-----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, NC8uSgY183l9zNgIb9Rgg3P6cxQWOwG7Pqiwd8bEAF9Q+thEJF0zt0tABQT00GM5 k7JY7WA3y87UJbkHu6aMwQ== 0001047469-98-041239.txt : 19981118 0001047469-98-041239.hdr.sgml : 19981118 ACCESSION NUMBER: 0001047469-98-041239 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19981116 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL VIDEO SYSTEMS INC CENTRAL INDEX KEY: 0001009395 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 770333728 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-46493 FILM NUMBER: 98752260 BUSINESS ADDRESS: STREET 1: 160 KNOWLES DR CITY: LOS GATOS STATE: CA ZIP: 95032 BUSINESS PHONE: 4088748200 MAIL ADDRESS: STREET 1: 160 KNOWLES DR CITY: LOS GATOS STATE: CA ZIP: 95032 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OREGON POWER LENDING INSTITUTION CENTRAL INDEX KEY: 0001073813 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 931253891 STATE OF INCORPORATION: OR FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O GORDON CARY ESQ STREET 2: 888 SW FIFTH AVENUE SUITE 890 CITY: PORTLAND STATE: OR ZIP: 97204 BUSINESS PHONE: 5032221415 MAIL ADDRESS: STREET 1: C/O GORDON CARY ESQ STREET 2: 888 SW FIFTH AVENUE SUITE 890 CITY: PORTLAND STATE: OR ZIP: 97204 SC 13D 1 SCHEDULE 13D ----------------------------- / OMB APPROVAL / / ------------------------- / / OMB Number: 3235-0145 / / Expires: August 31, 1999 / / Estimated average burden / / hours per response ..14.90 ---------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ____)* Digital Video Systems, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 25387R100 - -------------------------------------------------------------------------------- (CUSIP Number) Don Baker, Treasurer Oregon Power Lending Institution c/o Gordon Cary, Esq. 888 S.W. Fifth Avenue, Suite 890 Portland, OR 97204 (503) 222-1415 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 5, 1998 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of (S)(S)240.13d.1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S)240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. CUSIP No. 25387R100 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON OREGON POWER LENDING INSTITUTION - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) N/A - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Oregon - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 6,255,319 SHARES -------------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 0 EACH -------------------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON 6,255,319 WITH -------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,255,319 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES N/A - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT 19.8% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. This Schedule 13D relates to the common stock, par value $0.0001 per share ("Shares"), of Digital Video Systems, Inc., a Delaware corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 160 Knowles Drive, Los Gatos, California 95032. ITEM 2. IDENTITY AND BACKGROUND. The person filing this statement is Oregon Power Lending Institution, an Oregon corporation ("OPLI"). Its principal executive offices are located at 888 S.W. Fifth Avenue, Suite 890, Portland, Oregon 97204. OPLI is principally involved in the business of power generation facility financing and development. OPLI has not, during the last five years, (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting, or mandating activities subject to, Federal or State securities laws or a finding of any violation with respect to such laws. Certain information with respect to the directors, officers and controlling persons of OPLI is as follows: 1. (a) Don Baker (Director, Secretary and Treasurer of OPLI) (b) 2858 Stevens Creek Boulevard, #101, San Jose, CA 95128 (c) Mr. Baker is a real estate mortgage broker with First Financial Co., 2858 Stevens Creek Boulevard, #101, San Jose, CA 95128 (d) and (e) Mr. Baker has not, during the last five years, (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting, or mandating activities subject to, Federal or State securities laws or a finding of any violation with respect to such laws. (f) Mr. Baker is a citizen of the United States. (g) Mr. Baker beneficially owns no securities of the Issuer and has not engaged in any transactions in the Issuer's stock in the previous 60 days. Mr. Baker does share voting and investment control, in his capacity as a director and executive officer of OPLI, of the 6,255,319 Shares deemed beneficially owned by OPLI, as reported in this Schedule 13D. 2. (a) Oran Chang (Director and President of OPLI) (b) 487 Gianni Street, Santa Clara, CA 95054 (c) Mr. Chang is a general contractor with Great Earth Construction Co., 487 Gianni Street, Santa Clara, CA 95054. (d)and (e) Mr. has not, during the last five years, (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting, or mandating activities subject to, Federal or State securities laws or a finding of any violation with respect to such laws. (f) Mr. Chang is a citizen of the United States. (g) Mr. Chang beneficially owns no securities of the Issuer and has engaged in no transactions in the securities of the Issuer in the previous 60 days. Mr. Chang does share voting and investment control, in his capacity as a director and executive officer of OPLI, of the 6,255,319 Shares deemed beneficially owned by OPLI, as reported in this Schedule 13D. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The aggregate purchase price for securities which, upon conversion and exercise, become Shares, as described in Item 5 below, is $3,500,000. The $1,500,000 payable for exercise of the OPLI option for 2,000,000 shares has not yet been paid but OPLI has a current right to acquire those shares by exercising the option. The source of funding for the purchase of the Shares was (and, with respect to the exercise of the option, will be) OPLI's general working capital. Pending receipt of shareholder approval by the shareholders of the Issuer, which has not yet been obtained, OPLI shall have the right, with respect to an additional $8,000,000 investment, to purchase additional shares of Series C Convertible Preferred Stock. If such shares are purchased in the future, of which there is no assurance, the source of funds will be OPLI's working capital. ITEM 4. PURPOSE OF TRANSACTION. The securities were acquired for investment purposes. In addition, in connection with this investment, the Issuer has granted OPLI the right to designate two members of the Board of Directors. Two directors will not be sufficient to control the Board and control of the Board is not intended. Except with respect to placing two designees on the Issuer's Board, there are no plans or proposals with regard to any of the matters referred to in Items 4(a)-4(j) of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) and (b) Based on the number of Shares outstanding as reflected in the letter of intent regarding the subject transaction attached hereto as an exhibit, OPLI may be deemed to own beneficially 6,255,319 shares representing approximately 19.8% of the Issuer's outstanding Shares, assuming that the Conversion Price is $0.47. OPLI has the sole power to vote and direct the disposition of such securities. (c) Pursuant to a private placement (the "Placement"), on November 5, 1998, OPLI purchased from the Issuer 2,000 shares of Series C Convertible Preferred Stock (the "Preferred Shares") at $1,000 per share. Each Preferred Share is convertible into 2,127.6595 shares of the Issuer's Common Stock, at an initial conversion price of $0.47 per Common Share, subject to adjustment in the event of stock splits, reverse stock splits and other similar events of recapitalization. In connection with this investment, which totaled $2,000,000, OPLI was also issued an option to purchase an additional 2,000,000 shares of Common Stock at $0.75 per share (the "OPLI Option"). The OPLI Option is exercisable at any time or from time to time for the three year period beginning November 5, 1998. The information in this Schedule 13D regarding OPLI's ownership of Common Stock of the Issuer assumes conversion of its outstanding Preferred Shares and exercise of its outstanding OPLI Option. In addition, pending receipt of shareholder approval by the shareholders of the Issuer, of which there is no assurance, OPLI shall have the right, with respect to an additional $8,000,000 investment, to purchase up to an additional 8,000 Preferred Shares, at a purchase price of $1,000 per Preferred Share. Assuming OPLI makes the total investment, including purchase of all of the available Preferred Shares and exercise of the OPLI Option, of which there is no assurance, OPLI would beneficially own 23,276,595 shares of Common Stock of the Issuer which, without taking into account any additional issuances of securities other than the issuances to OPLI, will represent approximately 48% of the outstanding shares. (d) N/A (e) N/A ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. As described in response to Item 5, OPLI and the Issuer have signed a letter of intent that provides for a possible additional investment or series of investments by OPLI, pending receipt of shareholder approval, which is required pursuant to the corporate governance rules of The Nasdaq Stock Market, Inc. OPLI may invest up to $10,000,000 total (including the $2,000,000 invested as of November 5, 1998, as to which this Schedule 13D relates) for the purchase of Preferred Shares and an additional $1,500,000 pursuant to the exercise of the OPLI Option. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 Letter of Intent dated October 15, 1998 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 16, 1998 Date OREGON POWER LENDING INSTITUTION By: /s/ Don Baker ------------------------------- Don Baker Secretary, Treasurer and Director EX-1 2 EXHIBIT 1 [Digital Video Systems, Inc. Logo] October 15, 1998 Mr. Donald Baker Secretary & Treasurer Oregon Power Lending Institution 357 Castro Street Suite 2 Mountain View, CA 94041 Dear Don, RE: OREGON POWER LENDING INSTITUTION AND DIGITAL VIDEO SYSTEMS, INC. INVESTMENT AGREEMENT We are pleased to advise that Digital Video Systems, Inc.'s ("DVS") Board of Directors has approved the following Investment Structure, which is based upon your prior conversations and correspondence with us. It is contemplated that in this transaction Oregon Power Lending Institution ("OPLI") will have the right to acquire a total of approximately 24,275,000 shares of DVS common stock. DVS currently has outstanding approximately 25,337,000 shares of common stock, and upon completion of this transaction (excluding exercise of the OPLI option or any future issuances by DVS), the total outstanding shares of DVS will be approximately 49,612,000 (the "Final Outstanding Common Stock"). Because DVS is subject to Nasdaq rules, we are required to obtain shareholder approval before we can sell 20% or more of our ownership (or voting power) at a discount to the market price. Thus, we are required to split the transaction into separate tranches, with the tranches that follow the First Tranche being subject to shareholder approval. 1) FIRST TRANCHE. OPLI will make an initial investment of $1.5 million in cash by October 23rd and $500 thousand in cash on or before November 5th (the "First Tranche"). In consideration of and upon funding of the First Tranche, DVS will issue $2.0 million of convertible preferred shares ("Preferred Stock") to OPLI. The shares of Preferred Stock issued in the First Tranche will convert into 4,255,319 shares of DVS' common stock ("Common Stock"). This represents a conversion price of approximately $0.47 per share of Common Stock. [Digital Video Systems, Inc. Letterhead] LETTER TO: MR. DONALD BAKER OCTOBER 15, 1998 PAGE 2 OF 5 2) SECOND TRANCHE. OPLI will make an investment of $1.0 to $2.0 million in cash during November 1998 (the "Second Tranche"). In consideration of and upon funding of the Second Tranche, DVS will issue a minimum of $1.0 to a maximum of $2.0 million in convertible preferred shares ("Preferred Stock") to OPLI. The shares of Preferred Stock issued in the Second Tranche will convert into a minimum of 2,127,660 to a maximum of 4,255,319 shares of DVS' common stock ("Common Stock"). This represents a conversion price of approximately $0.47 per share of Common Stock. The Second Tranche is subject to and conditioned upon DVS obtaining the approval of its shareholders to the Second Tranche, as well as subsequent Tranches. DVS anticipates that it will obtain foregoing shareholder approval within approximately 30 to 60 days from the date hereof. 3) THIRD TRANCHE. OPLI will have an option to make a third investment of a maximum of $2.0 million in cash during December 1998 (the "Third Tranche"). In consideration of and upon funding of the Third Tranche, DVS will issue up to a maximum of $2.0 million of convertible preferred shares ("Preferred Stock") to OPLI. The shares of Preferred Stock issued in the Third Tranche will convert into a maximum of 4,255,319 shares of DVS' common stock ("Common Stock"). This represents a conversion price of approximately $0.47 per share of Common Stock. Upon the full investment of $6.0 million and the conversion of the $6.0 million into common shares issued in association with the First, Second and Third Tranches, OPLI will own approximately 33% of the Final Outstanding Common Stock (including the shares of the common stock underlying the Preferred Stock issued to OPLI in the First Tranche and Second Tranche). The Third Tranche is subject to and conditioned upon DVS obtaining the approval of its shareholders to the Second Tranche, as well as subsequent Tranches. 4) SUBSEQUENT TRANCHE(S). OPLI will have the opportunity to invest on or before April 30, 1999, an additional $4.0 million in DVS (the "Subsequent Tranche(s)") for a total potential investment (excluding exercise of OPLI's option) of $10.0 million. The subsequent Tranche(s) will be in increments of $2.0 million. In consideration of and upon funding of the Subsequent Tranche(s), DVS will issue up to an additional $4.0 million of Preferred Stock to OPLI. The maximum number of preferred shares of DVS issued in the Subsequent LETTER TO: MR. DONALD BAKER OCTOBER 15, 1998 PAGE 3 OF 5 Tranche(s) will be convertible into 8,510,638 shares of DVS common stock. This represents a conversion price of approximately $0.47 per share of Common Stock. OPLI will fund the Subsequent Tranche(s) with 50% in cash and 50% in Letter(s) of Credit issued to DVS suppliers. The Subsequent Tranche(s) are subject to and conditioned upon DVS obtaining the approval of its shareholders to the Second Tranche, as well as subsequent Tranches. 5) OPTION GRANT. In connection with funding the First Tranche, DVS will grant a stock option to purchase 2.0 million shares of Common Stock at an exercise price of $0.75 per share. In connection with the funding of the Second Tranche, DVS will grant a stock option to purchase 1.0 million shares of Common Stock at an exercise price of $0.75 per share. Both options will expire twenty-four (24) months after the grant date. The terms of the options will provide for OPLI to exercise this option, in whole or in part, at any time prior to its expiration by making a cash payment to DVS for the portion exercised. 6) TERMS OF PREFERRED STOCK. All of the Preferred Stock issued in the First Tranche, Second Tranche, Third Tranche, and Subsequent Tranche(s) will have identical terms. The Preferred Stock will have a term of three (3) years from the date of November 1, 1998 and will be convertible by OPLI into DVS common stock, at any time. Any shares of Preferred Stock not converted at the end of the three-year term will, at OPLI's option, probably be converted into shares of DVS common stock or with the mutual agreement of both OPLI and DVS; DVS will repurchase all or a portion of such outstanding Preferred Stock at a price equal to 125% of the original investment. DVS will file a registration statement for all common stock contemplated in this transaction within 60 days following the first conversion of the Preferred Stock into common stock to register the common stock for public resale by OPLI. 7) RIGHT OF FIRST REFUSAL. OPLI understands that DVS may need to raise additional capital in order to operate and grow its business. In order to do this DVS may be required to issue shares of Common Stock or other securities that may be convertible into Common Stock. Because any such issuance could result in OPLI converting the Preferred Stock from the First Tranche, Second Tranche and Third Tranche into less than 33% of the total outstanding Common Stock after the conversion, DVS hereby grants OPLI a right of first refusal to make an additional LETTER TO: MR. DONALD BAKER OCTOBER 15, 1998 PAGE 4 OF 5 investment in DVS on the same terms as have been offered to DVS by a third-party investor (the "Right of First Refusal") upon DVS accepting such third-party offer. The Right of First Refusal shall remain in effect up until such time as the term of the Preferred Stock expires; provided OPLI has converted into Common Stock at least half of all Preferred Stock issued to OPLI from the First Tranche, Second Tranche and Third Tranche within an eighteen (18) months from the date of issuance of the Preferred Stock associated with the First Tranche. 8) BOARD SEATS. DVS will provide OPLI with up to two (2) seats on the DVS' Board of Directors upon the completion of the funding associated with the First Tranche. OPLI may designate these individuals and DVS agrees to appoint them to DVS' Board of Directors, subject to a standard due diligence review that will take no more than five (5) business days. 9) RESTRUCTURING OF CAPITAL STRUCTURE. DVS will commit to using its best efforts to restructure its current capital structure, by eliminating, to the extent reasonably possible, its Class A Warrants and Class B Warrants (the "Warrants"). DVS proposes to swap the Warrants for Common Stock. If, however, another less dilutive or less costly method to eliminate the Warrants is available, DVS may use such alternative method. DVS estimates that it will require approximately four (4) months to complete this restructuring. 10) CONFIDENTIALITY. Each party shall safeguard the secrecy and confidentiality of the letter and will not allow the existence of or the contents of this letter to be published, disseminated or disclosed to any person (other than officers, directors and employees of such party and its accountants and lawyers, all of whom shall agree to maintain the confidentiality of this letter) without the prior written consent of the other party, except as is required by law or regulation applicable to the parties. 11) BINDING AGREEMENT. The undersigned, does hereby confirm and acknowledge that this letter is a binding expression of the terms of OPLI's investment in DVS and that such terms are acceptable, subject to obtaining the approval of DVS's shareholders for the Second Tranche, Third Tranche and Subsequent Tranche(s). LETTER TO: MR. DONALD BAKER OCTOBER 15, 1998 PAGE 5 OF 5 If you agree to the points described above, please so indicate by signing below and returning a signed copy of this letter to me by fax at (408) 871-8222. Should you have any questions concerning the information contained within this letter or the Subscription Agreement, please feel free to contact me by telephone at (408) 874-8224. We look forward to working with you in the future. Very truly yours, /s/ Edward M. Miller, Jr. - -------------------------------------- Edward M. Miller, Jr. President and Chief Executive Officer ACKNOWLEDGED AND AGREED TO: OREGON POWER LENDING INSTITUTION /s/ Don Baker - -------------------------------------- Donald Baker Secretary and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----