SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Telebyte Technology, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
TELEBYTE TECHNOLOGY, INC.
270 Pulaski Road
Greenlawn, New York 11740
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 25, 1999
To the Stockholders of Telebyte Technology, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Telebyte Technology, Inc., a Nevada corporation (the "Company"),
will be held at the Company's executive offices at 270 Pulaski Road, Greenlawn,
New York 11740 on June 25, 1999 at 10:00 a.m., local time, for the following
purposes:
(1) To elect a Board of three directors.
(2) To ratify the adoption of the Company's 1999 Stock Option
Plan.
(3) To approve an amendment to the Company's Certificate of
Incorporation to change the Company's name to "Telebyte, Inc."
(4) To approve a proposal to change the state of incorporation of
the Company from Nevada to Delaware by means of a merger of
the Company into its wholly-owned Delaware subsidiary. In
connection with this proposal, stockholders may be entitled to
assert dissenters' rights pursuant to Nevada Revised Statutes
Sections 92A.300 to 92A.500, inclusive, a copy of which
sections is attached to the accompanying Proxy Statement as
Exhibit B.
(5) To ratify the appointment of Grant Thornton, LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1999.
(6) To transact such other business as may properly come before
the Meeting.
Only stockholders of record at the close of business on May 18, 1999
are entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors
Kenneth S. Schneider
Chairman
Greenlawn, New York
May 25, 1999
==============================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE URGE YOU
TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE
BOARD OF DIRECTORS OF TELEBYTE TECHNOLOGY, INC., AND RETURN IT IN THE
PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. A STOCKHOLDER MAY
REVOKE HIS PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN NOTICE TO
SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING
THE MEETING AND VOTING IN PERSON.
==============================================================================
TELEBYTE TECHNOLOGY, INC.
270 Pulaski Road
Greenlawn, New York 11740
PROXY STATEMENT
SOLICITING, VOTING AND REVOCABILITY OF PROXY
This Proxy Statement is being mailed to all stockholders of record of
Telebyte Technology, Inc. (the "Company") at the close of business on May 18,
1999 in connection with the solicitation by the Board of Directors of Proxies to
be voted at the Annual Meeting of Stockholders (the "Meeting") to be held at the
Company's executive offices at 270 Pulaski Road, Greenlawn, New York 11740 on
June 25, 1999 at 10:00 a.m., local time, or any adjournment thereof. The Proxy
and this Proxy Statement were mailed to stockholders on or about May 25, 1999.
All shares represented by Proxies duly executed and received will be
voted on the matters presented at the Meeting in accordance with the
instructions specified in such Proxies. Proxies so received without specified
instructions will be voted (1) FOR the nominees named in the Proxy to the
Company's Board of Directors; (2) FOR the ratification of the adoption of the
Company's 1999 Stock Option Plan; (3) FOR the approval of an amendment to the
Company's Certificate of Incorporation to change the Company's name to
"Telebyte, Inc."; (4) FOR the approval of a proposal to change the state of
incorporation of the Company from Nevada to Delaware by means of a merger of the
Company into its wholly-owned Delaware subsidiary; and (5) FOR the ratification
of the appointment of Grant Thornton, LLP as the Company's independent auditors
for the fiscal year ending December 31, 1999. The Board does not know of any
other matters that may be brought before the Meeting nor does it foresee or have
reason to believe that Proxy holders will have to vote for substitute or
alternate nominees to the Board. In the event that any other matter should come
before the Meeting or any nominee is not available for election, the persons
named in the enclosed Proxy will have discretionary authority to vote all
Proxies not marked to the contrary with respect to such matters in accordance
with their best judgment.
The total number of shares of Common Stock of the Company ("Common
Shares") outstanding and entitled to vote as of May 18, 1999 was 1,248,631. The
Common Shares are the only class of securities of the Company entitled to vote
on matters presented to the stockholders of the Company, each share being
entitled to one noncumulative vote. A majority of the Common Shares outstanding
and entitled to vote as of May 18, 1999, or 624,316 Common Shares, must be
present at the Meeting in person or by proxy in order to constitute a quorum for
the transaction of business. Only stockholders of record as of the close of
business on May 18, 1999 will be entitled to vote.
1
With regard to the election of directors, votes may be cast in favor or
withheld. Directors shall be elected by a plurality of the votes cast. Votes
withheld in connection with the election of one or more of the nominees for
director will not be counted as votes cast for such individuals.
Stockholders may expressly abstain from voting on Proposals 2, 3, 4 and
5 by so indicating on the Proxy. Abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. However, neither abstentions nor broker non-votes will
be counted for the purpose of determining whether a particular proposal has been
approved. Since Proposal 2 requires the affirmative vote of a majority of the
votes cast for or against the proposal at the Meeting (assuming a quorum is
present at the Meeting), abstentions and broker non-votes will have no effect.
Since Proposals 3 and 4 require the approval of a majority of the outstanding
Common Shares of the Company, abstentions and broker non-votes will have the
effect of a negative vote.
Any person giving a Proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise. The Proxy may be
revoked by filing with the Company written notice of revocation or a fully
executed Proxy bearing a later date. The Proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the Meeting.
However, a stockholder who attends the Meeting need not revoke a Proxy given and
vote in person unless the stockholder wishes to do so. Written revocations or
amended Proxies should be sent to the Company at 270 Pulaski Road, Greenlawn,
New York 11740, Attention: Corporate Secretary.
The Proxy is being solicited by the Company's Board of Directors. The
Company will bear the cost of the solicitation of Proxies, including the charges
and expenses of brokerage firms and other custodians, nominees and fiduciaries
for forwarding proxy materials to beneficial owners of the Company's shares.
Solicitations will be made primarily by mail, but certain directors, officers or
employees of the Company may solicit Proxies in person or by telephone,
telecopier or telegram without special compensation.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides summary information for the fiscal years
ended December 31, 1998, 1997 and 1996 concerning the cash and certain other
compensation paid or accrued by the Company to Joel A. Kramer, Chairman of the
Board, President and Chief Executive Officer of the Company until January 20,
1999, and to the only other executive officer of the Company who had a combined
salary and bonus in excess of $100,000 for the fiscal year ended December 31,
1998.
2
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
---------------------------------------------------
Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Shares
Restricted Underlying
Name and Principal Other Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation Awards SARs Payouts Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Joel A. Kramer 1998 $124,306 $ 25,000 $20,130(2) 0 0 $ 5,747(3) $8,040
President, Chief
Executive Officer and
Director(1)
----------------------------------------------------------------------------------------------------------
1997 $111,631 $ 2,000 $16,629(2) 0 0 $ 12,662(3) $4,116
----------------------------------------------------------------------------------------------------------
1996 $107,100 $ 4,300 $11,481(2) 0 0 $ 11,281(3) $3,203
- -----------------------------------------------------------------------------------------------------------------------------------
Kenneth S. Schneider 1998 $112,534 $ 22,000 $10,170(2) 0 0 $ 4,080(3) $7,104
Senior Vice President,
Secretary, Treasurer and
Director
----------------------------------------------------------------------------------------------------------
1997 $100,686 $ 2,000 $ 8,804(2) 0 0 $ 4,080(3) $2,819
----------------------------------------------------------------------------------------------------------
1996 $ 95,599 $ 3,150 $ 7,256(2) 0 0 $ 4,080(3) $2,819
- -----------------------------------------------------------------------------------------------------------------------------------
(1)Mr. Kramer resigned his positions with the Company effective January 20,
1999 (See "Certain Relationships and Related Transactions").
(2)Represents commissions. Mr. Kramer received a commission equal to 2.5%
of net sales to customers not located within the United States. Dr. Schneider
received a commission equal to 0.2% of net sales to customers located within the
United States.
(3)See "Long-Term Incentive Plans -Awards in Last Fiscal Year" below.
Option Grants in Last Fiscal Year
There were no grants of stock options to Mr. Kramer or Dr. Schneider
during the fiscal year ended December 31, 1998.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Value Table
The following table sets forth certain information concerning option
exercises by Mr. Kramer and Dr. Schneider during fiscal 1998 and the value of
unexercised options held by them as of December 31, 1998:
3
- -------------------------------------------------------------------------------------------------------------------------------
Number of
Number of Common Shares
Common Shares Underlying Unexercised Value of Unexercised In-
Acquired on Value Options at the-Money Options at
Name Exercise Realized December 31, 1998 (1) December 31, 1998 (2)
- -------------------------------------------------------------------------------------------------------------------------------
Joel A. Kramer -0- -0- 10,000(3) $4,550(3)
- -------------------------------------------------------------------------------------------------------------------------------
Kenneth S. Schneider -0- -0- 10,000 $4,550
- -------------------------------------------------------------------------------------------------------------------------------
(1) All of such options are currently exercisable.
(2) Calculation based upon the average of the high and low bid prices of the
Common Shares on December 31, 1998, as reported by the National Quotation
Bureau.
(3)See "Certain Relationships and Related Transactions."
Long-Term Incentive Plans - Awards in Last Fiscal Year
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Future Payouts under Non-
Stock Price-Based Plans
Performance
or Other
Number of Shares, Period Until --------------------------------------------------
Units or Other Maturation
Name Rights or Payout Threshold Target Maximum
- ----------------------------------------------------------------------------------------------------------------------------------
Joel A. Kramer
President, Chief Executive Officer
and Director - June 11, 2002 $ 26,667(1) $ 26,667(1) $26,667(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Kenneth S. Schneider
Senior Vice President, Secretary,
Treasurer and Director - April 16, 2010 $ 26,667(1) $ 26,667(1) $26,667(1)
- ----------------------------------------------------------------------------------------------------------------------------------
(1) In 1990, the Company entered into deferred compensation agreements with
key officers, pursuant to which the officers will receive a defined
amount (approximately 30% of their 1990 base salary) each year for a
period of ten years after reaching age 65. The deferred compensation
plans are funded through life insurance and are being provided for
currently. The expense charged to operations in 1998 for such future
obligations was $9,827 ($5,747 and $4,080, for Joel A. Kramer and
Kenneth S. Schneider, respectively).
Compensation of Directors
Directors of the Company are not compensated solely for serving on the
Board of Directors. Non-employee directors are entitled to receive a per meeting
fee of $500, in addition to reimbursement of expenses for attending each
meeting. According to World Bank policy, Jamil
4
Sopher, a director of the Company, cannot accept the meeting fee.
Employment Contracts; Termination of Employment and Change-in-Control
Arrangements
The Company has an informal bonus plan in which officers and other key
personnel participate. The bonus award, if any, is fixed annually by the Board
of Directors. Bonuses were allocated and paid to executive officers under this
plan during fiscal 1998 and are shown in the Summary Compensation Table above.
Dr. Schneider is a party to an employment agreement with the Company
that provides for a minimum annual salary of $126,260. The initial term of the
agreement expires on August 1, 2000. The agreement provides for an automatic
three year renewal and successive two year renewals unless one year's notice of
non-renewal is provided prior to the expiration of the initial or any renewal
term. In the event of the termination of Dr. Schneider's employment agreement by
the Company other than for "cause" or in the event Dr. Schneider terminates his
employment agreement for "good reason" or following a change of control, he will
be entitled to receive a lump sum payment equal to his salary for the remainder
of the employment term. In addition, in the event Dr. Schneider's employment
agreement terminates due to his disability or death, he or his spouse shall be
entitled to continue to receive the amount of his salary for a period of 12
months.
Effective January 20, 1999, Mr. Kramer resigned his positions with the
Company and entered into certain agreements with the Company in connection
therewith. See "Certain Relationships and Related Transactions."
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of the Company based
solely upon records available to it, certain information as of April 30, 1999
regarding the beneficial ownership of the Common Shares (i) by each person who
the Company believes may be considered to be the beneficial owner of more than
5% of its outstanding Common Shares, (ii) by each current director, (iii) by
each person listed in the Summary Compensation Table under "Executive
Compensation" and (iv) by all current executive officers and directors as a
group:
5
- --------------------------------------------------------------------------------------------------------------------------
Name and Address of Number of Shares Approximate Percent
Beneficial Owner Beneficially Owned of Class
- --------------------------------------------------------------------------------------------------------------------------
Kenneth S. Schneider
270 Pulaski Road
Greenlawn, New York 11740 293,038(1) 23.4%
- --------------------------------------------------------------------------------------------------------------------------
Michael Breneisen
270 Pulaski Road
Greenlawn, New York 11740 41,900(2) 3.4%
- --------------------------------------------------------------------------------------------------------------------------
Jamil Sopher
270 Pulaski Road
Greenlawn, New York 11740 6,730(3) *
- --------------------------------------------------------------------------------------------------------------------------
All officers and directors
as a group (3 persons) 341,668(1)(2)(3) 27.0%
- --------------------------------------------------------------------------------------------------------------------------
* Less than 1%.
(1) Includes 10,000 shares issuable upon the exercise of stock options
granted under the Company's 1993 Stock Option Plan.
(2) Includes 5,000 shares issuable upon exercise of stock options granted
under the Company's 1987 Stock Option Plan.
(3) Includes 5,000 shares issuable upon exercise of stock options granted
under the Company's 1993 Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 20, 1999, Joel A. Kramer, Chairman of the Board,
President and Chief Executive Officer of the Company, resigned his positions
with the Company. However, Mr. Kramer has agreed to serve as a consultant to the
Company through January 19, 2002 for an aggregate consideration of $165,000 plus
reimbursement of certain expenses. Concurrently with Mr. Kramer's resignation,
the Company purchased all of the 262,635 Common Shares owned by him, and Mr.
Kramer agreed to cancel options to purchase 10,000 Common Shares, for an
aggregate consideration of $1,075,190 (of which $867,510 was for the Common
Shares, $17,680 was for the cancellation of such options and $190,000 was for
Mr. Kramer's restrictive covenant discussed below). Mr. Kramer has agreed not to
compete with the business of the Company until January 19, 2003 and has released
the Company from certain potential claims relative to his employment.
Furthermore, the Company transferred to Mr. Kramer a life insurance policy
previously maintained for Mr. Kramer's benefit and having a cash value of
approximately $80,000.
6
Effective January 20, 1999, Dr. Kenneth S. Schneider was elected Chairman
of the Board and Chief Executive Officer of the Company, and Michael Breneisen
was elected President and Chief Operating Officer of the Company. Dr. Schneider
was a co-founder of the Company and has served as Senior Vice President,
Secretary, Treasurer and a director. Mr. Breneisen has served as Vice President
and Chief Financial Officer of the Company, and will continue to serve as Chief
Financial Officer.
PROPOSAL 1: ELECTION OF DIRECTORS
Three directors are to be elected at the Meeting to serve until the
next annual meeting of stockholders and until their respective successors have
been elected and have qualified, or until their earlier resignation or removal.
If for some unforeseen reason one or more of the nominees is not available as a
candidate for director, the Proxies may be voted for such other candidate or
candidates as may be nominated by the Board.
Nominees for Director
All three of the nominees are currently directors of the Company. The
following tables set forth the positions and offices presently held with the
Company by each nominee, his age as of April 30, 1999 and the year in which he
became a director. Proxies not marked to the contrary will be voted in favor of
each such nominee's election. The Board recommends a vote FOR all nominees.
Positions and Offices
Presently Held with Director
Name Age the Company Since
Kenneth S. Schneider 54 Chairman of the Board of 1983
Directors, Chief Executive
Officer, Treasurer,
Secretary and Director
Michael Breneisen 34 President, Chief Operating 1999
Officer and Director
Jamil Sopher 55 Director 1996
Dr. Schneider has served as Chairman of the Board and Chief Executive
Officer of the Company since January 1999. He has also served as Treasurer of
the Company since August, 1983 and Secretary since March, 1991. Dr. Schneider
also served as Vice President of the company from August, 1983 to January, 1999.
Dr. Schneider is a Senior Member of the Institute of Electrical and Electronic
Engineers.
7
Mr. Breneisen has served as President and Chief Operating Officer of the
Company since January, 1999 and Chief Financial Officer since January, 1997. He
also served as Controller of the Company from July, 1992 to January 1999 and
Vice President from January, 1997 to January, 1999.
Mr. Sopher is a Principal Financial Analyst with the World Bank where he
has been employed for 19 years. Mr. Sopher received a Bachelor of Science Degree
and M. Eng. (Elect.) Degree from Cornell University and an MBA from Harvard
University.
Board Committees
The Audit Committee of the Board of Directors is responsible for (i)
recommending independent accountants to the Board, (ii) reviewing the Company's
financial statements with management and the independent accountants, (iii)
making an appraisal of the Company's audit effort and the effectiveness of the
Company's financial policies and practices and (iv) consulting with management
and the Company's independent accountants with regard to the adequacy of
internal accounting controls. The sole member of the Audit Committee is Mr.
Sopher, the only non-employee Board member. The Audit Committee met once last
year.
The Compensation Committee of the Board reviews and implements appropriate
action with respect to all matters pertaining to the compensation of the
Company's officers and employees. The full Board of Directors reviews the
Committee's recommendations regarding executive compensation. The Compensation
Committee's sole member is Mr. Sopher, the only non-employee member of the
Board. The Committee did not meet during the fiscal year ended December 31,
1998; all compensation matters were reviewed and acted upon in that period by
the Board as a whole.
The Company does not have a standing nominating committee of the Board of
Directors or a committee performing similar functions. These functions are
currently performed by the Board as a whole.
Meetings
The Board held five meetings during the year ended December 31, 1998. All
of the then incumbent directors of the Company attended each meeting. The Board
also acted on one occasion during 1998 by unanimous written consent in lieu of a
meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934, as amended ("Section
16"), requires that reports of beneficial ownership of Common Shares and changes
in such ownership be filed with the Securities and Exchange Commission (the
"SEC") by Section 16 "reporting persons," including directors, certain officers,
holders of more than 10% of the outstanding Common Shares and certain trusts of
which reporting persons are trustees. The Company is required to disclose in
this Proxy
8
Statement each reporting person whom it knows to have failed to file any
required reports under Section 16 on a timely basis during the fiscal year ended
December 31, 1998. To the Company's knowledge, based solely on a review of
copies of Forms 4 and 5 furnished to it and written representations that no
other reports were required, during the fiscal year ended December 31, 1998, the
Company's officers, directors and 10% stockholders complied with all Section
16(a) filing requirements applicable to them.
PROPOSAL 2: 1999 STOCK OPTION PLAN
The Company's Board of Directors has adopted the 1999 Stock Option Plan
(subject to stockholder approval thereof) (the "1999 Plan") and has reserved for
issuance thereunder 500,000 Common Shares of the Company. The following
statements include summaries of certain provisions of the 1999 Plan. The
statements do not purport to be complete and are qualified in their entirety by
reference to the provisions of the 1999 Plan, a copy of which is available at
the offices of the Company.
Purpose
The purpose of the 1999 Plan is to advance the interests of the Company by
inducing persons or entities of outstanding ability and potential to join and
remain with, or provide consulting or advisory services to, the Company, by
encouraging and enabling eligible employees, non-employee directors, consultants
and advisors to acquire proprietary interests in the Company, and by providing
such employees, non-employee directors, consultants and advisors with an
additional incentive to promote the success of the Company.
Administration
The 1999 Plan provides for its administration by the Board or by a
committee (the "Stock Option Committee") consisting of at least one director
chosen by the Board of Directors. The Board or the Stock Option Committee has
authority (subject to certain restrictions) to select from the group of eligible
employees, non-employee directors, consultants and advisors the individuals or
entities to whom options will be granted, and to determine the times at which
and the exercise price for which options will be granted. The Board or the Stock
Option Committee is authorized to interpret the 1999 Plan and the interpretation
and construction by the Board or the Stock Option Committee of any provision of
the 1999 Plan or of any option granted thereunder shall be final and conclusive.
The receipt of options by directors or any members of the Stock Option Committee
shall not preclude their vote on any matters in connection with the
administration or interpretation of the 1999 Plan.
Nature of Options
The Board or Stock Option Committee may grant options under the 1999 Plan
which are intended to either qualify as "incentive stock options" within the
meaning of Section 422 of the
9
Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options"), or not so qualify ("Nonstatutory Stock Options"). The Federal income
tax consequences relating to the grant and exercise of Incentive Stock Options
and Nonstatutory Stock Options are described below under "Federal Income Tax
Consequences."
Eligibility
Subject to certain limitations as set forth in the 1999 Plan, options to
purchase shares may be granted thereunder to persons or entities who, in the
case of Incentive Stock Options, are employees (including directors and
officers) of either the Company or its subsidiaries or, in the case of
Nonstatutory Stock Options, are employees (including directors and officers) or
non-employee directors of, and certain consultants or advisors to, the Company
or its subsidiaries. At April 30, 1999, approximately 47 employees and one
non-employee director were eligible to receive options under the 1999 Plan.
Option Price
The option price of the shares subject to an Incentive Stock Option may not
be less than the fair market value (as such term is defined in the 1999 Plan) of
the Common Shares on the date upon which such option is granted. In addition, in
the case of a recipient of an Incentive Stock Option who, at the time the option
is granted, owns more than 10% of the total combined voting power of all classes
of stock of the Company or of a parent or subsidiary corporation of the Company
(a "10% Stockholder"), the option price of the shares subject to such option
must be at least 110% of the fair market value of the Common Shares on the date
upon which such option is granted.
The option price of shares subject to a Nonstatutory Stock Option will be
determined by the Board of Directors or the Stock Option Committee at the time
of grant and need not be equal to or greater than the fair market value for the
Company's Common Shares.
On May 20, 1999, the closing bid price for the Company's Common Shares, as
reported by the Over The Counter Electronic Bulletin Board, was $1.38 per share.
Exercise of Options
An option granted under the 1999 Plan shall be exercised by the delivery by
the holder thereof to the Company at its principal office (attention of the
Secretary) of written notice of the number of shares with respect to which the
option is being exercised. Such notice shall be accompanied , or followed within
ten days, by payment of the full option price of such shares which shall be made
by the holder's delivery of (i) a check payable to the order of the Company in
such amount; or (ii) previously acquired Common Shares, the fair market value of
which shall be determined as of the date of exercise; or (iii) if provided in
the option agreement, a promissory note payable to the Company accompanied by
cash payment of the par value of the Common Shares being purchased; or a
combination of (i), (ii) and (iii).
10
Reload Feature
The Board of Directors or the Stock Option Committee may grant options with
a reload feature. A reload feature shall only apply when the option price is
paid by delivery of Common Shares. The agreement for options containing the
reload feature shall provide that the option holder shall receive,
contemporaneously with the payment of the option price in Common Shares, a
reload stock option to purchase that number of Common Shares equal to the number
of Common Shares used to exercise the option, and, with respect to Nonstatutory
Stock Options, the number of Common Shares used to satisfy any tax withholding
requirement incident to the exercise of such Nonstatutory Stock Option. The
exercise price of the reload options shall be equal to the fair market value of
the Common Shares on the date of grant of the reload option (or 110% of fair
market value in the case of a 10% Stockholder) and the term of the reload option
shall be equal to the remaining term of the option which gave rise to the reload
option. Subject to the foregoing, the terms of the 1999 Plan applicable to the
option shall be equally applicable to the reload option.
Alternate Stock Appreciation Rights
The Board of Directors or the Stock Option Committee may award to an
optionee, with respect to each Common Share covered by an option ("Related
Option"), a related alternate stock appreciation right ("SAR"), permitting the
optionee to be paid the appreciation on the Related Option in lieu of exercising
the Related Option. An SAR granted with respect to an incentive stock option
must be granted together with the Related Option; an SAR granted with respect to
a Nonstatutory Stock Option may be granted together with, or subsequent to, the
grant of such Related Option. An SAR may be exercised only if and to the extent
that its Related Option is eligible to be exercised. The SAR may be exercised
from time to time by delivery by the holder thereof to the Company of a written
notice of the number of shares with respect to which it is being exercised.
An optionee may exercise an SAR only when the market price on the exercise
date of a share of Common Stock subject to the Related Option exceeds the
exercise price per share of the Related Option (the "SAR Spread"). The amount of
payment to which an optionee shall be entitled upon the exercise of each SAR
shall be equal to 100% of the SAR Spread. Such amount is payable by the Company,
in the sole determination of the Company, in Common Shares, cash or a
combination thereof, as set forth in the SAR agreement. In the case of a payment
in shares, the number of Common Shares to be paid upon exercise of an SAR shall
be determined by dividing the amount of payment due to the optionee by the fair
market value of a Common Share on the exercise date of such SAR. The exercise of
any SAR shall cancel and terminate the right to purchase an equal number of
shares covered by the Related Option. Upon the exercise or termination of any
Related Option, the SAR with respect to such Related Option shall terminate to
the extent of the number of Common Shares as to which the Related Option was
exercised or terminated.
Duration of Options
No Incentive Stock Option granted under the 1999 Plan shall be exercisable
after the expiration of ten years from the date of its grant. However, if an
Incentive Stock Option is granted
11
to a 10% Stockholder, such option shall not be exercisable after the expiration
of five years from the date of its grant.
Nonstatutory Stock Options granted under the 1999 Plan may be of such
duration as shall be determined by the Board or the Stock Option Committee.
Non-Transferability
Options granted under the 1999 Plan are not transferable otherwise than by
will or the laws of descent and distribution and such options are exercisable,
during a holder's lifetime, only by the optionee.
Death, Disability or Termination of Employment
Subject to the terms of the stock option agreement pursuant to which
options are granted, if the employment of an employee or the services of a
non-employee director, consultant or advisor shall be terminated for cause, or
such employment or services shall be terminated voluntarily, any options held by
such persons or entities shall expire immediately. If such employment or
services shall terminate other than by reason of death or disability,
voluntarily by the employee, non-employee director, consultant or advisor or for
cause, then, subject to the terms of the stock option agreement pursuant to
which options are granted, such option may be exercised at any time within three
months after such termination, but in no event after the expiration of the
option. For purposes of the 1999 Plan, the retirement of an individual either
pursuant to a pension or retirement plan adopted by the Company or at the normal
retirement date prescribed from time to time by the Company is deemed to be a
termination of such individual's employment other than voluntarily by the
employee or for cause.
Subject to the terms of the stock option agreement pursuant to which
options are granted, if an option holder under the 1999 Plan (i) dies while
employed by the Company or its subsidiary or while serving as a non-employee
director of, or consultant or advisor to, the Company or its subsidiary, or (ii)
dies within three months after the termination of his employment or services
other than voluntarily or for cause, then such option may be exercised by the
estate of the employee, non-employee director, consultant or advisor, or by a
person who acquired such option by bequest or inheritance from the deceased
option holder, at any time within one year after his death. Subject to the terms
of the stock option agreement pursuant to which options are granted, if the
holder of an option under the 1999 Plan ceases employment or services because of
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) while employed by, or while serving as a non-employee director of, or
consultant or advisor to, the Company or its subsidiary, then such option may be
exercised at any time within one year after his termination of employment,
termination of directorship, or termination of consulting or advisory
arrangement or agreement due to the disability.
12
Amendment and Termination
The 1999 Plan (but not options previously granted thereunder) shall
terminate on April 16, 2009, ten years from the date that it was adopted by the
Board. Subject to certain limitations, the 1999 Plan may be amended or modified
from time to time or terminated at an earlier date by the Board or by the
stockholders.
Federal Income Tax Consequences
Nonstatutory Stock Options
Under the Code and the Treasury Department Regulations (the "Regulations"),
a Nonstatutory Stock Option does not ordinarily have a "readily ascertainable
fair market value" when it is granted. This rule will apply to the Company's
grant of Nonstatutory Stock Options. Consequently, the grant of a Nonstatutory
Stock Option to an optionee will result in neither income to him nor a deduction
to the Company. Instead, the optionee will recognize compensation income at the
time he exercises the Nonstatutory Stock Option in an amount equal to the
excess, if any, of the then fair market value of the shares transferred to him
over the option price. Subject to the applicable provisions of the Code and the
Regulations regarding withholding of tax, a deduction will be allowable to the
Company in the year of exercise in the same amount as is includable in the
optionee's income.
For purposes of determining the optionee's gain or loss on the sale or
other disposition of the shares transferred to him upon exercise of a
Nonstatutory Stock Option, the optionee's basis in such shares will be the sum
of his option price plus the amount of compensation income recognized by him on
exercise. Such gain or loss will be capital gain or loss and will be long-term
or short-term depending upon whether the optionee held the shares for more than
one year or one year or less. No part of any such gain will be an "item of tax
preference" for purposes of the "alternative minimum tax."
Incentive Stock Options
Options granted under the 1999 Plan which qualify as Incentive Stock
Options under Section 422 of the Code will be treated as follows:
Except to the extent that the alternative minimum tax rule described below
applies, no tax consequences will result to the optionee or the Company from the
grant of an Incentive Stock Option to, or the exercise of an Incentive Stock
Option by, the optionee. Instead, the optionee will recognize gain or loss when
he sells or disposes of the shares transferred to him upon exercise of the
Incentive Stock Option. For purposes of determining such gain or loss, the
optionee's basis in such shares will be his option price. If the date of sale or
disposition of such shares is at least two years after the date of the grant of
the Incentive Stock Option, and at least one year after the transfer of the
shares to him upon exercise of the Incentive Stock Option, the optionee will
realize long-term capital gain
13
treatment upon their sale or disposition.
The Company generally will not be allowed a deduction with respect to an
Incentive Stock Option. However, if an optionee fails to meet the foregoing
holding period requirements (a so-called disqualifying disposition), any gain
recognized by the optionee upon the sale or disposition of the shares
transferred to him upon exercise of an Incentive Stock Option will be treated in
the year of such sale or disposition as ordinary income, rather than capital
gain, to the extent of the excess, if any, of the fair market value of the
shares at the time of exercise (or, if less, in certain cases the amount
realized on such sale or disposition) over their option price, and in that case
the Company will be allowed a corresponding deduction.
For purposes of the alternative minimum tax, the amount, if any, by which
the fair market value of the shares transferred to the optionee upon such
exercise exceeds the option price will be included in determining the optionee's
alternative minimum taxable income. In addition, for purposes of such tax, the
basis of such shares will include such excess.
To the extent that the aggregate fair market value (determined at the time
the option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by the optionee during any calendar
year exceeds $100,000, such options will not be Incentive Stock Options. In this
regard, upon the exercise of an option which is deemed, under the rule described
in the preceding sentence, to be in part an Incentive Stock Option and in part a
Nonstatutory Stock Option, under existing Internal Revenue Service guidelines,
the Company may designate which shares issued upon exercise of such options are
Incentive Stock Options and which shares are Non-statutory Stock Options. In the
absence of such designation, a pro rata portion of each share issued is to be
treated as issued pursuant to the exercise of an Incentive Stock Option and the
balance of each share treated as issued pursuant to the exercise of a
Nonstatutory Stock Option.
Options Contemplated to be Granted
It is contemplated that, following stockholder approval of the 1999 Plan,
Michael Breneisen, President, Chief Financial Officer and Chief Operating
Officer of the Company, will be granted options under the 1999 Plan to purchase
Common Shares upon terms that have not, as of the date of this Proxy Statement,
been agreed upon.
Recommendation and Required Vote
The affirmative vote of a majority of the total votes cast for or against
the proposal at the Meeting is required for approval of this proposal. The Board
of Directors recommends a vote FOR ratification of the adoption of the 1999
Stock Option Plan.
14
PROPOSAL 3: AMENDMENT TO CERTIFICATE OF
INCORPORATION TO CHANGE NAME
The Company's Board of Directors has determined that it would be in the
best interest of the Company and its stockholders to amend the Company's
Certificate of Incorporation to change the Company's name to "Telebyte, Inc."
The Board of Directors believes that the proposed shorter name (the name by
which many of the Company's customers already refer to it) will enhance the
Company's future marketing efforts and distinguish it from its competitors.
In the event of stockholder approval of this proposal and Proposal 4
(Changing the State of Incorporation from Nevada to Delaware), the name change
will be effected as part of the reincorporation process.
Recommendation and Required Vote
The affirmative vote of the holders of a majority of the outstanding Common
Shares of the Company is required for approval of this proposal. The Board of
Directors recommends a vote FOR the adoption of the proposed amendment to the
Certificate of Incorporation.
PROPOSAL 4: CHANGING THE STATE OF
INCORPORATION FROM NEVADA TO DELAWARE
The Board of Directors has approved and adopted a proposal that the Company
change its state of incorporation from Nevada to Delaware. The reincorporation
will be effected by means of a statutory merger (the "Merger") of the Company, a
Nevada corporation ("Telebyte Nevada"), with and into Telebyte Technology, Inc.,
a newly formed Delaware subsidiary of Telebyte Nevada formed for purposes of the
Merger ("Telebyte Delaware"). Upon the effectiveness of the Merger, Telebyte
Delaware will be the surviving corporation, its name will be changed to
"Telebyte, Inc." (provided that the stockholders approve Proposal 3: Amendment
to Certificate of Incorporation to Change Name), and the Certificate of
Incorporation and By-laws of Telebyte Delaware will become the governing
instruments for the Company. Prior to the effective date of the Merger, Telebyte
Delaware will have conducted no business operations.
The proposed reincorporation in Delaware will effect a change in the legal
domicile of the Company and certain other changes, some of which are described
herein. However, the reincorporation will not result in any change in the
business, management, location of principal executive offices, assets,
liabilities or net worth of the Company. The provisions of the Agreement and
Plan of Merger between Telebyte Nevada and Telebyte Delaware (the "Merger
Agreement") and the effect thereof are more fully described below. For a full
statement of the terms and conditions of the proposed Merger, reference is made
to the Merger Agreement, a copy of which is attached hereto as Exhibit A.
15
Reasons
The Board of Directors believes that the proposed reincorporation of the
Company in Delaware will be in the best interests of the Company and its
stockholders. Since substantially more public companies are incorporated in
Delaware than in Nevada, potential investors, underwriters and their counsel are
more likely to be familiar with the provisions and interpretations of Delaware
corporate statutes than those of Nevada. In addition, for many years Delaware
has followed a policy of encouraging incorporation in that state and, in
furtherance of that policy, has adopted comprehensive, flexible corporate laws,
which are periodically updated and revised to meet changing business needs.
Although the provisions of Chapter 78 and Chapter 92A of the Nevada Revised
Statutes (herein, collectively the "Nevada Code") are similar to the Delaware
General Corporation Law (the "Delaware GCL"), there is a lack of predictability
under Nevada law resulting from the limited body of case law interpreting the
Nevada Code. This lack of case law may hinder management's ability to determine
its responsibilities and its alternatives in a given situation. Conversely, the
corporate law of Delaware has reached an advanced stage of development as a
result of the large number of corporations (including public corporations) which
are domiciled there and the numerous interpretive decisions that have been
rendered by its courts. Thus, reincorporation in Delaware may improve both
potential investors' perception of the Company and management's ability to
perform its duties.
Description of the Merger
The Merger will be implemented through the merger of Telebyte Nevada with
and into Telebyte Delaware. Pursuant to the Merger Agreement, each outstanding
Common Share of Telebyte Nevada will be converted into one share of Common Stock
of Telebyte Delaware. It is anticipated that the Merger will become effective as
soon as practicable after the Meeting.
Merger Agreement
The Merger Agreement is attached to this Proxy Statement as Exhibit A.
Statements made herein with respect to the Merger Agreement are only summaries
and are qualified in their entirety by reference to the full text of the Merger
Agreement.
Conditions of Merger
The Merger Agreement provides that the Merger will be submitted for
approval by the stockholders of the Company and of Telebyte Delaware. Approval
of the Merger requires the affirmative vote of the holders of a majority of the
outstanding Common Shares of the Company. In addition, the approval of the
holders of a majority of the outstanding stock of Telebyte Delaware is required.
The Company, as the holder of all of the outstanding stock of Telebyte Delaware,
intends to approve this transaction.
16
Amendment or Termination
The Board of Directors may amend, modify or supplement the Merger Agreement
at any time prior to the effectiveness of the Merger, whether before or after
stockholder approval, except that after such approval, the Merger Agreement may
not be amended in any manner which, in the judgment of the Board of Directors,
would have an adverse effect on the rights of the Company's stockholders. The
Board of Directors may also terminate the Merger Agreement and abandon the
Merger, notwithstanding stockholder approval, at any time prior to its
effectiveness for any reason including, without limitation, the exercise of
appraisal rights by stockholders of the Company (See "Rights of Dissenting
Stockholders"). In the event of such termination and abandonment, the Merger
Agreement will have no further force or effect.
Management
Upon the effectiveness of the Merger, the Board of Directors of Telebyte
Delaware will be composed of the same persons who are directors of Telebyte
Nevada at the time of such effectiveness. The officers of the Company at the
time of the Merger will be the same persons who were officers of the Company
prior to the Merger, and will perform the same duties for Telebyte Delaware.
Certificate of Incorporation and By-Laws
After the Merger, the Certificate of Incorporation and By-Laws of Telebyte
Delaware will become the Certificate of Incorporation and By-Laws of the
Company. There will be a number of differences between the By-Laws of Telebyte
Delaware and the By-laws of Telebyte Nevada, some of which are discussed below
under "Stockholder Proposals." Copies of the Certificate of Incorporation and
By-Laws of Telebyte Delaware are available at the offices of the Company.
Changes in the Rights of Stockholders
The Merger will effect several changes in the rights of stockholders as a
result of differences between the corporate laws of Nevada and Delaware. The
provisions of the Nevada Code and Delaware GCL differ in certain regards.
Summarized below are certain of the principal differences affecting the rights
of stockholders. This summary does not purport to be a complete statement of the
differences affecting stockholders' rights between the Delaware GCL and the
Nevada Code, and is qualified in its entirety by reference to the provisions
thereof.
1. Approval of Certain Transactions. The Delaware GCL generally requires
the approval of the holders of a majority of all outstanding shares entitled to
vote thereon for any merger, dissolution or sale of substantially all the assets
of a corporation. Under the Nevada Code, such matters likewise require the
approval of a majority of the outstanding shares entitled to vote thereon,
except that a dissolution requires the approval only of a majority of the votes
cast.
17
2. Dividends. Under the Delaware GCL, unless otherwise provided in the
certificate of incorporation, a corporation may declare and pay dividends out of
surplus, or if no surplus exists, out of net profits for the fiscal year in
which the dividend is declared and/or the preceding fiscal year (provided that
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets). In addition, the Delaware GCL provides, with limited
exceptions, that a corporation may redeem or repurchase its shares only out of
surplus.
The Nevada Code provides that no distribution may be made if, after giving
effect to such distribution, the corporation would not be able to pay its debts
as they become due in the usual course of business, or, except as otherwise
specifically allowed by the articles of incorporation, the corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed at the time of a dissolution to satisfy the preferential rights
of stockholders whose preferential rights are superior to those receiving the
distribution.
The provisions of the Delaware GCL are more restrictive than the provisions
of the Nevada Code and could conceivably affect future dividends or other
distributions.
3. Limitation of Directors' Liability for Breach of Fiduciary Duty. The
Certificate of Incorporation of Telebyte Nevada includes a provision designed to
remove the exposure of directors and officers to liability for certain breaches
of their fiduciary duty, either in a suit by or on behalf of the Company or an
action by stockholders of the Company. If the Merger is approved by the
stockholders, the Company's directors will be protected by similar provisions in
the Certificate of Incorporation of Telebyte Delaware. There are some
differences in the limitation of liability provided by the Delaware GCL but
these differences, in the opinion of management of the Company, are mostly
insignificant and, in any event, are beneficial to the stockholders of the
Company. In management's opinion, the only two significant differences regarding
limitation of liability are (i) the Delaware GCL does not extend the limitation
of liability to the officers of the Company, and (ii) while the Delaware
provision excepts from the limitation of liability a breach of the duty of
loyalty and any transaction from which the director derived an improper personal
benefit, the Nevada Code does not. Thus, the Nevada Code extends the limitation
of liability to a class of persons - officers - and a type of behavior - breach
of the duty of loyalty - that the Delaware GCL does not.
4. Removal of Directors. The stockholders of Telebyte Nevada can remove
directors during their term of office with or without cause only by a vote of
two-thirds of the outstanding shares. The stockholders of Telebyte Delaware will
be able to remove directors, with or without cause, by the vote of a majority of
the shares.
5. Restrictions on Business Combinations/Corporation Control. Both the
Delaware GCL and the Nevada Code contain provisions restricting the ability of a
corporation to engage in business combinations with an interested stockholder.
Under the Delaware GCL, except under certain circumstances, a corporation is not
permitted to engage in a business combination with any
18
interested stockholder for a three-year period following the date such
stockholder became an interested stockholder. The Delaware GCL defines an
interested stockholder generally as a person who owns 15% or more of the
outstanding shares of such corporation's voting stock.
Under the provisions of the Nevada Code, except under circumstances which
vary from the exceptions under the Delaware GCL, business combinations with
interested stockholders are not permitted for a period of three years following
the date such stockholder became an interested stockholder and thereafter only
if certain conditions are met. Restrictions also apply with respect to business
combinations after such three-year period. The Nevada Code defines an interested
stockholder, generally, as a person who owns 10% or more of the outstanding
shares of the corporation's voting stock.
Additionally, the Nevada Code generally disallows the exercise of voting
rights with respect to "control shares" of an "issuing corporation" held by an
"acquiring person," unless such voting rights are conferred by a majority vote
of the disinterested stockholders. An "issuing corporation" is a Nevada
corporation that has 200 or more shareholders with at least 100 of those
shareholders being stockholders of record and residents of Nevada, and that does
business in Nevada directly or through an affiliated corporation. "Control
shares" are the voting shares of an issuing corporation acquired in connection
with the acquisition of a "controlling interest." "Controlling interest" is
defined in terms of threshold levels of voting share ownership, which
thresholds, whenever each may be exceeded, trigger applications of the voting
bar with respect to the shares newly acquired.
6. Appraisal Rights. Under both Delaware and Nevada law, dissenting
shareholders who follow prescribed statutory procedures are entitled to
dissenters' rights in connection with certain types of mergers and other
transactions which may adversely affect the rights of shareholders. The Delaware
GCL and the Nevada Code provide similar dissenters' rights in connection with
mergers involving domestic corporations, domestic and foreign corporations, the
merger of a corporation with a not-for-profit corporation, and the merger of a
corporation with either a limited partnership or a limited liability company.
Under the Nevada Code, if a parent corporation owns at least 90% of the
outstanding shares of its subsidiary, the parent corporation may merge this
subsidiary into itself without shareholder approval, but dissenters' rights are
conferred upon the holders of the subsidiary's shares if the subsidiary is a
Nevada corporation. The Delaware GCL provides the same dissenters' rights if the
parent does not own all of the Delaware subsidiary's shares. In addition, under
the Nevada Code, the sale of all or substantially all of a corporation's assets
does not involve dissenters' rights. Under the Delaware GCL, the certificate of
incorporation may provide dissenters' rights in connection with such a sale,
although it is not contemplated that the Certificate of Incorporation of
Telebyte Delaware will so provide. The certificate of incorporation of a
Delaware corporation may also confer dissenters' rights in connection with an
amendment to the certificate of incorporation or in connection with any merger
or consolidation; however, it is not contemplated that the Certificate of
Incorporation of Telebyte Delaware will so provide. Finally, the Nevada Code
confers dissenters' rights (a) in connection with a plan of exchange pursuant to
which a Nevada corporation's shares are to be acquired, and (b) in connection
with the dissolution of a Nevada corporation pursuant to which the stockholders
receive stock and/or
19
bonds of another corporation. There are no parallel provisions under the
Delaware GCL. Conversely, the Delaware GCL confers dissenters' rights in
connection with a consolidation; there is no parallel under the Nevada Code.
Federal Income Tax Consequences
The proposed reincorporation is being presented for approval based upon the
expectation that, among other things:
(1) the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code;
(2) no gain or loss will be recognized by the Company (either Telebyte
Nevada or Telebyte Delaware) as a result of the Merger;
(3) no gain or loss will be recognized by United States stockholders
of the Company upon the exchange of their Common Shares of Telebyte
Nevada for shares of Common Stock of Telebyte Delaware pursuant to the
Merger, except with respect to the payment of dissenters' rights of
appraisal;
(4) the basis of the shares of Common Stock of Telebyte Delaware will
be the same as the basis of the Common Shares of Telebyte Nevada owned
by such stockholder which are exchanged pursuant to the Merger; and
(5) the holding period of the shares of Common Stock of Telebyte
Delaware received by the United States stockholders of the Company as
a result of the Merger will include the holding period of the Common
Shares surrendered in exchange therefor (provided that the shares of
Common Stock qualify as a capital asset in the hands of such
stockholders on the effective date of the Merger).
The foregoing is only a summary of the Federal income tax consequences and
is not tax advice. No ruling has been requested from the Internal Revenue
Service with respect to the foregoing tax matters. Each stockholder is urged to
consult with his, her or its own tax adviser concerning the United States
federal tax consequences of the Merger to such stockholder as well as any
applicable state and local tax consequences; likewise, each non-United States
stockholder of the Company is also urged to consider any applicable foreign tax
consequences of the Merger.
Rights of Dissenting Stockholders
Stockholders who oppose the proposed Merger will have the right to receive
payment for the value of their shares as set forth in Sections 92A.300 through
92A.500 of the Nevada Code, which are attached as Exhibit B to this Proxy
Statement. Under the Nevada Code, to assert dissenters' rights, a stockholder of
the Company must refrain from voting in favor of the Merger and must
20
deliver a written notice to the Company prior to the vote on the Merger of his
intention to demand payment for his shares if the Merger is effectuated (a
negative vote by a stockholder will not constitute the required notice). A
stockholder who holds his shares beneficially, and not of record, may assert his
dissenters' rights only by submitting with his written notice the written
consent of the stockholder of record to the dissent, and must exercise his
dissenters' rights for all the shares of which he is the beneficial owner or
over which he has power to direct the vote.
If the proposed Merger is approved by the required vote at the Meeting, the
Company is required to deliver a written dissenter's notice no later than 10
days after the Meeting to all stockholders who gave due notice of their
intention to demand payment and who refrained from voting in favor of the
Merger. The notice shall state where a demand for payment must be sent and where
and when certificates must be deposited in order to obtain payment; shall
include a form for demanding payment which includes the date of the first
announcement to the news media or the stockholders of the terms of the proposed
Merger, and a request for certification of the date on which the stockholder (or
the person on whose behalf the stockholder dissents) acquired beneficial
ownership of the shares; shall set a date by which the Company must receive the
demand for payment; and shall be accompanied by a copy of Sections 92A.300
through 92A.500 of the Nevada Code. The date set for receipt of the demand for
payment from the dissenting stockholders shall be not less than 30 nor more than
60 days after the date the notice is delivered. Stockholders who fail to demand
payment, or fail to deposit certificates as required by the notice mailed to the
dissenting stockholders, in each case by the date set forth in such notice,
shall have no right to receive payment for their shares.
Within 30 days following the date on which demand for payment is received
from dissenting stockholders who have deposited their certificates with the
Company, all in accordance with the notice of the Company, the Company shall
remit to the dissenting stockholders the amount which the Company estimates to
be the fair value of the shares, with interest. The remittance shall be
accompanied by the following:
(1) the Company's closing balance sheet and statements of income and
stockholders' equity for a fiscal year ending not more than 16 months before the
date of remittance, together with the latest available interim financial
statements;
(2) a statement of the Company's estimate of the fair value of the shares;
(3) an explanation of how the interest was calculated;
(4) a statement of the dissenters' right to demand payment pursuant to
Section 92.A480 (Dissenter's Estimate of Fair Value); and
(5) a copy of Sections 92A.300 through 92A.500 of the Nevada Code.
21
The Company may elect, however, to withhold remittance from any dissenter
with respect to shares of which the dissenter (or the person on whose behalf the
dissenter acts) was not the beneficial owner on the date specified in the notice
to dissenters that is described in the immediately preceding paragraph.
If a dissenting stockholder believes that the amount remitted is less than
the fair value of his shares, he may, within 30 days after the date of mailing
of the Company's remittance, mail to the Company his own estimate of the value
of the deficiency. If a dissenting stockholder fails to do so, he shall be
entitled to no more than the amount remitted. If a demand for payment remains
unsettled for 60 days after such demand is made by a dissenting stockholder, the
Company shall file a petition in an appropriate court requesting that the fair
value of the shares and interest thereon be determined by the court. All
dissenters are entitled to judgment for the amount by which the fair value of
their shares, plus interest, is found to exceed the amount previously remitted,
and for the fair value, plus interest, of his after-acquired shares for which
the Company elected to withhold payment. If the Company fails to file a
petition, each dissenter who has made a demand and who has not already settled
his claim against the Company shall be paid by the Company the amount demanded
by him with interest and may sue thereafter in an appropriate court.
Any stockholder receiving cash as a result of the exercise of dissenters'
rights will be treated as if such shares were redeemed by the Company, with the
tax consequences applicable to a redemption. The foregoing summary does not
purport to be a complete statement of the provisions of Section 92A.300 through
92A.500 of the Nevada Code and is qualified in its entirety by reference to
those sections, a copy of which is attached to this Proxy Statement as Exhibit
B. Stockholders intending to exercise appraisal rights should review Exhibit B
for more complete and definitive statement of the rights of dissenting
stockholders and the procedures to be followed.
The Merger Agreement provides that the Board of Directors may, prior to the
filing of the Articles of Merger with the Nevada Secretary of State, in its
discretion terminate the Merger notwithstanding stockholder approval. As
indicated previously, this provision enables the Board to evaluate the potentia1
burden to the Company arising from the exercise of dissenters' rights, and to
abandon the Merger if, among other things, the burden to the Company of such
exercise is too great in the opinion of the Board.
Exchange of Stock Certificates
If the Merger is effected, it will not be necessary for holders of Common
Shares of Telebyte Nevada to exchange their existing stock certificates for
stock certificates of Telebyte Delaware. The Company's present Common Share
certificates will automatically represent the same number of shares of Common
Stock of Telebyte Delaware.
After the Merger, as presently outstanding Common Share certificates are
presented for transfer, new certificates identifying the Company as a Delaware
corporation will be issued. New certificates for Telebyte Delaware will also be
issued in exchange for old Common Share certificates
22
of Telebyte Nevada upon the written request of any stockholder addressed to the
Company's transfer agent.
Recommendation and Required Vote
The affirmative vote of the holders of a majority of the outstanding Common
Shares of the Company is required for approval of this proposal. The Board of
Directors recommends a vote FOR the adoption of the reincorporation.
PROPOSAL 5: RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Grant
Thornton, LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999 and proposes ratification of such appointment.
A representative of Grant Thornton, LLP is expected to be present at the
Meeting with the opportunity to make a statement if he or she desires to do so,
and shall be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 2000 Annual
Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of the SEC,
promulgated under the Securities Exchange Act of 1934, as amended, must be
received by the Secretary of the Company at the principal executive offices of
the Company by January 25, 2000 for inclusion in the Company's Proxy Statement
and form of Proxy relating to such meeting.
The following requirements with respect to stockholder proposals and
stockholder nominees to the Board of Directors shall apply in the event of
stockholder approval of Proposal 4: Changing the State of Incorporation from
Nevada to Delaware:
1. Stockholder Proposals. For a proposal to be properly brought before an
annual meeting by a stockholder of Telebyte Delaware, the stockholder must have
given timely notice thereof to the Secretary of Telebyte Delaware. To be timely,
such proposals must be received by the Secretary of Telebyte Delaware at the
principal executive offices of Telebyte Delaware on a date which is not less
than 60 days nor more than 90 days prior to the date which is one year from the
date of the mailing of the Proxy Statement for the prior year's annual meeting
of stockholders. If during the prior year Telebyte Delaware did not hold an
annual meeting, or if the date of the meeting for which a stockholder intends to
submit a proposal has changed more than 30 days from the date of the meeting in
the prior year, then such notice must be received a reasonable time before
Telebyte Delaware mails the Proxy Statement for the current year. A
stockholder's notice must set forth as to each matter the stockholder proposes
to bring before the annual meeting certain information
23
regarding the proposal, including (a) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at such meeting; (b) the name and address of such stockholder proposing
such business; (c) the class and number of shares of Telebyte Delaware which are
beneficially owned by such stockholder; and (d) any material interest of such
stockholder in such business. No business proposed by a stockholder shall be
conducted at an annual meeting except in accordance with these procedures. These
requirements are separate from and in addition to the requirements a stockholder
must meet to have a proposal included in the Company's Proxy Statement.
2. Stockholder Nominees. In order for persons nominated to the Board of
Directors, other than those persons nominated by or at the direction of the
Board of Directors, to be qualified to serve on the Board of Directors, such
nomination must be made pursuant to timely notice in writing to the Secretary of
Telebyte Delaware. To be timely, a stockholder's notice must be received at the
principal executive offices of Telebyte Delaware not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that, in the event that
less than 70 days' notice of the date of the meeting is given to stockholders
and public disclosure of the meeting date, pursuant to a press release, is
either not made or is made less than 70 days prior to the meeting date, then
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the earlier of (a) the day on which
such notice of the date of the meeting was mailed to stockholders or (b) the day
on which such public disclosure was made. The stockholder filing the notice of
nomination must describe various matters, including such information as (a) the
name, age, business and residence addresses, occupation or employment and shares
held by the nominee; (b) any other information relating to such nominee required
to be disclosed in a Proxy Statement; and (c) the name, address and shares held
by the stockholder.
Any notice given pursuant to the foregoing requirements shall be required
to be sent to the Secretary of the Company at 270 Pulaski Road, Greenlawn, New
York 11740. The foregoing is only a summary of the contemplated provisions of
the By-Laws of Telebyte Delaware that relate to stockholder proposals and
stockholder nominations for director. Any stockholder desiring a copy of such
By-Laws will be furnished one without charge upon receipt by the Company of a
written request therefor.
OTHER BUSINESS
While the accompanying Notice of Annual Meeting of Stockholders provides
for the transaction of such other business as may properly come before the
Meeting, the Company has no knowledge of any matters to be presented at the
Meeting other than those listed as Proposals 1, 2, 3, 4 and 5 in the notice.
However, the enclosed Proxy gives discretionary authority in the event that any
other matters should be presented.
FORM 10-KSB
24
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998, as filed with the Securities and Exchange Commission
(excluding exhibits), has been furnished with this Proxy Statement to each
stockholder entitled to vote at the meeting.
By Order of the Board of Directors
Kenneth S. Schneider, Ph.D
Chairman of the Board and
Chief Executive Officer
Greenlawn, New York
May 25, 1999
25
EXHIBIT A
AGREEMENT AND PLAN OF
MERGER (the "Agreement"),
dated as of May ___, 1999,
by and between Telebyte
Technology, Inc., a Nevada
corporation ("Telebyte
Nevada"), and Telebyte
Technology, Inc, a Delaware
corporation ("Telebyte
Delaware").
Telebyte Nevada is a corporation duly organized and existing
under the laws of the State of Nevada and has an authorized capitalization of
9,100,000 shares, consisting of 9,000,000 shares of Common Stock, par value $.01
per share and 100,000 shares of Preferred Stock, par value $.01 per share. The
address of its principal office is 270 Pulaski Road, Greenlawn, New York 11740.
Telebyte Delaware is a corporation duly organized and existing
under the laws of the State of Delaware and has an authorized capitalization of
9,100,000 shares, consisting of 9,000,000 shares of Common Stock, par value $.01
per share, and 100,000 shares of Preferred Stock, par value $.01 per share, 100
shares of the Common Stock of which are outstanding and are held by Telebyte
Nevada. The address of its principal office is 270 Pulaski Road, Greenlawn, New
York 11740.
The respective Boards of Directors of Telebyte Nevada and
Telebyte Delaware have determined that, for the purpose of effecting the
reincorporation of Telebyte Nevada in the State of Delaware, it is advisable and
to the advantage of such two corporations that Telebyte Nevada merge with and
into Telebyte Delaware upon the terms and conditions herein provided.
The respective Boards of Directors of Telebyte Delaware and
Telebyte Nevada have approved this Agreement and the Boards of Directors of
Telebyte Delaware and Telebyte Nevada have directed that this Agreement be
submitted to a vote of their stockholders.
NOW THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Telebyte Delaware and Telebyte Nevada, subject to the terms
and conditions hereinafter set forth, hereby agree as follows:
I
MERGER
1.1 Merger. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law (the "Delaware GCL") and Chapters 78 and 92A of
the Nevada Revised Statutes (hereinafter, collectively the "Nevada Code"),
Telebyte Nevada shall be merged with and into Telebyte Delaware (the "Merger").
Telebyte Delaware shall be and is hereinafter sometimes referred to as the
"Surviving Corporation." Telebyte Delaware and Telebyte Nevada are sometimes
hereinafter referred to as the "Constituent Corporations."
1
1.2 Filing and Effectiveness. The Merger shall become effective (the
"Effective Date") when the following actions shall have been completed:
(a) The Agreement and the Merger shall have been adopted and
approved by the stockholders of each Constituent Corporation in
accordance with the requirements of the Delaware GCL and the Nevada
Code;
(b) An executed counterpart of the Agreement, and/or any other
certificates required by the Delaware GCL, shall have been filed with
the Secretary of State of the State of Delaware in accordance with the
applicable laws of such State; and
(c) Articles of Merger, in the form required by the Nevada
Code, shall have been filed with the Secretary of State of the State of
Nevada in accordance with the applicable laws of such State.
1.3 Certificate of Incorporation; Change of Name. The Certificate of
Incorporation of Telebyte Delaware as in effect on the effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation, except that, upon the Effective
Date, Article I thereof shall be amended to read as follows: "The name of the
corporation is Telebyte, Inc."
1.4 By-laws. The By-laws of Telebyte Delaware as in effect on the
Effective Date shall continue in full force and effect as the By-laws of the
Surviving Corporation.
1.5 Directors and Officers. The directors and officers of Telebyte
Delaware in office immediately prior to the Effective Date shall continue in
office as the directors and officers of the Surviving Corporation until their
successors shall have been elected and shall qualify or until otherwise provided
by law, the Certificate of Incorporation of the Surviving Corporation and the
By-laws of the Surviving Corporation.
1.6 Effect of Merger. Upon the Effective Date, the separate existence
of Telebyte Nevada shall cease and Telebyte Delaware, as the Surviving
Corporation (i) shall continue to possess all of its rights and property as
constituted immediately prior to the Effective Date and shall succeed, without
other transfer, to all of the rights and property of Telebyte Nevada, and (ii)
shall continue to be subject to all of its debts and liabilities as constituted
immediately prior to the Effective Date and shall succeed, without other
transfer, to all of the debts and liabilities of Telebyte Nevada in the same
manner as if Telebyte Delaware had itself incurred them, pursuant to the
Delaware GCL and Nevada Code.
2
II
MANNER OF CONVERSION OF STOCK
2.1 Telebyte Nevada Capital Stock. The Shares of Common Stock of
Telebyte Nevada issued and outstanding on the Effective Date shall, by virtue of
the Merger and without any action on the part of either the holders of such
shares or the Surviving Corporation, be converted into fully paid and
nonassessable shares of Common Stock, par value $.01 per share, of the Surviving
Corporation on the basis of one share of Common Stock of the Surviving
Corporation for each one share of Common Stock of Telebyte Nevada.
2.2 Telebyte Delaware Capital Stock. Any then outstanding shares of
Common Stock of Telebyte Delaware which are owned by Telebyte Nevada immediately
prior to the Merger shall be cancelled at the Effective Date.
III
MISCELLANEOUS
3.1 Covenants of Telebyte Delaware. Telebyte Delaware covenants and
agrees that it will, on or before the Effective Date, qualify to do business as
a foreign corporation in the State of New York and in connection therewith
irrevocably appoint an agent for service of process as required under the
applicable law of New York.
3.2 Abandonment. At any time before the Effective Date, the Agreement
may be terminated and the Merger may be abandoned for any reason whatsoever by
the Board of Directors of either Telebyte Nevada or Telebyte Delaware, or both,
notwithstanding approval of the Agreement by the shareholders of Telebyte Nevada
or Telebyte Delaware, or both.
3.3 Registered Office. The registered office of the Surviving
Corporation in the State of Delaware is located at 15 East North Street, Dover,
Delaware, and United Corporate Services, Inc. is the registered agent of the
Surviving Corporation at such address.
3.4 Agreement. Executed copies of the Agreement will be on file at the
principal place of business of the Surviving Corporation at 270 Pulaski Road,
Greenlawn, New York 11740, and copies thereof will be furnished to any
stockholder of each Constituent Corporation upon request and without cost.
3.5 Governing Law. The Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware, and, so far as applicable, the merger provisions of the
Nevada Code.
3
3.6 Counterparts. In order to facilitate the filing and recording of
the Agreement, it may be executed in any number of counterparts, each of which
shall be deemed to be an original.
IN WITNESS WHEREOF, this Agreement, having first been approved by the
Boards of Directors of Telebyte Delaware and Telebyte Nevada, is hereby executed
on behalf of each of such corporations by their respective officers thereunto
duly authorized.
TELEBYTE TECHNOLOGY, INC.
a Nevada corporation
By /s/ Michael Breneisen
Michael Breneisen
President
ATTEST:
/s/ Dr. Kenneth S. Schneider
Dr. Kenneth S. Schneider
Secretary
TELEBYTE TECHNOLOGY, INC.
a Delaware corporation
By /s/ Michael Breneisen
Michael Breneisen
President
ATTEST:
/s/ Dr. Kenneth S. Schneider
Dr. Kenneth S. Schneider
Secretary
4
EXHIBIT B
NEVADA REVISED STATUTES (NRS)
RIGHTS OF DISSENTING OWNERS
92A.300. Definitions. As used in NRS 92A.300 to 92A.500, inclusive, unless the
context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
92A.305. "Beneficial stockholder" defined. "Beneficial stockholder" means a
person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
92A.310. "Corporate action" defined. "Corporate action" means the action of a
domestic corporation.
92A.315. "Dissenter" defined. "Dissenter" means a stockholder who is entitled to
dissent from a domestic corporation's action under NRS 92A.380 and who exercises
that right when and in the manner required by NRS 92A.410 to 92A.480, inclusive.
92A.320. "Fair value" defined. "Fair value," with respect to a dissenter's
shares, means the value of the shares immediately, before the effectuation of
the corporate action to which he objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would be
inequitable.
92A.325. "Stockholder" defined. "Stockholder" means a stockholder of record or a
beneficial stockholder of a domestic corporation.
92A.330. "Stockholder of record" defined. "Stockholder of record" means the
person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner or shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335. "Subject corporation" defined. "Subject corporation" means the domestic
corporation which is the issuer of the shares held by a dissenter before the
corporate action creating the dissenter's rights becomes effective or the
surviving or acquiring entity of that issuer after the corporate action becomes
effective.
92A.340. Computation of interest. Interest payable pursuant to NRS 92A.300 to
92A.500, inclusive, must be computed from the effective date of the action until
the date of payment, at the average rate currently paid by the entity on its
principal bank loans or, if it has no bank loans, at a rate that is fair and
equitable under all of the circumstances.
92A.350. Rights of dissenting partner of domestic limited partnership. A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the
domestic limited partnership is a constituent entity.
92A.360. Rights of dissenting member of domestic limited-liability company. The
articles of organization or operating agreement of a domestic limited-liability
company or, unless otherwise provided in the articles of organization or
operating agreement, an agreement of merger or exchange, may, provide that
contractual rights with respect to the interest of a dissenting member are
available in connection with any merger or exchange in which the domestic
limited-liability company is a constituent entity.
92A.370. Rights of dissenting member of domestic nonprofit corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or
bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
chapter 704 of NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to subsection
1.
92A.380. Right of stockholder to dissent from certain corporate actions and to
obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, a
stockholder is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic
corporation is a party:
(1) If approval by the stockholders is required for the
merger by NRS 92A.120 to 92A.160, inclusive, or the articles of
incorporation and he is entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is
merged with its parent under NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's interests
will be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders
to the event that the articles of incorporation, bylaws or a resolution of
the board of directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
92A.390. Limitations on right of dissent: Stockholders of certain classes or
series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the
shares provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu
of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the
plan of merger or exchange, were either listed on a national
securities exchange, included in the national market system by
the National Association of Securities Dealers, Inc., or held of
record by a least 2,000 holders of owner's interests of record;
or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of
Paragraph (b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action of
the stockholders of the surviving domestic corporation under NRS 92A.130.
92A.400. Limitations on right of dissent: Assertion as to portions only to
shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his other
shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:
(a) He submits to the subject corporation the written consent
of the stockholder of record to the dissent not later than the time the
beneficial stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.
92A.410. Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights if taken without
a vote of the stockholders, the domestic corporation shall notify in writing all
stockholders entitled to assert dissenters' rights that the action was taken and
send them the dissenter's notice described in NRS 92A.430.
92A.420. Prerequisite to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote
is taken, written notice of his intent to demand payment for his shares if the
proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1
is not entitled to payment for his shares under this chapter.
92A.430. Dissenter's notice: Delivery to stockholders entitled to assert rights;
contents.
1. If a proposed corporate action creating dissenters' rights is authorized
at a
stockholders' meeting, the subject corporation shall deliver a written
dissenter's notice to all stockholders who satisfied the requirements to assert
those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand
for payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter's
rights certify whether or not he acquired beneficial ownership of the
shares before that date;
(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than 60 days
after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500 inclusive.
92A.440. Demand for payment and deposit of certificates; retention of rights of
stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenter's
notice for this certification; and
(c) Deposit his certificates, if any, in accordance with the
terms of the notice.
2. The stockholder who demands payment and deposits his certificates,
if any, retains all other rights of a stockholder until those rights are
canceled or modified by the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
92A.450. Uncertificated shares: Authority to restrict transfer after demand for
payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460. Payment for shares: General requirements.
1.1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its
registered office in this state, of the county where the dissenter
resides or has its registered office. The court shall dispose of the
complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment,
a statement of income for that year, a statement of changes in the
stockholders' equity for that year and the latest available interim
financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair
value of the shares:
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under
NRS 92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470. Payment for shares: Shares acquired on or after date of dissenter's
notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the
proposed action, it shall estimate the fair value of the shares, plus accrued
interest, and shall offer to pay this amount to each dissenter who agrees to
accept it in full satisfaction of his demand. The subject corporation shall send
with its offer a statement of its estimate of the fair value of the shares, an
explanation of how the interest was calculated, and a statement of the
dissenters' right to demand payment pursuant to NRS 92A.480.
92A.480. Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
92A.490. Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:
(a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the subject
corporation; or
(b) For the fair value, plus accrued interest, of his
after-acquired shares for which the subject corporation elected to withhold
payment pursuant to NRS 92A.470.
92A.500. Legal proceeding to determine fair value: Assessment of costs and fees.
1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all
dissenters if the court finds the subject corporation did not
substantially comply with the requirements of NRS 92A.300 to 92A 500.
inclusive; or
(b) Against either the subject corporation or a dissenter in
favor of any other party, if the court finds that the party against
whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by NRS
92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the subject corporation,
the court may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefitted.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
TELEBYTE TECHNOLOGY, INC.
270 Pulaski Road
Greenlawn, New York 11740
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Dr. Kenneth Schneider and Michael
Breneisen as Proxies, each with the power to appoint his substitute, and hereby
authorizes them, and each of them, to represent and vote, as designated below,
all the shares of Common Stock of Telebyte Technology, Inc. held of record by
the undersigned at the close of business on May 18, 1999, at the Annual Meeting
of Stockholders to be held on June 25, 1999 or any adjournment thereof.
1. Election of Directors:
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the contrary) for all nominees listed below
(Instruction: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list below.)
Kenneth Schneider Michael Breneisen Jamil Sopher
2. Proposal to ratify the adoption of the Company's 1999 Stock Option Plan.
FOR ____ AGAINST ____ ABSTAIN ____
3. Proposal to amend the Company's Certificate of Incorporation to change the
name of the Company to "Telebyte, Inc."
FOR ____ AGAINST ____ ABSTAIN ____
4. Proposal to change the state of incorporation of the Company from Nevada to
Delaware by means of a merger of the Company into its wholly-owned Delaware
subsidiary.
FOR ____ AGAINST ____ ABSTAIN ____
5. Proposal to ratify the appointment of Grant Thornton, LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999.
FOR ____ AGAINST ____ ABSTAIN ____
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the election of Directors and FOR Proposals 2, 3, 4 and 5.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Please sign exactly as
name appears below. When
shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
the President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
Dated:_______________, 1999
Signature
Signature if held jointly