UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PULSEPOINT COMMUNICATIONS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF PULSEPOINT COMMUNICATIONS]
March 23, 1999
To Our Shareholders:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of PulsePoint Communications to be held at our offices at 6307 Carpinteria
Avenue, Carpinteria, California 93013 on Friday, April 23, 1999 at 10:00 a.m.
The matters expected to be acted upon at the meeting are described in the
following Notice of Annual Meeting of Shareholders and Proxy Statement.
It is important that you use this opportunity to take part in the affairs
of your company by voting on the business to come before this meeting. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE PRIOR TO THE
MEETING. Returning the Proxy does NOT deprive you of your right to attend the
meeting and to vote your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
/S/ Mark C. Ozur
Mark C. Ozur
President and Chief Executive Officer
<PAGE>
PULSEPOINT COMMUNICATIONS
6307 Carpinteria Avenue
Carpinteria, California 93013
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
PulsePoint Communications (the "Company") will be held at the Company's offices
located at 6307 Carpinteria Avenue, Carpinteria, California 93013, on Friday,
April 23, 1999 at 10:00 a.m. for the following purposes:
1. To elect directors of the Company to serve until the next Annual Meeting of
Shareholders and until their successors have been elected and qualified.
The Company's nominees for director are John D. Beletic, Bandel L. Carano,
Scot B. Jarvis, Cameron D. Myhrvold, Mark C. Ozur and Frederick J. Warren.
2. To approve an amendment to the Company's 1983 Stock Option Plan to increase
the number of shares of the Company's Common Stock available under the Plan
from 2,375,000 to 2,625,000 shares.
3. To approve an amendment to the Company's Employee Stock Purchase Plan to
increase the number of shares of the Company's Common Stock available under
the Plan from 500,000 to 675,000 shares.
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 12, 1999 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
/s/ B. Robert Suh
B. Robert Suh
Corporate Secretary
Carpinteria, California
March 23, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE>
PULSEPOINT COMMUNICATIONS
6307 Carpinteria Avenue
Carpinteria, California 93013
PROXY STATEMENT
March 23, 1999
The accompanying proxy is solicited on behalf of the Board of Directors of
PulsePoint Communications, a California corporation (the "Company"), for use at
the Annual Meeting of Shareholders of the Company to be held at the Company's
principal executive offices located at 6307 Carpinteria Avenue, Carpinteria,
California 93013, on April 23, 1999 at 10:00 a.m. (the "Meeting"). Only holders
of record of the Company's Common Stock and the Series B Convertible Preferred
Stock at the close of business on March 12, 1999 will be entitled to vote at the
Meeting. At the close of business on that date, the Company had 5,289,545 shares
of Common Stock and 3,312,534 shares of Series B Convertible Preferred Stock
issued, outstanding and entitled to vote. A majority of the shares entitled to
vote will constitute the required quorum for the transaction of business. This
Proxy Statement and the accompanying form of proxy were first mailed to
shareholders on or about March 23, 1999. An annual report as required by Rule
14a-3 of the rules of the Securities and Exchange Commission is being mailed to
each shareholder along with this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Series B Convertible Preferred Stock is entitled to a number of votes
equal to the number of shares of Common Stock into which such shares of Series B
Convertible Preferred Stock could be converted. As of the record date, each
share of Series B Convertible Preferred Stock was convertible into 2.5 shares of
Common Stock. Holders of Common Stock are entitled to one vote for each share
held as of the record date. However, under the California Corporations Code, if
prior to the commencement of voting for the election of directors one or more
shareholders has given notice of his intention to cumulate his votes, then all
shareholders will have the right to elect directors by cumulative voting, with
each share entitled to a number of votes equal to the number of directors to be
elected, which votes may be cast for one candidate or distributed among two or
more candidates. If no such notice is given, there will be no cumulative voting,
which means a simple majority of the shares voting may elect all of the
directors. In the event of cumulative voting, the proxy solicited by the Board
of Directors confers discretionary authority on the proxies to cumulate votes so
as to elect the maximum number of nominees.
Under California law, shares represented by proxies that reflect
abstentions or "broker non-votes" (i.e., shares held by a broker or nominee
which are represented at the meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal or proposals) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. However, under California law, proxies
that reflect abstentions as to a particular proposal will be treated as voted
for purposes of determining the approval of that proposal and will have the same
effect as a vote against that proposal, while proxies that reflect broker
non-votes will be treated as unvoted for purposes of determining approval and
will not be counted as votes for or against that proposal.
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the proxy. A proxy may be revoked by a writing delivered to the
Company stating that the proxy is revoked, by a subsequent proxy that is signed
by the person who signed the earlier proxy and is presented at the Meeting or by
attendance at the Meeting and voting in person.
Page 1
<PAGE>
The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the initial mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, facsimile or in person. The Company has retained a proxy
solicitation firm, MacKenzie Partners, Inc. to aid it in the solicitation
process and will pay this firm a fee not to exceed $5,000 plus expenses.
Following the initial mailing of the proxies and other soliciting materials, the
Company will request brokers, custodians, nominees and other record holders to
forward copies of the proxy and other soliciting materials to persons for whom
they hold shares of Common Stock and to request authority for the exercise of
proxies. In such cases, the Company, upon the request of the record holders,
will reimburse such holders for their reasonable expenses.
Page 2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 1, 1999,
with respect to the beneficial ownership for each class of the Company's stock
by: (i) each shareholder known by the Company to be the beneficial owner of more
than five percent of the Company's stock, (ii) each director/nominee, (iii) each
of the named executive officers (Messrs. Ozur, Beckwith, Schreiber, Suh, and Ms.
Thompson) and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership(1)(2) Percent of Class
Name of Beneficial Owner Common Preferred Common(2) Preferred
------------------------ ------ --------- --------- ---------
<S> <C> <C> <C> <C>
Oak Investment Partners V, Limited 1,670,487 652,000 24.14% 19.68%
Partnership (3)...........................
Oak Investment Partners VII, Limited 1,625,835 650,334 23.51% 19.63%
Partnership (3)...........................
Oak Investment Partners III, A Limited 484,464 9.15%
Partnership (3)...........................
Oak VII Affiliates Fund, Limited 40,833 16,333 * *
Partnership (3)...........................
Oak V Affiliates Fund, Limited 36,804 14,667 * *
Partnership (3)...........................
Bandel L. Carano (4)......................... 3,873,423 1,333,334 44.89% 40.25%
Frederick J. Warren (5)...................... 249,913 66,667 3.05% 2.01%
Mark C. Ozur (6)............................. 100,369 1.86%
B. Robert Suh (7)............................ 42,250 *
Keith M. Beckwith (8)........................ 28,749 *
Benn L. Schreiber (9)........................ 22,811 *
Pamela J. Thompson (10)...................... 20,311 *
Scot B. Jarvis (11).......................... 18,228 6,666 * *
John D. Beletic (12)......................... 10,987 *
Cameron D. Myhrvold (13).....................
Microsoft Corporation (14)................... 1,666,668 666,667 23.96% 20.13%
Citiventure 96 A.P. Partnership Fund, L.P. (15) 868,668 347,467 14.11% 10.49%
Chancellor LGT Private Capital Offshore 386,333 154,533 6.81% 4.67%
Partners II, L.P. (15)....................
Chancellor LGT Private Capital Partners III, 214,668 85,867 3.90% 2.59%
Limited Partnership (15)..................
Chancellor LGT Private Capital Offshore 30,333 12,133 * *
Partners I, C.V. (15).....................
Moore Global Investments, Ltd. (16).......... 615,000 246,000 10.42% 7.43%
Remington Investment Strategies, L.P. (16)... 135,000 54,000 2.49% 1.63%
Strome Susskind Hedgecap Fund, L.P. (17)..... 261,235 104,494 4.71% 3.15%
Strome Offshore, Limited (17)................ 169,033 67,613 3.10% 2.04%
Strome Partners, L.P. (17)................... 138,300 55,320 2.55% 1.67%
Strome Hedgecap, Limited (17)................ 46,100 18,440 * *
All executive officers and directors as a group
(11 persons including those named above) (18)..... 4,390,384 1,406,667 48.65% 42.46%
</TABLE>
* Less than 1%
(1) Each share of Series B Preferred Stock is currently convertible, at the
election of the holder, into 2.5 shares of Common Stock. The Common Stock
columns reflect such conversion.
3
<PAGE>
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options, warrants and conversion from another security which are
currently exercisable or convertible, or will become exercisable or
convertible within 60 days of March 1, 1999 and are deemed outstanding for
computing the percentage of the person or entity holding such securities
are not outstanding for computing the percentage of any other person or
entity. Except as indicated by footnote, and subject to the community
property laws where applicable, to our knowledge the persons named in the
table above have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
(3) Oak Investment Partners V, Limited Partnership ("Oak V") owns 40,487 shares
of Common Stock and 652,000 shares of Series B Convertible Preferred Stock,
which is convertible into 1,630,000 shares of Common Stock. Oak V
Affiliates Fund, Limited Partnership ("V Affiliates") owns 137 shares of
Common Stock and 14,667 shares of Series B Convertible Preferred Stock,
which is convertible into 36,667 shares of Common Stock. Oak Investment
Partners III, Limited Partnership ("Oak III") owns 478,214 shares of Common
Stock, and an option in the name of Bandel L. Carano for the benefit of Oak
III dated May 6, 1996 to purchase 6,250 shares of Common Stock, which is
exercisable on, or within 60 days after, March 1, 1999. Oak Investment
Partners VII, Limited Partnership ("Oak VII") owns 650,334 shares of Series
B Convertible Preferred Stock, which is convertible into 1,625,835 shares
of Common Stock. Oak VII Affiliates Fund, Limited Partnership ("VII
Affiliates") owns 16,333 shares of Series B Convertible Preferred Stock,
which is convertible into 40,833 shares of Common Stock. The address of Oak
V, V Affiliates, Oak III, Oak VII, and VII Affiliates is 525 University
Avenue, Suite 1300, Palo Alto, CA 94301.
(4) Represents 15,000 shares of Common Stock held by Mr. Carano and the shares
held by Mr. Carano for the benefit of Oak Investment Partners III and the
shares held by Oak III, Oak V, V Affiliates, Oak VII, and VII Affiliates as
to which Mr. Carano has shared voting and investment power. Mr. Carano
disclaims beneficial ownership of any of the shares held by the Oak
partnerships. Mr. Carano's business address is 525 University Avenue, Suite
1300, Palo Alto, CA 94301.
(5) Represents 76,995 shares of Common Stock held by Mr. Warren, 6,250 shares
of Common Stock subject to options exercisable on, or within 60 days after,
March 1, 1999 held by Mr. Warren and 66,667 shares of Series B Convertible
Preferred Stock, which is convertible into 166,668 shares of Common Stock,
held jointly by Mr. Warren and Robin Grace Warren. Mr. Warren's business
address is 11150 Santa Monica Boulevard, Suite 1200, Los Angeles,
California 90025.
(6) Represents 6,620 shares of Common Stock held by Mr. Ozur and 93,749 shares
of Common Stock subject to options exercisable on, or within 60 days after,
March 1, 1999. Mr. Ozur's business address is 6307 Carpinteria Avenue,
Carpinteria, CA 93013.
(7) Represents 12,563 shares of Common Stock held by Mr. Suh and 29,687 shares
of Common Stock subject to options exercisable on, or within 60 days after,
March 1, 1999. Mr. Suh's business address is 6307 Carpinteria Avenue,
Carpinteria, CA 93013.
(8) Represents 28,749 shares of Common Stock subject to an option held by Mr.
Beckwith exercisable on, or within 60 days after, March 1, 1999. Mr.
Beckwith's business address is 6307 Carpinteria Avenue, Carpinteria, CA
93013.
(9) Represents 2,500 shares held by Mr. Schreiber and 20,311 shares subject to
an option exercisable on, or within 60 days after, March 1, 1999. Mr.
Schreiber's business address is 6307 Carpinteria Avenue, Carpinteria, CA
93013.
(10) Represents 20,311 shares subject to an option held by Ms. Thompson
exercisable on, or within 60 days after, March 1, 1999. Ms. Thompson's
business address is 6307 Carpinteria Avenue, Carpinteria, CA 93013.
(11) Represents 6,666 shares of Series B Convertible Preferred Stock, which is
convertible into 16,665 shares of Common Stock and 1,563 shares of Common
Stock subject to options exercisable on, or within 60 days after, March 1,
1999. Mr. Jarvis' business address is 2415 Carillon Point, Kirkland, WA
98033.
(12) Represents 150 shares of Common Stock held by Mr. Beletic and 10,837 shares
of Common Stock subject to options exercisable on, or within 60 days after,
March 1, 1999. Mr. Beletic's business address is 3333 Lee Parkway, Suite
100, Dallas, TX 75219.
4
<PAGE>
(13) Mr. Myhrvold may be deemed to share voting and investment power in the
1,666,668 shares of Common Stock and 666,667 shares of Series B Convertible
Preferred Stock held by Microsoft Corporation. Mr. Myhrvold disclaims
beneficial ownership of all of the shares held by Microsoft Corporation.
Mr. Myhrvold's business address is Microsoft Corporation, One Microsoft
Way, Redmond, WA 98052.
(14) Represents 666,667 shares of Series B Convertible Preferred Stock, which is
convertible into 1,666,668 shares of Common Stock. The address of Microsoft
Corporation is One Microsoft Way, Redmond, WA 98052.
(15) Chancellor LGT Private Capital Offshore Partners I, C.V. ("Chancellor I")
owns 12,133 shares of Series B Convertible Preferred Stock, which is
convertible into 30,333 shares of Common Stock. Chancellor LGT Private
Capital Offshore Partners II, L.P. ("Chancellor II") owns 154,533 shares of
Series B Convertible Preferred Stock, which is convertible into 386,333
shares of Common Stock. Chancellor LGT Private Capital Partners III, L.P.
("Chancellor III") owns 85,867 shares of Series B Convertible Preferred
Stock, which is convertible into 214,668 shares of Common Stock.
Citiventure 96 A.P. Partnership Fund, L.P. ("Citiventure") owns 347,467
shares of Series B Convertible Preferred Stock, which is convertible into
868,668 shares of Common Stock. The address of Citiventure, Chancellor I,
Chancellor II, and Chancellor III is 1166 Avenue of the Americas, New York,
NY 10038.
(16) Moore Global Investments, Ltd. ("MGI") owns 246,000 shares of Series B
Convertible Preferred Stock, which is convertible into 615,000 shares of
Common Stock. Remington Investment Strategies, L.P. ("RIS") owns 54,000
shares of Series B Convertible Preferred Stock, which is convertible into
135,000 shares of Common Stock. Moore Capital Management, Inc., a
Connecticut corporation, is vested with investment discretion with respect
to portfolio assets held for the account of MGI. Moore Capital Advisors,
L.L.C., a New York limited liability company, is the sole general partner
of RIS. Mr. Louis M. Bacon is the majority shareholder of Moore Capital
Management, Inc. and is the majority equity holder of Moore Capital
Advisors, L.L.C. As a result, Mr. Bacon may be deemed to be the indirect
beneficial owner of the aggregate 300,000 shares of Series B Preferred
Stock and the underlying 750,000 shares of Common Stock held by MGI and
RIS. The address of MGI, RIS and Mr. Bacon is 1251 Avenue of the Americas,
53rd Floor, New York, New York 10020.
(17) Strome Susskind Hedgecap Fund, L.P. ("Strome Susskind") owns 104,494 shares
of Series B Convertible Preferred Stock, which is convertible into 261,235
shares of Common Stock. Strome Hedgecap, Limited ("Strome Hedgecap") owns
18,440 shares of Series B Convertible Preferred Stock, which is convertible
into 46,100 shares of Common Stock. Strome Offshore, Limited ("Strome
Offshore") owns 67,613 shares of Series B Convertible Preferred Stock,
which is convertible into 169,033 shares of Common Stock. Strome Partners,
L.P. ("Strome Partners") owns 55,320 shares of Series B Convertible
Preferred Stock, which is convertible into 138,300 shares of Common Stock.
The general partner of Strome Susskind Hedgecap Fund, L.P., Strome
Hedgecap, Limited, Strome Offshore, Limited, Strome Partners, L.P., is
SSCO, Inc., a Delaware corporation. The address of Strome Susskind, Strome
Hedgecap, Strome Offshore, and Strome Partners is 100 Wilshire Boulevard,
15th Floor, Santa Monica, CA 90401.
(18) Represents 644,868 shares of Common Stock, 229,011 shares of Common Stock
subject to options exercisable on, or within 60 days after, March 1, 1999,
and 5,183,336 shares of Common Stock issuable upon conversion of Series B
Preferred Stock.
5
<PAGE>
PROPOSAL NO. 1--ELECTION OF DIRECTORS
At the Meeting, shareholders will elect directors to hold office until the
next Annual Meeting of Shareholders and until their respective successors have
been elected and qualified. The Company's Board of Directors is comprised of six
members. Shares represented by the accompanying proxy will be voted for the
election of the six nominees recommended by the Board of Directors unless the
proxy is marked in such a manner as to withhold authority to so vote. If any
nominee for any reason is unable or unwilling to serve, the proxies may be voted
for such substitute nominee as the proxy holders may determine. All of the
nominees named below have consented to being named herein and to serve if
elected.
Directors/Nominees
- ------------------
The names of the nominees and certain information about them are set forth
below:
Director
Name of Nominee Age Principal Occupation Since
- --------------- --- ----------------------------------- --------
John D. Beletic 47 Chairman and Chief Executive Officer, 1991
PageMart Wireless Inc.
Bandel L. Carano (1)(2) 37 Private Venture Capitalist 1988
Scot B. Jarvis (1) 38 Investor 1998
Cameron D. Myhrvold 37 Vice President, Microsoft Corporation 1998
Mark C. Ozur 43 President, Chief Executive Officer 1994
of the Company
Frederick J. Warren (1)(2) 59 Private Venture Capitalist 1983
(1) Member of the Compensation Committee of the Board of Directors in 1998.
(2) Member of the Audit Committee of the Board of Directors in 1998.
Each of the directors listed above, except for Mr. Jarvis and Mr. Myhrvold,
were reelected at the Company's Annual Meeting of Shareholders held on April 10,
1998. Mr. Jarvis and Mr. Myhrvold were appointed as directors by the Board of
Directors in January 1998. Each director will serve until the next Annual
Meeting of Shareholders and until his successor has been elected and qualified.
Mr. Beletic is Chairman and Chief Executive Officer of PageMart Wireless,
Inc. Mr. Beletic joined PageMart in March 1992, after serving as a venture
partner with Morgan Stanley Venture Capital for one year. From 1986 to 1991, Mr.
Beletic served as President and CEO of Dallas-based Tigon Voice Messaging
Network, the country's largest voice mail service provider. Under his
leadership, Tigon grew from a start-up company to the industry leader within
five years. Mr. Beletic also serves on the Board of Directors of PageMart
Wireless, Inc. and Triton PCS, Inc.
Mr. Carano has served as a director of the Company since August 1988. Since
July 1985, he has been a general partner of various venture capital funds
affiliated with Oak Investment Partners, a venture capital firm that is an
investor in the Company. Mr. Carano also serves on the Board of Directors of
Polycom, Inc.
Mr. Jarvis is co-founder of Cedar Grove Partners, LLC, a private investment
company. Mr. Jarvis also serves on the Board of Directors of Metawave
Communications, XYPoint Corp. and Leap Wireless International, Inc. From 1994 to
1996, Mr. Jarvis was Vice President-Operations of Eagle River Investments LLC,
Eagle River, Inc. Preceding his position at Eagle River Investments, Mr. Jarvis
also was Vice President of McCaw Development Corp. at McCaw Cellular
Communications, Inc.; Vice President/General Manager of the California Region
for Cellular One; and Vice President of Acquisitions and Development at McCaw
Communications Companies, Inc.
Mr. Myhrvold is Vice President of the Internet Customer Unit Strategic
Relations of Microsoft Corporation. He joined Microsoft in 1986, and has served
in a variety of positions. Most recently, he was the Director of Marketing for
Microsoft's developer division, which included responsibility for marketing
Microsoft's products, programs and services to developers, including the
Microsoft Developer Network (MSDN), and Microsoft "evangelism." Before this
assignment, he was Director of Systems Marketing for Microsoft Europe where he
helped develop product and business strategies, coordinating technical marketing
for Microsoft's nineteen European offices. Before that, he was the Director of
Developer Relations where he built and managed the group which evangelizes
Microsoft's operating systems to third party developers.
6
<PAGE>
Mr. Ozur has been President and Chief Executive Officer of the Company
since January 1995. Mr. Ozur served as Vice President and Chief Technical
Officer of the Company from April 1993 to December 1994. From 1990 to 1992 he
was Vice President of Precision Visuals, a software development company. From
1978 to 1982 and 1986 to 1990 he was at Digital Equipment Corporation, a
computer hardware and software company, developing software. During 1982 he
founded Omtool Corporation, a compiler and software publishing company.
Mr. Warren has served as a director of the Company since May 1983. He is a
founding general partner of Brentwood Associates, a venture capital and
leveraged buyout investment firm established in 1972.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINATED DIRECTORS.
Board of Directors' Meetings and Committees
- -------------------------------------------
The Board of Directors met four times during the fiscal year ended December
31, 1998. No director attended fewer than 75% of the aggregate of the total
number of meetings of the Board of Directors and the total number of meetings
held by all committees of the Board of Directors on which he served. The Company
pays each of its directors who is not an employee of the Company a retainer of
$1,000 per quarter and fees of $1,000 per Board of Directors meeting attended.
Standing committees of the Board of Directors include an Audit Committee
and a Compensation Committee. The Board of Directors does not have a nominating
committee or a committee performing similar functions.
Messrs. Carano and Warren were the members of the Audit Committee during
1998. The Audit Committee met once during 1998. The Audit Committee reviews the
Company's accounting practices and internal control systems and meets with the
Company's outside auditors concerning the scope and terms of their engagement
and the results of their audits.
Messrs. Carano, Jarvis and Warren were members of the Company's
Compensation Committee during 1998. The Compensation Committee met four times
during 1998. The Compensation Committee determines the salaries of executive
officers of the Company, reviews and approves executive officer bonus plans and
administers the Company's employee stock option plan.
The Company has an Amended and Restated Stock Option Plan for Independent
Directors (the "Directors' Plan") which was first adopted by the Board of
Directors and approved by the Company's shareholders in January 1990 and was
last amended by the shareholders in May 1996. The Directors' Plan covers 125,000
shares of Common Stock and provides for non-qualified stock options to assist
the Company in recruiting new directors and providing an incentive for existing
directors. The option exercise price is fair market value at the date of option
grant and options have a term of ten years. The Directors' Plan provides for an
automatic one-time grant of an option to purchase 6,250 shares at the time of a
director's first appointment or election to the Board of Directors, or
re-election at the 1996 Annual Meeting, if he was then a director, such option
to become exercisable on the fourth anniversary of the grant date, unless such
vesting is accelerated based on the fair market value of the shares of the
Company's Common Stock having achieved certain target prices. In addition,
whenever an independent director purchases shares of the Company's Common Stock
in the open market, such director is automatically granted an option to purchase
a like number of shares, such option to become exercisable in full six months
after the date of grant, provided that for each independent director the number
of shares covered by such options or options in the aggregate shall not exceed
6,250 shares.
7
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth information relating to the Chief Executive
Officer of the Company and the next four most highly compensated executive
officers for the fiscal year ended December 31, 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-term Compensation
--------------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------- ---------
Other(B) Restricted Securities All Other
Name and Salary Bonus Annual Stock Underlying LTIP Compensation
Principal Position Year ($)(A) ($)(A) Compensation Awards Options/SARs (#) Payouts ($)(C)
------------------ ---- ------ ------ ------------ ---------- ---------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark C. Ozur.............. 1998 265,260 - 985 110,000 985
President and CEO 1997 259,947 - 430 100,000 430
1996 230,748 60,000 15,370 19,250 370
Pamela J. Thompson........ 1998 200,372 85,000 83,802 25,000 719
Vice President, Marketing 1997 44,667 - 13,795 81,250 77
Benn L. Schreiber......... 1998 200,280 15,000 75,402 25,000 1,229
Vice President, 1997 66,493 75,380 91,887 81,250 174
Engineering
B. Robert Suh............. 1998 202,458 - 27,107 25,000 468
Vice President, Finance 1997 185,184 - 179 43,750 179
and CFO 1996 163,001 59,000 40,131 13,500 149
Keith M. Beckwith......... 1998 192,554 - 714 37,500 714
Vice President, Sales 1997 174,261 - 255 25,000 255
1996 152,726 - - 12,750 210
</TABLE>
(A) Listed amounts include cash compensation earned and received by executive
officers as well as amounts earned and to be paid in subsequent periods.
(B) For 1996, Mr. Ozur received a car allowance of $15,000. For 1998, Ms.
Thompson received relocation assistance of $83,802. For 1997, Ms. Thompson
received relocation assistance of $13,718. For 1998, Mr. Schreiber received
relocation assistance of $74,173. For 1997, Mr. Schreiber received
relocation assistance of $91,713. For 1998, Mr. Suh received relocation
assistance of $26,639. For 1996, Mr. Suh received relocation assistance of
$27,982 and a car allowance of $12,000. In each year, while the other named
executive officers received certain perquisites, such perquisites and
personal benefits were less than the lesser of $50,000 or 10% of annual
salary and bonus reported for each such executive officer.
(C) Amounts listed represent the excess value of term life insurance.
8
<PAGE>
<TABLE>
OPTION/SAR TABLE
Options/SAR Grants in Last Fiscal Year
<CAPTION>
Potential
Realizable Value at
Assumed Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term(C)
----------------------------------------- --------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in Or Base Expiration
Name Granted(A) Fiscal Year Price(B) Date 5%($) 10%($)
---------------- ---------- ----------- -------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Mark C. Ozur ........... 60,000 9.07% 8.380 04/02/06 $240,065 $574,996
50,000 7.56% 5.750 07/31/08 180,807 458,201
Benn L. Schreiber ...... 25,000 3.78% 5.750 07/31/08 90,404 229,100
Pamela J. Thompson...... 25,000 3.78% 5.750 07/31/08 90,404 229,100
Keith M. Beckwith ...... 12,500 1.89% 8.380 04/02/06 50,013 119,791
25,000 3.78% 5.750 07/31/08 90,404 229,100
B. Robert Suh .......... 25,000 3.78% 5.750 07/31/08 90,404 229,100
</TABLE>
(A) During 1998, Mr. Ozur, Mr. Schreiber, Ms. Thompson, Mr. Beckwith, and Mr.
Suh received options to purchase 50,000, 25,000, 25,000, 25,000, and 25,000
shares of stock, respectively, which become exercisable in annual
installments of 25% commencing on the anniversary of the grant dates of
July 31, 1998. These options vest immediately upon the satisfaction by the
Company of certain performance targets, which the Company did not meet.
During 1998, Mr. Ozur and Mr. Beckwith received options to purchase
additional 60,000 and 12,500 shares, respectively, which become exercisable
in annual installments of 25% commencing on the anniversary of the grant
date of April 2, 1998. The vesting schedule for Mr. Ozur's options is
accelerated upon the Company meeting certain revenue targets, which the
Company did not meet.
(B) The exercise price is the closing price of the Company's Common Stock on
the date of the option grant.
(C) The potential realizable value is calculated from the exercise price per
share, assuming the market price of the Company's Common Stock appreciates
in value at the stated percentage rate from the date of the option grant to
the expiration date. Actual realizable values, if any, are dependent on the
future market price of the Common Stock.
9
<PAGE>
<TABLE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised
on Value Options/SARs at FY-End In-the-Money Options/SARs
Exercise Realized (#)(B) at FY-End ($)(A)(B)
------------ ------------
Name(C) # $(A) Exercisable Unexercisable Exercisable Unexercisable
------- -------- -------- ------------------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark C. Ozur............. 0 0 78,749 210,494 $0 $0
Benn L. Schreiber........ 0 0 20,311 85,939 0 0
Pamela J. Thompson....... 0 0 20,311 85,939 0 0
B. Robert Suh............ 0 0 29,687 77,561 0 0
Keith M. Beckwith........ 0 0 25,624 68,999 0 0
</TABLE>
(A) Market price of underlying Common Stock on date of exercise or fiscal
year-end, minus the option exercise price. The market price per share at
December 31, 1998 was $4.063.
(B) Number of shares includes all shares subject to option; option value
calculation includes only those options for which the exercise price per
share was below the market price per share at December 31, 1998.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee has furnished the following report on executive
compensation.
Overall Policy
- --------------
The Compensation Committee consists entirely of independent, outside
directors and is responsible for formulating and implementing corporate policy
with respect to executive compensation. Each year the Compensation Committee
reassesses the Company's executive compensation program. The Compensation
Committee's annual review process involves determining the base salaries of
executive officers, reviewing and approving executive officer performance bonus
plans and bonus criteria, reviewing the Company's stock option and stock
purchase plans and administering the Company's employee stock option plan.
In formulating a comprehensive executive compensation package for 1998, the
Compensation Committee's objectives were twofold. First, the Compensation
Committee sought to attract and retain talented and entrepreneurial management.
To this end, the Compensation Committee set executive officer base salaries at
competitive levels. Second, the Compensation Committee sought to motivate
executive officers to perform to the full extent of their abilities.
Accordingly, the Compensation Committee created significant bonus compensation
opportunities intended to correlate executive compensation with the Company's
achievement of certain revenue goals. If the Company had achieved all revenue
goals set for 1998, approximately 17% of each executive officer's total cash
compensation would have consisted of bonus compensation.
The Company's 1998 executive compensation program comprised base salary,
bonuses and stock options. The policies underlying each component of the
compensation program are described more fully below. Although the components of
executive officer compensation are determined separately, the Compensation
Committee considers the entire compensation (earned or potentially earned) of
each executive officer in setting each component. Pursuant to Section 162(m) of
the Internal Revenue Code, in certain circumstances compensation paid to a named
executive officer in excess of $1 million may not be deducted as an expense by
the Company. Because the compensation of the Company's executive officers
historically has been well below this level, the Compensation Committee has not
given consideration to the potential application of Section 162(m) in setting
compensation policy.
10
<PAGE>
Base Salary
- -----------
The Compensation Committee's compensation philosophy is to attract, retain
and motivate highly talented and entrepreneurial members of the management team.
Candidates are typically sought from a broad range of high tech industries
including software, computers and computer equipment, electronics, data and
telecommunications as well as the Company's own peer group in the voice
information processing industry. In keeping with this philosophy, executive base
salaries are set to be competitive with similarly sized companies in comparable
industries and facing comparable business challenges. The Company participated
in a survey in 1997 of executive compensation conducted by Radford Associates, a
leading provider of compensation and benefits surveys to the technology
industries. The survey included approximately 74 high technology companies which
have annual revenues ranging from $10 million up to $200 million. The Radford
Associates executive compensation data provided a range of executive officer
base salaries and the midpoint salaries for various executive officer positions.
The Compensation Committee then set the range of the Company's 1998 base
salaries to reflect the level of competitiveness that the Company desired to
maintain in the marketplace at the executive officer level.
Once a range of base salaries has been established, the Compensation
Committee determines each executive's salary by examining such factors as
individual and Company performance, the Chief Executive Officer's
recommendations and any new responsibilities the executive may have assumed. In
keeping with the Company's commitment to incentive compensation, the
Compensation Committee typically sets executive officer base salaries slightly
below the midpoint of the range of base salaries paid by similarly sized
companies to comparable officers. The 1998 base salaries set for the Company's
executives officers ranged from 83% to 107% of the midpoint of the range of 1997
base salaries for comparable positions in the Radford Survey for companies with
sales between $40 million and $99 million.
The Compensation Committee increased executive officer base salaries by an
average of 3.7% for 1998 to remain competitive with the market.
Mr. Ozur has an employment agreement with the Company that provides in the
event of a change in control of the Company which results in the termination of
his employment, or in the event of a loss of corporate officer status for
reasons other than cause, he will continue to receive his base salary and group
health benefits for a period of one year, provided he agrees not to join any of
a list of competitors provided by the Company.
Bonus Plan
- ----------
The executive officers, including the Chief Executive Officer, participated
in a Company bonus plan, the 1998 Executive Officer Bonus Plan (the "Plan"),
which provided for cash bonuses and option grants.
CASH BONUSES
The cash portion of the Plan provided for a cash bonus of 10% of base
salary for each Vice President and 12.5% for the President at attainment of 100%
of the Company's annual revenue and pretax income targets. The Plan provided for
a maximum annual cash bonus potential of 31% of base salary contingent on
exceeding the annual targets. The percentage payout would be linearly prorated
if achievement fell between the targets. There was no cash bonus if the annual
revenue and pretax income targets were not met. Additionally, the Plan provided
for a cash bonus of 5% of base salary upon the closing of each contract over a
predetermined amount. No bonuses were paid in 1998 because the targets were not
met; however, Mr. Schreiber was granted a $15,000 bonus which was guaranteed at
Mr. Schreiber's time of hire.
11
<PAGE>
OPTION GRANTS
The Company's 1983 Stock Option Plan (the "1983 Plan") was adopted by the
Board of Directors and the shareholders of the Company in October of that year
and has been amended from time to time since then. The objectives of the 1983
Plan are to provide executive officers and other key employees an opportunity to
acquire equity in the Company, to compensate them and to serve as a retention
and motivation vehicle. All options are granted at the current market price of
the underlying Common Stock. Because the value of an option bears a direct
relationship to the Company's stock price, it is an effective incentive for
executive officers to create value for shareholders. The Compensation Committee
therefore views stock options as an important component of its performance-based
compensation policy.
The Company's practice under the 1983 Plan has been to make an initial
option grant when an executive officer is hired with vesting at 25% per annum
over a period of four years and a ten-year term. Upon completion of the second
year of employment, and annually thereafter, additional stock options may be
granted to the executive officer based upon individual and Company performance.
Additional options may be granted at the discretion of the Board of Directors.
COMPENSATION COMMITTEE
Bandel L. Carano
Frederick J. Warren
Scot B. Jarvis
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the Company's cumulative shareholder return on
its Common Stock (no dividends have been paid thereon) covering five the years
from December 31, 1993 to December 31, 1998 with the return on common stocks
included in the CRSP Index for the Nasdaq Stock Market (US Companies) and a Peer
Group of corporations selected by the Company (the "Peer Group").
COMPARISON OF CUMULATIVE TOTAL RETURNS
December 31, 1993 to December 31, 1998
[PERFORMANCE GRAPH APPEARS HERE]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS:
<TABLE>
<CAPTION>
PULSEPOINT
COMMUNICATIONS MARKET PEER
INDEX INDEX INDEX
-------------- ------ ----
<S> <C> <C> <C>
DEC 1993 100.0 100.0 100.0
DEC 1994 166.7 97.8 103.9
DEC 1995 100.0 138.3 204.8
DEC 1996 116.7 170.0 148.7
DEC 1997 110.4 208.3 105.7
DEC 1998 67.7 293.5 163.5
</TABLE>
Companies in the Self-Determined Peer Group:
Brite Voice Systems Centigram Communication Corp.
Comverse Technology Inc. Glenayre Technologies Inc.
Intervoice Inc.
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/31/93.
13
<PAGE>
PROPOSAL NO. 2--AMENDMENT TO THE 1983 STOCK OPTION PLAN
Proposed Amendment
- ------------------
At the Meeting shareholders will be asked to approve an amendment to the
1983 Stock Option Plan (the "1983 Plan") to increase the number of shares
authorized for issuance thereunder from 2,375,000 to 2,625,000 shares. The Board
of Directors approved this amendment on March 17, 1999.
The Board of Directors believes that the amendment is in the best interest
of the Company as the 1983 Plan plays an important role in the Company's efforts
to attract and retain employees.
The following is a summary of the principal provisions of the 1983 Plan and
the proposed amendment thereto. Tax information related to the 1983 Plan follows
this summary. This summary is qualified in its entirety by reference to the 1983
Plan, which is filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 and incorporated herein by reference.
Administration
- --------------
The 1983 Plan is currently administered by the Compensation Committee. The
Compensation Committee is authorized to determine the individuals to whom
options should be granted, to determine the number of shares to be subject to
such options, to designate whether an option should be an incentive stock option
("ISO") or a non-qualified stock option ("NSO") and to establish the terms and
conditions of such options consistent with the 1983 Plan. The Compensation
Committee is also authorized to adopt, amend and rescind rules relating to the
administration of the 1983 Plan and to interpret the terms of options. The costs
of administering the 1983 Plan are paid by the Company.
Eligibility
- -----------
The 1983 Plan provides that options may be granted to employees, including
officers and directors who are employees of the Company, as the Compensation
Committee may determine. Options may also be granted to others who serve as
independent contractors, consultants or advisors rendering services to the
Company. An optionee may hold more than one option, but only on the terms and
subject to the restrictions set forth in the 1983 Plan. As of March 1, 1999,
approximately 155 people were eligible to receive options under the 1983 Plan.
The 1983 Plan does not provide for a maximum or minimum number of option
shares that could be granted to any one optionee, although for options granted
after December 31, 1986, there is a limit on the aggregate market value of
shares subject to options receiving incentive stock option treatment that are
exercisable for the first time in any one calendar year.
Stock
- -----
The shares issuable upon exercise of the options are shares of the
Company's authorized but unissued Common Stock. The aggregate number of shares
that may be issued upon exercise of options granted or to be granted under the
1983 Plan, after giving effect to the proposed amendment, is 2,625,000 shares of
Common Stock. As of March 1, 1999, options covering a total of 2,184,303 shares
have been issued under the 1983 Plan. Of these, options covering a total of
702,430 shares have been exercised, and options covering a total of 1,481,873
shares are outstanding. Accordingly, the remaining number of shares that may be
issued under options to be granted under the 1983 Plan (assuming approval of the
amendment) is 440,697 shares of Common Stock. In the event that any outstanding
option under the 1983 Plan for any reason expires or becomes unexercisable in
whole or in part, the shares of Common Stock allocable to the unexercised
portion of such option may again be subject to an option under the 1983 Plan.
14
<PAGE>
Terms of Options
- ----------------
The Compensation Committee determines for each option whether the option is
to be an ISO or a NSO. Each option is evidenced by a grant agreement in such
form as the Compensation Committee approves and is generally subject to the
following terms and conditions:
- NUMBER OF SHARES. Each option states the number of shares to which it
pertains.
- OPTION PRICE. Each option states the option price, which in the case
of ISO's may not be less than 100% of the fair market value of the
shares of Common Stock on the date of the grant. The Committee
currently determines such fair market value based upon the closing
price of the Common Stock on the date of the grant, as quoted on the
Nasdaq Stock Market. The option price for NSOs may be less than 100%
of the fair market value of the Common Stock.
- VESTING. Options granted when an employee is hired generally vest and
become exercisable 25% after one year from the date of grant and
thereafter ratably over a four-year period from the date of grant and
have a ten-year term. The Committee also grants options that vest
after four years, but which may vest earlier if specified performance
criteria are met. The Committee may grant options with other vesting
schedules or terms in the future.
- EXERCISE AND MEDIUM OF PAYMENT. An option is exercised by giving
written notice of exercise to the Company, specifying the number of
shares of Common Stock to be purchased and, except as noted below,
tendering payment to the Company of the purchase price. The option
price may not be paid in shares of the Company's Common Stock,
however, if the exercise date is during the period (the "Blackout
Period") beginning on and including the first calendar day of the last
month of any fiscal quarter of the Company and ending on and including
the second business day following the date of the release to the
public of the quarterly (or annual) summary statement of the sales and
earnings of the Company related to such fiscal quarter (or the year
ending with such fiscal quarter), unless expressly authorized by the
Board of Directors.
- TERMINATION OF EMPLOYMENT. If an optionee ceases to be employed by the
Company for any reason other than death, options must be exercised not
later than three months after such termination and may be exercised
only to the extent the options were exercisable on the date of
termination. A longer exercise period and additional vesting may apply
in the case of death.
- NON-TRANSFERABILITY OF OPTION. An option generally may not be sold,
pledged, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the optionee, only by the optionee.
Amendment of the 1983 Plan
- --------------------------
The Compensation Committee may amend or terminate the 1983 Plan from time
to time without approval of the shareholders, provided, however, that
shareholder approval is required for any amendment that increases the number of
shares subject to the 1983 Plan (other than in connection with an adjustment
upon a change in capitalization) or makes any change in the designation of the
class of persons eligible to be granted options. However, no action by the
Compensation Committee or shareholders may affect any option previously granted
under the 1983 Plan without the written consent of the optionee.
Federal Income Tax Consequences
- -------------------------------
The Federal income tax discussion set forth below is intended for general
information only. State and local income tax consequences are not discussed, and
may vary from locality to locality.
15
<PAGE>
Non-Qualified Stock Options. For Federal income tax purposes, the recipient
of NSOs granted under the 1983 Plan will not realize taxable income upon the
grant of the option, nor will the Company then be entitled to any deduction.
Generally, upon exercise of NSOs the optionee will realize ordinary income, and
the Company will be entitled to a deduction, in an amount equal to the
difference between the option exercise price and the fair market value of the
stock at the date of exercise. The Company will be required to withhold taxes on
the ordinary income realized by an optionee upon exercise of NSOs in order to be
entitled to the tax deduction. An optionee's basis for the stock for purposes of
determining his gain or loss on his subsequent disposition of the shares
generally will be the fair market value of the stock on the date of exercise of
the NSO.
Incentive Stock Options. There is no taxable income to an employee when an
ISO is granted to him or when that option is exercised; however, the amount by
which the fair market value of the shares at the time of exercise exceeds the
option price will be an "item of tax preference" for the optionee. Gain realized
by an optionee upon sale of stock issued on exercise of an ISO is taxable as
long-term capital gain, and no tax deduction is available to the Company, unless
the optionee disposes of the shares within two years after the date of grant of
the option or within one year of the date the shares were transferred to the
optionee. In such event the difference between the option exercise price and the
fair market value of the shares on the date of the option's exercise will be
taxed at ordinary income rates, and, subject to the limits of Section 162(m) of
the Internal Revenue Code of 1986 (the "Code"), the Company will be entitled to
a deduction to the extent the employee must recognize ordinary income.
ERISA Information
- -----------------
The Company believes that the 1983 Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Recommendation and Vote
- -----------------------
The approval of the amendment to the 1983 Plan, which increases the
authorized shares thereunder from 2,375,000 to 2,625,000 requires the
affirmative vote of a majority of the shares present or represented and entitled
to vote at the Meeting, which shares voting affirmatively also constitute at
least a majority of the required quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE AMENDMENT TO THE 1983
PLAN.
PROPOSAL NO. 3-- AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN
Proposed Amendment
- ------------------
At the Meeting shareholders will be asked to approve an amendment to the
Employee Stock Purchase Plan (the "Stock Purchase Plan") to increase the number
of shares authorized for issuance thereunder from 500,000 to 675,000 shares. The
Board of Directors approved this amendment on March 17, 1999.
Description. The Stock Purchase Plan was first adopted by the Board of
Directors and approved by the shareholders in January 1990. The Stock Purchase
Plan qualifies as an "employee stock purchase plan" under Section 423 of the
Code. At December 31, 1998 approximately 58 employees were participating in the
Stock Purchase Plan.
As of March 1, 1999, of the 500,000 shares reserved for issuance under the
Stock Purchase Plan (without giving effect to the April 23, 1999 amendment),
498,124 shares had been issued and 1,876 shares were available for future
issuance. The Board of Directors believes that it is in the best interests of
the Company to provide employees with an opportunity to purchase Common Stock of
the Company through payroll deductions. With the approval of the amendment
described above, stock availability for employee purchase should be adequate
through April 30, 2000.
The principal features of the Stock Purchase Plan are set forth below, but
the summary is qualified in its entirety by reference to the Stock Purchase
Plan, which is filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 and incorporated herein by reference.
16
<PAGE>
Purpose
- -------
The purpose of the Stock Purchase Plan is to provide employees of the
Company with a convenient means of acquiring equity in the Company through
payroll deductions and to provide an incentive for continued employment.
Administration
- --------------
The Stock Purchase Plan is currently administered by the Board of
Directors, but may be administered by the Compensation Committee. The
interpretation or construction by the Board of Directors of any provision of the
Stock Purchase Plan or of any award granted under it is final and binding on all
participating employees.
Eligibility
- -----------
All employees of the Company are eligible to participate in the Stock
Purchase Plan except the following:
(1) employees who are not employed by the Company, or any parent or
subsidiary of the Company, on the fifteenth (15th) day of the month before
the beginning of an Offering Period (as defined below);
(2) employees who are customarily employed for less than twenty (20)
hours per week;
(3) employees who are customarily employed for less than five (5)
months in a calendar year; and
(4) employees who own or hold options to purchase or who, as a result
of participation in the Stock Purchase Plan, would own stock or hold
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company
pursuant to Section 424(d) of the Code.
Participation
- -------------
Each offering of Common Stock under the Stock Purchase Plan is for a period
of one year. Offering Periods commence on the first day of May and November of
each year. The first day of each Offering Period is the "Offering Date" for such
Offering Period. An employee cannot participate simultaneously in more than one
Offering Period. Each Offering Period consists of two Purchase Periods
commencing on the first day of May and November.
No employee will be able to purchase more than (1) 200% of the number of
shares determined by using 85% of the fair market value of a share of the
Company's Common Stock on the Offering Date or (2) the maximum number of shares
set by the Board of Directors. In addition, no employee will be able to purchase
shares at a rate which exceeds $25,000 in fair market value (determined on the
Offering Date) for each calendar year.
Purchase Price
- --------------
The purchase price of shares which may be acquired in any Offering Period
under the Stock Purchase Plan will be set by the Board of Directors, provided,
however, that the purchase price shall not be less than 85% of the lesser of (a)
the fair market value of the shares on the Offering Date, or (b) the fair market
value of the shares on the last day of the Offering Period. The fair market
value of the Common Stock on a given date is the closing sales price of the
Common Stock on the immediately preceding business day as quoted on the Nasdaq
Stock Market.
17
<PAGE>
Purchase of Stock; Exercise of Option
- -------------------------------------
The number of whole shares an employee will be able to purchase in any
Offering Period will be determined by dividing the total amount of payroll
deductions withheld from the employee during the Offering Period pursuant to the
Stock Purchase Plan by the price per share determined as described above. The
purchase shall take place automatically on the last day of the Offering Period.
On April 3, 1998, the Board of Directors adopted an amendment to the Stock
Purchase Plan (which amendment does not require shareholder approval and is not
being submitted to the shareholders for approval) pursuant to which the shares
obtained by an employee under the Stock Purchase Plan will be subject to a
prohibition on transfer for a six month period after purchase, and will be
transferable during such period only on such employee's death.
Withdrawal
- ----------
An employee may withdraw from any Offering Period or from the Stock
Purchase Plan at any time at least 15 days prior to the end of an Offering
Period. No further payroll deductions for the purchase of shares will be made
for the succeeding Offering Period unless the employee enrolls in the new
Offering Period in the same manner as for initial participation in the Stock
Purchase Plan.
Termination of Employment
- -------------------------
Termination of an employee's employment for any reason, including
retirement or death, immediately cancels his or her participation in the Stock
Purchase Plan. In such event, the payroll deductions credited to the employee's
account will be returned to such employee or, in case of death, to the
employee's legal representative.
Federal Income Tax Information
- ------------------------------
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code.
The following is a general summary of the federal income tax consequences
to the Company associated with the purchase of shares. The federal tax laws may
change and the federal, state and local tax consequences for any participating
employee will depend upon his or her individual circumstances. Each
participating employee has been and is encouraged to seek the advice of a
qualified tax advisor regarding the tax consequences of participation in the
Stock Purchase Plan.
The Company will be entitled to a deduction in connection with the
disposition of shares acquired under the Stock Purchase Plan only to the extent
that the employee recognizes ordinary income on a disqualifying disposition of
the shares. Such deduction is subject to the limits of Section 162(m) of the
Code. The Company will treat any transfer of record ownership of shares,
including a transfer to a broker or nominee or into "street name", as a
disposition, unless it is notified to the contrary. On April 3, 1998, the Board
of Directors adopted an amendment to the Stock Purchase Plan (which amendment
does not require shareholder approval and is not being submitted to the
shareholders for approval) pursuant to which the shares obtained by an employee
under the Stock Purchase Plan will be subject to a prohibition on transfer for a
six month period after purchase, and will be transferable during such period
only on such employee's death.
ERISA Information
- -----------------
The Company believes that the Stock Purchase Plan is not subject to any of
the provisions of ERISA.
Vote Required
- -------------
The approval of the amendment to the Stock Purchase Plan, which increases
the authorized shares thereunder from 500,000 to 675,000, requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented and entitled to vote at the Meeting, which shares voting
affirmatively also constitute at least a majority of the required quorum.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE IN FAVOR OF THE
AMENDMENT TO THE STOCK PURCHASE PLAN.
18
<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities ("Insiders"), to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
of the Company. Insiders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all such Section 16(a) filing requirements were complied
with during the fiscal year ended December 31, 1998.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Company's Proxy Statement and
form of proxy relating to the Company's 2000 Annual Meeting must be received by
the Company at its principal executive offices no later than November 25, 1999.
In addition, if the Company has not received notice on or before February 9,
2000 of any matter a shareholder intends to propose for a vote at the 2000
Annual Meeting, then a proxy solicited by the Board of Directors may be voted on
such matter in the discretion of the proxy holder, without a discussion of the
matter in the proxy statement soliciting such proxy and without such matter
appearing as a separate matter on the proxy card.
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the Meeting and, so far as is known to the Board of Directors,
no matters are to be brought before the Meeting except as specified in the
notice of the Meeting. As to any business that may properly come before the
Meeting, however, it is intended that proxies, in the form enclosed, will be
voted in the respect thereof in accordance with the judgment of the persons
voting such proxies.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected its independent public accountants for the
1999 fiscal year because it is considering requesting proposals from auditing
firms in an effort to maximize the value it receives relative to the cost it
pays for auditing services. Ernst & Young LLP was selected as the Company's
independent public accountants for the fiscal year ended December 31, 1998. A
representative of Ernst & Young LLP will be present at the annual meeting of
shareholders to be held on April 23, 1999. Such representative may make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
By Order of the Board of Directors
/s/ B. Robert Suh
B. Robert Suh
Corporate Secretary
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
19
<PAGE>
PULSEPOINT COMMUNICATIONS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Mark C. Ozur and B. Robert Suh, or either
of them, each with power of substitution, to represent the undersigned at the
Annual Meeting of Shareholders of PulsePoint Communications (the "Company") to
be held at the Company's principal executive offices located at 6307 Carpinteria
Ave., Carpinteria, California 93013 on April 23, 1999, at 10:00 a.m., and any
adjournment thereof, and to vote the number of shares the undersigned would be
entitled to vote if personally present at the meeting on the following matters:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR ELECTION AND
FOR PROPOSALS 2 AND 3.
THIS PROXY WILL BE VOTED AS DIRECTED ON THIS AND THE REVERSE SIDE. IN THE
ABSENCE OF DIRECTIONS, THIS PROXY WILL BE VOTED FOR THE COMPANY'S NOMINEES FOR
ELECTION AND FOR PROPOSALS 2 AND 3. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
meeting or any adjournment thereof to the extent authorized by Rule
14a-4(c) promulgated by the Securities and Exchange Commission.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
1. ELECTION OF DIRECTORS. Nominees: John D. Beletic, Bandel L. Carano, Scot B.
Jarvis, Cameron D. Myhrvold, Mark C. Ozur and Frederick J. Warren.
[_]FOR [_]WITHHOLD AUTHORITY
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below:
---------------------------------------------------------------------------
2. TO APPROVE AN AMENDMENT TO THE COMPANY'S 1983 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK AVAILABLE UNDER THE PLAN
FROM 2,375,000 TO 2,625,000 SHARES.
[_]FOR [_]AGAINST [_]ABSTAIN
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN TO
INCREASE THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK AVAILABLE UNDER
THE PLAN FROM 500,000 TO 675,000 SHARES.
[_]FOR [_]AGAINST [_]ABSTAIN
Dated
-------------------------------------
Signature(s)
------------------------------
------------------------------
Please sign exactly as your name(s) appears on
your stock certificate. If shares of stock are
held of record in the names of two or more persons
or in the name of husband or wife, whether as
joint tenants or otherwise, both or all of such
persons should sign the proxy. If shares of stock
are held of record by a corporation, the proxy
should be executed by the president or a vice
president and the secretary or assistant
secretary. Executors or administrators or other
fiduciaries who execute the above proxy for a
deceased shareholder should give their full title.
Please date the proxy.
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
