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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NOTIFY CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
NOTIFY CORPORATION
To All Shareholders:
The 1998 Annual Meeting of the Shareholders of Notify Corporation (the
"Company") will be held at the Cupertino Inn, 10889 North De Anza Boulevard,
Cupertino, California, 95014 on February 25, 1998 at 2:00 p.m., to act on the
following matters:
(1) To elect five persons to the Company's Board of Directors;
(2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year;
(3) To amend the Company's Articles of Incorporation to change the
Company's name from Notify Corporation to Notify Technology
Corporation; 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 5, 1998 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.
Dated: January 19, 1998
By Order of the Board of Directors
of
NOTIFY CORPORATION
By: Gerald W. Rice
Secretary
NOTIFY CORPORATION
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PROXY STATEMENT FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
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GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Notify Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on February 25, 1998 at 2:00 p.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 January 19, 1998
to all shareholders entitled to vote at the meeting.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on January 5, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
record date, 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.
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.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 1999 Annual Meeting of Shareholders must
be received by the Company no later than September 16, 1998 in order to be
eligible for inclusion in the proxy statement and form of proxy relating to
that meeting.
SHAREHOLDER NOMINATIONS
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 and that at an annual meeting only such
business may be conducted as has been brought before the meeting 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. In all cases, to be timely,
notice must be received by the Company not less than twenty (20) nor more than
sixty (60) days prior to the meeting (or if fewer than thirty (30) days notice
or prior public disclosure of the meeting date is given or made to
shareholders, 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 his address and the class and number of shares of the
Company which are held by the shareholder. In addition, if the shareholder
proposes to make a nomination or nominations to the Board of Directors 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
corporation which are beneficially owned by such person, (iv) any other
information relating to such person that is required by law to be disclosed in
solicitation of proxies for election of directors, and (v) such person's
written consent to being named as a nominee and to serving as a director if
elected and (b) as to the shareholder giving notice, (i) the name and address,
as they appear on the books of the Company, of such shareholder, (ii) the
class and number of shares of the Company which are beneficially owned by such
shareholders, and (iii) a description of all arrangements or understandings
between the shareholder making the nomination and each nominee and any other
person or persons (naming such person or persons) relating to the nomination.
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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, four 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 PRINCIPAL OCCUPATION SINCE
- ---------------------- --- ------------------------------------------- --------
Paul F. DePond........ 44 President and Chief Executive Officer of 1994
the Company
Gaylan I. Larson...... 57 Vice President of Operations of the Company 1994
Michael Ballard....... 42 Chief Executive Officer, Savannah Chanel 1996
Vineyards, Inc.
Michael Smith......... 51 President and Owner, COMAC 1996
Andrew Plevin......... 34 Acting President and Chief Executive --
Officer, Core Software Technology, Inc.
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--Corporate Marketing of 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, Marketing,
of 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.
Barry Bellue has served as a director of the Company since August 1995.
Since January 1996, Mr. Bellue has been the Chief Executive Officer of
Thinkstream, Inc., an imaging software company. From October 1993 to January
1995, Mr. Bellue served as Vice President of Symantec Corporation. From
December 1986 to October 1993, Mr. Bellue served as Chief Executive Officer of
Fifth Generation Systems, a security and data management software company.
Michael Ballard has served as a director of the Company since January 1996.
From May 1995 to October 1996, Mr. Ballard served as Executive Vice
President--Marketing of Telebit Corporation. From June 1993 to September 1994,
Mr. Ballard served as Chief of Operations of UUNet, Inc., an internet service
provider. From
-3-
January 1986 to May 1993, Mr. Ballard served as Chief Executive Officer of
Telebit Corporation. From October 1996 to November 1997, Mr. Ballard served as
a product director of Cisco Systems. Since 1995, Mr. Ballard has been the
Chief Executive Officer and Chairman of the Board of Directors of Savannah
Chanel Vineyards, Inc. Mr. Ballard sits on the Board of Directors of Telebit
Corporation, a wholly-owned subsidiary of Cisco Systems, Inc.
Michael Smith has served as a director of the Company since February 1996.
Since 1970, Mr. Smith has been the President and owner of COMAC, a literature
and product fulfillment company.
Andrew Plevin was nominated to serve on the Company's board of directors in
January 1998. Since November 1997, Mr. Plevin has been acting Chief Executive
Officer and President of Core Software Technology, Inc. From August 1993 to
November 1997 Mr. Plevin served as Vice President of D.H. Blair Investment
Banking Corp, a New York investment banking firm.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings during
fiscal 1997. 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.
The Board of Directors has an Audit Committee and a Compensation Committee.
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. This Committee, consisting of Michael Ballard and Michael
Smith, held one meeting during fiscal 1997.
The Compensation Committee reviews and administers the compensation of the
officers of the Company and administers the Company's 1997 Stock Plan. This
Committee, currently consisting of Paul DePond, Barry Bellue and Michael
Ballard, did not hold any meetings during fiscal 1997.
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.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee and 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, 1998.
-4-
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
year ending September 30, 1998. 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.
PROPOSAL NO. 3
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
The shareholders are being asked to vote on a proposal to change the name of
the Company from Notify Corporation to Notify Technology Corporation by
amending the Company's Articles of Incorporation. No other change to the
Company's Articles of Incorporation, other than to change the Company's name
as recorded by the California Secretary of State and to change the name under
which the Company transacts business and trades on the Nasdaq SmallCap Market,
is contemplated. The Company's new name will be effective upon the filing of
an Amended and Restated Articles of Incorporation with the California
Secretary of State.
The Board believes that for the following reasons the proposed name change
is in the best interest of the Company and the shareholders. The Company
recently received a letter from counsel to Airmedia, Inc. ("Airmedia") stating
that Airmedia owns a federal trademark registration for the mark "Notify" and
alleging that the Company's use of the mark "Notify" in connection with the
sale of its products and in its Internet domain name constitutes an
infringement of Airmedia's trademark rights. The Company has confirmed that
Airmedia owns federal trademark registrations for the mark "Notify" and for
several other marks using the term "Notify." In order to avoid litigation, the
Company has agreed with Airmedia to change its name to Notify Technology
Corporation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE
THE NAME OF THE COMPANY TO NOTIFY TECHNOLOGY CORPORATION.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table shows the total compensation of (i) the Chief Executive
Officer and (ii) all other executive officers of the Company who earned over
$100,000 in salary and bonus in fiscal 1997 (together the "Named Executive
Officers"), as well as the total compensation paid to each such individual for
the Company's two previous fiscal years.
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SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
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ANNUAL COMPENSATION AWARDS PAYOUTS
- ----------------------------------------------------------- --------------------- -------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS(S) OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)(1)
- ------------------------ ---- ---------- ----- ------------ ---------- ---------- ------- ------------
Paul F. DePond.......... 1997 121,381 -- -- -- -- -- 8,673
Chief Executive 1996 100,385 -- -- -- -- -- 7,146
Officer
David P. Yewell(2)...... 1997 102,204(3) -- -- -- -- -- 3,825
Vice President of 1996 101,345(4) -- -- -- -- -- 1,987
Sales and Marketing
Gerald W. Rice.......... 1997 95,519 -- -- -- 24,752 -- 6,886
Chief Financial 1996 63,895 -- -- -- -- -- --
Officer
Gaylan Larson .......... 1997 112,446 -- -- -- -- -- 7,518
Chief Operations 1996 95,365 -- -- -- -- -- --
Officer
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(1) Represents payments of insurance premiums on behalf of the Named Executive
Officers.
(2) Mr. Yewell resigned from his position at the Company on August 8, 1997.
(3) Includes amounts paid as commissions.
(4) Includes amounts paid as consulting fees.
The following tables set forth certain information for the Named Executive
Officers with respect to grants and exercises in fiscal 1997 of options to
purchase Common Stock of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
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NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE OR
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME (#) IN FISCAL YEAR ($/SH) DATE
- -------------------------- --------------- -------------- ----------- ----------
Paul F. DePond............ -- -- -- --
David P. Yewell........... -- -- -- --
Gerald W. Rice............ 24,752(1) 100 $5.00 April 2002
Gaylan I. Larson.......... -- -- -- --
- --------
(1) Mr. Rice was granted a warrant to purchase shares of Common Stock of the
Company pursuant to a warrant agreement. The warrant exercise price was at
the fair market value of the Company's Common Stock on the date of grant.
The warrant is exercisable in full at any time, and expires approximately
five years after the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF
ACQUIRED VALUE UNEXERCISED OPTIONS AT UNEXERCISED
ON REALIZED FISCAL IN-THE-MONEY OPTIONS
NAME EXERCISE(#) ($) YEAR END (#) AT FISCAL YEAR END (1)($)
- ------------------------ ---------- -------- ------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Paul F. DePond.......... -- -- 85,792 25,000 233,563.43 --
David P. Yewell......... -- -- -- -- -- --
Gerald W. Rice.......... -- -- 25,752 -- -- --
Gaylan Larson........... -- -- -- -- -- --
- --------
(1) Market value of underlying securities at fiscal year-end minus the exercise
price multiplied by the number of shares.
-6-
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 increases to $150,000 in
October, 1998, and 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. Under the
agreements, Messrs. Larson and Rice are eligible to receive annual bonuses
based on an earnings target approved by the board of directors of the Company.
In the event that the Company terminates Mr. Larson or Mr. Rice without
cause following a change in control, the terminated officer is entitled to
receive severance compensation equal to a continuation of his salary for a
period of twelve (12) months. In the event that the Company terminates Mr.
Larson or Mr. 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 board of directors of the Company
occurring within a two-year period; or (iii) the approval by the shareholders
of the Company of a transaction which would result in a transfer of more than
50% of the Company's voting power provided, however, that an initial public
offering of the Company's common stock does not constitute a change of
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.
-7-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of
January 5, 1998 by each director, the Named Executive Officers and all current
directors and executive officers as a group. The Company believes that the
persons and entities named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws, where applicable. The address for
each director and executive officer is that of the Company.
SHARES
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENTAGE(1)
- ---------------------------------------------------- ------------ -------------
Paul F. DePond(2)................................... 491,731 13.5%
Gaylan I. Larson.................................... 198,019 5.6
Gerald W. Rice(3)................................... 94,058 2.6
Michael Ballard(4).................................. 71,970 2.0
Michael Smith(5).................................... 54,269 1.5
Barry Bellue........................................ 46,533 1.3
All directors and executive officers as a group (6
persons)........................................... 956,580 26.1
- --------
(1) Applicable percentage of ownership is based on 3,547,237 shares of Common
Stock outstanding as of January 5, 1998 together with applicable options
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 warrants currently exercisable or exercisable within 60 days
after January 5, 1998 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 85,792 shares issuable upon exercise of currently exercisable
warrants.
(3) Includes 24,753 shares issuable upon exercise of currently exercisable
warrants.
(4) Includes 9,543 shares issuable upon exercise of currently exercisable
warrants.
(5) Includes 3,264 shares issuable upon exercise of currently exercisable
warrants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At various times in February and March 1995, the Company sold to Paul
DePond, President, Chief Executive Officer and Chairman of the Board of
Directors of the Company, convertible promissory notes with an aggregate
principal amount of $75,000 bearing interest rates of 10% per annum and
warrants to purchase 74,257 shares of common stock of the Company at an
exercise price of $1.01 per share for an aggregate purchase price of $75,000.
Additionally, in February 1997, the Company issued to Mr. DePond a 10%
subordinated promissory note with principal amount of $65,000 and warrants to
purchase 11,535 shares of the Company's Common Stock at a price per share of
$3.00 for an aggregate purchase price of $65,000. These notes have been repaid
in full, substantially out of a portion of the proceeds of the Company's
initial public offering (the "IPO").
In July 1996, pursuant to a Note Purchase Agreement, the Company issued
convertible promissory notes (the "Convertible Shareholder Notes") and
warrants to purchase shares of the Company's Common Stock for an aggregate
purchase price of $932,125. The Convertible Shareholder Notes accrued interest
at a rate of 8% per annum and were convertible into equity of the Company. Mr.
Ballard, a director of the Company, purchased a Convertible Shareholder Note
in the principal amount of $100,000 and the accompanying warrants for
aggregate consideration of $100,000. Mr. Smith, a director of the Company,
purchased a Convertible Shareholder Note in the principal amount of $50,000
and the accompanying warrants for an aggregate consideration of $50,000. In
January 1997, in connection with a restructuring of the Convertible
Shareholder Notes, Mr. Ballard converted his note into 22,804 shares of Common
Stock and exchanged his warrant for a warrant to purchase 6,528 shares of
Common Stock at a price of $0.25 per share and Mr. Smith converted his note
into 11,402 shares of Common Stock and exchanged his warrant for a warrant to
purchase 3,264 shares of Common Stock at a price per share of $0.25 per share.
-8-
In March 1997, the Company issued and sold 17 bridge units ("Bridge Units")
at $50,000 per unit. Each Bridge Unit consisted of a Bridge Note in the
principal amount of $50,000 and Bridge Warrants to purchase 25,000 shares of
Common Stock at a purchase price of $3.00 per share. The Bridge Warrants
automatically converted into Class A Warrants upon the closing of the IPO, and
the Bridge Notes were repaid out of proceeds from the IPO. Paul DePond
purchased one Bridge Unit in the Bridge Financing.
In April 1997, Michael Ballard, one of the Company's directors, loaned the
Company $200,000 in exchange for the a note (the "Ballard Note") in the
principal amount of $200,000 and warrants to purchase 2,970 shares of the
Company's Common Stock at a price per share of $5.00. The Company repaid the
Ballard Note with a portion of the proceeds of the IPO.
The Company has an ongoing business relationship with COMAC, a literature
and product fulfillment company owned by Michael Smith, its president and a
director of the Company. The Company uses COMAC, along with other fulfillment
companies, on a project by project basis to facilitate the distribution of its
products to telephone company customers. The Company has no contractual
obligation to use COMAC's services. In fiscal year 1996, the Company paid to
COMAC $4,349 in fees. During fiscal year 1997, the Company paid to COMAC
$145,665 in fees.
The Company has entered into employment agreements with Messrs. DePond,
Larson and Rice, the terms of which call for base salaries of $130,000,
$115,000 and $105,000 per annum, respectively.
From August 1993 to November 1997, Andrew Plevin, a nominee for the board of
directors of the Company, served as a Vice President of D.H. Blair Investment
Banking Corp ("D.H. Blair"). D.H. Blair served as placement agent for the
Company's 1997 Bridge Financing, and as underwriter for the Company's IPO. In
connection with the Bridge Financing and the IPO, D.H. Blair received
approximately $1,046,000 in discounts, commissions, and non-accountable
expense allowances. In addition, D.H. Blair received an option to purchase
160,000 of the units offered in the IPO, at a price per unit equal to 140% of
the IPO price, exercisable at any time, in whole or in part, during the two
year period commencing August 28, 2000. Each unit offered in the IPO consisted
of a share of Common Stock of the Company and a warrant to purchase one share
of Common Stock of the Company at an exercise price of $6.50 per share,
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, 1997 all filing
requirements applicable to its officers, directors and ten percent
shareholders were fulfilled, except for one amended Form 3 filed on behalf of
Gerald W. Rice, the Company's Chief Financial Officer.
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.
-9-
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: January 19, 1998
-10-
Please date, sign and mail your proxy card as soon as possible.
Annual Meeting of Shareholders
NOTIFY CORPORATION
February 25, 1998
_________________________________________________________
A [X] Please mark your vote as indicated in the example.
A vote FOR all nominees and FOR Proposals 2 and 3
are recommended by the Board of Directors
FOR WITHHELD
1. To elect Paul DePond, Michael [_] [_]
Ballard, Gaylan Larson, Michael
Smith and Andrew Plevin as Directors.
For, except vote withheld from the
following nominee(s):
- --------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of [_] [_] [_]
Ernst & Young LLP as the Company's
independent auditors.
3. To amend the Company's [_] [_] [_]
Articles of Incorporation to
change the name of the Company to
Notify Technology Corporation.
4. To transact such other business as
may properly come before the meeting
or any postponements or adjournments
thereof.
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 ______ , 1998
SIGNATURE OF 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.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NOTIFY CORPORATION
-------------------------------------
NOTIFY CORPORATION
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1998
The undersigned shareholder(s) of Notify Corporation, a California corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated January 19, 1998, and hereby appoints Paul F. DePond
and Gerald W. 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 1998 Annual Meeting of Shareholders of Notify
Corporation to be held on February 25, 1998 at 2:00 p.m., local time, at the
Cupertino Inn located at 10889 North De Anza Boulevard, Cupertino, California
95014. and at any adjournment or 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.