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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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
SBE, Inc.
(Name of Registrant as Specified In Its Charter)
Not applicable
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / 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:
______________________________
2. Aggregate number of securities to which transaction applies:
______________________________
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):___________
______________________________
4. Proposed maximum aggregate value of transaction:_____________________
______________________________
5. Total fee paid:______________________________________________________
/ / 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:______________________________________________
2. Form, Schedule or Registration Statement No.:________________________
_____________________________
3. Filing Party:________________________________________________________
4. Date Filed:__________________________________________________________
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SBE, Inc.
4550 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
NOTICE OF SOLICITATION OF WRITTEN CONSENT OF SHAREHOLDERS
TO THE SHAREHOLDERS OF SBE, INC.:
NOTICE IS HEREBY GIVEN that the written consent of the shareholders of SBE,
Inc., a California corporation (the "Company"), is being solicited for the
following purposes:
1. To approve an amendment to the Company's Amended and Restated Articles
of Incorporation to (a) increase the authorized number of shares of Common Stock
from 6,000,000 shares to 10,000,000 shares; and (b) increase the authorized
number of shares of Preferred Stock from 50,000 shares to 2,000,000 shares.
2. To approve the issuance and private sale of up to 1,000,000 shares of
a new series of the Company's Preferred Stock, designated "Series A Convertible
Preferred Stock," on the terms and subject to the conditions described in this
Consent Solicitation Statement.
The items set forth below are more fully described in the Consent
Solicitation Statement accompanying this Notice.
Only shareholders of record at the close of business on December 11, 1995
are entitled to consent to the foregoing matters by executing and returning the
enclosed consent form.
By Order of the Board of Directors
William R. Gage
CHAIRMAN OF THE BOARD
San Ramon, California
December 18, 1995
YOUR WRITTEN CONSENT IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
IN ORDER TO ENSURE THAT YOUR CONSENT WILL BE COUNTED, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED CONSENT FORM AND RETURN IT, USING THE ENCLOSED ENVELOPE, AS
SOON AS POSSIBLE.
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SBE, Inc.
4550 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
CONSENT SOLICITATION STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The Board of Directors of SBE, Inc., a California corporation (the
"Company"), has determined that the Company must obtain between $8,000,000 and
$12,000,000 of additional equity financing as described in Proposal 2 below.
Accordingly, your consent is being solicited on behalf of the Board of Directors
to (a) an amendment to the Company's Amended and Restated Certificate of
Incorporation to increase the authorized number of shares of Common Stock from
6,000,000 shares to 10,000,000 shares and increase the authorized number of
shares of Preferred Stock from 50,000 shares to 2,000,000 shares; and (b) the
issuance and private sale of up to 1,000,000 shares of a new series of the
Company's Preferred Stock, designated "Series A Convertible Preferred Stock."
The Company intends to mail this consent solicitation statement and accompanying
consent form on or about December 18, 1995 to all shareholders of record at the
close of business on December 11, 1995 (the "Record Date").
SOLICITATION
The Company will bear the entire cost of solicitation of consents,
including preparation, assembly, printing and mailing of this Consent
Solicitation Statement, the consent form and any additional information
furnished to shareholders. Copies of solicitation materials will be furnished
to banks, brokerage houses, fiduciaries and custodians holding in their names
shares of Common Stock beneficially owned by others to forward to such
beneficial owners. The Company may reimburse persons representing beneficial
owners of Common Stock for their costs of forwarding solicitation materials to
such beneficial owners. Original solicitation of consents by mail may be
supplemented by telephone, telegram or personal solicitation by directors,
officers or other regular employees of the Company. No additional compensation
will be paid to directors, officers or other regular employees for such
services.
RECORD DATE AND OUTSTANDING SHARES
Only shareholders of record at the close of business on the Record Date are
entitled to approve the matters described herein. On the Record Date, the
Company had outstanding and entitled to vote __________ shares of Common Stock.
CONSENT REQUIRED
The California Corporations Code requires that Proposal 1 (relating to the
amendment to the Company's Articles of Incorporation) be approved by a majority
of the outstanding shares of Common Stock. Rules promulgated by the National
Association of Securities Dealers, Inc. for companies whose stock is listed on
the Nasdaq National Market require that Proposal 2 (relating to the private
placement of Preferred Stock) also be approved by a majority of the outstanding
shares of Common Stock.
The Company may take the actions described in the proposal contained herein
as soon as it has received consents from shareholders holding a sufficient
number of shares of Common Stock to approve such proposals. THE COMPANY WISHES
TO TAKE THESE ACTIONS IN EARLY 1996. THEREFORE, SHAREHOLDERS WHO WISH TO
APPROVE SUCH PROPOSALS ARE URGED TO EXECUTE AND RETURN THE ENCLOSED CONSENT FORM
TO
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THE COMPANY IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE, BUT IN NO EVENT LATER
THAN JANUARY 22, 1996.
REVOCABILITY OF CONSENTS
Any person giving a consent to either proposal pursuant to this
solicitation has the power to revoke it by a writing received by the Company
prior to the time that consents representing the number of shares required to
authorize such proposal have been filed with the Company's transfer agent, First
National Bank of Boston, Attn: Duane Knutson, 435 Tasso Street, Suite 250, Palo
Alto, California 93404. Consents may not be revoked thereafter. Any such
revocation will become effective upon its receipt by the Company's transfer
agent.
PROPOSAL 1
APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF
COMMON AND PREFERRED STOCK
GENERAL
The Board of Directors has voted, subject to shareholder approval, to amend
and restate the Company's Articles of Incorporation to (a) increase the
authorized number of shares of Common Stock from 6,000,000 shares to 10,000,000
shares; and (b) increase the authorized number of shares of Preferred Stock from
50,000 shares to 2,000,000 shares.
DESCRIPTION OF CAPITAL STOCK
The additional Common Stock to be authorized by adoption of the amendment
and restatement would have rights identical to the currently outstanding common
Stock of the Company, and the additional Preferred Stock to be authorized would
have rights, restrictions, preferences and privileges designated by the Board of
Directors pursuant to the Company's Amended and Restated Articles of
Incorporation. Adoption of the proposed amendment and restatement would not
affect the rights of the holders of currently outstanding shares of Common Stock
of the Company. However, the issuance of Preferred Stock could affect the
rights of the Common Stock. See "Proposal 2 -- Approval of Private Placement of
Common Stock -- Effects of Private Placement on Existing Security Holders." If
the amendment and restatement is approved, it will become effective upon filing
of Amended and Restated Articles of Incorporation with the Secretary of State of
the State of California. In addition to the __________ shares of Common Stock
outstanding at December 11, 1995, the Board of Directors has reserved _________
_____ shares for issuance upon exercise of options and rights granted under the
Company's stock option and stock purchase plans.
EFFECTS OF INCREASING AUTHORIZED SHARES ON EXISTING SECURITY HOLDERS
The principal purpose of the proposed increase in authorized shares is to
permit the issuance of Series A Convertible Preferred Stock described in
Proposal 2 below. The additional shares may be issued, however, without further
shareholder approval for various purposes including, without limitation, raising
capital, providing equity incentives to employees, officers, directors or
consultants establishing strategic relationships with other companies and
expanding the Company's business or product lines through the acquisition of
other businesses or products. The preferred stock not issued in the private
placement discussed below may have rights, preferences and privileges senior to
the Common Stock or
2.
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the Series A Convertible Preferred Stock. The Company has no present intent to
issue Common Stock or Preferred Stock for these purposes other than as described
in Proposal 2 below.
The additional shares of Common Stock and Preferred Stock that would become
available for issuance if the proposal were adopted could also be used by the
Company to oppose a hostile takeover attempt or delay or prevent changes in
control or management of the Company. For example, without further shareholder
approval, the Board of Directors could adopt a "poison pill" that would, under
certain circumstances related to an acquisition of shares not approved by the
Board of Directors, give certain holders the right to acquire additional shares
of Common Stock or Preferred Stock at a low price, or the Board of Directors
could strategically sell shares of Common Stock or Preferred Stock in a private
transaction to purchasers who would oppose a takeover or favor the current Board
of Directors. Although this proposal to increase the authorized Common Stock
and Preferred Stock has been prompted by business and financial considerations
and not by the threat of any hostile takeover attempt, the approval of this
proposal could facilitate future efforts by the Company to deter or prevent
changes in control of the Company, including transactions in which the
shareholders might otherwise receive a premium for their shares over then
current market prices. The Company has no present intent to issue Common Stock
or Preferred Stock for this purpose.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 1.
PROPOSAL 2
APPROVAL OF PRIVATE PLACEMENT OF PREFERRED STOCK
The Board of Directors has voted, subject to shareholder approval, to issue
and sell in a private placement up to 1,000,000 shares of a new series of the
Company's Preferred Stock, designated "Series A Convertible Preferred Stock."
REASONS FOR PRIVATE PLACEMENT
For the last decade, the Company has specialized in the development of
board-level data communications products and industrial computer equipment.
However, in the early 1990's, the Company determined that a large opportunity
existed in the emerging remote local area network (LAN) market for low-end
remote access products. To seize that opportunity, the Company has invested
significant resources in developing netXpand, its new line of standalone remote
LAN access server/router products. In addition, the Company is restructuring
its sales and marketing channels and has added certain key management personnel
to better serve this emerging market. As a result of this investment and
decreased sales attributable to the shift in product focus, the Company incurred
substantial operating losses in fiscal 1995. The Board of Directors has
determined that the Company must obtain between $8,000,000 and $12,000,000 of
additional equity capital to gain additional market penetration for its netXpand
products, to develop enhancements to its netXpand products and traditional
product lines, to complete the restructuring of its sales and marketing channels
and for other working capital purposes.
PROPOSED TERMS OF PRIVATE PLACEMENT
The terms of the proposed private placement, including the rights,
preferences and privileges of the Series A Convertible Preferred Stock, will be
determined by negotiation between the Company and the investors participating in
such financing. The terms of the Series A Convertible Preferred Stock, after
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approval by the Company's Board of Directors, will be embodied in a Certificate
of Designation filed with the Secretary of State of California. Such
Certificate of Designation will constitute an amendment to the Company's Amended
and Restated Articles of Incorporation.
No investor has as yet agreed to participate, so negotiations with
investors have not yet begun. Therefore, the terms of the proposed private
placement cannot be described with any degree of precision. However, the Board
of Directors expects the following matters to be topics of discussion:
VOTING RIGHTS
The Board of Directors expects that each holder of Series A Convertible
Preferred Stock will be entitled to one vote for each share of Common Stock into
which the Series A Convertible Preferred Stock will be convertible on all
matters to be voted upon by the shareholders. With respect to the election of
directors, the holders of Series A Convertible Preferred Stock would be entitled
to exercise cumulative voting rights in the same manner as holders of Common
Stock.
CONVERSION RIGHTS
The Board of Directors expects that each share of Series A Convertible
Preferred Stock will initially be convertible, at the option of the shareholder,
into one or more shares of Common Stock. The rate at which each share of
Series A Convertible Preferred Stock converts into Common Stock may be subject
to change, based on factors such as certain future stock issuances by the
Company at prices below the conversion price then in effect.
REGISTRATION RIGHTS
The Board of Directors expects that the holders of Series A Convertible
Preferred Stock will be entitled to have the Company register such stock with
the Securities and Exchange Commission and applicable state securities
authorities for public resale under certain circumstances.
DIVIDENDS
The holders of Series A Convertible Preferred Stock may be entitled to
fixed dividends, subject to restrictions on dividend payment imposed by
applicable law.
LIQUIDATION PREFERENCE
The holders of Series A Convertible Preferred Stock may be entitled to
receive a portion of the proceeds from liquidation of the Company prior to the
holders of Common Stock.
OTHER PREFERENTIAL RIGHTS; PRICE PER SHARE
The holders of Series A Convertible Preferred Stock may seek certain other
preferential rights over the Common Stock, including the right to Board of
Directors representation and the right to redemption of the Series A Convertible
Preferred Stock under certain circumstances. In addition, the Company's
investors may seek to impose certain restrictive covenants on the Company. The
price per share of the Series A Convertible Preferred Stock will be based in
part on these preferential rights and the market price of the Company's Common
Stock on the date of sale. Because these preferential rights and the price of
the Company's Common Stock will be based in large part upon market conditions
and the Company's financial condition at the time of sale, it is impossible to
estimate such terms at this time.
4.
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EFFECTS OF PRIVATE PLACEMENT ON EXISTING SECURITY HOLDERS
The issuance of the Series A Convertible Preferred Stock, and the issuance
of Common Stock upon conversion of the Series A Convertible Preferred Stock,
will not affect the rights of holders of currently-outstanding Common Stock,
except for effects incidental to increasing the number of shares of capital
stock outstanding, such as dilution of the earnings per share and voting rights
of current holders of Common Stock. In the event the holders of Series A
Convertible Preferred Stock are entitled to a liquidation preference, the
proceeds payable to holders of Common Stock upon any liquidation of the Company
would be decreased by the amount of such preference.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
5.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by (a) all those
known by the Company to be beneficial owners of more than 5% of its Common
Stock, (b) each director, (c) the Company's Chief Executive Officer and its four
other most highly compensated executive officers as of October 31, 1995 (the
Company's most recent fiscal year end), and (d) all executive officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
Beneficial Ownership (1)
------------------------
Number Percent
Beneficial Owner of Shares of Total (2)
---------------- --------- ------------
<S> <C> <C>
Mr. William R. Gage
4550 Norris Canyon Road
San Ramon, CA 94583. . . . . . . . . . . . 230,171 11.1%
FMR Corp. (3)
82 Devonshire Street
Boston, MA 02109 . . . . . . . . . . . . . 136,100 6.6%
Mr. Franklin P. Johnson
2275 E. Bayshore Road, Suite 150
Palo Alto, CA 94301. . . . . . . . . . . . 133,995 6.5%
Mr. John W. Gage (4)
4550 Norris Canyon Road
San Ramon, CA 94583. . . . . . . . . . . . 125,783 6.1%
Doris Anderson Trust
St. Mary's Road
Lafayette, CA 94549. . . . . . . . . . . . 103,759 5.0%
Mr. William B. Heye, Jr. (5) . . . . . . . . . . 111,931 5.1%
Mr. Belton E. Allen (5). . . . . . . . . . . . . 29,989 1.4%
Mr. Raimon L. Conlisk (5). . . . . . . . . . . . 7,500 *
Mr. George E. Grega (5). . . . . . . . . . . . . 7,500 *
Mr. Edward H. Laird (5). . . . . . . . . . . . . 6,000 *
Mr. Eugene K. Buechele (5) . . . . . . . . . . . 11,100 *
Mr. Harold T. Hahn (5) . . . . . . . . . . . . . 3,750 *
Mr. Anthony J. Spielman (5). . . . . . . . . . . 5,100 *
All executive officers and directors as a group
(11 persons) (6) . . . . . . . . . . . . . . . . 421,191 18.8%
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based on information supplied by officers, directors and
principal shareholders of the Company and on any Schedules 13D or 13G
filed with the Securities and Exchange Commission. Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of
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the shareholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned.
(2) Applicable percentages are based on 2,074,254 shares outstanding on October
31, 1995, adjusted as required by rules promulgated by the Securities and
Exchange Commission.
(3) Shares are owned by Fidelity Low-Priced Stock Fund (the "Fund"), an
investment company, and are also beneficially owned by Fidelity Management
& Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., as
a result of acting as investment adviser to the Fund. Mr. Edward C.
Johnson 3d, and certain members of his family, form a controlling group
with respect to FMR Corp., and FMR Corp., through its control of Fidelity,
and the Fund each has sole investment power with respect to the shares
indicated. Sole voting power with respect to the shares indicated resides
with the Fund's Board of Trustees, and Fidelity carries out the voting of
the shares indicated under written guidelines established by the Fund's
Board of Trustees.
(4) Includes 518 shares held by Nikki Gage, Mr. Gage's wife, as to which Mr.
Gage disclaims beneficial ownership.
(5) Includes 110,320, 10,000, 7,500, 7,500, 3,500, 11,100, 3,750 and 5,000
shares that Messrs. Heye, Allen, Conlisk, Grega, Laird, Buechele, Hahn and
Spielman, respectively, have the right to acquire within 60 days of the
Record Date under the Company's option plans.
(6) Includes shares described in the footnotes above and 8,250 shares that
executive officers of the Company not named in the table above have the
right to acquire within 60 days of the Record Date under the Company's
option plans.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
Company's 1996 Annual Meeting of Shareholders must have been received by the
Company not later than October 17, 1995 in order to be included in the proxy
statement and proxy relating to that annual meeting.
By Order of the Board of Directors
WILLIAM R. GAGE
CHAIRMAN OF THE BOARD
Dated: December 18, 1995
7.
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SBE, INC.
CONSENT SOLICITED BY THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH OF THE FOLLOWING
PROPOSALS:
1. To approve an amendment to the Company's Amended and Restated Articles of
Incorporation to (a) increase the authorized number of shares of Common
Stock from 6,000,000 to 10,000,000; and (b) increase the authorized number
of shares of Preferred Stock from 50,000 shares to 2,000,000 shares.
/ / FOR / / AGAINST
2. To approve the issuance and private sale of up to 1,000,000 shares of a new
series of the Company's Preferred Stock, designated "Series A Convertible
Preferred Stock," on the terms and subject to the conditions described in
the Consent Solicitation Statement.
/ / FOR / / AGAINST
Dated: __________________, 199__ ____________________________________________
____________________________________________
Signature(s)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. IF THE STOCK IS REGISTERED IN THE
NAMES OF TWO OR MORE PERSONS, EACH SHOULD
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD
THEIR TITLES. IF SIGNER IS A CORPORATION,
PLEASE GIVE FULL CORPORATE NAME AND HAVE A
DULY AUTHORIZED OFFICER SIGN, STATING TITLE.
IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE VOTE, DATE AND RETURN THIS CONSENT IN THE ENCLOSED RETURN ENVELOPE, WHICH
IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES, AS SOON AS POSSIBLE, BUT IN
NO EVENT LATER THAN JANUARY 22, 1995.
