<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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SOLOPOINT.COM, 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
SOLOPOINT.COM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on June 20, 2000
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of
SoloPoint.com, Inc., a California corporation (the "Company"), will be held on
Tuesday, June 20, 2000 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 2001;
2. To approve amendments to the Company's 1993 Incentive Stock Plan (the
"Incentive Plan"), to (i) increase the number of shares of Common
Stock reserved for issuance under the Incentive Plan from 1,549,250 to
4,549,250 shares and (ii) increase the annual limit on the number of
stock options the Company can grant to an individual employee under
the Incentive Plan from 75,000 to 4,500,000 shares.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ended December 31, 2000;
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 May 19, 2000 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 J. O'Donnell
Michael J. O'Donnell
Secretary
Los Gatos, California
May 20, 2000
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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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<PAGE>
SOLOPOINT.COM, INC.
PROXY STATEMENT FOR 2000
ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
SoloPoint.com, Inc., a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Tuesday,
June 20, 2000, 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 were mailed on or about May 30, 2000 to
all shareholders entitled to vote at the Annual Meeting. The Company's Board of
Directors has unanimously approved the matters being submitted for shareholder
approval at the Annual Meeting. A copy of the Company's Form 10-KSB filed with
Securities and Exchange Commission on March 31, 2000 will be furnished by the
Company to any shareholder upon written request to the Company. Request should
be addressed to Thomas J. Muise, 130 B Knowles Drive, Los Gatos, California
95032.
Record Date; Outstanding Shares
Shareholders of record at the close of business on May 19, 2000 (the
'Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, 4,989,357 shares of Common Stock were issued and outstanding
and held of record by approximately 212 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.
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 2001, must be received by the Company no later than February 1, 2001 in
order that they may be included in the proxy statement and form of proxy
relating to that meeting.
<PAGE>
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 as 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, 1999,
are set forth below.
<TABLE>
<CAPTION>
Director
Name of Nominee Age Company Positions Since
- ------------------------------------------- --- -------------------------------------------- -----------
<S> <C> <C> <C>
Arthur G. Chang 41 President and Chief Executive Officer and 1998
Director
Edward M. Esber, Jr. (1,2) 47 Director, Chairman of the Board 1995
Kenneth Tai 50 Director 1999
Murali Narayanan (2) 46 Director 1999
</TABLE>
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(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. Since February 1998, Mr. Chang has
served 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 B.S. in electrical engineering from Northwestern
University and a M.A. in electrical and computer science from the University of
California at Berkeley.
Edward M. Esber, Jr. has served as Chairman of the Board of the Company
since 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 has 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 B.S.
in computer engineering from Case Western Reserve University, a M.A. in
electrical engineering from Syracuse University and a M.B.A. in general
management from Harvard Business School.
Kenneth Tai has served as a Director of the Company since October 1999.
For the past four years, Mr. Tai has been the Chairman of InveStar Capital,
Inc., a venture capital firm with $180,000,000 in capital and more than seventy
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portfolio companies. Since April 1998, he served as the Chairman of DigiTimes
Publication, Inc., a daily electronic newspaper reporting on technology issues
in Taiwan. From March 1993 to December 1995, Mr. Tai served as the Vice-
Chairman of UMAX USA, which makes computer peripherals. Mr. Tai was one of the
co-founders of the Acer Group, and held various positions including Vice
President of worldwide Sales and Marketing and President from 1990 to March
1993. Mr. Tai holds a B.S. degree in electrical engineering from the National
Chiao Tung University in Taiwan and a M.B.A from Tamkang University in Taiwan.
Murali Narayanan has served as a Director of the Company since January
1999. Mr. Narayanan is currently the Vice President, Program Management/Market
Readiness/Advanced Applications, of Mtel Corp. From March 1994 to July 1995,
Mr. Narayanan was Vice President of Business Development at AT&T Wireless
Services Messaging Division. From August 1992 to March 1994 Mr. Narayanan was
Director, Business Development at AT&T Consumer Products Division. From January
1986 to August 1992 Mr. Narayanan held various management positions with AT&T
and AT&T Bell Laboratories. Mr. Narayanan has a M.B.A. from the Kellogg
Graduate School of Business, Northwestern University, a M.S.E.E. degree from the
University of Michigan, a B.S.E.E. degree from Indian Institute of Science and a
B.S. degree from the University of Madras.
Board Meetings and Committees
The Board of Directors held six meetings and took action by written consent
three times during fiscal 1999. No 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 July 1999, the Compensation Committee consisted of directors Edward
M. Esber, Jr. and Murali Narayanan. For the remainder of the year previous to
this, the Compensation Committee consisted of directors Charlie Bass and Edward
M. Esber, Jr. The Compensation Committee 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 1999. Messrs. Esber and Narayanan each
attended the committee meeting.
Since July 1999, the Audit Committee consisted of directors Patrick Grady
and Murali Narayanan. For the remainder of the year previous to this, the Audit
Committee consisted of directors Charlie Bass and Murali Narayanan. The Audit
Committee 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 1999. Messrs. Bass and Narayanan each attended the first two
committee meetings, and Messrs. Grady and Narayanan each attended the third and
fourth committee meetings. Mr. Bass' service as a Director of the Company ended
at the 1999 Annual Meeting of Shareholders. Mr. Grady's service as a Director
of the Company ended when his resignation was accepted at the January 2000 Board
of Directors 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.
Directors Edward M. Esber Jr., Murali Narayanan, and Patrick Grady each
received a grant of an option to purchase 25,000 shares of Common Stock of the
Company in August 1999. Such options vest on a monthly basis over a four-year
period from the date of grant.
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<PAGE>
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.
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<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 1,549,250 shares of Common Stock
reserved for issuance under the Incentive Plan. As of May 1, 2000, options to
purchase 891,069 shares were outstanding under the Incentive Plan and 619,597
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 Incentive Plan currently 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. This proposal requests approval to
raise this annual limit to 4,500,000 shares of Common Stock.
The shareholders are now being requested to consider and approve amendments
to the Incentive Plan to (i) increase the number of shares of Common Stock
reserved for issuance thereunder to a new total of 4,549,250 shares and (ii)
raise the annual limit on individual employee stock option and stock purchase
rights to a new limit of 4,500,000.
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. This proposal would raise this limit to allow for grants of
options or stock purchase rights of up to 4,500,000 of common stock. The limits
imposed by section 162(m), however, will still apply to any future grants of
options or stock purchase rights.
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:
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(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.
(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
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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
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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.
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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 TO THE 1993 INCENTIVE STOCK PLAN
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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, 2000, 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, 2000.
-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 May 1,
2000 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 1999 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>
InveStar Excelsus Venture Capital, Inc. (3,4)................... 1,112,046 22.3%
12F, 333 Keelung Road, Section 1
Room 1201
Taipei, Taiwan R.O.C.
InveStar Dayspring Venture Capital, Inc. (3,4).................. 1,112,046 22.3%
12F, 333 Keelung Road, Section 1
Room 1201
Taipei, Taiwan R.O.C.
InveStar Burgeon Venture Capital, Inc.(3,5)..................... 741,364 14.9%
12F, 333 Keelung Road, Section 1
Room 1201
Taipei, Taiwan R.O.C.
Forefront Venture Partners L.P. (3,6)........................... 371,713 7.5%
1737 N. First Street
Suite 650
San Jose, CA 95112
Hui-Chuan Liu (7)............................................... 400,459 8.0%
8th Floor, 9, Lane 311, Alley 43, Section 2
Hoping East Road
Taipei, Taiwan R.O.C.
Arthur G. Chang (8)............................................. 130,231 2.6%
c/o SoloPoint.com, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Edward M. Esber, Jr. (9)........................................ 68,364 1.4%
c/o SoloPoint.com, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Murali Narayanan (10)........................................... 27,885 *
Skytel
200 South Lamar Street, 7th Floor
Jackson, MS 39201
Kenneth Tai (11)................................................ 0 *
1737 N. First Street
Suite 650
San Jose, CA 95112
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Donald Nanneman (12)............................................ 0 *
c/o SoloPoint.com, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
Ronald J. Tchorzewski (13)...................................... 0 *
c/o SoloPoint.com, Inc.
130-B Knowles Dr.
Los Gatos, CA 95032
All directors and officers as a group (7 persons) (14).......... 226,480 4.5%
</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) Applicable percent ownership is based on 4,989,357 shares of Common Stock
outstanding as of May 19, 2000.
(3) Company is a subsidiary of InveStar Capital, Inc. of which Kenneth Tai is
Chairman.
(4) Includes 343,572 shares subject to warrants exercisable within 60 days from
May 1, 2000.
(5) Includes 229,048 shares subject to warrants exercisable within 60 days
from May 1, 2000.
(6) Includes 115,555 shares subject to warrants exercisable within 60 days
from May 1, 2000.
(7) Includes 123,809 shares subject to warrants exercisable within 60 days from
May 1, 2000.
(8) Includes 99,156 shares subject to options exercisable within 60 days from
May 1, 2000. Includes 10,000 shares subject to repurchase options granted
to the Company under an agreement. The agreement grants the Company an
option to repurchase the 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. 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. Effective June 1, 2000, all of the shares pertaining to this
agreement will be released.
(9) Includes 8,254 shares subject to warrants and 41,667 shares subject to
options exercisable within 60 days from May 1, 2000.
(10) Includes 6,190 shares subject to warrants and 7,833 shares subject to
options exercisable within 60 days from May 1, 2000.
(11) Mr. Tai is the Chairman of InveStar Capital, Inc., the parent company of
InveStar Excelsus Venture Capital, Inc., InveStar Dayspring Venture
Capital, Inc., InveStar Burgeon Venture Capital, Inc., and Forefront
Venture Partners L.P., respectively.
(12) Mr. Nanneman resigned as Vice President of Marketing on March 15, 2000
and therefore has no beneficial ownership in the Company's Common Stock as
of May 1, 2000.
(13) Mr. Tchorzewski resigned as Chief Financial Officer on December 1, 1999
and therefore has no beneficial ownership in the Company's Common Stock as
of May 1, 2000.
(14) Includes 14,444 shares subject to warrants and 148,656 shares subject to
options exercisable within 60 days from May 1, 2000.
-11-
<PAGE>
EXECUTIVE COMPENSATION
Executive Officers
The executive officers of the Company and certain information about them as
of December 31, 1999 are listed below:
<TABLE>
<CAPTION>
Name Age Company Positions
- ------------------------------------------- ----- -------------------------------------------------------
<S> <C> <C>
Edward M. Esber, Jr. 47 Chairman of the Board of Directors
Arthur G. Chang 41 President and Chief Executive Officer
Ronald J. Tchorzewski (1) 49 Chief Financial Officer
Donald Nanneman (2) 45 Vice President of Marketing
</TABLE>
- -------------
(1) Mr. Tchorzewski resigned as Chief Financial Officer of the Company on
December 1, 1999. Thomas J. Muise was elected to the position of Chief
Financial Officer on January 11, 2000.
(2) Mr. Nanneman resigned as Vice President of Marketing on March 15, 2000.
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 B.S. in accounting
from Seton Hall University and a M.B.A. 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 1999 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 Compensation
Annual Compensation ------------------------
------------------------ Securities Underlying All Other
Name of Principal Position Fiscal Year Salary Bonus Options # Compensation (1)
- -------------------------------------------- ----------- ----------- --------- ------------------------ -----------------
<S> <C> <C> <C> <C> <C>
Edward M. Esber, Jr. 1997 $180,000 $72,000(2) $18,750(3) $5,299
Chairman of the Board 1998 68,288(4) - 41,250(5) 7,014
1999 - - 85,000(6) -
Arthur G. Chang, 1997 156,000 18,000(7) 18,750(8) 4,764
Chief Operating Officer 1998 166,000 - 65,125(9) 6,225
1999 180,000 66,102(10) 245,000(11) 1,957
Ronald J. Tchorzewski 1997 130,000 - 13,750(12) 5,254
Chief Financial Officer 1998 130,000 - - 6,225
1999 68,250(13) - 12,500(14) 7,848
Donald Nanneman 1997 130,000 - 22,500(16) 5,299
Vice President of Marketing (15) 1998 140,000 - 7,000(17) 4,092
1999 148,000 - 24,000(18) 7,183
</TABLE>
- ------------
(1) Consists of life and health insurance premiums paid by the Company.
(2) Represents bonus earned by the Named Officer based upon his performance in
the year noted.
(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, 1999, such
option was vested with respect to 11,328 shares of Common Stock.
(4) 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. In connection with this transition, Mr. Esber received half of his
monthly salary from March 1998 through July 1998, and received no salary
after July 1998.
(5) 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, 1999 such options were
vested as to (a) 6,797 shares and (b) 13,125 shares, respectively.
(6) Pursuant to the Company's 1993 Incentive Stock Plan, an option to purchase
25,000 shares of Common Stock at a price of $0.8125 per share was granted
to Mr. Esber in August 1999. Such option vests on a monthly basis over a
four-year period commencing August 31, 1999. As of December 31, 1999, such
option was vested with respect to 1,563 shares of Common Stock.
(7) Represents bonus earned by the Named Officer based upon his performance in
the year noted but paid in the subsequent year.
(8) 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, 1999, such
option was vested with respect to 11,328 shares of Common Stock.
(9) 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
-13-
<PAGE>
on October 22, 1998, vesting over a four-year period commencing October 22,
1998. As of December 31, 1999 such options were vested as to (a) 831
shares, (b) 16,953 shares and (c) 7,292 shares, respectively.
(10) Represents bonus earned by the Named Officer based upon his performance in
the year noted but credited against the Named Officer's indebtedness to the
Company. See "Certain Relationships and Related Transactions."
(11) Pursuant to the Company's 1993 Incentive Stock Plan, an option to purchase
245,000 shares of Common Stock at a price of $1.0625 per share was granted
to Mr. Chang in August 1999. Such option vests on a monthly basis over a
four-year period commencing August 2, 1999. As of December 31, 1999, such
option was vested with respect to 20,417 shares of Common Stock.
(12) 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, 1999, both such options were vested with respect
to an aggregate 9,088 shares of Common Stock.
(13) During 1999, Mr. Tchorzewski served as Chief Financial Officer on a part-
time basis.
(14) Pursuant to the Company's 1993 Incentive Stock Plan, an option to purchase
12,500 shares of Common Stock at a price of $1.0625 per share was granted
to Mr. Tchorzewski in August 1999. Such option vests on a monthly basis
over a four-year period commencing August 2, 1999. As of December 31,
1999, such option was vested with respect to 1,042 shares of Common Stock.
(15) Mr. Nanneman joined the Company in January 1997.
(16) 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, 1999, both such options were
vested with respect to an aggregate 9,401 shares of Common Stock.
(17) Pursuant to the Company's 1993 Incentive Stock Plan, an option to purchase
7,000 shares of Common Stock at a price of $1.25 per share was granted to
Mr. Nannemen in June 1998. Such option vests on a monthly basis over a
four-year period commencing March 1, 1998. As of December 31, 1999, such
option was vested with respect to 3,063 shares of Common Stock.
(18) Pursuant to the Company's 1993 Incentive Stock Plan, an option to purchase
24,000 shares of Common Stock at a price of $1.0625 per share was granted
to Mr. Nannemen in August 1999. Such option vests on a monthly basis over a
four-year period commencing August 2, 1999. As of December 31, 1999, such
option was vested with respect to 2,000 shares of Common Stock.
Employment Contracts. In February 1996, the Company entered into an at-
will 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. In
1996, Mr. Chang's annual salary was increased (i) to $132,000, (ii) to $156,000
for 1997 (iii) to $166,000 for 1998 and (iiii) to $180,000 for 1999. See
"Certain Relationships and Related Transactions."
In October 1996, the Company entered into an at-will employment agreement
with Ronald J. Tchorzewski, the Chief Financial Officer of the Company.
Pursuant to such agreement, Mr. Tchorzewski received a part-time salary of
$68,250 in 1999.
In January 1997, the Company entered into an at-will employment agreement
with Donald Nanneman, the Vice President of the Company. Pursuant to such
agreement, Mr. Nanneman originally received an annual salary of $130,000. Mr.
Nanneman's salary was increased to $148,000 in 1999.
-14-
<PAGE>
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, 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Granted
Underlying to Employees in Exercise Price
Name Options Granted(1) Fiscal Year Per Share Expiration Date
- --------------------------------------------------- ------------------ ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Edward M. Esber, Jr., 25,000(2) 4.7% $0.8125 8/31/09
Chairman of the Board of Directors
Arthur G. Chang, 245,000(3) 45.8% $1.0625 8/2/09
President and Chief Executive Officer
Ronald J. Tchorzewski, 12,500(4) 2.3% $1.0625 8/2/09
Chief Financial Officer
Donald Nanneman, 24,000(5) 4.5% $1.0625 8/2/09
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 25,000 shares of Common Stock was granted to Mr. Esber
at a price of $0.8125 per share in August 1999. Such option vests on a
monthly basis over a four-year period commencing August 31, 1999. As of
December 31, 1999, such option was vested with respect to an aggregate 1,563
shares of Common Stock.
(3) An option to purchase 245,000 shares of Common Stock at a price of $1.0625
per share was granted to Mr. Chang in August 1999. Such option vests on a
monthly basis over a four-year period commencing August 2, 1999. As of
December 31, 1999, such option was vested with respect to 20,417 shares of
Common Stock.
(4) An option to purchase 12,500 shares of Common Stock at a price of $1.0625
per share was granted to Mr. Tchorzewski in August 1999. Such option vests
on a monthly basis over a four-year period commencing August 2, 1999. As of
December 31, 1999, such option was vested with respect to 1,042 shares of
Common Stock.
(5) An option to purchase 24,000 shares of Common Stock at a price of $1.0625
per share was granted to Mr. Nannemen in August 1999. Such option vests on
a monthly basis over a four-year period commencing August 2, 1999. As of
December 31, 1999, such option was vested with respect to 2,000 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, 1999, and the number of shares covered by both exercisable and unexercisable
stock options held by the Named Officers as of December 31, 1999. 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, 1999 ($0.375 per share).
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at at December 31, 1999
Shares December 31, 1999
Acquired on -------------------------- --------------------------
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------ ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward M. Esber, Jr. 0 $0 32,813 52,187 $ 0 $ 0
Arthur G. Chang 0 0 56,821 272,054 1,139 2,766
Ronald J. Tchorzewski 0 0 10,131 16,119 0 0
Donald Nanneman 0 0 14,464 30,286 0 0
</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 $180,000. 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.
In September 1999, Mr. Chang elected with Board of Directors approval, to
have the Company forgive $57,500 of his indebtedness to the Company incurred to
purchase stock, in lieu of a cash bonus for his performance in 1999.
In March 2000, Mr. Chang secured a new promissory note in the amount of
$25,000.
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.
RECENT SALES OF UNREGISTERED SECURITIES
In September 1999, a total of 2,904,829 shares of Common Stock were issued
to accredited investors at a price of $1.0844 per share for a total value of
$3,150,000. In connection with the financing, the Company also issued warrants
exercisable for a total of 1,300,000 shares of Common Stock. The Company relied
upon Section 4(2) as the exemption
-16-
<PAGE>
from the registration requirements of the Securities Act of 1933, as amended. No
underwriters were used and no commission was paid.
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, 1999, 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 that you hold. You are, therefore, urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
envelope that has been enclosed.
-17-
<PAGE>
This Proxy is solicited on behalf of the Board of Directors
SOLOPOINT.COM, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 2000
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 May 20, 2000 and hereby appoints Arthur G. Chang,
and Thomas J. Muise, 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 under-signed at the 2000 Annual Meeting of Shareholders of
SOLOPOINT.COM, INC. to be held on June 20, 2000 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:
1. ELECTION OF DIRECTORS:
Nominees: Arthur G. Chang, Edward M. Esber, Jr., Murali Narayanan,
and Kenneth Tai.
[_] 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 AMENDMENTS TO THE COMPANY'S 1993 INCENTIVE STOCK
PLAN (THE "INCENTIVE PLAN") TO (i) INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE UNDER THE INCENTIVE PLAN FROM 1,549,250 TO
4,549,250 SHARES AND (ii) INCREASE THE ANNUAL LIMIT ON THE NUMBER OF
STOCK OPTIONS AND STOCK PURCHASE RIGHTS THE COMPANY CAN GRANT TO AN
INDIVIDUAL EMPLOYEE UNDER THE INCENTIVE PLAN FROM 75,000 TO 4,500,000
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, 2000:
[_] 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.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENTS TO THE 1993
INCENTIVE STOCK PLAN TO (i) INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
AND (ii) INCREASE THE ANNUAL LIMIT ON THE NUMBER OF OPTIONS THAT CAN BE GRANTED
TO AN INDIVIDUAL EMPLOYEE, 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.
Dated: __________________, 2000 _________________________________________
Signature of Shareholder
_________________________________________
(please print name)
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his, her, or their 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.)
