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
DATALINK SYSTEMS CORPORATION
(Name of Registrant as Specified in Its Charter)
DATALINK SYSTEMS CORPORATION
(Name of Person(s) Filing Proxy Statement)
DATALINK SYSTEMS CORPORATION
1735 TECHNOLOGY WAY, SUITE 790
SAN JOSE, CALIFORNIA 95110
(408) 367-1700
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 18, 1997
TO THE SHAREHOLDERS OF DATALINK SYSTEMS CORPORATION:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
Datalink Systems Corporation, a Nevada corporation, will be held at the
Company's offices at 1735 Technology Way, Suite 790, San Jose, California
95110, on Thursday, December 18, 1997, at 2:00 p.m., Pacific Time, and at any
and all adjournments thereof, for the purpose of considering and acting upon
the following matters.
1. The election of five (5) Directors of the Company to serve until
the next Annual Meeting of Shareholders and until their successors have been
duly elected and qualified.
2. Ratification of the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending March 31, 1998.
3. The approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of common stock from
50,000,000 shares to 80,000,000 shares.
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the $.001 par value Common Stock of the Company of
record at the close of business on November 20, 1997, will be entitled to
notice of and to vote at the Meeting or at any adjournment or adjournments
thereof. The proxies are being solicited by the Board of Directors of the
Corporation.
All shareholders, whether or not they expect to attend the Annual
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving of
a proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
ANTHONY N. LAPINE, PRESIDENT
San Jose, California
November 20, 1997
DATALINK SYSTEMS CORPORATION
1735 TECHNOLOGY WAY, SUITE 790
SAN JOSE, CALIFORNIA 95110
(408) 367-1700
______________________________
PROXY STATEMENT
______________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 18, 1997
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Datalink Systems Corporation, a Nevada corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at the Company's offices at 1735 Technology Way, Suite 790, San Jose,
California 95110, on Thursday, December 18, 1997, at 2:00 p.m., Pacific Time,
and at any adjournment thereof. It is anticipated that this Proxy Statement
and the accompanying Proxy will be mailed to the Company's shareholders on or
about November 21, 1997.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report on Form 10-KSB is being simultaneously
mailed to the Company's shareholders, but does not constitute part of these
proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.001 par value Common Stock. Each share of Common Stock entitles the holder
to one (1) vote. Only shareholders of record at the close of business on
November 20, 1997, are entitled to notice of and to vote at the Meeting or any
adjournment thereof. On November 20, 1997, the Company had 20,182,925 shares
of its $.001 par value Common Stock outstanding. Cumulative voting in the
election of Directors is not permitted.
A majority of the Company's outstanding Common Stock represented in
person or by proxy shall constitute a quorum at the Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares
entitled to vote owned beneficially, as of November 7, 1997, by any person,
who is known to the Company to be the beneficial owner of 5% or more of the
Company's Common Stock, and, in addition, by each Director of the Company and
by all Directors and Officers of the Company as a group. Information as to
beneficial ownership is based upon statements furnished to the Company by such
persons.
Amount and
Name and Address Nature of Bene-
Of Beneficial Owner ficial Ownership Percent of Class
- ------------------- ---------------- ----------------
Anthony LaPine 7,150,000 (1) 28.2%
2105 Hamilton Avenue, Suite 240
San Jose, California 95125
Nicholas Miller 2,933,333 (2) 14.1%
1590-1500 West Georgia Street
Vancouver, B.C.
Canada V6G 2Z6
Melanor Ltd. 1,057,833 5.2%
c/o George Davis Law Corp.
1100-100 Park Royal South
West Vancouver, B.C.
Canada V7T 1A2
Medan Ltd. 1,041,667 5.2%
c/o George Davis Law Corp.
1100-100 Park Royal South
West Vancouver, B.C.
Canada V7T 1A2
Dr. Gene M. Amdahl 100,000 .5%
385 Moffet Park Drive, Suite 210
Sunnyvale, CA 94089
Marshall Geller 100,000 .5%
1875 Century Park East, Suite 2200
Los Angeles, CA 90067
Robert Wilson 100,000 .5%
Building 2, Suite 220
3000 San Hill Road
Menlo Park, CA 94025
Peter A. Allard 3,249,167 (3) 15.3%
Seawatch, The Garden
St. James, Barbados
British West Indies
All Officers and Directors 10,383,333 (1) 39.4%
as a Group (6 Persons) (2)
___________________
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(1) Includes 700,000 shares underlying currently exercisable options held by
Mr. LaPine; 250,000 shares underlying currently exercisable options held by Mr.
LaPine's wife, Pamela LaPine; 2,800,000 shares underlying 280,000 shares of
Series A Convertible Preferred Stock, and 1,400,000 shares underlying warrants
held by Mr. LaPine. Does not include 2,000,000 shares underlying warrants
which are not exercisable within 60 days.
(2) Includes 700,000 shares underlying currently exercisable options held by
Mr. Miller, 150,000 shares held by Arundel Holdings, a company owned by Mr.
Miller and his wife, and 937,500 shares held by Mr. Miller's wife, Linda
Fraser. Does not include 2,000,000 shares underlying warrants which are not
exercisable within 60 days.
(3) Includes 1,000,000 shares underlying warrants held by Mr. Allard, and
100,000 shares held by Euphemia Trust.
ELECTION OF DIRECTORS
The Board of Directors is currently set at five (5) members. The Board
of Directors recommends the election as Directors of the five (5) nominees
listed below, to hold office until the next Annual Meeting of Shareholders and
until their successors are elected and qualified or until their earlier death,
resignation or removal. Each member of the present Board of Directors has
been nominated for reelection. The person named as "Proxy" in the enclosed
form of Proxy will vote the shares represented by all valid returned proxies
in accordance with the specifications of the shareholders returning such
proxies. If at the time of the Meeting any of the nominees named below should
be unable to serve, which event is not expected to occur, the discretionary
authority provided in the Proxy will be exercised to vote for such substitute
nominee or nominees, if any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
Positions and Offices Held
Name Age and Term as a Director
- ---------------- --- --------------------------------------------
Anthony N. LaPine 54 Chairman of the Board, President, Chief
Executive Officer and Director since June
1996
Nicholas R. Miller 45 Chief Information Officer, Secretary,
Treasurer and Director since June 1996
Dr. Gene M. Amdahl 74 Director since November 1997
Marshall Geller 58 Director since November 1997
Robert Wilson 77 Director since November 1997
There is no family relationship between any Director or Executive
Officer of the Company.
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Set forth below are the names of all Directors, Nominees for Director
and Executive Officers of the Company, all positions and offices with the
Company
held by each such person, the period during which he has served as such, and
the principal occupations and employment of such persons during at least the
last five years:
ANTHONY N. LAPINE was appointed Chairman of the Board on September 1,
1997, and has served as President, Chief Executive Officer and a Director of
the Company since June 27, 1996. Mr. LaPine's career began at IBM in 1964,
where his technical achievements earned him several patents and "outstanding
contribution" awards. His Data Synchronization invention (Patent 3,701,039)
remains the state of the art in today's disk drives. In 1969, he was
recruited as one of the founders of Memorex's Equipment Group where he was
instrumental in giving birth to the floppy disk drive. He subsequently played
a major role in Memorex's turnaround and relisting on the New York Stock
Exchange. After Memorex's first billion dollar revenue year, he was
instrumental in the sale of Memorex to Burroughs, now Unisys. In 1981 Mr.
LaPine was recruited to re-engineer Irwin/Olivetti where he orchestrated the
invention of the first removal cartridge tape backup in personal computers.
In 1983, he formed LaPine Technology, raising $30 million and launching the
new 3-1/2 inch Winchester disk drive technology. He led his company's growth
to a profitable $60 million in sales before selling the company to his
alliance partners, Prudential and Kyocera, in 1987. In 1987 he formed The
LaPine Group, a private investment and turnaround management firm which he
owned and operated until December 1994. From December 1994 to June 1996, he
served as CEO of Andor International, a company launched by Dr. Gene Amdahl.
After reorganizing the company, Mr. LaPine negotiated its sale to the Fortel
Group where he now serves as Chairman. He lectures in the Graduate School of
Business at the University of San Francisco. He has served as Chairman of the
Hoover Institution's Council on Economic Development and as a strategic
advisor to the Russian government on the transition to capitalism. In 1993,
he received the San Jose State University "Alumni Award of Distinction" and is
the recipient of the Santa Clara University 1994 "Distinguished Engineering
Alumni Award." He received a BSEE Cum Laude from San Jose State University in
1965, an MSEE from Santa Clara University in 1971, and an MBA from the
University of San Francisco in 1986.
NICHOLAS MILLER served as Chairman of the Board, Secretary and Treasurer
of the Company from June 27, 1996 until September 1, 1997, when he stepped
down as Chairman of the Board and was named Chief Information Officer. In
June 1993, Mr. Miller founded the Company's wholly-owned Canadian subsidiary.
From February 1987 until June 1993, he was the owner and President of Arundel
Holdings Inc., a management consulting company which provided consulting
services to emerging growth companies in the United States and Canada. From
June 1987 until May 1988, he served as President of two companies: Tai Capital
Corporation, a U.S. and Canadian based holding company specializing in the
syndication of limited partnerships and in the financing of emerging growth
companies; and Accessgroup, a company specializing in financial communications
for public emerging growth and resource based companies. From February 1984
until February 1987, he was President and founder of Sona Systems Corporation,
a company engaged in developing and marketing microcomputer software products.
From March 1982 until February 1984, he was President and founder of Canada
Microsystems Ltd., a wholesale distributor and developer of microcomputer
based software products.
THOMAS C. BLAND has served as the Company's Chief Financial Officer
since March 15, 1997, after consulting for the Company since August 1996.
From February 1993 until July 1996, he was employed by Coopers & Lybrand LLP
as a senior audit manager and from January 1986 until January 1993, he was
employed by Ernst & Young LLP as a senior audit manager. Mr. Bland received a
Master of
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Science in Genetics from the University of Arizona in 1974, and a Bachelor of
Science in Genetics from the University of California, Davis in 1973. He
received his CPA license in 1989.
DR. GENE MYRON AMDAHL joined the Company's Board of Directors on
November 5, 1997. Dr. Amdahl spent his early professional career at IBM where
he worked on simulation studies and machine design for character recognition;
was the initial planner for the IBM 709 and 7030; became Manager of
Architecture for the IBM System 360 and, in 1965, was named an IBM Fellow
(during part of which period he was named Director of IBM's Advanced Computing
Systems Laboratory in Menlo Park, California). During the 1960's, he
implemented a milestone in computer technology: the concept of compatibility
between systems. Dr. Amdahl left IBM Corporation in the Fall of 1970 to
create more innovative mainframe computers.
Dr. Amdahl is best known for founding Amdahl Corporation, the first
successful IBM-compatible CPU manufacturer. Amdahl Corporation's
accomplishments include the development of the world's first large scale
integrated (LSI) chips which allowed for the production of high performance,
air-cooled, rather than water-cooled, CPU's. In the first full year of
shipments, Amdahl shipped $96 million worth of product, the second full year
$190 million, and the third year $320 million. In 1979, he became Amdahl's
Chairman Emeritus and a consultant to the company.
In 1980, Dr. Amdahl co-founded Trilogy Systems Corporation to produce
fault tolerant wafer-scale chips and a high-performance CPU. In 1987, Dr.
Amdahl founded Andor International Ltd. which specialized in the design,
manufacture and marketing of unique IBM-compatible products designed to
improve the efficiency, performance, access, capacity and protection of
programs and data. The first in a series of products was the CacheXchange,
the first breakthrough in disaster recovery.
MARSHALL GELLER joined the Company's Board of Directors on November 5,
1997. Mr. Geller is currently the Chairman, Chief Executive Officer, and
Founding Partner of Geller & Friend Capital Partners, Inc., which was formed
in November 1995. From 1991 to October 1995, Mr. Geller was the Senior
Managing Partner and founder of Golenberg & Geller, Inc., a merchant banking
and investment company. From 1988 to 1990, he was the Vice Chairman of
Gruntal & Company, a New York Stock Exchange investment banking firm. From
1967 through 1988, Mr. Geller was Senior Managing Director for Bear Stearns &
Company. While at Bear Stearns, Mr. Geller was the Managing Partner in charge
of all areas of Corporate Finance, Public Finance, Institutional Equities &
Debt for Bear Stearns offices in Los Angeles, San Francisco, Chicago and Hong
Kong. He was also a director of Shun Loong-Bear Stearns Far East and Sun Hung
Kai-Bear Stearns, both leading Chinese investment banking firms. Mr. Geller
also helped pioneer the equity and investment banking business in Japan, Hong
Kong, and China.
Mr. Geller formerly served as Interim Co-Chairman of Hexcel Corporation
(NYSE: HXL) and is still currently on the Board of Directors. Mr. Geller was
formerly Interim President and Chief Operating Officer of Players
International, Inc. ("PLAY"), and now serves on their board as its Chairman of
their Investment Committee. Mr. Geller also serves as Vice Chairman on the
board of Value Vision International, Inc. ("VVTV"), and serves as Chairman of
their Investment Committee. He also serves on the boards of the following
companies: Ballantyne of Omaha, Inc. (AMEX: BTN), and Cabletel Communications
Corporation (AMEX: TTV). He has served on the boards of numerous charitable
organizations, ranging from the Coro Foundation to the Jewish Federations of
Los Angeles, San Francisco and Chicago to The Center for the Partially
Sighted.
-5-
Mr. Geller has served on the Illinois Task Force on Financial Services,
an organization created by Governor James R. Thompson to analyze and suggest
needed changes in the State Financial Services Regulations. Mr. Geller also
served on former Mayor of Los Angeles Tom Bradley's Advisory Board to the
California Corporation Commissioner, assisting in the study of the Securities
and Real Estate industries.
ROBERT WILSON joined the Company's Board of Directors on November 5,
1997. Mr. Wilson has served in top management roles for all three of the
principal functional areas of a business--marketing, manufacturing and
engineering. After graduating with a degree in Mechanical Engineering from
the University of California in 1941, Mr. Wilson joined General Electric.
Following World War II he served in various design and management positions at
General Electric, ending his career there as Vice President responsible for
the Industrial Drive Division. He then served as President of the Commercial
Products Group at North American Rockwell (now Rockwell International).
Subsequently, he became President and Chief Executive Officer of the Collins
Radio Company where he reduced costs and expenses by over $40 million per year
and led the company to profitability.
Mr. Wilson became Chairman, President and Chief Executive Officer of
Memorex in early 1974. Memorex had lost $90 million in 1973. It was heavily
in debt, and morale was at a low ebb. A major turnaround was effected in a
short period of time. In Mr. Wilson's first full year of responsibility,
1975, the company reported net income of $18 million. Accomplishments at
Memorex included relisting on the New York Stock Exchange, a successful public
offering, debt repayment and acquisition of Telex Europe.
In 1980, Mr. Wilson retired from Memorex and subsequently joined Wilson
& Chambers as a partner and Chairman. Wilson & Chambers provides consulting
services, turnaround management, and makes small investments in ventures. Mr.
Wilson has served on over 20 boards of directors including Rockwell
International, Collins Radio, Chrysler, GAF, Computervision, Monolithic
Memories, Siltec, Andros Incorporated, ReSound Corporation, SyQuest
Technology, Giga-tronics, Western Digital, Storage Technology Corporation,
Southwell Technologies, Inc., Wyse Technology, and Spectrian Corporation.
The Company does not have any standing audit, nominating or compensation
committees.
The Company's Board of Directors held five (5) meetings during the year
ended March 31, 1997. Each Director attended at least 75% of the aggregate
number of meetings held by the Board of Directors during the time each such
Director was a member of the Board.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for December
18, 1997. There are no known arrangements or understandings between any
director or executive officer and any other person pursuant to which any of
the above-named executive officers or directors was selected as an officer or
director of the Company.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were either a
director, Officer or beneficial owner of more than 10% of the Company's Common
Stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year.
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EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's President and each other Executive Officer who
received compensation in excess of $100,000 for the fiscal years ended March
31, 1997. No executive officer received any compensation for the fiscal years
ended March 31, 1996 and 1995.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
SECURI-
TIES
UNDERLY-
OTHER RE- ING ALL
ANNUAL STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) PAYOUTS SATION
- ------------------ ---- -------- ----- ------- -------- -------- ------- -------
Anthony LaPine, 1997 $195,000 -0- $11,000 -0- 700,000 -0- -0-
President (1)
Nicholas Miller, 1997 $180,000 -0- $12,000 -0- 700,000 -0- -0-
Chairman of the (1)
Board
- ------------------
(1) Represents car allowance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning individual
grants of stock options made to each of the Executive Officers named above
during the fiscal year ended March 31, 1997.
INDIVIDUAL GRANTS
---------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARs EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE
- ---------------- ------------ ------------ ----------- ----------
Anthony LaPine 700,000 34.4% $2.20 9/17/01
Nicholas Miller 700,000 34.4% $2.20 9/17/01
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES UNDER- VALUE OF UNEXER-
SHARES LYING UNEXER- CISED-IN-THE
ACQUIRED CISED OPTIONS MONEY\OPTIONS/
ON SARS AT FY-END SARS AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------- -------- -------- ---------------- ----------------
Anthony LaPine -0- -0- 700,000 / 0 0 / 0
Nicholas Miller -0- -0- 700,000 / 0 0 / 0
EMPLOYMENT AGREEMENTS
Effective May 1, 1996, Datalink Communications Corporation, the
Company's wholly owned subsidiary, entered into a three year employment
agreement with Arundel Holdings, Inc., a company owned by Nicholas Miller and
his wife, whereby Mr. Miller is to serve as the Company's Chairman of the
Board and Secretary. The agreement also provides that Mr. Miller will receive
a base salary of $180,000 per year, plus discretionary increases in accordance
with the Company's normal review procedures. In addition, subject to the
achievement of certain mutually agreed upon performance goals, Mr. Miller will
be paid an annual bonus equal to 100% of his base salary. Mr. Miller also
receives a $1,000 per month car allowance. In the event that the Company
terminates this agreement prior to the expiration of the three year term for
other than cause or disability, or if Mr. Miller terminates the agreement for
"good reason" (as defined in the Agreement), the Company is required to
continue paying the salary and other benefits for the remainder of the term of
the agreement. Mr. Miller also receives full health, dental, vision and
disability insurance.
On September 17, 1996, the Company entered into a Directors Agreement
with Mr. Miller pursuant to which Mr. Miller serves as a Director of the
Company. The Agreement provides that the Company will indemnify Mr. Miller to
the fullest extent permitted by the Company's Articles of Incorporation and
applicable laws. The Agreement also grants Mr. Miller options to purchase
700,000 shares of the Company's Common Stock at $2.44 per share.
Effective May 1, 1996, Datalink Communications Corporation, the
Company's wholly owned subsidiary, entered into a three year employment
agreement with Anthony LaPine, the Company's President, which was subsequently
amended on January 1, 1997, pursuant to which he receives a base salary of
$140,000 per year, plus discretionary increases in accordance with the
Company's normal review procedures. In addition, subject to the achievement
of certain mutually agreed upon performance goals, Mr. LaPine will be paid an
annual bonus equal to 86% of his base salary. Mr. LaPine also receives a
$1,000 per month car allowance. In the event that the Company terminates this
agreement prior to the expiration of the three year term for other than cause
or disability, or if Mr. LaPine terminates the agreement for "good reason" (as
defined in the Agreement), the Company is required to continue paying the
salary and other benefits for the remainder of the term of the agreement. Mr.
LaPine also receives full health, dental, vision and disability insurance.
Concurrently with the execution of the employment agreement, Mr. LaPine
entered into a Stock Purchase Agreement pursuant to which he purchased
2,000,000 shares of the Common Stock of Datalink Communications Corporation
(which were later exchanged for 2,000,000 shares of the Company's Common
Stock), and as payment therefor Mr. LaPine executed a non-recourse promissory
note in the amount of $1,500,000. The note bears interest at 5% per annum and
the principal plus
-8-
interest are due on or before April 1, 2001. As security for the note, Mr.
LaPine granted the Company a security interest in the 2,000,000 shares of
Common Stock.
On June 26, 1996, the Company entered into a Loan Forgiveness Agreement
with Mr. LaPine which provided that Mr. LaPine's $1,500,000 promissory note
would be forgiven if Mr. LaPine has continued to serve as the Company's Chief
Executive Officer through May 1, 1999, and there are no uncured defaults by
Mr. LaPine under his Employment Agreement on May 1, 1999.
On January 2, 1997, the Company entered into a three year lease with Mr.
LaPine and his wife whereby the Company leases from the LaPine's 4,000 square
feet of office space located in the LaPine's home at an annual rate of
$100,000 or $8,333.37 per month.
The Board of Directors has agreed that no bonuses will be paid to
Messrs. LaPine and Miller until the Company has four consecutive profitable
quarters. The performance goals for Messrs. LaPine and Miller will be
established by a compensation committee of which a majority of the members
will be independent directors.
EMPLOYEE STOCK OPTION PLAN
During June 1996, the Board of Directors adopted the Employee Stock
Option Plan (the "Plan") which was approved by the Company's shareholders on
June 14, 1996. The Plan authorizes the issuance of options to purchase up to
3,000,000 shares of the Company's Common Stock.
The Plan allows the Board to grant stock options from time to time to
employees, officers and directors of the Company. The Board has the power to
determine at the time the option is granted whether the option will be an
Incentive Stock Option (an option which qualifies under Section 422 of the
Internal Revenue Code of 1986) or an option which is not an Incentive Stock
Option. Vesting provisions are determined by the Board at the time options
are granted. The option price for any option will be no less than the fair
market value of the Common Stock on the date the option is granted.
During September 1996, the Company's Board of Directors granted a total
of 2,680,800 options to a total of 21 employees and consultants. Except as
disclosed below, all options have an exercise price of $4.00 per share.
Included among the recipients were Anthony L. LaPine and Nicholas Miller,
Officers and Directors of the Company, who received 700,000 options each, and
Pamela LaPine, the wife of Anthony LaPine, who received 250,000 options. The
options for the LaPine's and Mr. Miller have an exercise price of $2.44.
EMPLOYEE WARRANTS
In addition to the stock options granted under the Company's Employee
Stock Option Plan, in August 1997, the Board of Directors approved the
issuance of warrants to Anthony N. LaPine and Nicholas R. Miller as of the
initial closing date of the Company's recent private offering. Mr. LaPine
received warrants to purchase 2,000,000 shares of Common Stock at $.375 per
share. These vest over a three-year period in equal installments of one-third
of the total shares on each anniversary of the date of grant, and expire five
years from the closing date of the Company's recent private offering. Mr.
Miller received warrants to purchase 2,000,000 shares of Common Stock at $.375
per share. Of these warrants, 1,500,000 will vest over a three-year period
upon the achievement of certain performance goals, and the remaining 500,000
will vest over a three-year period
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in equal installments of one-third of such number on each anniversary of the
date of grant. These warrants also expire five years from the closing date of
the private offering. The above warrants were approved pursuant to the
requirements of the Company's letter of intent with the Placement Agent.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITION OF DATALINK COMMUNICATIONS CORPORATION
On June 27, 1996, the Company issued 16,465,316 shares of Common Stock
to the holders of 100% of the outstanding common stock of Datalink
Communications Corporation ("DCC") in an exchange transaction in which DCC
became a wholly-owned subsidiary of the Company.
The stock issuances were made pursuant to an Agreement Concerning the
Exchange of Common Stock (the "Agreement") between the Company and DCC. The
terms of the Agreement were the result of negotiations between the managements
of the Company and DCC. However, the Company's Board of Directors did not
obtain any independent "fairness" opinion or other evaluation regarding the
terms of the Agreement, due to the cost of obtaining such opinions or
evaluations.
Among those persons receiving stock in this exchange were the following
persons who became officers, directors or 5% shareholders of the Company:
NAME NUMBER OF SHARES
--------------------------- ----------------
Nicholas R. Miller 2,083,333
Anthony N. LaPine 2,000,000
Silhouette Investments Ltd. 2,083,333
Melanor Ltd. 2,157,833
Medan Ltd. 1,041,667
Peter Allard 482,500
Mark Moldenhauer, the former President and a Director of Lord Abbott,
sold back to the Company at the closing of the foregoing transaction 1,533,333
shares of Lord Abbott's common stock for $10,000.
In connection with the acquisition, and pursuant to Regulation S of the
Securities Act, the Company issued to Westridge Capital Limited ("Westridge"),
a non-U.S. entity and an affiliate of the Lord Abbott shareholders, as a
finder's fee, a convertible debenture in the principal amount of $130,000,
which was convertible into 1,300,000 shares of Common Stock at $0.10 per
share. Westridge exercised its right to convert the debenture on October 11,
1996, and the Company issued to Westridge 1,300,000 shares of Common Stock at
that time. The Company believes that such shares were subsequently
distributed to the owners of Westridge.
MERGER WITH LORD ABBOTT CORPORATION
On June 18, 1996, the Company merged with Lord Abbott Corporation, a
publicly traded Colorado corporation (the "Merger"). Upon the consummation of
the Merger, the outstanding shares of Lord Abbott Corporation were converted
into shares of Common Stock and the Company was the surviving corporation.
TRANSACTIONS INVOLVING THE COMPANY
During July 1996, the Company completed a transaction in which it sold
to Peter Allard, an unaffiliated investor, a convertible debenture (the
"Debenture") in the principal amount of $2,000,000. The Debenture was to
mature on July 1,
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1998, and was convertible at any time prior thereto into shares of the
Company's Common Stock at $2.00 per share. Mr. Allard was also issued a
warrant to purchase up to 1,000,000 shares of the Company's Common Stock at
$2.50 per share at any time prior to July 15, 1998. Mr. Allard received
certain registration rights in connection with these securities. On October
14, 1996, Mr. Allard exercised his right to convert the Debenture and the
Company issued Mr. Allard 1,000,000 shares of Common Stock. In connection
with the closing of the transaction, the Company also issued 100,000 shares of
Common Stock to the Euphemia Trust for services rendered in connection with
the transaction. The Euphemia Trust is beneficially owned by Mr. Allard.
On the closing of the Company's recent private offering, in response to
certain claims asserted by Mr. Allard, the Company issued 1,000,000 shares of
Common Stock to Mr. Allard and exchanged Mr. Allard's existing warrant for
1,000,000 warrants, the terms and conditions of which are identical to the
warrants issued to the Placement Agent in connection with the offering. The
Company received no compensation for the issuance of these shares and the
exchange of the warrants. The Company expects to record a substantial change
in its earnings in the quarter ending December 31, 1997, as a result of this
issuance.
On January 2, 1997, the Company entered into a three year lease with Mr.
LaPine and his wife whereby the Company leases from the LaPine's 4,000 square
feet of office space located in the LaPine's home at an annual rate of
$100,000 or $8,333.37 per month. The lease terminates if Mr. LaPine's
employment with the Company is terminated.
Concurrently with the execution of his employment agreement, Mr. LaPine
entered into a Stock Purchase Agreement pursuant to which he purchased
2,000,000 shares of the Common Stock of Datalink Communications Corporation
(which were later exchanged for 2,000,000 shares of the Company's Common
Stock), and as payment therefor Mr. LaPine executed a non-recourse promissory
note in the amount of $1,500,000. The note bears interest at 5% per annum and
the principal plus interest are due on or before April 1, 2001. As security
for the note, Mr. LaPine granted the Company a security interest in the
2,000,000 shares of Common Stock.
On May 20, 1996, the Company entered into a Loan Forgiveness Agreement
with Mr. LaPine which provided that Mr. LaPine's $1,500,000 promissory note
would be forgiven if Mr. LaPine has continued to serve as the Company's Chief
Executive Officer through May 1, 1999, and there are no uncured defaults by
Mr. LaPine under his Employment Agreement on May 1, 1999.
On June 17, 1997, the Board of Directors of the Company approved the
repricing of Mr. LaPine's and Mr. Miller's outstanding options from an
exercise price of $2.20 per share to a exercise price of $0.44 per share. On
the same date, the Board also approved the repricing of all of the options
held by the other employees of the Company from an exercise price of $2.00 per
share to an exercise price of $0.40 per share.
In addition to the stock options granted under the Company's Employee
Stock Option Plan, in August 1997, the Board of Directors approved the
issuance of warrants to Anthony N. LaPine and Nicholas R. Miller as of the
closing date of the recent private offering. Mr. LaPine received warrants to
purchase 2,000,000 shares of Common Stock at $.375 per share. These will vest
over a three-year period in equal installments of one-third of the total
shares on each anniversary of the date of grant, and expire five years from
the closing date of the private offering. Mr. Miller received warrants to
purchase 2,000,000 shares of Common Stock at $.375 per share. Of these
warrants, 1,500,000 will vest over a three-
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year period upon the achievement of certain performance goals, and the
remaining 500,000 will vest over a three-year period in equal installments of
one-third of such number on each anniversary of the date of grant. These
warrants also expire five years from the closing date of the recent private
offering. The above warrants were approved pursuant to the requirements of
the Company's letter of intent with the Placement Agent.
As compensation for their service as directors of the Company, Dr.
Amdahl, Mr. Geller and Mr. Wilson each received options to purchase 100,000
shares of Common Stock at a price of $.685, which was not less than the fair
market value of the Common Stock on the date the options were granted.
Mr. LaPine agreed to subscribe to purchase seven (7) Units in the recent
private offering in exchange for a promissory note payable to the Company and
secured by certain of Mr. LaPine's assets other than his personal residence
and its contents. The Placement Agent received its standard commission and
fees on Mr. LaPine's subscription.
In connection with the recent private offering, the Company issued
warrants to the Placement Agent to purchase up to 8,243,825 shares of Common
Stock at an exercise price of $.375 per share. The Placement Agent's Warrants
are convertible, at the option of the Placement Agent, into an equal number
of warrants, the terms of which will be identical to the terms of the Warrants
included in the Units.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Board has unanimously approved and proposed for stockholder approval
an amendment to the Company's Certificate of Incorporation to increase the
Company's authorized Common Stock from 50,000,000 to 80,000,000 shares. The
Company's Certificate of Incorporation currently authorizes the issuance of
50,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. As
of November 5, 1997, 20,182,925 shares of the Company's Common Stock were
issued and outstanding, 3,000,000 shares of Common Stock were reserved for
issuance under the Company's Stock Option Plan, and 1,000,000 shares were
reserved for issuance upon the exercise of outstanding warrants held by Peter
Allard.
On November 5, 1997, the Company completed a private offering of 68.5
Units, where each Unit consisted of 40,000 shares of Series A Convertible
Preferred Stock ("Preferred Stock") and warrants to purchase 200,000 shares of
Common Stock at $.50 per share. Each share of Preferred Stock is convertible
into 10 shares of Common Stock. Therefore, there are 27,400,000 shares
issuable upon conversion of the Preferred Stock and 13,700,000 shares issuable
upon exercise of warrants sold in the private offering. In addition, the
Placement Agent for the private offering was issued warrants to purchase
8,243,826 shares of Common Stock.
On the closing of the private offering, the Company also issued to
Anthony LaPine and Nicholas Miller warrants to purchase 2,000,000 shares each
at a price of $.375 per share.
The sum of the 20,182,925 shares outstanding and the 27,400,000 shares
issuable upon conversion of the Preferred Stock and 29,943,826 shares issuable
upon exercise of outstanding options and warrants exceeds the 50,000,000
shares of Common Stock currently authorized by 27,536,751 shares. The
Certificate of Incorporation must be amended to increase the authorized Common
Stock sufficiently to allow for the reservation of all 27,536,751 shares
before any of
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such shares can be issued. Holders of a majority of the Company's shares
currently outstanding have signed consent minutes approving the amendment, and
such minutes will be utilized if the shareholders fail to approve such
amendment at the annual meeting.
If the proposed change in authorized capital is approved by the
stockholders, the Company will have 2,463,249 shares of unissued and
unreserved shares of Common Stock available of issuance in the future.
The Board believes that the additional shares of Common Stock resulting
from the amendment of the Certificate of Incorporation should be available for
issuance from time to time as may be required for various purposes, including
the issuance of Common Stock in connection with financing or acquisition
transactions and the issuance or reservation of Common Stock for employee
stock options. The Company anticipates that in the future it will consider a
number of possible financing and acquisition transactions that may involve the
issuance of additional equity, debt or convertible securities. If the
proposed increase in authorized capital is approved, the Board would be able
to authorize the issuance of shares for these purposes without the necessity,
and related costs and delays, of either calling a special stockholders'
meeting or of waiting for the regularly scheduled annual meeting of
stockholders in order to increase the authorized capital. If in a particular
instance stockholder approval were required by law, or otherwise deemed
advisable by the Board, then the matter would be referred to the stockholders
for their approval regardless of whether a sufficient number of shares
previously had been authorized. The stockholders of the Company are not
entitled to preemptive rights with respect to the issuance of any authorized
but unissued shares.
The proposed change in capital is not intended to have any anti-takeover
effect and is not part of any series of anti-takeover measures contained in
any debt instruments or the Certificate of Incorporation or the Bylaws of the
Company in effect on the date of this Proxy Statement. However, stockholders
should note that the availability of additional authorized and unissued shares
of Common Stock could make any attempt to gain control of the Company or the
Board more difficult or time consuming and that the availability of additional
authorized and unissued shares might make it more difficult to remove current
management. Although the Board currently has no intention of doing so, shares
of Common Stock could be issued by the Board to dilute the percentage of
Common Stock owned by a significant stockholder and increase the cost of, or
the number of, voting shares necessary to acquire control of the Board or to
meet the voting requirements imposed by Nevada law with respect to a merger or
other business combination involving the Company. The Company is not aware of
any proposed attempt to take over the Company or of any attempt to acquire a
large block of the Company's Common Stock. The Company has no present
intention to use the increased authorized Common Stock for anti-takeover
purposes.
The affirmative vote of a majority of the outstanding shares of the
Common Stock entitled to vote at the Annual Meeting of Shareholders is
required to approve the proposed amendment to the Certificate of
Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL CONCERNING
THE INCREASE IN AUTHORIZED CAPITAL.
PROPOSAL TO RATIFY THE SELECTION OF
COOPERS & LYBRAND L.L.P. AS AUDITORS
The independent accounting firm of Coopers & Lybrand L.L.P. audited the
financial statements of the Company for the year ended March 31, 1997, and has
been selected in such capacity for the current fiscal year. At the direction
of
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the Board of Directors, this appointment is being presented to the
shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the shareholders do not ratify the appointment of Coopers &
Lybrand L.L.P., the appointment of auditors will be reconsidered by the Board
of Directors.
It is expected that representatives of Coopers & Lybrand L.L.P. will be
present at the meeting and will be given an opportunity to make a statement if
they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY
THE SELECTION OF COOPERS & LYBRAND L.L.P. AS AUDITORS.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the year ending March 31,
1997, accompanies this Proxy Statement. The Annual Report is not incorporated
into this Proxy Statement and is not to be considered part of the solicitation
material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN SEPTEMBER 1998
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in September 1998 must be received
at the offices of the Company, Datalink Systems Corporation, 1735 Technology
Way, Suite 790, San Jose, California 95110, on or before April 8, 1998, in
order to be included in the Company's proxy statement and proxy relating to
that meeting.
ANTHONY N. LAPINE, PRESIDENT
San Jose, California
November 20, 1997
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P R O X Y
DATALINK SYSTEMS CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony N. LaPine with the power to
appoint his substitute, and hereby authorizes him to represent and to vote as
designated below, all the shares of common stock of Datalink Systems
Corporation held of record by the undersigned on November 20, 1997, at the
Annual Meeting of Shareholders to be held on December 18, 1997, or any
adjournment thereof.
1. The election of five (5) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified:
___ FOR all nominees listed below (except as marked
to the contrary).
___ WITHHOLD authority to vote for all the nominees listed
below:
Anthony N. LaPine Nicholas R. Miller
Dr. Gene M. Amdahl Robert Wilson
Marshall Geller
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Coopers & Lybrand L.L.P. as
the Company's independent accountants for the fiscal year ending March 31,
1998:
___ FOR ___ AGAINST ___ ABSTAIN
3. The approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of common stock from
50,000,000 shares to 80,000,000 shares.
___ FOR ___ AGAINST ___ ABSTAIN
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF Datalink
Systems Corporation. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
(To be signed on the other side)
DATALINK SYSTEMS CORPORATION
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, Proxy Statement and Annual Report.
Dated: ______________, 1997 _______________________________________
Signature(s) of Shareholder(s)
_______________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.