentive Plan at an exercise price no less than fair
market value on the date of grant. For so long as the Company's Common
Stock is listed on the Nasdaq National Market, the fair market value is
the closing sale price for the Common Stock. Non-qualified options may be
granted at an exercise price of no less than 85% of fair market value on
the date of grant. Options generally become exercisable as to 25% of the
shares subject to the option one year after the date of grant, and as to
the remainder in equal monthly installments over the succeeding 36 months.
Options generally terminate on the earlier of thirty days after
termination of the optionee's employment by or services to the Company, or
ten years after grant.
(2) An option to purchase 11,250 shares of Common Stock was granted to Mr.
Esber at a price of $3.50 per share in January 1998. Such option vests on
a monthly basis over a four-year period commencing June 1, 1997. An option
to purchase 6,250 shares of Common Stock was granted to Mr. Esber at a
price of $1.25 per share in June 1998. Such option vests on a monthly
basis over a four-year period commencing March 1, 1998. As of December 31,
1998, both such options were vested with respect to an aggregate 9,844
shares of Common Stock.
(3) An option to purchase 1,375 shares of Common Stock was granted to Mr.
Chang at a price of $3.50 per share in January 1998. Such option vests on
a monthly basis over a four-year period commencing June 1, 1997. An option
to purchase 38,750 shares of Common Stock was granted to Mr. Chang at a
price of $1.25 per share in June 1998. Such option vests on a monthly
basis over a four-year period commencing March 1, 1998. An option to
purchase 25,000 shares of Common Stock was granted to Mr. Chang in October
1998. Such option vests on a monthly basis over a four-year period
commencing October 22, 1998. As of December 31, 1998,all such options were
vested with respect to an aggregate 8,303 shares of Common Stock.
(4) Mr. Nanneman's option was granted in June 1998. Such option vests on a
monthly basis over a four-year period commencing March 1, 1998. As of
December 31, 1998, such option was vested with respect to 1,312 shares of
Common Stock.
15
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth certain information concerning the
number of options exercised by the Named Officers during the fiscal year ended
December 31, 1998, and the number of shares covered by both exercisable and
unexercisable stock options held by the Named Officers as of December 31,
1998. Also reported are values for "in-the-money" options that represent the
positive spread between the respective exercise prices of outstanding options
and the fair market value of the Company's Common Stock as of December 31,
1998 ($3.50 per share).
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
Shares December 31, 1998 at December 31, 1998
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward M. Esber, Jr. ... 0 $ 0 16,875 43,125 $36,914 $ 94,336
Arthur G. Chang......... 0 0 15,334 68,541 17,034 122,419
Ronald J. Tchorzewski... 0 0 5,937 7,813 0 0
Donald Nanneman......... 0 0 7,563 13,187 2,872 12,440
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1996, Arthur G. Chang, the then Chief Operating Officer of the
Company, and the Company, entered into a Restricted Stock Purchase Agreement
pursuant to which Mr. Chang bought 18,750 shares of the Company's Common
Stock, at a price of $2.00 per share, pursuant to the Incentive Plan. These
shares are subject to repurchase by the Company, at the original $2.00
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
18,750 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 $168,000. In December 1998 the Company and Mr. Chang amended the due
date for the borrowed funds to December 31, 2000.
In April 1996, the Board of Directors approved the sale of 10,000 shares of
the Company's Common Stock at a price of $2.00 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 $2.00 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 10,000 shares of restricted
Common Stock purchased by Mr. Chang. In December 1998 the Company and Mr.
Chang amended the due date for the borrowed funds to December 31, 2000.
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.
16
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
In February 1996, a total of 160,714 shares of Series A-7 Preferred Stock
were issued to accredited investors at a price of $20.00 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 610,675
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. The
foregoing share numbers have been adjusted to reflect the Company's 1998 one-
for-four reverse stock split. 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 7,500 shares
of common stock at $20.00 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 issued and no commission was paid. The
foregoing share numbers have been adjusted to reflect the Company's 1998 one-
for-four reverse stock split. 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, 1998, all Section 16(a) filing
requirements applicable to its officers, directors and 10% shareholders were
complied with.
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.
1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 1999
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 30, 1999 and hereby appoints Arthur G. Chang,
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 1999 Annual Meeting of
Shareholders of SOLOPOINT, INC. to be held on June 1, 1999 at 2:00 p.m. local
time, at 130-B Knowles, Los Gatos, California 95032 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:
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.
(CONTINUED ON THE OTHER SIDE -- IMPORTANT TO MARK, DATE AND SIGN ON THE OTHER
SIDE.)
<PAGE>
1. ELECTION OF DIRECTORS:
Nominees: Arthur G. Chang, Edward M. Esber, Jr., Patrick Grady and
Murali Narayanan.
__ __
|__| FOR all nominees listed above |__| WITHHOLD for all nominees
(except as indicated below) listed above
__
|__| WITHHOLD authority to vote for the following:__________________
2. PROPOSAL TO APPROVE THE AMENDMENT OF THE COMPANY'S 1993 INCENTIVE
STOCK PLAN (THE "INCENTIVE PLAN") TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE UNDER THE INCENTIVE PLAN FROM 349,250 TO
949,250 SHARES:
__ __ __
|__| FOR |__| AGAINST |__| ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL PERIOD ENDING
DECEMBER 31, 1999:
__ __ __
|__| FOR |__| AGAINST |__| ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
Dated: __________________, 1999 _____________________________________
Signature of Shareholder
_____________________________________
(please print name)
(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.)
