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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
AVISTAR COMMUNICATIONS CORPORATION
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies: N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
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(4) Proposed maximum aggregate value of transaction: N/A
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(5) Total fee paid: N/A
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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: N/A
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(2) Form, Schedule, or Registration Statement No.: N/A
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(4) Date Filed: N/A
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AVISTAR COMMUNICATIONS CORPORATION
TO OUR STOCKHOLDERS:
This information statement is being provided to the stockholders of
Avistar Communications Corporation (the "Company"). The Company and its majority
stockholders have approved an amendment to its Bylaws which increases the number
and range of persons serving on its Board of Directors. As a matter of
regulatory compliance, we are sending you this information statement, which
describes the purpose and effect of the aforementioned amendment.
Please feel free to call us at (650) 610-2900 should you have any
questions on the enclosed information statement. We thank you for your continued
interest in the Company.
For the Board of Directors of
AVISTAR COMMUNICATIONS CORPORATION
Gerald J. Burnett
President
Redwood Shores, California
January __, 2001
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AVISTAR COMMUNICATIONS CORPORATION
555 TWIN DOLPHIN DRIVE, SUITE 360
REDWOOD SHORES, CA 94065
(650) 610-2900
INFORMATION STATEMENT
GENERAL INFORMATION FOR STOCKHOLDERS
This information statement is furnished to the holders of Common Stock
of Avistar Communications Corporation, a Delaware corporation (the "COMPANY"),
in order to comply with the requirements of Section 14(c) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Regulation 14C under
the Exchange Act. The purpose of this Information Statement is to inform all
stockholders of the approval of an amendment (the "AMENDMENT") to the Company's
Bylaws to increase the authorized number of members of the Company's Board of
Directors from a range of four to six directors to a range of five to nine
directors. This information statement is being first sent to stockholders on or
about December 30, 2000.
The Company has obtained the affirmative vote of the holders of a
majority of the Company's Common Stock (the "VOTING CAPITAL STOCK") to the
foregoing amendment. WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT AND YOU ARE
REQUESTED NOT TO SEND US A PROXY OR CONSENT.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Voting Capital
Stock is required to amend Article III, Section 3.2 of the Company's bylaws.
Each share of Voting Capital Stock is entitled to one vote per share on the
Amendment. The record date established by the Company for purposes of
determining the number of outstanding shares of Common Stock of the Company is
December 29, 2000 (the "RECORD DATE"); the number of shares that voted to
approve the aforementioned actions was __________, representing ___% of the
Voting Capital Stock.
SECTION 228 OF THE DELAWARE GENERAL CORPORATION LAW
Section 228 of the Delaware General Corporation Law (the "DELAWARE LAW")
provides that the written consent of the holders of outstanding shares of Voting
Capital Stock, having not less than the minimum number of votes which would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, may be substituted for such a
special meeting. Pursuant to Article III, Section 3.2 of the Company's Bylaws
and in accordance with Section 109 of the Delaware Law, a majority of the
outstanding shares of Voting Capital Stock entitled to vote thereon is required
in order to amend the Bylaws. In order to eliminate the costs and management
time involved in holding a special meeting and in order to effect the increase
in the range of authorized directors as early as possible in order to accomplish
the purposes of the Company as hereafter described, the Board of Directors of
the Company voted to utilize the written consent of the holders of a majority in
interest of the Voting Capital Stock of the Company.
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Pursuant to Section 228 of the Delaware Law, the Company is required to
provide prompt notice of the taking of the corporate action without a meeting to
the stockholders of record who have not consented in writing to such action. No
additional action will be undertaken pursuant to such written consents, and no
dissenters' rights under the Delaware Law are afforded to the Company's
stockholders as a result of the approval of the Amendment.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 2001 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than February 5, 2001 in order that they may be included in the proxy statement
and form of proxy relating to that meeting. The proxy card attached to the
materials for the 2001 Annual Meeting of Stockholders will grant the proxy
holders discretionary authority to vote on any matter raised at the Annual
Meeting. If a stockholder intends to submit a proposal at the Company's Annual
Meeting in 2001 but does not request inclusion in the materials prepared by the
Company, or intends to bring before the stockholders at the 2001 Annual Meeting
a proposal that is not eligible for inclusion in the proxy statement relating to
that meeting, the stockholder must give notice to the Company in accordance with
the requirements set forth in the Securities Exchange Act of 1934, as amended,
no later than February 5, 2001. The stockholder may not bring the proposal
before the stockholders at the 2001 Annual Meeting of Stockholders, regardless
of whether the proposal is included in the materials sent to the stockholders,
unless the stockholder has complied with the foregoing notice provisions. The
proxy holders will be allowed to use their discretionary voting authority when
and if the proposal is raised at the Company's 2001 Annual Meeting in 2001.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 29, 2000 certain
information regarding beneficial ownership of the Common Stock by (i) each
stockholder known to the Company to be the beneficial owner of more than 5% of
the Common Stock, (ii) each director and named executive officer of the Company
and (iii) all executive officers and directors as a group. Unless otherwise
indicated, each of the stockholders has sole voting investment power with
respect to the shares beneficially owned.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF PERCENT OF
COMMON COMMON
STOCK STOCK
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED(1)
------------------------ ------------ -------------
<S> <C> <C>
UBS (USA) Inc.(2) ..................................... 1,053,369 4.2%
Stamford Branch
677 Washington Boulevard
Stamford, Connecticut 06901
Gerald J. Burnett(3) .................................. 11,277,835 44.9
R. Stephens Heinrichs(4) .............................. 5,052,354 20.1
William L. Campbell ................................... 948,263 3.8
Michael G. Barsotti ................................... 287,500 1.1
James P. Hughes(5) .................................... 425,000 1.7
R. Jan Afridi(6) ...................................... 26,500 *
William R. Brody ...................................... 24,000 *
David M. Solo ......................................... -- *
Robert M. Metcalfe .................................... -- *
Executive officers and directors as a group
(14 persons) ........................................ 18,737,077 74.5
</TABLE>
(1) Based on 25,121,647 shares of Common Stock outstanding on December 29,
2000 together with applicable options for such stockholder. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission (the "Commission"), and includes voting and
investment power with respect to shares. Shares of Common Stock subject
to options currently exercisable or exercisable within 60 days after
December 29, 2000 are deemed outstanding for computing the percentage
ownership of the person holding such options but are not deemed
outstanding for computing the percentage of any other person. Except as
otherwise noted, the stockholders 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 applicable community property
laws.
(2) UBS (USA) is a wholly owned subsidiary of UBS AG.
(3) Shares are held by Dr. Burnett as a co-trustee of a marital trust, as to
which he has sole voting and investment power.
(4) Shares are held by Mr. Heinrichs as a co-trustee of a marital trust, as
to which he has sole voting and investment power.
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(5) Mr. Hughes is an executive officer of Avistar Systems Corporation, a
wholly owned subsidiary of the Company ("ASC").
(6) Mr. Afridi is an executive officer of ASC.
Except as otherwise noted above, the address of each person listed on
the table is 555 Twin Dolphin Drive, Suite 360, Redwood Shores, California
94065.
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AMENDMENT TO BYLAWS
The Company's Bylaws currently provides for four (4) to six (6) persons
to serve as members of its Board of Directors, with the exact number set at six
(6). On November 28, 2000, the Board of Directors adopted resolutions setting
forth the proposed amendment to Article III, Section 3.2 of the Company's Bylaws
(the "AMENDMENT"), the advisability of the Amendment, and a call for submission
of the Amendment for approval by written consent of the Company's stockholders.
The text of Article III, Section 3.2 of the Bylaws of the Company, as
proposed to be amended will read:
"The number of directors of the corporation shall be not less than five
(5) nor more than nine (9). The current number of authorized directors is seven
(7). The indefinite number of directors may be changed, or a definite number may
be fixed without provision for an indefinite number, by a duly adopted amendment
to the certificate of incorporation or by an amendment to this bylaw duly
adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote. Directors need not be stockholders. No
reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires."
On January __, 2001, Gerald J. Burnett, R. Stephen Heinrichs and
William Campbell, each of whom is a member of the Company's Board of Directors
(the "Majority Stockholders"), approved the Amendment pursuant to an Action by
Written Consent of the Stockholders. The Amendment will be effective on January
__, 2001.
PURPOSE AND EFFECT OF THE AMENDMENT
The Board of Directors believes that it is in the Company's best
interest to increase the size of the Board of Directors in order to allow the
Company to appoint additional qualified directors. The Board of Directors also
believes that the availability of additional directorships will provide it with
the flexibility to identify and recruit key individuals whose industry knowledge
and expertise will benefit the direction and vision of the Company by
contributing to discussions as to whether the Company should make acquisitions,
establish strategic relationships with other companies or enter into any other
proper corporate action. Furthermore, the proposed range of authorized persons
serving as directors offers the Board of Directors greater flexibility in
determining the size of the Board without further stockholder approval, within
the range set by the stockholders. Upon the effectiveness of the Amendment, the
Board of Directors intends to appoint two additional directors when and if such
qualified candidates are identified and available.
The Board of Directors believes that the proposed increase in the number
of directors will effectively increase the number of outside independent
directors, which may serve to further legitimize the actions of the Board of
Directors and ensure that proposed corporate transactions are
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at arms-length. However, the proposed amendment to increase the size of the
Board of Directors could, under certain circumstances, have an anti-takeover
effect, although this is not the intention of this proposal. For example, in the
event of a hostile attempt to take over control of the Company, in addition to
the fact that a further change to the size of the Board of Directors requires
the approval of the holders of a majority of the voting capital stock, it may be
easier for the Company to impede the attempt with a larger Board since it would
require more directors to vote in favor of the take-over attempt. The Amendment
therefore may have the effect of discouraging unsolicited takeover attempts. By
potentially discouraging initiation of any such unsolicited takeover attempt,
the proposed Amendment may limit the opportunity for the Company's stockholders
to dispose of their shares at the higher price generally available in takeover
attempts or that may be available under a merger proposal. The proposed
amendment may have the effect of permitting the Company's current management,
including the current Board of Directors, to retain its position, and place it
in a better position to resist changes that stockholders may wish to make if
they are dissatisfied with the conduct of the Company's business. However, the
Board of Directors is not aware of any attempt to take control of the Company
and the Board of Directors has not presented this proposal with the intent that
it be utilized as a type of anti-takeover device.
CUMULATIVE VOTING Under Delaware law, cumulative voting is not
mandatory, and cumulative voting rights must be provided in a corporation's
certificate of incorporation if stockholders are to be entitled to cumulative
voting rights. The Company's certificate of incorporation provides for such
cumulative voting.
Cumulative voting entitles each stockholder to cast a number of votes
that is equal to the number of voting shares held by such stockholder multiplied
by the total number of directors to be elected, and to cast all such votes for
one nominee or distribute the votes among up to as many candidates as there are
positions to be filled. Without cumulative voting, a stockholder or group of
stockholders must hold a majority of the voting shares to cause the election of
one or more nominees. Cumulative voting enables a minority stockholder or group
of stockholders holding a relatively small number of shares to elect a
representative or representatives to the Board of Directors.
The Amendment would increase the number of authorized directors and, as
a result, a minority stockholder would face less difficulty in electing a
representative to the Board of Directors because the number of votes available
to each stockholder would increase and fewer votes would be required to elect
any single director. The Amendment could have the impact of facilitating the
re-election of existing members of the Board as fewer of the available votes
would be necessary to elect each director.
REMOVAL OF DIRECTORS
In the case of a Delaware corporation having cumulative voting, if less
than the entire board is to be removed, a director may not be removed without
cause if the number of votes cast against such removal would be sufficient to
elect the director. As noted above, the Company's certificate of incorporation
provides for cumulative voting. Although the Company's bylaws specify that the
Board of Directors, or any individual director, may be removed from office with
or without cause at
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any time, no individual director may be removed if the number of votes cast
against removal would be sufficient to elect that director.
An increase in the number of authorized directors would reduce the
number of shares voting against removal that would be sufficient to impede a
director's removal without cause. Thus, increasing the size of the board of
directors may have the impact of making it more difficult to remove sitting
directors.
CLASSIFIED BOARD OF DIRECTORS
A classified board is one on which a certain number, but not all, of the
directors are elected on a rotating basis each year. This method of electing
directors makes changes in the composition of the board of directors more
difficult, and thus a potential change in control of a corporation a lengthier
and more difficult process. Delaware law permits, but does not require, a
classified board of directors, pursuant to which the directors can be divided
into as many as three classes with staggered terms of office, with only one
class of directors standing for election each year. The Company's certificate of
incorporation and bylaws do not provide for a classified board and the Company
presently does not intend to propose establishment of a classified board.
INTEREST OF CERTAIN PERSONS IN THE AMENDMENT
The directors of the Company may be deemed to have a substantial
interest in the Amendment because the Amendment may have the effect of
preserving the current directors on the Company's Board of Directors and
committees thereof due to cumulative voting, as fewer votes would be necessary
to elect each director and more votes would be necessary to remove a director
without cause.
For the Board of Directors of
AVISTAR COMMUNICATIONS CORPORATION
Gerald J. Burnett
Chief Executive Officer
Dated: January __, 2001
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