-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SOV8A2mPlpWPF923tTJJZSsyzDOXNymYDwTArzx5Uz+VRXOJszgqL/5n1NwQ6emd oJaRYrFka5zsE7VnPdvZ+g== 0000948830-97-000294.txt : 19971125 0000948830-97-000294.hdr.sgml : 19971125 ACCESSION NUMBER: 0000948830-97-000294 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971218 FILED AS OF DATE: 19971124 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATALINK SYSTEMS CORP /CA/ CENTRAL INDEX KEY: 0000832370 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 353574355 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-21069 FILM NUMBER: 97727183 BUSINESS ADDRESS: STREET 1: 2105 HAMILTON AVENUE STREET 2: SUITE 240 CITY: SAN JOSE STATE: CA ZIP: 95125 BUSINESS PHONE: 408-558-08 MAIL ADDRESS: STREET 1: 2105 HAMILTON AVENUE STREET 2: SUITE 240 CITY: SAN JOSE STATE: CA ZIP: 95125 FORMER COMPANY: FORMER CONFORMED NAME: PLATINUM PRODUCTIONS INC /CO DATE OF NAME CHANGE: 19930803 FORMER COMPANY: FORMER CONFORMED NAME: LORD ABBOTT INC DATE OF NAME CHANGE: 19920703 DEF 14A 1 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: ___ Preliminary Proxy Statement ___ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) _X_ 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 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 and Series A Convertible Preferred 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 and Series A Convertible Preferred Stock. Each share of Common Stock entitles the holder to one (1) vote and each share of Series A Convertible Preferred Stock is entitled to ten votes. 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 $.001 par value Common Stock and 2,740,000 shares of Series A Convertible Preferred Stock outstanding. Cumulative voting in the election of Directors is not permitted. A majority of the Company's outstanding Common and Preferred Stock, considered as a single class, 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 and Preferred 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- Percent of Of Beneficial Owner ficial Ownership Class (1) - ------------------- ---------------- ----------- Anthony LaPine 7,150,000(2) 25.2% 1735 Technology Way, Suite 7900 8,243,826(3) San Jose, California 95110 Nicholas Miller 2,933,333(4) 6.2% 1590-1500 West Georgia Street Vancouver, B.C. Canada V6G 2Z6 Melanor Ltd. 1,057,833 2.2% c/o George Davis Law Corp. 1100-100 Park Royal South West Vancouver, B.C. Canada V7T 1A2 Medan Ltd. 1,041,667 2.2% c/o George Davis Law Corp. 1100-100 Park Royal South West Vancouver, B.C. Canada V7T 1A2 Dr. Gene M. Amdahl 100,000 .2% 385 Moffet Park Drive, Suite 210 Sunnyvale, CA 94089 Marshall Geller 100,000 .2% 1875 Century Park East, Suite 2200 Los Angeles, CA 90067 Robert Wilson 100,000 .2% Building 2, Suite 220 3000 San Hill Road Menlo Park, CA 94025 Peter A. Allard 3,249,167(5) 6.7% Seawatch, The Garden St. James, Barbados British West Indies Commonwealth Associates 10,443,826(6) 22.0% 830 Third Avenue New York, NY 10022 All Officers and Directors 18,627,159(2)(3)(4) 30.1% as a Group (6 Persons) -2- _________________ (1) For the purposes of this table, the Company's Common Stock and Series A Convertible Preferred Stock are considered as a single class. (2) 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. (3) Represents 8,243,826 shares which are issuable upon the exercise of warrants owned by Commonwealth Associates for which Mr. LaPine has been given a one year irrevocable proxy to vote if the warrants are exercised. The proxy expires on November 13, 1998; however, the proxy will also terminate upon the death or disability of Mr. LaPine or his no longer serving as the Chairman or Chief Executive Officer of the Company, and it will terminate at such time as Commonwealth Associates and its affiliates beneficially owns less than 10% of the outstanding common stock of the Company. (4) 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. (5) Includes 1,000,000 shares underlying warrants held by Mr. Allard, and 100,000 shares held by Euphemia Trust. (6) Includes 1,000,000 shares of Common Stock and 8,243,826 shares underlying currently exercisable warrants held by Commonwealth Associates, and 1,200,000 shares held by affiliates of Commonwealth Associates. Commonwealth Associates has granted a one year irrevocable proxy to Mr. LaPine to vote the shares which are issuable upon the exercise of the warrants. See footnote (3) above. 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 55 Chairman of the Board, President, Chief Executive Officer and Director since June 1996 -3- Nicholas R. Miller 45 Chief Information Officer, Secretary, 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. 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 Treasurer 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 -4- 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. He has also served as Treasurer since September 1, 1997. 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 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. -5- 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. 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. -6- 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. 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% $ .44 9/17/01 Nicholas Miller 700,000 34.4% $ .44 9/17/01 -7- 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 $195,000 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 $11,000 per year 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, and disability insurance and the Agreement grants Mr. LaPine options to purchase 700,000 shares of the Common Stock at $.44 per share. 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 -8- 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 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 $.40 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 $.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, -9- 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 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. -10- 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, 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 charge 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 -11- 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-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 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 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. -12- 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 -13- 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 and Preferred 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 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. -----END PRIVACY-ENHANCED MESSAGE-----