<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GEOWORKS CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it is determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
GEOWORKS CORPORATION
960 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 27, 1998
To Our Stockholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of Geoworks Corporation, a Delaware Corporation (the "Company"), will
be held on Monday, July 27, 1998 at 11:00 a.m. local time at the Company's
principal executive offices, located at 960 Atlantic Avenue, Alameda,
California, for the following purposes:
1. To consider and vote upon a proposal to amend the Company's Employee
Stock Purchase Plan to increase the number of shares of Common Stock
reserved for issuance thereunder by 200,000 shares from 200,000 shares
to 400,000 shares.
2. To consider and vote upon a proposal to amend the Company's Employee
Stock Purchase Plan to provide that the number of shares of Common Stock
reserved for issuance thereunder will be increased automatically by
200,000 shares on the first business day of each fiscal year of the
Company for fiscal year 2000 and fiscal year 2001 and by 150,000 shares
on the first day of fiscal year 2002.
3. To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on June 1, 1998 are
entitled to notice of and to vote at the Special Meeting or any adjournment or
postponement thereof.
All stockholders are cordially invited to attend the Special Meeting in
person. However to ensure your representation at the Special Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Special Meeting may vote in person even if such
stockholder has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
JORDAN J. BRESLOW
Secretary
Alameda, California
June 15, 1998
<PAGE> 3
GEOWORKS CORPORATION
960 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Geoworks Corporation, a Delaware corporation (the "Company"), for use at a
Special Meeting of Stockholders (the "Special Meeting") to be held on July 27,
1998 at 11:00 a.m., local time, or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of Special
Meeting of Stockholders. The Special Meeting will be held at the Company's
principal executive offices, located at 960 Atlantic Avenue, Alameda, California
94501. The telephone number at that location is (510) 814-1660. Only holders of
record of the Company's Common Stock at the close of business on June 1, 1998
(the "Record Date") will be entitled to vote at the Special Meeting. At the
close of business on June 1, 1998, the Company had 15,908,265 shares of Common
Stock outstanding and entitled to vote. A majority of the shares outstanding on
the Record Date will constitute a quorum for the transaction of business. All
proxies will be voted in accordance with the instructions contained therein and,
if no choice is specified, the proxies will be voted in favor of the proposals
set forth in the accompanying Notice of Special Meeting of Stockholders and this
Proxy Statement.
These proxy solicitation materials were first mailed on or about June 15,
1998 to all stockholders entitled to vote at the Special Meeting.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Special Meeting or at the Special
Meeting prior to the vote pursuant to the proxy. A proxy may be revoked (i) by a
writing delivered to the Company (Attention: Jordan Breslow, Vice President and
General Counsel) stating that the proxy is revoked, (ii) by a subsequent proxy
that is signed by the person who signed the earlier proxy and is presented at
the Special Meeting or (iii) by attendance at the Special Meeting and voting in
person. Please note, however, that if a stockholder's shares are held of record
by a broker, bank or other nominee and that stockholder wishes to vote at the
Special Meeting, the stockholder must bring to the Special Meeting a letter from
the broker, bank or other nominee confirming that stockholder's beneficial
ownership of the shares.
VOTING RIGHTS
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the above Record Date.
Proposal Nos. 1 and 2 each require for approval the affirmative vote of the
majority of shares of Common Stock present in person or represented by proxy at
the Special Meeting entitled to vote. All votes will be tabulated by the
Inspector of Election appointed for the Special Meeting who will tabulate
affirmative and negative votes, abstentions and broker non-votes. Abstentions
will be counted towards a quorum and have the same effect as negative votes with
regard to the proposal. Broker non-votes will also be counted towards a quorum
but will not be counted for any purpose in determining whether the proposal has
been approved.
<PAGE> 4
SOLICITATION OF PROXIES
The Company will bear the cost of soliciting the enclosed proxies. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Solicitation of proxies by mail
may be supplemented by telephone, telegram, facsimile, electronic means or
personal solicitation by directors, officers or regular employees of the
Company. No additional compensation will be paid to such persons for such
activities. In addition, the Company has hired and will pay the fees of a proxy
solicitor estimated to be approximately $6,000.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of Stockholders of the Company which are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting had to have been
received by the Company no later than March 12, 1998 in order that they could be
included in the proxy statement and form of proxy relating to that meeting.
PROPOSAL 1 -- APPROVAL OF AMENDMENT TO INCREASE THE NUMBER OF
SHARES RESERVED FOR ISSUANCE UNDER THE EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "Plan") was adopted by the Board of
Directors and approved by the stockholders in 1994. The Company is seeking
stockholder approval for an amendment to the Plan to increase the number of
shares of Common Stock reserved thereunder. Under the proposed amendment, the
shares reserved for issuance under the Plan will be increased from 200,000
shares to 400,000 shares (an increase of 200,000 shares, representing 1.3% of
the Company's total shares outstanding as of June 1, 1998). The Board approved
the proposed amendment on April 23, 1998, to be effective upon stockholder
approval.
Management believes that this amendment is in the best interests of the
Company because of the need to provide options to attract and retain quality
employees and remain competitive in the industry.
For a summary of the principal provisions of the Plan see below.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE
AMENDMENT TO THE PLAN.
PROPOSAL 2 -- APPROVAL OF AMENDMENT TO PROVIDE FOR AUTOMATIC INCREASE
EACH YEAR FOR THE NEXT THREE YEARS IN THE NUMBER OF SHARES RESERVED
FOR ISSUANCE UNDER THE EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "Plan") was adopted by the Board of
Directors and approved by the stockholders in 1994. The Company is seeking
stockholder approval for an amendment to the Plan to provide that the number of
shares of Common Stock reserved for issuance thereunder will be increased
automatically by 200,000 shares on the first day of each fiscal year of the
Company for fiscal year 2000 and fiscal year 2001 and by 150,000 shares on the
first day of fiscal year 2002 (an increase of 750,000 shares, representing 3.5%
of the Company's total shares outstanding as of June 1, 1998). The Board
approved the proposed amendment on April 23, 1998, to be effective upon
stockholder approval.
Management believes that this amendment is in the best interests of the
Company because of the need to provide options to attract and retain quality
employees and remain competitive in the industry.
For a summary of the principal provisions of the Plan see below.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE
AMENDMENT TO THE PLAN.
2
<PAGE> 5
The essential provisions of the Plan are set forth below:
GENERAL
The Plan provides for the grant of options to employees of the Company and
its subsidiaries.
PURPOSE
The purpose of the Plan is to provide employees of the Company and its
subsidiaries designated by the Board with a convenient means of acquiring an
equity interest in the Company through accumulated payroll deductions and to
provide an incentive for continued employment.
SHARES SUBJECT TO THE PLAN
An aggregate of 950,000 shares of the Common Stock of the Company has been
reserved by the Board for issuance under the Plan (after approval of the
amendments under Proposal Nos. 1 and 2).
ADMINISTRATION
The Plan is administered by the Board or a committee of members (the
"Committee") of the Board appointed by the Board. The Committee currently
consists of Eric Schmidt, who is both a "non-employed director," as that term is
defined in the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and an "outside director," as that term is defined pursuant to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code").
The interpretation and construction of any provision of the Plan by the
Board or its Committee is final and conclusive. Members of the Board or its
Committee receive no separate compensation for their services in connection with
the administration of the Plan.
ELIGIBILITY
Any employee (i) whose customary employment is at least twenty (20) hours
per week and more than five (5) months in any calendar year and, (ii) who has
been continuously employed by the Company for at least three (3) months is
eligible to participate in the Plan; provided, however, that in the case of
individuals who become employees of the Company as a result of a merger or
acquisition, the employee's employment service with the acquired company shall
be considered when determining whether the employee has met the requirement of
three (3) months of continuous employment.
No employee shall be granted an option under the Plan (i) to the extent,
immediately after such grant, such employee (or any person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company and/or hold outstanding options to purchase such
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company, or of any subsidiary,
or (ii) to the extent his or her rights to purchase stock under all employee
stock purchase plans of the Company and its subsidiaries to accrue at a rate
which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined
at the fair market value of the shares at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
As of June 1, 1998, approximately 209 persons were eligible to participate
in the Plan, 166,109 shares of Common Stock had been issued pursuant to the Plan
and 783,891 shares were reserved for future issuance pursuant to the Plan
(including the 750,000 additional shares by which the Plan is to be increased
under Proposal Nos. 1 and 2).
OFFERING PERIOD
"Offering Period" shall mean a period of approximately six (6) months,
commencing on the first Trading Day on or after August 1 and ending the
following January 31, or commencing on the first Trading Day on or after
February 1 and ending the following July 31. The duration, commencement and
termination of Offering
3
<PAGE> 6
Periods may be changed by the Board without stockholder approval if such change
is announced at least ten (10) days prior to the beginning of the Offering
Period to be effected.
TERM OF PLAN
The Plan shall continue in effect for a term of ten (10) years unless
sooner terminated by the Board.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event any change is made in the Company's capitalization without
receipt of consideration by the Company, such as a stock split, reverse stock
split or stock dividend, appropriate adjustment shall be made in the option
price, the number of shares subject to the option, and the number of shares
reserved for issuance under the Plan.
DISSOLUTION OR LIQUIDATION
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board.
MERGER OR ASSET SALE
In the event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company, with or into another corporation,
each option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new exercise date (the "New
Exercise Date") or to cancel each outstanding right to purchase and refund all
sums collected from participants during the Offering Period(s) then in progress.
If the Board shortens the Offering Period(s) then in progress in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify each participant in writing, at least ten (10) business days prior
to the New Exercise Date, that the Exercise Date for his or her option has been
changed to the New Exercise Date.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may amend the Plan at any time or may terminate it
without approval of the stockholders. However, no such action by the Board of
Directors or stockholders may alter or impair any option previously granted
under the Plan without the consent of the optionee.
The Plan provides that stockholder approval of any amendment to the Plan
will be required only to the extent necessary to comply with then current
provisions of Rule 16-3 under the Securities Exchange Act of 1934 or Section 423
of the Internal Revenue Code (or any other applicable law or regulation).
TAX INFORMATION
FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS OF
THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE
COMPANY AND U.S. EMPLOYEES PARTICIPATING IN THE PLAN. FEDERAL TAX LAWS MAY
CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPATING
EMPLOYEE WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH
PARTICIPATING EMPLOYEE HAS BEEN AND IS ENCOURAGED TO SEEK THE ADVICE OF A
QUALIFIED TAX ADVISER REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE
PLAN.
The Plan is intended to qualify as an "employee stock purchase plan' within
the meaning of Section 423 of the Code.
4
<PAGE> 7
Tax Treatment of the Participating Employee. Participating employees will
not recognize income for federal income tax purposes either upon enrollment in
the Plan or upon the purchase of shares. All tax consequences are deferred until
a participating employee sells the shares, disposes of the shares by gift or
dies.
If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable Offering Period, or if
the participating employee dies while owning the shares, the participating
employee realizes ordinary income on a sale (or a disposition by way of gift or
upon death) to the extent of the lesser of: (i) 15% of the fair market value of
the shares at the beginning of the Offering Period; or (ii) the actual gain (the
amount by which the market value of the shares on the date of sale, gift or
death exceeds the purchase price). All additional gain upon the sale of shares
is treated as medium-term or long-term capital gain. If the shares are sold and
the sale price is less than the purchase price, there is no ordinary income and
the participating employee has a medium-term or long-term capital loss for the
difference between the sale price and the purchase price.
If the shares are sold or are otherwise disposed of including by way of
gift (but not death, bequest or inheritance) (in any case, a "disqualifying
disposition") within either the one-year or the two-year holding periods
described above, the participating employee realizes ordinary income at the time
of sale or other disposition, taxable to the extent that the fair market value
of the shares at the date of purchase is greater than the purchase price. This
excess will constitute ordinary income (not currently subject to withholding) in
the year of the sale or other disposition even if no gain is realized on the
sale or if a gratuitous transfer is made. The difference, if any, between the
proceeds of sale and the aggregate fair market value of the shares at the date
of purchase is a capital gain or loss. Capital gains may be offset by capital
losses, and up to $3,000 of capital losses may be used annually against ordinary
income.
Maximum Tax Rates. The maximum tax rate applicable to ordinary income is
39.6%. Long-term capital gain will be taxed at a maximum of 20%. For this
purpose, in order to receive long-term capital gain treatment, the stock must be
held for more than eighteen months,. Mid-term capital gain will be taxed at a
maximum of 28%. For this purpose, in order to receive mid-term capital gain
treatment, the stock must be held for more than one year but not for more than
eighteen months. Capital gains are offset by capital losses and up to $3,000 of
capital losses may be offset against ordinary income.
5
<PAGE> 8
Tax Treatment of the Company. The Company will be entitled to a deduction
in connection with the disposition of shares acquired under the Plan only to the
extent that the participating employee recognizes ordinary income on a
disqualifying disposition of the shares. The Company will treat any transfer of
record ownership of shares as a disposition, unless it is notified to the
contrary. In order to enable the Company to learn of disqualifying dispositions
and ascertain the amount of the deductions to which it is entitled,
participating employees will be required to notify the Company in writing of the
date and terms of any disposition of shares purchased under the Plan.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
EMPLOYEE STOCK PURCHASE PLAN(1)
--------------------------------
NAME AND POSITIONS DOLLAR VALUE NUMBER OF SHARES
------------------ ------------ ----------------
<S> <C> <C>
Gordon E. Mayer......................................... $-- --
David A. Thatcher....................................... -- --
Leland J. Llevano....................................... -- --
Jordan J. Breslow....................................... -- --
Donald L. Reeves, III................................... -- --
David E.J. Crisp........................................ -- --
All current executive officers as a group (6 persons)... -- --
All current directors who are not executive officers as
a group (1 person).................................... -- --
All employees, including all current officers who are
not executive officers, as a group.................... -- --
</TABLE>
- - ---------------
(1) The amounts of future option grants under the Employee Stock Purchase Plan
to (i) the Named Executive Officers; (ii) all current executive officers as
a group; (iii) all current directors who are not executive officers as a
group; and (iv) all employees, including all officers who are not executive
officers, as a group are not determinable because, under the terms of the
Plan, such purchases are based on participant contributions.
6
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of June 1,
1998 by (a) each beneficial owner of more than 5% of the Company's Common Stock,
(b) the Named Executive Officers (as defined below), (c) each director/nominee
of the Company, and (d) all directors and executive officers of the Company as a
group. Except as otherwise indicated, each person has sole voting and investment
power with respect to all shares shown as beneficially owned, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED OWNED
---------------- ------------ ------------
<S> <C> <C>
Travelers Group Inc.(1)..................................... 4,122,625 25.9
Nokia Mobile Phones Ltd.(2)................................. 1,000,000 6.3
Putnam Investments Inc.(3).................................. 989,075 6.2
Gordon E. Mayer(4).......................................... 231,500 1.5
David A. Thatcher(5)........................................ 220,000 1.4
Leland J. Llevano(6)........................................ 170,106 *
Jordan J. Breslow(7)........................................ 130,750 *
Donald L. Reeves, III(8).................................... 129,679 *
David E.J. Crisp(9)......................................... 96,813 *
Eric E. Schmidt (10)........................................ 22,750 *
All directors and executive officers as a group (7
persons)(11).............................................. 1,001,598 6.3
</TABLE>
- - ---------------
* Less than one percent of the outstanding shares of Common Stock.
(1) Based on the Schedule 13G/A filed by Travelers Group Inc. ("Travelers")
dated April 9, 1998, on behalf of itself, Mutual Management Corp., Smith
Barney Inc. and Salomon Smith Barney Holdings Inc. The address of Travelers
is 388 Greenwich Street, Legal Dept. 20th Floor, New York, New York 10013.
(2) Based on the Schedule 13D filed by Nokia Mobile Phones Ltd. ("Nokia") dated
February 17, 1995. The address of Nokia is P.O. Box 68, Kanslerinkatu 14,
4th Floor, Fin-33721, Tampere, Finland.
(3) Based on Amendment Number 1 to Schedule 13G filed by Putnam Investment Inc.
on behalf of itself, Marsh & McLennan Companies, Inc., Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc. The address of
Putnam Investment Inc. is One P.O. Box Square, Boston, Massachusetts 02109.
(4) Represents 53,792 shares issuable pursuant to options exercisable within 60
days of June 1, 1998, 24,000 shares held by Mayer Family Partners LP,
22,500 shares held by the Mayer Family Revocable Trust dated October 5,
1995 and 25,000 shares held by Custom Technology Growth Fund LLC.
(5) Includes 48,333 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
(6) Includes 55,522 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
(7) Includes 61,305 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
(8) Includes 44,188 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
(9) Includes 45,833 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
(10) Includes 4,219 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
(11) Includes 313,192 shares issuable pursuant to options exercisable within 60
days of June 1, 1998.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years ended
March 31, 1998, by (i) the Company's Chief Executive Officer, (ii) the four
other most highly compensated executive officers who were serving as executive
officers at the end of fiscal 1998 and (iii) one additional individual who was
an executive officer for a portion of fiscal 1998 (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------ SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING
POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gordon E. Mayer.................... 1998 $220,000 $26,394 -- 17,500
Chairman of the Board 1997 220,000 33,000 -- 130,000
and Chief Executive Officer 1996 200,275 35,000 -- --
David E.J. Crisp(2)................ 1998 165,666 21,655 -- 50,000
Former Vice President, Marketing
and 1997 11,333 -- -- 50,000
Business Development
David A. Thatcher(3)............... 1998 152,500 23,187 -- 120,000
President and Chief Financial
Officer 1997 3,231 -- -- 100,000
Leland J. Llevano.................. 1998 120,000 40,618 $40,540(4) 10,000
Vice President, 1997 120,000 75,659 -- 40,000
Strategic Partnerships 1996 129,501 5,000 -- 50,000
Jordan J. Breslow.................. 1998 140,000 13,437 -- 10,000
Vice President, General Counsel 1997 140,000 26,250 -- 52,000
1996 130,275 16,500 -- 50,000
Donald L. Reeves, III.............. 1998 125,625 16,951 -- 49,000
Vice President, Engineering 1997 105,000 8,200 -- 4,000
1996 84,141 500 -- 25,000
</TABLE>
- - ---------------
(1) Includes cash profit sharing, cash bonuses and commissions earned for the
fiscal year, whether accrued or paid.
(2) Mr. Crisp was the Vice President, Marketing & Business Development of the
Company until March 16, 1998. Pursuant to an agreement, dated March 16,
1998, between the Company and Mr. Crisp, the Company is compensating Mr.
Crisp for the period between March 16, 1998 and November 16, 1998 at a rate
of $15,000 per month (an aggregate of $120,000). Mr. Crisp remains an
employee of the Company.
(3) Mr. Thatcher joined the Company late in March 1997, and accordingly,
compensation information for fiscal 1997 reflects less than one month of
service.
(4) Represents commission earned in 1998.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
options granted to each of the Named Executive Officers during the fiscal year
ended March 31, 1998. In accordance with the rules of the Securities and
Exchange Commission, also shown below is the potential realizable value over the
term of the options (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation of 5% and 10%, compounded annually.
These amounts are based on certain assumed rates of appreciation and do not
represent the Company's estimate of future stock price. Actual gains, if any, on
stock option exercises will be dependent on the future performance of the Common
Stock.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATE OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
GRANTED EMPLOYEES PRICE PER EXPIRATION ---------------------
NAME (1) IN FISCAL 1998 SHARE DATE 5% 10%
---- ---------- -------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gordon E. Mayer................. 17,500 1.0% $ 8.47 08/19/07 $ 93,205 $ 236,199
David E.J. Crisp................ 50,000 2.8 6.22 07/16/07 195,549 495,558
David A. Thatcher............... 20,000 1.3 8.47 08/19/07 106,520 269,942
100,000 5.7 5.81 02/03/08 365,545 926,363
Leland J. Llevano............... 10,000 0.5 8.47 08/19/07 53,260 134,971
Jordan J. Breslow............... 10,000 0.6 8.47 08/19/07 53,260 134,971
Donald L. Reeves, III........... 4,000 0.2 6.53 06/03/07 16,430 41,637
45,000 2.6 16.63 09/23/07 470,492 1,192,319
</TABLE>
- - ---------------
(1) All options except those granted to Messrs. Llevano and Breslow on August
19, 1997 have a ten-year term and vest over four years, ratably at 1/48 per
month. Options granted to Messrs. Llevano and Breslow on August 19, 1997
have a ten-year term and vest 100% on August 19, 1998.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to option exercises
in fiscal 1998 by the Named Executive Officers and the value of such officers'
unexercised options at March 31, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gordon E. Mayer............. -- -- 41,958 117,542 $ 8,695 $ 2,585
David A. Thatcher........... -- -- 30,000 190,000 20,640 211,110
Leland J. Llevano........... -- -- 66,334 56,666 7,442 1,958
Jordan J. Breslow........... 3,000 $19,000 58,639 61,458 54,843 --
Donald L. Reeves, III....... -- -- 43,884 52,166 130,137 3,599
David E.J. Crisp............ -- -- 45,833 -- 40,706 --
</TABLE>
- - ---------------
(1) Market value of underlying securities on the exercise date, minus the
exercise price.
(2) Value is based on the last reported sale of the Company's Common Stock on
the Nasdaq National Market of $7.44 per share on March 31, 1998 (the last
trading day for fiscal 1998), minus the exercise price of in-the-money
options.
9
<PAGE> 12
DIRECTOR COMPENSATION
The Company does not compensate its directors for services as such, except
pursuant to the grant provisions of its 1994 Stock Plan. Pursuant to such
provisions, Mr. Dunlevie was granted an option to purchase 5,000 shares on
August 27, 1997, which was canceled upon his resignation from the Board of
Directors on February 2, 1998; Mr. Schmidt was granted an option to purchase
5,000 shares on August 27, 1997; and Mr. Soini was granted an option to purchase
10,000 shares on October 16, 1997, which was canceled upon his resignation from
the Board of Directors on May 29, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consisted of directors Soini and
Schmidt as of March 31, 1998. Mr. Soini resigned from the Board on May 29, 1998.
Neither director has ever been an officer of the Company. No executive officer
of the Company served on the compensation committee of another entity or on any
other committee of the board of directors of another entity performing similar
functions during the last fiscal year.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Special
Meeting. If any other matters properly come before the Special Meeting or any
adjournment or postponement thereof, it is the intention of the persons named in
the enclosed form of Proxy to vote the shares they represent as the Board of
Directors may recommend.
10
<PAGE> 13
Geoworks Corporation
Employee Stock Purchase Plan
Plan Document
As Amended July 27, 1998
The following constitute the provisions of the Employee Stock Purchase Plan (the
"Plan") of Geoworks Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the Company and
its Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. Definitions.
a. "Board" shall mean the Board of Directors of the Company.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended.
c. "Common Stock" shall mean the Common Stock of the Company.
d. "Company" shall mean Geoworks, a California corporation.
e. "Compensation" shall mean all base straight time gross earnings,
payments for overtime, shift premium, incentive compensation, incentive
payments, bonuses, and commissions.
f. "Designated Subsidiaries" shall be the Subsidiaries, if any,
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
g. "Employee" shall mean any individual who is an employee of the
Company for purposes of tax withholding under the Code whose customary
employment with the Company or any Designated Subsidiary is at least twenty (20)
hours per week and more than five (5) months in any calendar year. For purposes
of the Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds ninety (90) days and the individual's
right to re-employment is not guaranteed either by statute or by
<PAGE> 14
contract, the employment relationship will be deemed to have terminated on the
91st day of such leave.
h. "Enrollment Date" shall mean the first day of each Offering
Period.
i. "Exercise Date" shall mean the last day of each Offering Period,
or, with respect to an Extended Offering Period shall mean the last day of each
Purchase Period.
j. "Extended Offering Period" shall mean a period of approximately
twenty-four (24) months, commencing on the date or dates so specified by the
Board, during which options granted pursuant to the Plan may be exercised. The
duration, commencement and termination of Extended Offering Periods may be
changed pursuant to Section 4 of this Plan.
k. "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
1. If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for the Common Stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest volume of
trading in Common Stock) on the date of such determination (or, if not a market
trading day, then the last market trading day prior to the date of
determination), as reported in The Wall Street Journal or such other source as
the Board deems reliable; or
2. If the Common Stock is quoted on the NASDAQ system (but
not on the National Market system thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the date of such determination), as reported in The Wall Street Journal or
such other source as the Board deems reliable; or
3. Notwithstanding paragraphs (1) and (2), in the case of an
Offering Period commencing substantially concurrent with the Company's initial
public offering, the Fair Market Value may be determined by the Board to be
equal to the initial price to the public of shares of Common Stock in such
offering; or
4. In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
<PAGE> 15
l. "Offering Period" shall mean a period of approximately six (6)
months, commencing on the first Trading Day on or after August 1 and the last
Trading Day in the period ending the following January 31, or commencing on the
first Trading Day on or after February 1 and terminating on the last Trading Day
in the period ending the following July 31 during which options granted pursuant
to the Plan may be exercised. The duration, commencement and termination of
Offering Periods may be changed pursuant to Section 4 of this Plan.
Notwithstanding the foregoing, in the event the Company shall effect an initial
public offering of Common Stock, the Board may determine to commence an Offering
Period substantially concurrent with the public offering, such Offering Period
to continue until the next succeeding January 31 or July 31 as the Board may
determine.
m. "Plan" shall mean this Employee Stock Purchase Plan.
n. "Purchase Period" shall mean, with respect to an Extended
Offering Period, the approximately six (6) month period commencing after one
Exercise Date and ending with the next Exercise Date, except that the first
Purchase Period of any extended Offering Period shall commence on the Enrollment
Date and end with the next Exercise Date. The duration, commencement and
termination of Purchase Periods may be changed pursuant to Section 4 of this
Plan.
o. "Purchase Price" shall mean an amount equal to eighty-five
percent (85%) of the Fair Market Value of a share of Common Stock on the
Enrollment Date or on the Exercise Date, whichever is lower.
p. "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
q. "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than fifty percent (50%) of the voting shares are held by the
Company or Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
r. "Trading Day" shall mean a day on which national stock exchanges
and the NASDAQ system are open for trading.
3. Eligibility.
a. Any Employee (as defined in Section 2 (g)) who has been
continuously employed by the Company for at least three (3) months and who is
employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan; provided, however, that in the case of individuals who
<PAGE> 16
become Employees of the Company as a result of a merger or acquisition, the
Employee's employment service with the acquired company shall be considered when
determining whether the Employee has met the requirement of three (3) months of
continuous employment.
b. Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent,
immediately after such grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company, or of
any Subsidiary, or (ii) to the extent his or her rights to purchase stock under
all employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock
(determined at the Fair Market Value of the shares at the time such option is
granted) for each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after February 1 and August 1 each year, or on such other dates as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof. The Board shall have the power: (i) to change the duration,
commencement and termination of Offering Periods and/or Purchase Periods with
respect to future offerings without stockholder approval if such change is
announced at least ten (10) days prior to the scheduled beginning of the first
Offering Period or Purchase Period to be effective thereafter, (ii) to implement
Extended Offering Periods, and (iii) to implement overlapping Offering Periods
and/or overlapping Extended Offering Periods.
5. Participation.
a. An eligible Employee may become a participant in the Plan by
completing a Subscription Agreement authorizing payroll deductions and filing it
with the Company's Human Resources department at least one (1) day prior to the
applicable Enrollment Date.
b. Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
a. At the time a participant files his or her Subscription
Agreement, he
<PAGE> 17
or she shall elect to have payroll deductions made on each pay day during the
Offering Period or Extended Offering Period in an amount not less than one
percent (1%) and not exceeding ten percent (10%) of the Compensation which he or
she receives on each pay day during the Offering Period or Extended Offering
Period, and the aggregate of such payroll deductions during the Offering Period
or Extended Offering Period shall not exceed ten percent (10%) of the
participant's Compensation during said Offering Period or Extended Offering
Period.
b. All payroll deductions made for a participant shall be credited
to his or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such account.
c. A participant may discontinue his or her participation in the
Plan as provided in Section 19 hereof by filing with the Company a Notice of
Withdrawal. A participant may increase or decrease the rate of his or her
payroll deductions during the Offering Period by completing or filing with the
Company a Change Form authorizing a change in payroll deduction rate. A
participant may not change his or her payroll deduction rate, either by
increasing or decreasing such rate, more than once during an Offering Period.
The Board may, in its discretion, adjust the number of participation rate
changes permitted during any Offering Period or Purchase Period. The change in
rate shall be effective with the first full payroll period following ten (10)
business days after the Company's receipt of a signed Change Form unless the
Company elects to process a given change in participation more quickly. A
participant's Subscription Agreement shall remain in effect for successive
Offering Periods and Purchase Periods unless terminated as provided in Section
10 hereof.
d. Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at such time during any
Offering Period or Purchase Period which is scheduled to end during the current
calendar year (the "Current Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan in a
prior Offering Period or Purchase Period which ended during that calendar year
plus all payroll deductions shall recommence at the rate provided in such
participant's Subscription Agreement at the beginning of the first Offering
Period or Purchase Period which is scheduled to end in the following calendar
year, unless terminated by the participant as provided in Section 10 hereof.
e. At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
Compensation the
<PAGE> 18
amount necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of Common Stock
by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the participant's account as of the
Exercise Date by the applicable Purchase Price: provided that in no event shall
an Employee be permitted to purchase during each Offering Period (or, with
respect to an Extended Offering Period, during each six-month Purchase Period)
more than a number of Shares determined by dividing $12,500 by the Fair Market
Value of a share of the Company's Common Stock on the Enrollment Date, and
provided further that such purchase shall be subject to the limitations set
forth in Sections 3(b) and 12 hereof. Exercise of the option shall occur as
provided in Section 8 hereof, unless the participant has withdrawn pursuant to
Section 10 hereof, and shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased: any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period or Purchase Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.
10. Withdrawal and Termination of Employment.
a. A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company by
completing a Withdrawal Notice available from the Human Resources department.
<PAGE> 19
All of the participant's payroll deductions credited to his or her account will
be paid to such participant promptly after receipt of notice of withdrawal and
such participant's option for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of shares will be
made for such Offering Period. If a participant withdraws from an Offering
Period, payroll deductions will not resume at the beginning of the succeeding
Offering Period unless the participant delivers to the Company a new
Subscription Agreement.
b. Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, including by virtue of him or her having
failed to remain an Employee of the Company for at least twenty (20) hours per
week during an Offering Period in which the Employee is a participant, he or she
will be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant's account during the Offering Period but
not yet used to exercise the option will be returned to such participant or, in
the case of his or her death, to the person or persons entitled thereto under
Section 14 hereof, and such participant's option will be automatically
terminated.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
a. The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 400,000, subject to
adjustment upon changes in capitalization of the Company as provided for in
Section 18 hereof. Such maximum number of shares shall be increased
automatically by 200,000 shares on the first day of the fiscal year of the
Company each fiscal year for fiscal year 2000 and fiscal year 2001 and by
150,000 shares on the first day of fiscal year 2002. If on a given Exercise Date
the number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
b. The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised.
c. Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
13. Administration.
a. Administrative Body. The Plan shall be administered by the Board
<PAGE> 20
or a committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties. Members of the Board
who are eligible employees are permitted to participate in the Plan, provided
that:
1. Members of the Board who are eligible to participate in
the Plan may not vote on any matter affecting the administration of the Plan or
the grant of any option pursuant to the Plan.
2. If a committee is established to administer the Plan, no
member of the Board who is eligible to participate in the Plan may be a member
of the committee.
b. Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be only administered by
such a body and such a manner as shall comply with the applicable requirements
of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion concerning
decisions regarding the Plan shall be afforded to any committee or person that
is not "disinterested" as that term is used in Rule 16b-3.
14. Designation of Beneficiary.
a. A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
b. Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to
<PAGE> 21
any one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
company may designate.
15. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
a. Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves as well as the price per share of
Common Stock covered by each option under the Plan which has not been exercised
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration". Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to the number of price of shares of Common Stock subject to an option.
b. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
<PAGE> 22
c. Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company,
with or into another corporation, each option under the Plan shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period or Extended Offering Period(s) then
in progress by setting a new Exercise Date (the "New Exercise Date") or to
cancel each outstanding right to purchase and refund all sums collected from
participants during the Offering Period(s) or Extended Offering Period(s) then
in progress. If the Board shortens the Offering Period(s) or Extended Offering
Period(s) then in progress in lieu of assumption or substitution in the event of
a merger or sale of assets, the Board shall notify each participant in writing,
at least ten (10) business days prior to the New Exercise Date, that the
Exercise Date for his or her option has been changed to the New Exercise Date
and that his or her option will be exercised automatically on the New Exercise
Date, unless prior to such date he or she has withdrawn from the Offering
Period(s) or Extended Offering Period(s) as provided in Section 10 hereof. For
purposes of this paragraph, an option granted under the Plan shall be deemed to
be assumed if, following the sale of the assets or merger, the option confers
the right to purchase, for each share of option stock subject to the option
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in Section 424(e)
of the Code), the Board may, with the consent of the successor corporation and
the participant, provide for the consideration to be received upon exercise of
the option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of it discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event the Company
effects one or more reorganizations, recapitalization, rights offerings or other
increases or reductions of shares of outstanding Common Stock, and in the event
of the Company being consolidated with or merged into any other corporation.
19. Amendment or Termination.
a. The Board may at any time and for any reason terminate or amend
<PAGE> 23
the Plan. Except as provided in Section 18 hereof, no such termination can
affect options previously granted, provided than an Offering Period may be
terminated by the Board on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 18 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
the participant. To the extent necessary to comply with Rule 16b-3 or under
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such a manner and to such a degree as required.
b. Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
Extended Offering Periods or Purchase Periods, limit the frequency and/or number
of changes in the amount withheld during an Offering Period, Extended Offering
Period or Purchase Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of such
exercise that the shares are being purchased for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the
<PAGE> 24
Company, such a representation is required by any of the aforementioned
applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company.
It shall continue in effect for a term of ten (10) years unless sooner
terminated in Section 19 hereof.
23. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions Rule
16b-3. The Plan shall be deemed to contain, and such options shall contain, and
the shares issued upon exercise thereof shall be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemptions from Section 16 of the Exchange Act with respect to Plan
transactions.
24. Automatic Transfer to Low Price Extended Offering Period. To the extent
permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of the
Common Stock on any Exercise Date in an Extended Offering Period is lower than
the Fair Market Value of the Common Stock on the Enrollment Date of such
Extended Offering Period, then all participants in such Extended Offering Period
shall be automatically withdraw from such Extended Offering Period immediately
after the exercise of their option on such Exercise Date and automatically
reenrolled in the immediately following Extended Offering Period as of the first
day thereof.
25. Federal Income Tax Implications. The federal income tax consequences of
the grant and exercise of stock options under the Plan, the subsequent
disposition of shares acquired under such options, are summarized below. The
summary is not intended to be exhaustive and may not cover all tax aspects of
every situation. Participants should consult with their tax advisors when
specific questions arise.
a. Time of Grant of Stock Option. A participant is not taxed at the
time of the grant of his/her stock option even though the Purchase Price is no
greater than eighty-five percent (85%) of the market price of the stock on the
date of the grant.
b. Time of Exercise of Stock Option. A participant is not taxed when
shares are purchased pursuant to the exercise of an option under the Plan, even
though the shares are purchased at the lower of eighty-five percent (85%) of the
Fair Market Value on the Enrollment Date or eighty-five percent (85%) of the
Fair Market Value on the Exercise Date.
c. Sale or Other Disposition of Shares Acquired Under the Plan.
<PAGE> 25
1. If a participant sells shares after the expiration of two
years or more from the beginning of an Offering Period AND one year or more from
the Exercise Date (the "Statutory Holding Period"):
a. Any profit up to the 15% discount on the Purchase
Price (15% of the lesser of the Fair Market Value of the shares at the beginning
of the Offering Period or the Fair Market Value of the shares on the Exercise
Date) is taxable as ordinary income, any further profit is taxable as gain; and
b. Any loss is treated as capital loss.
2. If a participant sells or otherwise disposes of shares
before the expiration of the Statutory Holding Periods:
a. The difference between the price paid by the
participant and the Fair Market Value of the shares on the date of purchase is
taxable as ordinary income; and
b. The difference between the amount received by the
participant on the disposition of the shares and the Fair Market Value of the
shares on the date of purchase is treated as a capital gain or loss.
d. Tax Deduction by Company. If shares are sold before the
expiration of the Statutory Holding Period, the Company is entitled to a tax
deduction for the difference between the price paid by the participant and the
Fair Market Value of the shares at the date of purchase. At any time, the
Company may, but will not be obligated to, withhold from the participant's
Compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
stock by the participant.
<PAGE> 26
GEOWORKS CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
JULY 27, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints David A. Thatcher and Teresa M. Gutierrez, or
either of them, each with power of substitution, to represent the undersigned at
the Special Meeting of Stockholders of Geoworks Corporation (the "Company") to
be held at 960 Atlantic Avenue, Alameda, California 94501 on July 27, 1998, at
11 a.m., local time, and any adjournment or postponement thereof, and to vote
the number of shares the undersigned would be entitled to vote if personally
present at the meeting on the following matters:
SEE REVERSE
SIDE
<PAGE> 27
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK YOU CHOICE LIKE THIS
ACCOUNT NUMBER COMMON
- - -----------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. AMENDMENT OF FOR AGAINST ABSTAIN
EMPLOYEE STOCK [ ] [ ] [ ]
PURCHASE PLAN TO THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF
INCREASE THE NUMBER DIRECTION, THIS PROXY WILL BE VOTED FOR THE PROPOSALS.
OF SHARES OF COMMON
STOCK RESERVED FOR
ISSUANCE THEREUNDER
BY 200,000 SHARES.
In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or
2. AMENDMENT OF FOR AGAINST ABSTAIN any adjournment or postponement thereof to the extent authorized
EMPLOYEE STOCK [ ] [ ] [ ] by Rule 14a-4(c) promulgated by the Securities and Exchange
PURCHASE PLAN TO Commission.
INCREASE THE NUMBER
OF SHARES OF COMMON
STOCK RESERVED FOR
ISSUANCE THEREUNDER THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AUTOMATICALLY BY THE COMPANY.
200,000 SHARES ON
THE FIRST BUSINESS
DAY OF EACH FISCAL
YEAR FOR FISCAL YEAR
2000 AND FISCAL YEAR
2001 AND BY 150,000
SHARES ON THE FIRST
DAY OF FISCAL YEAR
2002.
----------------------------------------------------------------
Dated: _____________________, 1998
__________________________________
__________________________________
Signature(s) Please sign exactly as your name(s) appear(s) on your
stock certificate. If shares are held of record in the names of
two or more persons or in the name of husband and wife, whether as
joint tenants or otherwise, both or all of such persons should
sign the proxy. If shares of stock are held of record by a
corporation, the proxy may be executed by an officer, agent or
proxyholder as the bylaws of the corporation may prescribe, or in
the absence of that determination, by the chairman, president, any
vice president or any other person authorized to do so by the
chairman, president or any vice president. Executors,
administrators or other fiduciaries who execute the above proxy
for a deceased stockholder should give their full title. Please
date the proxy. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED, POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING.
</TABLE>
