SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [ ]240.14a-11(c) or [ ]240.14a-12
SOCKET COMMUNICATIONS, INC.
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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)
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and 0-11.
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<PAGE>
SOCKET COMMUNICATIONS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 21, 2000
DEAR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of
Stockholders of SOCKET COMMUNICATIONS, INC., a Delaware corporation
(the "Company"), to be held Wednesday, June 21, 2000 at 9:00 a.m.,
local time, at the Company's headquarters at 37400 Central Court,
Newark, California 94560 for the following purposes:
(1) To elect seven directors to serve until the next Annual
Meeting of Stockholders or until their successors are duly elected.
(2) To approve an amendment to the Company's 1995 Stock Plan to
reserve an additional 1,200,000 shares of Common Stock for issuance
thereunder.
(3) To approve an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of the
Company's Common Stock from 50,000,000 to 100,000,000.
(4) To ratify the appointment of Ernst & Young LLP as
independent public accountants of the Company for the fiscal year
ending December 31, 2000.
(5) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
Only stockholders of record at the close of business on April 24,
2000 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in
person. However, to assure your representation at the meeting, you
are urged to mark, sign, date and return the enclosed Proxy as
promptly as possible in the postage prepaid envelope enclosed for that
purpose. Any stockholder attending the meeting may vote in person
even if he or she has returned a Proxy.
Sincerely,
Kevin J. Mills
President and Chief Executive Officer
Newark, California
May 15, 2000
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE
<PAGE>
SOCKET COMMUNICATIONS, INC.
PROXY STATEMENT FOR 2000
ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of
Directors of SOCKET COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held Wednesday, June 21, 2000 at 9:00 a.m., local
time, or at any adjournment thereof, for the purposes set forth herein
and in the accompanying Notice of the Annual Meeting. The Annual
Meeting will be held at the Company's headquarters at 37400 Central
Court, Newark, California 94560. The Company's principal executive
offices are located at 37400 Central Court, Newark, California 94560,
and the Company's telephone number at that location is (510) 744-2700.
These proxy solicitation materials and the Annual Report on
Form 10-KSB for the year ended December 31, 1999, including financial
statements, were first mailed on or about May 15, 2000 to all
stockholders entitled to vote at the meeting.
Record Date and Principal Share Ownership
Stockholders of record at the close of business on April 24, 2000
(the "Record Date") are entitled to notice of and to vote at the
meeting. The Company has one series of Common Stock outstanding,
designated Common Stock, $0.001 par value. At the Record Date,
20,085,871 shares of the Company's authorized Common Stock were issued
and outstanding and held of record by approximately 11,000
stockholders. The Company has two series of Preferred Shares
outstanding, designated Series C-2 Convertible Preferred Stock, $.001
par value, and Series D Convertible Preferred Stock, $.001 par value.
At the Record Date, 16,857 shares of Series C-2 Convertible Preferred
Stock were outstanding and held of record by one stockholder and
43,573 shares of Series D Convertible Preferred Stock were outstanding
and held of record by two stockholders. The shares of Series C-2
Convertible Preferred Stock and Series D Convertible Preferred Stock
are convertible into 365,764 (including accrued dividends of 47,708
shares through March 31, 2000), and 435,730 shares of Common Stock,
respectively. The holders of the Series D Convertible Preferred Stock
are entitled to the number of votes each would be entitled to cast as
if the Series D Convertible Preferred Stock were converted into Common
Stock. The holders of the Series C-2 Convertible Preferred Stock are
not entitled to vote on any matter submitted to the stockholders of
the Company for approval.
Provided herein under the caption entitled "Management - Security
Ownership of Certain Beneficial Owners and Management" is a table
which sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of the Record Date as to
(i) each person who is known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each Named
Executive Officer (as defined herein), (iii) each director and each
nominee for director of the Company, and (iv) all directors and
executive officers as a group.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by
the person giving it at any time before its use by delivering to the
Secretary of the Company a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting and
voting in person.
Voting and Solicitation
Each holder of Common Stock is entitled to one vote for each
share of stock held in all matters to be voted on by the stockholders.
Each holder of Series D Convertible Preferred Stock is entitled to
the number of votes such holder would be entitled to cast if the
Series D Convertible Preferred Stock were converted into Common Stock.
As of April 24, 2000, each share of the Series D Convertible
Preferred Stock was convertible into 10 shares of Common Stock. Every
stockholder voting for the election of directors (Proposal One) may
cumulate such stockholder's votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the
number of shares that such stockholder is entitled to vote, or
distribute such stockholder's votes on the same principle among as
many candidates as the stockholder may select, provided that votes
cannot be cast for more than seven candidates. However, no
stockholder shall be entitled to cumulate votes unless the candidate's
name has been placed in nomination prior to the voting and the
stockholder, or any other stockholder, has given notice at the
meeting, prior to the voting, of the intention to cumulate the
stockholder's votes. On all other matters, stockholders may not
cumulate votes.
This solicitation of proxies is made by the Company, and all
related costs will be borne by the Company. In addition, the Company
may reimburse brokerage firms and other persons representing
beneficial owners of stock for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be
solicited by certain of the Company's directors, officers and regular
employees, without additional compensation, personally or by telephone
or telefacsimile.
Deadline for Receipt of Stockholder Proposals to be Included in the
Company's Proxy Materials
The attached proxy card grants the proxy holders discretionary
authority to vote on any matter raised at the 2000 annual meeting.
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's 2001 Annual Meeting of
Stockholders must be received by the Company no later than January 16,
2001 in order that they may be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
If a stockholder intends to submit a proposal at the 2001 annual
meeting that is not eligible for inclusion in the proxy statement and
proxy, the stockholder must do so no later that March 31, 2001. If
such a stockholder fails to comply with the foregoing notice
provision, the proxy holders will be allowed to use their
discretionary authority when the proposal is raised at the 2001 annual
meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall be
composed of seven directors. The Board currently consists of seven
directors. The nominees consist of five present directors and two
nominees to join the Board. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the
vacancy. The Company is not aware of any nominee who will be unable,
or will decline to serve, as a director. Different candidates may be
nominated by the proxy holders. The term of office for each person
elected as a director will continue until the next Annual Meeting or
until a successor has been elected and qualified.
Nominees
The names of the nominees and certain information about them as
of April 24, 2000 are set forth below:
Director
Name of Nominee Age Position with the Company Since
- ------------------------ --- ------------------------------------- --------
Charlie Bass............ 58 Chairman of the Board 1992
Kevin Mills............. 39 President, Chief Executive Officer 2000
and Director
Micheal L. Gifford...... 42 Executive Vice President and Director 1992
Jack C. Carsten......... 58 Director 1993
Gianluca Rattazzi...... 46 Director 1998
Leon Malmed............. 62 None --
Enzo Torresi............ 55 None --
All directors hold office until the next Annual Meeting of
Stockholders of the Company or until their successors have been
elected. There are no family relationships among any of the directors
or executive officers of the Company.
Charlie Bass co-founded Socket Communications in March 1992, and
has been the Chairman of the Board of Directors from such time to the
present. Dr. Bass also served as our interim Chief Executive Officer
during January and February 1996 and from April 1997 until February
1998, at which time Mr. Bass assumed the position of Chief Executive
Officer, a position he relinquished on March 22, 2000. Dr. Bass has
been the General Partner of Bass Associates, a venture capital firm,
since September 1989. Dr. Bass currently serves as a director of
Digital Island, Inc. and several private companies. Dr. Bass holds a
Ph.D. in electrical engineering from the University of Hawaii.
Kevin J. Mills was appointed our President and Chief Executive
Officer and a director of the Company on March 22, 2000. He has served
as our Chief Operating Officer since September 1998. Mr. Mills joined
Socket Communications in September 1993 as Vice President of
Operations, and has also served as our Vice President of Engineering.
Prior to joining Socket Communications, Mr. Mills worked from
September 1987 to August 1993 at Logitech, Inc., a computer
peripherals company, serving most recently as its Director of
Operations. He received a B.E. in Electronic Engineering from the
University of Limerick, Ireland.
Micheal L. Gifford has been a director of Socket Communications
since its inception in March 1992 and has served as our Executive Vice
President since October 1994. Mr. Gifford served as our President
from our inception in March 1992 to September 1994, and as our Chief
Executive Officer from March 1992 to June 1994. From December 1986 to
December 1991, Mr. Gifford served as a director and as Director of
Sales and Marketing for Tidewater Associates, a computer consulting
and computer product development company. Prior to working for
Tidewater Associates, Mr. Gifford co-founded and was President of
Gifford Computer Systems, a computer network integration company.
Mr. Gifford received a B.S. in Mechanical Engineering from the
University of California at Berkeley.
Jack C. Carsten has been a director of Socket Communications
since May 1993. He also served us in a consulting capacity as an
interim Chief Executive Officer of the Company from July 1994 to
September 1994. Mr. Carsten owns and operates Technology Investments,
a venture capital firm and is managing director of Horizon Ventures, a
venture capital fund since 1999. Prior to founding Technology
Investments, Mr. Carsten was a general partner of U.S. Venture
Partners, a venture capital firm. Prior to U.S. Venture Partners, he
held senior management positions at Intel Corporation, most recently
serving as Senior Vice President and General Manager of the Component
Group, Microcomputer Group and ASIC Components Group. He received an
A.B. in Physics from Duke University.
Gianluca Rattazzi has been a director of Socket Communications
since June 1998. Dr. Rattazzi co-founded Meridian Data, Inc., a
provider of CD ROM networking software and systems, in July 1988. He
has served as President and a director of Meridian Data since inception
and was appointed Chief Executive Officer of Meridian Data serving from
October 1992 until its recent sale to Quantum Corporation. From 1985
to 1988, Dr. Rattazzi held various executive level positions at Virtual
Microsystems, Inc., a computer peripheral networking company, most
recently as President. Dr. Rattazzi holds an M.S. degree in Electrical
Engineering and Computer Science from the University of California,
Berkeley, and a Ph.D. in Physics from the University of Rome, Italy.
Leon Malmed has served as Senior Vice President of Worldwide
Marketing and Sales of SanDisk Corporation, a manufacturer of flash
memory products, from 1992 to his retirement in March 2000. Prior to
his tenure with SanDisk Corporation, Mr. Malmed was Executive Vice
President of Worldwide Marketing and Sales for Syquest Corporation, a
disk storage manufacturer, from 1990 to 1992, and Senior Vice
President of Worldwide Sales, Marketing and Programs for Maxtor
Corporation, a disk drive company, from 1984 to 1990. Mr. Malmed
serves as a director of several corporations including Valdor
Corporation (fiber optics connectivity), Omnivision Technologies, Inc.
(image sensors semiconductors), Artisan Components, Inc. (licenser of
building blocks for complex I.C. designs), and Adtron Corporation
(storage systems). Mr. Malmed holds a B.S. degree in Mechanical
Engineering from the University of Paris, and also has completed the
AEA/UCLA Senior Executive Program at the University of California at
Los Angeles, and the AEA/Stanford Executive Institute Program for
Management of High Technology Companies at Stanford Business School.
Enzo Torresi founded and manages EuroFund Partners, a venture
capital fund, since 1999. In 1997 and 1998, he was Chairman and CEO of
ICAST Corporation, a software company specializing in broadcasting
solutions for the Internet. During 1995 and 1996 he was Entrepreneur-
In-Residence at Accel Partners, a venture capital fund. From November
1993 to 1994, he was Vice-Chairman of Power Computing Corporation, a
PC manufacturer he cofounded. From 1989 to October 1994, Dr. Torresi
was President and Chief Executive Officer of NetFRAME Systems, Inc., a
computer manufacturer that is now part of Micron Electronics, Inc.
Dr. Toressi serves on the boards of various private and public
companies including PictureTel, Optibase Ltd. And Network Associates.
Dr. Torresi holds a Doctorate in Electronics Engineering from the
Polytechnic Institute in Turin, Italy.
Vote Required and Recommendation of the Board
If a quorum is present and voting, the seven nominees receiving
the highest number of votes will be elected to the Board of Directors.
Votes withheld from any nominee are counted for purposes of
determining the presence or absence of a quorum. Abstentions and
shares held by brokers that are present but not voted because the
brokers were prohibited from exercising discretionary authority
("broker non-votes") will be counted as present for the purposes of
determining if a quorum is present.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE COMPANY'S NOMINEES FOR DIRECTOR.
Board Meeting and Committees
The Board of Directors of Socket Communications held a total of 4
regular meetings and 1 telephonic meeting during fiscal 1999. No
director attended fewer than 75% of the meetings of the Board of
Directors and committees thereof, if any, upon which such director
served. The Board of Directors has a Compensation Committee and an
Audit Committee. The Board of Directors has no nominating committee
or any committee performing such functions.
The Compensation Committee, which consisted of Jack Carsten and
Gianluca Rattazzi, did not meet or act by written consent during the
fiscal year. This Committee is responsible for determining salaries,
incentives and other forms of compensation for directors and officers
of the Company and administers various incentive compensation and
benefit plans. During fiscal 1999, the Board, as a whole (excluding
any interested parties), acted with respect to such decisions.
The Audit Committee, which consisted of Edward Esber and Lars
Lindgren, met once during the year ended December 31, 1999. This
Committee is responsible for overseeing actions taken by the Company's
independent auditors and reviews the Company's internal financial
controls and financial statements. In connection with the completion
of the annual audit of the Company's financial statements for the year
ended December 31, 1998, the Audit Committee met in March 1999 with
management and with the independent auditors to review the financial
statements and the annual audit results, including an assessment of
internal controls and procedures, and discussed the matters with the
independent auditors denoted as required communications by Statement
of Auditing Standards 61. In March 2000, the Audit Committee was
increased to three independent directors with the addition of Jack
Carsten. The Audit Committee met again in March 2000 with management
and with the independent auditors to review the financial statements
for the year ended December 31, 1999 and the annual audit results.
The meeting included review of internal accounting controls,
discussion and review of auditor independence, review with management
and discussion with the independent auditors of the annual financial
statements (Form 10-KSB), other matters included in required
communications with the independent auditors (SAS61), and a
recommendation to the Board to approve the issuance of the financial
statements for the year ended December 31, 1999.
Compensation Committee Interlocks
None of the members of the Compensation Committee of the Board
was at any time during fiscal 1999 an officer or employee of the
Company. No executive officer of the Company serves as a member of
the Board of Directors or Compensation Committee of any entity that
has one or more executive officers serving on the Board or the
Compensation Committee of the Board.
Director Compensation
Outside directors (excluding Mr. Gifford and Mr. Mills) receive
$1,500 per regular Board meeting attended. The Company's Outside
Directors are also entitled to participate in the Company's 1995 and
1999 Stock Option Plans, and during fiscal 1999 Messrs. Bass, Carsten,
Esber, Lindgren and Rattazzi were each granted options to purchase
10,000 shares, respectively, of the Company's Common Stock, each at an
option exercise price of $0.5625 per share, the fair market value of
the Company's Common Stock on the date of grant.
PROPOSAL TWO
APPROVAL OF AMENDMENT TO THE 1995 STOCK PLAN
At the Annual Meeting, stockholders are being asked to approve an
amendment to the Company's 1995 Stock Plan (the "1995 Plan"), which
would increase the number of shares of Common Stock ("Shares")
reserved for issuance thereunder by 1,200,000 shares to 4,135,000
shares.
The foregoing amendment was approved by the Board of Directors in
March, 2000. The adoption of the 1995 Plan was approved by the Board
of Directors in April 1995 and by the stockholders in May 1995. As of
April 24, 2000, 552,000 shares of Common Stock had been issued
pursuant to option exercises under the 1995 Plan, options to purchase
an aggregate of 2,318,390 shares were outstanding and 94,879 shares
(exclusive of the 1,200,000 shares subject to stockholder approval at
the Annual Meeting) were available for future grant under the 1995
Plan.
The purpose of the 1995 Plan is to retain, motivate and reward
employees and executives by providing them with long-term equity
participation in the Company relating directly to the financial
performance and long-term growth of the Company. The purpose of the
amendment to the 1995 Plan is to ensure the availability of Common
Stock for options to existing key executives, employees and
consultants and to attract and retain qualified personnel necessary
for the growth of the Company. In this regard, it is anticipated
that, if the amendment is approved by the stockholders, a significant
portion of the 1,200,000 additional shares available for options under
the 1995 Plan will be allocated to options granted in the future to
new personnel and also to the present executive officers and key
employees of the Company. The Board believes that such an allocation
is in the best interests of the Company to attract, retain and
motivate its executive officers and key employees. Since each of the
Company's executive officers and directors is eligible to receive
options under the 1995 Plan, each such officer and director has a
material financial interest in the proposed amendment to the 1995
Plan.
Summary of the 1995 Plan
General. The purpose of the 1995 Plan is to attract and retain
the best available personnel for positions of substantial
responsibility with the Company, to provide additional incentive to
the employees, directors and consultants of the Company and to promote
the success of the Company's business. Options and stock purchase
rights may be granted under the 1995 Plan. Options granted under the
1995 Plan may be either "incentive stock options," as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or nonstatutory stock options.
Administration. The Plan may generally be administered by the
Board or the Committee appointed by the Board (as applicable, the
"Administrator"). The Administrator may make any determinations
deemed necessary or advisable for the 1995 Plan.
Eligibility. Nonstatutory stock options and stock purchase
rights may be granted under the 1995 Plan to employees, directors and
consultants of the Company and any parent or subsidiary of the
Company. Incentive stock options may be granted only to employees.
The Administrator, in its discretion, selects the employees, directors
and consultants to whom options and stock purchase rights may be
granted, the time or times at which such options and stock purchase
rights shall be granted, and the number of shares subject to each such
grant.
Limitations. Section 162(m) of the Code places limits on the
deductibility for federal income tax purposes of compensation paid to
certain executive officers of the Company. In order to preserve the
Company's ability to deduct the compensation income associated with
options and stock purchase rights granted to such persons, the 1995
Plan provides that no employee, director or consultant may be granted,
in any fiscal year of the Company, options to purchase more than
750,000 shares of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a
stock option agreement between the Company and the optionee, and is
subject to the following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise
price of options at the time the options are granted. The exercise
price of an incentive stock option may not be less than 100% of the
fair market value of the Common Stock on the date such option is
granted; provided, however, the exercise price of an incentive stock
option granted to a 10% stockholder may not be less than 110% of the
fair market value of the Common Stock on the date such option is
granted. The fair market value of the Common Stock is generally
determined with reference to the closing sale price for the Common
Stock (or the closing bid if no sales were reported) on the date the
option is granted.
(b) Exercise of Option; Form of Consideration. The
Administrator determines when options become exercisable, and may in
its discretion, accelerate the vesting of any outstanding option. The
means of payment for shares issued upon exercise of an option is
specified in each option agreement. The Plan permits payment to be
made by cash, check, promissory note, other shares of Common Stock of
the Company (with some restrictions), cashless exercises, a reduction
in the amount of any Company liability to the optionee, any other form
of consideration permitted by applicable law, or any combination
thereof.
(c) Term of Option. The term of an incentive stock option may
be no more than ten (10) years from the date of grant; provided that
in the case of an incentive stock option granted to a 10% stockholder,
the term of the option may be no more than five (5) years from the
date of grant. No option may be exercised after the expiration of its
term.
(d) Termination of Employment. If an optionee's employment or
consulting relationship terminates for any reason (including death or
disability), then all options held by the optionee under the 1995 Plan
expire on the earlier of (i) the date set forth in his or her notice
of grant or (ii) the expiration date of such option. The Plan and the
option agreement may provide for a longer period of time for the
option to be exercised after the optionee's death or disability than
for other terminations. To the extent the option is exercisable at
the time of such termination, the optionee (or the optionee's estate
or the person who acquires the right to exercise the option by bequest
or inheritance) may exercise all or part of his or her option at any
time before termination.
(e) Nontransferability of Options: Unless otherwise determined
by the Administrator, options granted under the 1995 Plan are not
transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only
by the optionee.
(f) Other Provisions: The stock option agreement may contain
other terms, provisions and conditions not inconsistent with the 1995
Plan as may be determined by the Administrator.
Stock Purchase Rights. In the case of stock purchase rights,
unless the Administrator determines otherwise, the restricted stock
purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the
purchaser's service to the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to
the restricted stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option
shall lapse at a rate determined by the Administrator.
Adjustments Upon Changes in Capitalization. In the event that
the stock of the Company changes by reason of any stock split, reverse
stock split, stock dividend, combination, reclassification or other
similar change in the capital structure of the Company effected
without the receipt of consideration, appropriate adjustments shall be
made in the number and class of shares of stock subject to the 1995
Plan, the number and class of shares of stock subject to any option or
stock purchase right outstanding under the 1995 Plan, and the exercise
price of any such outstanding option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised
options or stock purchase rights will terminate.
Effect of a Merger. In connection with any merger of the Company
with or into another corporation, each outstanding option and stock
purchase right may be assumed or an equivalent option substituted by
the successor corporation. If the successor corporation refuses to
assume the options or to substitute substantially equivalent options,
all outstanding options will terminate as of the date of the closing
of the merger.
Amendment and Termination of the 1995 Plan. The Board may amend,
alter, suspend or terminate the 1995 Plan, or any part thereof, at any
time and for any reason. However, the Company shall obtain
stockholder approval for any amendment to the 1995 Plan to the extent
necessary and desirable to comply with applicable law. No such action
by the Board or stockholders may alter or impair the rights of any
optionee without the written consent of the optionee. Unless
terminated earlier, the 1995 Plan shall terminate ten years from the
date of its approval by the stockholders or the Board of the Company,
whichever is earlier.
Federal Income Tax Consequences
Incentive Stock Options. An optionee who is granted an incentive
stock option does not recognize taxable income at the time the option
is granted or upon its exercise, although the exercise is an
adjustment item for alternative minimum tax purposes and may subject
the optionee to the alternative minimum tax. Upon a disposition of
the shares more than two years after grant of the option and one year
after exercise of the option, any gain or loss is treated as long-term
capital gain or loss. Net capital gains on shares held for more than
12 months may be taxed at a maximum federal rate of 20%. Capital
losses are allowed in full against capital gains and up to $3,000
against other income. If these holding periods are not satisfied, the
optionee recognizes ordinary income at the time of disposition equal
to the difference between the exercise price and the lower of (i) the
fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount
treated as ordinary income is treated as long-term or short-term
capital gain or loss, depending on the holding period. A different
rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is also an officer, director, or 10%
stockholder of the Company. Unless limited by Section 162(m) of the
Code, the Company is entitled to a deduction in the same amount as the
ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any
taxable income at the time he or she is granted a nonstatutory stock
option. Upon exercise, the optionee recognizes taxable income
generally measured by the excess of the then fair market value of the
shares over the exercise price. Any taxable income recognized in
connection with an option exercise by an employee of the Company is
subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Code, the Company is entitled to a deduction in
the same amount as the ordinary income recognized by the optionee.
Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as provided above, is treated
as long-term or short-term capital gain or loss, depending on the
holding period. Net capital gains on shares held more than 12 months
may be taxed at a maximum federal rate of 20%. Capital losses are
allowed in full against capital gains and up to $3,000 against other
income.
Stock Purchase Rights. Stock purchase rights will generally be
taxed in the same manner as nonstatutory stock options. However,
restricted stock is generally purchased upon the exercise of a stock
purchase right. At the time of purchase, restricted stock is subject
to a "substantial risk of forfeiture" within the meaning of Section 83
of the Code, because the Company may repurchase the stock when the
purchaser ceases to provide services to the Company. As a result of
this substantial risk of forfeiture, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will
recognize ordinary income on the dates when the stock is no longer
subject to a substantial risk of forfeiture (i.e., when the Company's
right of repurchase lapses). The purchaser's ordinary income is
measured as the difference between the purchase price and the fair
market value of the stock on the date the stock is no longer subject
to right of repurchase.
The purchaser may accelerate to the date of purchase his or her
recognition of ordinary income, if any, and begin his or her capital
gains holding period by timely filing, (i.e. within thirty days of the
purchase), an election pursuant to Section 83(b) of the Code. In such
event, the ordinary income recognized, if any, is measured as the
difference between the purchase price and the fair market value of the
stock on the date of purchase, and the capital gain holding period
commences on such date. The ordinary income recognized by a purchaser
who is an employee will be subject to tax withholding by the Company.
Different rules may apply if the purchaser is also an officer,
director, or 10% stockholder of the Company.
The foregoing is only a summary of the effect of federal income
taxation upon optionees, holders of stock purchase rights, and the
Company with respect to the grant and exercise of options and stock
purchase rights under the 1995 Plan. It does not purport to be
complete, and does not discuss the tax consequences of the employee's
or consultant's death or the provisions of the income tax laws of any
municipality, state or foreign country in which the employee or
consultant may reside.
Participation in the 1995 Plan
The Company is unable to predict the amount of benefits that will be
received or allocated to any particular participant under the 1995
Plan. The following table sets forth the dollar amount and the number
of shares granted under the 1995 Plan during the last fiscal year to
(i) each of the Company's Named Executive Officers, (ii) all executive
officers as a group, (iii) all non-employee directors as a group and
(iv) all employees other than executive officers as a group.
Shares Dollar
Subject to Value of
Options Option
Name and Position Granted Grants(1)($)
- ---------------------------------------------- ------------ ------------
Charlie Bass.................................. -- --
Chairman and Chief Executive Officer
Micheal L. Gifford............................ 50,000 $28,125
Executive Vice President and Director
David W. Dunlap............................... 50,000 $28,125
Vice President of Finance and
Administration, Secretary and CFO
Kevin J. Mills................................ 50,000 $28,125
Chief Operating Officer
Leonard L. Ott................................ 25,000 $14,063
Vice President of Engineering
All current executive officers
as a group (5 persons)..................... 175,000 $98,438
All current non-executive directors
as a group (3 persons)..................... -- --
All other employees (excluding current
executive officers) as a group............. 160,000 $218,875
- --------------------
(1) The dollar value of option grants under the Stock Plan was
computed by multiplying the number of shares subject to the option
times the exercise price of the option. All options granted under
the 1995 Plan were granted at an exercise price equal to the fair
market value of the Common Stock on the date of grant.
Vote Required and Recommendation of the Board
At the Annual Meeting, the stockholders are being asked to
approve the amendment to the 1995 Plan. The affirmative vote of the
holders of a majority of the shares entitled to vote at the Annual
Meeting will be required to approve the amendment to the 1995 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE AMENDMENT TO THE COMPANY'S 1995 PLAN.
PROPOSAL THREE
APPROVAL OF AMENDMENT TO
CERTIFICATE OF INCORPORATION
INCREASING THE NUMBER OF AUTHORIZED SHARES
Proposed Amendment
Proposal Three is to amend the Company's current Certificate of
Incorporation (the "Certificate") for the purpose of increasing the
total number of shares of Common Stock the Company is authorized to
issue from 50,000,000 shares to 100,000,000 shares. All references to
such amendment shall refer to the "Certificate Amendment." The
Company's current Certificate authorizes the Company to issue
3,000,000 shares of Preferred Stock, $.001 par value per share, and
50,000,000 shares of Common Stock, $.001 par value per share. On
March 22, 2000, the Board of Directors authorized an amendment to the
Certificate to increase the authorized number of shares of Common
Stock to 100,000,000 shares.
Reasons for the Amendment
The Company believes it is important to retain a significant
reserve of authorized but unissued Common Stock that could be used to
raise additional capital through the sale of securities, declare stock
dividends or stock splits, acquire another company or its business or
assets, create negotiating leverage and flexibility in the event of an
unfriendly takeover bid or establish a strategic relationship with a
corporate partner, among other uses. In particular, the Company
believes that maintaining a sufficient reserve of authorized but
unissued Common Stock is important to preserving the Company's
flexibility to enter into future financing opportunities. The Company
expects to seek to raise additional capital through equity financing,
joint ventures with corporate partners or through other sources.
Current Number of Shares Outstanding and Subject to Issue
As of the Record Date, 20,085,871 shares of Common Stock were issued
and outstanding. Approximately 801,494 additional shares were issuable
upon conversion of Convertible Preferred Stock (including 47,708
shares for the payment of accrued and unpaid dividends for Series C
Convertible Preferred Stock). A total of 3,045,777 shares were
issuable upon the exercise of outstanding stock options. In addition,
the Company has reserved 1,917,620 shares for the exercise of
outstanding warrants. Should all of the current rights to acquire
common stock be exercised by the holders of those rights, a total of
25,834,083 shares of Common Stock would be outstanding. In addition,
dividends on Series C Convertible Preferred Stock are payable in
shares of Common Stock and will continue to accrue until converted.
Future dividends on Series D Convertible Preferred Stock may also be
paid in shares of Common Stock. And, if Proposal Three is approved,
stock options shares reserved for future stock option grants will be
increased by 1,200,000 shares.
Text of Certificate Amendment
Under the proposed Certificate Amendment, the first two sentences
of Article III of the Certificate would read substantially as follows:
"This Company is authorized to issue two classes of shares
to be designated, respectively, Common Stock, $0.001 par
value ("Common Stock") and Preferred Stock, $0.001 par value
("Preferred Stock"). The total number of shares of all
classes of stock which the Company shall have authority to
issue is One Hundred Three Million (103,000,000), consisting
of One Hundred Million (100,000,000) shares of Common Stock
and Three Million (3,000,000) shares of Preferred Stock."
Effect of Amendment
If approved, the proposed amendment to the Certificate would
authorize additional shares of Common Stock that will be available in
the event that the Board of Directors determines to authorize stock
dividends or stock splits, to raise additional capital through the
sale of securities, to acquire another company or its business or
assets, to create negotiating leverage and flexibility in the event of
an unfriendly takeover bid or to establish a strategic relationship
with a corporate partner, among other uses. Any additional equity
financings may be dilutive to stockholders.
If the proposed amendment is adopted, 50,000,000 additional
shares of Common Stock of the Company will be available for the
issuance of Common Stock at the discretion of the Board of Directors,
except that certain large issuances of shares may require stockholder
approval in accordance with the requirements of The Pacific Exchange
and certain stock-based employee benefit plans may require stockholder
approval in order to obtain desirable treatment under tax or
securities laws and accounting regulations. The Board of Directors
believes it desirable that the Company have the flexibility to issue
the additional shares as described above. As is typical in publicly
held technology companies, the holders of Common Stock have no
preemptive rights to purchase any stock of the Company. Stockholders
should be aware that the issuance of additional shares could have a
dilutive effect on earnings per share and on the equity ownership of
the present holders of Common Stock. No actions are currently being
taken with respect to any large issuance of additional shares.
The flexibility of the Board of Directors to issue additional
shares of Common Stock could also enhance the Board's ability to
negotiate on behalf of the stockholders in an unfriendly takeover
situation. Although it is not the purpose of the proposed Certificate
Amendment, the authorized but unissued shares of Common Stock (as well
as the existing authorized but unissued shares of Preferred Stock)
also could be used by the Board of Directors to discourage, delay or
make more difficult a change in the control of the Company. The Board
of Directors is not aware of any pending or proposed effort to acquire
control of the Company.
Vote Required and Recommendation of the Board
The approval of the amendment to the Certificate requires the
affirmative vote of a majority of the outstanding shares of Common
Stock of the Company. An abstention or nonvote is not an affirmative
vote and, therefore, will have the same effect as a vote against the
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK FROM 50,000,000 SHARES TO 100,000,000 SHARES.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP,
independent public accountants, to audit the financial statements of
the Company for the fiscal year ending December 31, 2000, and
recommends that stockholders vote for ratification of such appointment.
In the event of a negative vote on ratification, the Board of Directors
will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements
annually since 1992. Representatives of Ernst & Young LLP are
expected to be present at the meeting with the opportunity to make a
statement if they desire to do so and are expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
MANAGEMENT
The current executive officers of the Company are as follows:
Name of Officer Age Position with the Company
- ------------------------ --- ---------------------------------------------
Charlie Bass........... 58 Chairman of the Board of Directors and
Chief Executive Officer through March 22,2000
Kevin Mills............ 39 President, Chief Executive Officer since
March 22, 2000, previously Chief Operating
Officer
Micheal L. Gifford..... 42 Executive Vice President and Director
David W. Dunlap........ 57 Vice President of Finance and Administration,
Chief Financial Officer and Secretary
Leonard L. Ott......... 41 Vice President of Engineering
John R. Adams, Jr. .... 46 Vice President of Worldwide Sales
Charlie Bass co-founded Socket Communications in March 1992, and
has been the Chairman of the Board of Directors from such time to the
present. Dr. Bass also served as our interim Chief Executive Officer
during January and February 1996 and from April 1997 until February
1998, at which time Mr. Bass assumed the position of Chief Executive
Officer, a position he relinquished on March 22, 2000. Dr. Bass has
been the General Partner of Bass Associates, a venture capital firm,
since September 1989. Dr. Bass currently serves as a director of
Digital Island, Inc. and several private companies. Dr. Bass holds a
Ph.D. in electrical engineering from the University of Hawaii.
Kevin J. Mills was appointed our President and Chief Executive
Officer and a director of the Company on March 22, 2000. He has served
as our Chief Operating Officer since September 1998. Mr. Mills joined
Socket Communications in September 1993 as Vice President of
Operations, and has also served as our Vice President of Engineering.
Prior to joining Socket Communications, Mr. Mills worked from
September 1987 to August 1993 at Logitech, Inc., a computer
peripherals company, serving most recently as its Director of
Operations. He received a B.E. in Electronic Engineering from the
University of Limerick, Ireland.
Micheal L. Gifford has been a director of Socket Communications
since its inception in March 1992 and has served as our Executive Vice
President since October 1994. Mr. Gifford served as our President
from our inception in March 1992 to September 1994, and as our Chief
Executive Officer from March 1992 to June 1994. From December 1986 to
December 1991, Mr. Gifford served as a director and as Director of
Sales and Marketing for Tidewater Associates, a computer consulting
and computer product development company. Prior to working for
Tidewater Associates, Mr. Gifford co-founded and was President of
Gifford Computer Systems, a computer network integration company.
Mr. Gifford received a B.S. in Mechanical Engineering from the
University of California at Berkeley.
David W. Dunlap has served as the Company's Vice President of
Finance and Administration, Secretary and Chief Financial Officer
since February 1995. Mr. Dunlap previously served as Vice President
of Finance and Administration and Chief Financial Officer at several
public and private companies including Appian Technology Inc., a
semiconductor company from September 1993 to February 1995, and
Mountain Network Solutions, Inc., a computer peripherals manufacturing
company, from March 1992 to September 1993. He is a certified public
accountant, and received an M.B.A. and a B.A. in Business
Administration from the University of California at Berkeley.
Leonard L. Ott was appointed Vice President of Engineering in
December 1998. Mr. Ott joined the Company in March 1994, serving in
increasingly responsible engineering positions including Director of
Software Development and Director of Engineering. Mr. Ott also worked
as an engineering consultant with the Company from November 1993 to
March 1994. Prior to joining the Company, Mr. Ott served from March
1988 to November 1993 with Vision Network Systems, a networking
systems company, serving most recently as its Vice President Research
and Development. He received a B.S. in Computer Science from the
University of California at Berkeley.
John R. Adams, Jr. joined the Company as Vice President of
Worldwide Sales in February 2000. Mr. Adams previously held various
increasingly responsible sales and general management positions with
Network Equipment Technologies, a network systems company, from 1986
to 1999, the last four years as a business unit Vice President and
General Manager. He received a B.S. in Business Administration from
the College of Notre Dame.
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation paid by the
Company during the fiscal years ended December 31, 1999, 1998 and 1997
to the Company's Chief Executive Officers, and the four other most
highly compensated executive officers whose total 1999 salary and
bonus exceeded $100,000 (collectively, the "Named Executive
Officers"):
<TABLE>
<CAPTION>
Long-term
Compensation
Awards
Annual Compensation Securities Other All
----------------------- Underlying Annual Other
Name and Principal Position Year Salary ($) Bonus ($)(1) Options(#) Compensation($) Compensation($)
- ------------------------------------ ---- ---------- ----------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Charlie Bass (2)................... 1999 -- -- 10,000 6,000(2) --
Chief Executive Officer through 1998 -- -- 530,767 7,500(2) --
March 22, 2000 and Director 1997 -- -- 30,000 -- --
Kevin J. Mills..................... 1999 131,250 33,268 150,000 -- --
Chief Operating Officer 1998 125,000 17,239 152,580 -- --
1997 115,000 20,930 32,500 -- --
Micheal L. Gifford................. 1999 131,250 32,444 150,000 -- --
Executive Vice President 1998 125,000 17,536 172,411 -- --
and Director 1997 120,000 21,829 32,500 -- --
David W. Dunlap.................... 1999 131,250 33,209 150,000 -- --
Vice President of Finance and 1998 125,000 17,114 152,580 -- --
Administration, Chief Financial 1997 120,000 20,696 32,500 -- --
Officer and Secretary
Leonard L. Ott..................... 1999 110,000 20,819 50,000 -- --
Vice President of Engineering 1998 101,250 7,133 60,703 -- --
</TABLE>
- --------------------
(1) Represents cash bonuses earned for work performed during fiscal
1999. Bonuses earned during the first three fiscal quarters of
fiscal 1999 were paid in fiscal 1999 whereas bonuses earned during
the fourth fiscal quarter of 1999 were paid in the first quarter of
fiscal 2000.
(2) Dr. Bass served as Acting Chief Executive Officer from April 24,
1997 through January 1998, at which time Dr. Bass assumed the role
of Chief Executive Officer. In consideration for such services,
the Company granted Dr. Bass an option in 1998 to purchase 500,000
shares of Common Stock at an exercise price of $0.6875 and vesting
over a four-year period commencing April 24, 1997. Dr. Bass serves
without cash compensation. Other annual compensation consists of
fees for attendance at board meetings at a rate of $1,500 per
meeting attended during 1998 and 1999.
Option Grants in Fiscal 1999
The following table sets forth certain information for the fiscal
year ended December 31, 1999 with respect to each grant of stock
options to the Named Executive Officers. No stock appreciation rights
were granted during such year.
Individual Grants
----------------------------------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to Price Per
Options Employees in Share Expiration
Name Granted Fiscal 1999(1) ($)(2) Date
- ----------------------- ----------- -------------- ----------- ----------
Charlie Bass.......... 10,000 1.3 0.5625 06/16/09
Kevin J. Mills........ 150,000 19.4 0.5625 06/16/09
Micheal L. Gifford.... 150,000 19.4 0.5625 06/16/09
David W. Dunlap....... 150,000 19.4 0.5625 06/16/09
Leonard L. Ott........ 50,000 6.5 0.5625 06/16/09
- --------------------
(1) Based on options granted to employees, consultants and directors
during fiscal 1999 to purchase 775,000 shares of Common Stock.
(2) All options were granted at an exercise price equal to the fair
market value of the Company's Common Stock, as determined by the
Board of Directors on the date of grant.
Aggregated Option Exercises in Fiscal 1999
and Fiscal Year-End Option Values
The following table provides information on aggregate option
exercises during the year ended December 31, 1999 and on the value of
such officers' unexercised options at December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options At In-the-Money Options at
on Value December 31, 1999 (#) December 31, 1999 ($)(1)
Exercise Received -------------------------- --------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ------------------------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charlie Bass......... -- -- 399,110 176,146 3,256,738 1,437,351
Kevin J. Mills....... 12,417 101,323 126,531 212,499 1,032,493 1,733,992
Micheal L. Gifford... -- -- 142,412 212,499 1,162,082 1,733,992
David W. Dunlap...... -- -- 136,908 212,499 1,117,169 1,733,992
Leonard L. Ott....... -- -- 44,272 82,292 361,260 671,503
- ---------------------
</TABLE>
(1) Based upon a final bid price, as of December 31, 1999, of
$8.16 per share.
Employment Contracts and Termination of
Employment and Change-in Control Arrangements
In February, 1998, the Company initiated a bonus plan pursuant
to which the Company will create a bonus pool in the amount of 10% of
any consideration payable by a buyer in a change of control
transaction to be allocated to the executive officers and such other
employees the Board of Directors determine in its discretion to
include in such bonuses.
In October 1997, the Company entered into separate employment
agreements with Micheal Gifford, Kevin Mills and David Dunlap (each an
"Executive" and collectively the "Executives"). Pursuant to these
agreements, which expire on December 31, 2000 and are each terminable
at will by each party, respectively, the Company is obligated to pay
the Executive's current base salary of $150,000. If the Company
terminates the Executive's employment without cause, the Company shall
pay the Executive (i) six months' base salary regardless of whether he
secures other employment during those six months, (ii) health
insurance until the earlier of the date of the Executive's eligibility
for the health insurance benefits provided by another employer or the
expiration of six months, (iii) the full bonus amount to which he
would have been entitled for the first quarter following termination
and one-half of such bonus amount for the second quarter following
termination, and (iv) certain other benefits including the ability to
purchase at book value certain items of Company property purchased by
the Company for the Executive's use, which may include a personal
computer, a cellular phone, and other similar items.
Additionally, under the 1995 Plan, all optionees' rights to
purchase stock shall, upon a change of control of the Company, be
immediately vested and be fully exercisable under certain
circumstances.
Limitation of Liability and Indemnification Matters
Pursuant to the Delaware General Corporation Law ("Delaware
Law"), the Company has adopted provisions in its Amended and Restated
Certificate of Incorporation which eliminate the personal liability of
its directors and officers to the Company and its stockholders for
monetary damages for breach of the directors' fiduciary duties in
certain circumstances. The Company's Bylaws require the Company to
indemnify its directors, officers, employees and other agents to the
fullest extent permitted by law.
The Company has entered into indemnification agreements with each
of its current directors and officers which provide for
indemnification to the fullest extent permitted by Delaware Law,
including in circumstances in which indemnification and the
advancement of expenses are discretionary under Delaware Law. The
Company believes that the limitation of liability provisions in its
Amended and Restated Certificate of Incorporation and the
indemnification agreements will enhance the Company's ability to
continue to attract and retain qualified individuals to serve as
directors and officers.
There is no pending litigation or proceeding involving a
director, officer or employee of the Company to which the
indemnification agreements would apply.
Compensation of Directors
See the information set forth above under "Proposal One-Election
of Directors-Director Compensation."
Certain Transactions
On October 12, 1999, the Company sold 10,138 shares of its Common
Stock at a price per share of $1.08, for an aggregate purchase price
of $10,949, to the Bass Trust in a private placement offering pursuant
to preemptive participation rights to participate in the Company's
common stock financing completed in September 1999. Charlie Bass,
Chief Executive Officer and Chairman of the Board of the Company, is
the trustee of the Bass Trust. The Company also issued to the Bass
Trust three-year warrants to acquire 1,521 shares of Common Stock at
$1.08 per share.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of April 24, 2000, certain
information with respect to the beneficial ownership of the Common
Stock of the Company, on an as-converted basis for the Series C and D
Preferred Stock of the Company, and on an as-exercised basis for
options and warrants exercisable within 60 days of April 24, 2000, as
to (i) each person known by the Company to own beneficially more than
5% of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each Named Executive Officer, and (iv) all directors and
officers of the Company as a group. Except as otherwise noted, the
named beneficial owner has sole voting and investment power with
respect to the shares shown.
Number of Percentage
Shares of Shares
Beneficially Beneficially
Name and Address of Beneficial Owner Owned (1) Owned (%)(2)
- --------------------------------------- -------------- ------------
Explorer Funds......................... 1,185,595(3) 5.8%
Pictet Bank & Trust Ltd. .............. 1,024,350(4) 5.1%
J.P. Wood.............................. 1,021,030(5) 5.0%
Charlie Bass........................... 1,445,449(6) 6.9%
Micheal L. Gifford..................... 290,208(7) 1.4%
David W. Dunlap........................ 195,928(8) 1.0%
Kevin J. Mills......................... 144,728(9) *
Leonard L. Ott......................... 57,518(10) *
Edward M. Esber, Jr. .................. 14,583(11) *
Lars Lindgren.......................... 14,583(12) *
Gianluca Rattazzi..................... 14,583(13) *
Jack C. Carsten........................ 2,917(14) *
All Directors and Officers
as a group (9 persons)............... 2,180,551(15) 10.2%
- --------------------
*Less than 1%
(1) To the Company's knowledge, the persons named in the table have
sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to
community property laws where applicable and the information
contained in the footnotes to this table.
(2) Percentage ownership is based on 20,085,871 shares of Common
Stock outstanding on April 24, 2000 and any shares issuable
pursuant to securities convertible into or exercisable for shares
of Common Stock by the person or group in question on April 24,
2000 or within 60 days thereafter.
(3) Consists of 657,120 shares of common stock plus 528,475 shares of
Common Stock issuable upon the exercise of warrants. Explorer
Partners II holds 653,620 common shares. Explorer Fund Management,
as investment advisor to Explorer Partners II, has shared voting
and investment power of the shares directly owned by Explorer
Partners II with Tom Papoutsis, the Managing Director of Explorer
Partners II. Robert Holz, as Managing Director of Explorer Fund
Management, exercises voting and investment control with respect to
the shares held by Explorer Fund Management. Messrs. Papoutsis and
Holz disclaim beneficial ownership of the shares held by the
Explorer Funds except to the extent of their respective pecuniary
interests therein. The address of Explorer Funds is 444 North
Michigan Avenue, Suite 2190, Chicago, IL 606ll.
(4) Represents 921,690 shares of common stock plus 104,160 shares of
Common Stock issuable upon the exercise of a warrant. The address
of Pictet Bank & Trust Ltd. is Charlotte House, Charlotte Street,
P.O. Box N-4837, Nassau, Bahamas.
(5) Represents 785,408 shares of common stock plus 235,622 shares of
common stock issuable upon exercise of a warrant. The address of
J. P. Wood is Bird House, Lyford Cay, Nassau, Bahamas N7776.
(6) Consists of 367,268 shares owned by Bass Associates (including
65,256 shares of common stock subject to options exercisable within
60 days of April 24, 2000) and 1,078,181 shares owned by Bass Trust
(including 113,287 shares of common stock, 365,764 shares of common
stock issuable upon conversion of Series C convertible preferred
stock within 60 days of April 24, 2000, 400,416 shares of common
stock subject to options exercisable within 60 days of April 24,
2000, 174,290 shares of common stock issuable upon conversion of
Series D convertible preferred stock within 60 days of April 24,
2000, and 24,424 shares of common stock subject to warrants
exercisable within 60 days of April 24, 2000). Dr. Bass is the
General Partner of Bass Associates and may be deemed to share
voting and investment power with respect to these shares. However,
Dr. Bass disclaims beneficial ownership of shares owned by Bass
Associates except to the extent of his pecuniary interest therein.
(7) Includes 147,708 shares of common stock and 142,500 shares of
common stock subject to options exercisable within 60 days of April
24, 2000.
(8) Includes 163,844 shares of common stock and 32,084 shares of
common stock subject to options exercisable within 60 days of April
24, 2000.
(9) Includes 100,199 shares of common stock and 44,583 shares of
common stock subject to options exercisable within 60 days of April
24, 2000.
(10) Includes 29,560 shares of common stock and 27,958 shares of common
stock subject to options exercisable within 60 days of April 24,
2000.
(11) Represents 14,583 shares of common stock subject to options
exercisable within 60 days of April 24, 2000.
(12) Represents 14,583 shares of common stock subject to options
exercisable within 60 days of April 24, 2000.
(13) Represents 14,583 shares of common stock subject to options
exercisable within 60 days of April 24, 2000.
(14) Represents 2,917 shares of common stock subject to options
exercisable within 60 days of April 24, 2000.
(15) See notes (6) through (14) above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's executive officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with
the Securities and Exchange Commission ("SEC") and the National
Association of Securities Dealers, Inc. Executive officers, directors
and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on its review of the copies of such
forms received by it, or written representations from certain
reporting persons, the Company believes that, during fiscal 1999, all
filing requirements applicable to its executive officers and directors
were complied with.
OTHER MATTERS
The Company knows of no other matters to be submitted at the
meeting. If any other matters properly come before the meeting, it is
the intention of the persons named in the enclosed form of Proxy to
vote the stock they represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: May 15, 2000
<PAGE>
EDGAR APPENDIX A
Form of Proxy
This Proxy is solicited on behalf of the Board of Directors
of Socket Communications, Inc.
2000 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of SOCKET COMMUNICATIONS, INC., a
Delaware corporation, hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement, each dated May 15,
2000, and hereby appoints Charlie Bass and David Dunlap, and each of
them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the 2000 Annual Meeting of Stockholders of SOCKET
COMMUNICATIONS, INC. to be held on Wednesday, June 21, 2000 at 9:00 a.m.
local time, at the Company's headquarters at 37400 Central Court,
Newark, California 94560, and at any adjournment or adjournments
thereof, and to vote all shares of Common Stock which the undersigned
would be entitled to vote if then and there personally present, on the
matters set forth below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed [ ] Withhold Authority to vote for
ALL Nominees Listed
Nominees: Charlie Bass, Kevin Mills, Micheal Gifford, Jack Carsten,
Gianluca Rattazzi, Leon Malmed, Enzo Torresi
If you wish to withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list
below:
Charlie Bass, Kevin Mills, Micheal Gifford, Jack Carsten,
Gianluca Rattazzi, Leon Malmed, Enzo Torresi
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1995 STOCK PLAN
TO RESERVE AN ADDITIONAL 1,200,000 SHARES OF COMMON STOCK FOR
ISSUANCE THEREUNDER
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK FROM 50,000,000 TO 100,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG, LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and, in their discretion, upon such other matter or matters which may
properly come before the meeting or any adjournment or adjournments
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE
AMENDMENT OF THE 1995 STOCK PLAN, FOR THE INCREASE IN AUTHORIZED COMMON
SHARES, AND FOR THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
____________________ ____________________ Date: ______________, 2000
Signature Signature
(This Proxy should be marked, dated and signed by the stockholder(s)
exactly as his or her name appears hereon, and returned promptly in
the enclosed envelope. Persons signing in a fiduciary capacity should
so indicate. If shares are held by joint tenants or as community
property, both should sign.)
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