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:
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[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Notify Technology Corporation
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N/A
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[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
NOTIFY TECHNOLOGY CORPORATION
To All Shareholders:
The 2001 Annual Meeting of the Shareholders of Notify Technology
Corporation (the "Company") will be held at the Cupertino Inn, 10889 North De
Anza Blvd., Cupertino, California 95014 on March 8, 2001 at 10:00 a.m., to act
on the following matters:
(1) To elect five persons to the Company's Board of Directors;
(2) To ratify and approve amendments to the Company's 1997 Stock Plan to
increase the number of shares issuable thereunder by 500,000 shares and
to increase the number of shares of Common Stock that can be issued to
current service providers each year from 50,000 shares to 150,000
shares;
(3) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year; and
(4) To act on such other matters as may properly come before the meeting
or any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on January 17, 2001
are entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign and return the enclosed proxy card as promptly as possible
in the postage-prepaid envelope enclosed for that purpose. Any shareholder
attending the Annual Meeting may vote in person even if he or she returned a
proxy.
By Order of the Board of Directors of
NOTIFY TECHNOLOGY CORPORATION
By: Gerald W. Rice
Secretary
Dated: February 6, 2001
1
NOTIFY TECHNOLOGY CORPORATION
PROXY STATEMENT FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Notify Technology Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on March 8, 2001 at 10:00 a.m., local time, or at any
adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at the Cupertino Inn, 10889 North De Anza Boulevard, Cupertino,
California 95014. The Company's principal offices are located at 1054 S. De
Anza Boulevard, Suite 105, San Jose, California 95129. The telephone number at
that address is (408) 777-7920.
These proxy solicitation materials were mailed on or about February 6, 2001
to all shareholders entitled to vote at the meeting.
Record Date and Shares Outstanding
Shareholders of record at the close of business on January 17, 2001 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
record date, 5,264,966 shares of the Company's Common Stock (the "Common
Stock") were issued and outstanding.
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 Company (Attn:
Corporate Secretary) a written notice of revocation or a duly executed proxy
bearing a later date, or by attending the meeting and voting in person. The
mere presence at the Annual Meeting of the shareholder who has appointed a
proxy will not revoke the prior appointment. If not revoked, the proxy will be
voted at the Annual Meeting in accordance with the instructions indicated on
the proxy card, or if no instructions are indicated, will be voted for the
slate of directors described herein, for Proposals Two and Three and as to any
other matter that may be properly brought before the Annual Meeting, in
accordance with the judgement of the proxy holders.
Voting and Solicitation
Every shareholder is entitled to one vote per share. With respect to the
election of directors, every shareholder voting at the election of directors
may cumulate such shareholder's votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
votes to which the shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among as many candidates as the
shareholder thinks fit, provided that votes cannot be cast for more than five
candidates. However, no shareholder shall be entitled to cumulate votes unless
the candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes. On all other
matters, each share has one vote.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telefax or telegram.
1
Quorum; Abstentions; Broker Non-votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR", "AGAINST" or "ABSTAIN" on a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares "represented and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total
number of Votes Cast with respect to a proposal (other than the election of
directors). In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Accordingly, abstentions
will have the same effect as a vote against the proposal.
Broker non-votes will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but will not be counted
for purposes of determining the number of Votes Cast with respect to the
proposal on which the broker has expressly not voted. Thus, a broker non-vote
will not affect the outcome of the voting on a proposal.
An automated system administered by the Company's transfer agent will be
used to tabulate proxies. Tabulated proxies will be transmitted to a
representative of the Company's transfer agent who will serve as inspector of
elections.
Deadlines for Submission of Shareholder Proposals for 2002 Annual Meeting
Shareholders of the Company are entitled to present proposals for
consideration at forthcoming shareholder meetings provided that they comply
with the proxy rules promulgated by the Securities and Exchange Commission and
the Bylaws of the Company. Shareholders wishing to present a proposal at the
Company's 2002 Annual Shareholder Meeting must submit such proposal to the
Company by October 9, 2001 if they wish for it to be eligible for inclusion in
the proxy statement and form of proxy relating to that meeting. In addition,
under the Company's Bylaws, a shareholder wishing to make a proposal at the
2002 Annual Shareholder Meeting must submit such a proposal to the Company
prior to December 23, 2001.
Shareholder Nominations and Proposals
The Company's Bylaws provide that only persons nominated by or at the
direction of the Board of Directors or by a shareholder who has given timely
written notice to the Secretary of the Company prior to the meeting will be
eligible for election as directors. In all cases, to be timely, notice must be
received by the Company not less than twenty (20) days prior to the meeting;
provided, however, if fewer than thirty (30) days notice or prior public
disclosure of the meeting date is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than the tenth day
following the day on which such notice was mailed or such public disclosure was
made. In the notice, the shareholder must provide (a) as to each person, whom
the shareholder proposes to nominate for election as a director: (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares
of the Company which are beneficially owned by such person, (iv) any other
information relating to such person that is required by law to be disclosed in
solicitations of proxies for election of directors; and (b) as to the
shareholder giving the notice: (i) the name and address, as they appear on the
Company's books, of such shareholder, (ii) the class and number of shares of
the Company which are beneficially owned by such shareholder, and (iii) a
description of all arrangements or understandings between such shareholder and
each nominee and any other person or persons (naming such person or persons)
relating to the nomination.
2
The Company's Bylaws also provide that all business which can be conducted
at the meeting must be properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (a) as specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a shareholder. Business to be brought before the meeting
by a shareholder shall not be considered properly brought if the shareholder
has not given timely notice thereof in writing to the Secretary of the Company.
To be timely, a shareholder's notice must be delivered to the principal
executive offices of the Company not less than forty five (45) days prior to
the date on which the Company first mailed proxy materials for the prior year's
annual meeting; provided, however, that if the Company's annual meeting of
shareholders occurs on a date more than thirty (30) days earlier or later than
the Company's prior year's annual meeting, then the Company's Board of
Directors shall determine a date a reasonable period prior to the Company's
annual meeting of shareholders by which date the shareholders notice must be
delivered and publicize such date in a filing pursuant to the Securities
Exchange Act of 1934, as amended, or via press release. Such publication shall
occur at least ten (10) days prior to the date set by the Board of Directors. A
shareholder's notice to the Secretary shall set forth, as to each matter, what
the shareholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address of the shareholder proposing such business, (iii) the class and
number of shares of the Company, which are beneficially owned by the
shareholder, (iv) any material interest of the shareholder in such business,
and (v) any other information that is required by law to be provided by the
shareholder in his capacity as proponent of a shareholder proposal.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees and Vote Required
A board of five (5) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the five nominees named below, all of whom are presently directors of the
Company. In the event that any such nominee is unable or declines to serve as
a director at the time of the Annual Meeting of Shareholders, the proxies will
be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner in accordance with cumulative voting
as will assure the election of as many of the nominees listed below as
possible, and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. The five nominees for director receiving the
highest number of affirmative votes of the shares entitled to be voted for
them shall be elected as directors. Votes withheld from any director are
counted for purposes of determining the presence or absence of a quorum, but
have no other legal effect under California law. It is not expected that any
nominee will be unable or will decline to serve as a director. The term of
office of each person elected as a director will continue until the next
Annual Meeting of Shareholders or until a successor has been elected and
qualified.
The names of the nominees, and certain information about them as of the
record date, are set forth below.
Director
Name of Nominee Age Position Since
--------------- --- -------- --------
Paul F. DePond.......... 47 President, Chief Executive Officer 1994
and Chairman of the Board of
Directors of the Company
Gaylan I. Larson........ 60 Vice President of Operations of the
Company and Director 1994
Michael K. Ballard...... 45 Director 1995
Andrew H. Plevin........ 37 Director 1998
David A. Brewer......... 49 Director 2000
Paul F. DePond, founder of the Company, has served as its President, Chief
Executive Officer and Chairman of the Board of Directors since the Company's
inception in August 1994. From September 1992 through May 1994, Mr. DePond
served as Vice President of Corporate Marketing at Telebit Corporation, a
supplier of high speed modems and dialup remote access products. From January
1991 through September 1992, Mr. DePond served as Vice President of Marketing
at Alantec Corporation, a manufacturer of networking products.
Gaylan I. Larson has served as Vice President of Operations and as a
director of the Company since August 1994. From January 1991 to August 1994,
Mr. Larson was Chief Operating Officer of SportSense, Inc., a manufacturer of
golf training equipment. Prior to SportSense, Mr. Larson served as General
Manager of the Data Systems Division of Hewlett Packard Company, a company
with which he had an 18 year relationship.
Michael K. Ballard has served as a director of the Company since January
1995. Since September 1999, Mr. Ballard has been a director of NetSilicon,
Inc. Since September 1996, Mr. Ballard has been the President of Savannah
Chanel Vineyards, Inc. From October 1996 to November 1997, Mr. Ballard served
as a product director of Cisco Systems. From April 1995 to September 1996, Mr.
Ballard served as Vice President of Business Development at Telebit
Corporation, a wholly-owned subsidiary of Cisco Systems, Inc. From June 1993
to September 1994, Mr. Ballard served as Chief of Operations of UUNet, Inc.,
an Internet service provider. From January 1986 to May 1993, Mr. Ballard
served as Chief Executive Officer of Telebit Corporation.
Andrew H. Plevin has served as a director of the Company since February
1998. From November 1997 to August 2000, Mr. Plevin served as President, Chief
Executive Officer and Chief Financial Officer of Core
4
Software Technology, Inc. From August 1993 to November 1997, Mr. Plevin served
as Vice President of D.H. Blair Investment Banking Corp. ("D.H. Blair"), a New
York investment banking firm. Mr. Plevin was nominated for election to, and
serves on the Board of Directors pursuant to a requirement contained in the
underwriting agreement between the Company and D.H. Blair for the Company's
initial public offering ("IPO"). The provision provides that D.H. Blair shall
have the right to designate one director of the Company's Board of Directors
for a period of five years from the closing date of the Company's IPO.
David A. Brewer has served as a director of the Company since February 2000.
Since January 1999, Mr. Brewer has served as general manager for Aragon
Ventures LLC, a private equity investment firm. From November 1999 to present,
Mr. Brewer has served as Chief Executive Officer of Explore Holdings LLC, a
private equity investment firm, and from July 1995 to present he has served as
a managing member of Inktomi LLC, an internet research company. From September
1995 to December 1999, Mr. Brewer served as President, Chief Executive Officer
and director of Explore Technologies, Inc., an educational toy manufacturer.
From February 1996 to May 1996, Mr. Brewer served as President, Chief Executive
Officer, Chief Financial Officer and director of Inktomi Corporation, an
internet software developer. Mr. Brewer was nominated for election to the Board
of Directors pursuant to a requirement contained in that certain securities
purchase agreement between the Company and Mr. Brewer dated March 4, 1999.
Board Meetings and Committees
The Board of Directors of the Company held a total of four meetings during
fiscal 2000. No director attended fewer than 75% of such meetings or of
committee meetings held while such director was a member of the Board or of a
committee, except for Mr. Ballard, who attended three of the meetings of the
board of directors and did not attend the annual Audit Committee meeting. The
committees of the Board of Directors include an Audit Committee and a
Compensation Committee.
The Audit Committee of the Board of Directors consists of Michael K.
Ballard, David A. Brewer and Andrew H. Plevin and held one meeting during
fiscal 2000. The Audit Committee recommends engagement of the Company's
independent auditors, approves services performed by such auditors and reviews
and evaluates the Company's accounting system and its system of internal
accounting controls. The Audit Committee has adopted a written charter, which
is attached to this Proxy Statement as Appendix B. Each member of our Audit
Committee is "independent" as defined under the National Association of
Securities Dealers' listing standards.
The Compensation Committee of the Board of Directors consists of Michael K.
Ballard and Paul F. DePond and held one meeting during fiscal 2000. The
Compensation Committee reviews and administers the compensation of the officers
of the Company and administers the Company's 1997 Stock Plan.
Audit Committee Report
The following is the audit committee's report submitted to the Board of
Directors for the fiscal year ended on September 30, 2000.
The Audit Committee of the Board of Directors has:
. reviewed and discussed the Company's audited financial statements for the
fiscal year ending on September 30, 2000 with the Company's management;
. discussed with Ernst & Young LLP, the Company's independent auditors, the
materials required to be discussed by Statement of Auditing Standard 61;
and
. reviewed the written disclosures and the letter from Ernst & Young LLP
required by Independent Standards Board No. 1 and has discussed with
Ernst & Young LLP its independence.
Based on the foregoing review and discussion, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's 2000 Annual Report on Form 10-K.
5
AUDIT COMMITTEE
Michael K. Ballard
David A. Brewer
Andrew H. Plevin
Compensation of Directors
Members of the Company's Board of Directors do not receive compensation for
their services as directors.
Vote Required
If a quorum is present and voting, the five nominees receiving the highest
number of votes will be elected to the Board of Directors. Votes withheld from
any nominee will be counted for purposes of determining the presence or
absence of a quorum for transaction of business at the meeting and the total
number of Votes Cast with respect to a nominee. Accordingly, abstentions will
have the same effect as a vote against the nominee. Broker non-votes will be
counted for purposes of determining the presence or absence of a quorum for
the transaction of business, but will not be counted for purposes of
determining the number of Votes Cast with respect to a nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE ABOVE CANDIDATES FOR THE COMPANY'S BOARD OF DIRECTORS.
6
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE COMPANY'S 1997 STOCK PLAN TO INCREASE THE NUMBER
OF SHARES ISSUABLE THEREUNDER BY 500,000 SHARES AND TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK THAT CAN BE ISSUED TO CURRENT SERVICE PROVIDERS EACH
YEAR FROM 50,000 SHARES TO 150,000 SHARES
At the Annual Meeting, the shareholders are being requested to consider and
approve an amendment to the Company's 1997 Stock Plan, as amended (the "1997
Plan"), to increase the number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares and to increase the number of shares of Common
Stock that can be issued to current service providers each year from 50,000
shares to 150,000 shares.
The 1997 Plan was adopted by the Board of Directors in January 1997. A total
of 700,000 shares of Common Stock have been reserved for issuance under the
1997 Plan. As of November 30, 2000, options to purchase 605,220 shares of
Common Stock were outstanding under the 1997 Plan and 77,150 shares remained
available for future issuance under the 1997 Plan (without giving effect to the
proposed increase in the proposed amendment). Options to purchase a total of
17,630 shares under the 1997 Plan had been exercised as of such date. In
January 2000, the Board of Directors approved an increase of 500,000 shares
issuable under the 1997 Plan, which, if approved by the shareholders at the
2001 Annual Meeting of the Shareholders, would increase the total shares
reserved for issuance under the 1997 Plan since its inception to 1,200,000
shares. A summary of the principal terms of the 1997 Plan is located in
Appendix A to this Proxy Statement.
Purpose and Effect of Amendments
One purpose of the proposed amendments to the 1997 Plan is to increase the
number of shares available for issuance under the 1997 Plan. The Board of
Directors believes that this proposed amendment is in the best interests of the
Company and its shareholders for a number of reasons. First, the Board of
Directors believes that the Company's 1997 Plan is vital to retaining,
motivating and rewarding employees, executives and consultants by providing
them with long-term equity participation in the Company relating directly to
the financial performance and long-term growth of the Company. Second, the
Board of Directors believes that granting stock options to employees is an
important contributor to aligning the incentives of the Company's employees
with the interests of the Company's shareholders. Third, the increase in the
number of shares reserved for issuance under the 1997 Plan will provide the
Company with an adequate pool of options to compete effectively with other
companies for existing and new employees. Competition for qualified employees
in the technology market is extremely intense, and, due to the rapid growth of
many successful companies in this sector, such competition is increasing. The
Board of Directors believes that in order to remain competitive with other
technology companies with regard to its long-term incentive plans, the Company
must continue to provide employees with the opportunity to obtain equity in the
Company.
Another purpose of the proposed amendments to the 1997 Plan is to increase
the size of annual grants of stock options to service providers. The Board of
Directors believes that this proposed amendment to the 1997 Plan is in the best
interests of the Company and its stockholders because larger annual stock
option grants are more valuable to the grantees and thus will help to attract
and retain qualified individuals.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendments to the 1997 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
AMENDMENTS TO THE 1997 PLAN.
7
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT AUDITORS
Subject to the ratification by the shareholders, the Board of Directors
appointed Ernst & Young LLP, independent public auditors to serve for the
fiscal year ending September 30, 2001.
The Board of Directors recommends that the shareholders vote for
ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors to audit the financial statements for the Company for the
fiscal year ending September 30, 2001. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
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.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
ratify Ernst & Young LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
8
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table sets forth information for the three most recently
completed fiscal years concerning the compensation of (i) the Chief Executive
Officer and (ii) all other executive officers of the Company who earned over
$100,000 in salary and bonus in the fiscal year ended September 30, 2000
(together the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
------------------------------- --------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Award(s) Options Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)(1)
------------------ ---- ------- ----- ------------ ---------- ---------- ------- ------------
Paul F. DePond.......... 2000 167,978 -- -- -- 50,000 -- 9,570
Chief Executive 1999 166,531 -- -- -- -- -- 7,116
Officer 1998 132,739 -- -- -- -- -- 7,950
Gaylan I. Larson ....... 2000 136,154 -- -- -- 50,000 -- 7,852
Chief Operations 1999 116,500 -- -- -- -- -- 6,346
Officer 1998 115,585 6,138
Gerald W. Rice.......... 2000 122,634 -- -- -- 50,000 -- 10,085
Chief Financial Officer 1999 116,207 -- -- -- -- -- 8,401
1998 105,759 -- -- -- -- -- 6,562
Maurice J. Hamoy ....... 2000 104,038 -- -- -- 40,000 -- 4,637
Vice President of 1999 -- -- -- -- -- -- --
Marketing 1998 -- -- -- -- -- -- --
(1) Represents payments of health insurance premiums and dental on behalf of
the Named Executive Officers.
9
The following tables set forth certain information for the Named Executive
Officers with respect to grants and exercises in fiscal 2000 of options to
purchase Common Stock of the Company:
Individual Option Grants in Last Fiscal Year
Number % of Total
of Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date
---- ------------- ------------ ----------- ----------
Paul F. DePond............. 50,000 11.0 $8.813 2/22/10
Gaylan I. Larson........... 50,000 11.0 $8.813 2/22/10
Gerald W. Rice............. 50,000 11.0 $8.813 2/22/10
Maurice J. Hamoy........... 40,000 8.8 $6.375 11/9/09
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Number of Securities
Underlying Value of Unexercised In-
Unexercised Options at the-Money Options at
Shares Value Fiscal Year End (#) Fiscal Year End (1)($)
Acquired Realized ------------------------- -------------------------
Name on Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------- ----------- ------------- ----------- -------------
Paul F. DePond.......... -- -- 9,722 40,278 $ -- $ --
Gaylan I. Larson........ -- -- 9,722 40,278 $ -- $ --
Gerald W. Rice ......... -- -- 9,722 40,278 $ -- $ --
Maurice J. Hamoy........ -- -- -- 40,000 $ -- $ --
- --------
(1) Market value of Company's Common Stock at September 30, 2000 of $3.375,
minus the exercise price multiplied by the number of shares.
Employment Agreements and Change-in-control Arrangements
In December 1996, the Company entered into an employment agreement with Paul
F. DePond, the Company's President and Chief Executive Officer. The agreement
provides for a base salary of $130,000, which increased to $150,000 thirteen
months following the Company's initial public offering, and increased to
$175,000 in February 2000. Mr. DePond is eligible for a $50,000 bonus
contingent on the Company's attainment of certain performance milestones. In
addition, if the Company is sold while Mr. DePond is employed by the Company,
Mr. DePond will receive a bonus equal to 2% of the price at which the Company
is sold.
In the event that the Company terminates Mr. DePond without cause following
a change in control, Mr. DePond is entitled to receive severance compensation
equal to a continuation of his salary for a period of twenty-four (24) months.
In the event that the Company terminates Mr. DePond without cause apart from a
change of control, Mr. DePond is entitled to receive severance compensation
equal to a continuation of his salary for a period of eighteen (18) months. Mr.
DePond is not entitled to severance compensation in the event of a termination
for cause or voluntary resignation. In the event of a termination due to
disability, Mr. DePond is entitled to receive only those severance or
disability benefits as are established under the Company's then existing
severance and benefits plans and policies.
In December 1996, the Company entered into employment agreements with Mr.
Larson, the Company's Vice President of Operations and Mr. Rice, the Company's
Chief Financial Officer. The agreements provide for base salaries of $115,000
and $105,000 for Messrs. Larson and Rice, respectively. These base salaries
were increased in February 2000 to $145,000 and $130,000, respectively. Under
the agreements, Messrs. Larson and Rice are eligible to receive annual bonuses
based on an earnings target approved by the Company's board of directors.
In the event that the Company terminates Messrs. Larson or Rice without
cause following a change in control, the terminated officer is entitled to
receive severance compensation equal to a continuation of his salary
10
for a period of twelve (12) months. In the event that the Company terminates
Messrs. Larson or Rice without cause apart from a change of control, the
terminated officer is entitled to receive severance compensation equal to a
continuation of his salary for a period of six (6) months. Messrs. Larson and
Rice are not entitled to severance compensation in the event of a termination
for cause or voluntary resignation. In the event of a termination due to
disability, the terminated officer is entitled to receive only those severance
or disability benefits as are established under the Company's then existing
severance and benefits plans and policies.
The foregoing agreements define a "change in control" as (i) the acquisition
of more than 30% of the voting securities of the Company by any person or
group; (ii) a change in a majority of the Company's board of directors
occurring within a two-year period; or (iii) the approval by the Company's
shareholders of a transaction which would result in a transfer of more than 50%
of the Company's voting power provided, however, that a public offering of the
Company's common stock does not constitute a change of control. Messrs. DePond,
Rice and Larson have also agreed that the acquisition of shares and warrants by
David Brewer does not constitute a "change in control." The agreements define
"cause" as an act of dishonesty in connection with employment; a conviction of
a felony which will detrimentally affect the Company's reputation or business;
willful and gross misconduct injurious to the Company; and continued and
willful failure to perform duties. The agreements define "disability" as the
inability to perform duties under the agreement due to mental or physical
illness determined to be total and permanent by a physician.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of Common Stock of the Company as of November 30, 2000 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 director and each nominee
for director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table above, and (iv) all directors and executive officers
as a group. Except as otherwise indicated, the Company believes that the
beneficial owners of the Common Stock listed below have sole investment and
voting power with respect to such shares, subject to community property laws.
Name and Address of Beneficial
Owner Shares Beneficially Owned(1) Percentage (1)
------------------------------ --------------------------- -------------
David A. Brewer(2)(3)(4) ......... 2,253,620 36.5%
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Paul F. DePond(5)................. 533,398 9.9
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
J. Morton Davis(6)................ 288,704 5.3
c/o D.H. Blair Investment Banking
Corp.
44 Wall Street
New York, NY 10005
Gaylan I. Larson(7)............... 214,686 4.1
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Andrew Plevin(8).................. 248,474 4.6
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Gerald W. Rice(9)................. 110,725 2.1
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Michael Ballard(10)............... 71,905 1.4
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
Maurice J. Hamoy(11).............. 11,667 *
c/o Notify Technology Corporation
1054 S. De Anza Blvd., Suite 105
San Jose, California 95129
All directors and executive
officers as a group
(8 persons)...................... 3,444,475 52.6
12
- --------
* less than 1%
(1) Applicable percentage of ownership is based on 5,264,966 shares of Common
Stock outstanding as of November 30, 2000 together with applicable options
or warrants for such shareholder. Beneficial ownership is determined in
accordance with the rules of the Securities Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options or warrants currently exercisable or
exercisable within 60 days after November 30, 2000 are deemed outstanding
for purposes of computing the percentage ownership of the person holding
such options or warrants, but are not deemed outstanding for computing the
percentage of any other stockholder.
(2) Includes 903,919 shares issuable upon exercise of currently exercisable
warrants.
(3) Includes 19,801 shares of Common Stock owned by New Madrone Fund, Inc., of
which Mr. Brewer is a shareholder.
(4) Includes 12,500 shares of Common Stock owned by JEB Associates, of which
Mr. Brewer is a shareholder.
(5) Includes 110,792 shares issuable upon exercise of currently exercisable
warrants and 16,667 shares issuable upon exercise of a currently
exercisable option.
(6) Information provided herein is based solely on J. Morton Davis's Schedule
13G dated February 12, 1999. Mr. Davis claims sole voting power as to
72,000 shares. Mr. Davis may be deemed to beneficially own 288,704 shares
as follows: (i) 36,000 shares and 36,000 shares underlying currently
exercisable warrants owned directly by D.H. Blair Investment Banking Corp.,
of which Mr. Davis is the sole shareholder, and (ii) 108,352 shares and
108,352 shares underlying currently exercisable warrants owned by Mr.
Davis's wife, Rosalind Davidowitz. Mr. Davis disclaimed beneficial
ownership of all securities held by Mrs. Davidowitz pursuant to Rule 13d-4
under the Securities Exchange Act of 1934, as amended, on the Schedule 13G
dated February 12, 1999.
(7) Includes 16,667 shares issuable upon exercise of a currently exercisable
option.
(8) Includes 42,708 shares issuable upon exercise of currently exercisable
warrants. Also includes (i) 64,000 shares issuable upon exercise of a
currently exercisable option to purchase 64,000 of the Company's units,
each of which consists of one share of Common Stock and one of the
Company's Class A warrants, and (ii) 64,000 shares issuable upon exercise
of the Class A warrants that underlie the option to purchase such units.
(9) Includes 24,752 shares issuable upon exercise of currently exercisable
warrants and 16,667 shares issuable upon exercise of a currently
exercisable option.
(10) Includes 9,498 shares issuable upon exercise of currently exercisable
warrants.
(11) Includes 11,667 shares issuable upon exercise of a currently exercisable
option.
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1999, pursuant to a certain Securities Purchase Agreement (the
"Brewer Agreement"), the Company sold to Mr. David A. Brewer, a member of the
Company's Board of Directors, in a private placement 850,000 share of Common
Stock and warrants to purchase 1,344,444 shares of Common Stock for an
aggregate consideration of $3,060,000. The warrants consisted of four warrants
to purchase 155,800 shares of Common Stock at $3.60 per share and one warrant
to purchase 721,244 shares of Common Stock at $3.60 per share. The four
warrants to purchase 155,800 shares of common Stock terminate at the earlier of
(i) the achievement by the Company of certain milestones or (ii) September 3,
2000. The termination date for the warrant to purchase 721,244 shares of Common
Stock is March 3, 2003. In addition, under Section 6.2(ii) of the Brewer
Agreement, the Company agreed to issue additional warrants to Mr. Brewer if the
Company sold shares of common stock in a capital raising transaction at a price
below $3.60 per share prior at the earlier of (i) March 3, 2002 or (ii) the
Company calling its outstanding Class A warrants (the "Anti-dilution
Provision").
In October 1999, the Company and Mr. Brewer agreed to amend the Brewer
Agreement ("Amendment No. 1"). Pursuant to Amendment No.1, Mr. Brewer exercised
two of his four warrants to purchase 155,800 shares of Common Stock and
received 311,600 shares of Common Stock for an aggregate purchase price of
$1,121,760. In addition, under Amendment No.1, the termination date for his
remaining two warrants to purchase 155,800 shares of Common Stock was changed
to March 31, 2001. In February 2000, Mr. Brewer exercised one of these warrants
and received 155,800 shares of Common Stock for an aggregate purchase price of
$560,880.
In October 2000, the Company and Mr. Brewer agreed to further amend the
Brewer Agreement ("Amendment No. 2"). Pursuant to Amendment No. 2, Mr. Brewer
agreed to waive the Anti-dilution Provision in Section 6.2(ii) of the Brewer
Agreement with respect to the November 2000 Private Placement, as described
below.
In November 2000, the Company sold in a private placement, 376,865 shares of
Common Stock and warrants to purchase 188,424 shares of Common Stock for an
aggregate purchase price of $1,225,000 (the "November 2000 Private Placement").
As part of the November 2000 Private Placement, Mr. Andrew H. Plevin, a member
of the Company's Board of Directors, purchased 76,916 shares of Common Stock
and warrants to purchase 38,458 shares of Common Stock for an aggregate
consideration of $250,000. The warrants consisted of two warrants to purchase
19,229 shares of Common Stock at $3.25 per share. One of the warrants will
expire upon the earlier of August 8, 2001 or when the Company sells
substantially all of its assets. The other warrant will expire upon the earlier
of November 8, 2003 or when the Company sells substantially all of its assets.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties.
14
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") 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 an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent shareholders are also required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during the fiscal year ended September 30, 2000 all filing requirements
applicable to its officers, directors and ten percent shareholders were
fulfilled.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your stock be represented at the meeting, regardless of
the number of shares that you hold. You are, therefore, urged to execute and
return the accompanying proxy in the envelope that has been enclosed, at your
earliest convenience.
The Board of Directors
By: Gerald W. Rice
Secretary
Dated: February 6, 2001
15
APPENDIX A
SUMMARY OF 1997 STOCK PLAN
The Company's 1997 Stock Plan, as amended (the "1997 Plan") was adopted by
the Board of Directors in January 1997. Including the 500,000 shares reserved
for issuance by the Board of Directors in January 2000, a total of 1,200,000
shares of Common Stock currently are reserved for issuance under the 1997 Plan
(pending shareholder approval of a 500,000 share increase).
General. The purposes of the 1997 Plan are 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 1997 Plan.
Options granted under the 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 1997 Plan may generally be administered by the Board of
Directors or the Committee appointed by the Board of Directors (as applicable,
the "Administrator").
Eligibility; Limitations. Nonstatutory stock options and stock purchase
rights may be granted under the 1997 Plan to employees, directors and
consultants 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.
The 1997 Plan provides that no employee, director or consultant may be
granted, in any fiscal year of the Company, options to purchase more than
150,000 shares of Common Stock (pending shareholder approval of an increase
from 50,000 shares to 150,000 shares). Notwithstanding this limit, however, in
connection with such individual's initial employment with the Company, he or
she may be granted options to purchase up to an additional 50,000 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 greater than 10% shareholder 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 last market trading day prior
to 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. Stock options granted under the 1997 Plan
generally vest and become exercisable over five years. The means of payment for
shares issued upon exercise of an option is specified in each option agreement.
The 1997 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 greater than 10% shareholder, 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.
A-1
(d) Termination of Employment. If an optionee's employment or consulting
relationship terminates for any reason (other than death or disability), the
optionee may exercise his or her option within such period of time as is
specified in the option agreement to the extent that the option is vested on
the date of termination (but in no event later than the expiration of the term
of such option as set forth in the option agreement). In the absence of a
specified time in the option agreement, the option shall remain exercisable for
three (3) months following the optionee's termination.
(e) Death or Disability. If an optionee's employment or consulting
relationship terminates as a result of disability, the optionee may exercise
his or her option within such period of time as is specified in the option
agreement (but in no event later than the expiration of the term of such option
as set forth in the option agreement) to the extent that the option is vested
on the date of termination. In the absence of a specified time in the option
agreement, the option shall remain exercisable for twelve (12) months following
the optionee's termination. If an optionee's employment or consulting
relationship terminates as a result of death while the optionee is an employee
or consultant, the option may be exercised by the optionee's estate or a person
who acquired the right to exercise the option by bequest or inheritance within
such period of time as is specified in the option agreement (but in no event
later than the expiration of the term of such option as set forth in the notice
of grant) to the extent that the option is vested on the date of termination.
In the absence of a specified time in the option agreement, the option shall
remain exercisable for twelve (12) months following the optionee's death.
(f) Nontransferability of Options and Stock Purchase Rights. Unless
otherwise determined by the Administrator, options and stock purchase rights
granted under the 1997 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.
(g) Other Provisions. The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the 1997 Plan as may be
determined by the Administrator.
Stock Purchase Rights. In the case of stock purchase rights, unless the
Administrator determines otherwise, the standard form of restricted stock
purchase agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment with 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, Dissolution, Merger or Asset
Sale. 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 1997 Plan, the number and
class of shares of stock subject to any option or stock purchase right
outstanding under the 1997 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. The Administrator may, in its discretion,
provide that each optionee shall have the right to exercise all of the
optionee's options and stock purchase rights, including those not otherwise
exercisable, until the date ten (10) days prior to the consummation of the
liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option or stock purchase
right shall be assumed or an equivalent option or right substituted by the
successor corporation. If the successor corporation refuses to assume the
options and stock purchase rights or to substitute substantially equivalent
options and stock purchase rights, the optionee shall have the right to
exercise the option or stock purchase right as to all of the optioned stock,
including shares not
A-2
otherwise exercisable. In such event, the Administrator shall notify the
optionee that the option or stock purchase right is fully exercisable for
fifteen (15) days from the date of such notice and that the option or stock
purchase right terminates upon expiration of such period.
Amendment and Termination of the Plan. The Board of Directors may amend,
alter, suspend or terminate the 1997 Plan, or any part thereof, at any time and
for any reason. However, the Company shall obtain shareholder approval for any
amendment to the 1997 Plan to the extent necessary to comply with Section
162(m) and Section 422 of the Code, or any similar rule or statute. No such
action by the Board of Directors or shareholders may alter or impair any option
or stock purchase right previously granted under the 1997 Plan without the
written consent of the optionee. Unless terminated earlier, the 1997 Plan shall
terminate 10 years from the date of its approval by the shareholders or the
Board of Directors 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 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. 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 greater than 10% shareholder of the Company. 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. 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.
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. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject
to a substantial risk of forfeiture. The stock will generally cease to be
subject to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of
employment with the Company. At such times, the purchaser will recognize
ordinary income 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 a
substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding
period by timely filing 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
A-3
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 greater than
10% shareholder 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 1997
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.
A-4
APPENDIX B
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
NOTIFY TECHNOLOGY CORPORATION
PURPOSE:
The purpose of the Audit Committee of the Board of Directors of Notify
Technology Corporation (the "Company") shall be:
. to provide oversight and monitoring of Company management and the
independent auditors and their activities with respect to the Company's
financial reporting process;
. to provide the Company's Board of Directors with the results of its
monitoring and recommendations derived therefrom;
. to nominate to the Board of Directors independent auditors to audit the
Company's financial statements and oversee the activities and independence
of the auditors; and
. to provide to the Board of Directors such additional information and
materials as it may deem necessary to make the Board of Directors aware of
significant financial matters that require the attention of the Board of
Directors.
The Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors and will consist of at least two members
of the Board of Directors. A majority of the members of the Audit Committee
shall be independent directors in accordance with the Nasdaq Audit Committee
requirements.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
. Providing oversight and monitoring of Company management and the
independent auditors and their activities with respect to the Company's
financial reporting process;
. Recommending the selection and, where appropriate, replacement of the
independent auditors to the Board of Directors;
. Reviewing fee arrangements with the independent auditors;
. Reviewing the independent auditors' proposed audit scope, approach and
independence;
. Reviewing the performance of the independent auditors, who shall be
accountable to the Board of Directors and the Audit Committee;
. Requesting from the independent auditors a formal written statement
delineating all relationships between the auditor and the Company,
consistent with Independent Standards Board Standard No. 1, and engaging
in a dialogue with the auditors with respect to any disclosed
relationships or services that may impact the objectivity and independence
of the auditors;
. Directing the Company's independent auditors to review before filing with
the SEC the Company's interim financial statements included in Quarterly
Reports on Form 10-QSB, using professional standards and procedures for
conducting such reviews;
B-1
. Discussing with the Company's independent auditors the matters required to
be discussed by Statement on Accounting Standard No. 61, as it may be
modified or supplemented;
. Reviewing with management, before release, the audited financial
statements and Management's Discussion and Analysis in the Company's
Annual Report on Form 10-KSB;
. Providing a report in the Company's proxy statement in accordance with the
requirements of Item 306 of Regulation S-K and Item 7(e) (3) of Schedule
14A;
. Reviewing the Audit Committee's own structure, processes and membership
requirements; and
. Performing such other duties as may be requested by the Board of
Directors.
MEETINGS:
The Audit Committee will meet at least quarterly. The Audit Committee may
establish its own schedule, which it will provide to the Board of Directors in
advance.
The Audit Committee will meet separately with the independent auditors as
well as members of the Company's management as it deems appropriate in order to
review the financial controls of the Company.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
REPORTS:
Apart from the report prepared pursuant to Item 306 of Regulation S-K and
Item 7(e) (3) of Schedule 14A, the Audit Committee will summarize its
examinations and recommendations to the Board from time to time as may be
appropriate, consistent with the Committee's charter.
B-2
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NOTIFY TECHNOLOGY CORPORATION
------------------------------
NOTIFY TECHNOLOGY CORPORATION
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
MARCH 8, 2001
The undersigned shareholder(s) of Notify Technology Corporation, a
California corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated February 6, 2001, and
hereby appoints Paul Depond and Gerald Rice, 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 2001 Annual Meeting
of Shareholders of Notify Technology Corporation to be held on March 8, 2001 at
10:00 a.m., local time, at the Cupertino Inn, located at 10889 North De Anza
Blvd., Cupertino, California 95014, and at any adjournment of postponement
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if personally present on any of the following matters and with
discretionary authority as to any and all other matters that may properly come
before the meeting.
* Please Detach and Mail in the Envelope Provided.*
- -------------------------------------------------------------------------------
[ X ] Please mark your
votes as in this example.
The Board of Directors recommends a vote for all nominees and for proposals 2
and 3.
FOR all nominees
listed at right (except
as marked to the
1. To elect five contrary below) WITHHELD Nominees:
persons to the [_] [_] Paul F. DePond
Company's Board Gaylan I. Larson
of Directors: Michael K. Ballard
Andrew H. Plevin
- ---------------------------------------------- David A. Brewer
2. To ratify and approve amendments to the Company's 1997 Stock Plan to increase
the number of shares issuable thereunder by 500,000 shares and to increase
the number of shares of Common Stock that can be issued to current Service
Providers each year from 50,000 shares to 150,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the current fiscal year.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To act on such other matters as may properly come before come before the
meeting or any adjournment(s) thereof.
[_] FOR [_] AGAINST [_] ABSTAIN
Change of Address and/or Comments Mark Here.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND
PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE.
SIGNATURE(S)_______________________________________DATE___________________, 2001
SIGNATURE IF JOINTLY HELD
NOTE: This proxy should be marked, dated and signed by each shareholder exactly
as such shareholder's name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. If shares are held by joint tenants
or as community property both holders should sign.
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