UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported):
March 21, 2006
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SBE,
INC.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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0-8419
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94-1517641
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer Identification No.)
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of
incorporation)
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4000
Executive Parkway, Suite 200
San
Ramon, CA
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94583
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (925)
355-2000
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Not
Applicable
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(Former
name or former address, if changed since last
report.)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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ITEM
1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Stockholder
Approval of 2006 Equity Incentive Plan
On
March
21, 2006, the stockholders of SBE, Inc. (the “Company”) approved the Company’s
2006 Equity Incentive Plan (the “Plan”) and the reservation of 1,500,000 shares
of the Company’s Common Stock for issuance thereunder. All material terms of the
Plan were described in the Company’s proxy statement on Schedule 14A filed with
the Securities and Exchange Commission on February 13, 2006 and are incorporated
herein by reference.
Approval
of Chief Executive Officer Terms of Compensation
On
March
21, 2006, the Compensation Committee of the Board of Directors of the Company
(the “Compensation Committee”) approved new compensation terms for Kenneth G.
Yamamoto, who was appointed recently as President and Chief Executive Officer
of
the Company. These new compensation terms comprise the following: (a) an annual
base salary of $225,000 (subject to reduction during the Company’s salary
reduction program as described below); (b) an option to purchase 100,000 shares
of the Company’s common stock described in more detail below; and (c) a
restricted stock grant of 15,000 shares of the Company’s common stock described
in more detail below. In addition, Mr. Yamamoto would enter into the Company’s
standard Executive Severance Benefits Agreement, which provides that if, within
six months after a change in control of the Company, Mr. Yamamoto’s employment
is terminated by the Company without cause or Mr. Yamamoto resigns for certain
reasons specified in the agreement, then Mr. Yamamoto would be entitled to
receive severance payments equal to six months of his then base salary,
acceleration in full of all outstanding options held by him and a pro rata
portion of any bonus to which he would have been entitled had his employment
continued.
Approval
of Officer Stock Option and Restricted Stock Grants
On
March
21, 2006, the Compensation Committee also approved Company-wide stock option
and
restricted stock bonus grants. The option and bonus grants made to the executive
officers of the Company (including persons who constitute the Company’s “named
executive officers” within the meaning of Item 402 of Regulation S-K promulgated
by the Securities and Exchange Commission) were as follows:
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Name
and Title
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Number
of Shares Subject to Stock Option Grant
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Number
of Shares Subject to Restricted Stock Grant
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Kenneth
G. Yamamoto
President
and Chief Executive Officer
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100,000
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15,000
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David
W. Brunton
Vice
President, Finance and Chief Financial Officer
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25,000
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15,000
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Nelson
Abal
Vice
President, Sales
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20,000
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12,000
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All
options granted have a per share exercise price equal to $1.00, which was the
fair market value of one share of the Company’s Common Stock on the date of
grant, and a term of seven years from the date of grant. Mr. Yamamoto’s option
is subject to vesting over four years from the date of grant, with the option
becoming exercisable as to 1/4 of the shares subject to the option on the first
anniversary of the date of grant and exercisable as to an additional 1/48 of
the
shares subject to the option each month thereafter, for so long as Mr. Yamamoto
remains in continuous service to the Company during the vesting period. All
other options granted are subject to vesting over two years from the date of
grant, with each option becoming exercisable as to 1/2 of the shares subject
to
the option on the first anniversary of the date of grant and exercisable as
to
an additional 1/12 of the shares subject to the option each month thereafter,
for so long as the optionee remains in continuous service to the Company during
the vesting period. Each restricted stock grant is subject to vesting
(forfeiture to the Company) over 18 months from the date of grant, with 1/4
of
the shares vesting on the first anniversary of the date of grant and 3/4 of
the
shares vesting each month thereafter, provided the recipient remains in
continuous service to the Company during the vesting period.
Approval
of Salary Reduction Program and Stock Grants
On
March
21, 2006, the Compensation Committee also approved a continuation in its
company-wide salary reduction program, subject to certain modifications. In
the
modified program, each employee’s salary (in most cases as it existed prior to
implementation of the Company’s salary reduction program in January 2006) would
be reduced by the following percentage: (a) for employees with an original
base
salary of less than $100,000, 10%; (b) for employees with a title below that
of
Director with an original base salary of $100,000 or higher, 15%; (c) for
Director-level employees and higher, 20%; and (d) for the Chief Executive
Officer, 37.8%. The salary reductions will remain in effect until such time
as
the Board determines to increase them.
All
officers of the Company were included in this salary reduction program. The
new
base salaries of the executive officers of the Company are as
follows:
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Name
and Title
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Original
Annualized
Base
Salary
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Annualized
Base Salary During Salary Reduction
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Kenneth
G. Yamamoto
President
and Chief Executive Officer
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$225,000
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$140,000
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David
W. Brunton
Vice
President, Finance and Chief Financial Officer
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$180,000
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$144,000
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Nelson
Abal
Vice
President, Sales
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$140,000
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$112,000
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In
order
to continue to motivate and retain the Company’s employees despite such salary
reductions, and in consideration of the employees’ prior service to the Company,
the Compensation Committee also approved stock grants to all employees of the
Company pursuant to the Company’s 2006 Equity Incentive Plan. At the time of
each regular payroll date of the Company, each employee would receive a stock
bonus for a number of shares equal to (a) the dollar amount by such employee’s
gross salary was reduced for such payroll period pursuant to the Company’s
salary reduction program, divided by (b) 85% of the closing price of the
Company’s Common Stock on a date within five business days prior to the payroll
date, such date to be selected by the Company in its sole
discretion
In
addition, the Compensation Committee also approved the continued suspension
of
all cash Board and Board committee fees. In place of such cash payments, each
non-employee member of the Board will receive a monthly stock bonus for a number
of shares equal to (a) his monthly director fee ($3,750 in the case of the
Chairman of the Board and $2,500 in the case of all other non-employee
directors), divided by (b) 85% of the closing price of the Company’s Common
Stock on a date within five business days prior to the payment date, such date
to be selected by the Company in its sole discretion.
The
salary and director fee reduction was adopted in order to reduce the Company’s
operating expenses in the short term while continuing to develop the Company’s
next-generation IP storage products. On March 14, 2006 in a cost reduction
measure, the Company terminated the employment of Andre Hedrick, Chief Technical
Officer, and two other employees. The Company expects to save $326,000 per
quarter as a result of such salary and director fee reductions coupled with
the
resignation of Dan Grey, CEO & President and the savings as a result of the
termination of the three previously mentioned employees. The Company expects
that employees of the Company will sell shares granted pursuant to such stock
grants as they vest in order to cover their personal expenses, and that such
selling may have a depressive effect on the Company’s stock price in the short
term.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated:
March 23, 2006
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SBE,
Inc.
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By: |
/s/
David Brunton
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David
Brunton
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Chief
Financial Officer
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