<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.
240.14a-11(c) or sec. 240.14a-12
</TABLE>
STM Wireless, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not 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:
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<PAGE> 2
STM WIRELESS, INC.
ONE MAUCHLY
IRVINE, CALIFORNIA 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 17, 1998
TO THE STOCKHOLDERS OF STM WIRELESS, INC.:
The 1998 Annual Meeting of Stockholders of STM Wireless, Inc. (the
"Company") will be held at the Sutton Place Hotel, 4500 MacArthur Boulevard,
Newport Beach, California, on September 17, 1998, at 10:00 A.M., for the
following purposes as more fully described in the accompanying Proxy Statement:
(1) To elect the following seven (7) nominees to serve as directors
until the next annual meeting of stockholders or until their
successors are elected and have qualified:
Emil Youssefzadeh Frank T. Connors Lawrence D. Lenihan, Jr.
Jack F. Acker Chan Kien Sing Guy W. Numann
Dr. Ernest U. Gambaro
(2) To ratify an amendment to the Company's Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan --
1992 to increase the number of shares subject thereto by 900,000
to a total of 1,750,000;
(3) To ratify the appointment of KPMG Peat Marwick as independent
auditors of the Company for the fiscal year ending December 31,
1998; and
(4) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on August 14, 1998
will be entitled to vote at the meeting or any adjournment or postponement
thereof.
By Order of the Board of Directors
Emil Youssefzadeh
Chief Executive Officer and Secretary
August 17, 1998
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. Any
stockholder present at the meeting may withdraw his or her proxy and vote
personally on each matter brought before the meeting. Stockholders attending the
meeting whose shares are held in the name of a broker or other nominee who
desire to vote their shares at the meeting should bring with them a proxy or
letter from that firm confirming their ownership of shares.
<PAGE> 3
STM WIRELESS, INC.
ONE MAUCHLY
IRVINE, CALIFORNIA 92618
---------------
PROXY STATEMENT
---------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of STM Wireless, Inc., a
Delaware corporation ("STM" or the "Company"), for use at its 1998 Annual
Meeting of Stockholders ("Annual Meeting") to be held on September 17, 1998, at
10:00 A.M., at the Sutton Place Hotel, 4500 MacArthur Boulevard, Newport Beach,
California. This Proxy Statement and the accompanying proxy are being mailed to
stockholders on or about August 17, 1998. The Company has retained the services
of U.S. Stock Transfer Corporation to assist in soliciting proxies from brokers
and nominees for the Annual Meeting. The estimated costs for these services is
$3,500 and will be borne by the Company. It is contemplated that this
solicitation of proxies will be made primarily by mail; however, if it should
appear desirable to do so in order to ensure adequate representation at the
meeting, directors, officers and employees of the Company may communicate with
stockholders, brokerage houses and others by telephone, telegraph or in person
to request that proxies be furnished and may reimburse banks, brokerage houses,
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to the beneficial owners of the shares held by them. All
expenses incurred in connection with this solicitation shall be borne by the
Company.
Holders of shares of Common Stock of the Company ("stockholders") who
execute proxies retain the right to revoke them at any time before they are
voted. Any proxy given by a stockholder may be revoked or superseded by
executing a later dated proxy, by giving notice of revocation to the Secretary,
STM Wireless, Inc., One Mauchly, Irvine, California 92618 in writing prior to or
at the meeting or by attending the meeting and voting in person. A proxy, when
executed and not so revoked, will be voted in accordance with the instructions
given in the proxy. If a choice is not specified in the proxy, the proxy will be
voted "FOR" the nominees for election of directors named in this Proxy
Statement, "FOR" ratification of the amendment of the Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan--1992 and "FOR" the
ratification of KPMG Peat Marwick LLP as the Company's independent auditors.
VOTING SECURITIES
The shares of Common Stock, $.001 par value, constitute the only
outstanding class of voting securities of the Company. Only the stockholders of
the Company of record as of the close of business on August 14, 1998 (the
"Record Date") will be entitled to vote at the meeting or any adjournment or
postponement thereof. As of the Record Date, there were 7,042,204 shares of
Common Stock outstanding and entitled to vote. No shares of the Company's
preferred stock, $0.001 par value, were outstanding. A majority of shares
entitled to vote represented in person or by proxy will constitute a quorum at
the meeting. Each stockholder is entitled to one vote for each share of Common
Stock held as of the Record Date. Abstentions and broker non-votes are each
included in the determination of the number of shares present and voting for the
purpose of determining whether a quorum is present. Abstentions will be treated
as shares present and entitled to vote for purposes of any matter requiring the
affirmative vote of a majority or other proportion of the shares present and
entitled to vote. With respect to shares relating to any proxy as to which a
broker non-vote is indicated on a proposal, those shares will not be considered
present and entitled to vote with respect to any such proposal. Abstentions or
broker non-votes or other failures to vote will have no effect in the election
of directors, who will be elected by a plurality of the affirmative votes cast.
With respect to any matter brought before the Annual Meeting requiring the
affirmative vote of a majority or other proportion of the outstanding shares, an
abstention or broker non-vote will have the same effect as a vote against the
matter being voted upon.
<PAGE> 4
All stockholders entitled to vote at the Annual Meeting may cumulate
their votes in the election of directors. With cumulative voting, each
stockholder is entitled to a number of votes as shall equal the number of votes
which the stockholder would be entitled to cast for the election of directors
with respect to the stockholder's shares of stock multiplied by the number of
directors to be elected by the stockholders, and each stockholder may cast all
of such votes for a single director or may distribute them among the number of
directors to be voted for, or for any two or more of them as the stockholder may
see fit. In order to cumulate votes, stockholders must attend the meeting and
vote in person or make arrangements with their own proxies and a stockholder
must give notice at the meeting prior to voting of the stockholder's intention
to cumulate votes. If any one stockholder has given such notice, all
stockholders may cumulate their votes. Otherwise, the proxies solicited by the
Board of Directors confer discretionary authority in the proxy holders to
cumulate votes so as to elect the maximum number of nominees.
PROPOSAL ONE
ELECTION OF DIRECTORS
Currently, there are seven (7) members of the Board of Directors. On May
7, 1998 the Board of Directors approved an increase in the authorized number of
directors from six (6) to seven (7) and Jack F. Acker was elected by the Board
of Directors to fill the vacancy resulting from such increase until the next
annual stockholders' meeting. Directors are elected at each annual stockholders'
meeting to hold office until the next annual meeting or until their successors
are elected and have qualified. Unless otherwise instructed, the proxy holders
named in the enclosed proxy will vote the proxies received by them for the seven
(7) nominees named below. Emil Youssefzadeh, Jack F. Acker, Frank T. Connors,
Chan Kien Sing and Dr. Ernest U. Gambaro are nominees that are presently
directors of the Company. Dennis Elliott and Diane Walker are not standing for
reelection to the Board of Directors and are resigning from the Board of
Directors as of September 17, 1998.
If any nominee becomes unavailable for any reason before the election,
the enclosed proxy will be voted for the election of such substitute nominee or
nominees, if any, as shall be designated by the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees will be unavailable
to serve.
Under Delaware law, the seven (7) nominees receiving the highest number
of votes will be elected as directors at the annual meeting. As a result,
proxies voted to "Withhold Authority," which will be counted, and broker
non-votes, which will not be counted, will have no practical effect.
The names and certain information concerning the seven (7) nominees for
election as directors are set forth below. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Emil Youssefzadeh 45 Chief Executive Officer, Secretary and
Chairman of the Board
Jack F. Acker 51 President--STM Network Systems Division and
Director
Frank T. Connors 64 President--DTPI and Vice-Chairman of the Board
Chan Kien Sing 42 Director
Dr. Ernest U. Gambaro 59 Director
Lawrence D. Lenihan, Jr. 33 Director Nominee
Guy Numann 66 Director Nominee
</TABLE>
Emil Youssefzadeh, 45, is the founder of the Company. He has been a
director of the Company and has served as its President since he founded the
Company in January 1982, and has served as Chief Executive Officer from January
1982 to June 1988 and since January 1991. From January 1979 until founding the
Company, Mr. Youssefzadeh was a satellite research engineer with Hughes Aircraft
Company where his projects included
3
<PAGE> 5
design of satellite communications systems and satellite earth stations. He also
was a member of the team responsible for communications system engineering for
the Intelsat-VI spacecraft.
Jack F. Acker, 51, has been President of STM's Network Systems Division
since January 1998 and a director of the Company since May 1998. Mr. Acker was
President and Chief Executive Officer of Telecom International, Inc. ("TI") when
TI was acquired by the Company in December of 1997. From 1984 to 1993, Mr. Acker
was Corporate Senior Vice President and President of the Network Systems Group
at Scientific Atlanta, a large satellite communications systems company. From
1968 to 1984, Mr. Acker was responsible for developing communications systems at
Harris Corporation.
Frank T. Connors, 64, has been a director of the Company since June
1988, and served as its Chairman of the Board of Directors from June 1988 to
September 1993, and as its Chief Executive Officer from June 1988 to January
1991. Since October 1, 1994, Mr. Connors has been Vice Chairman of the Board of
Directors of the Company. From October of 1994 to January 1998, Mr. Connors was
Executive Vice President of the Company. Since January 1998, Mr. Connors has
served as President of Direc-To-Phone International, Inc., the Company's fixed
station satellite telephony service subsidiary. From December 1982 to January
1988, Mr. Connors was the Chief Executive Officer of Doelz Networks, a
manufacturer of packet switching equipment. From 1979 to 1981, Mr. Connors was
Group Vice President of Northern Telecom's Computer Systems Group. Mr. Connors
is currently a director of DISC, Inc. (NASDAQ NMS: DCSC; DCSCW), an optical
computer storage manufacturing Company located in northern California.
Chan Kien Sing, 42, has been a director of the Company since March 1998.
Mr. Chan is a member of the Malaysian Association of Certified Public
Accountants and Malaysian Institute of Accountants. In 1993, Mr. Chan was
appointed to the Board of Berjaya Group Berhad. Mr. Chan joined Berjaya in 1989
as General Manager, Investment. Mr. Chan is a director of various subsidiary
companies under the Berjaya Group of companies in Malaysia. He is also a
director in several foreign-based companies such as Berjaya Holding (HK) Ltd., a
company listed on the Hong Kong Stock Exchange, and International Lottery &
Totalizator Systems, Inc. a company listed on the NASDAQ stock market.
Dr. Ernest U. Gambaro, 59, has been a director of the Company since
March 1997. In 1988, Dr. Gambaro directed the formation of Infonet Services
Corporation and has since served as its Vice President, General Counsel and
Secretary. Infonet Services Corporation operates the world's largest value added
international data communication network with offices in 58 countries. Prior to
1988, Dr. Gambaro was Assistant General Counsel for Computer Sciences
Corporation focusing on the Company's international, acquisition and divestiture
activities. Between 1962 and 1975, Dr. Gambaro directed programs at The
Aerospace Corporation relating to the conceptual, definition and implementation
of advanced technology systems for space.
Lawrence D. Lenihan, Jr., 33, is a principal at Dawson-Samberg Capital
Management, Inc. and has been a managing member of the general partner of Pequot
Private Equity Fund, L.P. since February 1997. From August 1993 to October 1996,
Mr. Lenihan was a principal at Broadview Associates, LLC. He currently serves as
a director of Direc-To-Phone International, Inc., Digital Generation Systems,
Inc., Trikon Technologies, Inc. and Sanctuary Woods Multimedia Corporation.
Guy Numann, 66, was the President of the Communications Sector of Harris
Corporation from 1989 until his retirement in 1997. From 1962 to 1989, Mr.
Numann served in various capacities in the Communications Sector and Two Way
Radio Division of Harris Corporation.
OTHER EXECUTIVE OFFICERS
Mohammad H. Farzin, 47, has been Executive Vice President of the Company
since January 1998. From January 1993 to January 1998, Mr. Farzin was the
Company's Vice President for Technology and Business Development. From January
1990 to January 1993, Mr. Farzin was the Company's Manager of Systems
Engineering.
4
<PAGE> 6
Michael Lindsay, 41, has been a corporate officer and Chief Operating
Officer of Direc-To-Phone International, Inc., the Company's fixed station
satellite telephony services provider since January 1998. Mr. Lindsay was Chief
Operating Officer of the Company from July 1994 until January 1998. From January
1993 to March 1994, Mr. Lindsay served as Chief Operating Officer of Numedia
Corporation, a software developer. From September 1988 to October 1992, Mr.
Lindsay held various officer positions at Dowty Communications, Inc., a company
specializing in data communications, including President, Executive Vice
President and Vice President - Finance Operations.
Joseph J. Wallace, 38, has been Vice President-Finance and Chief
Financial Officer of the Company since March 1997. From April 1994 to March
1997, Mr. Wallace was Corporate Controller of MAI Systems Corporation, a
publicly held worldwide provider of total information system solutions. From
1990 to 1993, Mr. Wallace was Controller and Chief Financial Officer of Simmons
Magee, PLC, a British based value added reseller of computer products and
services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1997 and 1996, the Company contracted with Gulf Communications
International, Inc. ("GCI") in the normal course of business to provide
installation services. Until June 1998, Jack Acker, President of STM's Network
Systems Division and a director of the Company, served as the Chairman of the
Board and was a 50% owner of GCI. In June 1998, Mr. Acker sold his interest in
GCI. Total purchases by the Company from GCI were approximately $720,000 and
$469,990 in 1997 and 1996, respectively.
In December 1997, the Company entered into an Agreement and Plan of
Merger with Telecom International, Inc. ("TI") pursuant to which TI merged with
and into a wholly-owned subsidiary of the Company. Under the terms of the
acquisition, the Company issued 480,000 shares of its Common Stock to TI's
former stockholders, including Jack Acker, who received 260,458 shares of the
Company's Common Stock as a result of the acquisition.
In March 1998, the Company completed a $10 million equity offering of
common stock of the Company and mandatory redeemable preferred stock of
Direc-To-Phone International, Inc. ("DTPI"), the Company's subsidiary, to Pequot
Private Equity Fund L.P. ("Pequot"), the private investment vehicle of
Dawson-Samberg Capital Management, Inc ("Dawson-Samberg"). Through the
transaction, Pequot acquired 571,429 shares in the Company and an interest in
DTPI. Dawson-Samberg is the beneficial owner of these shares. In addition,
Dawson-Samberg and its affiliates have purchased 182,500 shares of the Company
in the open market. Coinciding with the equity offering, two officers of
Dawson-Samberg, including Lawrence D. Lenihan, Jr., a nominee to the board of
directors of the Company, were appointed to DTPI's board of directors.
BOARD MEETINGS AND ATTENDANCE
The Board of Directors of the Company held meetings during the fiscal
year ended December 31, 1997. Each incumbent director attended at least
seventy-five percent (75%) of the aggregate of the number of meetings of the
Board and the number of meetings held by all committees of the Board on which he
served. There are no family relationships among any of the directors or
executive officers of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation and
Stock Option Committee. The Audit Committee is presently comprised of three (3)
directors selected by the Board of Directors of the Company. The members of the
Audit Committee are currently Dennis Elliott, Dianne Walker and Frank Connors.
The Audit Committee is authorized to handle all matters which it deems
appropriate regarding the Company's independent accountants and to otherwise
communicate and act upon matters relating to the review and audit of the
Company's books and records, including the scope of the annual audit and the
accounting methods and systems to be utilized by the Company. In addition, the
Audit Committee also makes recommendations to the Board of Directors with
5
<PAGE> 7
respect to the selection of the Company's independent accountants. The Audit
Committee held three meetings during the fiscal year ended December 31, 1997.
The Compensation and Stock Option Committee is presently comprised of
three (3) directors selected by the Board of Directors of the Company. The
members of the Compensation and Stock Option Committee are currently Dr. Ernest
U. Gambaro, Dennis Elliott and Diane Walker. The functions of the Compensation
and Stock Option Committee include advising the Board of Directors on officer
and employee compensation and administering the Company's stock option plans.
The Board of Directors, based on input from the Compensation and Stock Option
Committee, establishes the annual compensation rates for the Company's executive
officers. The Compensation and Stock Option Committee held three meetings during
the fiscal year ended December 31, 1997.
The Board of Directors does not have a nominating committee. Instead,
the Board of Directors, as a whole, identifies and screens candidates for
membership on the Company's Board of Directors.
6
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the fiscal year
ended December 31, 1997, by the Company's Chief Executive Officer and its other
most highly compensated executive officers (collectively, the "Named Executive
Officers") whose aggregate salary and bonus exceeded $100,000 for the fiscal
year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards -
---------------------- Securities Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation(2)
- --------------------------- ---- ------ ----- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Emil Youssefzadeh 1997 $239,698 -- 10,000 (3) 33,020
President and Chief 1996 219,448 -- 10,000 (4) 33,020
Executive Officer 1995 222,883 -- -- 33,000
Frank Connors 1997 165,577 -- 15,000 (5) --
Executive, VP 1996 150,000 -- 10,000 (4) --
Vice President & 1995 150,000 -- 5,000 (4) --
President, DTPI
Michael Lindsay 1997 160,169 -- -- --
Corporate Officer & 1996 148,440 -- -- --
Chief Operating 1995 143,554 -- -- --
Officer, DTPI
Joseph Wallace (1) 1997 95,673 -- 25,000 --
VP, Finance & Chief
Financial Officer
</TABLE>
- -----------------
(1) Mr. Wallace commenced employment with the Company in March 1997.
(2) During 1997, 1996 and 1995 amounts represent $33,020, $33,020 and $33,000,
respectively, of automobile allowance and expenses paid by the Company for
the benefit of the Chief Executive Officer.
(3) Includes regrant of 10,000 options on March 20, 1997 in connection with the
Company's option cancellation/regrant program.
(4) These options were cancelled on March 20, 1997 in connection with the
Company's option cancellation/regrant program.
(5) Includes regrant of 15,000 options on March 20, 1997 in connection with the
Company's option cancellation/regrant program.
7
<PAGE> 9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Potential
Total Realizable Value at
Options Assumed Annual
Number of Granted Rates of Stock
Securities to Exercise Price Appreciation
Underlying Employees of Base for Option Term(3)
Options in Fiscal Price ------------------
Name Granted Year(1) ($/Share) Expiration Date(2) 5% 10%
- ---- ---------- --------- --------- ------------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
Emil Youssefzadeh..... 10,000 (4) 1.85% $7.125 05/02/06 $44,809 $113,554
Frank Connors......... 10,000 (4) 1.85 7.125 05/02/06 44,809 113,554
5,000 (5) .93 7.125 09/30/04 22,404 56,777
Joseph Wallace........ 25,000 4.63 7.125 03/11/07 112,021 283,885
</TABLE>
- ---------------
(1) Options to purchase an aggregate of 539,850 shares of Common Stock were
granted to employees, including the Named Executive Officers, during the
year ended December 31, 1997. Included were 332,850 options granted to
replace a like number of options cancelled in connection with the
Company's cancellation/regrant program.
(2) Options granted have a term of 10 years, subject to earlier termination
in certain events related to termination of employment or service to the
Company.
(3) Based on fair market value, in accordance with the rules and regulations
of the Securities and Exchange Commission, such gains are based on
assumed rates of annual compound stock appreciation of 5% and 10% from
the date on which the options were granted over the full term of the
options. The rates do not represent the Company's estimate or projection
of future Common Stock prices, and no assurance can be given that the
rates of annual compound stock appreciation assumed will be achieved.
(4) Regrant of 10,000 options on March 20, 19987 in connection with the
Company's option cancellation/regrant program.
(5) Regrant of 5,000 options on March 20, 1997 in connection with the
Company's option cancellation/regrant program.
The Company implemented an option cancellation/regrant program for
directors, executive officers, and all other employees holding stock options
with an exercise price per share in excess of the market value of STM's common
stock at the time the cancellation/regrant occurred. Optionees who accepted the
repricing agreed that the re-granted options would vest ratably over a period
one year longer than the vesting period of the options cancelled. The program
was effected on March 20, 1997 and 332,850 options in excess of $7.125 per share
were cancelled and 332,850 new options were granted with an exercise price of
$7.125.
The following table sets forth information regarding option repricings
for all Named Executive Officers with respect to each of the Company's Named
Executive Officers who participated in the option cancellation/regrant program
effective March 20, 1997.
10-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
Number of Market Length of
Securities Price of Exercise Original
Underlying Stock at Price at New Option Term
Options Time of Time of Exercise Remaining at
Name Date Repriced Repricing Repricing Price Date of Repricing
- ---- ------- ----------- ---------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Emil Youssefzadeh. 3/20/97 10,000 $7.125 $12.125 $7.125 9 years, 1 month
Frank Connors..... 3/20/97 10,000 7.125 12.125 7.125 9 years, 1 month
3/20/97 5,000 7.125 9.875 7.125 7 years, 6 months
</TABLE>
8
<PAGE> 10
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underling Unexercised in-the-Money Options
Shares Options at Fiscal Year-End at Fiscal Year-End(1)
Acquired Value --------------------------- --------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ----------- ----------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Emil Youssefzadeh. -- $ -- 3,334 6,666 $ 4,584 $ 9,166
Frank Connors..... -- -- 8,334 6,666 11,459 9,166
Michael Lindsay... -- -- 60,000 40,000 82,500 55,000
Joseph Wallace.... -- -- -- 25,000 -- 34,375
</TABLE>
- ------------------
(1) Market value of underlying securities at exercise date or year-end, as
the case may be, minus the exercise or base price of "in-the-money"
options. The closing sale price for the Company's Common Stock as of
December 31, 1997 on the Nasdaq National Market was $8.50.
DIRECTOR'S FEES
The Chairman of the Board of Directors received an annual retainer at
the rate of $48,000, and each of the outside directors received an annual
retainer at the rate of $15,000 for services rendered in his or her capacity as
a director of the Company. Accordingly, during 1997, Mr. Elliott received
$48,000, Ms. Walker received $15,000, Mr. Tan received $15,000 and Mr. Gambaro
received $11,250 (as he joined the Company's Board in March 1997) for their
services as outside directors of the Company. The Company's outside directors
were also reimbursed for expenses incurred for meetings of the Board of
Directors which they attended.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon its review of the copies of reports furnished to the
Company, or written representations that no annual Form 5 reports were required,
the Company believes that all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") applicable to
its directors, officers and any persons holding ten percent (10%) or more of the
Company's Common Stock were made with respect to the Company's fiscal year ended
December 31, 1997.
9
<PAGE> 11
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Set forth below is certain information as of the Record Date regarding
the beneficial ownership of the Company's Common Stock by (i) any person who was
known by the Company to own more than five percent (5%) of the voting securities
of the Company, (ii) all directors and nominees, (iii) each of the Named
Executive Officers identified in the Summary Compensation Table, and (iv) all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owners Beneficial Ownership (1) Percent of Class
- ------------------------------------- ------------------------ ----------------
<S> <C> <C>
Emil Youssefzadeh (1)......................... 1,322,922 18.4%
STM Wireless, Inc.
One Mauchly
Irvine, California 92618
Berjaya Group (Cayman), Ltd. (2).............. 1,221,294 17.0%
Level 17, Shazan Prudential Tower
30 Jalan Sultan Ismail
50250 Kuala Lumpur, Malaysia
Kien Sing Chan (3)............................ 1,221,294 17.0%
Level 17, Shazan Prudential Tower
30 Jalan Sultan Ismail
50250 Kuala Lumpur, Malaysia
Dawson-Samberg Capital Management, Inc. (4)... 753,929 10.5%
354 Pequot Avenue,
Southport, CT 06490
Lawrence D. Lenihan, Jr. (4).................. 753,929 *
Guy Numann.................................... 0 *
Jack F. Acker................................. 260,458 3.6%
Frank T. Connors (5)......................... 189,747 2.6%
Dennis W. Elliott (6)......................... 24,000 *
Dianne C. Walker (7).......................... 27,308 *
Dr. Ernest U. Gambaro (8)..................... 5,000 *
Michael Lindsay (9)........................... 80,000 1.1%
Joseph Wallace (10)........................... 6,250 *
All Directors and Executive Officers 3,890,908 54.1%
as a group (11 persons) (1) (3)(4)..........
</TABLE>
- --------------
* Less than 1%
(1) Includes 249,000 and 244,020 shares held by Kamil Youssefzadeh and
Shafigh Youssefzadeh, respectively, who are brothers of Emil
Youssefzadeh, for which Emil Youssefzadeh has voting rights.
Accordingly, Emil Youssefzadeh is deemed to share beneficial ownership
of these shares. Further, includes 6,667 shares issuable upon exercise
of stock options exercisable within 60 days of the Record Date.
(2) According to a report filed with the Securities and Exchange Commission,
Berjaya Group (Cayman), Ltd. ("Berjaya Cayman") is a wholly-owned
subsidiary of, and is controlled by, Berjaya Group Berhad ("Berjaya"), a
Malaysian corporation, whose principal offices are located at Level 17,
Shazan Prudential Tower, 30 Jalan Sultan Ismail, 50250 Kuala Lumpur,
Malaysia. Accordingly, Berjaya may be deemed to beneficially own such
shares. However, Berjaya disclaims such beneficial ownership pursuant to
Rule 13d-4 under the Securities Exchange Act of 1934, as amended.
(3) Consists of shares held by Berjaya Cayman. Mr. Chan is Group Executive
Director of Berjaya and, accordingly, may be deemed to beneficially own
such shares. However, Mr. Chan disclaims such beneficial ownership
pursuant to Rule 13d-4 under the Securities Exchange Act of 1934, as
amended.
(4) At March 31, 1998, Dawson-Samberg beneficially owned 753,929 shares in
the Company. 571,429 shares were acquired through its Pequot Private
Equity Fund L.P. Mr. Lenihan is a principal at Dawson-Samberg and,
accordingly, may be
10
<PAGE> 12
deemed to beneficially own such shares. However, Mr.
Lenihan disclaims such beneficial ownership pursuant to Rule 13d-4 under
the Securities Exchange Act of 1934, as amended.
(5) Inclusive of 11,667 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(6) Inclusive of 20,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(7) Inclusive of 20,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(8) Inclusive of 5,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(9) Inclusive of 80,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(10) Inclusive of 6,250 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
11
<PAGE> 13
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The following report is submitted by the Compensation and Stock Option
Committee of the Board of Directors with respect to the executive compensation
policies established by the Compensation and Stock Option Committee and
recommended to the Board of Directors and compensation paid or awarded to
executive officers for the fiscal year ended December 31, 1997.
The Compensation and Stock Option Committee determines the annual
salary, bonus and other benefits, including incentive compensation awards, of
the Company's senior management and recommends new employee benefit plans and
changes to existing plans to the Company's Board of Directors. The Compensation
and Stock Option Committee met three times in 1997 and is presently comprised
entirely of Dr. Ernest U. Gambaro, Dennis Elliott and Diane Walker.
COMPENSATION POLICIES AND OBJECTIVES
In establishing and evaluating the effectiveness of compensation
programs for executive officers, as well as other employees of the Company, the
Compensation and Stock Option Committee is guided by three basic principles:
o The Company must offer competitive salaries to be able to
attract and retain highly-qualified and experienced executives
and other management personnel.
o Annual executive compensation in excess of base salaries should
be tied to individual and Company performance.
o The financial interests of the Company's executive officers
should be aligned with the financial interest of the
stockholders, primarily through stock option grants which reward
executives for improvements in the market performance of the
Company's Common Stock.
Salaries and Employee Benefit Programs. In order to retain executives
and other key employees, and to be able to attract additional well-qualified
executives when the need arises, the Company strives to offer salaries, and
health care and other employee benefit programs, to its executives and other key
employees that are comparable to those offered to persons with similar skills
and responsibilities by competing businesses in the local geographic area.
In recommending salaries for executive officers, the Compensation and
Stock Option Committee (i) reviews the historical performance of the executives
and (ii) informally reviews available information, including information
published in secondary sources, regarding prevailing salaries and compensation
programs offered by competing businesses that are comparable to the Company in
terms of size, revenue, financial performance and industry group. Many, though
not all, of these competing businesses, that have securities which are publicly
traded, are included in the S&P Communication - Equipment Manufacturer Index
used in the Stock Performance Graph on page 14 of this Proxy Statement. Another
factor which is considered in recommending salaries of executive officers is the
cost of living in Southern California where the Company is headquartered, as
such cost generally is higher than in other parts of the country.
In order to retain qualified management personnel, the Company has
followed the practice of seeking to promote executives from within the Company
whenever practicable. The Board of Directors believes that this policy enhances
employee morale and provides continuity of management. Typically, modest salary
increases are made in conjunction with such promotions.
Performance-Based Compensation. The Board of Directors believes that the
motivation of executives and key employees increases as the market value of the
Company's Common Stock increases. Nevertheless, the Company provides a merit
bonus in cash or stock options to executives and key employees which is
dependent on the Company's achievements and the direct contributions made by
each executive and other key employees. Accordingly, at
12
<PAGE> 14
the beginning of each fiscal year, the Company establishes short term and long
term plans, and at the end of the fiscal year, the collective and individual
contributions of the executives to the Company's achievements are evaluated.
Cash bonuses are awarded if the Company achieves or exceeds the earnings goal
established for the fiscal year and are limited to amounts ranging from five
percent (5%) to fifty percent (50%) of an executive's base salary.
The earnings goal is established on the basis of the annual operating
plan developed by management and approved by the Board of Directors. The annual
operating plan, which is designed to maximize profitability within the
constraints of economic and competitive conditions, some of which are outside
the control of the Company, is developed on the basis of (i) the Company's
performance for the prior fiscal year; (ii) estimates of sales revenue for the
plan year based upon recent market conditions, trends and competition and other
factors which, based on historical experience, or expected to affect the level
of sales that can be achieved; (iii) historical operating costs and cost savings
that management believes can be realized; (iv) competitive conditions faced by
the Company; and (v) additional expenditures beyond prior fiscal years in
expansion or research and development toward growth of the Company's business in
future fiscal years. By taking all of these factors into account, including
market conditions, the earnings goal in the annual operating plan is determined.
In certain instances, bonuses are awarded not only on the basis of the
Company's overall profitability, but also on the achievement by an executive of
specific objectives within his or her area of responsibility. For example, a
bonus may be awarded for any executive's efforts in achieving greater than
anticipated cost savings, or completing a new product on target.
As a result of this performance-based merit bonus program, executive
compensation, and the proportion of each executive's total cash compensation
that is represented by incentive or bonus income, may increase in those years in
which the Company's profitability increases.
Stock Options and Equity-Based Programs. In order to align the financial
interests of executive officers and other key employees with those of the
stockholders, the Company grants stock options to its executive officers and
other key employees on a periodic basis, taking into account the size and terms
of previous grants of equity-based compensation and stock holdings in
determining awards. Stock option grants, in particular, reward executive
officers and other key employees for performance that results in increases in
the market price of the Company's Common Stock, which directly benefit all
stockholders. Moreover, the Compensation and Stock Option Committee generally
has followed the practice of granting options on terms which provide that the
options become exercisable in cumulative annual installments, generally over a
three to five-year period. The Compensation and Stock Option Committee believes
that this feature of the option grants not only provides an incentive for
executive officers to remain in the employ of the Company, but also makes longer
term growth in share prices important for the executives who receive stock
options.
FISCAL YEAR 1997 COMPENSATION
The salaries of the Named Executive Officers increased slightly over the
salaries paid in fiscal 1996 as a result of cost of living increases, and since
the Company did not meet the earnings goals established of the year, no bonus
payments were made to any of the Named Executive Officers for the year ended
December 31, 1997.
13
<PAGE> 15
The Company is required to disclose its policy regarding qualifying
executive compensation deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
deduction for compensation paid or accrued with respect to a covered employee of
a public corporation is limited to no more than $1 million per year. It is not
expected that the compensation to be paid to the Company's executive officers
for fiscal 1998 will exceed the $1 million limit per officer. The Company's
Incentive Stock Option, Non-Qualified Stock Option and Restricted Stock Purchase
Plan - 1992 is structured so that any compensation deemed paid to an executive
officer when he exercises an outstanding option under the plan, with an exercise
price equal to the fair market value of the option shares on the grant date,
will qualify as performance-based compensation that will not be subject to the
$1 million limitation.
The Compensation Committee of the
Board of Directors
Dr. Ernest U. Gambaro
Dennis Elliott
Diane Walker
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Report and
the performance graph on page 14 shall not be incorporated by reference into any
such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1997, the Company's Board of
Directors established the levels of compensation for the Company's executive
officers. Emil Youssefzadeh, a director and the President and Chief Executive
Officer of the Company, and Frank Connors, the Vice Chairman and the Executive
Vice President of the Company participated in the deliberations of the Board
regarding executive compensation, but did not participate in proceedings or
decisions of the Board of Directors regarding their compensation.
14
<PAGE> 16
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative stockholder
return on the Company's Common Stock with the cumulative total return of the S&P
Communications-Equipment/Manufacturer Index and the Nasdaq Stock Market -- US
Index for the period commencing December 31, 1992 and ended on December 31,
1997.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG STM WIRELESS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P COMMUNICATIONS EQUIPMENT INDEX
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------------------
12/92 12/93 12/94 12/95 12/96 12/97
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
STM Wireless, Inc. 100.00 65.52 135.63 177.01 64.37 78.16
NASDAQ Stock Market (U.S.) 100.00 114.79 112.21 158.69 195.18 239.48
S & P Communications Equipment 100.00 92.20 109.74 164.24 192.36 250.62
</TABLE>
15
<PAGE> 17
PROPOSAL TWO
RATIFICATION OF THE AMENDMENT TO THE 1992 PLAN TO INCREASE THE TOTAL
NUMBER OF SHARES ISSUABLE THEREUNDER
INTRODUCTION
The Board of Directors adopted and the stockholders of the Company
originally approved the Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan -- 1992 (the "1992 Plan") in January 1992. The
Board of Directors amended the 1992 Plan on May 7, 1998 to increase the
aggregate authorized number of shares of Common Stock issuable thereunder by
900,000 shares and to reserve the additional shares for issuance under the 1992
Plan, bringing the total number of shares of Common Stock subject to the 1992
Plan to 1,750,000.
WHILE THE AMENDMENT TO THE 1992 PLAN WAS MADE EFFECTIVE IMMEDIATELY AND
IS NOT CONDITIONED ON ITS APPROVAL BY THE STOCKHOLDERS OF THE COMPANY, THE
COMPANY IS REQUESTING RATIFICATION OF THE AMENDMENT BY THE STOCKHOLDERS OF THE
COMPANY. IF THE STOCKHOLDERS OF THE COMPANY DO NOT RATIFY THE AMENDMENT TO THE
1992 PLAN WITHIN ONE YEAR FROM THE DATE OF THE AMENDMENT, THE 900,000 NEW SHARES
ISSUABLE UNDER THE 1992 PLAN WILL NOT BE ELIGIBLE FOR INCENTIVE STOCK OPTION
TREATMENT, BUT RATHER, WILL BE TREATED AS NONQUALIFIED STOCK options.
Ratification of the amendment to the 1992 Plan will require the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock present
or represented at the annual meeting of stockholders and entitled to vote
thereat. Proxies solicited by management for which no specific direction is
included will be voted FOR the ratification of the amendment of the 1992 Plan to
add 900,000 shares of Common Stock to the pool of shares reserved for issuance
thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
AMENDMENT TO THE 1992 PLAN.
The principal features of the 1992 Plan are summarized below, but the
summary is qualified in its entirety by reference to the 1992 Plan itself.
Copies of the 1992 Plan can be obtained by writing to the Secretary, STM
Wireless, Inc., One Mauchly, Irvine, California 92618.
1992 PLAN TERMS
Prior to the amendment of the 1992 Plan, the 1992 Plan provided for the
grant by the Company of options and/or rights to purchase up to an aggregate of
850,000 shares of Common Stock of the Company to its officers, directors, key
employees, consultants and other business persons having important business
relationships with the Company, or any parent or subsidiary corporation of the
Company. As of the Record Date, approximately ten (10) executive officers and
directors of the Company and approximately 140 other employees were eligible to
participate. The purpose of the 1992 Plan is to enable the Company to attract
and retain persons of ability as employees, officers, directors and consultants
and to motivate such persons by providing them with an equity participation in
the Company. The 1992 Plan expires in January 2002 unless terminated earlier by
the Board of Directors.
The 1992 Plan provides that it is to be administered by the Board of
Directors or a committee appointed by the Board. Presently, the Company's
Compensation and Stock Option Committee administers the 1992 Plan (the
"Administrator"). The Administrator has broad discretion to determine the
persons entitled to receive options and/or rights to purchase under the 1992
Plan, the terms and conditions on which options and/or rights to purchase are
granted and the number of shares subject thereto. The Administrator also has
discretion to determine the nature of the consideration to be paid upon the
exercise of an option and/or right to purchase granted under the 1992 Plan. Such
consideration may generally consist of cash or shares of Common Stock of the
Company or, in the case of rights to purchase, a promissory note.
16
<PAGE> 18
Options granted under the 1992 Plan may be either "incentive stock
options," within the meaning of Section 422 of the Internal Revenue Code, or
"nonqualified stock options," as determined by the Administrator. Options may be
granted under the 1992 Plan for terms of up to ten (10) years. The exercise
price of options and the purchase price of rights to purchase must be at least
equal to the fair market value of the Common Stock of the Company as of the date
of grant. No optionee may be granted incentive stock options under the 1992 Plan
to the extent that the aggregate fair market value (determined as of the date of
grant) of the shares of Common Stock with respect to which incentive options are
exercisable for the first time by the optionee during any calendar year would
exceed $100,000. Options granted under the 1992 Plan to officers, employees,
directors, or consultants of the Company generally may be exercised only while
the optionee is employed or retained by the Company or within three months to
one year after termination for any reason, with the exact date of expiration to
be determined by the Administrator.
Upon the occurrence of a consolidation or merger in which the Company is
not the surviving corporation, the sale of substantially all of the Company's
assets and certain other similar events (a "Change-of-Control Event"), the 1992
Plan provides that the 1992 Plan itself and all outstanding options shall
terminate unless provision is made in writing for the continuance of the 1992
Plan and for the assumption of outstanding options and rights to purchase
previously granted. If provision for the assumption of outstanding options and
rights to purchase is not made in connection with a Change-of-Control Event,
then notice shall be provided to all participants and all outstanding options
and rights to purchase shall be accelerated. In the event that the outstanding
shares of Common Stock while the 1992 Plan is in effect are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of merger, consolidation or
reorganization in which the Company is the surviving corporation, or of a
recapitalization, stock split, combination of shares, reclassification,
reincorporation, stock dividend or of another change in the corporate structure
of the Company, appropriate adjustments will be made by the Board of Directors
to the aggregate number and kind of shares subject to the 1992 Plan and the
number and kind of shares and the price per share subject to outstanding
incentive options, nonqualified options and rights to purchase in order to
preserve, but not to increase, the benefits to persons then holding incentive
options, nonqualified options or rights to purchase.
Payment for shares upon exercise of an option or upon issuance of
restricted stock must be made in full at the time of exercise, or issuance with
respect to restricted stock. The form of consideration payable upon exercise of
an option or purchase of restricted stock shall, at the discretion of the
Administrator, be (i) by tender of United States dollars in cash, check or bank
draft; (ii) subject to any legal restriction against the Company's acquisition
or purchase of the Company's shares of Common Stock, shares of Common Stock,
which shall be deemed to have a value equal to the aggregate fair market value
of such shares determined on the date of exercise or purchase, (iii) by the
issuance of a promissory note acceptable to the Administrator; or (iv) pursuant
to other methods described in the 1992 Plan.
As of the Record Date, options to purchase an aggregate of 1,213,950
shares of Common Stock (net of canceled options) have been granted under the
1992 Plan to the following persons or groups: (i) Emil Youssefzadeh, 10,000
shares; (ii) Jack Acker, 100,000 shares; (iii) Mohammad Farzin, 202,000 shares;
(iv) Frank Connors, 15,000 shares; (v) Michael Lindsay, 100,000 shares; (vi)
Joseph Wallace, 25,000 shares; (v) all current executive officers (as a group),
452,000 shares; and (vi) all other employees who are not executive officers (as
a group), 761,950 shares. On June 8, 1997, (A) Jack Acker was granted 100,000
options under the 1992 Plan, of which 44,000 options are intended to qualify as
incentive stock options and (B) Mohammad Farzin was granted 100,000 options
under the 1992 Plan, of which 44,000 options are intended to qualify as
incentive stock options. As described above, If the stockholders of the Company
do not ratify the amendment to the 1992 Plan within one year from the date of
the amendment, the 900,000 new shares issuable under the 1992 Plan will not be
eligible for Incentive Stock Option treatment, but rather, will be treated as
Nonqualified Stock Options. Accordingly, unless the stockholders of the Company
ratify the amendment to the 1992 Plan, the 44,000 options granted to each of
Messrs. Acker and Farzin will receive nonqualified tax treatment, rather than
incentive stock option tax treatment.
17
<PAGE> 19
FEDERAL TAX CONSEQUENCES
The following is a brief summary of the tax effects under the Code that
may accrue to participants in the 1992 Plan.
Incentive Stock Options. No taxable income will be recognized by an
optionee under the 1992 Plan upon either the grant or the exercise of an
incentive stock option; provided the optionee holds the stock for at least two
years after the grant of the options and one year after the exercise of the
option. If an incentive stock option is exercised more than three months after
termination, except for death or disability, it will be treated as the exercise
of a nonqualified stock option as described below. The Company receives no tax
deduction from the exercise of incentive stock options granted unless the
optionee fails to meet the holding requirements set forth above. Any gain or
loss as a result of a sale or other disposition of shares acquired upon the
exercise of an incentive stock option will be treated as capital gain.
Nonqualified Stock Options. No taxable income is recognized by an
optionee upon the grant of a nonqualified stock option. Upon exercise, however,
the optionee will recognize ordinary income in the amount by which the fair
market value of the shares purchased, on the date of exercise, exceeds the
exercise price paid for such shares. The income recognized by the optionee will
be subject to income tax withholding by the Company out of the optionee's
current compensation. If such compensation is insufficient to pay the taxes due,
the optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the optionee,
provided the applicable withholding requirements are satisfied.
Restricted Stock. The receipt of restricted stock will not result in a
taxable event until the applicable period(s) of restriction lapse, unless the
participant makes an election under Section 83(b) of the Code to be taxed as of
the date of grant. If a Section 83(b) election is made, the participant will
recognize ordinary income in an amount equal to the excess of the fair market
value of such shares on the date of grant over the amount paid for such shares.
If no amount is paid for such shares, the participant will recognize ordinary
income in an amount equal to the fair market value of such shares on the date of
the grant. Even if the amount paid and the fair market value of the shares are
the same (in which case there would be no ordinary income), a Section 83(b)
election must be made to avoid deferral of the date ordinary income is
recognized. If no Section 83(b) election is made, a taxable event will occur on
each date the participant's ownership rights vest (i.e., when the period(s) of
restriction lapse) as to the number of shares that vest on that date, and the
holding period for long-term capital gain purposes will not commence until the
date the shares vest. The participant will recognize ordinary income on each
date shares vest in an amount equal to the excess of the fair market value of
such shares on that date over the amount paid for such shares.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KMPG Peat Marwick LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 1998, and recommends that stockholders vote for ratification
of such appointment. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection.
KPMG Peat Marwick LLP has audited the Company's financial statements
annually since fiscal year 1991. Its representatives 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.
18
<PAGE> 20
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the 1999
Annual Meeting of Stockholders and presentation in the Company's Proxy Statement
with respect to such meeting should arrange for such proposal to be delivered to
the Company at its principal place of business no later than November 30, 1998
in order to be considered for inclusion in the Company's proxy statement
relating to that meeting. Matters pertaining to such proposals, including the
number and length thereof, eligibility of persons entitled to have such
proposals included and other aspects are regulated by the Securities Exchange
Act of 1934, Rules and Regulations of the Securities and Exchange Commission and
other laws and regulations to which interested persons should refer.
On May 21, 1998 the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a stockholder proposal
which is not addressed in the Company's proxy statement. The new amendment
provides that if a proponent of a proposal fails to notify the Company at least
45 days prior to the month and day of mailing of the prior year's proxy
statement, then the Company will be allowed to use its discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement.
With respect to the Company's 1999 Annual Meeting of Stockholders, if
the Company is not provided notice of a stockholder proposal, which the
stockholder has not previously sought to include in the Company's proxy
statement, by February 15, 1999, the Company will be allowed to use its
discretionary voting authority as outlined above.
OTHER MATTERS
Management is not aware of any other matters to come before the meeting.
If any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
/s/ EMIL YOUSSEFZADEH
-------------------------------------
Emil Youssefzadeh
Chief Executive Officer and Secretary
August 17, 1998
The Annual Report to Stockholders of the Company for the fiscal year
ended December 31, 1997 is being mailed concurrently with this Proxy Statement
to all stockholders of record as of August 14, 1998. The Annual Report is not to
be regarded as proxy soliciting material or as a communication by means of which
any solicitation is to be made.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1997 WILL BE
PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, STM WIRELESS, INC., ONE MAUCHLY, IRVINE, CALIFORNIA 92618.
19
<PAGE> 21
STM WIRELESS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING -- SEPTEMBER 17, 1998
The undersigned shareholder of STM Wireless, Inc. (the "Company")
acknowledges receipt of the Notice of the Annual Meeting of Stockholders and
Proxy Statement, each dated August 17, 1998, and the undersigned revokes all
prior proxies and appoints Emil Youssefzadeh, Frank Connors and Joe Wallace, and
each of them, proxies for the undersigned to vote all shares of Common Stock of
the Company which the undersigned would be entitled to vote at the Annual
Meeting of Stockholders to be held at The Sutton Place Hotel, 4500 MacArthur
Boulevard, Newport Beach, California at 10:00 a.m. on September 17, 1998 and any
postponement or adjournment thereof, and instructs said proxies to vote as
follows:
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF SEVEN DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
Emil Youssefzadeh, Jack F. Acker, Frank T. Connors, Chan Kien Sng, Dr. Ernest U.
Gambaro, Lawrence D. Denihan, Jr. and Guy W. Numann
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below)
- --------------------------------------------------------------------------------
2. Ratification of amendment to Company's Incentive Stock Option, Nonqualified
Stock Option and Restricted Stock Purchase Plan -- 1992:
[ ] FOR ratification [ ] AGAINST ratification
3. Ratification of appointment of KPMG Peat Marwick as independent auditors of
the Company for the fiscal year ending December 31, 1998:
[ ] FOR ratification [ ] AGAINST ratification
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE> 22
(CONTINUED FROM REVERSE SIDE)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO
SPECIFICATIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE SEVEN
NOMINEES FOR DIRECTOR.
Dated this ____ day of ________ , 1998
--------------------------------------
Signature of Stockholder
--------------------------------------
Signature of Stockholder
Please sign exactly as your name or
names appear hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If shares are held
jointly, each holder should sign.
PLEASE MARK, SIGN, DATE AND MAIL THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
