ý Preliminary
Proxy Statement
|
o Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
o Definitive
Proxy
Statement
|
o Definitive
Additional
Materials
|
ý Soliciting
Material Under Rule 14a-12
|
|
|
o
|
No
fee required.
|
(1)
|
Title
of each class of securities to which transaction applies: Common
Stock,
par value $0.001 per share, of the Registrant (the “Common
Stock”).
|
|
(2)
|
Aggregate
number of securities to which transaction applies: N/A
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|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11: N/A
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(4)
|
Proposed
maximum aggregate value of transaction: $3,000,000
|
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(5)
|
Total
fee paid: $600
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|
o
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Fee
paid previously with preliminary materials.
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|
|
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|
o
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the form or schedule and the date of its filing.
|
|
(1)
|
Amount
previously paid: N/A
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(2)
|
Form,
Schedule or Registration Statement No.: N/A
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(3)
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Filing
Party: N/A
|
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(4)
|
Date
Filed: N/A
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Sincerely,
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|
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/s/
Greg Yamamoto
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Greg
Yamamoto
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|
Chief
Executive Officer and President
|
(1) To
approve the sale of our embedded business pursuant to an asset purchase
agreement between us and One Stop Systems, Inc. pursuant to which
One Stop
would acquire our embedded business for $2,200,000 in cash and assume
our
obligations under the lease of our corporate headquarters building
and
certain equipment leases; and
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|
|
|
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(2) To
transact such other business as may properly come before the meeting
or
any adjournment thereof.
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By
Order of the Board of Directors,
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/s/
David W. Brunton
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David
W. Brunton
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|
Secretary
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Page
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1
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WHERE
YOU CAN FIND MORE INFORMATION
|
1
|
QUESTIONS
ABOUT THE SALE OF ASSETS
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2
|
SUMMARY
TERM SHEET FOR THE SALE OF EMBEDDED BUSINESS
|
6
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RISK
FACTORS
|
9
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Risk
Relating to the Transaction
|
9
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THE
COMPANIES
|
11
|
SBE
|
11
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One
Stop
|
11
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THE
ASSET SALE
|
12
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Background
of the Asset Sale
|
12
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Reasons
for the Asset Sale
|
13
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Recommendation
of Our Board of Directors
|
13
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Opinion
of Our Financial Advisor
|
14
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PROPOSAL
-- APPROVAL OF THE SALE OF SBE’S EMBEDDED BUSINESS
|
15
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General
|
15
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Effective
Time of the Asset Sale
|
15
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Representations
and Warranties
|
15
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Certain
Covenants
|
16
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Conditions
Precedent
|
17
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Termination
|
17
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Restriction
on Competition
|
17
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Indemnification
|
17
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Waivers
|
18
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Amendments
|
18
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Fees
and Expenses
|
18
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
19
|
OTHER
MATTERS
|
21
|
Annex
A
|
Agreement
for Purchase and Sale of Assets, dated January 11, 2007, between
SBE, Inc.
and One Stop Systems, Inc.
|
Annex
B
|
Opinion
of Samuel Seidman & Co., dated January 12,
2007
|
•
|
the
timing and success of the proposed sale of our embedded business
and any
subsequent acquisition by us of a larger operating business in a
stock-for-stock merger or exchange transaction, which we refer to
as a
reverse merger, or liquidation;
|
•
|
the
effect of the transaction on our market
price;
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•
|
the
factors discussed under “Risk Factors,” beginning on page ___;
and
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•
|
other
risks referenced from time to time in our filings with the Securities
and
Exchange Commission, or SEC.
|
•
|
To
vote in person, come to the special meeting and we will give you
a ballot
when you arrive.
|
•
|
To
vote using the proxy card, simply complete, sign and date the enclosed
proxy card and return it promptly in the envelope provided. If you
return
your signed proxy card to us before the special meeting, we will
vote your
shares as you direct.
|
•
|
You
may submit another properly completed proxy card with a later
date;
|
•
|
You
may send a written notice that you are revoking your proxy to our
Secretary at 4000 Executive Parkway, Suite 200, San Ramon, California
94583; or
|
•
|
You
may attend the special meeting and vote in person. However, simply
attending the special meeting will not, by itself, revoke your
proxy.
|
•
|
accuracy
of our representations on and as of the
closing;
|
•
|
our
performance, satisfaction and compliance with all covenants, agreements
and closing conditions;
|
•
|
no
material adverse change will have occurred with respect to the embedded
business;
|
•
|
receipt
of an officer’s certificate executed by our chief executive officer
certifying that all closing conditions have been
fulfilled;
|
•
|
absence
of litigation pertaining to the sale of the embedded
business;
|
•
|
our
receipt of stockholder approval of the transaction;
and
|
•
|
payment
of certain outstanding accounts payable attributable to our embedded
business.
|
•
|
accuracy
of One Stop’s representations on and as of the
closing;
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•
|
One
Stop’s performance, satisfaction and compliance with all covenants,
agreements and closing conditions;
and
|
•
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absence
of litigation pertaining to the
transaction.
|
•
|
by
mutual written consent of the parties, duly authorized by their respective
boards;
|
•
|
the
closing has not occurred on or before April 30, 2007, unless the
party
terminating in this circumstance is at fault for the delay in
closing;
|
•
|
any
proceeding is pending against either party that could prevent performance
of the asset sale; or
|
•
|
any
governmental entity has issued an order, the effect of which is to
prohibit the asset sale.
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1.
|
the
amount and form of the consideration to be paid in the
transaction;
|
2.
|
the
belief that, after conducting an extensive review of our financial
condition, results of operations and business and earning prospects,
the
sale of the embedded business was likely to create greater value
for our
stockholders as compared to pursuing our existing course of business
or an
alternative business strategy; and
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3.
|
the
extensive process conducted by our management in seeking potential
buyers
and the belief that the alternatives to the proposed transaction
were not
reasonably likely to provide equal or greater value to us and our
stockholders.
|
1.
|
all
the reasons described above under “Reasons for the Asset
Sale”;
|
2.
|
the
judgment, advice and analyses of our senior management, including
their
favorable recommendation of the asset
sale;
|
3.
|
alternatives
to the asset sale;
|
4.
|
the
presentations by and discussions with our senior management and
representatives of our counsel and financial advisor regarding the
terms
and conditions of the asset
purchase;
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5.
|
the
presentations by and discussions with our senior management and
representatives of our counsel regarding the terms and conditions
of the
asset purchase agreement and the asset sale;
and
|
6.
|
that
while the asset sale is likely to be completed, there are risks associated
with completing the transactions and, as a result of conditions to
the
completion of the transactions, it is possible that the transactions
may
not be completed even if approved by our
stockholders.
|
•
|
our
organization, qualification and good
standing;
|
•
|
the
accuracy of our financial
statements;
|
•
|
the
absence of certain changes since July 31,
2006;
|
•
|
our
debts, obligations and liabilities;
|
•
|
the
assets of our business, including our real property, inventory, tangible
personal property, accounts receivable, intellectual property and
other
intangible property;
|
•
|
title
to and sufficiency of our assets;
|
•
|
our
customers and sales;
|
•
|
our
employment contracts and benefits;
|
•
|
insurance
policies;
|
•
|
our
compliance with laws and
regulations;
|
•
|
litigation;
|
•
|
necessary
authority and consents;
|
•
|
conflicts
of interest with our customers, suppliers or competitors;
and
|
•
|
personnel.
|
•
|
organization,
qualification and good standing;
|
•
|
necessary
authority and consents; and
|
•
|
ability
to pay the purchase price.
|
•
|
provide
One Stop with access to all of our records and
documents;
|
•
|
conduct
our embedded business in the ordinary course and in substantially
the same
manner as conducted prior to the asset purchase
agreement;
|
•
|
preserve
our business and relationships;
|
•
|
maintain
our existing insurance;
|
•
|
not
make changes in compensation or benefits of our employees, sales
agents or
representatives;
|
•
|
not
enter into new contracts (i) not in the ordinary course or consistent
with
past practices, (ii) in the ordinary course for an amount in excess
of
$50,000, (iii) for the lease of capital equipment or property with
annual
lease charges in excess of $10,000 or (iv) for the sale of any capital
assets with a net book value in excess of
$10,000;
|
•
|
not
modify or terminate any of our existing contracts or agreements;
|
•
|
obtain
the written consent of certain third
parties;
|
•
|
upon
request, deliver to One Stop a description of our trade secrets,
processes
or business procedures;
|
•
|
obtain
written approval of our board of directors for the asset sale;
and
|
•
|
comply
with our confidentiality
obligations.
|
•
|
comply
with its confidentiality
obligations;
|
•
|
cooperate
in our efforts to obtain the consents of certain third
parties;
|
•
|
furnish
a resale certificate to comply with California sales and use tax
laws;
and
|
•
|
obtain
written approval of its board of directors for the purchase of
assets.
|
•
|
accuracy
of our representations on and as of the
closing;
|
•
|
our
performance, satisfaction and compliance with all covenants, agreements
and closing conditions;
|
•
|
no
material adverse change will have occurred with respect to the embedded
business;
|
•
|
receipt
of an officer’s certificate executed by our chief executive officer
certifying that all closing conditions have been
fulfilled;
|
•
|
absence
of litigation pertaining to the sale of the embedded
business;
|
•
|
our
receipt of stockholder approval of the transaction;
and
|
•
|
payment
of certain outstanding accounts payable attributable to the embedded
business.
|
•
|
accuracy
of One Stop’s representations on and as of the
closing;
|
•
|
One
Stop’s performance, satisfaction and compliance with all covenants,
agreements and closing conditions;
and
|
•
|
absence
of litigation pertaining to the
transaction.
|
•
|
by
mutual written consent of the parties, duly authorized by their respective
boards;
|
•
|
the
closing has not occurred on or before April 30, 2007, unless the
party
terminating in this circumstance is at fault for the delay in
closing;
|
•
|
any
proceeding is pending against either party that could prevent performance
of the asset sale; or
|
•
|
any
governmental entity has issued an order, the effect of which is to
prohibit the asset sale.
|
Beneficial
Ownership (1)
|
|||||||
Beneficial
Owner
|
Number
of Shares
|
Percent
of Total(2)
|
|||||
Mr.
Kenneth G. Yamamoto (3)(6)
|
853,031
|
7.7
|
%
|
||||
Mr.
Daniel Grey (3)
|
--
|
--
|
|||||
Mr.
William B. Heye, Jr. (3)(4)(5)
|
386,284
|
3.5
|
%
|
||||
Mr.
John Reardon (3)
|
75,545
|
0.07
|
%
|
||||
Mr.
Ronald J. Ritchie (3)
|
95,817
|
0.09
|
%
|
||||
Mr.
Marion M. (Mel) Stuckey (3)
|
75,545
|
0.07
|
%
|
||||
Mr.
John d’Errico (3)
|
70,863
|
0.06
|
%
|
||||
Mr.
David Brunton (3)
|
453,982
|
4.1
|
%
|
||||
Mr.
Kirk Anderson (3)
|
244,392
|
2.2
|
%
|
||||
Mr.
Nelson Abal (3)
|
132,271
|
1.2
|
%
|
||||
Mr.
Leo Fang (3)
|
354,251
|
3.2
|
%
|
||||
All
executive officers and directors as a group (11 persons) (3)
|
2,741,981
|
24.7
|
%
|
(1)
|
This
table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G, if any, filed with
the
SEC. Unless otherwise indicated in the footnotes to this table and
subject
to community property laws where applicable, we believe that each
of the
stockholders 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 11,101,554 shares outstanding on January
10,
2007, adjusted as required by rules promulgated by the
SEC.
|
(3)
|
Includes,
445,000, 386,284, 45,000, 35,000, 45,000, 50,000, 320,000, 202,000,
110,000 and 255,000 shares that Messrs. Yamamoto, Heye, Reardon,
Ritchie,
Stuckey, d’Errico, Brunton, Anderson, Abal and Fang, respectively, have
the right to acquire within 60 days after the date of this table
under
outstanding stock options.
|
(4)
|
Includes
50 shares held by Joan G. Heye, the wife of Mr.
Heye.
|
(5)
|
Mr.
Heye resigned from the board of directors on October 31, 2006 and
has
until January 29, 2007 to exercise any vested stock options. Any
unexercised stock options as of January 30, 2007 will be
cancelled.
|
(6)
|
Includes
60,000 shares
held by UTMA as Custodian for Melanie Yamamoto and 60,000 shares
held by
UTMA as Custodian for Nicholas Yamamoto, the children of Mr.
Yamamoto.
|
|
|
|
By
Order of the Board of Directors,
|
|
|
|
|
|
/s/
David W. Brunton
|
|
|
|
David
W. Brunton
|
|
Secretary
|
RECITALS
|
1
|
|
ARTICLE
1. DEFINITIONS
|
1
|
|
ARTICLE
2. PURCHASE AND SALE OF ASSETS
|
2
|
|
2.1
|
Sale
and Transfer of Assets
|
2
|
2.2
|
Excluded
Assets
|
3
|
2.3
|
Consideration
from Buyer at Closing
|
4
|
2.4
|
Assumption
of Liabilities
|
4
|
2.5
|
Purchase
Price and Allocation
|
4
|
2.6
|
Excise
and Property Taxes
|
4
|
2.7
|
Possible
Purchase Price Adjustment for Inventory
|
4
|
2.8
|
Escrow
Reserve and Payment
|
5
|
ARTICLE
3. WARRANTIES OF CORPORATION
|
5
|
|
3.1
|
Organization,
Standing, and Qualification of Corporation
|
5
|
3.2
|
Financial
Statements
|
6
|
3.3
|
Absence
of Changes in Corporation
|
6
|
3.4
|
Claims
and Liabilities
|
7
|
3.5
|
Assets
of Business
|
7
|
3.6
|
Title
to Assets; Sufficiency of Assets
|
10
|
3.7
|
Customers
and Sales
|
11
|
3.8
|
Employment
Contracts and Benefits
|
11
|
3.9
|
Insurance
Policies
|
11
|
3.10
|
Other
Contracts
|
11
|
3.11
|
Compliance
with Laws
|
12
|
3.12
|
Litigation
|
12
|
3.13
|
Agreement
Will not Cause Breach or Violation
|
12
|
3.14
|
Authority
and Consents
|
12
|
3.15
|
Interest
in Customers, Suppliers, and Competitors
|
12
|
3.16
|
Personnel
|
13
|
3.17
|
Full
Disclosure
|
13
|
ARTICLE
4. BUYER’S WARRANTIES
|
13
|
|
4.1
|
Organization,
Standing and Qualification
|
13
|
4.2
|
Authority
and Consents
|
13
|
4.3
|
Full
Disclosure
|
13
|
4.4
|
Financial
Wherewithal
|
13
|
ARTICLE
5. CORPORATION’S OBLIGATIONS BEFORE CLOSING
|
13
|
|
5.1
|
Buyer’s
Access to Premises and Information
|
13
|
5.2
|
Conduct
of Business in Normal Course
|
14
|
5.3
|
Preservation
of Business and Relationships
|
14
|
5.4
|
Maintenance
of Insurance
|
14
|
5.5
|
Employees
and Compensation
|
14
|
5.6
|
New
Transactions
|
14
|
5.7
|
Existing
Agreements
|
15
|
5.8
|
Consents
of Others
|
15
|
5.9
|
Corporate
Approval
|
15
|
5.10
|
Information
to Be Held in Confidence
|
15
|
ARTICLE
6. BUYER’S OBLIGATIONS BEFORE CLOSING
|
15
|
|
6.1
|
Information
to Be Held in Confidence
|
15
|
6.2
|
Cooperation
in Securing Consents of Third Parties
|
16
|
6.3
|
Resale
Certificate
|
16
|
6.4
|
Bulk
Sales Law
|
16
|
6.5
|
Corporate
Approval
|
16
|
ARTICLE
7. CONDITIONS PRECEDENT TO BUYER’S PERFORMANCE
|
16
|
|
7.1
|
Accuracy
of Corporation’s Representations and Warranties
|
16
|
7.2
|
Performance
by Corporation
|
16
|
7.3
|
No
Material Adverse Change
|
16
|
7.4
|
Certification
by Corporation
|
17
|
7.5
|
Absence
of Litigation
|
17
|
7.6
|
Shareholder
Approval
|
17
|
7.7
|
Approval
of Documentation and Delivery
|
17
|
7.8
|
Payment
of Accounts Payable
|
17
|
ARTICLE
8. CONDITIONS PRECEDENT TO CORPORATION’S PERFORMANCE
|
17
|
|
8.1
|
Accuracy
of Buyer’s Representations and Warranties
|
17
|
8.2
|
Buyer’s
Performance
|
17
|
8.3
|
Absence
of Litigation
|
17
|
8.4
|
Approval
of Documentation and Delivery
|
18
|
8.5
|
Shareholder
Approval
|
18
|
ARTICLE
9. THE CLOSING
|
18
|
|
9.1
|
Time
and Place
|
18
|
9.2
|
Corporation’s
Obligations at Closing
|
18
|
9.3
|
Buyer’s
Obligation at Closing
|
19
|
ARTICLE
10. OBLIGATIONS AFTER CLOSING
|
19
|
|
10.1
|
Shareholder’s
Competition
|
19
|
10.2
|
Further
Assurances
|
19
|
10.3
|
Corporate
Liabilities
|
20
|
10.4
|
Accounts
Payable and Accounts Receivable
|
20
|
ARTICLE
11. NATURE AND SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS
|
20
|
|
11.1
|
Representations
and Warranties
|
21
|
11.2
|
Survival
|
21
|
11.3
|
Indemnification
and Reimbursement by Corporation
|
21
|
11.4
|
Indemnification
and Reimbursement by Corporation--Environmental Matters
|
21
|
11.5
|
Indemnification
and Reimbursement by Buyer
|
22
|
11.6
|
Time
Limitations
|
22
|
11.7
|
Limitations
on Corporation’s
Indemnity
|
22
|
11.8
|
Knowledge
of Breach.
|
22
|
11.9
|
Indemnification
Claims.
|
22
|
11.10
|
Defense
of Third Party Actions.
|
23
|
11.11
|
Subrogation.
|
24
|
11.12
|
Exclusivity.
|
24
|
ARTICLE
12. PUBLICITY
|
24
|
|
ARTICLE
13. COSTS
|
24
|
|
13.1
|
Finder’s
or Broker’s Fees
|
24
|
13.2
|
Expenses
|
24
|
ARTICLE
14. FORM OF AGREEMENT
|
25
|
|
14.1
|
Effect
of Headings
|
25
|
14.2
|
Word
Usage
|
25
|
14.3
|
Entire
Agreement; Modification; Waiver
|
25
|
14.4
|
Counterparts;
Facsimile Delivery
|
25
|
ARTICLE
15. PARTIES
|
26
|
|
15.1
|
Parties
in Interest
|
26
|
15.2
|
Assignment
|
26
|
ARTICLE
16. REMEDIES
|
26
|
|
16.1
|
Arbitration
|
26
|
16.2
|
Specific
Performance and Waiver of Rescission Rights
|
26
|
16.3
|
Recovery
of Litigation Costs
|
26
|
16.4
|
Termination
|
27
|
ARTICLE
17. NOTICES
|
28
|
|
ARTICLE
18. GOVERNING LAW
|
28
|
|
ARTICLE
19. SEVERABILITY
|
28
|
To Corporation at: |
SBE,
Inc.
4000
Executive Parkway, Suite 200
San
Ramon, California 94583
Attention:
Greg Yamamoto, President/CEO
|
To Buyer at: |
One
Stop Systems, Inc.
2235
Enterprise Street, Suite 110
Escondido,
California 92029
Attention:
Steve Cooper, President, CEO
|
BUYER
One
Stop Systems, Inc.
a
California corporation
By:/s/SteveCooper
Steve
Cooper,
President/CEO
|
CORPORATION
SBE,
Inc.
a
Delaware corporation
By:
/s/
Greg
Yamamoto
Greg
Yamamoto,
President/CEO
|