<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of
the Commission Only (as
Permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
NOTIFY TECHNOLOGY CORPORATION
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--Enter Company Name Here--
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
Notes:
<PAGE>
PRELIMINARY COPY
[NOTIFY LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
NOTIFY TECHNOLOGY CORPORATION
To All Shareholders:
The 2000 Annual Meeting of the Shareholders of Notify Corporation (the
"Company") will be held at the Residence Inn by Marriott, 1080 Stewart Drive,
Sunnyvale, California, 94086 on February 23, 2000 at 2:00 p.m., to act on the
following matters:
(1) To elect five persons to the Company's Board of Directors;
(2) To approve an amendment to the Company's Bylaws to increase the
maximum number of directors on the Board of Directors from five to nine;
(3) To ratify and approve a 500,000 share increase in the Common Stock
issuable under the 1997 Stock Plan;
(4) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year; and
(5) To act on such other matters as may properly come before the meeting
or any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on January 7, 2000 are
entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign and return the enclosed proxy card as promptly as possible
in the postage-prepaid envelope enclosed for that purpose. Any shareholder
attending the Annual Meeting may vote in person even if he or she returned a
proxy.
By Order of the Board of Directors
of
NOTIFY TECHNOLOGY CORPORATION
Gerald W. Rice
By:__________________________________
Secretary
Dated: January , 2000
<PAGE>
PRELIMINARY COPY
NOTIFY TECHNOLOGY CORPORATION
PROXY STATEMENT FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Notify Technology Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on February 23, 2000 at 2:00 p.m., local time, or at
any adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at the Residence Inn by Marriott, 1080 Stewart Drive, Sunnyvale,
California 94086. The Company's principal offices are located at 1054 S. De
Anza Boulevard, Suite 105, San Jose, California 95129. The telephone number at
that address is (408) 777-7920.
These proxy solicitation materials were mailed on or about January , 2000
to all shareholders entitled to vote at the meeting.
Record Date and Shares Outstanding
Shareholders of record at the close of business on January 7, 2000 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
record date, 4,703,699 shares of the Company's Common Stock (the "Common
Stock") were issued and outstanding.
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 Company (Attn:
Corporate Secretary) a written notice of revocation or a duly executed proxy
bearing a later date, or by attending the meeting and voting in person. The
mere presence at the Annual Meeting of the shareholder who has appointed a
proxy will not revoke the prior appointment. If not revoked, the proxy will be
voted at the Annual Meeting in accordance with the instructions indicated on
the proxy card, or if no instructions are indicated, will be voted for the
slate of directors described herein, for Proposals Two, Three and Four, and as
to any other matter that may be properly brought before the Annual Meeting, in
accordance with the judgement of the proxy holders.
Voting and Solicitation
Every shareholder is entitled to one vote per share. With respect to the
election of directors, every shareholder voting at 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 five
candidates. However, no shareholder shall be entitled to cumulate votes unless
the candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes. On all other
matters, each share has one vote.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telefax or telegram.
Quorum; Abstentions; Broker Non-votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR", "AGAINST" or
<PAGE>
"ABSTAIN" on a matter are treated as being present at the meeting for purposes
of establishing a quorum and are also treated as shares "represented and
voting" at the Annual Meeting (the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total
number of Votes Cast with respect to a proposal (other than the election of
directors). In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Accordingly, abstentions
will have the same effect as a vote against the proposal.
Broker non-votes will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but will not be counted
for purposes of determining the number of Votes Cast with respect to the
proposal on which the broker has expressly not voted. Thus, a broker non-vote
will not affect the outcome of the voting on a proposal.
An automated system administered by the Company's transfer agent will be
used to tabulate proxies. Tabulated proxies will be transmitted to a
representative of the Company's transfer agent who will serve as inspector of
elections.
Deadlines for Submission of Shareholder Proposals for 2001 Annual Meeting
Shareholders of the Company are entitled to present proposals for
consideration at forthcoming shareholder meetings provided that they comply
with the proxy rules promulgated by the Securities and Exchange Commission and
the Bylaws of the Company. Shareholders wishing to present a proposal at the
Company's 2001 Annual Shareholder Meeting must submit such proposal to the
Company by September 16, 2000 if they wish for it to be eligible for inclusion
in the proxy statement and form of proxy relating to that meeting. In addition,
under the Company's Bylaws, a shareholder wishing to make a proposal at the
2000 Annual Shareholder Meeting must submit such a proposal to the Company
prior to December 10, 2000.
Shareholder Nominations and Proposals
The Company's Bylaws provide that only persons nominated by or at the
direction of the Board of Directors or by a shareholder who has given timely
written notice to the Secretary of the Company prior to the meeting will be
eligible for election as directors. In all cases, to be timely, notice must be
received by the Company not less than twenty (20) days prior to the meeting;
provided, however, if fewer than thirty (30) days notice or prior public
disclosure of the meeting date is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than the tenth day
following the day on which such notice was mailed or such public disclosure was
made. In the notice, the shareholder must provide (a) as to each person, whom
the shareholder proposes to nominate for election as a director: (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares
of the Company which are beneficially owned by such person, (iv) any other
information relating to such person that is required by law to be disclosed in
solicitations of proxies for election of directors; and (b) as to the
shareholder giving the notice: (i) the name and address, as they appear on the
Company's books, of such shareholder, (ii) the class and number of shares of
the Company which are beneficially owned by such shareholder, and (iii) a
description of all arrangements or understandings between such shareholder and
each nominee and any other person or persons (naming such person or persons)
relating to the nomination.
The Company's Bylaws also provide that beginning with the 2001 Annual
Meeting of Shareholders, the Company can only conduct shareholder proposed
business at the annual meeting if such shareholder has properly provided notice
to the Company as to such business not less than forty five (45) days prior to
the date on which the Company first mailed proxy materials for the prior year's
annual meeting.
2
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees and Vote Required
A board of five (5) directors is to be elected at the meeting. Michael
Smith, a current member of the Board of Directors, will not stand for
reelection. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the five nominees named below, four of whom are
presently directors of the Company. In the event that any such nominee is
unable or declines to serve as a director at the time of the Annual Meeting of
Shareholders, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of as many of
the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. The five
nominees for director receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the
presence or absence of a quorum, but have no other legal effect under
California law. It is not expected that any nominee will be unable or will
decline to serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until
a successor has been elected and qualified.
The names of the nominees, and certain information about them as of the
record date, are set forth below.
<TABLE>
<CAPTION>
Director
Name of Nominee Age Position Since
- --------------- --- -------- --------
<S> <C> <C> <C>
Paul F. DePond.......... 46 President Chief Executive Officer and Chairman of the Board 1994
of Directors of the Company
Gaylan I. Larson........ 59 Vice President of Operations of the Company and Director 1994
Michael Ballard......... 44 Director 1996
Andrew Plevin........... 36 Director 1998
David Brewer............ 48 -- --
</TABLE>
Paul F. DePond, founder of the Company, has served as its President, Chief
Executive Officer and Chairman of the Board of Directors since the Company's
inception in August 1994. From September 1992 through May 1994, Mr. DePond
served as Vice President--Corporate Marketing of Telebit Corporation, a
supplier of high speed modems and dialup remote access products. From January
1991 through September 1992, Mr. DePond served as Vice President, Marketing,
of Alantec Corporation, a manufacturer of networking products.
Gaylan I. Larson has served as Vice President of Operations and as a
Director of the Company since August 1994. From January 1991 to August 1994,
Mr. Larson was Chief Operating Officer of SportSense, Inc., a manufacturer of
golf training equipment. Prior to SportSense, Mr. Larson served as General
Manager of the Data Systems Division of Hewlett-Packard Company, a company
with which he had an 18 year relationship.
Michael Ballard has served as a director of the Company since January 1996.
Since 1995, Mr. Ballard has been the Chief Executive Officer and Chairman of
the Board of Directors of Savannah Chanel Vineyards, Inc. Mr. Ballard also
sits on the Board of Directors of Telebit Corporation, a wholly-owned
subsidiary of Cisco Systems, Inc. From October 1996 to November 1997, Mr.
Ballard served as a product director of Cisco Systems. From May 1995 to
October 1996, Mr. Ballard served as Executive Vice President--Marketing of
Telebit Corporation. From June 1993 to September 1994, Mr. Ballard served as
Chief of Operations of UUNet, Inc., an Internet service provider. From January
1986 to May 1993, Mr. Ballard served as Chief Executive Officer of Telebit
Corporation.
3
<PAGE>
Andrew Plevin has served as a director of the Company since February 1998.
Since November 1997, Mr. Plevin has been acting Chief Executive Officer and
President of Core Software Technology, Inc. From August 1993 to November 1997,
Mr. Plevin served as Vice President of D.H. Blair Investment Banking Corp.
("D.H. Blair"), a New York investment banking firm. Mr. Plevin was nominated
for election to, and serves on the Board of Directors pursuant to a
requirement contained in the underwriting agreement between the Company and
D.H. Blair for the Company's initial public offering ("IPO"). The provision
provides that D.H. Blair shall have the right to designate one director of the
Company's Board of Directors for a period of five years from the closing date
of the Company's IPO.
David Brewer has, since January 1999, served as general manager for Aragon
Ventures LLC, a private equity investment firm. From November 1999 to present,
Mr. Brewer has served as Chief Executive Officer of Explore Holdings LLC, a
private equity investment firm, and from July 1995 to present he has served as
a managing member of Inktomi LLC, an internet research company. From September
1995 to December 1999, Mr. Brewer served as President, Chief Executive Officer
and director of Explore Technologies, Inc., an educational toy manufacturer.
From February 1996 to May 1996, Mr. Brewer served as President, Chief
Executive Officer, Chief Financial Officer and director of Inktomi
Corporation, an internet software developer.
Board Meetings and Committees
The Board of Directors of the Company held a total of four meetings during
fiscal 1999. No director attended fewer than 75% of such meetings or of
committee meetings held while such director was a member of the Board or of a
committee, except for Mr. Smith, who attended one of the four meetings during
fiscal 1999.
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee recommends engagement of the Company's independent
auditors, approves services performed by such auditors and reviews and
evaluates the Company's accounting system and its system of internal
accounting controls. The Audit Committee currently consists of Michael Ballard
and Andrew Plevin and held two meeting during fiscal 1999. Mr. Smith was a
member of the Audit Committee until September 8, 1999, when he was replaced by
Mr. Plevin.
The Compensation Committee reviews and administers the compensation of the
officers of the Company and administers the Company's 1997 Stock Plan. This
Committee, currently consisting of Michael Ballard and Paul DePond, held one
meeting during fiscal 1999.
Compensation of Directors
Members of the Company's Board of Directors do not receive compensation for
their services as directors.
Vote Required
If a quorum is present and voting, the five nominees receiving the highest
number of votes will be elected to the Board of Directors. Votes withheld from
any nominee will be counted for purposes of determining the presence or
absence of a quorum for transaction of business at the meeting and the total
number of Votes Cast with respect to a nominee. Accordingly, abstentions will
have the same effect as a vote against the nominee. Broker non-votes will be
counted for purposes of determining the presence or absence of a quorum for
the transaction of business, but will not be counted for purposes of
determining the number of votes cast with respect to a nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE ABOVE CANDIDATES FOR THE COMPANY'S BOARD OF DIRECTORS.
4
<PAGE>
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S BYLAWS
The shareholders are being asked to approve an amendment of the Company's
Bylaws to authorize an increase in the maximum number of directors authorized
to serve on the Board of Directors at the meeting. The Company's Bylaws
currently authorize a maximum number of five directors to serve on the Board of
Directors. By resolution of the Board of Directors, the exact number of
directors has been set at five. The Company's Board of Directors has adopted,
subject to shareholder approval, an amendment to the Bylaws that would increase
the maximum number of directors authorized to serve on the Company's Board of
Directors to nine.
If the proposal to amend the Bylaws is approved, Section 2 of Article III of
the Company's Bylaws would be amended and restated in its entirety as follows:
"Section 2. Number of Directors. The number of directors of the
corporation shall be not less than five (5) nor more than nine (9). The
exact number of directors shall be five (5) until changed, within the
limits specified above, by a bylaw amending this Section 3.2, duly adopted
by the board of directors or by the shareholders. The indefinite number of
directors may be changed, or a definite number may be fixed without
provision for an indefinite number, by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw duly adopted by
the vote or written consent of holders of a majority of the outstanding
shares entitled to vote; provided, however, that an amendment reducing the
fixed number or the minimum number of directors to a number less than five
(5) cannot be adopted if the votes cast against its adoption at a meeting,
or the shares not consenting in the case of an action by written consent,
are equal to more than sixteen and two-thirds percent (16-2/3%) of the
outstanding shares entitled to vote thereon. No amendment may change the
stated maximum number of authorized directors to a number greater than two
(2) times the stated minimum number of directors minus one (1).
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires."
Purpose of the Amendment
The purpose of the Amendment to the Bylaws is to provide the Board of
Directors with flexibility to select additional directors who might add
valuable experience to the Board of Directors.
Vote Required; Recommendation of the Board of Directors
Sections 211 and 152 of the California Law and Section 2 of Article III of
the Company's Bylaws requires that a majority of the outstanding shares of
Common Stock approve the amendment to the Bylaws. Since the required vote of
the shareholders is based upon the number of outstanding shares of Common
Stock, rather than upon the shares actually voted, the failure by the holder of
any such shares to submit a proxy or to vote in person at the Special Meeting,
including abstentions and "broker non-votes", will have the same effect as a
vote against the approval of the amendment to the Bylaws.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
AMENDMENT TO THE BYLAWS.
5
<PAGE>
PROPOSAL NO. 3
APPROVAL OF A 500,000 SHARE INCREASE IN
SHARES ISSUABLE UNDER THE 1997 STOCK PLAN
At the Annual Meeting, the shareholders are being requested to consider and
approve an amendment to the Company's 1997 Stock Plan, as amended (the "1997
Plan"), to increase the number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares.
The 1997 Plan was adopted by the Board of Directors in January 1997. A total
of 200,000 shares of Common Stock was initially reserved for issuance under the
1997 Plan. In November 1999, the Board of Directors approved an increase of
500,000 shares issuable under the 1997 Plan, which, if approved by the
shareholders, would increase the total shares reserved for issuance under the
1997 Plan since its inception to 700,000 shares. As of January 7, 1999, options
to purchase 179,184 shares of Common Stock were outstanding under the 1997 Plan
and 511,764 shares remained available for future issuance under the 1997 Plan
(which assumes the adoption of the proposed amendment). Options to purchase a
total of 9,052 shares under the 1997 Plan had been exercised as of such date.
The closing price of Common Stock on the Nasdaq SmallCap Market was $6.188 per
share on such date. A summary of the principal terms of the 1997 Plan is
located in Appendix A to this Proxy Statement.
Purpose and Effect of Amendment
The purpose of the proposed amendment to the 1997 Plan is to increase the
number of shares available for issuance under the 1997 Plan. The Board of
Directors believes that the proposed amendment is in the best interests of the
Company and its shareholders for a number of reasons. First, the Board of
Directors believes that the Company's 1997 Plan is vital to retaining,
motivating and rewarding employees, executives and consultants by providing
them with long-term equity participation in the Company relating directly to
the financial performance and long-term growth of the Company. Second, the
Board of Directors believes that granting stock options to employees is an
important contributor to aligning the incentives of the Company's employees
with the interests of the Company's shareholders. Third, the increase in the
number of shares reserved for issuance under the 1997 Plan will provide the
Company with an adequate pool of options to compete effectively with other
companies for existing and new employees. Competition for qualified employees
in the technology market is extremely intense, and, due to the rapid growth of
many successful companies in this sector, such competition is increasing. The
Board of Directors believes that in order to remain competitive with other
technology companies with regard to its long-term incentive plans, the Company
must continue to provide employees with the opportunity to obtain equity in the
Company. A summary of the principal terms of the 1997 Plan is located in
Appendix A to this Proxy Statement.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendment to the 1997 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE AMENDMENT TO
THE 1997 PLAN.
6
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT AUDITORS
Subject to the ratification by the shareholders, the Board of Directors
appointed Ernst & Young LLP, independent public auditors to serve for the
fiscal year ending September 30, 2000.
The Board of Directors recommends that the shareholders vote for
ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors to audit the financial statements for the Company for the
year ending September 30, 2000. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of Ernst & Young LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
ratify Ernst & Young LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
7
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table sets forth information for the three most recently
completed fiscal years concerning the compensation of (i) the Chief Executive
Officer and (ii) all other executive officers of the Company who earned over
$100,000 in salary and bonus in the fiscal year ended September 30, 1999
(together the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
-------------------------- --------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Award(s) Options Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)(1)
------------------ ---- ------- ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul F. DePond.......... 1999 166,531 -- -- -- -- -- 7,116
Chief Executive Officer 1998 132,739 -- -- -- -- -- 7,950
1997 121,381 -- -- -- -- -- 8,673
Gaylan Larson........... 1999 116,500 -- -- -- -- -- 6,346
Chief Operations
Officer 1998 115,585 -- -- -- -- -- 6,138
1997 112,446 -- -- -- -- -- 7,518
Gerald W. Rice.......... 1999 116,207 -- -- -- -- -- 8,401
Chief Financial Officer 1998 105,759 -- -- -- -- -- 6,562
1997 95,519 -- -- -- 24,752 -- 6,886
</TABLE>
- --------
(1) Represents payments of health insurance premiums on behalf of the Named
Executive Officers.
The following tables set forth certain information for the Named Executive
Officers with respect to grants and exercises in fiscal 1999 of options to
purchase Common Stock of the Company:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted Exercise or
Options Granted to Employees Base Price Expiration
Name (#) in Fiscal Year ($/Sh) Date
- ---- --------------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Paul F. DePond............ -- -- -- --
Gaylan I. Larson.......... -- -- -- --
Gerald W. Rice............ -- -- -- --
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised Options at Fiscal In-the-Money Options
Year End(#) at Fiscal Year End (1)($)
---------------------------------- -------------------------
Shares Value
Acquired on Realized
Name Exercisable(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------- ---------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul F. DePond.......... -- -- 110,792 -- $576,230 $--
Gaylan Larson........... -- -- -- -- $ -- $--
Gerald W. Rice.......... -- -- 24,752 -- $ 65,766 $--
</TABLE>
- --------
(1) Market value of Company's Common Stock at September 30, 1999 of $7.656,
minus the exercise price multiplied by the number of shares.
8
<PAGE>
Employment Agreements and Change-in-control Arrangements
In December 1996, the Company entered into an employment agreement with Paul
DePond, the Company's President and Chief Executive Officer. The agreement
provides for a base salary of $130,000, which increased to $150,000 thirteen
months following the Company's initial public offering, and a $50,000 bonus
contingent on the Company's attainment of certain performance milestones. In
addition, if the Company is sold while Mr. DePond is employed by the Company,
Mr. DePond will receive a bonus equal to 2% of the price at which the Company
is sold.
In the event that the Company terminates Mr. DePond without cause following
a change in control, Mr. DePond is entitled to receive severance compensation
equal to a continuation of his salary for a period of twenty-four (24) months.
In the event that the Company terminates Mr. DePond without cause apart from a
change of control, Mr. DePond is entitled to receive severance compensation
equal to a continuation of his salary for a period of eighteen (18) months. Mr.
DePond is not entitled to severance compensation in the event of a termination
for cause or voluntary resignation. In the event of a termination due to
disability, Mr. DePond is entitled to receive only those severance or
disability benefits as are established under the Company's then existing
severance and benefits plans and policies.
In December 1996, the Company entered into employment agreements with Mr.
Larson, the Company's Vice President of Operations and Mr. Rice, the Company's
Chief Financial Officer. The agreements provide for base salaries of $115,000
and $105,000 for Messrs. Larson and Rice, respectively. Under the agreements,
Messrs. Larson and Rice are eligible to receive annual bonuses based on an
earnings target approved by the Company's board of directors.
In the event that the Company terminates Messrs. Larson or Rice without
cause following a change in control, the terminated officer is entitled to
receive severance compensation equal to a continuation of his salary for a
period of twelve (12) months. In the event that the Company terminates Messrs.
Larson or Rice without cause apart from a change of control, the terminated
officer is entitled to receive severance compensation equal to a continuation
of his salary for a period of six (6) months. Messrs. Larson and Rice are not
entitled to severance compensation in the event of a termination for cause or
voluntary resignation. In the event of a termination due to disability, the
terminated officer is entitled to receive only those severance or disability
benefits as are established under the Company's then existing severance and
benefits plans and policies.
The foregoing agreements define a "change in control" as (i) the acquisition
of more than 30% of the voting securities of the Company by any person or
group; (ii) a change in a majority of the Company's board of directors
occurring within a two-year period; or (iii) the approval by the Company's
shareholders of a transaction which would result in a transfer of more than 50%
of the Company's voting power provided, however, that a public offering of the
Company's common stock does not constitute a change of control. Messrs. DePond,
Rice and Larson have also agreed that the acquisition of shares and warrants by
David Brewer does not constitute a "change in control." The agreements define
"cause" as an act of dishonesty in connection with employment; a conviction of
a felony which will detrimentally affect the Company's reputation or business;
willful and gross misconduct injurious to the Company; and continued and
willful failure to perform duties. The agreements define "disability" as the
inability to perform duties under the agreement due to mental or physical
illness determined to be total and permanent by a physician.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of Common Stock of the Company as of January 7, 2000 as to
(i) each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, (ii) each director and each nominee for
director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table below, and (iv) all directors and executive officers
as a group. Except as otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below have sole investment and
voting power with respect to such shares, subject to community property laws.
<TABLE>
<CAPTION>
Name and Address of Beneficial
Owner Shares Beneficially Owned(1) Percentage (1)
------------------------------ --------------------------- -------------
<S> <C> <C>
David A. Brewer(2)(3)(4)........... 2,239,745 39.0%
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Paul F. DePond(5).................. 516,731 10.7
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Alan Stahler(6).................... 315,500 6.5
c/o D.H. Blair & Co., Inc.
84 William Street
New York, NY 10006
J. Morton Davis(7)................. 288,704 6.0
c/o D.H. Blair Investment Banking
Corp.
44 Wall Street
New York, NY 10005
D.H. Blair & Co., Inc(8)........... 261,500 5.4
84 William Street
New York, NY 10006
Gaylan I. Larson................... 198,019 4.2
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Andrew Plevin(9)................... 133,100 2.8
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Gerald W. Rice(10)................. 94,058 2.0
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Michael Ballard(11)................ 71,905 1.5
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Michael Smith(12).................. 54,269 1.2
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
All directors and executive offi-
cers as a group
(6 persons)....................... 1,068,082 21.4
</TABLE>
10
<PAGE>
- --------
(1) Applicable percentage of ownership is based on 4,703,699 shares of Common
Stock outstanding as of January 7, 2000 together with applicable options
or warrants for such shareholder. Beneficial ownership is determined in
accordance with the rules of the Securities Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options or warrants currently exercisable or
exercisable within 60 days after January 7, 2000 are deemed outstanding
for purposes of computing the percentage ownership of the person holding
such options or warrants, but are not deemed outstanding for computing the
percentage of any other stockholder.
(2) Includes 1,045,844 shares issuable upon exercise of currently exercisable
warrants.
(3) Includes 19,801 shares of Common Stock owned by Hanabusa Investments,
Inc., of which Mr. Brewer is a shareholder.
(4) Includes 12,500 shares of Common Stock and 13,000 shares issuable upon
exercise of currently exercisable warrants owned by JBB Associates, of
which Mr. Brewer is a shareholder.
(5) Includes 110,792 shares issuable upon exercise of currently exercisable
warrants.
(6) Information provided herein is based solely on a joint filing of Schedule
13G by Alan Stahler and D.H. Blair & Co., Inc. dated February 16, 1999.
Mr. Stahler claims shared voting and dispositive power as to 315,500
shares as follows: (i) 126,500 shares and 125,000 shares underlying
currently exercisable warrants owned directly by D.H. Blair & Co., Inc.,
of which Mr. Stahler is a principle shareholder, (ii) 18,000 shares and
18,000 shares underlying currently exercisable warrants owned by a
foundation in which Mr. Stahler is Trustee and (iii) 14,000 shares and
14,000 shares underlying currently exercisable warrants owned by a family
partnership controlled by Mr. Stahler's wife. Mr. Stahler disclaimed
beneficial ownership of all securities held by Mrs. Stahler pursuant to
Rule 13d-4 under the Securities Exchange Act of 1934, as amended, on the
Schedule 13G dated February 16, 1999.
(7) Information provided herein is based solely on J. Morton Davis's Schedule
13G dated February 12, 1999. Mr. Davis claims sole voting power as to
72,000 shares. Mr. Davis may be deemed to beneficially own 288,704 shares
as follows: (i) 36,000 shares and 36,000 shares underlying currently
exercisable warrants owned directly by D.H. Blair Investment Banking
Corp., of which Mr. Davis is the sole shareholder, and (ii) 108,352 shares
and 108,352 shares underlying currently exercisable warrants owned by Mr.
Davis's wife, Rosalind Davidowitz. Mr. Davis disclaimed beneficial
ownership of all securities held by Mrs. Davidowitz pursuant to Rule 13d-4
under the Securities Exchange Act of 1934, as amended, on the Schedule 13G
dated February 12, 1999.
(8) Information provided herein is based solely on a joint filing of Schedule
13G by Alan Stahler and D.H. Blair & Co., Inc. dated February 16, 1999.
D.H. Blair & Co., Inc. claims sole voting and dispositive power as to
261,500 shares. Includes 125,000 shares issuable upon exercise of
currently exercisable warrants.
(9) Includes 4,250 shares issuable upon exercise of currently exercisable
warrants. Also includes (i) 64,000 shares issuable upon exercise of a
currently exercisable option to purchase 64,000 of the Company's units,
each of which consists of one share of Common Stock and one of the
Company's Class A warrants, and (ii) 64,000 shares issuable upon exercise
of the Class A warrants that underlie the option to purchase such units.
(10) Includes 24,752 shares issuable upon exercise of currently exercisable
warrants.
(11) Includes 9,498 shares issuable upon exercise of currently exercisable
warrants.
(12) Includes 3,264 shares issuable upon exercise of currently exercisable
warrants.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an ongoing business relationship with COMAC, a literature
and product fulfillment company previously owned by Michael Smith. Mr. Smith
currently serves as the president of COMAC, a subsidiary of Pierce Leahy Corp.
The Company uses COMAC, along with other fulfillment companies, on a project by
project basis to facilitate the distribution of the Company's products to
telephone company customers. The Company has no contractual obligation to use
COMAC's services. During fiscal years ended September 30, 1998 and September
30, 1999, the Company paid to COMAC $61,000 and $3,911, respectively, in fees.
From August 1993 to November 1997, Mr. Andrew Plevin, a member of the
Company's Board of Directors, served as Vice President of D.H. Blair Investment
Banking Corp. D.H. Blair Investment Banking Corp. served as placement agent for
the Company's 1997 bridge financing and as underwriter for the Company's
initial public offering. In connection with the 1997 bridge financing and the
Company's initial public offering, D.H. Blair Investment Banking Corp. received
approximately $1,150,000 in discounts, commission, and non-accountable expense
allowances. In addition, D.H. Blair Investment Banking Corp. received an option
to purchase 160,000 of the units offered in the Company's initial public
offering, at $7.00 per unit, exercisable at any time, in whole or in part,
during the two year period commencing August 28, 2000. Each unit offered in the
Company's initial public offering consisted of a share of Common Stock and a
warrant to purchase one share of Common Stock at an exercise price of $6.50 per
share.
In March 1999, The Company sold to David A. Brewer in a private placement
850,000 shares of Common Stock and warrants to purchase 1,334,444 shares of
Common Stock for aggregate consideration of $3,060,000. The warrants consisted
of four warrants to purchase 155,800 share of Common Stock at $3.60 per share
and one warrant to purchase 721,244 shares of Common Stock at $3.60 per share.
Mr. Brewer exercised two of the four warrants on October 11, 1999 and received
311,600 shares of Common Stock underlying such warrants for an aggregate
exercise price of $1,121,760. Two of the four warrants will expire upon the
earlier of September 3, 2000 or 30 days after the Company meets certain product
sales or revenue milestones. The fifth warrant expires on March 3, 2003 and
contains a net exercise provision. In connection with the sale of the Common
Stock and warrants to Mr. Brewer, the Company agreed to issue additional
warrants to Mr. Brewer if the Company sells shares of Common Stock in a capital
raising transaction at price below $3.60 per share prior to the earlier of (i)
March 3, 2002 or (ii) the Company calling its outstanding Class A warrants. In
addition, the Company agreed to register for resale the Common Stock sold in
the private placement and the Common Stock underlying the warrants at the
request of Mr. Brewer which may be made at any time after June 3, 1999. The
Company also agreed to seek shareholder approval to increase the size of our
board of directors and to elect Mr. Brewer to the Company's board of directors.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and the Company's officers, directors and principal shareholders
and their affiliates will be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors of
the Board of Directors, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
12
<PAGE>
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
equity securities to file an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent 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 copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during the fiscal year ended September 30, 1999 all filing requirements
applicable to its officers, directors and ten percent shareholders were
fulfilled except for one late report filed on behalf of Mr. Plevin, a director
of the Company.
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 to vote the shares they represent as the
Board of Directors may recommend.
It is important that your stock be represented at the meeting, regardless of
the number of shares that you hold. You are, therefore, urged to execute and
return the accompanying proxy in the envelope that has been enclosed, at your
earliest convenience.
The Board of Directors
Gerald W. Rice
By:__________________________________
Secretary
Dated: January , 2000
13
<PAGE>
APPENDIX A
SUMMARY OF 1997 STOCK PLAN
The Company's 1997 Stock Plan, as amended (the "1997 Plan") was adopted by
the Board of Directors in January 1997. Including the 500,000 shares reserved
for issuance by the Board of Directors in November 1999, a total of 700,000
shares of Common Stock currently are reserved for issuance under the 1997 Plan
(pending shareholder approval of a 500,000 share increase).
General. The purposes of the 1997 Plan are to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors 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 1997 Plan.
Options granted under the Plan may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or nonstatutory stock options.
Administration. The 1997 Plan may generally be administered by the Board of
Directors or the Committee appointed by the Board of Directors (as applicable,
the "Administrator").
Eligibility; Limitations. Nonstatutory stock options and stock purchase
rights may be granted under the 1997 Plan to employees, directors and
consultants of the Company. Incentive stock options may be granted only to
employees. The Administrator, in its discretion, selects the employees,
directors and consultants 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 granted to such persons, the 1997 Plan provides
that no employee, director or consultant may be granted, in any fiscal year of
the Company, options to purchase more than 50,000 shares of Common Stock.
Notwithstanding this limit, however, in connection with such individual's
initial employment with the Company, he or she may be granted options to
purchase up to an additional 50,000 shares of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the following
additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value
of the Common Stock on the date such option is granted; provided, however,
the exercise price of an incentive stock option granted to a greater than
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 fair market value of
the Common Stock is generally determined with reference to the closing sale
price for the Common Stock (or the closing bid if no sales were reported)
on the last market trading day prior to the date the option is granted.
(b) Exercise of Option; Form of Consideration. The Administrator
determines when options become exercisable and may, in its discretion,
accelerate the vesting of any outstanding option. Stock options granted
under the 1997 Plan generally vest and become exercisable over five years.
The means of payment for shares issued upon exercise of an option is
specified in each option agreement. The 1997 Plan permits payment to be
made by cash, check, promissory note, other shares of Common Stock of the
Company (with some restrictions), cashless exercises, a reduction in the
amount of any Company liability to the optionee, any other form of
consideration permitted by applicable law, or any combination thereof.
14
<PAGE>
(c) Term of Option. The term of an incentive stock 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 greater than 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),
the optionee may exercise his or her option within such period of time as
is specified in the option agreement to the extent that the option is
vested on the date of termination (but in no event later than the
expiration of the term of such option as set forth in the option
agreement). In the absence of a specified time in the option agreement, the
option shall remain exercisable for three (3) months following the
optionee's termination.
(e) Death or Disability. If an optionee's employment or consulting
relationship terminates as a result of disability, the optionee may
exercise his or her option within such period of time as is specified in
the option agreement (but in no event later than the expiration of the term
of such option as set forth in the option agreement) to the extent that the
option is vested on the date of termination. In the absence of a specified
time in the option agreement, the option shall remain exercisable for
twelve (12) months following the optionee's termination. If an optionee's
employment or consulting relationship terminates as a result of death while
the optionee is an employee or consultant, the option may be exercised by
the optionee's estate or a person who acquired the right to exercise the
option by bequest or inheritance within such period of time as is specified
in the option agreement (but in no event later than the expiration of the
term of such option as set forth in the notice of grant) to the extent that
the option is vested on the date of termination. In the absence of a
specified time in the option agreement, the option shall remain exercisable
for twelve (12) months following the optionee's death.
(f) Nontransferability of Options and Stock Purchase Rights. Unless
otherwise determined by the Administrator, options and stock purchase
rights granted under the 1997 Plan are not transferable other than by will
or the laws of descent and distribution, and may be exercised during the
optionee's lifetime only by the optionee.
(g) Other Provisions. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the 1997 Plan as may
be determined by the Administrator.
Stock Purchase Rights. In the case of stock purchase rights, unless the
Administrator determines otherwise, the standard form of restricted stock
purchase agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment with the
Company for any reason (including death or disability). The purchase price for
shares repurchased pursuant to the restricted stock purchase agreement 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 shall lapse
at a rate determined by the Administrator.
Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale. 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 1997 Plan, the number and
class of shares of stock subject to any option or stock purchase right
outstanding under the 1997 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, in its discretion,
provide that each optionee shall have the right to exercise all of the
optionee's options and stock purchase rights, including those not otherwise
exercisable, until the date ten (10) days prior to the consummation of the
liquidation or dissolution.
15
<PAGE>
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 substituted by the
successor corporation. If the successor corporation refuses to assume the
options and stock purchase rights or to substitute substantially equivalent
options and stock purchase rights, the optionee shall have the right to
exercise the option or stock purchase right as to the all the optioned stock,
including shares not otherwise exercisable. In such event, the Administrator
shall notify the optionee that the option or stock purchase right is fully
exercisable for fifteen (15) days from the date of such notice and that the
option or stock purchase right terminates upon expiration of such period.
Amendment and Termination of the Plan. The Board of Directors may amend,
alter, suspend or terminate the 1997 Plan, or any part thereof, at any time and
for any reason. However, the Company shall obtain shareholder approval for any
amendment to the 1997 Plan to the extent necessary to comply with Section
162(m) and Section 422 of the Code, or any similar rule or statute. No such
action by the Board of Directors or shareholders may alter or impair any option
or stock purchase right previously granted under the 1997 Plan without the
written consent of the optionee. Unless terminated earlier, the 1997 Plan shall
terminate 10 years from the date of its approval by the shareholders or the
Board of Directors of the Company, whichever is earlier.
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 greater than 10% shareholder of the Company. The Company is entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. The Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.
Stock Purchase Rights. Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject
to a substantial risk of forfeiture. The stock will generally cease to be
subject to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of
employment with the Company. At such times, the purchaser will recognize
ordinary income measured as the 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.
16
<PAGE>
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 greater than 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 1997
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.
17
<PAGE>
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NOTIFY TECHNOLOGY CORPORATION
-----------------------------
NOTIFY TECHNOLOGY CORPORATION
PROXY FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 23, 2000
The undersigned shareholder(s) of Notify Technology Corporation, a
California corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated January 24, 2000, and
hereby appoints Paul F. Depond and Gerald W. Rice, 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 2000 Annual Meeting
of Shareholders of Notify Technology Corporation to be held on February 23, 2000
at 2:00 p.m., local time, at the Residence Inn by Marriott, located at 1080
Stewart Drive, Sunnyvale, California 94086, and at any adjournment or
postponement thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if personally present on any of the
following matters and with discretionary authority as to any and all other
matters that may properly come before the meeting.
(Continued and to be signed on reverse side)
<PAGE>
* Please Detach and Mail in the Envelope Provided.*
- -------------------------------------------------------------------------------
[ X ] Please mark your
votes as in this example.
The Board of Directors recommends a vote for all nominees and for proposals 2, 3
and 4.
FOR all nominees
listed at right (except
as marked to the
1. Election of contrary below) WITHHELD Nominees:
Directors [_] [_] Paul DePond
Michael Ballard
Gaylan Larson
Andrew Plevin
- ---------------------------------------------- David Brewer
2. To approve an amendment to the Company's Bylaws to increase the maximum
number of directors on the Board of Directors from five to nine.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify and approve a 500,000 share increase in the Common Stock issuable
under the 1997 Stock Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the current fiscal year.
[_] FOR [_] AGAINST [_] ABSTAIN
5. To transact such other business as may properly come before come before the
meeting or any postponements or adjournments thereof.
[_] FOR [_] AGAINST [_] ABSTAIN
Change of Address and/or Comments Mark Here.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND
PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE.
SIGNATURE(S)_______________________________________DATE___________________, 2000
SIGNATURE IF JOINTLY HELD
NOTE: This proxy should be marked, dated and signed by each shareholder exactly
as such shareholder's name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. If shares are held by joint tenants
or as community property both holders should sign.
- -------------------------------------------------------------------------------
