SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
XOX Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
XOX CORPORATION
7640 WEST 78TH STREET
BLOOMINGTON, MINNESOTA 55439
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 2, 2000
TO THE SHAREHOLDERS OF XOX CORPORATION:
The annual meeting of shareholders (the "Annual Meeting") of XOX
Corporation, a Delaware Corporation (the "Company"), will be held on Tuesday,
May 2, 2000, at 3:30 p.m. local time, at the Minneapolis Club, 729 Second Ave.
S., Minneapolis, Minnesota for the following purposes:
1) To elect members to the Board of Directors;
2) To elect Grant Thornton, LLP as the Company's independent
auditor for the fiscal year ending December 31, 2000; and
3) To act upon such other business as may properly come before
the Annual Meeting, or any adjournment or adjournments
thereof.
Shareholders of record at the close of business on March 24, 2000 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or
adjournments thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete statement of matters to be considered at the Annual
Meeting. A copy of the Company's Annual Report for the fiscal year ended
December 31, 1999 also accompanies this Notice.
Your are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend, please sign, date and return your Proxy in the reply
envelope provided.
By Order of the Board of Directors,
/s/ Mark O. Senn
Mark O. Senn
President & COO
Minneapolis, Minnesota
Date: April 5, 2000
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
XOX CORPORATION
7640 WEST 78TH STREET
BLOOMINGTON, MINNESOTA 55439
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 2000 AT 3:30 P.M.
BEVERAGE AND APPETIZERS WILL BE SERVED AFTER MEETING
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of XOX
Corporation, a Delaware corporation (the "Company"), for use at the annual
meeting of stockholders to be held on May 2, 2000 (the "Annual Meeting"), at
3:30 p.m. local time, at the Minneapolis Club, 729 Second Ave. S., Minneapolis,
Minnesota or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
Solicitation of proxies may be made in person or by mail, telephone or facsimile
transmission by directors, officers and regular employees of the Company. The
directors, officers and regular employees of the Company will not receive any
additional compensation for such activities. The Company may also request
banking institutions, brokerage firms, custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of common stock of the
Company held of record by such persons, and the Company will reimburse the
reasonable forwarding expenses. The cost of this solicitation of proxies will be
paid by the Company. This Proxy Statement and the enclosed form of proxy are
furnished in connection with the proxy solicitation and are first being mailed
to stockholders on or about April 5, 2000.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999, is enclosed herewith. THE COMPANY WILL FURNISH WITHOUT CHARGE
TO ANY PERSON WHOSE PROXY IS BEING SOLICITED ADDITIONAL COPIES OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB, WITHOUT EXHIBITS, FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING FINANCIAL STATEMENTS INCLUDED THEREIN, UPON WRITTEN REQUEST TO XOX
CORPORATION, 7640 WEST 78TH STREET, BLOOMINGTON, MINNESOTA 55439, ATTENTION:
MARK SENN. THE COMPANY WILL FURNISH THE EXHIBITS TO SUCH FORM 10-KSB UPON
WRITTEN REQUEST TO THE ABOVE ADDRESS AND THE PAYMENT OF A FEE COVERING THE
COMPANY'S REASONABLE EXPENSES IN FURNISHING SUCH EXHIBITS.
<PAGE>
REVOCATION OF PROXY
Any stockholder returning the accompanying proxy may revoke such proxy at any
time prior to its exercise (a) by giving written notice to the Company of such
revocation, (b) by voting in person at the meeting, or (c) by delivering to the
Company, a properly signed proxy bearing a later date. Attendance at the Annual
Meeting will not in itself constitute revocation of a proxy. Any written notice
or proxy revoking a proxy should be sent to XOX Corporation, 7640 West 78th
Street, Bloomington, Minnesota 55439, Attention: Mark Senn.
RECORD DATE AND VOTING
The voting securities of the Company are shares of its common stock, $.25 par
value per share ("Common Stock"), each share of which entitles the holder
thereof to one vote on each matter to come before the Annual Meeting or any
adjournment thereof.
At the close of business on March 24, 2000 (the "Record Date"), the Company had
issued and outstanding 3,094,735 shares of Common Stock held of record by
approximately 178 registered holders on behalf of approximately 716 beneficial
owners. Only holders of record of Common Stock are entitled to vote on matters
that come before the Annual Meeting or any adjournment thereof. As provided in
the Certificate of Incorporation of the Company, there is no right of cumulative
voting. All matters being voted upon by the stockholders require a majority vote
of the shares of Common Stock represented at the Annual Meeting either in person
or by proxy.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
election inspectors appointed for the meeting and will determine whether or not
a quorum is present. The presence in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting or any
adjournment thereof. If a quorum is not present or represented at the meeting,
the stockholders entitled to vote, present in person, or represented by proxy,
have the power to adjourn the meeting from time to time, without notice other
than an announcement at the meeting, until a quorum is present or represented.
At any such reconvened meeting at which a quorum is present or represented, any
business may be transacted that might have been transacted at the meeting as
originally notified.
Shares represented by proxies marked "Abstained" will be considered present at
the meeting for purposes of determining a quorum and for purposes of calculating
the total number of votes cast, but will not be considered to have been voted in
favor of such matter. If an executed proxy is returned by a broker holding
shares in street name which indicates that the broker does not have
discretionary authority to vote on one or more matters as to certain shares,
such shares will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be voted at the meeting for
purposes of calculating the vote with respect to such matter.
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<PAGE>
ACTION TO BE TAKEN UNDER THE PROXY
Shares represented by properly executed and returned proxies will be voted as
specified on the proxies. Shares represented by proxies where no specification
has been made will be voted (i) FOR, PROPOSAL ONE - - the election of the two
people named in this Proxy Statement as nominees for election to the Board of
Directors, (ii) FOR, PROPOSAL TWO - - the appointment of Grant Thornton LLP as
the independent auditors of the Company for the current fiscal year; and (iii)
in the discretion of the proxy holders, as to any other business that properly
comes before the meeting. Stockholders may designate a person or persons other
than those named in the enclosed proxy to vote their shares at the Annual
Meeting or any adjournment thereof.
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Amended and Restated Bylaws provide that the number of directors that
constitute the Board of Directors shall be as least one (1). The Board of
Directors currently has six (6) members consisting of Steven B. Liefschultz,
Bernard J. Reeck, Peter Dahl, Craig Gagnon, Layton Kinney and Brian Zelickson.
The Board is divided into three classes, with each class elected in a different
year for a term of three years. Bernard Reeck and Craig Gagnon have been
nominated for election to the Board of Directors at the 2000 Annual Meeting and
have consented to serve if elected. Nominees may be contacted at the offices of
the Company. The Company knows of no reason why the listed nominee would be
unavailable to serve.
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
WHOSE TERM WILL EXPIRE IN 2003
Bernard Reeck (71) Mr. Reeck has been a director of
the Company since 1997. Mr.
Reeck's biography is included
below under "Directors."
Craig Gagnon (59) Mr. Gagnon has been a director of
the Company since 1998. Mr.
Gagnon's biography is included
below under "Directors."
In case any nominee should become unavailable for election for any
reason, the persons named on the enclosed proxy card may vote for a substitute
nominee as the Board of Directors may propose.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
ITS NOMINEE TO THE BOARD OF DIRECTORS.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of February 18, 2000 the number of shares of
the Company's Common Stock beneficially owned by: (i) each director of the
Company; (ii) each of the Named Executive Officers; (iii) each person known by
the Company to beneficially own more than 5% of the outstanding shares of Common
Stock; and (iv) all executive officers and directors as a group.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNER(1) OUTSTANDING SHARES
- ---------------- ------------------- ------------------
Minnesota Investment Network Corp. 183,293(2) 5%
111 Third Avenue South
Suite 420
Minneapolis, Minnesota 55401
Steven B. Liefschultz 410,500(3) 13%
7630 West 78th Street
Bloomington, Minnesota 55401
Bernard J. Reeck 243,628(4) 8%
1232 Duluth Court
St. Paul, Minnesota 55109
Peter Dahl 7,500(5) *
BankWindsor
740 Marquette Ave
IDS Center
Minneapolis, Minnesota 55402
Craig Gagnon 22,500(6) *
Oppenheimer Wolff & Donnelly
45 South 7th Street
Suite 3400
Minneapolis, Minnesota 55402
Layton Kinney None owned 0
14458 Shady Beach Trail
Prior Lake, MN 55372
Brian D. Zelickson None owned 0
4100 West 50th Street
Edina, MN 55424
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Mark O. Senn 50,000(7) 1%
7640 W. 78th Street
Bloomington, MN 55439
Robert J. Fink 198,185(8) 6.4%
1850 Arvin Drive
Mendota Heights, MN 55118
Total Executive Officers and Directors 1,115,606(9) 36%
as a group (six persons & affiliates)
- -----------------
* Less than 1%.
(1) Shares of Common Stock subject to options, warrants, or convertible debt
securities currently exercisable or exercisable within 60 days after
date of this form are deemed to be outstanding for purposes of computing
the percentage of shares beneficially owned by the person holding such
options, warrants, or convertible debt securities but are not deemed to
be outstanding for purposes of computing such percentage for any other
person. Except as indicated by footnote, each person or group identified
has sole voting and investment powers with respect to all shares of
Common Stock shown as beneficially owned by them.
(2) Includes 28,500 options currently exercisable.
(3) Includes 30,600 warrants issuable upon exercise of warrants and 172,500
options currently exercisable.
(4) Includes 28,000 warrants issuable upon exercise of warrants and 37,500
options currently exercisable.
(5) Includes 7,500 options currently exercisable.
(6) Includes 22,500 options currently exercisable.
(7) Includes 50,000 options currently exercisable.
(8) Shares held.
(9) Includes securities held by Minnesota Investment Network and Mark Senn
who is the Company's President & COO.
DIRECTORS
Director
Name Age Position Since
- ---- --- -------- --------
Steven B. Liefschultz 51 Chairman of the Board of Directors(2)(3) 1997
Bernard J. Reeck 71 Director(2)(3) 1997
Craig Gagnon 59 Director(1)(2)(3)(4) 1998
Peter Dahl 32 Director(1) 1998
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Layton Kinney 66 Director(1) 1999
Brian D. Zelickson 39 Director 2000
Mark O. Senn 51 President and Chief Operating Officer
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Executive Committee
(4) Compliance Committee
STEVEN B. LIEFSCHULTZ has served as Chairman of the Board of Directors since
November 1997. Mr. Liefschultz is Chairman of the Remada Company, a real estate
development and management company in Minnesota. Prior to this, Mr. Liefschultz
practiced law for 12 years, specializing in commercial litigation, contract
negotiation and commercial real estate. He has extensive experience in the
development, ownership, financing and management of income real estate and other
areas of investment. Mr. Liefschultz received his B.A. and law degree from the
University of Minnesota.
BERNARD J. REECK is a director of the Company. Mr. Reeck is currently the
president of Group Services Company, which has interests in, among other things,
in the oil and gas industry and the Cellars Wines & Spirits Inc., a chain of
retail liquor stores in Minnesota. Mr. Reeck has also been involved in numerous
real estate transactions since 1975. Mr. Reeck has a law degree from the
University of North Dakota and is a retired managing editor of West Publishing
Company.
CRAIG GAGNON is a director of the Company. Mr. Gagnon is currently a partner
with Oppenheimer Wolff & Donnelly in Minneapolis, Minnesota. Mr. Gagnon's
practice is concentrated in the areas of securities fraud, accounting
malpractice and legal malpractice defense work. Mr. Gagnon chairs the Board of
Trustees for William Mitchell College of Law, is a Fellow in the American
College of Trial Lawyers, and is a past president of the Metropolitan Breakfast
Club. Mr. Gagnon also acts as a general partner in several commercial real
estate partnerships located in Minnesota. Mr. Gagnon received his Bachelor of
Arts degree from the University of Minnesota and his Juris Doctor degree from
William Mitchell College of Law.
PETER DAHL is a director of the Company. Mr. Dahl currently is the Executive
Vice President and Chief Operating Officer for BankWindsor. He oversees the
commercial and private lending functions of the bank as well as the overall
asset growth and performance of the loan portfolio. His areas of expertise
involve small business, mezzanine and real estate finance, which enhance his
ability to cultivate relationships with entrepreneurs and their businesses. Mr.
Dahl works closely with younger companies to establish the credit facilities
they need to help them grow.
6
<PAGE>
LAYTON G. KINNEY is a director of the Company. Mr. Kinney has been an
independent business consultant since 1991. From 1985 through 1991, he was Vice
President of the Minnesota Cooperation Office, a private enterprise consulting
organization specializing in entrepreneurial start-up companies. From 1960 to
1985, Mr. Kinney was employed by Control Data Corporation in various management
positions including Corporate Vice President, Division General Manager and
Subsidiary President. Mr. Kinney also serves on the Boards of several private
corporations.
BRIAN D. ZELICKSON is a director of the Company. Mr. Zelickson is currently an
Assistant Professor and the Electron Microscopy Laboratory Director in the
Department of Dermatology at theUniversity of Minnesota. Mr. Zelickson completed
his undergraduate studies at the University of Colorado, earning a Bachelor of
Arts in Molecular, Cellular and Development biology, with honors, Phi Beta
Kappa. Mr. Zelickson attended the Mayo Medical School in Rochester, Minnesota
and completed his residency in Dermatology at the Mayo Clinic Graduate School of
Medicine, Rochester, Minnesota.
MARK O. SENN was promoted from Executive Vice President and Chief Operating
Officer to President and Chief Operating Officer on June 1, 1999. Mr. Senn has
20 years of operations and management experience in both the private and public
sector. His experience includes positions as the Vice President and General
Manager of Oxford Properties, Inc. and President of Marcus Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors currently has four committees - an Executive Committee,
an Audit Committee, a Compliance Committee and a Compensation Committee. The
recently created Executive Committee takes an active role in the operation and
strategic direction of the Company. It is authorized and directed to take any
and all necessary and appropriate action of the Company including, but not
limited to, forming and appointing members to an advisory committee, determining
the compensation of any such advisory committee, conducting executive searches,
filling employment positions with the Company, hiring organizational
consultants, conducting directorial searches and recommending candidates to the
Board of Directors and negotiating contracts with existing and potential
customers of the Company. The Executive Committee as a whole, met at least 5
times and numerous other times with only a majority, during 1999. The Audit
Committee reviews the results and scope of the audit and other services provided
by the Company's independent auditors, as well as the Company's accounting
principles and its system of internal controls, and reports the results of its
review to the Board of Directors. The Audit Committee met 2 times during 1999.
The Compliance Committee reviews all desired stock transactions by the Company's
Directors and/or Officers. The Compliance Committee did not meet during 1999.
The Compensation Committee makes recommendations concerning executive
compensation and incentive compensation for employees of the Company, subject to
ratification by the Board of Directors. The Compensation Committee DID NOT meet
during 1999.
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<PAGE>
1999 MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held 7 formal meetings during 1999. In addition, the
Board of Directors frequently met on a casual basis and conducted its business
through written actions in lieu of meetings. No incumbent director attended
fewer than 75% of the aggregate of the total number of meetings of the Board of
Directors or meetings of the Executive, Audit, Nominating or Compensation
Committees on which the incumbent director served.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and all persons who beneficially
own more than 10% of the outstanding shares of the Company's Common Stock to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of the Company's Common Stock. Directors,
executive officers and greater than 10% beneficial owners are also required to
furnish the Company with copies of all Section 16(a) forms that they file.
Mr. Steven Liefschultz, Chairman of the Board, on May 10, 1999, filed a Form 4
to report grants of stock options for serving as Chairman of the Board, member
of the Executive Committee and as a Director.
Mr. Bernard Reeck, Director, on May 10, 1999, filed a Form 4 to report grants of
stock options for serving as a member of the Executive Committee and as a
Director.
Mr. Craig Gagnon, Director, on May 10, 1999, filed a Form 4 to report grants of
stock options for serving as a member of the Executive Committee and as a
Director.
Mr. Peter Dahl, Director, on May 19, 1999, filed a Form 4 to report a grant of
stock options for serving as a Director.
Mr. Bernard Reeck, Director, on September 8, 1999, filed a Form 4 to report a
transaction.
Mr. Bernard Reeck, Director, on November 19, 1999, filed a Form 4 to report a
transaction.
Mr. Mark Senn, President & COO, on February 16, 2000, filed a Form 5 to report
options granted as part of compensation.
Mr. Robert Kanne, Interim CFO, on February 15, 2000, filed a Form 5 to report
options granted as part of compensation.
Except as indicated above, and based solely upon a review of the copies of such
reports furnished to the Company, the Company believes that all directors and
greater than 10% owners complied with all Section 16(a) filing requirements
applicable to them during fiscal 1999.
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<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table provides certain summary information for the years
indicated, ending December 31, concerning executive compensation received from
the Company by each person who was an executive offer of the Company (the "Named
Executive Officers") and whose total compensation for fiscal 1999 exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES
FISCAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- ---------------------------------- ------ -------- ------- ------------
<S> <C> <C> <C> <C>
Mark O. Senn (1) 1999 $81,250 None 50,000
(President and Interim Chief 1998 $29,000 2,400 50,000
Operating Officer)
Pradeep Sinha (2) 1999 $40,600 None None
(Chief Executive Officer and 1998 $112,000 None 60,000
Chief Technical Officer)
</TABLE>
(1) Mr. Senn served as Executive Vice President and Chief Operating Officer from
May 1998 to May 1999. Mr. Senn was elected to serve as President & Chief
Operating Officer effective as of June 1, 1999 and continues to serve in
that capacity.
(2) Dr. Sinha served as Interim Chief Executive Officer from August 1997 to
October 1997. Dr. Sinha was elected to serve as Chief Executive Officer as
of June 4, 1998, and served in that capacity until his resignation effective
March 26, 1999.
STOCK OPTION GRANTS DURING FISCAL YEAR 1999
The following table provides information regarding stock options granted during
fiscal year 1999 to the Named Executive Officers in the Summary Compensation
Table.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL OPTIONS EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED GRANTED IN FISCAL YEAR PER SHARE DATE
---- --------------- ---------------------- -------------- ----------
<S> <C> <C> <C> <C>
Mark O. Senn (1) 50,000 25% $1.37 April 19, 2009
</TABLE>
(1) Mr. Senn may exercise the subject non-qualified stock options effective May
31, 2000.
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<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE (1) OF UNEXERCISED
NUMBER OF AT DECEMBER 31, 1999 OPTIONS AT DECEMBER 31, 1999
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Pradeep Sinha 0 0 15,000 0 No Value No Value
Mark O. Senn 0 0 50,000 50,000 53,500 53,500
</TABLE>
(1) Value is the difference between the exercise price of the option and the
closing price of the Common Stock on December 31, 1999 of $2.44.
EMPLOYMENT AGREEMENTS
The Company has a written agreement with Mark O. Senn regarding his employment
as President and Chief Operating Officer. This written agreement is effective
from June 1, 1999 through May 31, 2000.
DIRECTOR COMPENSATION
The Company has a standard arrangement outlining the compensation to be given to
its Board of Directors. Members of the Board (or the entities with which such
directors are affiliated) do not receive any cash compensation for serving on
the Board, except for reimbursement for expenses incurred in attending meetings,
but rather receive a non-qualified stock option to purchase 7,500 shares of the
Company's Common Stock for each year of service on the Board. In addition,
during fiscal year 1999, members of the Company's Executive Committee received
stock options to purchase 15,000 shares of Common Stock at 100% of the Fair
Market Value of each share at the date of grant. Each option granted to
Directors on the Executive Committee vests one year from the date of grant,
provided that on such anniversary date the Optionee has served on such Executive
Committee for one year. In addition, in fiscal year 1997, Steven Liefschultz was
granted an option to purchase 100,000 shares of Common Stock with an exercise
price of $1.70 per share which was not less then 85% of the Fair Market Value of
the Common Stock on date of grant. This grant was not made pursuant to the
Company's 1996 Omnibus Stock Plan, but rather was made in consideration of the
additional contemplated work to be performed by Mr. Liefschultz. This option
vests as follows: 25% of the shares vested immediately upon grant; 50% of the
shares vested in equal installments on November 30, 1997, December 31, 1997, and
January 31, 1998; and the remaining
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25% of the shares vest upon the occurrence of certain contingencies related to
either the amount of time Mr. Liefschultz works for the Company or the
occurrence of various business and financial transactions.
1996 OMNIBUS STOCK PLAN
The Board of Directors of the Company adopted, and the Company's stockholders
approved, the 1996 Omnibus Stock Plan (the "Stock Plan") effective June 14,
1996. The Stock Plan supersedes both the 1987 Incentive Stock Option Plan and
the 1987 Non-Qualified Stock Option Plan of the Company and, while options
previously granted thereunder remain exercisable, no new options will be granted
under either of the superseded plans. The purpose of the Stock Plan is to
promote the interests of the Company and its stockholders by providing personnel
of the Company with stronger incentive to put forth maximum effort for the
continued success and growth of the Company and to aid the Company in attracting
and retaining personnel of outstanding ability. The Company reserved a total of
500,000 shares of Common Stock for issuance under the Stock Plan. At the Annual
Shareholder Meeting held on June 4, 1998, Stockholders approved an amendment to
the Stock Plan to add 500,000 shares of the Company's common stock to be
reserved for issuance under the Stock Plan (so that a total of 1,000,000 shares
of common stock will have been reserved for issuance under the Plan) and to
eliminate the formula provisions under the Stock Plan. As of December 31, 1999,
417,083 Shares of Common Stock are available for issuance under the Stock Plan.
The Plan is administered by a committee of three or more non-employee directors
of the Company (the "Committee") appointed by the Board. The Committee has the
responsibility to interpret the Stock Plan and all determinations made by it are
final and conclusive, subject in all cases to the provisions of the Stock Plan
and the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Code"). The Committee has complete discretion to select the participants
and to establish the terms and conditions of each award. Outside Directors are
eligible to receive only nonqualified stock options under the Stock Plan.
Employees of the Company are eligible to receive incentive stock options (as
that term is defined in Section 422 of the Code), nonqualified stock options,
reload options, stock appreciation rights and restricted stock under the Stock
Plan. Other key individuals, who are not employees, may also be granted
nonqualified options under the Stock Plan. Common Stock of the Company granted
to recipients may be unrestricted or may contain such restrictions, including
provisions requiring forfeiture and imposing restrictions upon stock transfer.
Unless forfeited, the recipient of restricted Common Stock will have all other
rights of a stockholder including, without limitation, voting and dividend
rights. The value of a stock appreciation right granted to a recipient is
determined by the appreciation in Common Stock of the Company, subject to any
limitations upon the amount or percentage of total appreciation that the
Committee may determine at the time the right is granted. Concurrent with the
award of any options, the Committee also may authorize reload options to
purchase for cash or shares a number of shares of Common Stock.
The Stock Plan requires that the option price of incentive stock options granted
under the Stock Plan shall be no less than 100% of the fair market value of the
Company's Common Stock as of the date the option is granted and that the term of
an incentive stock option may not exceed ten years. The Stock Plan provides that
nonqualified stock options shall have an option price not less than 85% of
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the fair market value of the Company's Common Stock on the date of grant. The
exercise price of any incentive stock option granted to an employee who owns
capital stock representing more than 10% of the voting rights of the Company's
outstanding capital stock on the date of grant must be equal to at least 110% of
the fair market value on the date of grant and shall expire five years from the
date of grant. The Committee sets the term during which any nonqualified options
may be exercised and determines whether such options are exercisable
immediately, in stages, or otherwise. All options granted under the Stock Plan
are nontransferable and are subject to various other conditions and
restrictions. Shares of Common Stock subject to canceled options are available
for subsequently granted options under the Stock Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As noted in the chart following the descriptions below, each of the following
transactions involved parties related to the Company.
In February 1993, the Company issued a series of variable repayment debentures
(the "VRDs") as part of an exchange of its then current debt. These VRDs
included: Collateralized VRDs in the aggregate principal amount of $150,352;
Directors VRDs in the aggregate principal amount of $27,767; Employee
Interest-Bearing Notes in the aggregate principal amount of $282,266; Employee
Non-Interest Bearing Notes in the aggregate principal amount of $276,866; and
the SAS IP VRD in the principal amount of $279,657. In connection with a
Subordination and Deferral Agreement, the holders of the VRDs held warrants to
purchase 15,302 shares of Common Stock at a purchase price of $1.50 per share.
Of these warrants, 603 were held by officers and major stockholders of the
Company.
With the exception of the Employee Non-Interest Bearing Notes, which did not
bear interest, the VRDs did bear interest at a rate equal to the prime rate plus
two percent (2%). Interest was payable on a quarterly basis, and principal was
payable out of "adjusted after tax profits" as defined in the instruments
evidencing the debt. The Employee Non-Interest Bearing Notes were convertible
into Common Stock at a conversion rate of $2.50 per share at the option of the
note holder and were payable in eight (8) quarterly installments beginning 90
days after all of the VRDs had been repaid.
During the second quarter 1999, pursuant to an initiative by the Company's Board
of Directors, all Company long-term debt was repaid. Debt repayments in the
second quarter 1999 reduced interest expense to $0 from $12,794 for the
comparable quarter in 1998.
12
<PAGE>
The following table includes major stockholders, current and former directors
and officers of the Company who participated in the foregoing transactions as
follows:
Debt ($)
- --------------------------------------------------------------------------------
Employee Employee
Collater- Interest- Non-interest
alized Bearing Bearing 1996
VRDS Notes Notes Bridge
Thomas J. Lucas -- -- -- 25,000
Turhan F. Rahman 11,605 11,383 --
Pradeep Sinha 2,001 16,367 16,054 --
Totals 2,001 27,972 27,437 25,000
Equity (Shares of Common Stock)
- --------------------------------------------------------------------------------
Steven B. Liefschultz 50,000 PPM November 11, 1997
Bernard J. Reeck 50,000 PPM November 11, 1997
On December 2, 1997 the Company entered into a lease agreement (the "Lease")
with the Braemar Business Center, LLC regarding the leasing of the Company's
office space. Prior to December 31, 1997, Mr. Steven B. Liefschultz, Chairman of
the Company's Board of Directors, had a significant ownership interest in
Braemar Center, LLC. Currently, Mr. Liefschultz has no financial interest or
ownership in the Braemer Center.
The Company intends that all ongoing and future transactions between the Company
and its directors, officers, principal stockholders and affiliates of any such
persons will be on terms no less favorable to the Company than those that are
generally available from unaffiliated third parties, and will be ratified by a
majority of the independent outside members of the Company's Board of Directors
who do not have an interest in the transaction.
13
<PAGE>
PROPOSAL TWO:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
XOX Corporation, on May 18, 1999, dismissed Ernst & Young LLP as its independent
accountant. The decision was recommended by the Board of Directors of the
Company and was not the result of any matter of accounting principles or
practices, financial statement disclosures, or auditing scope or procedures. The
Board approved the appointment of Grant Thornton LLP to serve as independent
auditors to the Company for, the remainder of the fiscal year ending December
31, 1999.
The Board of Directors of the Company, has again selected Grant Thornton LLP to
serve as independent auditors to the Company for the fiscal year ending December
31, 2000 and recommends that the stockholders of the Company appoint Grant
Thornton LLP as the Company's independent auditors. Representatives of Grant
Thornton LLP are expected to be present at the Annual Meeting and will be given
an opportunity to make a statement if they so desire and to respond to
appropriate questions. If the appointment of Grant Thornton LLP is not ratified
by the stockholders, the Board of Directors is not obligated to appoint other
auditors, but the Board of Directors will give consideration to such unfavorable
vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be considered for inclusion in the Proxy
Statement for presentation at the 2001 Annual Meeting must be received by the
Secretary of the Company, 7640 West 78th Street, Bloomington, Minnesota, 55439,
no later than January 14, 2001. Stockholder proposals must be made in accordance
with the provisions of Rule 14a-8 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1734. It is suggested that the
proposal be submitted by certified mail, return receipt requested.
Stockholders who intend to present a proposal at the 2001 Annual Meeting without
including such proposal in the Company's Proxy Statement must provide notice to
the Company of such proposal no later than March 31, 2001. The Company reserves
the right to reject, rule out of order or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
14
<PAGE>
OTHER BUSINESS
The Company's management knows of no other business that will be presented for
consideration at the Annual Meeting other than that described in this Proxy
Statement. If any other business properly comes before the Annual Meeting, it is
intended that proxies solicited by the Board of Directors will be voted in
accordance with the judgment of the person voting the proxies. The Company also
requests that each stockholder pay special attention to the items addressed in
the cover letter to this Proxy Statement by Mr. Mark Senn, President and Chief
Operating Officer of the Company. It relates to the current status of the
Company and outlines the direction the Company anticipates moving in the future.
Although these developments are not subject to stockholder vote, the Company
deems them to be important enough to be brought to each stockholder's attention.
If you have any questions with respect to the matters set forth in this Proxy
Statement or the Annual Meeting, please do not hesitate to contact Mark Senn,
President and Chief Operating Officer, XOX Corporation, 7640 West 78th Street,
Bloomington, Minnesota 55439.
By Order of the Board of Directors,
/s/ Mark Senn
Mark Senn
President & COO
Bloomington, Minnesota
April 5, 2000
15
<PAGE>
XOX CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 2000
3:30 P.M.
MINNEAPOLIS CLUB
729 SECOND AVE. S.
MINNEAPOLIS, MINNESOTA
XOX CORPORATION
7640 WEST 78TH STREET, BLOOMINGTON, MN 55439 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Steven B. Liefschultz, Chairman of the Board and
Bernard Reeck, Secretary, or either of them as attorneys and proxies of the
undersigned, with full power of substitution, to vote all of the shares of the
Common Stock of XOX Corporation, a Delaware Corporation (the "Company"), held or
owned by the undersigned or standing in the name of the undersigned at the
Annual Meeting of Shareholders of the Company to be held at the Minneapolis
Club, 729 Second Avenue South, Minneapolis, Minnesota 55402-2463, at 3:30 p.m.
local time on May 2, 2000, and any adjournment thereof, and the undersigned
hereby instructs said attorneys to vote as follows:
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<TABLE>
<S> <C>
1. Election of directors: 01 Bernard Reeck (Class III) [ ] Vote FOR [ ] Vote WITHHELD
02 Craig Gagnon (Class III) all nominees from all nominees
(except as marked)
_________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |_________________________________________|
2. To ratify the appointment of Grant Thornton LLP as the Company's
independent Auditors for the fiscal year ending December 31, 2000. [ ] For [ ] Against [ ] Abstain
3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the
Annual Meeting or any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY APPOINTMENT WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
Address Change? Mark Box [ ] Date __________________________
Indicate changes below:
_________________________________________
| |
| |
|_________________________________________|
Signature(s) in Box
Please sign exactly as your name(s) appear
on Proxy. If held in joint tenancy, all
persons must sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as
such. Corporations should provide full name
of corporation and title of authorized
officer signing the proxy.
</TABLE>
