<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
/x/ Definitive Information Statement
MOBINETIX SYSTEMS, INC.
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
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:
- --------------------------------------------------------------------------------
<PAGE> 2
MOBINETIX SYSTEMS, INC.
500 OAKMEAD PARKWAY
SUNNYVALE, CA 94086
INFORMATION STATEMENT
INTRODUCTION
GENERAL INFORMATION FOR STOCKHOLDERS
This information statement is furnished in connection with the prior
receipt by the Board of Directors of MobiNetix Systems, Inc., a Delaware
corporation (the "COMPANY"), of approval by written consent of the holders of a
majority of the Company's Common and Preferred Stock (the "VOTING CAPITAL
STOCK") of a proposal (the "PROPOSAL") to approve an amendment (the "AMENDMENT")
to the Company's 1996 Stock Plan (the "STOCK PLAN") to increase the maximum
aggregate number of shares of Common Stock of the Company (the "SHARES") which
may be optioned and sold under the Stock Plan from 1,500,000 to 1,950,000
shares. This information statement is being first sent to stockholders on or
about October 13, 1998. The Company anticipates that the Amendment will become
effective on or about October 21, 1998.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
VOTE REQUIRED
The vote required to approve the Proposal is the affirmative vote of the
holders of a majority of the Company's Voting Capital Stock, voting together on
an as-converted basis. Each holder of Common Stock is entitled to one vote for
each share held. Each holder of Series B Preferred is entitled to approximately
2.03 votes for each share held. Each holder of Series C Preferred is entitled to
approximately 40.90 votes for each share held. Each holder of Series D Preferred
is entitled to one vote for each share held. The record date for purposes of
determining the number of outstanding shares of Common Stock and Preferred Stock
of the Company, and for determining stockholders entitled to vote, is the close
of business on August 4, 1998 (the "RECORD DATE"), the day on which the Board of
Directors of the Company adopted the resolution setting forth and recommending
the Amendment. As of the Record Date, the Company had outstanding [1,872,746]
shares of Common Stock, [no] shares of Series A Preferred Stock, [732,050]
shares of Series B Preferred Stock, [28,125] shares of Series C Preferred Stock,
and [1,273,149] shares of Series D Preferred Stock.
2
<PAGE> 3
VOTE OBTAINED - 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 Section 157 of the Delaware Law and Section 14 of
the Stock Plan, a majority of the outstanding shares of Voting Capital Stock
entitled to vote thereon is required in order to amend the Stock Plan. In order
to eliminate the costs and management time involved in holding a special meeting
and in order to effect the Amendment 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, and did in fact obtain, the written consent of the
holders of a majority in interest of the Voting Capital Stock of the Company.
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.
This Information Statement is intended to provide such notice. No dissenters' or
appraisal rights under the Delaware Law are afforded to the Company's
stockholders as a result of the approval of the Proposal.
PROPOSAL TO INCREASE THE AGGREGATE NUMBER OF SHARES
UNDER THE STOCK PLAN
GENERAL
At meetings of the Company's Board of Directors on August 4, 1998 and
September 18, 1998, subject to stockholder approval, the Board of Directors
amended the Stock Plan to increase the maximum aggregate number of Shares which
may be optioned and sold under the Stock Plan from 1,500,000 to 1,900,000, and
from 1,900,000 to 1,950,000, respectively. On October 13, 1998 these proposals
to amend the Stock Plan was approved by written consent of the holders of a
majority of the Company's Voting Capital Stock, voting together as a single
class.
AMENDMENT TO THE STOCK PLAN
The Company's Stock Plan was approved by the Board of Directors on October
22, 1996 and by the stockholders on January 31, 1997. On August 4, 1998 the
Board of Directors approved an amendment to the Stock Plan to increase the
number of shares of Common Stock authorized for issuance thereunder by 400,000
shares, bringing the total number of shares reserved under the Stock Plan to
1,900,000 shares of Common Stock. On September 18, 1998 the Board of Directors
approved an amendment to the Stock Plan to increase the number of shares of
Common Stock authorized for issuance thereunder by 50,000 shares, bringing the
total number of shares reserved under the Stock Plan to 1,950,000 shares of
Common Stock.
Stock options play a key role in the Company's ability to recruit,
reward and retain executives and key employees and consultants. Technology
companies have historically used stock options as an important part of
recruitment and retention packages. The Company competes directly with these
technology companies for experienced executives and engineers and must be able
to offer comparable packages to attract the caliber of individuals that the
Company believes is necessary to provide the growth that stockholders desire.
The Stock
3
<PAGE> 4
Plan provides for the grant of options and stock purchase rights to employees
and consultants to provide additional incentive to encourage their continued
service to the Company.
The essential provisions of the Stock Plan are outlined below.
SUMMARY OF THE STOCK PLAN
GENERAL. The purpose of the Stock Plan is to attract and retain the best
available personnel for positions of substantial responsibility within the
Company, to provide additional incentives to the employees and consultants of
the Company and to promote the success of the Company's business. Options and
stock purchase rights granted under the Stock 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 and stock purchase rights
("SPRS").
ADMINISTRATION. The Stock Plan may be administered by the Board of
Directors or a committee of the Board (the "COMMITTEE"), which Committee shall,
in the case of options intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Code, consist of two or more
"outside directors" within the meaning of Section 162(m) of the Code. The
Committee has the power to determine the terms of the options or SPRs granted,
including the exercise price, the number of shares subject to each option or
SPR, the exercisability thereof, and the form of consideration payable upon such
exercise. In addition, the Committee has the authority to amend, suspend or
terminate the Stock Plan, provided that no such action may affect any share of
Common Stock previously issued and sold or any option previously granted under
the Stock Plan.
TERMS AND CONDITIONS OF OPTIONS. Options and SPRs granted under the Stock
Plan are not generally transferable by the optionee, and each option and SPR is
exercisable during the lifetime of the optionee only by such optionee. Options
granted under the Stock Plan must generally be exercised within three months of
the end of the optionee's status as an employee or consultant of the Company, or
within twelve months after such optionee's termination by death or disability,
but in no event later than the expiration of the option's ten year term. In the
case of SPR's, unless the Committee determines otherwise, the 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 Committee. The exercise price of all incentive stock
options granted under the Stock Plan must be at least equal to the fair market
value of the Common Stock on the date of grant. The exercise price of
nonstatutory stock options and SPRs granted under the Stock Plan is determined
by the Committee, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code, the exercise price must be at least equal to the fair market value
of the Common Stock on the date of grant. With respect to any participant who
owns stock possessing more than 10% of the voting power of all classes of the
Company's outstanding capital stock, the exercise price of any incentive stock
option must be at least 110% of the fair market value on the grant date and the
term of such incentive stock option must not exceed five years. The term of all
other options granted under the Stock Plan may not exceed ten years. The Company
will receive no monetary consideration for the granting of options or SPRs under
the Stock Plan.
4
<PAGE> 5
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The Stock Plan provides that in
the event of a merger of the Company with or into another corporation, a sale of
substantially all of the Company's assets or a like transaction involving the
Company, each option shall be assumed or an equivalent option substituted by the
successor corporation. If the outstanding options are not assumed or substituted
as described in the preceding sentence, the Optionee shall fully vest in and
have the right to exercise the option or SPR as to all of the optioned stock,
including shares as to which it would not otherwise be exercisable. If an option
or SPR becomes fully vested and exercisable in the event of a merger or sale of
assets, the Administrator shall notify the optionee that the option or SPR shall
be fully vested and exercisable for a period of fifteen (15) days from the date
of such notice, and the option or SPR will terminate upon the expiration of such
period.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the excise 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. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director or 10% stockholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain recognized on such a premature disposition of the shares in excess of
the amount treated as ordinary income will be characterized as long-term capital
gain, depending on the holding period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he is granted a nonstatutory option. However, upon its
exercise, the optionee will recognize taxable income generally measured as the
excess of the then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option exercise by an
optionee who is also an employee of the Company will be subject to a tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
The Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by the optionee with respect to shares acquired upon
exercise of a nonstatutory option.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Stock Plan and does not purport to be complete. Reference
should be made to the applicable provisions of the Code. In addition, this
summary does not discuss the tax consequences of the optionee's death or the
income tax laws of any municipality, state or foreign country in which an
optionee may reside.
CERTAIN MATTERS RELATED TO THE PROPOSAL
The Amendment will become effective approximately 20 days after this
Information Statement has been distributed to the Company's stockholders.
5
<PAGE> 6
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of each class of the Company's voting
securities as of September 30, 1998, by (a) each beneficial owner of more than
5% of the Company's Common Stock or Preferred Stock, (b) the Chief Executive
Officer and the other four executive officers who earned more than $100,000
during the last fiscal year (c) each director of the Company and (d) all
directors and executive officers of the Company as a group. Except as otherwise
indicated, each person has sole voting and investment power with respect to all
shares shown as beneficially owned, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Title of Class Ownership(1)(2) Percent of
Name and Address of Beneficial Owner Class
- ----------------- ------------------------------------------------------ -------------------- ---------------
<S> <C> <C> <C>
Common Stock Aziz Valliani (3) 385,078 18.8%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Nazim Kareemi (4) 289,099 14.8%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Llavan Fernando (5) 201,313 10.3%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock David M. Licurse, Sr. (6) 200,205 10.3%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Abbas Rafii (7) 197,833 10.2%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Wilmont Living Trust (8) 185,000 9.6%
13333 La Cresta Drive, Los Altos, CA 94022
Common Stock Paul Dali (10) 35,416 1.8%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock William Powar (9) 24,083 1.3%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Title of Class Ownership(1)(2) Percent of
Name and Address of Beneficial Owner Class
- ----------------- ------------------------------------------------------ -------------------- ---------------
<S> <C> <C> <C>
Common Stock Vivian Stevenson (11) 23,083 1.2%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock All Directors and Officers as a group (seven 1,356,110 60.8%
persons) (12)
Series B Life Investors Insurance Company of America 352,942 14.3%
Preferred Stock 4333 Edgewood Rd NE
Cedar Rapids, IA 52499
Series C Nazem & Company 28,125 22,9%
Preferred Stock 3000 Sand Hill Road, Building 2, Suite 205
Menlo Park, CA 94025
Series D Welch Allyn, Inc. 1,273,149 25.4%
Preferred Stock 4619 Jordan Road
Skaneateles Falls, NY 13153
Preferred Stock All Directors and Officers as a group (one person) 1,273,149 25.4%
- ----------------- ------------------------------------------------------ ------------------- ---------
</TABLE>
- -----------------------
(1) The Company effected a reverse stock split in October 1996, converting each
share of Series B Preferred into one-half share, increasing the conversion
ratio of Series B Preferred into Common Stock from 1:1 to 1:2.03,
converting each share of Series C Preferred into one-fourth share and
increasing the conversion ratio of Series C Preferred into Common Stock
from 1:10 to 1:40.90.
(2) Applicable percentage ownership is based on 1,914,664 shares of Common
Stock outstanding as of September 30, 1998, 710,818 shares of Series B
Preferred Stock outstanding as of September 30, 1998, 28,125 shares of
Series C Preferred Stock outstanding as of September 30, 1998 and 1,273,149
shares of Series D Preferred Stock outstanding as of September 30, 1998.
The percentage ownership of the Common Stock also treats as outstanding all
shares of Common Stock issuable upon exercise of options held by the
particular beneficial owner that are included in the first column.
(3) Includes 131,145 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(4) Includes 35,166 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(5) Includes 167,938 shares held by the Llavanya X. Fernando Trust as to which
Mr. Fernando claims voting and investment control and 33,375 shares subject
to currently exercisable options or options exercisable within 60 days of
September 30, 1998.
7
<PAGE> 8
(6) Includes 162,428 shares held by the D. and P. Licurse Trust, for the
benefit of Mr. Licurse's wife, and 37,777 shares subject to currently
exercisable options or options exercisable within 60 days of September 30,
1998. Mr. Licurse disclaims beneficial ownership of the shares held by the
trust for the benefit of his wife.
(7) Includes 29,895 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(8) Includes 10,000 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(9) Includes 2,083 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(10) Includes 35,416 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(11) Includes 23,083 shares subject to currently exercisable options or options
exercisable within 60 days of September 30, 1998.
(12) Includes all shares described in notes (3)-(7) and notes (9)-(11) above.
BY ORDER OF THE BOARD OF DIRECTORS
[October 21, 1998]
8
