UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[_] Preliminary Proxy Statement
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COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Evoke 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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Notes:
EVOKE COMMUNICATIONS, INC.
1157 Century Drive
Louisville, Colorado 80027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 2001
To The Stockholders Of Evoke Communications, Inc.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Evoke
Communications, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, June 20, 2001 at 9:00 a.m. local time at the Westin Tabor Center,
1672 Lawrence Street, Denver, Colorado 80202 for the following purposes:
1. To elect two directors to hold office until the 2004 Annual Meeting of
Stockholders;
2. To ratify the selection of KPMG LLP as independent auditors of the
Company for its fiscal year ending 2001; and
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 23, 2001 as
the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Stephanie A. Anagnostou
Secretary
Louisville, Colorado
May 14, 2001
All Stockholders are cordially invited to attend the meeting in
person. Whether or not you expect to attend the meeting, please complete,
date, sign and return the enclosed proxy as promptly as possible in order
to ensure your representation at the meeting. A return envelope (which is
postage prepaid if mailed in the United States) is enclosed for that
purpose. Even if you have given your proxy, you may still vote in person
if you attend the meeting. Please note, however, that if your shares are
held of record by a broker, bank or other nominee and you wish to vote at
the meeting, you must obtain from the record holder a proxy issued in
your name.
EVOKE COMMUNICATIONS, INC.
1157 Century Drive
Louisville, Colorado 80027
(800) 878-7326
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
----------------
June 20, 2001
Information Concerning Solicitation and Voting
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Evoke Communications, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on June 20, 2001, at 9:00 a.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Westin Tabor Center,
1672 Lawrence Street, Denver, Colorado 80202. The Company intends to mail this
proxy statement and accompanying proxy card on or about May 14, 2001, to all
stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on April
23, 2001 will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on April 23, 2001, the Company had outstanding and
entitled to vote 47,097,199 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter
has been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive
office, 1157 Century Drive, Louisville, Colorado 80027, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is January 15, 2002. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so not later than the close of business on March 22, 2002 nor
earlier than the close of business on February 20, 2002.
2
Proposal 1
Election of Directors
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be divided into three classes, each class
consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board
may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the number of directors) shall serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of seven members. There are
two directors in the class whose term of office expires in 2001. Each of the
nominees for election to this class is currently a director of the Company who
was previously elected by the stockholders. If elected at the Annual Meeting,
each of the nominees would serve until the 2004 annual meeting and until his
or her successor is elected and has qualified, or until such director's
earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for
the election of the two nominees named below. In the event that any nominee
should be unavailable for election as a result of an unexpected occurrence,
such shares will be voted for the election of such substitute nominee as
management may propose. Each person nominated for election has agreed to serve
if elected, and management has no reason to believe that any nominee will be
unable to serve.
Nominees for Election for a Three-year Term Expiring at the 2004 Annual
Meeting
Paul A. Berberian
Paul A. Berberian, age 35, has served as our Chairman of the Board, Chief
Executive Officer and President since co-founding our Company in April 1997.
From November 1995 to April 1997, Mr. Berberian was director of ConferLink, a
division of ConferTech International, now Global Crossing, focusing on revenue
call management information systems. In June 1993, Mr. Berberian co-founded
LINK-VTC, a videoconferencing service provider, and served as its president
and a member of its board of directors until it was acquired by ConferTech
International in November 1995. He holds a B.S. degree in management and is a
distinguished graduate from the U.S. Air Force Academy.
Carol deB. Whitaker
Carol deB. Whitaker, age 47, has served as a member of our Board of
Directors since June 1999. Ms. Whitaker has over 20 years of investment
banking experience with both corporations and Wall Street firms. Since 1990,
Ms. Whitaker has served as president of Whitko & Company, a Denver-based
corporate finance consulting firm. From January 1996 to July 1996, Ms.
Whitaker served as chief executive officer of W.W. Comm, Inc., a start-up
company pursuing wireless communication opportunities in Latin America. Ms.
Whitaker was a member of the board of directors of Brooks Fiber Properties,
Inc. from October 1996 until the sale of the company in January 1998 to MCI
WorldCom and of Optiglobe, Inc. from January 2000 until February 2001. Ms.
Whitaker is a member of the board of directors of Yipes Communications, Inc.,
a privately-held company. Ms. Whitaker holds a B.A. degree in economics from
Colorado College and a MBA degree from the University of Chicago.
The Board Of Directors Recommends
A Vote In Favor Of Each Named Nominee.
3
Directors Continuing in Office until the 2002 Annual Meeting
Bradley A. Feld
Bradley A. Feld, age 35, has served as a member of our Board of Directors
since May 1998. Since June 1996, Mr. Feld has served as a principal managing
director of current and prior technology funds of SOFTBANK Venture Capital, a
venture capital investment entity. In 1995, Mr. Feld founded Intensity
Ventures Inc., a company that helped launch and operate software companies.
From 1994 to 1995, Mr. Feld served as chief technology officer of AmeriData
Technologies, Inc., a publicly-traded company that was acquired by GE Capital
in 1996. From 1985 to 1993, Mr. Feld was the president of Feld Technologies, a
software consulting firm that he founded, which was acquired by AmeriData in
1993. Mr. Feld is a director of Interliant, Inc., MessageMedia, Inc. and
PeoplePC Inc. and a director of a number of privately-held companies. Mr. Feld
holds S.B. and S.M. degrees from the Massachusetts Institute of Technology.
Steven C. Halstedt
Steven C. Halstedt, age 55, has served as a member of our Board of
Directors since June 2000. He is a general partner of Centennial Fund IV, L.P.
and Centennial Fund V, L.P. and a managing principal of Centennial Fund VI,
LLC, each of which is a part of Centennial Ventures, a firm he co-founded in
1981. Centennial Ventures is a venture capital firm that focuses its
investment activities on communications convergence. Mr. Halstedt is chairman
of the board of Verio Inc. and a director of a number of privately-held
companies.
Andre Meyer
Andre Meyer, age 54, has served as a member of our Board of Directors since
March 2000. Mr. Meyer is chief executive officer of INOVATEL, a network and
telecommunications system provider controlled by Vivendi Group, a French
holding company with primary investments in telecommunications. Since June
1997, Mr. Meyer has held a number of positions in companies controlled by
Vivendi Group, including: chief technical officer of @viso; president of
CEGETEL Entreprises; director of the Development Center for Innovative
Services for INOVATEL; and general manager of CEGETEL Entreprises. From August
1985 to June 1997, Mr. Meyer held various positions with Hewlett Packard
Corporation, a company focused on electronics and computer technology,
including general manager of the Telecom Systems Business Unit from 1992 to
1997. Mr. Meyer holds degrees in electromechanics and in electronic and
automation engineering.
Directors Continuing in Office Until the 2003 Annual Meeting
Donald Hutchison
Donald Hutchison, age 44, has served as a member of our Board of Directors
since January 2000. Mr. Hutchison is the outgoing chief executive officer and
chairman of the board of Work.com, positions that he held since the company's
inception in April 2000. Work.com is a joint venture of Excite@Home, Dow Jones
& Company and Mr. Hutchison that provided Internet-based resources for
businesses and recently sold its principal assets to Business.com. From
February 1997 to April 2000, Mr. Hutchison served as senior vice president and
general manager of @Work, a commercial division of Excite@Home that provides
business class Internet working solutions. From May 1994 to January 1997, Mr.
Hutchison served as senior vice president for sales and marketing of Netcom,
an Internet service provider. Mr. Hutchison also worked with leading
technology companies such as TAU Corporation, a digital image computing
company, and Pixar, a digital animation company. Mr. Hutchison is a member of
the board of directors of Zengine, Inc., a public company, and Overlap, Inc.,
a private company. Mr. Hutchison is an honors graduate from the University of
California at Santa Barbara with a B.A. degree in economics and earned an MBA
degree in finance and organizational development from Loyola Marymount
University.
Dr. Massih Tayebi
Dr. Massih Tayebi, age 41, was appointed to our Board of Directors in June
2000. Dr. Tayebi co-founded Wireless Facilities, Inc., a full-service
infrastructure development company, in 1994 and has served as its chief
4
executive officer and one of its directors since its inception. Since 1995,
Dr. Tayebi has served as a technical manager for Computer Integrated
Management Systems, an Internet-based business exchange company. From 1989 to
1994, he was a senior faculty member of the Engineering Department of the
University of Paisley, Great Britain, and served as its Director of Computer
Integrated Product Life Cycle Research. Dr. Tayebi received an M.S. in
computer integrated manufacturing and a Ph.D. in the integration of design and
process planning from the University of Strathclyde, United Kingdom. He
performed post-doctorate work on the integration of design and inspection at
the University of Brunel, London.
Board Committees and Meetings
During the fiscal year ended December 31, 2000, the Board of Directors held
twelve meetings and acted by unanimous written consent six times. The Board
has an Audit Committee and a Compensation Committee.
The Audit Committee recommends to the Board the independent auditors to be
retained, reviews the internal accounting and financial controls of the
Company and meets with the independent auditors to review the scope of
proposed audits, the results of the annual audit and the Company's financial
statements. The Audit Committee is composed of three directors: Mr. Meyer, Dr.
Tayebi and Ms. Whitaker. It met three times during the last fiscal year and
did not act by unanimous written consent during the last fiscal year. All
members of the Company's Audit Committee are independent (as independence is
defined in Rule 4200(a)(14) of the NASD listing standards). The Audit
Committee has adopted a written Amended and Restated Audit Committee Charter,
which is attached hereto as Appendix A.
The Compensation Committee reviews and approves compensation and benefits
for our officers and employees, reviews and administers our compensation and
stock plans, makes recommendations to the Board regarding compensation and
employee benefit issues and performs such other functions regarding
compensation as the Board may delegate. The Compensation Committee is composed
of three outside directors: Mr. Feld, Mr. Meyer and Ms. Whitaker. It met two
times during the last fiscal year and acted by unanimous written consent two
times. The Non-Management Stock Option Committee consists of Mr. Berberian,
who may award stock options to employees who are not officers in amounts up to
10,000 shares per grant.
During the fiscal year ended December 31, 2000, all directors, except Dr.
Tayebi, attended at least 75% of the aggregate of the meetings of the Board
and of the committees on which he or she served, held during the period for
which he or she was a director or committee member, respectively. From June
2000 when Dr. Tayebi joined the Audit Committee until the end of the last
fiscal year, the Audit Committee held three meetings, two of which he was
unable to attend.
Report of the Audit Committee of the Board of Directors
The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 or 1934 Act.
The Audit Committee is comprised of three independent directors and
operates under a written charter adopted by the Company's Board of Directors.
A copy of the charter is included as Appendix A to this proxy statement. The
Audit Committee, among other things, recommends to the Board of Directors the
selection of the Company's independent auditors.
The Audit Committee has reviewed and discussed with the Company's
management the audited financial statements of the Company for the year ended
December 31, 2000. In addition, the Audit Committee has discussed with KPMG
LLP, the Company's independent auditors, the matters required by Statements on
Auditing Standards No. 61.
5
The Audit Committee also has received the written report, disclosure and
the letter from KPMG LLP required by Independence Standards Board Standard No.
1, and has reviewed, evaluated and discussed the written report with KPMG LLP.
In addition, the Audit Committee has discussed with KPMG LLP its independence
from the Company. The Audit Committee has also discussed with the management
of the Company and KPMG LLP such other matters and received such assurances
from them, as the Audit Committee deemed appropriate.
Based on the foregoing reviews and discussions and relying thereon, the
Audit Committee has recommended to the Company's Board of Directors the
inclusion of the Audited Financial Statements in the Company's Annual Report
for the year ended December 31, 2000 on Form 10-K, to be filed with the
Securities and Exchange Commission.
Audit Committee of the Board of
Directors
Andre Meyer
Dr. Massih Tayebi
Carol deB. Whitaker
6
Proposal 2
Ratification Of Selection Of Independent Auditors
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2001 and has further directed
that management submit the selection of independent auditors for ratification
by the stockholders at the Annual Meeting. KPMG LLP has audited the Company's
financial statements since its inception in 1997. Representatives of KPMG LLP
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection, the Audit Committee and the Board will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the
Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG LLP. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
Audit Fees
During the fiscal year ended December 31, 2000, the aggregate fees billed
by KPMG LLP for the audit of the Company's financial statements for such
fiscal year and for the reviews of the Company's interim financial statements
by was $81,000.
Financial Information Systems Design and Implementation Fees
During the fiscal year ended December 31, 2000, no information technology
consulting fees were billed by KPMG LLP.
All Other Fees
During fiscal year ended December 31, 2000, the aggregate fees billed by
KPMG LLP for professional services other than audit and information technology
consulting fees was $352,500. These fees principally related to services
provided in connection with the Company's initial public offering and
consulting on accounting matters.
The Audit Committee has determined that the rendering of all non-audit
services by KPMG LLP is compatible with maintaining the auditor's
independence.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 2.
7
Security Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 31, 2001 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers and directors of the Company
as a group; and (iv) all those known by the Company to be beneficial owners of
more than five percent of its Common Stock.
In accordance with the rules of the Securities and Exchange Commission (the
"SEC"), the following table gives effect to the shares of Common Stock that
could be issued upon the exercise of outstanding options within 60 days of
March 31, 2001. In computing the number of shares beneficially owned by a
person, shares of Common Stock that are subject to our right of repurchase at
the original exercise price paid per share, or such shares that are subject to
exercisable but unvested options, are not included.
Number of
Shares Percent
Beneficially of
Beneficial Owner Owned(/1/) Total
- ---------------- ------------ -------
Paul A. Berberian(/2/)................................... 2,038,499 4.3
Todd Vernon(/3/)......................................... 221,470 *
Terence G. Kawaja(/4/)................................... 350,000 *
James M. LeJeal(/5/)..................................... 1,370,665 2.9
Centennial Fund V, L.P. (/6/)............................ 4,312,646 9.2
Centennial Fund VI, L.P. (/7/)........................... 3,161,615 6.7
Entities affiliated with SOFTBANK Technology
Ventures(/8/)........................................... 5,353,150 11.4
Intel Corporation(/9/)................................... 2,444,444 5.2
Pequot Private Equity Fund II, L.P. (/10/)............... 3,111,111 6.6
Steven C. Halstedt(/11/)................................. 13,147 *
Donald Hutchison(/12/)................................... 134,813 *
Bradley A. Feld(/13/).................................... 5,387,963 11.4
Andre Meyer(/14/)........................................ 20,517 *
Dr. Massih Tayebi(/15/).................................. 247,035 *
Carol deB. Whitaker(/16/)................................ 103,183 *
All named executive officers and directors as a group (10
persons) (/17/)......................................... 9,887,292 20.8
- --------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the SEC.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, the Company believes that each
of the stockholders named in this table has sole voting and investment
power with respect to the shares indicated as beneficially owned.
Applicable percentages are based on 47,097,359 shares outstanding on March
31, 2001, adjusted as required by rules promulgated by the SEC.
(2) Includes 1,969,600 shares held by Berberian Investments LLC, 10,400 shares
held by Paul A. Berberian Family Trust and 50,499 shares subject to
options exercisable within 60 days of March 31, 2001. Excludes 83,334
shares that are subject to options that are unvested but exercisable
within 60 days of March 31, 2001.
(3) Includes 50,000 shares held by Vernon Investments, LLC. Voting and
investment power over shares held by Vernon Investments, LLC is shared
between Mr. Vernon and his wife. Also includes 171,470 shares subject to
options exercisable within 60 days of March 31, 2001. Excludes 119,029
shares that are subject to options that are unvested but exercisable
within 60 days of March 31, 2001.
(4) Mr. Kawaja is the former Chief Financial Officer of the Company.
(5) Includes 1,274,000 held by LeJeal Investments, LLC, 46,000 shares held by
James M. LeJeal Irrevocable Family Trust and 49,999 shares subject to
options exercisable within 60 days of March 31, 2001. Excludes 36,111
shares that are subject to options that are unvested but exercisable
within 60 days of March 31,
8
2001. Mr. LeJeal shares voting and investment power over the shares held by
LeJeal Investments, LLC and the shares held by James M. LeJeal Irrevocable
Family Trust. Mr. LeJeal formerly served as Chief Operating Officer and as a
director of the Company.
(6) Excludes 66,560 shares held by Centennial Holdings I, LLC, 3,161,615 shares
held by Centennial Fund VI, L.P., 105,888 shares held by Centennial
Entrepreneurs' Fund V, L.P., 83,200 shares held by Centennial
Entrepreneurs' Fund VI, L.P. and 166,401 shares held by Centennial
Strategic Partners VI, L.P. Centennial Fund V, L.P. has no voting or
investment power over the excluded shares and disclaims beneficial
ownership of such shares. Centennial Entrepreneurs' Fund V, L.P. disclaims
beneficial ownership of the shares held by Centennial Fund V, L.P.
Centennial Holdings V, L.P. is the sole general partner of Centennial Fund
V, L.P. and Centennial Entrepreneurs' Fund V, L.P., and, accordingly, may
be deemed to be the indirect beneficial owner of the shares held by such
funds by virtue of its authority to make decisions regarding the voting and
disposition of such shares. Mr. Halstedt, who is one of our directors, is
one of four general partners of Centennial Holdings V, L.P., has no voting
or investment power over any of the excluded shares and disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein. The address of Centennial Fund V, L.P. is 1428 Fifteenth
Street, Denver, Colorado 80202.
(7) Excludes 66,560 shares held by Centennial Holdings I, LLC, 4,312,646 shares
held by Centennial Fund V, L.P., 105,888 shares held by Centennial
Entrepreneurs' Fund V, L.P., 83,200 shares held by Centennial
Entrepreneurs' Fund VI, L.P. and 166,401 shares held by Centennial
Strategic Partners VI, L.P. Centennial Fund VI, L.P. has no voting or
investment power over the excluded shares and disclaims beneficial
ownership of such shares. Centennial Entrepreneurs' Fund VI, L.P. disclaims
beneficial ownership of the shares held by Centennial Fund VI, L.P.
Centennial Holdings VI, LLC is the sole general partner of Centennial Fund
VI, L.P. and Centennial Entrepreneurs' Fund VI, L.P., and, accordingly, may
be deemed to be the indirect beneficial owner of the shares held by such
funds by virtue of its authority to make decisions regarding the voting and
disposition of such shares. Mr. Halstedt, who is one of our directors, is
one of five managing principals of Centennial Holdings VI, LLC, has no
voting or investment power over any of the excluded shares and disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein. The address of Centennial Fund VI, L.P. is 1428 Fifteenth
Street, Denver, Colorado 80202.
(8) Includes 3,726,230 shares held by SOFTBANK Technology Ventures IV, L.P.,
74,142 shares held by SOFTBANK Technology Advisors Fund, L.P., 1,485,874
shares held by SOFTBANK Technology Ventures V, L.P., 40,196 shares held by
SOFTBANK Technology Advisors Fund V, L.P. and 26,708 shares held by
SOFTBANK Technology Entrepreneurs' Fund V, L.P. SOFTBANK Technology
Ventures IV, LLC is the general partner of SOFTBANK Technology Ventures IV,
L.P. and SOFTBANK Technology Advisors Fund, L.P. (the three entities
collectively being the "Fund IV Entities"). SOFTBANK Technology Ventures V,
LLC is the general partner of SOFTBANK Technology Ventures V, L.P.,
SOFTBANK Technology Advisors Fund V, L.P. and SOFTBANK Technology
Entrepreneurs' Fund V, L.P. (the four entities collectively being the "Fund
V Entities"). The Fund IV Entities have no voting or investment power over
any of the shares held by the Fund V Entities and disclaim beneficial
ownership of any such shares. The Fund V Entities have no voting or
investment power over any of the shares held by the Fund IV Entities and
disclaim beneficial ownership of any such shares. SOFTBANK Technology
Ventures IV, L.P. has no voting or investment power over any of the shares
held by SOFTBANK Technology Advisors Fund, L.P. and disclaims beneficial
ownership of such shares. SOFTBANK Technology Advisors Fund, L.P. has no
voting or investment power over any of the shares held by SOFTBANK
Technology Ventures IV, L.P. and disclaims beneficial ownership of such
shares. SOFTBANK Technology Ventures V, L.P. has no voting or investment
power over any of the shares held by either SOFTBANK Technology Advisors
Fund V, L.P. or SOFTBANK Technology Entrepreneurs' Fund V, L.P. and
disclaims beneficial ownership of such shares. SOFTBANK Technology Advisors
Fund V, L.P. has no voting or investment power over any of the shares held
by either SOFTBANK Technology Ventures V, L.P. or SOFTBANK Technology
Entrepreneurs' Fund V, L.P. and disclaims beneficial ownership of such
shares. SOFTBANK Technology Entrepreneurs' Fund V, L.P. has no voting or
investment power over any of the shares held by either SOFTBANK Technology
Ventures V, L.P. or SOFTBANK Technology Advisors Fund V, L.P. and disclaims
beneficial ownership of such shares. The address of SOFTBANK Technology
Ventures IV, L.P. is 200 W. Evelyn Avenue, Suite 200, Mountain View,
California 94043.
9
(9) The address of Intel Corporation is 2200 Mission College Boulevard, Santa
Clara, California 95052.
(10) Pequot Capital Management, Inc. beneficially owns the shares held by
Pequot Private Equity Fund II, L.P. by virtue of its power to control
Pequot Private Equity Fund II, L.P. The address of Pequot Private Equity
Fund II, L.P. is 500 Nyala Farm Road, Westport, Connecticut 06880.
(11) Includes 8,147 shares subject to options exercisable within 60 days of
March 31, 2001. Excludes 18,519 shares that are subject to options that
are unvested but exercisable within 60 days of March 31, 2001.
Mr. Halstedt holds such options for the benefit of certain Centennial
Ventures' entities. Also excludes 66,560 shares held by Centennial
Holdings I, LLC, 4,312,646 shares held by Centennial Fund V, L.P.,
105,888 shares held by Centennial Entrepreneurs' Fund V, L.P., 3,161,615
shares held by Centennial Fund VI, L.P., 83,200 shares held by Centennial
Entrepreneurs' Fund VI, L.P. and 166,401 shares held by Centennial
Strategic Partners VI, L.P. Mr. Halstedt is one of four general partners
of Centennial Holdings V, L.P., which is the sole general partner of
Centennial Fund V, L.P. and Centennial Entrepreneurs' Fund V, L.P., and
is one of five managing principals of Centennial Holdings VI, LLC, which
is the sole general partner of Centennial Fund VI, L.P. and Centennial
Entrepreneurs' Fund VI, L.P. Mr. Halstedt has no voting or investment
power over any of the excluded shares and disclaims beneficial ownership
of such shares except to the extent of his pecuniary interest therein.
(12) Includes 8,147 shares subject to options exercisable within 60 days of
March 31, 2001. Excludes 18,519 shares that are subject to options that
are unvested but exercisable within 60 days of March 31, 2001.
(13) Includes 3,726,230 shares held by SOFTBANK Technology Ventures IV, L.P.,
74,142 shares held by SOFTBANK Technology Advisors Fund, L.P., 1,485,874
shares held by SOFTBANK Technology Ventures V, L.P., 40,196 shares held
by SOFTBANK Technology Advisors Fund V, L.P. and 26,708 shares held by
SOFTBANK Technology Entrepreneurs' Fund V, L.P. Mr. Feld, who is one of
our directors, is a managing director of SOFTBANK Technology Ventures and
disclaims beneficial ownership of the included shares held by such
entities except to the extent of his pecuniary interest therein. Also
includes 34,813 shares subject to options exercisable within 60 days of
March 31, 2001. Excludes 18,519 shares that are subject to options that
are unvested but exercisable within 60 days of March 31, 2001.
(14) Includes 18,517 shares subject to options exercisable within 60 days of
March 31, 2001. Excludes 34,815 shares that are subject to options that
are unvested but exercisable within 60 days of March 31, 2001.
(15) Includes 147,766 shares held by BridgeWest, LLC, 82,973 shares held by
Global Telepartners, LLC and 16,296 shares subject to options exercisable
within 60 days of March 31, 2001. Dr. Tayebi shares voting and investment
power over the shares held by BridgeWest, LLC and Global Telepartners,
LLC with other LLC members. Excludes 37,037 shares that are subject to
options that are unvested but exercisable within 60 days of March 31,
2001.
(16) Includes 84,666 shares held by Whitko & Company and 18,517 shares subject
to options exercisable within 60 days of March 31, 2001. Excludes 28,149
shares that are subject to options that are unvested but exercisable
within 60 days of March 31, 2001.
(17) Includes shares as described in the notes above, as applicable.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. 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.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2000, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that Dr.
Tayebi timely reported all holdings and transactions, but inadvertently did
not include in a Form 3 report the indirect shareholdings of Global
TelePartners LLC and BridgeWest, LLC. The error was corrected on an amended
Form 3 report.
10
Management
Our executive officers and key employees are as follows:
Name Age Position at the Company
---- --- -----------------------
Paul A. Berberian 35 Chairman of the Board, Chief Executive Officer and
President
Nicholas J. Cuccaro 59 Chief Financial Officer
Todd Vernon 37 Chief Technology Officer
Stephanie A. Anagnostou 33 Senior Vice President, General Counsel and
Secretary
Henry Rodriguez III 40 Senior Vice President of Engineering
Bryce Ambraziunas 31 Vice President of Operations
Peter Holst 32 Vice President of Corporate Development
Kenneth Mesikapp 37 Vice President of Finance and Accounting and
Treasurer
Nicholas Papadopoulos 34 Vice President of Direct Sales
Executive Officers
Biographical information for Paul A. Berberian is in the section entitled
"Proposal 1 Election of Directors."
Nicholas J. Cuccaro has served as our Chief Financial Officer since March
2001. From November 1999 to March 2001, Mr. Cuccaro served as executive vice
president and chief financial officer of NetLibrary, an electronic book
publisher. From June 1994 to November 1999, Mr. Cuccaro held a number of
positions, including president, publishing division, senior vice president and
chief executive officer, for Neodata, a customer management company, which was
acquired by EDS Corporation and renamed Centrobe. Mr. Cuccaro is a certified
public accountant and holds a B.B.A. degree from St. John's University in
Queens, NY.
Todd Vernon has served as our Chief Technology Officer since our inception
in April 1997. From August 1996 to April 1997, Mr. Vernon served as senior
software engineer for ConferLink, a division of ConferTech International, a
multimedia teleconferencing company. From January 1996 until August 1996, Mr.
Vernon served as product architect and lead developer for Rogue Wave Software,
a software company. From August 1994 to January 1996, Mr. Vernon served as
senior software engineer at Evolving Systems, Inc., also a software company.
From February 1987 to August 1994, Mr. Vernon served as senior electronic
engineer at NASA Dryden Flight Research Facility. He holds a B.S. degree in
electrical engineering from Central Missouri State University.
Key Employees
Stephanie A. Anagnostou has served as our Senior Vice President and General
Counsel since April 2000 and as Secretary since January 2001. From March 1995
to April 2000, Ms. Anagnostou served as an attorney at Cooley Godward LLP,
practicing primarily in areas of public offerings, private placements, mergers
and acquisitions and strategic partnerships. Ms. Anagnostou is licensed to
practice law in Colorado and California. She holds a B.A. degree in mass
communications with an emphasis in business from University of California, Los
Angeles and a J.D., cum laude, from University of San Francisco School of Law.
Henry Rodriguez III has served as our Senior Vice President of Engineering
since April 2000. From October 1999 to March 2000, Mr. Rodriguez served as
chief technical officer for ExchangePoint, an online provider of enterprise
software and business services. From January 1999 to September 1999, Mr.
Rodriguez held the position of vice president research and
development/operations for Xtra-Online, a developer of Internet-based travel
products. From February 1998 to January 1999, he held the position of vice
president research and development/chief architect for Borealis, a technology
research and development company. From November 1995 to February 1998, Mr.
Rodriguez held the position of vice president research and development/chief
architect for Seagate Software, a software company.
Bryce L. Ambraziunas has served as our Vice President of Operations since
November 1998. From October 1997 to November 1998, Mr. Ambraziunas served as
executive manager of U.K. operations for Frontier
11
Videoconferencing, a division of Frontier ConferTech. From January 1996 to
October 1997, Mr. Ambraziunas held various positions in the operations and
sales departments of LINK-VTC, including technical account executive for its
videoconferencing offering. He received a B.A. degree in economics from the
University of California at Santa Cruz.
Peter Holst has served as our Vice President of Corporate Development since
October 2000. From September 1997 to September 2000, Mr. Holst served as vice
president of corporate development for LyncStar Communications, a broadband
services company. From March 1996 to September 1997, Mr. Holst served as
director of sales for Autoskill International, a software company. He holds a
B.Adm degree in finance from the University of Ottawa, Canada.
Kenneth Mesikapp has served as our Vice President of Finance and Accounting
and Assistant Treasurer since October 1999, as our Treasurer since January
2001, as our Corporate Controller from December 1997 to October 1999 and as
our Acting Chief Financial Officer for part of March 2001. From November 1994
to December 1997, Mr. Mesikapp served as audit manager of Brock and Company,
CPAs, P.C., an accounting firm located in Boulder, Colorado. From June 1986 to
November 1994, Mr. Mesikapp held a variety of positions and most recently was
a manager at Nykiel, Carlin and Company, an accounting firm located in
Schaumburg, Illinois. Mr. Mesikapp holds a B.S. in accounting from the
University of Illinois at Chicago and is a certified public accountant.
Nicholas Papadopoulos has served as our Vice President of Direct Sales
since September 2000 and from January 2000 to September 2000, as a director of
one of our departments of direct sales. From August 1998 to January 2000, Mr.
Papadopoulos served as director of sales and marketing for Autopart
International, Inc., an automobile parts importing company. From June 1996 to
August 1998, Mr. Papadopoulos served as sales manager of SouthWestern Bell, a
telecommunications company. From September 1993 to June 1996, Mr. Papadopoulos
served as sales and training manager of WearGuard Corporation, a direct mail
marketing company, which is a subsidiary of Aramark Corporation. Mr.
Papadopoulos holds a B.A. in history from New York University.
12
Management Compensation
Compensation of Directors
Directors of the Company do not currently receive any cash compensation for
their services as directors, but are eligible for reimbursement for customary
and reasonable expenses incurred in connection with attendance at Board and
committee meetings in accordance with Company policy. Non-employee directors
are entitled to receive options and stock issuances pursuant to our 2000
Equity Incentive Plan. Unless otherwise noted below, options granted to non-
employee directors vest over a period of three years commencing on the date of
grant, with 1/36th of the underlying shares vesting each month, and have an
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant. During the last fiscal year, the Company granted the
following options and issuances to non-employee directors pursuant to the
Company's 2000 Equity Incentive Plan:
. On June 20, 2000, Messrs. Feld, Hutchison, Halstedt, Meyer and Ms.
Whitaker each received an option to purchase 26,666 shares of our Common
Stock at an exercise price of $10.80 per share;
. On June 20, 2000, Mr. Meyer received an option to purchase 26,666 shares
of our Common Stock at an exercise price of $10.80 per share (such
option vests over a period of three years commencing on March 21, 2000,
with 1/36th of the underlying shares vesting each month);
. On June 20, 2000, Dr. Tayebi received an option to purchase 53,333
shares of our Common Stock at an exercise price of $10.80 per share;
. On May 16, 2000, Dr. Tayebi was granted a stock purchase award pursuant
to which he purchased 46,296 shares of our Common Stock at a purchase
price of $10.80 per share;
. On March 21, 2000, Mr. Meyer received a stock purchase award pursuant to
which he purchased 2,000 shares of our Common Stock at a purchase price
of $10.80 per share;
. On January 25, 2000, Mr. Hutchison received an option to purchase 26,666
shares of our Common Stock at an exercise price of $4.50 per share; and
. On January 25, 2000, Mr. Hutchison purchased 100,000 shares of our
Common Stock at $4.50 per share.
As of March 31, 2001, options to purchase 99,998 shares of our common stock
granted to non-employee directors had been exercised pursuant to the Company's
2000 Equity Incentive Plan.
13
Compensation of Executive Officers
Summary of Compensation
The following table shows for the fiscal years ended December 31, 1999 and
December 31, 2000, compensation awarded or paid to, or earned by, the
Company's Chief Executive Officer, other executive officers on December 31,
2000 whose annual salary and bonus exceeded $100,000 for services rendered to
the Company in all capacities and one executive officer who departed from the
Company on December 31, 2000 (the "Named Executive Officers"):
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------- ------------
Securities
Name and Principal Underlying
Position Year Salary Bonus Other Options
- ------------------ ---- -------- ------- -------- ------------
Paul A Berberian, 2000 $215,614 268,708
President and Chief 1999 131,515 $ 5,000 133,333
Executive Officer
Todd Vernon, 2000 190,558 150,000 263,500
Chief Technology Officer 1999 119,697 12,000 33,333
Terence G. Kawaja, 2000 166,805 107,500 $120,000(/1/) 100,000(/2/)
Former Executive Vice
President and Chief
Financial Officer
James M. LeJeal, 2000 215,662 193,500 86,110(/3/)
Former Chief Operating 1999 131,500 5,000 133,333(/3/)
Officer
- --------
(1) Amount represents relocation expenses.
(2) Option is a non-qualifying stock option with an exercise price of $0.10
per share. Option is fully vested and exercisable until 5 p.m. on March 2,
2002.
(3) Pursuant to the terms of a Separation Agreement between the Company and
Mr. LeJeal, dated November 14, 2000, options representing an aggregate of
80,556 shares were cancelled and the underlying shares reverted to the
Company.
Stock Option Grants And Exercises
The Company grants options to our executive officers under our 2000 Equity
Incentive Plan. As of March 31, 2001, options to purchase a total of 6,642,700
shares were outstanding under the 2000 Equity Incentive Plan and options to
purchase 5,334,448 shares remained available for grant thereunder. In
addition, the Company assumed options representing an aggregate of 1,574,831
shares of Common Stock as part of the Company's acquisition of Contigo
Software, Inc. in June 2000. Such options were issued pursuant to Contigo
Software, Inc.'s 1999 Stock Option Plan and 1999 Section 25102(o) Stock
Option/Stock Issuance Plan.
Our Board of Directors may reprice options pursuant to the terms of the
Company's option plans. Options are granted at an exercise price equal to the
fair market value of our Common Stock on the date of grant. Since the initial
public offering of the Company, the fair market value of our Common Stock is
the closing sales price of the stock as reported on the Nasdaq National Market
for the date of grant. Prior to the initial public offering, the fair market
value of our Common Stock on the date of grant was determined by our Board,
taking into consideration a number of factors, including:
. our historical and prospective revenue and profitability;
. our cash balance and rate of cash consumption;
. the growth and size of the market for our services;
14
. the stability of our management team; and
. the quality of our services.
Options generally vest over a four year period, with 25% of the underlying
shares vesting one year after the date of grant and the remaining shares
vesting at a rate of 1/48th per month thereafter. Options granted to executive
officers typically fully vest upon a change of control, as defined in the
Company's 2000 Equity Incentive Plan, unless the acquiring company assumes the
options or substitutes similar options.
Stock Option Grants
The following tables show for the fiscal year ended December 31, 2000,
certain information regarding options granted to, exercised by, and held at
year end by, the Named Executive Officers. An aggregate of 6,398,240 options
were granted to employees in fiscal year 2000.
The potential realizable value is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounding annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. For options granted after the Company's initial public offering, the
stock price on the date of grant is the closing sales price of the stock as
reported on the Nasdaq National Market for the date of grant. For options
granted prior to the initial public offering, the stock price on the date of
grant is assumed to be the initial public offering price of $8.00 pursuant to
rules promulgated by the SEC. The amounts represent certain assumed rates of
appreciation only, in accordance with the rules of the SEC, and do not reflect
the Company's estimate or projection of future stock price performance. For
example, if the calculations were based on the closing sales price of our
stock on December 29, 2000 (the last trading date of fiscal year 2000) as
reported on the Nasdaq National Market of $1.75, the potential realizable
values would be significantly lower. Actual gains, if any, are dependent on
the actual future performance of the Company's Common Stock and no gain to the
optionee is possible unless the stock price increases over the option term,
which will benefit all stockholders.
Option Grants in Last Fiscal Year
Potential Realizable Value
at Assumed Annual Rates of
Number of Percent of Stock Price
Securities Total Options Appreciation for
Underlying Granted to Exercise Option Term
Options Employees Price Per --------------------------------
Name Granted in 2000 Share Expiration Date 5% 10%
- ---- ---------- ------------- --------- ----------------- ------------- -------------
Paul A. Berberian....... 33,333 0.5% $5.31 August 16, 2010 $ 111,366 $ 282,222
1,000 0 2.56 December 5, 2010 1,612 4,084
234,375 3.7 2.56 December 5, 2010 377,705 957,179
Todd Vernon............. 22,222 0.4 4.50 December 31, 2009 189,579 361,106
1,111 0 4.50 December 31, 2009 9,478 18,054
66,667 1.0 8.00 July 23, 2010 335,412 850,000
72,500 1.1 5.31 August 16, 2010 242,223 613,840
100,000 1.6 2.56 December 5, 2010 161,154 408,397
1,000 0 2.56 December 5, 2010 1,612 4,084
Terence G. Kawaja....... 800,000 12.5 9.30 March 29, 2010 0(/1/) 0(/1/)
200,000 3.1 5.31 August 16, 2010 0(/1/) 0(/1/)
1,000 0 2.56 December 5, 2010 0(/1/) 0(/1/)
James M. LeJeal......... 33,333 0.5 5.31 August 16, 2010 0(/2/) 0(/2/)
- --------
(1) Options were cancelled on March 2, 2001 pursuant to the terms of a
separation and release agreement between the Company and Mr. Kawaja.
(2) Option was cancelled on December 31, 2000 pursuant to the terms of a
separation and release agreement between the Company and Mr. LeJeal.
15
Stock Option Exercises
The following table sets forth information for each Named Executive Officer
regarding options that were exercised during 2000 and options that were
unexercised on December 31, 2000. Amounts characterized as "Unexercisable" in
the table include unvested options notwithstanding the fact that some unvested
options are immediately exercisable upon grant because the shares underlying
such options are subject to repurchase by the Company at the original exercise
price upon the employee's cessation of service. The value of the unexercised
in-the-money options is equal to the closing sales price of the stock as
reported on the Nasdaq National Market for December 29, 2000 ($1.75) minus the
per share exercise price of the option, multiplied by the number of shares
underlying the option.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options on
Shares Options on December 31, 2000 December 31, 2000
Acquired Value ------------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ------------- --------------- ----------- -------------
Paul A. Berberian....... -- -- 36,111 365,930 $ 6,861 $18,472
Terence G. Kawaja....... -- -- -- 1,001,000 -- --
James M. LeJeal......... -- -- 36,111 130,555 6,861 18,472
Todd Vernon............. -- -- 152,775 310,724 230,379 52,120
16
Employment Agreements,
Severance and Change in Control Arrangements
Paul A. Berberian. In November 1999, we entered into a personal services
agreement with Mr. Berberian, our Chairman of the Board, Chief Executive
Officer and President. The agreement has an initial two year term and
continues indefinitely thereafter until notice of termination by either party.
Pursuant to the terms of the agreement, Mr. Berberian receives an annual base
salary of $215,000 beginning in 2000, plus a performance-based bonus as
determined by the compensation committee.
If Mr. Berberian is terminated without cause or terminates his own
employment "for good reason," then he will receive his base salary through the
end of the initial term or for a period of 18 months, whichever is longer,
plus any accrued bonuses, and all unexercised stock options will vest. If Mr.
Berberian is terminated "for cause," by mutual agreement or voluntarily, then
he will be entitled to accrued compensation and unreimbursed expenses. "For
good reason" is generally defined as a material change in the executive's job
duties inconsistent with his position, a reduction in salary inconsistent with
a general reduction of the salaries of similarly situated employees, a
required relocation more than 50 miles from our current location, or our
material breach of the applicable employment period. "For cause" is generally
defined as a material breach of the employment agreement by the executive,
dishonesty with respect to us, willful misfeasance intended to materially
damage us, conviction of a crime of moral turpitude or crime, other than a
vehicle offense, that could materially damage our reputation or willful or
prolonged absence, other than due to illness, or failure to perform his duties
for 20 days following written notice.
If Mr. Berberian is terminated following a "change of control," then he
will receive his base salary through the end of the initial term or for a
period of 18 months, whichever is longer, plus any bonus that would have been
paid to him had he remained employed during such period, and the initial grant
of stock options shall vest. A "change of control" is generally defined as our
liquidation or dissolution, the sale of all or substantially all of our
assets, and a merger or consolidation that results in our stockholders holding
less than 50% of the stock of the surviving corporation.
The agreement also contains non-competition and confidentiality provisions.
Pursuant to the terms of the agreement, Mr. Berberian agrees not to compete
with us within the United States, nor to hire or attempt to hire any of our
employees for a period of 12 months following his termination or while we are
making payments to him.
James M. LeJeal. In November 2000, we entered into a separation and release
agreement with Mr. LeJeal whereby Mr. LeJeal resigned from his position as our
Chief Operating Officer and his position on our Board of Directors and the
Board of Directors of our subsidiary as of December 31, 2000. Pursuant to the
terms of the agreement, we will continue to pay Mr. LeJeal his annual base
salary of $215,000 through June 30, 2002. In addition, we will pay certain
other of Mr. LeJeal's benefits through June 30, 2002. Pursuant to the terms of
the agreement, a stock option to purchase 133,333 shares of our Common Stock
that was granted to Mr. LeJeal in November 1999 will continue to vest pursuant
to its original terms until June 30, 2002, and the exercise period of such
option is extended until December 31, 2003. A stock option to purchase 33,333
shares of our Common Stock that was granted to Mr. LeJeal in August 2000 was
cancelled on December 31, 2000, and the underlying shares reverted to us. The
agreement contains non-competition and confidentiality provisions. Pursuant to
the terms of the agreement, Mr. LeJeal agrees not to compete with us within
the United States, nor to hire or attempt to hire any of our employees through
June 30, 2002. The agreement also contains a lock-up provision, whereby Mr.
LeJeal may not transfer shares that he beneficially owns, either directly or
indirectly. One-ninth of such shares are released from this restriction on the
22nd of each month, beginning on January 22, 2001, until all such shares are
released.
Terence G. Kawaja. In March 2001, we entered into a separation and release
agreement with Mr. Kawaja whereby Mr. Kawaja resigned from his positions as
our Executive Vice President and Chief Financial Officer and his position on
the Board of Directors of our subsidiary. Pursuant to the terms of the
agreement, we will continue to pay Mr. Kawaja his annual base salary of
$215,000 through July 20, 2001. We also granted
17
Mr. Kawaja 250,000 shares of our Common Stock pursuant to the terms of our
2000 Equity Incentive Plan. Pursuant to the terms of the agreement, stock
options to purchase an aggregate of 1,001,000 shares of our Common Stock that
were granted to Mr. Kawaja over the course of his employment with us were
cancelled. Also, a promissory note issued by Mr. Kawaja to us to purchase
250,000 shares of our Common Stock was cancelled in exchange for the return of
such shares. The agreement contains non-competition and confidentiality
provisions. Pursuant to the terms of the agreement, Mr. Kawaja agrees not to
compete with us within the United States, nor to hire or attempt to hire any
of our employees through March 2, 2002. The agreement also contains a lock-up
provision, whereby Mr. Kawaja may not transfer shares that he beneficially
owns, either directly or indirectly until June 1, 2001.
Report of the Compensation Committee of the Board of Directors
on Executive Compensation
The material in this report is not "solicited material," is not deemed
"filed" with the SEC and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing.
The Compensation Committee of the Board of Directors is composed of three
non-employee directors of the Company. The members of the Compensation
Committee are Mr. Feld, Mr. Meyer and Ms. Whitaker. The Compensation Committee
is responsible for establishing and administering the policies governing the
compensation of all employees of the Company, including our executive
officers. In addition, the Compensation Committee evaluates the performance
of, and determines the total compensation package for, the Company's Chief
Executive Officer ("CEO") and other executive officers of the Company.
Compensation Policies
The Company's compensation policies are designed to attract, retain and
reward executive officers through a combination of competitive base salaries,
annual bonuses and long-term equity-based incentives. The Company strives to
create compensation packages that reward executives who contribute to both the
short-term and the long-term success of the Company and that align executive
reward with stockholder value. Consistent with these philosophies, the
Compensation Committee considers a variety of factors, including level of
responsibility, prior experience, individual and corporate performance, short-
term and long-term business strategies and objectives and competitive pay
practices, in determining the total compensation package of an executive. Each
component of the Company's executive compensation packages is discussed
separately below.
Base Salary
The Compensation Committee sets a range of base salaries for our executive
officers, primarily based on the competitive pay practices within the
industry, particularly of comparable high-technology companies. In addition,
the Compensation Committee, together with the Board of Directors, will
evaluate the level of performance of each executive officer, the specific
duties to be performed and the length of service to the Company in determining
current and future appropriate base pay levels. The Compensation Committee
periodically reviews the base salaries of our executive officers, considering
the above-listed factors, as well as corporate performance. Corporate
performance is measured by relevant financial results and the success of the
management team in non-financial areas, such as strategic business decisions,
operational performance and management objectives.
Annual Bonuses
Executive officers are eligible for target annual bonuses that are
calculated by the Compensation Committee as a percentage of the officers' base
salary. The Compensation Committee views annual bonuses as an opportunity to
link continuous improvements in corporate performance and increases in
stockholder value to executive rewards. To this end, specific corporate
performance goals and milestones, which are established each year by
management, are primarily used to measure annual bonuses. Corporate
performance is measured by the Company's actual performance as compared to
corporate revenue and earnings targets. Individual performance is based on
subjective and objective factors, including actual performance as compared to
department metrics and functions.
18
Long-Term Equity-Based Incentives
The Company has a 2000 Equity Incentive Plan and a 2000 Employee Stock
Purchase Plan, which exist to provide employees, including executive officers,
the opportunity to share in the long-term performance of the Company and the
motivation to maximize stockholder value.
The Company typically grants stock options to executives upon the
commencement of their service for the Company or upon a significant change in
responsibilities based on competitive pay practices of comparable companies.
In addition, the Company periodically grants stock options to executives in an
effort to retain and reward a high-quality management team. In this regard,
the Compensation Committee bases its decisions regarding stock options on
current market conditions, as well as corporate and individual performance.
Where the Compensation Committee grants options as a compensation award for
past performance, the significance of the accomplishment or milestone is
measured against objective criteria to determine the size of the award. In
addition, where options are viewed as an incentive mechanism, the number of
options or shares granted to or owned by the executive, in addition to the
price at which such options or shares were granted or purchased, is taken into
consideration in determining the size of the award.
Stock options granted to executives typically vest over a period of four
years and expire ten years after the date of grant. The exercise price of the
stock options is typically 100% of the fair market value of the Company's
Common Stock on the date of grant. Executives also may participate in the
Company's 2000 Employee Stock Purchase Plan, which allows employees to
authorize payroll deductions of up to 15% of their earnings for the purchase
of stock at a discounted price pursuant to the plan.
CEO Compensation and Corporate Performance
Mr. Berberian's base salary, annual bonus and long-term incentives are
determined in accordance with the compensation policies described above. Mr.
Berberian's base salary was $215,000 for the fiscal year 2000. In setting Mr.
Berberian's base salary, the Compensation Committee considered the prevailing
competitive salaries in the technology sector for similar positions in
comparable companies. In addition, the Compensation Committee measures
corporate performance to determine changes in base salary and the annual bonus
of Mr. Berberian. Corporate performance includes objective measures of
financial goals such as revenue and earnings as well as certain other
performance metrics, such as operational, strategic and management objectives,
service quality and customer satisfaction. Last year, in lieu of granting Mr.
Berberian a year-end cash bonus, the Compensation Committee granted Mr.
Berberian a year-end bonus of an option to purchase 234,375 shares of the
Company's Common Stock at an exercise price of $2.56, which was the fair
market value of the stock on the date of grant. The entire option vests on
June 6, 2001. Mr. Berberian's annual bonus was awarded to compensate Mr.
Berberian for his contribution in the strategic direction of the Company in
2000 and to motivate and align his performance to successfully execute the
Company's recent restructuring efforts.
19
Mr. Berberian also received certain long-term equity-based incentives
throughout 2000. In particular, the Company granted Mr. Berberian stock
options to purchase an aggregate of 34,333 shares of the Company's Common
Stock at an exercise price equal to the fair market value of the stock on the
date of grant. The Compensation Committee's decision to grant long-term
equity-based incentives to Mr. Berberian was also based on its determination
that Mr. Berberian contributed substantially to the growth and performance of
the Company and that it is the Compensation Committee's philosophy to link the
motivation of executives, particularly the CEO, with maximizing long-term
stockholder value.
Compensation Committee of the Board of
Directors
Bradley A. Feld
Andre Meyer
Carol deB. Whitaker
Compensation Committee Interlocks and Insider Participation
As noted above, Mr. Feld, Mr. Meyer and Ms. Whitaker are the members of the
Compensation Committee of the Board of Directors. No member of the
Compensation Committee has been an officer or employee of the Company at any
time. None of our executive officers serve as a member of the board of
directors or compensation committee of any other company that has one or more
executive officers serving as a member of our Board of Directors or
Compensation Committee.
20
Performance Measurement Comparison
This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
The following graph shows the total stockholder return of an investment of
$100 in cash on July 25, 2000 for the Company's Common Stock and the Nasdaq
Stock Market (U.S.) Index and an investment of $100 in cash on June 30, 2000
for the Russell 2000 Technology Sector Index. All values assume reinvestment
of the full amount of all dividends and are calculated as of the last day of
the applicable month:
Comparison of 7 Month Cumulative Total Return among Evoke Communications,
Inc., the
Nasdaq Stock Market (U.S.) Index and the Russell 2000 Technology Sector Index
[PERFORMANCE GRAPH APPEARS HERE]
EVOKE COMMUNICATIONS INC.
RUSSELL
NASDAQ 2000
EVOKE STOCK TECHNOLOGY
COMMUNICATIONS MARKET SECTOR
INC. (U.S.) INDEX INDEX
------------- ------------ ---------
07/25/00 $100.00 $100.00 $100.00
07/00 $ 98.46 $ 93.35 $ 86.32
08/00 $135.38 $104.38 $100.17
09/00 $ 80.78 $ 90.81 $ 90.87
10/00 $ 60.00 $ 83.33 $ 78.52
11/00 $ 24.62 $ 64.25 $ 54.95
12/00 $ 21.54 $ 60.80 $ 54.34
01/01 $ 15.38 $ 68.22 $ 65.25
02/01 $ 26.93 $ 52.94 $ 47.05
21
Certain Relationships and Related Transactions
Loans
As of March 31, 2001, the Company had a loan outstanding in the principal
amount of $100,000 to Mr. Berberian, who is an executive officer and director
of the Company. The loan was entered into in January 2001 pursuant to a
promissory note with a two year term and an annual interest rate of 8%. If Mr.
Berberian's employment with the Company is terminated for any reason prior to
his payment of the note, then the unpaid portion of principal and interest
will become immediately due.
Service Agreements
In March 2001, the Company entered into a Termination and Release Agreement
with Work.com LLC, of which Mr. Hutchison, who is one of our directors, is the
outgoing chairman of the board and chief executive officer. Pursuant to the
terms of the agreement, certain service agreements between the Company and
Work.com were terminated and both parties were released from any further
obligations pursuant to such agreements. The parties agreed that certain
promotion fees due by the Company to Work.com would be reduced by $150,000 and
that Work.com would pay $55,000 to the Company as the final payment for all
services rendered by the Company.
Leases
In March 1997, the Company entered into a contract with BMC Properties, LLC
for the lease of 4,295 square feet of office space at 5777 Central Avenue,
Boulder, Colorado 80301. This lease commenced in June 1997 and expires in May
2002. In 2000, the Company paid an aggregate of $75,162 to BMC Properties, LLC
and expects to pay an aggregate of $75,162 in 2001 and $31,318 in 2002. Byron
Chrisman, a former director of the Company, is a managing member of BMC
Properties LLC.
In June 1999, the Company entered into a contract with BLC Properties, LLC
for the lease of our principal executive offices at 1157 Century Drive,
Louisville, Colorado 80027. This lease commenced in October 1999 and has a
term of 10 years. Pursuant to this lease, the Company pays rent of $50,110 per
month subject to an annual adjustment for inflation based on the consumer
price index. The Company also pays the operating expenses related to this
building, which vary on a monthly basis. Messrs. Berberian, Chrisman, and
LeJeal are members of BLC Properties, LLC.
The Company believes that each of the transactions described above was
carried out on terms that were no less favorable to us than those that would
have been obtained from unaffiliated third parties.
Stock Option Grants and Issuances
Stock option grants and stock issuances pursuant to our executive
compensation plan to our executive officers and directors are described in the
sections entitled "Compensation of Executive Officers" and "Compensation of
Directors."
Employment Agreements
The Company has entered into an employment agreement with Mr. Berberian,
which is described in the section entitled "Employment Agreements, Severance
and Change in Control Arrangements."
Severance Agreements
The Company has entered into severance agreements with each of Mr. Kawaja
and Mr. LeJeal, each of which is described in the section entitled "Employment
Agreements, Severance and Change in Control Arrangements."
22
Other Matters
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
Stephanie A. Anagnostou
Secretary
May 14, 2001
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K, as amended, for the fiscal year ended December 31,
2000 is available without charge upon written request to: Corporate Secretary,
Evoke Communications, Inc., 1157 Century Drive, Louisville, Colorado 80027.
23
Appendix A
EVOKE INCORPORATED
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors to be known as the
audit committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the corporation, and the quality and integrity of the financial reports of
the corporation. In so doing, it is the responsibility of the audit committee
to maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of
the corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
. Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
. Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations of
the independent auditors.
. Review with the independent auditors, the company's internal auditor,
and financial and accounting personnel, the adequacy and effectiveness
of the accounting and financial controls of the corporation, and elicit
any recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the
adequacy of such internal controls to expose any payments, transactions,
or procedures that might be deemed illegal or otherwise improper.
. Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year and the coordination of such plans with
the independent auditors.
. Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Any changes in accounting principles should be reviewed.
. Provide sufficient opportunity for the internal and independent auditors
to meet with the members of the audit committee without members of
management present. Among the items to be discussed in these meetings
are the independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
24
. Review accounting and financial human resources and succession planning
within the company.
. Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
25
EVOKE COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, June 20, 2001
9:00 a.m. (MDT)
WESTIN TABOR CENTER
1672 Lawrence Street
Denver, CO 80202
- --------------------------------------------------------------------------------
Evoke Communications, Inc.
1157 Century Drive
Louisville, Colorado 80027 proxy
________________________________________________________________________________
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on June 20, 2001.
The shares of stock you hold in your account will be voted as you specify on
the reverse side.
If no choice is specified, the proxy will be voted "FOR" Items 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint Paul A. Berberian
and Stephanie A. Anagnostou, and each of them, with full power of substitution,
to vote your shares on the matters shown on the reverse side and any other
matters which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
Please detach here
The Board of Directors Recommends a Vote FOR Items 1 and 2
1. Election of directors 01 Paul A. Berberian
02 Carol deB. Whitaker
[ ] Vote FOR all nominees (except as marked)
[ ] Vote WITHHELD from all nominees
(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) of the nominee(s) in the box provided to the right.)
2. To ratify and approve the appointment of KPMG LLP, independent auditors of
the Company for its fiscal year ending December 31, 2001.
[ ] For
[ ] Against
[ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
Indicate changes below: Date:__________________________
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
proxy.