SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Filed by the Registranto | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o Preliminary Proxy Statement | o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
TELECOMMUNICATION SYSTEMS, INC.
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o 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:
o | Fee paid previously with preliminary materials. | |
o | 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:
![(TELECOMMUNICATION SYSTEMS, INC. LOGO)](https://capedge.com/proxy/DEF 14A/0000950133-05-001825/w08323tcsl6.gif)
275 West Street | |
Annapolis, Maryland 21401 | |
May 2, 2005 |
Sincerely, | |
![]() | |
Maurice B. Tosé | |
Chairman of the Board | |
Chief Executive Officer and President |
1. | To elect two directors to hold office until the Annual Meeting of Stockholders in 2008, and until their respective successors are duly elected and qualify(the Board of Directors recommends a vote FOR the election of the nominated directors). | |
2. | To transact such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. |
By Order of the Board of Directors | |
![]() | |
Bruce A. White | |
Secretary | |
Annapolis, Maryland | |
May 2, 2004 |
-2-
-3-
-4-
Nominating Committee |
Nominating Process |
-5-
• | in the case of an annual meeting, not more than 120 days and not less than 90 days prior to the earliest of (i) such annual meeting, (ii) the first anniversary of the mailing date of the notice of the preceding year’s annual meeting and (iii) the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s annual meeting, notice by the stockholder must be so delivered not earlier than the 120th day prior to the annual meeting and not later than the earlier of the close of business on the 90th day prior to the annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made; and | |
• | in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the earlier of the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public announcement of the date of the special meeting was made, whichever first occurs. |
• | as to each person whom the stockholder proposes to nominate for election as a director, all information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; and | |
• | as to the stockholder giving the notice (i) the name and address of such stockholder as they appear on the Company ’s books and of the beneficial owner, if any, on whose behalf the nomination is made, (ii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such stockholder and such beneficial owner, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A of |
-6-
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. |
Name | Age | Position | ||||
Clyde A. Heintzelman | 66 | Director | ||||
Richard A. Kozak | 59 | Director |
-7-
-8-
Percentage of Shares | ||||||||||||||||
Shares Beneficially Owned | Beneficially Owned | |||||||||||||||
Name and Address of | ||||||||||||||||
Beneficial Owner(1) | A Shares | B Shares(3) | A Shares | B Shares | ||||||||||||
Directors and executive officers: | ||||||||||||||||
Maurice B. Tosé(2) | 1,346,706 | 8,222,801 | 4.0 | % | 100 | % | ||||||||||
Richard A. Young(4) | 642,746 | — | 1.9 | % | — | |||||||||||
Thomas M. Brandt, Jr.(5) | 573,827 | — | 1.7 | % | — | |||||||||||
Drew A. Morin(6) | 890,515 | — | 2.6 | % | — | |||||||||||
Timothy J. Lorello(7) | 593,912 | — | 1.7 | % | — | |||||||||||
Kevin M. Webb(8) | 298,887 | — | * | — | ||||||||||||
Clyde A. Heintzelman(9) | 75,317 | — | * | — | ||||||||||||
Richard A. Kozak(10) | 75,733 | — | * | — | ||||||||||||
Weldon H. Latham(11) | 78,733 | — | * | — | ||||||||||||
Byron F. Marchant(12) | 58,733 | — | * | — | ||||||||||||
All directors and executive officers as a group (10 persons)(13) | 4,635,109 | 8,222,801 | 13.9 | % | 100 | % | ||||||||||
Five percent holders: | ||||||||||||||||
Riverview Group LLC (14) | 3,809,894 | — | 11.4 | % | — | |||||||||||
033 Asset Management LLC (15) | 2,752,185 | — | 8.2 | % | — | |||||||||||
Diker Management, LLC | 2,040,033 | 6.1 | % | — |
* | Less than 1%. |
(1) | Except as set forth herein, the business address of the named beneficial owner is c/o TeleCommunication Systems, Inc., 275 West Street, Annapolis, Maryland 21401. | |
(2) | Includes 667,218 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 69,498 shares of restricted Class A Common Stock. Under the rules of the SEC, Mr. Tosé is deemed to beneficially own 223,995 shares of Class A Common Stock owned by Teresa M.S. Layden, Mr. Tosé’s wife, 173,995 shares of Class A Common Stock held in a trust for the benefit of Mr. Tosé’s and Ms. Layden’s extended family, 215,753 shares of Class B Common Stock held in a trust for the benefit of Mr. Tosé’s and Ms. Layden’s children, and 25,142 shares of Class B Common Stock held by Mr. Tosé’s minor children. Mr. Tosé disclaims beneficial ownership of all of these shares. | |
(3) | The holders of Class B Common Stock are entitled to three votes per share on all matters submitted to a vote of the stockholders. Each share of our Class B Common Stock is convertible at any time, at the option of the holder, into one share of our Class A Common Stock. | |
(4) | Includes 409,272 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 64,750 shares of restricted Class A Common |
-9-
Stock. Under the rules of the SEC, Mr. Young is deemed to beneficially own 30,000 shares of Class A Common Stock held in a trust for the benefit of Mr. Young’s wife and children. Mr. Young disclaims beneficial ownership of all of these shares. | ||
(5) | Includes 395,721 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 36,737 shares of restricted Class A Common Stock. Under the rules of the SEC, Mr. Brandt is deemed to beneficially own 51,370 shares of Class A Common Stock held in a trust for the benefit of Mr. Brandt’s wife. Mr. Brandt disclaims beneficial ownership of all the shares in the trust. | |
(6) | Includes 221,714 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 28,628 shares of restricted Class A Common Stock. Under the rules of the SEC, Mr. Morin is deemed to beneficially own 245,354 shares of Class A Common Stock held in a trust for the benefit of Mr. Morin’s wife and child. Mr. Morin disclaims beneficial ownership of all of these shares. | |
(7) | Includes 202,636 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 30,000 shares of restricted Class A Common Stock. Under the rules of the SEC, Mr. Lorello is deemed to beneficially own 236,849 shares of Class A Common Stock held in a trust for the benefit of Mr. Lorello’s wife and children. Mr. Lorello disclaims beneficial ownership of all these shares. | |
(8) | Includes 233,386 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 18,227 shares of restricted Class A Common Stock. | |
(9) | Consists of 68,733 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005. |
(10) | Includes 22,500 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005. |
(11) | Includes 53,322 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005. |
(12) | Includes 58,733 shares of Class A Common Stock issuable upon the exercise of stock options exercised within 60 days of April 30, 2005. |
(13) | Includes an aggregate of 2,333,235 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 30, 2005 and 247,840 shares of restricted Class A Common Stock. |
(14) | The address of each of Riverview Group LLC, Millenco, LP, Millennium Holding Group, L.P., Millennium Management, LLC and Israel A. Englander is c/o Millennium Management, LLC, 666 Fifth Avenue, New York, NY 10103. Note: The sole member of Riverview is Millennium Holding Group, L.P., a Delaware limited partnership (“Millennium Holdings”). Millennium Management, LLC, a Delaware limited liability company (“Millennium Management”), is the general partner of Millennium Holdings and consequently has voting control and investment discretion over securities owned by Millennium Holdings and by Riverview, and of Millenco, L.P. (“Millenco”). Israel A. Englander (“Mr. Englander”) is the managing member of Millennium Management. As a result, Mr. Englander may be considered the beneficial owner of any shares deemed to be beneficially owned by Millennium Management. Each of Millennium Holdings, Millennium Management and Mr. Englander disclaims any beneficial ownership of the shares owned by Riverview. The information set forth in this footnote (14) is based on a review of the Schedule 13G filed with the SEC on February 11,2005 by the Riverview Group LLC. |
(15) | According to a Schedule 13D filed with the SEC on February 4, 2005, the address of 033 Asset Management, LLC is 125 High Street, Suite 1405, Boston, Massachusetts 02110. |
(16) | The address of each of Diker GP, LLC, Diker Management, LLC, Charles M. Diker, and Mark N. Diker is 745 Fifth Avenue, Suite 1409, New York, NY 10151. Note: As the sole general partner of the Diker Funds, Diker GP has the power to vote and dispose of the shares of the Common |
-10-
Stock owned by the Diker Funds and, accordingly, may be deemed the beneficial owner of such shares. Pursuant to investment advisory agreements, Diker Management serves as the investment manager of the Diker Funds. Accordingly, Diker Management may be deemed the beneficial owner of shares held by the Diker Funds. Charles M. Diker and Mark N. Diker are the managing members of each of Diker GP and Diker Management, and in that capacity direct their operations. Therefore, Charles M. Diker and Mark N. Diker may be beneficial owners of shares beneficially owned by Diker GP and Diker Management. The Reporting Persons disclaim all beneficial ownership, however, as affiliates of a Registered Investment Adviser, and in any case disclaim beneficial ownership except to the extent of their pecuniary interest in the shares. The information set forth in this footnote (16) is based on a review of the Schedule 13G filed with the SEC on April 20, 2005 by Diker Management LLC. |
Audit Committee |
-11-
Report of the Audit Committee |
-12-
AUDIT COMMITTEE | |
Richard A. Kozak, Chairman | |
Clyde A. Heintzelman | |
Byron F. Marchant |
Compensation Committee |
Report of the Compensation Committee |
-13-
-14-
COMPENSATION COMMITTEE | |
Clyde A. Heintzelman (Chairman) | |
�� | Weldon H. Latham |
-15-
Long-Term | |||||||||||||||||||||||||||||
Compensation(2) | |||||||||||||||||||||||||||||
Annual Compensation(1) | |||||||||||||||||||||||||||||
Securities | Restricted | ||||||||||||||||||||||||||||
Base | Underlying | Share | All Other | ||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus(2) | Other(3) | Options | Grants | Compensation(4) | ||||||||||||||||||||||
Maurice B. Tosé | 2004 | $ | 403,000 | — | $ | 27,431 | — | — | $ | 11,280 | |||||||||||||||||||
Chief Executive Officer, | 2003 | 377,326 | $ | 188,663 | 25,972 | 436,404 | — | 11,656 | |||||||||||||||||||||
President, and Chairman of the Board | 2002 | 369,005 | 160,000 | 28,399 | 135,000 | 318,000 | 13,445 | ||||||||||||||||||||||
Richard A. Young | 2004 | $ | 285,000 | — | $ | 21,934 | — | — | $ | 11,378 | |||||||||||||||||||
Executive Vice President, | 2003 | 258,251 | $ | 142,000 | 17,822 | 279,013 | — | 11,754 | |||||||||||||||||||||
Chief Operating Officer | 2002 | 251,922 | 110,000 | 21,807 | 75,000 | 194,250 | 12,138 | ||||||||||||||||||||||
Thomas M. Brandt, Jr. | 2004 | $ | 235,125 | — | $ | 13,565 | — | — | $ | 11,327 | |||||||||||||||||||
Senior Vice President and | 2003 | 215,051 | $ | 90,000 | 12,981 | 157,392 | — | 11,703 | |||||||||||||||||||||
Chief Financial Officer | 2002 | 205,101 | 100,000 | 11,833 | 63,000 | 135,000 | 13,713 | ||||||||||||||||||||||
Drew A. Morin | 2004 | $ | 235,125 | — | $ | 8,487 | — | — | $ | 11,255 | |||||||||||||||||||
Senior Vice President and | 2003 | 220,101 | $ | 90,000 | 11,800 | 157,392 | — | 11,631 | |||||||||||||||||||||
Chief Technical Officer | 2002 | 215,201 | 76,980 | 15,217 | 63,000 | 135,000 | 12,141 | ||||||||||||||||||||||
Timothy J. Lorello | 2004 | $ | 220,500 | — | $ | 10,164 | — | — | $ | 11,280 | |||||||||||||||||||
Senior Vice President — | 2003 | 208,052 | $ | 45,000 | 5,553 | 100,158 | — | 11,656 | |||||||||||||||||||||
Chief Marketing Officer | 2002 | 205,104 | 50,055 | 16,763 | 63,000 | 90,000 | 10,416 |
(1) | Includes perquisites and other personal benefits, the aggregate annual amount of which for each named executive officer was less than the lesser of $50,000 or 10% of the total salary and bonus reported. |
(2) | Bonuses and long-term compensation are reported in the year earned, even if actually paid/granted in a subsequent year. Long-term compensation amounts, if any, for fiscal year 2004 performance have not yet been determined. |
(3) | Represents payments made to each of these executive officers in lieu of accrued vacation. |
(4) | Represent matching contributions made by us under our 401(k) plan and health and life insurance premiums paid by us. |
-16-
Number of | ||||||||||||||||||||||||
Number of | Securities Underlying | Value of Unexercised In- | ||||||||||||||||||||||
Shares | Unexercised Options | The-Money Options at | ||||||||||||||||||||||
Acquired | at December 31, 2004 | December 31, 2004(2) | ||||||||||||||||||||||
on | Value | |||||||||||||||||||||||
Name | Exercise | Realized(1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Maurice B. Tosé | — | $ | — | 408,500 | 617,904 | $ | 113,965 | $ | 50,385 | |||||||||||||||
Richard A. Young | — | — | 253,768 | 379,013 | 155,190 | 27,750 | ||||||||||||||||||
Thomas M. Brandt, Jr. | 10,000 | 64,900 | 303,087 | 216,312 | 476,777 | 16,016 | ||||||||||||||||||
Drew A. Morin | — | — | 129,080 | 216,312 | 35,354 | 16,016 | ||||||||||||||||||
Timothy J. Lorello | — | — | 129,080 | 159,078 | 35,354 | 16,016 |
(1) | Amounts disclosed in this column do not reflect amounts actually received by the named officers but are calculated based on the difference between the fair market value of our Class A Common Stock on the date of exercise and the exercise price of the options. The named officers will receive cash only if and when they sell the shares of Class A Common Stock issued upon exercise of the options, and the amount of cash received by such individuals is dependent on the price of our Class A Common Stock at the time of such sale. |
(2) | Value is based on the difference between the option exercise price and the fair market value at December 31, 2004 (based upon a last reported sale price of $3.34 per share as quoted on the Nasdaq National Market on December 31, 2004) multiplied by the number of shares underlying the option. |
Number of securities | ||||||||||||
remaining available | ||||||||||||
for future issuance | ||||||||||||
Number of securities | Weighted average | under equity | ||||||||||
to be issued upon | exercise price of | compensation plans | ||||||||||
exercise of | outstanding | (excluding securities | ||||||||||
outstanding options, | options, warrants | reflected in | ||||||||||
warrants and rights | and rights | Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders(1) | 8,650,374 | $ | 4.25 | 6,584,745 | ||||||||
Equity compensation plans not approved by security holders | None | N/A | None | |||||||||
Total | 8,650,374 | $ | 4.25 | 6,584,745 | ||||||||
(1) | As a result of the merger of XYPOINT Corporation (“XYPOINT” ) with the Company effective January 15, 2001 and the merger of ReachNet, Inc. (“ReachNet” ) with the Company effective February 14, 2001, the Company assumed the options issued under the XYPOINT 1995, 1997 and 2000 Stock Option Plans and the ReachNet 2000 Stock Incentive Plan. As of December 31, 2004, 129,781 shares of our Class A Common Stock were reserved for future issuance upon the |
-17-
exercise of the outstanding stock options assumed in the mergers at a weighted average exercise price of $6.09. No further options may be granted under the XYPOINT 1995, 1997 and 2000 Stock Option Plans or the ReachNet 2000 Stock Incentive Plan. |
-18-
![(LINE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950133-05-001825/w08323w0832301.gif)
-19-
-20-
ANNUAL MEETING OF STOCKHOLDERS OF
TELECOMMUNCATION SYSTEMS, INC.
June 9, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach and mail in the envelope provided.â
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREý
(1) Election of Directors.
NOMINEES | ||||
o FOR ALL NOMINEES | ¡ | Clyde A. Heintzelmam | ||
¡ | Richard A. Kozak | |||
oWITHHOLD AUTHORITY FOR ALL NOMINEES | | |||
oFOR ALL EXCEPT (See instructions below) |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark“FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here: l |
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.o
FOR AGAINST ABSTAIN | |||||
(2) | TO ACT UPON SUCH OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. | o | o | o |
The undersigned hereby acknowledges receipt of notice of said meeting and the related Proxy Statement.
IF NO CHOICE IS INDICATED ABOVE, THE PROXIES WILL VOTE “FOR” THE TWO DIRECTOR NOMINEES.
PLEASE MARK, SIGN AND RETURN THE PROXY PROMPTLY, USING THE ENCLOSED POSTAGE PAID ENVELOPE.
Signature of Stockholder __________________ Date: ________________ Signature of Stockholder____________________ Date: _________________
Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
TELECOMMUNICATION SYSTEMS, INC.
Annapolis, Maryland 21401
ANNUAL MEETING JUNE 9, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas M. Brandt, Jr. and Bruce A. White, and each of them, proxies (and if the undersigned is a proxy, as substitute proxies) each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all of the shares of Class A Common Stock and Class B Common Stock of TeleCommunication Systems, Inc, which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on Thursday, June 9, 2005, at 10:00 a.m. local time, at the O’Callaghan Hotel Annapolis, 174 West Street, Annapolis, MD 21401 and any adjournments or postponements thereof.
(Continued and to be signed on the reverse side)