SCHEDULE 14C
(Rule 14c-101)
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
___ Preliminary Information Statement
_X_ Definitive Information Statement
___ Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d) (2))
RADYNE COMSTREAM INC.
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
_X_ No fee required
___ Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
___ Fee paid previously with preliminary materials.
___ 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
RADYNE COMSTREAM INC.
May 12, 1999
TO THE STOCKHOLDERS OF RADYNE COMSTREAM INC.
You are invited to attend the Annual Meeting (the "Annual Meeting") of the
Stockholders of Radyne ComStream Inc. (the "Company") to be held on June 15,
1999 at 2:00 p.m., local time, at the offices of the Company, 3138 East Elwood
Street, Phoenix, Arizona 85034.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Information Statement.
We look forward to seeing you at the Annual Meeting.
/s/ Robert C. Fitting
---------------------
Robert C. Fitting
Chief Executive Officer
May 12, 1999
<PAGE>
RADYNE COMSTREAM INC.
3138 East Elwood Street
Phoenix, Arizona 85034
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 1999
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the "Annual
Meeting") of Radyne ComStream Inc. (the "Company"), a New York corporation, will
be held on June 15, 1999 at 2:00 p.m., local time, at the offices of the
Company, 3138 East Elwood Street, Phoenix, Arizona 85034 for the following
purposes:
1. To elect 6 directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the selection of KPMG LLP as the Company's independent
accountants for the fiscal year ended December 31, 1998 and the fiscal year
ending December 31, 1999; and
3. To act upon such other matters as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Information
Statement accompanying this Notice.
Only Stockholders of record at the close of business on April 16, 1999 are
entitled to notice of and to vote at the meeting and at any adjournment thereof.
The stock transfer books will not be closed between the record date and the date
of the meeting. A list of Stockholders entitled to vote at the Annual Meeting
will be available for inspection at the offices of the Company, 3138 East Elwood
Street, Phoenix, Arizona 85034.
All Stockholders are cordially invited to attend the meeting in person.
However, since it is anticipated that a single shareholder which holds a
majority of the Common Stock of the Company will vote in favor of all of the
aforementioned proposals, we are not soliciting proxies.
<PAGE>
RADYNE COMSTREAM INC.
3138 East Elwood Street
Phoenix, Arizona 85034
----------
INFORMATION STATEMENT
Pursuant to Section 14
of the Securities Exchange Act of 1934
and Regulation 14C and Schedule 14C Thereunder
----------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
----------
This Information Statement (the "Information Statement") is being furnished
pursuant to Sections 14(a) and 14(c) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to the holders (the "Stockholders") of the common
stock, par value $.002 per share (the "Common Stock"), of Radyne ComStream Inc.,
a New York corporation (the "Company"), in connection with certain proposals to
be voted on by the Stockholders at an Annual Meeting to be held on June 15, 1999
at 2:00 p.m., local time, at the offices of the Company, 3138 East Elwood
Street, Phoenix, Arizona 85034. This Information Statement was first mailed to
Stockholders on or about May 12, 1999.
PURPOSE OF MEETING
The Annual Meeting is being held for the following purposes:
1. To elect 6 directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the selection of KPMG LLP as the Company's independent
accountants for the fiscal year ended December 31, 1998 and the fiscal year
ending December 31, 1999; and
3. To act upon such other matters as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described herein. The record
date for determining those Stockholders who will be entitled to notice of, and
to vote at, the Annual Meeting and at any adjournment thereof is April 16, 1999
(the "Record Date"). The stock transfer books will not be closed between the
Record Date and the date of the meeting. A list of Stockholders entitled to vote
at the Annual Meeting will be available for inspection at the offices of the
Company, 3138 East Elwood Street, Phoenix, Arizona 85034.
VOTING RIGHTS
Each share of Common Stock entitles the holder thereof to one vote. It is
anticipated that at the Annual Meeting, Stetsys US, Inc. and Stetsys Pte Ltd,
(collectively, "ST"), members of the Singapore Technologies group which together
hold approximately 91% of the 5,934,340 shares of Common Stock outstanding as of
the Record Date, will vote in favor of the aforementioned proposals. Since the
proposals will have been approved by the holders of the required majority of the
issued and outstanding Common Stock, and since the Company has no other
outstanding class of stock, no proxies are being solicited in connection with
this Information Statement and the accompanying Notice of Annual Meeting of the
Stockholders of the Company.
Pursuant to Rule 14c-2 under the Exchange Act, the proposals will not be
adopted until a date at least twenty (20) days after the date on which this
Information Statement has been mailed to the Stockholders. As this Information
Statement is being sent to the beneficial owners of the Common Stock on May 12,
1999, which is more
<PAGE>
than twenty (20) days before the date of the Annual Meeting, the Company
anticipates that the actions contemplated by this Information Statement will be
effected on or about the close of business on the date of the Annual Meeting.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date hereof, the ownership of the
Common Stock by (i) each person who is known by the Company to own of record or
beneficially more than 5% of the outstanding Common Stock, (ii) each of the
Company's directors and its Chief Executive Officer and Executive Vice
President, and (iii) all directors and executive officers of the Company as a
group. Except as otherwise indicated, the Stockholders listed in the table have
sole voting and investment powers with respect to the shares indicated.
NUMBER OF PERCENTAGE
NAME AND ADDRESS SHARES OF CLASS
- ---------------- ------ --------
Stetsys US, Inc. 1,180,000 19.88%
c/o Singapore Technologies Pte Ltd
83 Science Park Drive
#01-01/02 The Curie, Singapore Science Park
Singapore 118258
Stetsys Pte Ltd 5,376,000(1) 90.59%
c/o Singapore Technologies Pte Ltd
83 Science Park Drive
#01-01/02 The Curie, Singapore Science Park
Singapore 118258
Dennis W. Elliott -- --
c/o Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, Arizona 85034
Steven Eymann 230,335(2) 3.74%
c/o Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, Arizona 85034
Robert C. Fitting 226,335(2) 3.67%
c/o Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, Arizona 85034
Robert A. Grimes -- --
c/o Radyne ComStream Inc.
3138 East Elwood Street
Phoenix, Arizona 85034
3
<PAGE>
NUMBER OF PERCENTAGE
NAME AND ADDRESS SHARES OF CLASS
- ---------------- ------ --------
Lee Yip Loi -- --
c/o Singapore Technologies Pte Ltd
83 Science Park Drive
#01-01/02 The Curie, Singapore Science Park
Singapore 118258
Chan Wee Piak 10,000 *
c/o Singapore Technologies Pte Ltd
83 Science Park Drive
#01-01/02 The Curie, Singapore Science Park
Singapore 118258
Lim Ming Seong -- --
c/o Singapore Technologies Pte Ltd
83 Science Park Drive
#01-01/02 The Curie, Singapore Science Park
Singapore 118258
All directors and executive officers of the 466,670(2) 7.31%
Company as a group
- ----------
* Less than one percent.
(1) The shares reported as owned by Stetsys Pte Ltd include the shares
reported as beneficially owned by Stetsys US, Inc., of which Stetsys
Pte Ltd is sole stockholder. 100% of the stock of Stetsys US, Inc. and
Stetsys Pte Ltd is ultimately owned by the Minister for Finance
(Incorporated) of Singapore.
(2) Includes 226,335 shares underlying exercisable options held by each of
Messrs. Eymann and Fitting.
----------
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Shareholder proposals that are intended to be presented at the Company's
Annual Meeting of Stockholders to be held in 2000 must be received by the
Company no later than January 14, 2000 in order to be included in the
Information or Proxy Statement and related materials relating to that meeting.
4
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
General
A board of six (6) directors is to be elected at the Annual Meeting. It is
expected that a majority of the Common Stock will be voted in favor of the six
(6) nominees named below, five (5) of whom are presently directors of the
Company. The board recognizes the service of Chan Wee Piak, who previously
served as a director of the Company and who has elected not to stand for
election as a director for the coming year. In the event that any management
nominee is unable or declines to serve as a director, an alternate nominee shall
be designated by the present Board of Directors to fill the vacancy. The Company
is not aware of any nominee who will be unable or will decline to serve as a
director. The term of office for each person elected as a director will continue
until the next Annual Meeting of Stockholders or until his or her successor has
been elected and qualified.
Vote Required
If a quorum is present and voting, the six (6) nominees receiving the
highest number of votes will be elected to the Board of Directors.
Nominees
The names of the nominees, and certain information about them are set forth
below:
Name of Nominee Age Title
- --------------- --- -----
Lim Ming Seong 51 Chairman of the Board of Directors
Lee Yip Loi 55 Director
Robert A. Grimes 46 Director
Dennis W. Elliott 57 Director
Tang Kum Chuen 43 Nominee for Office of Director
Robert C. Fitting 64 Director, Chief Executive Officer and
President
LIM MING SEONG has been a Director and Chairman of the Board of the Company
since August 13, 1996 and is chairman of its Compensation Committee. He is the
Chairman of ST and of Vertex Management, Inc., a member of the Singapore
Technologies group, and he has been Group Director of Singapore Technologies Pte
Ltd, the parent of ST
5
<PAGE>
since February of 1995. From March 1992 until February 1995, he was Executive
Director of Singapore Technologies Ventures Pte Ltd and from February 1990 to
March 1992, he was Group President of Singapore Technologies Holdings Pte Ltd.
Prior to that time he held various corporate and government positions, including
Deputy Secretary in the Singapore Ministry of Defense from 1979 to 1986. Mr. Lim
is a director of 41 subsidiary companies of Singapore Technologies.
LEE YIP LOI has been a Director of the Company since August 13, 1996 and is
chairman of the Audit Committee and a member of the Compensation Committee of
the Board. He was Regional Director (America) of Singapore Technologies Pte Ltd
from March 1994 until December 1998, and from May 1990 to January 1997 he was
President of its affiliate, Metheus Corporation. Prior to that time he held a
number of managerial positions with such corporations as Morgan Guaranty Trust
and Singapore Technologies Pte Ltd and government positions with the Singapore
Ministries of Education, Defense, Culture and Home Affairs. Mr. Lee is currently
a director of Stetsys Pte Ltd, Stetsys US Inc., California Avitron Corporation,
Tritech Microelectronics Ltd, Chartered Semiconductor Manufacturing Inc., ST
Assembly and Test Services, Inc., and Vertex Management, Inc.
ROBERT A. GRIMES, who is a member of the Audit and Compensation Committees
of the Board, has served as a member of the Board of Directors since December,
1994. He has been President of Pinkerton Systems Integration since 1998. From
1991 to 1998 Mr. Grimes served as a member of the Board of Engineering and
Technical Services, Inc. of which he was President until December 31, 1997. He
was also the President of Stetsys US, Inc. from February 24, 1997 to January 23,
1998.
DENNIS W. ELLIOTT has been a Director and a member of the Audit and
Compensation Committees since October 1998. He is the President of Elliott
Communications Co., a technology/marketing consulting concern involved in
advising companies on strategy and developing operating ventures in
telecommunications, data networking, digital television/HDTV and multimedia.
Until September 1998, Mr. Elliott was a Director of STM Wireless, Inc. and a
member of its Compensation Committee from January to September 1998. Mr. Elliott
is currently a director of Firetalk, Inc. He has also held executive positions
at Pacific Telecom, Inc., RCA American Communications (now GE American
Communications) and RCA Global Communications.
TANG KUM CHUEN is a new nominee to the Board of Directors of the Company.
Mr. Tang has been the General Manager of Agilis Communication Technologies Pte
Ltd since January 1999. From July 1997 until December 1998, he was the Deputy
General Manager of CET Technologies Pte Ltd. From April 1990 until June 1997, he
was employed by Singapore Technologies Electronics Limited, initially as Senior
Project Engineer and promoted to Divisional Manager on 1 July 1996. From May
1987 until March 1990, he held various government positions with the Singapore
Ministry of Defense. Mr. Tang has a Master of Science degree (IE) from the
National University of Singapore and a Bachelor of Engineering degree (First
Class Honors) from Monash University.
6
<PAGE>
ROBERT C. FITTING has been Chief Executive Officer of the Company since
October 1998 and has been President of the Company since February 1995. He
became a Director of the Company in March 1995. Mr. Fitting has a Master of
Electrical Engineering degree from New York University and a Bachelors with
distinction from Penn State University. His professional career began at Bell
Laboratories in 1962 where he spent six years developing innovative
communication technologies. Mr. Fitting then joined the Motorola Government
Electronics Division where he was an engineering manager. He published more than
a dozen technical papers and was awarded a number of patents. He left Motorola
in 1978 to build a new company under an agreement with Comtech
Telecommunications. The new company was named Comtech Data Corporation,
currently known as Fairchild Data Corporation. Mr. Fitting was the General
Manager and President of Comtech Data Corporation from 1978 to 1984. He left
Comtech to start a new company called EFData Corporation. As co-founder, CEO and
President of EFData Corporation, Mr. Fitting built the company into a worldwide
market leader in satellite communications equipment. While at EFData, Mr.
Fitting won the "Arizona Entrepreneur of the Year" award in 1993 in the
manufacturing/high technology category.
Board Meetings and Committees
The Board of Directors of the Company held a total of four meetings during
the year ended December 31, 1998. Each Director attended all of the meetings of
the Board of Directors and committees thereof, if any, upon which such Director
served, except that Mr. Chan was absent from one meeting of the Compensation
Committee. The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee, which consists of directors Lee, Grimes and Elliott,
met three times during the fiscal year ended December 31, 1998. The Audit
Committee reviews and approves the scope of the audit performed by the Company's
independent auditors as well as the Company's accounting principles and internal
accounting controls.
The Compensation Committee, which consists of directors Lim, Lee, Chan,
Elliott and Grimes, met three times during the fiscal year ended December 31,
1998. The Committee reviews the performance of management and will at the
appropriate times review the structure of management and plans for management
succession. The Committee also reviews and approves the Company's compensation
policies and administers the Company's 1996 Incentive Stock Option Plan.
The Company's policy during the year ended December 31, 1998 was initially
to provide no compensation to directors for their services other than
reimbursement of expenses incurred in connection with attendance at Board
meetings. On October 6, 1998, the Board of Directors resolved that outside
directors will be paid $4,000 per meeting attended and $500 if attendance is via
telephone. Moreover, commencing in March 1999, all directors will be eligible to
receive stock options, if granted.
7
<PAGE>
PROPOSAL TWO
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the Stockholders to ratify the selection of KPMG LLP
as the Company's independent accountants for the fiscal year ended December 31,
1998 and for the fiscal year ending December 31, 1999. It is anticipated that
holders of a majority of the shares of Common Stock outstanding will vote in
favor of this proposal, which will be sufficient for such ratification.
KPMG LLP has audited the Company's financial statements since the fiscal
year ended December 31, 1998. It is not expected that a representative of KPMG
LLP will be present at the Annual Meeting.
On July 17, 1998 the Company engaged KPMG LLP as its principal independent
accountant to audit its financial statements and terminated its engagement of
Deloitte & Touche LLP. This change was recommended by the audit committee, and
approved by the Board of Directors, of the Company.
The Board of Directors concluded that the retention of KPMG LLP, which is
the principal accounting firm for the controlling beneficial owner of the
Company's common stock, Singapore Technologies Pte Ltd ("STPL"), would be the
most prudent course of action. Although the Company's relationship with Deloitte
& Touche was extremely satisfactory, the Board believed that this step would
enable the Company to share in the advantages of scale inherent in its status as
a member of the STPL group.
Deloitte & Touche's reports on the Company's financial statements for the
past two fiscal years contained neither an adverse opinion, a disclaimer of
opinion nor a qualification or modification as to uncertainty, audit scope or
accounting principles. There has been no disagreement, during or subsequent to
the Company's past two fiscal years, between the Company and Deloitte & Touche
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreement, if not resolved
to their satisfaction, would have caused Deloitte & Touche to make reference to
the subject matter of such disagreement in connection with its report.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Committee Report on Executive Compensation
The Company's executive officers, Robert C. Fitting and Steven Eymann, its
Chief Executive Officer and Executive Vice President, respectively, are
compensated pursuant to an employment agreement which was executed in 1995 prior
to the Committee members' election to the Board. Mr. Fitting's and Mr. Eymann's
compensation is composed principally of base salary and stock options granted in
1996 and 1998. The options granted in 1996 were originally subject to conditions
as to exercisability as set forth in the 1995 employment agreement. As such,
those options would become exercisable in accordance with a milestone schedule
by reference to the Company's earnings before interest and taxes. On October 6,
1998, the
8
<PAGE>
Committee determined, and the Board agreed, that the milestones should be deemed
satisfied as a result of the Company's acquisition of ComStream Holdings, Inc.
Accordingly, those options have become exercisable.
In addition, on October 6, 1998, the Committee and the Board recognized the
fact that the ComStream acquisition more than doubled the size of the Company,
with a resulting substantial increase in the responsibilities of Messrs. Fitting
and Eymann. As a result, Mr. Fitting's annual salary was increased from $130,000
to $160,000 and Mr. Eymann's from $125,000 to $140,000.
Compensation Committee:
Lim Ming Seong, Chairman
Lee Yip Loi
Chan Wee Piak
Robert A. Grimes
Dennis W. Elliott
Compensation Committee Interlocks and Insider Participation
The Compensation Committee has consisted of Messrs. Lim, Chan, Lee, Elliott
and Grimes. There were no interlocking relationships between the Company and
other entities that might affect the determination of the compensation of the
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
YEAR ALL OTHER
NAME AND PRINCIPAL POSITION ENDED(1) SALARY OPTIONS(#) COMPENSATION(2)
- --------------------------- -------- ------ ---------- ---------------
<S> <C> <C> <C> <C>
Robert C. Fitting, CEO 12/31/98 $144,234 30,000 $1,186
12/31/97 116,529 0 1,165
12/31/96 40,000 279,085 435
06/30/96 80,000 0 738
Steven Eymann, Exec. Vice Pres. 12/31/98 $133,543 30,000 $1,174
12/31/97 11,162 0 1,112
12/31/96 40,000 279,085 435
06/30/96 80,000 0 738
</TABLE>
- ----------
(1) The Company's fiscal year was changed to the calendar year, so the figures
shown for the year ended December 31, 1996 reflect a period of six months.
(2) Matching 401(k) plan contributions.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF TOTAL OPTIONS
OPTIONS GRANTED TO EMPLOYEE IN EXERCISE EXPIRATION START DATE
NAME GRANTED FISCAL YEAR PRICE DATE PRESENT VALUE(1)
- ---- ------- ------------------------ -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Robert C. Fitting 15,000 3% $2.50 02/05/08 $3.37
15,000 3% $3.125 10/15/08 $2.48
Steven Eymann 15,000 3% $2.50 02/05/08 $3.37
15,000 3% $3.125 10/15/08 $2.48
</TABLE>
- ----------
(1) Based on the Black-Scholes option pricing model, assuming that one-fourth
of the options will be exercisable on the grant date and each of the first
three anniversaries thereof, no dividend yield, expected volatility of 105%
and a risk-free interest rate of 6.125%.
AGGREGATE OPTION EXERCISES IN 1998 AND HOLDINGS AT YEAR END
The following table sets forth information concerning option exercises and
option holdings for the year ended December 31, 1998 with respect to Robert C.
Fitting, the Chief Executive Officer and President of the Company and Steven
Eymann, the Executive Vice President.
AGGREGATE OPTIONS EXERCISED IN THE
LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
NUMBER OPTIONS HELD AT IN THE MONEY OPTIONS AT
SHARES OF DECEMBER 31, 1998 DECEMBER 31, 1998 (1)
ACQUIRED ON VALUE --------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Fitting 0 $0.00 182,585 62,500 $157,418 $47,656
Steven Eymann 0 $0.00 182,585 62,500 157,418 47,656
</TABLE>
- ----------
(1) Based on the December 31, 1998 closing price of the Common Stock of $3.375
per share on the OTC Bulletin Board, less the per share exercise price.
10
<PAGE>
Performance Graph
Set forth below is a line graph comparing the cumulative total returns
(assuming the investment of $100 on January 31, 1994 and the reinvestment of
dividends1/) on the Company's Common Stock against the Russell 3000 Stock Index
and the SIC Code 366 - Communication Equipment Index prepared by Media General
Financial Services, Inc. for the period from January 31, 1994 through December
31, 1998. It should be noted that the Company's predecessor, Radyne Corp.,
operated under Chapter 11 bankruptcy protection from April 1994 until December
16, 1994, and that the results reported in the graph are not to be interpreted
as forecasts of the future performance of the Company's Common Stock.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL]
<TABLE>
1/31/94 12/16/94 6/30/95 6/30/96 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
RADYNE COMSTREAM INC. 100.00 38.46 250.00 288.46 307.69 276.92 207.69
SIC CODE INDEX 100.00 103.83 117.10 136.08 127.29 146.01 153.19
RUSSELL 3000 INDEX 100.00 97.20 115.93 146.09 161.98 213.47 264.31
</TABLE>
Employment Agreements
Under the employment agreement between the Company and Messrs. Fitting and
Eymann, they will serve as President and Vice President of the Company,
respectively, until the earlier of June 30, 2000 or such time as the Company's
adjusted earnings before interest and taxes exceeds $6,000,000 for a period of
four (4) calendar quarters. Pursuant to the agreement, the Company presently
pays Mr. Fitting an annual salary of $160,000 and Mr. Eymann an annual salary of
$140,000 and has granted them certain of the stock options described in the
above table. Each of Mr. Fitting and Mr. Eymann has also agreed that if he
exercises any of such stock options, he will not engage in any business which
competes with the Company until after the second anniversary of his termination
of employment with the Company, except in the case of involuntary termination
without cause.
Certain Relationships and Related Transactions
Sales to ETS for the twelve month period ended December 31, 1998, were
$50,000. Until October 1998, ETS was a wholly owned subsidiary of ST. During the
fiscal year ended December 31, 1998, the Company made sales to Agilis
Communication Technologies Pte Ltd, another member of the Singapore Technologies
group, of $65,000. The General Manager of Agilis, Chan Wee Piak, is a Director
of the Company.
ST loaned $10 million to the Company in connection with the ComStream
acquisition. Under the terms of this loan, the Company is required to repay ST
with interest at 6.375% per annum out of the proceeds of a rights offering of
its Common Stock. In turn, Stetsys Pte Ltd has agreed to purchase approximately
$16,040,000 of Common Stock at $3.73 in the rights offering. As of December 31,
1998, the Company owed ST another $5,618,272, plus interest at rates ranging
from 6.625% to 6.844% per annum.
Interest expense on notes payable to affiliates was $581,000 for the year
ended December 31, 1998.
- ----------
(1) No cash dividends have been declared on the Company's Common Stock.
11
<PAGE>
Management believes that all of the foregoing transactions were on terms no
less favorable to Radyne ComStream than it could have obtained in arms length
transactions with unaffiliated third parties.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Executive officers, directors and greater than ten percent
Stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of the copies
of such forms received by it during the year ended December 31, 1998, the
Company believes that, during such year its executive officers, directors and
ten percent Stockholders complied with all such filing requirements, except that
a Form 3 report was filed late by Dennis Elliott and three Form 4 reports were
filed late by Robert Grimes.
OTHER MATTERS
The Board knows of no other matters to be presented for shareholder action
at the Annual Meeting. However, other matters may properly come before the
Annual Meeting or any adjournment or postponement thereof.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, including financial statements, is enclosed herewith. The Company will
furnish any exhibit to such Annual Report on Form l0-K upon request by a
stockholder directed to Director of Administration, Radyne ComStream Inc., 3138
East Elwood Street, Phoenix, Arizona 85034, for a fee limited to the Company's
reasonable expenses in furnishing such exhibits.
By order of the Board of Directors
/s/ Garry Kline
----------------------------------
Garry Kline
Secretary
Phoenix, Arizona
May 12, 1999
12
