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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Schedule 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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Telesciences, Inc.
(Name of Subject Company)
Telesciences, Inc.
(Name of Person(s) Filing Statement)
Common Stock, par value $.04 per share
(Title of Class of Securities)
87951X202
(CUSIP Number of Class of Securities)
Andrew P. Maunder
President and Chief Executive Officer
4000 Midlantic Drive
Mount Laurel, New Jersey 08054-5476
Telephone: 856-866-1000
Facsimile: 856-866-2439
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person(s) filing statement)
With a Copy to:
Jason M. Shargel, Esq.
Wolf, Block, Schorr and Solis-Cohen LLP
1650 Arch Street
22nd Floor
Philadelphia, PA 19103-2097
Telephone: 215-977-2000
Facsimile: 215-977-2740
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Item 1. Security and Subject Company.
The name of the subject company is Telesciences, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive
offices is 4000 Midlantic Drive, Mount Laurel, New Jersey 08054-5476. The
title of the class of equity securities to which this statement relates is the
common stock, par value $.04 per share, of the Company (the "Common Stock").
Item 2. Tender Offer of the Purchaser.
This statement relates to a tender offer by EDB 4tel Acquisition Corp., a
Delaware corporation ("Purchaser") and a wholly owned subsidiary of EDB
Business Partner ASA, a Norwegian limited company ("Parent"), disclosed in a
Tender Offer Statement on Schedule 14D-1, dated October 25, 1999 (the
"Schedule 14D-1"), to purchase all outstanding shares of Common Stock (the
"Shares"), at a price of $8.79 per Share, net to the seller in cash, without
interest (such price or any higher price that may be paid for each share in
the Offer, the "Offer Price") upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated October 25, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal (which Letter of
Transmittal, together with the Offer to Purchase, constitute the "Offer"). The
Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
October 19, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company, which, among other things, provides for (i) the making of the Offer
by Purchaser, subject to the conditions set forth in the Offer to Purchase and
to the conditions and upon the terms of the Merger Agreement, (ii) the
subsequent merger of Purchaser with and into the Company (the "Merger"), (iii)
the redemption of the Company's Series A Preferred Stock and (iv) the
settlement of the Company's in-the-money stock options for an amount equal to
the difference between the Offer Price and the applicable exercise price times
the number of Shares subject to the applicable options. In the Merger, each
share of Common Stock outstanding at the Effective Time (as defined below)
(other than Shares held in the treasury of the Company or held by Purchaser or
Parent or their subsidiaries, or Shares held by stockholders validly
exercising appraisal rights pursuant to Section 262 of the Delaware General
Corporation Law (the "DGCL")) will, by virtue of the Merger and without any
action by the holder thereof, be converted into the right to receive, without
interest, an amount in cash equal to the Offer Price.
As set forth in the Schedule 14D-1, the principal executive offices of
Purchaser and Parent are located at Ruselokkveien 6, N-0251 Oslo, Norway
(Postal Address: Postboks 6798, St. Olavs Plass, N-0130 Oslo, Norway).
Item 3. Identity and Background.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Certain material contracts, agreements, arrangements and understandings
between the Company or its affiliates and: (1) its executive officers,
directors or affiliates or (2) the Purchaser, its executive officers,
directors or affiliates, are described in the attached Annex II and are
incorporated herein by reference or are set forth below.
Annex II is being furnished to the Company's stockholders pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14f-1 issued under the Exchange Act in connection
with Purchaser's right (after consummation of the Offer) to designate persons
to be appointed to the Board of Directors of the Company (the "Board") other
than at a meeting of the stockholders of the Company.
Material Contracts Between the Company and its Executive Officers, Directors
and Affiliates
Employment and Related Agreements
Andrew Maunder, Michael Moore, Frances Penfold, and Greg Fegley, executive
officers of the Company, serve in their respective capacities pursuant to
employment agreements. C. Thomas Faulders III, Chairman of the Board, is a
party to a consultant agreement with the Company.
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In 1994, the Company and Mr. Maunder entered into an agreement regarding his
employment with the Company, the principal terms of which were set forth in a
definitive employment agreement executed on February 10, 1995. Pursuant to
this agreement, the Company agreed to employ Mr. Maunder as Chief Executive
Officer and President, subject to the right of the Company to terminate the
employment relationship immediately for cause (as defined) or at any time
without cause upon 12 months prior written notice. Mr. Maunder has the right
to terminate the agreement upon 6 months prior notice to the Company. The
agreement provides that the Company pay Mr. Maunder an annual base salary
which is subject to an annual review, and which, as of April 1999, was
adjusted to $191,937. Mr. Maunder is entitled to participate in an incentive
bonus program pursuant to which cash payments are calculated based upon
performance of the Company and upon individual performance targets and are
subject to a maximum payment of 50% of his annual salary. The agreement also
entitles Mr. Maunder to health and other insurance benefits. As part of his
employment agreement, Mr. Maunder is required not to disclose any proprietary
information at any time and agreed to non-competition and non-interference
covenants that expire 12 months after the termination of his employment. Mr.
Maunder's agreement also contains a covenant restricting him from soliciting
the Company's customers for a period of 6 months after termination of his
employment.
In connection with the Offer and the Merger, the Company and Mr. Maunder
agreed to amend Mr. Maunder's employment agreement to provide for the
following: (i) upon the purchase by Purchaser of at least a majority of the
Shares pursuant to the Offer (the "Completion of the Offer"), Mr. Maunder's
employment with the Company will terminate and Mr. Maunder will be paid
$100,000 in cash on such date and an additional $100,000 in twelve equal
monthly installments commencing 30 days after the Completion of the Offer,
(ii) Mr. Maunder will be entitled to receive health and other insurance
benefits provided to the Company's executive officers for a period of 12
months after the Completion of the Offer, and (iii) the period of certain non-
competition and non-solicitation covenants contained in Mr. Maunder's current
employment agreement will be lengthened from 6 months to 12 months.
In May 1998, the Company and Mr. Moore entered into an agreement regarding
his employment with the Company. Pursuant to this agreement, the Company
agreed to employ Mr. Moore as Vice President, Business Development. In June
1998, Mr. Moore assumed the position of Executive Vice President of the
Company. Mr. Moore's employment with the Company is subject to the right of
the Company to terminate the relationship immediately for cause (as defined)
or at any time without cause upon 6 months prior written notice. Mr. Moore has
the right to terminate the agreement upon 3 months written notice to the
Company. The agreement provides that Mr. Moore shall be paid an annual base
salary of $140,000 that is subject to review by the Company on an annual
basis. The agreement also entitles Mr. Moore to incentive compensation, health
and other insurance benefits. Under the terms of the agreement, Mr. Moore
received, pursuant to the Company's Stock Incentive Plan (the "Stock Incentive
Plan"), options exercisable for ten years from the date of the grant, to
purchase 14,250 Shares at a price of $16.00 per Share (after giving effect to
the one-for-four reverse stock split of the Common Stock effective October 15,
1999). The options vest in three equal installments, at six months, one year
and two years from the date of the grant. If Mr. Moore's employment with the
Company is terminated, other than as a result of his breach of the employment
agreement, the options will vest in full and be exercisable for 90 days
following the termination. Pursuant to the Merger Agreement, all of these
options will be terminated at the Effective Time without any payment in
respect thereof. As part of the agreement, Mr. Moore is required not to
disclose any proprietary information at any time and agreed to non-disclosure,
non-interference, non-solicitation and non-competition covenants, which expire
24 months after termination of his employment.
In May 1998, the Company and Ms. Penfold entered into an agreement regarding
Ms. Penfold's employment with the Company. Pursuant to this agreement, the
Company agreed to employ Ms. Penfold as Director of Special Projects. In
September 1998, Ms. Penfold assumed the position of Vice President, Finance of
the Company. Ms. Penfold's employment with the Company is subject to the right
of the Company to terminate the relationship immediately for cause (as
defined) or at any time without cause upon 3 months prior written notice. Ms.
Penfold has the right to terminate the agreement upon 3 months written notice
to the Company. The agreement provides that Ms. Penfold shall be paid an
annual base salary which is subject to
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an annual review, and which, as of November 1998, was adjusted to $115,000.
The agreement also entitles Ms. Penfold to incentive compensation, health and
other insurance benefits. Under the terms of the agreement, Ms. Penfold
received, pursuant to the Stock Incentive Plan, options exercisable for ten
years from the date of the grant, to purchase 10,000 Shares at a price of
$16.00 per Share (after giving effect to the one-for-four reverse stock split
of the Common Stock effective October 15, 1999). The options vest in three
equal installments, at six months, one year and two years from the date of the
grant. If Ms. Penfold's employment with the Company is terminated, other than
as a result of her breach of the employment agreement, the options will vest
in full and be exercisable for 90 days following any such termination.
Pursuant to the Merger Agreement, all of these options will be terminated at
the Effective Time without any payment in respect thereof. As part of the
agreement, Ms. Penfold is required not to disclose any proprietary information
at any time and agreed to non-disclosure, non-interference, non-solicitation
and non-competition covenants, which expire 6 months after termination of her
employment.
In July 1998, the Company entered into a Consultant Agreement with Mr.
Faulders. Pursuant to the agreement, Mr. Faulders was retained as Chairman of
the Company's Board, subject to the right of the Board to remove Mr. Faulders
from his position as Chairman immediately with cause (as defined) or at any
time without cause upon 3 months prior written notice. Mr. Faulders may
terminate the agreement at any time upon 1 month written notice to the
Company. The Company is not obligated to nominate or cause the election of Mr.
Faulders as a director of the Company. Pursuant to the terms of the agreement,
Mr. Faulders is required to devote such of his business time and attention, as
is agreed from time to time, to the business and affairs of the Company. The
agreement provides that Mr. Faulders shall be paid an annual consultant fee of
$75,000 which was reduced to $37,500 in April 1999 pursuant to a mutual
agreement between Mr. Faulders and the Company. On July 1, 1999 all payments
due under the agreement ceased pursuant to a mutual agreement between Mr.
Faulders and the Company. The agreement further provides that Mr. Faulders is
eligible for participation in the Stock Incentive Plan as approved from time
to time by the Board. As part of the agreement, Mr. Faulders has agreed to
non-disclosure, non-interference, and non-competition covenants, which expire
12 months after the termination of the agreement. The agreement also contains
a covenant restricting Mr. Faulders from soliciting the Company's customers
for a period of 6 months after the termination of the agreement.
In April 1999, the Company and Mr. Fegley entered into an agreement
regarding Mr. Fegley's employment with the Company. Pursuant to this
agreement, the Company agreed to employ Mr. Fegley as Vice President,
Operations Support, subject to the right of the Company to terminate the
relationship immediately for cause or at any time without cause upon 3 months
prior written notice. Mr. Fegley has the right to terminate the agreement upon
3 months written notice to the Company. The agreement provides that Mr. Fegley
shall be paid an annual base salary which is subject to annual review, and
which, as of July 1999, was adjusted to $120,000. The agreement also entitles
Mr. Fegley to incentive compensation, health and other insurance benefits. As
part of the agreement, Mr. Fegley is required not to disclose any proprietary
information at any time and agreed to non-disclosure, non-interference, non-
solicitation and non-competition covenants, which expire 12 months after
termination of his employment.
William Rahe served as Executive Vice President, Engineering and Product
Management of the Company until February 12, 1999. Pursuant to the terms of
his employment agreement with the Company, Mr. Rahe is entitled to receive his
annual compensation for a period of twelve months following his termination
(other than for cause). Accordingly, Mr. Rahe is entitled to receive an annual
salary of $162,000 until February 12, 2000. Upon leaving the Company, Mr. Rahe
executed a Severance Agreement and General Release which generally provides
for (i) the payment of severance payments until February 12, 2000, (ii) the
continuation of Mr. Rahe's health and insurance benefits until February 12,
2000, (iii) the terms of Mr. Rahe's options to be modified so as to expire two
years from the date that his employment with the Company terminates (other
than as a result of disability or death), and (iv) the release and discharge
of the Company and its affiliates, officers, directors, employees, attorneys,
stockholders and agents and their respective successors and assigns (the
"Releasees") from any and all actions, charges, causes of action or claims of
any kind which Mr. Rahe, his heirs, agents, successors or assigns ever had or
in the future may have against the Releasees.
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Agreements with Option Holders
As described below under "The Merger Agreement--Stock Options," pursuant to
the terms of the Merger Agreement, holders of Options (as defined below) are
entitled to receive, where the amount is positive ("in-the-money Options"), a
cash payment from the Company in an amount equal to the product of (i) the
Offer Price minus the exercise price per Share of the in-the-money Option and
(ii) the number of Shares covered by such in-the-money Option. The Company
intends to enter into Option Agreements with its in-the-money Option holders
to confirm that each such Option holder receives the treatment provided for in
the Merger Agreement with respect to such in-the-money Options. The form of
Option Agreement is filed as Exhibit 6 to this Schedule 14D-9. Effective as of
the Effective Time, the Company will terminate those Options with an exercise
price that is greater than the Offer Price.
Agreements With Affiliates
The information set forth in Item 6(a)(2) below relating to the Exchange
Agreement entered into between the Company, Security Services plc, and
Securicor Communications Limited is incorporated herein by reference.
Material Contracts Between the Company and Parent, their Executive Officers,
Directors and Affiliates
Introduction
On October 19, 1999, Parent, Purchaser and the Company entered into the
Merger Agreement, pursuant to which Purchaser has agreed to make the Offer.
The Merger Agreement provides that, at the effective time of the Merger (the
"Effective Time"), Purchaser will be merged with and into the Company, and
each then outstanding Share (other than Shares owned by the Company, any
subsidiary of the Company, Parent, Purchaser, any other subsidiary of Parent
or by stockholders, if any, who are entitled to and who properly exercise
appraisal rights under the DGCL) will be converted into the right to receive
an amount in cash equal to the Offer Price. Each share of common stock of
Purchaser issued and outstanding immediately prior to the Effective Time will
be converted into one share of common stock of the Surviving Corporation (as
defined in the Merger Agreement). The Certificate of Incorporation and Bylaws
of Purchaser, as in effect immediately before the Effective Time, will be the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
If required by applicable law, in order to consummate the Merger, the
Company, acting through its Board, shall, subject to the Board's fiduciary
duties under applicable law, take all necessary action pursuant to its
Certificate of Incorporation and Bylaws to duly call, give notice of, convene
and hold a special meeting (the "Special Meeting") of its stockholders as soon
as practicable following the Completion of the Offer (provided that, if a Form
15 is promptly filed with the Securities and Exchange Commission (the
"Commission") after such completion, the Board shall be entitled to delay
giving notice until the registration of the Shares under the Exchange Act has
been terminated, but not more than 100 days after the Completion of the Offer)
for the purpose of considering and taking action upon the Merger Agreement.
The Company shall also prepare and file with the Commission a proxy statement
in accordance with all applicable requirements of the Exchange Act, if any.
In addition, on October 19, 1999, Parent, Purchaser and certain senior
executives of the Company entered into shareholder agreements (the
"Shareholder Agreements") pursuant to which such executives have agreed to
tender all Shares beneficially owned by them in the Offer.
The following is a summary of certain provisions of the Merger Agreement,
the Shareholder Agreements and the escrow agreement entered into between
Parent, Purchaser, the Company and First Union National Bank (the "Escrow
Agreement"), copies of which are included as exhibits to this Schedule 14D-9
by incorporation by reference to Exhibit 2 to the Company's Current Report on
Form 8-K filed on October 20, 1999 and are incorporated herein by reference.
Such summaries are qualified in their entirety by reference to the text of
such agreements.
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The Merger Agreement
The Offer. The Merger Agreement provides that Purchaser will commence the
Offer and that, upon the terms and subject to the prior satisfaction or waiver
of the conditions of the Offer, Purchaser will purchase all Shares validly
tendered pursuant to the Offer and not withdrawn prior to the expiration date
of the Offer (the "Expiration Date"). The obligation of Purchaser to accept
for payment and pay for Shares tendered is subject to the Minimum Condition,
which is the valid tender and non-withdrawal prior to the Expiration Date of
that number of Shares which when added to any Shares then beneficially owned
by Parent represent at least a majority of the total number of the outstanding
Shares, and to the satisfaction of the other conditions described in Annex A
to the Merger Agreement. The Merger Agreement provides that Purchaser may not,
without the prior written consent of the Company, (i) decrease the Offer Price
with respect to any Shares, (ii) decrease the number of Shares to be purchased
in the Offer, (iii) change the form of consideration payable in the Offer,
(iv) add to or change the conditions to the Offer set forth in Annex A to the
Merger Agreement, (v) waive the Minimum Condition or (vi) make any other
change in the terms or conditions of the Offer; provided that, if the Merger
Agreement shall not have been terminated in accordance with the terms of the
Merger Agreement, if the conditions set forth in Annex A to the Merger
Agreement are not satisfied or, to the extent permitted by the Merger
Agreement, waived by Purchaser as of the date the Offer would otherwise have
expired, then, except to the extent that such conditions are incapable of
being satisfied, Purchaser will extend the Offer from time to time until the
earlier of the consummation of the Offer or the date which is twenty (20)
business days from the initial Expiration Date of the Offer (such date, the
"Final Date"). The Merger Agreement further provides that Purchaser shall,
subject to the terms and conditions of the Offer, accept for payment Shares
validly tendered and not withdrawn prior to the Expiration Date as soon as it
is legally permitted to do so under applicable law; provided, however, that
Purchaser shall be entitled to extend the Offer one or more times beyond the
Final Date for an aggregate period of up to ten (10) business days if on the
Final Date the conditions to the Offer set forth in Annex A to the Merger
Agreement have been satisfied or waived, but there shall not have been
tendered that number of Shares which would equal at least ninety percent (90%)
of the issued and then outstanding Shares. Purchaser is obligated to
consummate the Offer immediately upon reaching such ninety percent (90%)
threshold. The Company has agreed that it will not tender, and will not permit
any of its subsidiaries to tender, any Shares held by it or any such
subsidiary pursuant to the Offer.
Conditions to the Merger. The Merger Agreement provides that the obligations
of Parent, Purchaser and the Company to consummate the Merger are subject to
the satisfaction of certain conditions, including the following:
. the Merger Agreement shall have been adopted by the affirmative vote of
the stockholders of the Company at the Special Meeting by the requisite
vote in accordance with applicable law, if such vote is required by
applicable law;
. all regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof, if
any, shall have expired;
. no statute, rule or regulation shall have been enacted or promulgated by
any governmental authority which prohibits the consummation of the
Merger;
. there shall be no order or injunction of a United States Federal or state
court of competent jurisdiction (each party agreeing to use its
reasonable efforts to have any such order reversed or injunction lifted)
in effect precluding consummation of the Merger; and
. Purchaser shall have purchased the Shares pursuant to the Offer;
provided, however, that this condition shall be deemed satisfied with
respect to Parent and Purchaser if Purchaser's failure to purchase Shares
pursuant to the Offer results from a breach of Parent's or Purchaser's
obligations under the Merger Agreement.
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Board Recommendation. The Company represents in the Merger Agreement that
the Board has (1) determined that the terms of the Offer and the Merger are
advisable, fair to and in the best interests of, the stockholders of the
Company, (2) approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and (3) resolved to recommend
that stockholders of the Company accept the Offer and tender their Shares
pursuant to the Offer. The Company has agreed to file with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 containing such
recommendations, subject to certain conditions.
Termination of the Merger Agreement. The Merger Agreement may be terminated
and the Merger may be abandoned at any time notwithstanding approval thereof
by the stockholders of the Company, but prior to the Effective Time:
(a) by mutual consent of Parent and the Company;
(b) by Parent or Purchaser, if an occurrence or circumstance (except where
Parent's or Purchaser's failure to fulfill any of their respective obligations
under the Merger Agreement is the cause of or resulted in such occurrence or
circumstance or except where there has been a material breach of any
representation or warranty on the part of Parent or Purchaser which has not
been cured) has rendered the conditions set forth in Annex A of the Merger
Agreement incapable of being satisfied, and (i) Purchaser shall have failed to
commence the Offer within the time required by Regulation 14D under the
Exchange Act, (ii) the Offer shall have been terminated or shall have expired
without Purchaser having purchased any Shares pursuant to the Offer or (iii)
Purchaser shall have failed to pay for Shares pursuant to the Offer prior to
the Final Date;
(c) by either Parent or the Company if any court of competent jurisdiction
or other governmental body within the United States shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and non-appealable; provided, however,
that a termination of the Merger Agreement by the Company pursuant to this
paragraph (c) after the Board Transition Date (as defined below) shall require
the affirmative vote of a majority of the Board and a majority of the
Independent Directors (as defined below);
(d) by Parent or Purchaser prior to the purchase of Shares pursuant to the
Offer, if:
(i) Purchaser shall discover that any representation or warranty made by
the Company in the Merger Agreement is untrue at the time such representation
or warranty was made or (except for those representations and warranties made
as of a particular date which need only be true and correct as of such date)
shall not be true and correct as of the date of consummation of the Offer,
except where the failure to be so true and correct would not have a Material
Adverse Effect (as defined in the Merger Agreement), provided that, if any
such failure to be so true and correct is capable of being cured prior to the
Final Date, then Parent and Purchaser may not terminate the Merger Agreement
under this paragraph (d) until the Final Date;
(ii) there shall have been a breach of any covenant or agreement on the
part of the Company under the Merger Agreement resulting in a Material Adverse
Effect which shall not be capable of being cured prior to the Final Date;
(iii) the Board (x) fails to recommend approval and adoption of the Merger
Agreement and the Merger by the stockholders of the Company or withdraws or
amends or modifies in a manner adverse to Parent and Purchaser its
recommendation or approval in respect of the Merger Agreement, the Offer or
the Merger, (y) makes any recommendation with respect to an Alternative
Acquisition (as defined below) other than a recommendation to reject such
Alternative Acquisition or (z) publicly announces its intention to enter into
an Alternative Acquisition; or
(iv) there shall not have been validly tendered and not withdrawn prior to
the expiration of the Offer at least a majority of the then outstanding
Shares, and on or prior to such date a person shall have made a written
proposal to the Company and not withdrawn such proposal for an Alternative
Acquisition;
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(e) by the Company, if:
(i) the Company discovers that any representation or warranty made by
Parent or Purchaser in the Merger Agreement is untrue at the time such
representation or warranty was made or (except for those representations and
warranties made as of a particular date which need only be true and correct as
of such date) shall not be true and correct as of the date of consummation of
the Offer, except where the failure to be so true and correct would not
materially adversely effect (or materially delay) the consummation of the
Offer or the Merger, provided that if any such failure to be so true and
correct is capable of being cured prior to the Final Date, then the Company
may not terminate the Merger Agreement under this paragraph (e) until the
Final Date and unless at such time the matter has not been cured;
(ii) there shall have been a material breach of any covenant or agreement
in the Merger Agreement on the part of Parent or Purchaser which materially
adversely effects (or materially delays) the consummation of the Offer or the
Merger which shall not be capable of being cured prior to the Final Date;
(iii) prior to the acceptance of any Shares pursuant to the Offer and the
Company is in compliance with the non-solicitation provisions described below,
such termination is necessary to allow the Company to enter into a binding
written agreement with respect to a Superior Proposal (as defined below);
provided, however, that a termination of the Merger Agreement by the Company
pursuant to paragraphs (e)(i) or (ii) above after the Board Transition Date
shall require the affirmative vote of a majority of the Board and a majority
of the Independent Directors; or
(f) by the Company, if there shall not have been a material breach of any
representation, warranty, covenant or agreement on the part of the Company
which has not been cured and (i) Purchaser shall have failed to commence the
Offer within the time required by Regulation 14D under the Exchange Act, (ii)
the Offer shall have been terminated or shall have expired without Purchaser
having purchased any Shares pursuant to the Offer or (iii) Purchaser shall
have failed to pay for Shares pursuant to the Offer prior to the Final Date.
An "Alternative Acquisition" is the possible acquisition of the Company
(whether by way of merger, purchase of capital stock, purchase of assets or
otherwise) or any material portion of its capital stock or assets (with any
such efforts by any such person, including a firm proposal to make such an
acquisition).
A "Superior Proposal" is an unsolicited proposal by any person, entity or
group delivered to the Company, prior to the consummation of the Offer and in
writing, for an Alternative Acquisition which is not subject to any financing
contingency, which the Board by a majority vote in its good faith judgment
(after consultation with its independent financial advisor) determines is
reasonably likely to be consummated and if consummated will be more favorable,
from a financial point of view, to the holders of the Shares than the
transactions contemplated by the Merger Agreement.
Termination Fees and Expenses. The Merger Agreement provides that the
Company will pay, or cause to be paid, to Parent $400,000 as a termination fee
within two business days after the date of termination if (i) the Company
terminates the Merger Agreement in accordance with the provision described in
paragraph (e)(iii) under "Termination of the Merger Agreement" above, or (ii)
Parent or Purchaser terminates the Merger Agreement in accordance with the
provisions described in paragraph (d)(iii) under "Termination of the Merger
Agreement" above, at any time after a proposal for an Alternative Acquisition
has been made. The Company will also pay or cause to be paid, to Purchaser the
Purchaser Expenses (as defined below) upon demand if Parent or Purchaser
terminates the Merger Agreement in accordance with the provision described in
paragraph (d)(i) or (d)(ii) under "Termination of the Merger Agreement" above.
"Parent Expenses" shall mean reasonable and reasonably documented out-of-
pocket fees and expenses incurred or paid by or on behalf of Parent and its
subsidiaries in connection with the Offer and the Merger or the consummation
of any of the transactions contemplated by the Merger Agreement; provided,
that in no event shall Parent Expenses exceed $100,000 (which $100,000 limit
shall not apply in the event of a breach by the Company of the Merger
Agreement).
The Merger Agreement also provides that Parent will pay, or cause to be
paid, to the Company the Company Expenses (as defined below) upon demand if
the Company terminates the Merger Agreement in accordance with
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the provision described in paragraph (e)(i), (e)(ii) or (f)(i) under
"Termination of Merger Agreement" above. "Company Expenses" shall mean
reasonable and reasonably documented out-of-pocket fees and expenses incurred
or paid by or on behalf of the Company in connection with the Offer and the
Merger or the consummation of any of the transactions contemplated by the
Merger Agreement; provided, that in no event shall Company Expenses exceed
$100,000. The foregoing does not, however, limit the Company's right to pursue
remedies for breach of the Merger Agreement.
In addition, no fee or expense reimbursement will be paid to any party who
is in material breach of its obligations under the Merger Agreement.
Covenants
Conduct of Business by the Company. The Company has agreed that, except as
contemplated by the Merger Agreement, during the period from the date of the
Merger Agreement to such time at which directors of the Company affiliated
with or designated by Parent or Purchaser shall constitute a majority of the
Board (such time, the "Board Transition Date"), the Company and its
subsidiaries will each conduct its operations according to its ordinary and
usual course of business, substantially consistent with past practice.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by the Merger Agreement, neither the Company nor any of its
subsidiaries will, prior to the Board Transition Date, without the prior
written consent of Parent:
(i) issue, sell or pledge, or authorize or propose the issuance, sale or
pledge of (A) additional shares of capital stock of any class of the
Company, or securities convertible into any such shares, or any rights,
warrants or options to acquire any such shares or other convertible
securities, other than such issuance of Shares pursuant to the exercise of
options outstanding on the date hereof, and other than the issuance of
Shares in connection with the Company's employee stock purchase plan, or
(B) any other securities in respect of, in lieu of or in substitution for,
Shares outstanding on the date of the Merger Agreement,
(ii) purchase or otherwise acquire, or propose to purchase or otherwise
acquire, any outstanding Shares,
(iii) declare or pay any dividend or distribution on any shares of its
capital stock,
(iv) propose or adopt any amendments to its Amended and Restated
Certificate of Incorporation, as amended, or Amended and Restated Bylaws,
or
(v) agree in writing or otherwise to take any of the foregoing actions or
any action which would prevent the conditions to Purchaser's obligation to
purchase Shares under the Offer or Parent's and Purchaser's obligation to
consummate the Merger from being satisfied; provided, however, that the
Company shall be permitted to accelerate the vesting schedule of all
outstanding Options. The Company shall, through its Board or any committee
thereof, terminate the Company's Employee Stock Purchase Plan so that no
Shares shall be issued thereunder subsequent to the date of the Merger
Agreement.
Indemnification and Insurance. In the Merger Agreement, Parent and Purchaser
have agreed that all rights to indemnification existing in favor, and all
limitations on the personal liability of, each present and former director,
officer, employee or agent of the Company or any of its subsidiaries or a
director, officer, employee, agent or trustee of any employee benefit plan for
employees of the Company or any of its subsidiaries, and each person who is or
was then serving in any such capacity (or any person who is or was then
serving any other corporation or entity in any such capacity at the request of
the Company) (individually, an "Indemnified Party" and collectively, the
"Indemnified Parties") provided for in the Company's Amended and Restated
Certificate of Incorporation, as amended, or Amended and Restated Bylaws or
similar organizational documents of any Company subsidiary as in effect on the
date of the Merger Agreement with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect for a period of not less than six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
for indemnification for losses, damages or liabilities of any kind or nature
incurred (an "Indemnifiable
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Claim") which is asserted or made within such period shall continue until the
final disposition of such claim. The Merger Agreement further provides that
Parent has agreed that it shall indemnify any Indemnified Party in respect of
any Indemnifiable Claim to the extent that the Company does not promptly
indemnify such party for an Indemnifiable Claim.
The Merger Agreement provides that Parent and the Surviving Corporation
shall cause to be put into effect by the completion of the Offer, with a
carrier satisfactory to the Board on the date of the Merger Agreement,
directors' and officers' liability insurance covering each Indemnified Party
who is currently covered by the Company's directors' and officers' liability
insurance with respect to claims arising from facts or events which occurred
at or prior to the Effective Time, which insurance shall remain in effect for
a period of at least six (6) years after the Effective Time and which shall be
no less favorable than such insurance maintained in effect by the Company on
the date of the Merger Agreement in terms of coverage and amounts; provided
that, in no event shall the Surviving Corporation be required to make annual
premium payments for such insurance in excess of $150,000.
Other Covenants. The Merger Agreement further provides that, except as set
forth on the Disclosure Schedule or contemplated by the Merger Agreement, from
the date of the Merger Agreement to the Board Transition Date, (i) the Company
will not, and will not permit any of its subsidiaries to, merge or consolidate
with any other person or acquire a material amount of stock or assets of any
other person; (ii) the Company will not, and will not permit any of its
subsidiaries to, sell, lease, license or otherwise dispose of any material
subsidiary or material amount of assets, securities or property except (A)
pursuant to existing contracts or commitments and (B) in the ordinary course
consistent of business with past practice; (iii) the Company will (and will
cause its subsidiaries to) use reasonable efforts not to, (A) take any action
that (x) would make any representation and warranty of the Company in the
Merger Agreement that is qualified by materiality or Material Adverse Effect
inaccurate in any respect at, or as of any time prior to, the Effective Time
or (y) would make any representation or warranty of the Company in the Merger
Agreement that is not so qualified to be inaccurate in any material respect
at, or as of any time prior to, the Effective Time or (B) omit to take any
action necessary to prevent any such representation or warranty from being
inaccurate in any respect or material respect, as the case may be, at any such
time; (iv) the Company will not, and will not permit any of its subsidiaries
to, sell, transfer, license, sublicense or otherwise dispose of any material
intellectual property rights (other than in the ordinary course of business
consistent with past practice) or amend or modify any existing agreements with
respect to any material intellectual property rights or third party
intellectual property rights; (v) the Company will not, and will not permit
any of its subsidiaries to, (A) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any other person
(other than (x) for an amount not exceeding $4,000,000 in the aggregate, or
make any loans, advances, or capital contributions to, or investments in, any
other person, (B) enter into or amend any contract or agreement other than in
the ordinary course of business consistent with past practice, (C) authorize
or make any capital expenditures or purchases of fixed assets that are not
currently budgeted and that in the aggregate exceeds $1,000,000, (D) terminate
any material contract to which the Company is a party or amend in any material
respect any such material contract or (E) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited
by the Merger Agreement; (vi) the Company will not, and will not permit any of
its subsidiaries to, take any action, other than as required by generally
accepted accounting principles, to change accounting policies or procedures or
cash maintenance policies or procedures (including, without limitation,
procedures with respect to revenue recognition, capitalization of development
costs, payments of accounts payable and collection of accounts receivable);
(vii) the Company will not, and will not permit any of its subsidiaries to,
make any tax election not required by law and inconsistent with past practice
or settle or compromise any tax liability, except to the extent the amount of
any such settlement or compromise has been reserved for on the consolidated
financial statements contained in the Company's filings with the Commission,
(viii) the Company will not, and will not permit any of its subsidiaries to,
pay, discharge, settle, or satisfy any lawsuits, claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice of liabilities reflected or
reserved against on the Company's unaudited estimated September 30, 1999
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balance sheet which was provided to Parent and Purchaser or incurred in the
ordinary course of business consistent with past practice or other payments,
discharges or satisfactions which in the aggregate do not exceed $1,000,000 or
waive the benefits of, or agree to modify in any manner, any confidentiality
or standstill agreement.
No Solicitation. The Merger Agreement provides that, until the earlier of
the Board Transition Date or the termination of the Merger Agreement, the
Company will not directly or indirectly (i) solicit, engage in discussions or
negotiate with any person (whether such discussions or negotiations are
initiated by the Company or otherwise) or take any other action intended or
designed to facilitate the efforts of any person (other than Parent) relating
to the possible acquisition of the Company (whether by way of merger, purchase
of capital stock, purchase of assets or otherwise) or any material portion of
its capital stock or assets, (ii) provide information with respect to the
Company to any person, other than Parent, relating to a possible Alternative
Acquisition by any person, other than the Parent, (iii) enter into an
agreement with any person, other than Parent, providing for a possible
Alternative Acquisition, or (iv) make or authorize any statement,
recommendation or solicitation in support of any possible Alternative
Acquisition by any person, other than by Parent.
The Merger Agreement provides that the Company shall and shall cause its
representatives to, cease immediately and cause to be terminated all
activities, discussions and negotiations, if any, conducted prior to the date
of the Merger Agreement with respect to any Alternative Acquisition.
Notwithstanding the foregoing, prior to the consummation of the Offer, the
Company may participate in discussions or negotiations with, and furnish non-
public information, and afford access to the properties, books, records,
officers, employees and representatives of the Company to any person, entity
or group if such person, entity or group has delivered a Superior Proposal to
the Company. In the event the Company receives a Superior Proposal, nothing
contained in the Merger Agreement will prevent the Board from executing or
entering into an agreement relating to such Superior Proposal and recommending
such Superior Proposal to its stockholders; in such case, the Board may
withdraw, modify or refrain from making its recommendation of the Offer and
the Merger; provided, however that the Company (i) shall have promptly
notified Parent, and in any event within 24 hours, of any proposal for an
Alternative Acquisition received by, any such information requested from, or
any such negotiations or discussions sought to be initiated or recommended
with, the Company or any of its subsidiaries, indicating, in connection with
such notice, the name of the person making the proposal for an Alternative
Acquisition or taking such action and, in reasonable detail, the significant
terms of any such proposal for an Alternative Acquisition and including with
such notice any documentation relating to such Alternative Acquisition, (ii)
shall provide Parent at least two business days prior written notice of the
Company's intention to execute or enter into an agreement relating to such
Superior Proposal and (iii) may only terminate the Merger Agreement by written
notice to Parent, provided no sooner than two business days after Parent's
receipt of a copy of such Superior Proposal (or a detailed description of the
significant terms and conditions thereof).
Control of Board of Directors. The Merger Agreement provides that, subject
to the requirements of applicable law, promptly upon the purchase of not less
than a majority of the outstanding Shares by Purchaser pursuant to the Offer
and from time to time thereafter, subject to Section 1.03(c) of the Merger
Agreement (relating to the appointment of Independent Directors), Purchaser
shall be entitled to designate up to such number of directors, rounded up to
the next whole number plus one, on the Board as will give Purchaser
representation on the Board equal to the product of the total number of
directors on the Board, after giving effect to such representation, and the
percentage that such number of Shares so purchased bears to the total number
of issued and outstanding Shares, and the Company shall use its reasonable
efforts to, upon request by Purchaser, promptly, at the Company's election,
either increase the size of the Board or secure the resignation of such number
of directors as is necessary to enable Purchaser's designees to be elected to
the Board and shall cause Purchaser's designees to be so elected, but in no
event less than a majority of directors. At such times the Company will use
its reasonable efforts to cause individuals designated by Purchaser to
constitute the same percentage as is on the Board of (i) each committee of the
Board (other than any committee of the Independent Directors), (ii) each board
of directors of each subsidiary of the Company designated by Purchaser and
(iii) each committee of each such board.
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The Merger Agreement provides that the Company's obligation to appoint
designees to the Board shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. The Company agreed to promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this provision of the Merger Agreement and to include in
the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1.
Parent or Purchaser will supply to the Company in writing and be solely
responsible for any information with respect to any of them and their
nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
Pursuant to the Merger Agreement, after the time that Purchaser's designees
constitute at least a majority of the Board and until the Effective Time, the
Board shall always have at least two members (the "Independent Directors") who
are neither officers of Parent nor designees, stockholders or affiliates of
Parent or Parent's affiliates. During such period, any (i) amendment or
termination of the Merger Agreement, (ii) extension of time for the
performance or waiver of the obligations or other acts of Parent or Purchaser
or waiver of the Company's rights under the Merger Agreement, or (iii) action
by the Company with respect to the Merger Agreement and the transactions
contemplated thereby which adversely effects the interests of the stockholders
of the Company, shall require the approval of a majority of the Independent
Directors in addition to any required approval thereof by the full Board.
Stock Options. Pursuant to the Merger Agreement, on the latest of (i) the
Completion of the Offer, (ii) the first business day of January 2000 and (iii)
the earlier of (A) 30 days after termination notice is given in accordance
with the terms of the plan governing the Options (as defined below) and (B)
the date that the Option holder agrees to the treatment provided in Section
2.08 of the Merger Agreement, each holder of then outstanding options to
purchase Shares granted by the Company (whether or not then currently
exercisable) (the "Options") will be entitled to receive, and shall receive,
at the sole election of the holder of such Option in settlement of each Option
where the amount set forth in clause (i) below is a positive amount, a cash
payment from the Company in an amount equal to the product of (i) the Offer
Price minus the exercise price per Share of the Option and (ii) the number of
Shares covered by such Option. Such payment shall be reduced by any applicable
withholding taxes. The Company, acting through its Board or any committee
thereof, has the right at any time or from time to time following the
execution of the Merger Agreement to accelerate and vest, in full or in part,
any and all Options not currently exercisable in full. Effective as of the
Effective Time, the Company, acting through its Board or a committee thereof,
shall terminate those Options with an exercise price that is greater than the
Offer Price. Under the terms of the Stock Incentive Plan, the Board or a
committee thereof has the authority to take such actions without the consent
of the Option holders provided it has given 30 days notice to the Option
holders.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company as to, among other things, organization,
capitalization, subsidiaries, compliance with laws and court orders, absence
of certain changes since June 30, 1999, undisclosed liabilities, public
filings, consents and approvals, litigation, title to properties, benefit
plans, taxes, and patents, trademarks and trade names. In addition, Parent and
Purchaser have represented as to, among other things, organization and good
standing, corporate authorizations, consents and approvals and ownership of
Shares.
Shareholder Agreements
On October 19, 1999, Parent, Purchaser and each of Michael Moore ("Moore")
and Frances Penfold ("Penfold") entered into a shareholder agreement
(collectively the "Shareholder Agreements"). Pursuant to the terms of the
Shareholder Agreements, at least two (2) business days prior to the
consummation by Purchaser of the Offer, Moore and Penfold shall tender to the
Depositary (i) letters of transmittal with respect to an aggregate of 198,597
Shares (which includes in-the-money Options to purchase 1,875 Shares held by
Penfold) (the "Executive Shares") and any other Shares held by Moore and
Penfold, (ii) the certificates representing the Executive Shares, and (iii)
all other documents or instruments required to be delivered pursuant to the
terms of the Offer to Purchase. The Shareholder Agreements provide that Moore
and Penfold may decline to tender, or
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may withdraw, any and all Executive Shares or other Shares held by them if
Purchaser amends the Offer Price to less than $8.79 per Share, reduces the
number of Shares subject to the Offer, changes the form of consideration
payable in the Offer in a manner adverse to the stockholders of the Company
(other than insignificant changes or amendments or other than to waive any
conditions). Moore and Penfold are required to give Purchaser at least two (2)
business days prior notice of any withdrawal of the Executive Shares. The
Shareholder Agreements further provide that, so long as the Merger Agreement
is in effect, or Purchaser notifies Moore or Penfold of its intent to continue
the Offer or a revised Offer within two (2) business days after the date of
termination of the Merger Agreement, Moore and Penfold will (i) vote all
Executive Shares now or hereafter owned by them or execute a consent or proxy,
and not revoke any proxy, vote or a consent, in favor of the Merger Agreement,
the Merger and the transactions contemplated thereby, and (ii) oppose any
Alternative Acquisition and vote all Executive Shares now or hereafter owned
by them, or execute a consent or proxy, against any Alternative Acquisition.
Escrow Agreement
On October 19, 1999, Parent, Purchaser, the Company and First Union National
Bank (the "Escrow Agent") entered into an Escrow Agreement pursuant to which
Purchaser agreed to deposit into escrow a sufficient amount of funds necessary
to (i) make the cash payments contemplated by the Merger Agreement in
connection with the Offer, (ii) make the cash payments contemplated by the
Merger Agreement with respect to the settlement of Options to purchase Shares
granted by the Company and (iii) redeem the outstanding shares of Series A
Preferred Stock of the Company for cash in accordance with the terms of the
Certificate of Designation. On October 21, 1999, Parent deposited $13,655,445
into escrow pursuant to the Escrow Agreement. The funds may only be released
from escrow pursuant to the joint written instructions of the Company and
Purchaser. The Company, Parent and Purchaser have provided customary
indemnifications to the Escrow Agent against any losses, liabilities,
expenses, claims or demands arising out of or in connection with the
performance of its obligations under the Escrow Agreement.
Item 4. The Solicitation or Recommendation.
(a) Recommendation of the Board of Directors.
At a meeting held on October 18, 1999, the Board (i) approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, (ii) determined that the terms of the Offer and the Merger are
advisable, fair to, and in the best interests of, holders of Shares and (iii)
resolved to recommend that the holders of Shares accept the Offer and tender
their Shares pursuant to the Offer. There were no dissents or abstentions, but
one director was unable to participate because he was not in the country.
Accordingly, the Board recommends that holders of Shares tender their Shares
pursuant to the Offer.
(b) (1) Background.
The Company designs, manufactures and markets systems for billing data
collection, transaction data management, revenue assurance and fraud
management to telecommunications service providers. Following a period of
revenue growth between 1994 and 1996, the Company has since seen a reduction
in revenues, as well as a period of operating losses, causing a reduction in
the Company's cash reserves. These adverse operating developments have
resulted from, among other factors, lower sales volumes from the Company's
larger domestic customers related largely to their internal Year 2000
preparations; international deregulation and privatization activity that has
reduced or delayed orders; and the Asia Pacific economic crisis that limited
the Company's access to this market resulting in lower than expected sales
volumes.
In early 1999, the management of the Company analyzed the market
opportunities open to it. This resulted in a discussion at a meeting of the
Board on March 23, 1999 regarding the Company's strategic options. At that
meeting, the Board resolved that the Company should engage a financial advisor
to help it to review these options, and on April 26, 1999, the Company signed
a letter agreement (the "Engagement Letter") with Brooks,
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Houghton Securities, Inc. ("Brooks, Houghton") to act as its financial
advisor. Subsequent to its engagement, Brooks, Houghton has worked closely
with the Company and has approached over 60 companies with regard to a
possible strategic transaction involving the Company. A limited number of
these companies executed confidentiality agreements with the Company and
received certain non-public information. Although the Company did not enter
into any other agreements with any such companies, the Company did have non-
binding discussions regarding valuation of the Company with certain of these
companies.
In August 1999, Parent became aware that the Company was pursuing strategic
alternatives and arranged to have a meeting with Michael Moore, Executive Vice
President of the Company during an upcoming trip of Mr. Moore's in Romania. In
preparation for that meeting, on August 26, 1999, John Freeman, Executive
Director of Brooks, Houghton, sent Mr. Asbjorn Eide, Chief Executive Officer
of EDB 4tel, a division of Parent ("EDB 4tel"), a confidentiality letter
agreement which was signed and returned. Mr. Freeman then provided Mr. Eide
with certain non-public information about the Company.
On August 31, 1999, Mr. Eide met with Michael Moore in Bucharest, Romania.
At the meeting, the parties exchanged general industry and company
information, including an introduction of their businesses and an explanation
of their current and future growth strategies. At the conclusion of the
meeting, Mr. Eide expressed to Mr. Moore Parent's possible interest in
acquiring the Company.
On September 14 and 15, 1999, at the Company's executive offices in Mt.
Laurel, New Jersey, and on September 16, 1999, in San Diego, California, Mr.
Eide and a team of EDB 4tel employees met with the Company's executive
management to discuss the opportunities available to their respective
companies which could result from a business combination.
During the week of September 27, 1999, EDB 4tel executives conducted
interviews with certain customers of the Company.
On September 29, 1999, the Board of Directors of Parent met to consider the
proposed acquisition by Parent of the Company, and approved such acquisition
at a price of not more than an aggregate of $8.5 million for all of the
outstanding shares of the Company. The preceding sentence and other
descriptions contained in this Section relating to the meetings of Parent's
Board of Directors are based on information provided by Parent. Subsequently,
Mr. Eide contacted executives of Securicor Communications Limited
("Securicor"), the Company's largest stockholder, and made an offer to buy
Shares owned by Securicor for a purchase price of $2.40 per Share. No response
was provided by Securicor to Parent's offer.
On October 1, 1999, Parent provided a preliminary expression of interest in
acquiring the Company at an approximate valuation of $8.5 million. The Company
and Brooks, Houghton advised Parent that interest had been expressed by other
third parties in acquiring the Company based on a substantially higher
valuation.
Between October 6, 1999 and October 13, 1999, there were occasional informal
communications between representatives of Parent and the Company in which the
possibility of an offer by Parent based on a higher valuation, as well as the
structure and timing of such an offer, were discussed.
On October 12, 1999, Mr. Moore met with Mr. Eide in Oslo, Norway and
continued discussions regarding Parent's interest in acquiring the Company
based on a higher valuation.
On October 14, 1999, the Board of Directors of Parent met to consider
increasing the purchase price of the proposed acquisition by Parent of the
Company, and approved such increase to a price of not more than an aggregate
of $13.65 million for all of the outstanding shares of capital stock of the
Company. Subsequently, Parent sent a letter to Andrew P. Maunder, President
and Chief Executive Officer of the Company, indicating that Parent was
prepared to make an offer of $13.65 million for all of the shares of the
Company if the Company would negotiate exclusively with Parent through October
17, 1999.
On October 14, 1999, the Board met to consider the letter from Parent and
authorized the Company's management to enter into negotiations with Parent.
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On October 14, 1999, the Company's legal counsel sent a draft of a proposed
Merger Agreement to legal counsel for Parent. On October 15, 1999,
representatives of Parent flew to Philadelphia in preparation for negotiations
to commence on October 16, 1999.
On October 16, 1999, executives of Parent met with executives of the Company
and the Company's financial advisor to discuss the terms of a proposed
transaction. That same day, Parent's legal counsel provided comments on the
Merger Agreement to the Company's legal counsel. Those comments were discussed
pursuant to a telephonic conference call that included executives and legal
counsel of Parent and the Company, and representatives of the Company's
financial advisor.
Negotiation of the Merger Agreement was ongoing from October 16, 1999
through October 18, 1999. On October 17, 1999, the Board held a special
meeting at which the Board was informed as to the status of negotiations. The
Board authorized the Company's representatives to continue negotiations at a
purchase price at or above $13.65 million.
By the morning of October 18, 1999, the Company's and Parent's
representatives reached agreement on all aspects of the Merger Agreement. A
special meeting of the Board was held on the afternoon of October 18, 1999,
prior to which substantially final drafts of the Merger Agreement and the
fairness opinion prepared by Brooks, Houghton were distributed. At the
meeting, the Company's President reported on the status of negotiations with
Parent. The Company's legal counsel made a presentation regarding the Board's
fiduciary duties when considering the sale of the Company and then summarized
the terms and conditions of the Merger Agreement. A representative of Brooks,
Houghton then rendered its oral opinion that the consideration to be received
by the Company's common stockholders in the Offer and the Merger, at $8.79 per
share, was fair, from a financial point of view, to the Company's common
stockholders and gave a presentation on the basis of that opinion. Following
discussion of the Offer and the Merger, the Board approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, and resolved to recommend that the stockholders of the Company
accept the Offer and tender their Shares pursuant to the Offer and that the
stockholders of the Company approve and adopt the Merger Agreement. There were
no dissents or abstentions, but one director was unable to participate because
he was not in the country.
As of Tuesday, October 19, 1999, the parties executed and delivered the
Merger Agreement. On the morning of Tuesday, October 19, 1999, Parent and the
Company publicly announced that they had entered into the Merger Agreement.
On October 25, 1999, Purchaser commenced the Offer.
(2) Reasons for the Recommendation.
In making the determinations and recommendations set forth in subparagraph
(a) above, the Board considered a number of factors, including without
limitation the following:
(i) information with regard to the financial condition, results of
operations, business and prospects of the Company as well as current
economic and market conditions (including current conditions in the market
segments in which the Company competes);
(ii) the Company's prospects if it were to remain independent, including
the risks and benefits inherent in remaining independent, including its
financing requirements, its ability to increase revenues, and the nature of
its competitive position in its markets;
(iii) the extensive process undertaken by Brooks, Houghton on behalf of
the Company to identify companies that might be interested in a strategic
transaction involving the Company and the fact that the Company had, on
June 30, 1999, publicly announced its interest in engaging in a strategic
transaction;
(iv) the valuations at which other companies had discussed, on a non-
binding basis, a possible acquisition of the Company;
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(v) the terms of the Merger Agreement, including the parties'
representations, warranties and covenants and the conditions to their
respective obligations and the proposed structure of the Offer and Merger
involving a cash tender offer for all outstanding Shares to be followed by
a merger for the same consideration, thereby enabling all holders of the
Shares to obtain cash for their Shares at the earliest practicable time;
(vi) the high likelihood that the proposed acquisition would be
consummated, in light of the facts that the Offer and Merger are not
subject to any financing contingencies and that the entire $13.65 million
required to complete the Offer and the Merger, as well as redeem the Series
A Preferred Stock and settle the in-the-money Options, were to be placed
into escrow;
(vii) the historical and recent market prices for the shares and the fact
that the Offer Price of $8.79 per Share represented a premium of
approximately 180% over the $3.125 closing sales price for the Shares as
quoted on the Nasdaq SmallCap Market on October 18, 1999, the last trading
day before the execution of the Merger Agreement was announced;
(viii) the presentation of Brooks, Houghton at the October 18, 1999
meeting of the Board and the opinion of Brooks, Houghton that, based upon
and subject to assumptions, limited procedures and other limitations set
forth therein, the Offer Price to be received by the holders of the Shares
pursuant to the Offer and the Merger is fair to such holders from a
financial point of view. The opinion dated October 19, 1999 is attached as
Annex I hereto and is incorporated herein by reference. Holders of Shares
are encouraged to read the opinion in its entirety.
The Board did not assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the Board viewed its position
and recommendations as being based on the totality of the information
presented to and considered by it.
Item 5. Persons Retained, Employed or to be Compensated.
Brooks, Houghton was engaged by the Company pursuant to the terms of the
Engagement Letter to advise the Company with respect to a possible Transaction
(as defined in the Engagement Letter) and to undertake an analysis to enable
Brooks, Houghton to provide an opinion to the Board as to the fairness to the
Company or its stockholders, from a financial point of view, of the
consideration to be received by the Company or its stockholders in any
proposed Transaction. The Company agreed to pay Brooks, Houghton the following
fees:
(i) a retainer fee of $10,000 per month, payable monthly in advance;
(ii) a contingent fee equal to $200,000 plus 1.0% of the Transaction
Amount (the total consideration paid or contributed for (a) the net assets,
or existing and any newly issued stock of the Company, plus (b) the amount
of any debt assumed, acquired, or remaining outstanding) in excess of $10
million contingent upon the consummation of the transaction (the contingent
fee payable to Brooks, Houghton pursuant to this clause (ii) is expected to
be approximately $262,000); and
(iii) a fee of $45,000, for conducting a study of the financial terms of the
Transaction and furnishing its findings to the Board and a fee of $5,000 upon
the furnishing of Brooks, Houghton's written opinion.
The Company has also agreed to reimburse Brooks, Houghton for all reasonable
out-of-pocket expenses, including expenses for travel, outside counsel and
other services, incurred by Brooks, Houghton in connection with the
engagement. In addition, the Company is responsible for the payment of fees,
expenses and deposits that are required by accountants, attorneys, appraisers
and lenders in the course of the Transaction and has agreed to indemnify
Brooks, Houghton for certain liabilities in connection with the engagement.
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
15
<PAGE>
Item 6. Recent Transactions and Intent with Respect to Securities.
(a) (1) On October 14, 1999, the stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation to effect a one-for-
four reverse stock split of the shares of Common Stock of the Company issued
and outstanding, or held as treasury shares (the "Reverse Stock Split"). The
effect of the Reverse Stock Split was to increase the par value of the Common
Stock to $.04 per share from $.01 per share but did not change the number of
authorized shares of Common Stock. The Reverse Stock Split became effective on
October 15, 1999 upon the filing with the Secretary of State of the State of
Delaware of a Certificate of Amendment of the Company's Certificate of
Incorporation.
(2) On September 30, 1999, the Company entered into an agreement (the
"Exchange Agreement") with Security Services plc, a company organized under
the laws of England and Wales ("Security Services"), and Securicor
Communications Limited, a company organized under the laws of England and
Wales, and an indirect subsidiary of Security Services (the "Subsidiary"),
whereby, on that date, the Subsidiary surrendered to the Company 3,476,900
shares of Common Stock of the Company before adjustment for the Reverse Stock
Split in exchange for an equal number of shares of the Company's Series A
Preferred Stock (the "Preferred Stock"). In connection therewith, the
Subsidiary also delivered and executed an irrevocable proxy to vote in favor
of an amendment to the Company's Certificate of Incorporation to effect the
Reverse Stock Spilt, which amendment was approved by the stockholders of the
Company at a special meeting of the stockholders held on October 14, 1999 and
became effective on October 15, 1999. In addition, Security Services agreed to
maintain the validity of a letter of credit which it previously issued
securing the Company's obligations under its bank credit facility upon the
terms and conditions as are currently operative (except that the amount of the
letter of credit may be reduced from $3.0 million to $2.0 million after June
30, 2000) until the earlier of December 31, 2000 or the completion of (a) a
sale by the Company of all, or substantially all, of the assets of the
Company; (b) the merger of the Company with or into another entity; or (c) a
tender offer accepted by the holders of at least a majority of the Company's
then outstanding Common Stock (a "Strategic Transaction"). The Exchange
Agreement further provides that the Subsidiary shall not sell or otherwise
dispose of the Preferred Stock without the prior written agreement of the
Company except in accordance with the provisions of the Certificate of
Designation relating to the Preferred Stock (the "Certificate of
Designation").
The Certificate of Designation provides that the Company shall have the
right to require the holder of the Preferred Stock to sell to the Company the
Preferred Stock held by such holder (the "Redemption Right"). The Redemption
Right may be exercised by the Company, without prior notice, one time in the
aggregate, in full, but not in part, upon the earlier of (i) the completion by
the Company of a Strategic Transaction or (ii) December 31, 2000. The purchase
price payable with respect to a redemption of the Preferred Stock shall equal:
(i) the greater of (a) Twenty-Five Cents ($0.25) or (b) fifty percent (50%) of
the per share valuation of the Common Stock at which the Strategic Transaction
is consummated as determined by the Board in its reasonable discretion if
payment is made in the form of (x) a bank treasurer's check or bank cashier's
check, (y) a wire transfer of immediately available funds to an account
specified by the holder or (z) if the Note Conditions (as defined below) are
met, by the delivery of a promissory note of the Company or its successor
pursuant to a Strategic Transaction in the form provided in the Certificate of
Designation or (ii) the greater of (a) Twenty-Five Cents ($0.25) or (b)
seventy-five (75%) of the per share valuation of the Common Stock at which the
Strategic Transaction is consummated as determined by the Board in its
reasonable discretion if the Note Conditions are not met, by the delivery of a
one-year promissory note of the Company or its successor pursuant to a
Strategic Transaction in the form provided for in the Certificate of
Designation. Pursuant to the terms of the Merger Agreement, the Preferred
Stock will be redeemed for an aggregate of $3,820,244 in cash upon Completion
of the Offer.
(3) On August 31, 1999, 857 Shares (after giving effect to the Reverse Stock
Split) were issued to Steven Cotton, a consultant with the Company, in lieu of
payment, under the terms of a Retainer Agreement and Subscription Agreement
entered into between the Company and Mr. Cotton in March 1999.
(4) On August 31, 1999, 5,605 Shares (after giving effect to the Reverse Stock
Split) were issued to certain employees of the Company, at a price of $2.975
per Share, who purchased such Shares pursuant to the Company's Employee Stock
Purchase Plan (including 1,634 Shares, after giving effect to the Reverse
Stock Split, purchased by Mr. Maunder).
16
<PAGE>
Other than the transactions described herein, no transactions in the Shares
have been effected during the past 60 days by the Company or, to the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company currently intends to tender all Shares
over which he, she or it has sole dispositive power as of the Expiration Date.
Certain senior executives of the Company have entered into Shareholder
Agreements with Parent and Purchaser pursuant to which such executives have
agreed to tender Shares beneficially owned by them into the Offer. Reference
is made to Items 2 and 3 above.
Item 7. Certain Negotiations and Transactions by Subject Company.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (ii) a purchase, sale
or transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) None
Item 8. Additional Information to be Furnished.
(a) The Information Statement attached hereto as Annex II and incorporated
herein by reference is being furnished to the Company's stockholders in
connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders as described in Item 3.
(b) Section 203 of the DGCL
Section 203 of the DGCL purports to regulate certain business combinations
of a corporation organized under Delaware law whose stock is publicly traded,
such as the Company, with a stockholder beneficially owning 15% or more of the
outstanding voting stock of such corporation (an "Interested Stockholder").
Section 203 provides, in relevant part, that the corporation shall not engage
in any business combination for a period of three years following the date
such stockholder first becomes an Interested Stockholder unless (i) prior to
the date the stockholder first becomes an Interested Stockholder, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an Interested
Stockholder, (ii) upon becoming an Interested Stockholder, the Interested
Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, or (iii) on or subsequent
to the date the stockholder becomes an Interested Stockholder, the business
combination is approved by the board of directors and authorized at an annual
or special meeting of stockholders by the affirmative vote of at least two-
thirds of the outstanding voting stock which is not owned by the Interested
Stockholder. The Board has approved the Merger Agreement and the transactions
contemplated thereby, including the Offer, the Merger and the Stockholder
Agreements, for the purposes of Section 203 of the DGCL; therefore, the
restrictions of Section 203 are inapplicable to the Offer, the Merger and the
related transactions.
17
<PAGE>
Item 9. Material to be Filed as Exhibits.
<TABLE>
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of October 19, 1999, by and
among EDB Business Partner ASA, EDB 4tel Acquisition Corp. and
Telesciences, Inc. (incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K filed on October 20, 1999).
Exhibit 2 Escrow Agreement, dated as of October 19, 1999, by and among
Telesciences, Inc., EDB Business Partner ASA, EDB 4tel Acquisition
Corp. and First Union National Bank (incorporated by reference to
Annex B to Exhibit 2 to the Company's Current Report on Form 8-K
filed on October 20, 1999).
Exhibit 3 Shareholder Agreement, dated as of October 19, 1999, by EDB
Business Partner ASA, EDB 4tel Acquisition Corp. and Frances
Penfold.
Exhibit 4 Shareholder Agreement, dated as of October 19, 1999, by EDB
Business Partner ASA, EDB 4tel Acquisition Corp. and Michael Moore.
Exhibit 5 Confidentiality Letter executed by EDB 4tel, a division of EDB
Business Partner ASA, dated August 26, 1999.
Exhibit 6 Form of Option Agreement between Telesciences, Inc. and Option
Holders.
Exhibit 7 Employment Agreement, between Securicor Telesciences Inc. and
Andrew Philip Maunder dated July 1, 1994 (incorporated by reference
to Exhibit 10.2 to the Company's Registration Statement on Form S-
1, File No. 333-25439).
Exhibit 8 Amendment, dated October 19, 1999, to Employment Agreement, between
Telesciences, Inc. and Andrew Philip Maunder dated July 1, 1994.
Exhibit 9 Employment Agreement, between Securicor Telesciences Inc. and
William J. Rahe, Jr., dated February 15, 1995 (incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement
on Form S-1, File No. 333-25439).
Exhibit 10 Severance Agreement and General Release dated February 12, 1999,
between the Company and William J. Rahe.
Exhibit 11 Employment Agreement between the Company and Michael L. Moore,
dated May 15, 1998 (incorporated by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998).
Exhibit 12 Employment Agreement between the Company and Frances Penfold, dated
May 15, 1998 (incorporated by reference to Exhibit 10.5 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998).
Exhibit 13 Consultant Agreement between the Company and C. Thomas Faulders
III, dated July 23, 1998 (incorporated by reference to the
Company's Quarterly Report of Form 10-Q for the quarter ended June
30, 1998).
Exhibit 14 Employment Agreement between the Company and Greg R. Fegley, dated
April 1, 1999.
Exhibit 15 Exchange Agreement entered into as of September 30, 1999, by and
among the Company, Security Services plc and Securicor
Communications Limited (incorporated by reference to Exhibit 99.1
to the Company's Current Report on Form 8-K filed on October 14,
1999).
Exhibit 16 Press Release issued by Telesciences, Inc., dated October 19, 1999
(incorporated by reference to Exhibit 99 to the Company's Current
Report on Form 8-K filed on October 20, 1999).
Exhibit 17 Letter to Stockholders of Telesciences, Inc., dated November 1,
1999.*
Exhibit 18 Opinion of Brooks, Houghton Securities, Inc. dated October 19,
1999.**
</TABLE>
- --------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
** Included as Annex I to the Schedule 14D-9.
18
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
TELESCIENCES, INC.
By: /s/ Andrew P. Maunder
---------------------------------
Andrew P. Maunder
President, Chief Executive
Officer
Dated: November 1, 1999
19
<PAGE>
Annex I
[LOGO]
BROOKS, HOUGHTON SECURITIES, INC.
444 Madison Avenue . 25th Floor . New York, NY 10022 . Telephone: 212-753-1991
. Facsimile: 212-753-7730
- -------------------------------------------------------------------------------
October 19, 1999
The Board of Directors
Telesciences, Inc.
4000 Midlantic Drive
Mount Laurel, NJ 08054
Members of the Board:
Brooks, Houghton Securities, Inc. and Brooks, Houghton & Company, Inc.
(collectively "BHC") have acted as financial advisor to Telesciences, Inc.
(the "Company") in connection with the proposed merger of the Company and EDB
Business Partner ASA ("Parent") pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated October 19, 1999, among the Company, Parent,
and EDB 4Tel Acquisition Corp., a wholly owned subsidiary of Parent
("Purchaser"), which provides, among other things, for Parent to commence a
tender offer (the "Tender Offer") to the shareholders of the Company for all
outstanding shares of common stock, par value $0.04 per share, of the Company
("Company Common Stock") for $8.79 in cash (the "Consideration") and for the
subsequent merger of Purchaser with and into the Company (the "Merger"), as a
result of which the Company will become a wholly owned subsidiary of Parent.
As set forth more fully in the Merger Agreement, as a result of the Merger,
all outstanding Company Common Stock not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the
Consideration. The terms and conditions of the Tender Offer and the Merger are
more fully set forth in the Merger Agreement.
You have requested our opinion, as investment bankers, as to the fairness,
from a financial point of view, of the Consideration to be paid to the
Company's common shareholders (the "Common Shareholders").
In connection with our role as financial advisor to the Company, and in
arriving at our opinion, we have, among other things (i) reviewed and
considered the competitive, publicly announced sale process which lead to the
proposed Merger; (ii) reviewed the Merger Agreement and certain related
documents and discussed with Company management the terms of the Merger
Agreement; (iii) reviewed certain publicly available financial and other
information concerning the Company and certain internal analyses and other
information furnished to Parent by the Company; (iv) held discussions with
members of the senior management of the Company regarding the business,
operations, historical results and future prospects of the Company; (v)
reviewed the reported prices and trading activity for Company Common Stock;
(vi) compared certain financial and stock market information for the Company
with similar information for certain other companies whose securities are
publicly traded and reviewed the financial terms of certain recent business
combinations; and (vii) performed such other studies and analyses and
considered such other factors as we deemed appropriate.
We have not assumed responsibility for independent verification of, and have
not independently verified, any information, whether publicly available or
furnished to us, concerning the Company, including, without limitation, any
financial information, forecasts or projections considered in connection with
the rendering of our opinion. Accordingly, for purposes of our opinion, we
have assumed and relied upon the accuracy and completeness of all such
information. In addition, we have not conducted a physical inspection of any
of the properties or assets, and have not prepared or obtained any independent
evaluation or appraisal of any of the assets or liabilities, of the Company.
With respect to the financial forecasts and projections made available to us
and used in our analyses, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management of the Company, as the case may be, as to the
matters covered thereby. In rendering our opinion, we express no view as to
the reasonableness of such forecasts
I-1
<PAGE>
and projections or the assumptions on which they are based. Our opinion is
necessarily based upon economics, market and other conditions as in effect on,
and the information made available to us as of, the date hereof.
For purposes of rendering our opinion, we have assumed that, in all respects
material to our analysis, the representations and warranties of the Company,
Purchaser and Parent contained in the Merger Agreement are true and correct,
and that the Company, Purchaser and Parent will each perform all of the
covenants and agreements to be performed by it under the Merger Agreement. We
have also assumed that all material governmental, regulatory or other
approvals and consents required in connection with the consummation of the
Merger will be obtained and that in connection with obtaining any necessary
governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which
either the Company or Parent is a party or is subject or by which it is bound,
no limitations, restrictions or conditions will be imposed or amendments,
modifications or waivers made that would have a material adverse effect on the
Company or Parent or materially reduce the contemplated benefits of the Merger
to the Common Shareholders.
This opinion is addressed to, and for the use and benefit of, the Board of
Directors of the Company, and is not a recommendation to the stockholders of
the Company to tender their shares pursuant to the Tender Offer or to vote in
favor of the Merger. This Opinion is limited to the fairness, from a financial
point of view, to the Common Shareholders of the Consideration, and we express
no opinion as to the merits of the underlying decision by the Company to enter
into the Merger Agreement or engage in the Merger.
BHC will be paid a fee for its services as financial advisor to the Company
in connection with the Merger, a substantial portion of which is contingent
upon consummation of the Merger. BHC does not hold or trade in the equity
securities of Telesciences or any of their respective affiliates.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the Consideration is fair, from a
financial point of view, to the Common Shareholders.
Very truly yours,
/s/ Brooks, Houghton Securities,
Inc.
Brooks Houghton Securities, Inc.
I-2
<PAGE>
Annex II
TELESCIENCES, INC.
4000 Midlantic Drive
Mount Laurel, New Jersey 08054-5476
----------------
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AND RULE 14F-1 THEREUNDER
----------------
No Vote Or Other Action Of The Company's Stockholders Is Required In
Connection With
This Information Statement. No Proxies Are Being Solicited And You Are
Requested Not To
Send The Company A Proxy.
----------------
This Information Statement is being mailed on or about November 1, 1999 as a
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Telesciences, Inc. (the "Company") to the holders of
record of shares of common stock, par value $.04 per share, of the Company
(the "Common Stock" or the "Shares"). You are receiving this Information
Statement in connection with the possible election of persons designated by
EDB 4tel Acquisition Corp. ("Purchaser") to a majority of the seats on the
Board of Directors of the Company (the "Board"). Capitalized terms used herein
and not otherwise defined herein have the meaning set forth in the Schedule
14D-9.
On October 19, 1999, the Company, Purchaser and EDB Business Partner ASA
("Parent") entered into the Merger Agreement in accordance with the terms and
subject to the conditions of which (1) Parent caused Purchaser to commence the
Offer for any and all outstanding Shares at a price of $8.79 per Share, net to
the seller in cash, without interest thereon, and (2) Purchaser will be merged
with and into the Company (the "Merger"). As a result of the Offer and the
Merger, and the redemption of the Company's Series A Preferred Stock in
accordance with its terms and the terms of the Merger Agreement, the Company
would become a wholly owned subsidiary of Parent. The Offer is scheduled to
expire at 12:00 Midnight, New York City time, on November 22, 1999, unless the
Offer is extended in accordance with the Merger Agreement and applicable law.
The Merger Agreement provides that, promptly after the purchase of a
majority of the outstanding Shares pursuant to the Offer, Purchaser shall be
entitled to designate directors (the "Purchaser Designees") on the Board as
will give Purchaser representation proportionate to its ownership interest
plus one. The Company has agreed either to increase the size of the Board or
secure the resignation of such number of directors as is necessary to enable
the Purchaser Designees to be elected or appointed to the Board and to cause
the Purchaser Designees to be so elected or appointed. In addition, the
Company has agreed to use its reasonable efforts to cause the Purchaser
Designees to constitute the same percentage as is on the Board of (i) each
committee of the Board (other than any committee of the Independent Directors
(as defined below)), (ii) each board of directors of each subsidiary of the
Company designated by Purchaser and (iii) each committee of each such board.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You
are not, however, required to take any action at this time.
The information contained in this Information Statement (including the
information incorporated by reference) concerning Parent, Purchaser and the
Purchaser Designees has been furnished to the Company by Parent, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
II-1
<PAGE>
GENERAL INFORMATION REGARDING THE COMPANY
As of October 19, 1999 there were 1,044,631 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote. As of October
19, 1999, there were 3,476,900 shares of Series A Preferred Stock of the
Company (the "Preferred Stock") outstanding. The Preferred Stock is not
entitled to any voting rights, except as required by law. The Preferred Stock
will be redeemed by the Company in accordance with the terms of the
Certificate of Designation at or about the time of the purchase of Shares in
accordance with the Offer. The Board currently consists of six members.
Prior to September 30, 1999, Security Services plc ("Security Services")
beneficially owned, through its subsidiary, Securicor Communications Limited
(the "Subsidiary"), 45.4% of the Common Stock. On September 30, 1999, Security
Services and the Subsidiary entered into an Exchange Agreement with the
Company whereby the Subsidiary exchanged 3,476,900 shares of Common Stock for
an equal number of shares of the Preferred Stock. As a result of the
transaction, Security Services no longer beneficially owns any shares of
Common Stock.
RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES
The Merger Agreement provides that promptly after the purchase of a majority
of the outstanding Shares pursuant to the Offer, Purchaser shall be entitled
to designate the number of directors, rounded up to the next whole number plus
one, on the Board equal to the product of (1) the total number of directors on
the Board (giving effect to the directors designated by Purchaser) and (2) the
percentage that such number of Shares so purchased bears to the total number
of issued and outstanding Shares then beneficially owned by Purchaser, but not
less than a majority, subject to compliance with Section 14(f) of the Exchange
Act. In addition, the Merger Agreement provides that the Company will use its
reasonable efforts to cause individuals designated by Purchaser to constitute
the same percentage as is on the Board of (1) each committee of the Board
(other than any committee of the Independent Directors), (2) each board of
directors of each subsidiary of the Company designated by Purchaser and (iii)
each committee of such Board. However, until the Effective Time, the Board
will continue to have at least two directors who are neither officers of
Parent nor designees, stockholders or affiliates of Parent or Parent's
affiliates (each, an "Independent Director"). If the number of Independent
Directors shall be reduced below two for any reason, any remaining Independent
Director shall be entitled to designate a person to fill the vacancy who meets
the eligibility requirements for Independent Directors. If no Independent
Directors then remain, the other directors shall designate two persons to fill
such vacancies who shall not be current or former officers of affiliates of
Parent or any of Parent's affiliates, and such persons shall be deemed to be
Independent Directors for purposes of the Merger Agreement. The Company has
agreed either to increase the size of the Board or secure the resignation of
such number of directors as is necessary to enable the Purchaser Designees to
be elected to the Board and to cause the Purchaser Designees to be so elected.
Purchaser has informed the Company that it will choose the initial Purchaser
Designees from the persons listed below. With respect to the Purchaser
Designees, the following table, prepared from information furnished to the
Company by Parent, sets forth the name, occupation and age of each such
Purchaser Designee. Parent has informed the Company that each of the Purchaser
Designees listed below has consented to act as a director, if so designated.
If necessary, Purchaser may choose additional or other Purchaser Designees,
subject to the requirements of Rule 14f-1.
Purchaser has advised the Company that none of the Purchaser Designees (i)
has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was, or is, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to federal or state securities laws or finding any
violation of such laws, (ii) is currently a director of, or holds any position
with, the Company, (iii) has a familial relationship with any directors or
executive officers of the Company or (iv) to the best of Purchaser's
knowledge, beneficially owns any securities (or rights to acquire such
securities) of the Company. The Company has been advised by Purchaser that, to
the best
II-2
<PAGE>
of Purchaser's knowledge, none of the Purchaser Designees has been involved in
any transactions with the Company or any of its directors, executive officers
or affiliates which are required to be disclosed pursuant to the rules and
regulations of the Commission, except as may be disclosed herein or in the
Schedule 14D-9.
It is expected that the Purchaser Designees may assume office at any time
following the purchase by Purchaser of a majority of the outstanding Shares
pursuant to the Offer, which purchase cannot be earlier than November 22,
1999, and that, upon assuming office, the Purchaser Designees will thereafter
constitute at least a majority of the Board.
<TABLE>
<CAPTION>
Name and Principal
Business Address (1) Age Principal Occupation or Employment, Material Positions Held During the Past 5 Years
-------------------- --- ----------------------------------------------------------------------------------------------------
<C> <C> <S>
Asbjorn Eide(2) 39 Mr. Eide has served as President and a director of Purchaser since its inception in October 1999.
Since May 1998, he has served as President of EDB 4tel AS, a Norwegian limited company, and its
successor, EDB 4tel, a division of Parent (collectively, "4tel"). From January 1997 to January 1998,
he served as Executive Vice President of the Product Division and member of the Executive Committee
of Telenor Bedrift, a Norwegian limited company. From January 1996 to December 1996, Mr. Eide served
as Vice President of Telenor Bedrift, and Chairman of Telenor Dolphin, Telenor Infomedica, Ephorma
AS, formerly known as Telenor Allianse and Telenor Ergosoft, all of which are Norwegian limited
companies and subsidiaries of Parent. From March 1994 until December 1995, he served as President of
Telenor Dolphin.
Arnhild Schia(2) 36 Ms. Schia has served as the Vice President and Secretary of Purchaser since its inception in October
1999. Since January 1999, she has served as Executive Vice President of 4tel. From May 1998 to
January 1999, Ms. Schia served as Vice President of Marketing of 4tel. From January 1994 to May
1998, she served as Director of the Information Technology division of Telenor R&D, a division of
Telenor AS, a Norwegian limited company.
Kjersti Wiklund(2) 37 Since March 1999, Ms. Wiklund has served as Vice President of Network Management of 4tel. From
February 1995 until March 1999, she served as Director of Strategy and Business Development of
Telenor Corporate AS, a Norwegian limited company.
Kjell Lia(2) 40 Since May 1998, Kjell Lia has served as Vice President of Finance and Administration of 4tel. From
January 1997 until May 1998, Kjell Lia served as Vice President, Controlling & Analysis of Telenor
Bedrift, a Norwegian limited company. From January 1994 until December 1996, Kjell Lia served as
Group Controller, Operations of Nycomed Pharma AS, a limited company.
</TABLE>
- --------
(1) No designee is a director of any other company which has a class of
securities registered pursuant to Section 12 of the Exchange Act or
subject to Section 15(d) of the Exchange Act, or any company registered as
an investment company under the Investment Company Act of 1940.
(2) The principal business address is EDB 4tel AS, Okernveien 121, P.O. Box
6798 St. Olavs plass, 0130 Oslo, Norway.
II-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of September 30, 1999.
<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<S> <C> <C>
C. Thomas Faulders............... 50 Chairman of the Board
Robert B. Kelly.................. 43 Director
Sammy W. Pearson................. 54 Director
Trevor Sokell.................... 58 Director
Michael G. Wilkinson............. 49 Director
Andrew P. Maunder................ 42 Director, President, Chief Executive Officer and Treasurer
Frances Penfold.................. 55 Vice President of Finance, Secretary
Michael L. Moore................. 43 Executive Vice President
Greg R. Fegley................... 44 Vice President Operations
</TABLE>
C. THOMAS FAULDERS was appointed Chairman of the Board of Directors in July
1998. Since June, 1999, Mr. Faulders has served as Chairman of the Board,
President and Chief Executive Officer of LCC International, Inc., a supplier
of integrated end to end infrastructure consulting services to the wireless
telecommunications industry. From March 1998 to June 1999, Mr. Faulders was an
independent consultant. From May 1995 to March 1998, Mr. Faulders was
Executive Vice President, Treasurer and Chief Financial Officer for BDM
International Inc., as well as President of its Integrated Supply Chain
Solutions business unit. Mr. Faulders directed the information technology
company's first and second public offerings, as well as several commercial
acquisitions and subsequent merger with TRW, Inc. From 1992 to 1995, Mr.
Faulders was Vice President and Chief Financial Officer for COMSAT
Corporation, a global provider of satellite services and digital networking
services and technology. During a seven-year tenure with MCI Communications
Corporation beginning in 1985, Mr. Faulders garnered senior level experience
in finance, sales and management. His last position was as a Senior Vice
President in Business Marketing. Mr. Faulders began his business career in
1981 at Satellite Business Systems where he rose to the position of treasurer.
Mr. Faulders earned an MBA from The Wharton School and graduated from the
University of Virginia with a BA in Economics. A former United States Navy
officer with a distinguished eight-year service record, Mr. Faulders also
serves on the Board of Directors of MLC Group, Inc., James Martin & Co. and
Universal Systems & Technology Corporation. Among his non-profit work, Mr.
Faulders serves on the board of the Ronald Reagan Institute for Emergency
Medicine at George Washington University Hospital, the Northside Hospital
Advisory Board in Atlanta, and the Leukemia Society of America.
ROBERT B. KELLY has served as a member of the Board since July 1997.
Mr. Kelly has been a partner in the Washington, DC law firm of Squire, Sanders
& Dempsey, LLP since May 1998. Mr. Kelly was a principal in the Washington, DC
law firm of Kelly & Povich, P.C. from October 1994 to April 1998. Mr. Kelly
was a partner in the Washington DC firm of Piper & Marbury from January 1989
to March 1992, was a sole practitioner from March 1992 to February 1993 and
was a principal in the firm of Kelly, Hunter, Mow & Povich, P.C. from February
1993 to October 1994. Mr. Kelly is a director of Securicor Wireless Holdings,
Inc., a wholly owned subsidiary of Securicor plc, previously known as Intek
Global Corporation, a wireless communications company ("Securicor Wireless").
SAMMY W. PEARSON has been a director of the Company since October 1996. Mr.
Pearson has been Area Vice President, Professional Services of Siebel Systems
since March 1999 and prior to this time was Vice President of Aerospace and
Defense of Baan Company from February 1998 to February 1999. From February
1994 to February 1998, Mr. Pearson was Vice President, Enterprise Solutions of
Oracle Government Services, a business unit of Oracle Corporation, a provider
of advanced software products, services and management solutions. From May
1992 until February 1994, Mr. Pearson was Vice President of Oracle Federal
Consulting, where he managed Oracle's Federal government consulting business.
From May 1991 to May 1992, Mr. Pearson was the principal of TechSales Limited,
a software marketing company.
II-4
<PAGE>
TREVOR SOKELL has served as a director of the Company since July 1994. Mr.
Sokell has been a director of Ridgeway Systems & Software, Inc., a developer
of multimedia software products, since March 1998. Mr. Sokell served as the
Company's President and Chief Executive Officer from July 1994 until October
1994 and served as the Company's Treasurer and Secretary from July 1994 until
March 1995. From November 1996 until May 1997, Mr. Sokell was the Chairman of
the Board of Directors of Securicor 3Net, Ltd., a communications company based
in the United Kingdom ("3Net"). From January 1987 until November 1996, Mr.
Sokell served as Managing Director of 3Net. From November 1996 until May 1997,
Mr. Sokell was Chairman of Securicor Telecoms Ltd., an affiliate of Securicor
plc, a multinational company based in the United Kingdom ("Securicor").
MICHAEL G. WILKINSON has been a director of the Company since July 1994. Mr.
Wilkinson has been the Finance Director of the Communications Division of
Securicor since September 1992. From 1987 to September 1992, Mr. Wilkinson was
Finance Director of Securicor's Business Services Division. Prior to joining
Securicor in 1980, Mr. Wilkinson served as a Finance Director of RCA Limited,
an electronics company based in the United Kingdom. Mr. Wilkinson is a
Director of Securicor Wireless.
ANDREW P. MAUNDER has served as the Company's President and Chief Executive
Officer since October 1994 and as the Company's Treasurer since March 1995.
Mr. Maunder was Chairman of the Board from August 1997 through July 1998 and
has been a director of the Company since October 1996. From March 1994 until
he joined the Company, Mr. Maunder served as Chief Financial Officer of Oxford
Molecular Group plc, a biotechnology company based in the United Kingdom. From
April 1987 until February 1994, Mr. Maunder was Finance and Operations
Director of 3Net. From October 1996 to May 1997, Mr. Maunder also served as a
director of Securicor 3Net, Inc. ("3Net Delaware"), which until September 1997
was a wholly-owned indirect subsidiary of Securicor. Mr. Maunder is also on
the executive committee of the Computer and Communications Industry
Association ("CCIA").
FRANCES PENFOLD was appointed Vice President, Finance in September 1998, and
has served as the Company's Secretary since November 1998. From May 1998 to
September 1998, Ms. Penfold served as Director of Special Projects of the
Company. Ms. Penfold joined the Company from Innovative Data Technology, a
California corporation ("IDT"), which was acquired by the Company in May 1998.
Ms. Penfold served as Chief Financial Officer of IDT since 1988 and a director
since 1990. From 1985 until 1988, Ms. Penfold was IDT's Vice President of
Finance. Ms. Penfold has thirty years experience in the manufacturing
industry.
MICHAEL L. MOORE was appointed Executive Vice President in June 1998. From
May 1998 to June 1998, Mr. Moore served as Vice President, Business
Development of the Company. Mr. Moore joined the Company from IDT, which was
acquired by the Company in May 1998. Mr. Moore served as Chairman of IDT since
1997, as President and Chief Executive Officer since 1994, and as Vice
President of Sales from 1985 to 1994. Previously, Mr. Moore held positions
with Ampex, Applied Digital Data Systems, and NCR Corporation. Mr. Moore has
over twenty years experience in telecommunications and extensive experience in
billing mediation in international markets.
GREG R. FEGLEY has been with the Company and its predecessor business since
January 1988 and was appointed Vice President, Operations Support in October
1997. From January 1988 to September 1997, he held several positions, most
recently Director, Operations. From January 1986 to December 1987, Mr. Fegley
served as Marketing Manager for Northern Telecom's Spectron Division.
The executive officers are annually elected and serve until their successors
are elected and have qualified, or until resignation or removal. There are no
family relationships between any of the executive officers or directors of the
Company.
There are no arrangements or understandings between any of the executive
officers of the Company and other persons relating to their selection as
officers.
There have been no events under any bankruptcy act, no original proceedings,
and no judgments or injunctions material to the evaluation of the ability and
integrity of any director or executive officer during the past five years.
II-5
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
There were 7 meetings of the Board during the fiscal year ended September
30, 1999 ("Fiscal 1999"). All of the directors attended at least 75% of the
meetings of the Board and the committees thereof on which they served.
The Board has two standing committees: the Compensation Committee and the
Audit Committee. The Board does not have a nominating committee. The functions
normally performed by a nominating committee are performed by the Board.
Audit Committee
The Audit Committee, which consists of Messrs. Pearson, Wilkinson and
Sokell, held one meeting during Fiscal 1999. The functions of the Audit
Committee generally include reviewing with the independent auditors the scope
and results of their engagement and reviewing the adequacy of the Company's
internal accounting controls.
Compensation Committee
The Compensation Committee consists of Messrs. Kelly, Pearson and Sokell.
The Compensation Committee is responsible for establishing salaries, bonuses
and other compensation, and granting stock options, for the Company's
executive officers. The Compensation Committee held one meeting during Fiscal
1999. Compensation Committee matters generally were acted upon by the full
Board.
COMPENSATION OF DIRECTORS
Each of the Company's directors, other than Mr. Maunder, is entitled to
receive an annual fee for his service on the Board. Until June 30, 1999, Mr.
Faulders, Chairman of the Board, received an annual fee of $75,000, which
included fees to which he was entitled pursuant to his Consultant Agreement
with the Company. In April 1999, Mr. Faulders and the Company agreed to reduce
the consultant fees to $37,500 and in July 1999, Mr. Faulders and the Company
agreed to cease all payments under the Consultant Agreement. Messrs. Pearson,
Sokell, Wilkinson and Kelly each received an annual fee of $20,000 until March
30, 1999, when the fees were reduced to $10,000 per annum. In addition, each
director is entitled to reimbursement of travel and other expenses incurred in
connection with his service as a director. Pursuant to employment arrangements
between Securicor and Mr. Wilkinson, his director's fee is paid to Securicor.
Mr. Faulders has been granted options to purchase 6,250 shares of Common Stock
(after giving effect to the Reverse Stock Split) under the Company's 1997
Stock Incentive Plan (the "Plan"). Messrs. Pearson and Sokell have each been
granted options to purchase 3,750 shares of Common Stock and Messrs. Kelly and
Wilkinson have each been granted options to purchase 2,500 shares of Common
Stock (after giving effect to the Reverse Stock Split) under the Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From July 1994 to March 1995, Mr. Sokell served as an executive officer of
the Company. In addition, from January 1987 until he ended his employment
relationship with Securicor in June 1997, Mr. Sokell served in senior
management positions with 3Net, first as Managing Director and then as
Chairman of its Board of Directors.
Mr. Kelly and Mr. Wilkinson serve as directors of Securicor Wireless,
previously an affiliate of Securicor and now a wholly owned subsidiary. Mr.
Kelly also acts as Securicor Wireless' telecommunications counsel.
II-6
<PAGE>
CERTAIN OTHER RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to September 30, 1999, Security Services beneficially owned, through
its Subsidiary, 45.4% of the Common Stock. On September 30, 1999, Security
Services and the Subsidiary entered into an Exchange Agreement with the
Company whereby the Subsidiary exchanged 3,476,900 shares of Common Stock for
an equal number of shares of the Preferred Stock. As a result of the
transaction, Security Services no longer beneficially owns any shares of
Common Stock. In connection therewith, the Subsidiary also delivered and
executed an irrevocable proxy to vote in favor of an amendment to the
Company's Certificate of Incorporation to effect the Reverse Stock Split. In
addition, Security Services agreed to maintain the validity of a letter of
credit which it previously issued securing the Company's obligations under its
bank credit facility upon the terms and conditions as are currently operative
(except that the amount of the letter of credit may be reduced from $3.0
million to $2.0 million after June 30, 2000) until the earlier of December 31,
2000 or the completion of a Strategic Transaction. The Exchange Agreement
further provides that the Subsidiary shall not sell or otherwise dispose of
the Preferred Stock without the prior written agreement of the Company except
in accordance with the provisions of the Certificate of Designation.
The Certificate of Designation provides that the Company shall have the
right to require the holder of the Preferred Stock to sell to the Company the
Preferred Stock held by such holder (the "Redemption Right"). The Redemption
Right may be exercised by the Company, without prior notice, one time in the
aggregate, in full, but not in part, upon the earlier of (i) the completion by
the Company of a Strategic Transaction or (ii) December 31, 2000. The purchase
price payable with respect to a redemption of the Preferred Stock shall equal:
(i) the greater of (a) Twenty-Five Cents ($0.25) or (b) fifty percent (50%) of
the per share valuation of the Common Stock at which the Strategic Transaction
is consummated as determined by the Board in its reasonable discretion if
payment is made in the form of (x) a bank treasurer's check or bank cashier's
check, (y) a wire transfer of immediately available funds to an account
specified by the holder or (z) if the Note Conditions (as defined below) are
met, by the delivery of a promissory note of the Company or its successor
pursuant to a Strategic Transaction in the form provided in the Certificate of
Designation or (ii) the greater of (a) Twenty-Five Cents ($0.25) or (b)
seventy-five (75%) of the per share valuation of the Common Stock at which the
Strategic Transaction is consummated as determined by the Board in its
reasonable discretion if the Note Conditions are not met, by the delivery of a
one-year promissory note of the Company or its successor pursuant to a
Strategic Transaction in the form provided for in the Certificate of
Designation. Pursuant to the terms of the Merger Agreement, the Preferred
Stock will be redeemed for an aggregate of $3,820,244 in cash upon Completion
of the Offer.
Prior to the completion of the Company's initial public offering (the
"Offering"), the Company operated as an indirect wholly-owned subsidiary of
Securicor and was a member of the Telecoms Sector of the Communications
Division of Securicor. Accordingly, Securicor assessed the Company
intercompany charges related to group and divisional costs and sales and
marketing activities. These charges were based on Securicor's estimate of its
total relevant costs for the applicable fiscal year, allocated pro rata based
on estimated revenues of each applicable business unit. Upon completion of the
Offering, the Company was no longer liable to Securicor for any group or
divisional charges. In May 1997, the Company and Securicor entered into an
agreement pursuant to which Securicor provided international sales and
marketing services to the Company. The Company no longer obtains services
pursuant to this Agreement. Accordingly, there were no charges from Securicor
for these services during Fiscal 1999.
Prior to the completion of the Offering, Securicor, from time to time,
advanced funds to the Company to meet the Company's needs for working capital
and for other corporate purposes. Such advances were treated as indebtedness
of the Company to Securicor, a portion of which bore interest at varying rates
ranging from a low of 6.25% per annum to a high of 7.75% per annum. In July
1997, the Company used proceeds of the Offering to repay $22.9 million in
Company borrowings from Securicor. At September 30, 1999, the balance of
indebtedness to Securicor was $45,700 which represented payments made on the
Company's behalf to one of the Company's United Kingdom employees and fees
payable with respect to Michael Wilkinson's service as a director of the
Company.
II-7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The table below sets forth certain information, as of October 15, 1999
regarding the holdings of Common Stock and Preferred Stock of (i) each person
who is known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Common Stock and Preferred Stock, (ii) each director
of the Company, (iii) the Company's Chief Executive Officer and each of the
Company's other "Named Executive Officers," as defined in Item 402(a)(3) of
Regulation S-K promulgated by the Securities and Exchange Commission (the
"Commission") (collectively with the Company's Chief Executive Officer, the
"Named Executive Officers") and (iv) all directors and executive officers of
the Company as a group. Unless otherwise specified, the named beneficial owner
has sole voting and investment power. The information in the table below was
furnished by the persons listed, and constitutes beneficial ownership as
defined in regulations of the Commission. Shares issuable pursuant to the
exercise of stock options are included in the table below if such options are
currently exercisable or exercisable by December 15, 1999.
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
-------------------------- -------------------------
Percent of Percent of
Outstanding Outstanding
Name and Addresses of Number of Share of Number Share of
Beneficial Owners Shares (3)(4) Common Stock of Shares Preferred Stock
--------------------- ------------- ------------ --------- ---------------
<S> <C> <C> <C> <C>
Securicor Communications
Limited (1)............. -0- -0- 3,476,900 100%
Dale A. Spencer(2)....... 52,747 5.05% -0- -0-
Michael L. Moore......... 110,259 10.55% -0- -0-
Frances Penfold.......... 103,253 9.88% -0- -0-
C. Thomas Faulders, III.. 14,416 * -0- -0-
Andrew P. Maunder........ 13,169 * -0- -0-
Sammy W. Pearson......... 5,125 * -0- -0-
Trevor Sokell............ 4,000 * -0- -0-
Michael G. Wilkinson(1).. 1,666 * -0- -0-
Robert B. Kelly.......... 1,666 * -0- -0-
Greg R. Fegley........... 5,604 * -0- -0-
William J. Rahe, Jr.
(5)..................... 6,692 * -0- -0-
All directors and
executive officers as a
group (9 persons)....... 259,158(5) * -0- -0-
</TABLE>
- --------
* Less than one percent.
(1) The address of Securicor Communications Limited ("Securicor
Communications") is Sutton Park House, 15 Carshalton Road, Sutton Surrey,
United Kingdom. Mr. Wilkinson, a director of the Company, may be deemed to
own beneficially the shares of Preferred Stock owned by Securicor
Communications by virtue of his role as director of Securicor
Communications. Mr. Wilkinson disclaims beneficial ownership of these
shares. Securicor Communications is an indirect wholly-owned subsidiary of
Securicor.
(2) Mr. Spencer's address is 3501 Waterfall Drive, Sparks, Nevada 89434
(3) Shares issuable upon the exercise of options to purchase the Common Stock:
Mr. Moore 9,499; Ms. Penfold 7,291; Mr. Faulders 4,166; Mr. Maunder 8,749;
Mr. Pearson 2,500; Mr. Sokell 2,500; Mr. Wilkinson 1,666; Mr. Kelly 1,666;
Mr. Fegley 5,604; and Mr. Rahe 5,000.
(4) Reflects number of Shares after giving effect to the Reverse Stock Split.
(5) Mr. Rahe's employment with the Company terminated on February 12, 1999.
The amount of Shares held by him is not included in the number of Shares
held by all directors and executive officers as a group.
II-8
<PAGE>
EXECUTIVE COMPENSATION
Summary
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Named
Executive Officers for the years ended September 30, 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------- ------------
Securities
Bonus/ Underlying All Other
Name and Principal Position Year Salary Commission Options Compensation(4)
- --------------------------- ---- -------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Andrew P. Maunder ...... 1999 $199,719 $ 0 16,250(1) $5,139
President, Chief
Executive Officer 1998 202,308 18,000 10,000(1)(2) 8,783
1997 175,252 6,000 13,333(1)(2) 5,423
Frances Penfold ........ 1999 113,750 5,000 1,875(1) 14,175
Vice President,
Finance, Secretary 1998 28,077 0 10,000(1)(2) 0
Michael L. Moore ....... 1999 140,000 4,072 0 9,570
Executive Vice
President 1998 52,000 0 14,250(1)(2) 0
Greg R. Fegley ......... 1999 113,253 3,652 14,375(1) 3,324
Vice President,
Operations Support 1998 104,240 5,025 6,219(1)(2) 4,097
1997 93,455 0 3,831(1)(2) 3,505
William J. Rahe,
Jr.(3)................. 1999 171,658(5) 4,356 0 2,318
Executive Vice
President, Engineering 1998 151,283 17,340 30,000(1)(2) 6,685
and Product Management 1997 139,475 12,282 27,560(1)(2) 5,592
</TABLE>
- --------
(1) Consists of options to purchase the Common Stock granted pursuant to the
Plan after giving effect to the Reverse Stock Split.
(2) Options granted in fiscal 1997 were repriced in January 1998. After the
repricing and after giving effect to the Reverse Stock Split, the options
held by the Named Executive Officers became exercisable at a price of
$22.00 per share in July 1999 and cannot be exercised unless on the date
of exercise the closing market price of the Common Stock equals or exceeds
$36.00 per share. The repricing of the options was accomplished by means
of canceling outstanding options and issuing new options on the revised
terms.
(3) Mr. Rahe's employment with the Company terminated on February 12, 1999.
(4) Includes amounts paid by the Company with respect to life insurance
premiums for the benefit of the Named Executive Officers and Company
contributions to the 401(k) accounts of such officers as follows: (i) Mr.
Maunder: $5,127, $8,487 and $4,665 in 401(k) contributions in fiscal 1997,
1998 and 1999, respectively, and $296, $296 and $474 for life insurance
premiums in each of fiscal 1997, 1998 and 1999, respectively; (ii) Mr.
Rahe: $5,320, $6,323 and $2,130 in 401(k) contributions in fiscal 1997,
1998 and 1999, respectively, and $362, $362 and $188 in insurance premiums
in fiscal 1997, 1998 and 1999, respectively; (iii) Mr. Fegley: $3,505,
$4,097 and $3,324 in 401(k) contributions in fiscal 1997, 1998 and 1999,
respectively; (iv) Mr. Moore: $2,625 in 401(k) contributions, $2,620 for
life insurance premiums and $4,325 in long term disability premiums in
fiscal 1999; and (v) Ms. Penfold: $2,156 in 401(k) contributions, $4,521
for life insurance premiums and $7,498 in long term disability premiums in
fiscal 1999. Excludes any amounts based upon Mr. Maunder's right to sell
to Securicor (at a price based on operating results in fiscal 1996 of
certain Securicor businesses) shares of 3Net previously held by him that
he acquired prior to his service with the Company.
(5) Includes $101,250 of severance payments made to Mr. Rahe in connection
with the termination of his employment with the Company.
II-9
<PAGE>
Employment Agreements
For a summary of the employment agreements entered into between the Company
and each of its executive officers, See Item 3(b) of the Schedule 14D-9 to
which this Information Statements is attached, which Item 3(b) is incorporated
herein by reference.
1997 Stock Incentive Plan
Under the Plan, a variety of awards, including stock options, stock
appreciation rights and restricted and unrestricted stock grants may be made
to the Company's employees, officers, consultants and advisors who are
expected to contribute to the Company's future growth and success. The Company
initially reserved 450,000 shares of Common Stock for issuance under the Plan.
On May 12, 1998, the Board amended the Plan to increase the number of shares
authorized for issuance under the Plan from 450,000 to 1,050,000, and on
December 18, 1998, the Board further amended the Plan to authorize the
issuance of 2,000,000 shares of Common Stock. Both amendments were
subsequently approved by the Company's stockholders. After giving effect to
the Reverse Stock Split, there are 500,000 shares reserved for issuance under
the Plan. The Compensation Committee administers the Plan and determines the
price and other terms upon which awards shall be made. Stock options may be
granted either in the form of incentive stock options or non-qualified stock
options. The option exercise price of incentive stock options may not be less
than the fair market value of the Common Stock on the date of the grant.
Grants under this Plan may consist of stock options; stock appreciation
rights, which represent rights to receive any excess in value of shares of
Common Stock over the exercise price; restricted stock awards, which entitle
recipients to acquire shares of Common Stock, subject to the right of the
Company to repurchase all or a part of such shares at their purchase price in
the event that the conditions specified in the award are not satisfied; or
unrestricted stock awards, which represent grants of shares to participants
free of any restrictions under the Plan. Options or other awards that are
granted under the Plan but expire unexercised are available for future grants.
Under the terms of the Plan, the Company may not grant options to purchase in
excess of 75,000 shares of Common Stock to any one grantee during any fiscal
year.
Employee Stock Purchase Plan
In July 1997, the Board adopted an Employee Stock Purchase Plan (the "Stock
Purchase Plan") pursuant to which the Company's employees are permitted to
purchase an aggregate of up to 75,000 shares of Common Stock (after giving
effect to the Reverse Stock Split). The employee's purchase price is the lower
of (a) 85% of the fair market value of a share of the Common Stock on the
first day of the Purchase Period (as defined) and (b) 85% of the fair market
value of a share of the Common Stock on the last day of the Purchase Period.
The Stock Purchase Plan is being terminated pursuant to the terms of the
Merger Agreement.
II-10
<PAGE>
Option Grants in Fiscal 1999
The following table shows the number of options (after giving effect to the
Reverse Stock Split) granted to the Company's Named Executive Officers during
Fiscal 1999:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potentially
Realizable
Value At
Assumed Rates
of Stock Price
Appreciation
for Option
Individual Grants Term(1)
---------------------------------------------- ---------------
Number of % of Total
Securities Options At 5% At 10%
Underlying Granted to Exercise Annual Annual
Options Employees Price per Expiration Growth Growth
Name Granted In Fiscal Year Share Date Rate Rate
---- ---------- -------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Andrew P. Maunder....... 6,250 3.99% $5.375 3/23/09 $27,513 $69,727
10,000 6.38% $ 3.75 6/22/09 $23,584 $59,775
Frances Penfold......... 1,875 1.20% $ 7.00 12/15/08 $ 8,254 $20,918
Greg R. Fegley.......... 1,875 1.20% $ 7.00 12/15/08 $ 8,254 $20,918
2,500 1.60% $5.375 3/23/09 $ 8,451 $21,419
10,000 6.38% $ 3.75 6/22/09 $23,584 $59,775
</TABLE>
- --------
(1) The potential realizable values are based on an assumption that the stock
price of the Shares appreciate at the annual rate shown (compounded
annually) from the date of grant until the end of the option term. These
values do not take into account amounts required to be paid as income
taxes under the Internal Revenue Code of 1986, as amended, and any
applicable state laws, or option provisions providing for termination of
an option following termination of employment, nontransferability, or
vesting over periods of up to five years. These amounts are calculated
based on the requirements promulgated by the Commission and do not reflect
the Company's estimate of future growth of the price of the Shares.
Fiscal Year-End Option/SAR Values
During 1999, none of the Named Executive Officers exercised any stock
options. The table below sets forth certain information for Fiscal 1999
concerning unexercised options held by each of the Named Executive Officers
(after giving effect to the Reverse Stock Split) as of September 30, 1999.
AGGREGATED COMPANY OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of
Acquired Securities Underlying Value of Unexercised
on Value Unexercised Options at In-The-Money Options at
Exercise (#) Realized ($) Fiscal Year End (#) Fiscal Year End($)(1)
------------ ------------ ------------------------- -------------------------
NAME Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew P. Maunder....... -0- -0- 8,749 30,834 -0- -0-
Frances Penfold......... -0- -0- 7,291 4,584 -0- -0-
Greg R. Fegley.......... -0- -0- 5,604 18,821 -0- -0-
Michael L. Moore........ -0- -0- 9,499 4,751 -0- -0-
William J. Rahe,
Jr.(2)................. -0- -0- 4,999 9,391 -0- -0-
</TABLE>
- --------
(1) The price of the Shares as reported on the Nasdaq SmallCap Market at
September 30, 1999 was $1.875 per share (after giving effect to the
Reverse Stock Split). The exercise price of the options granted in Fiscal
1999 to the Named Executive Officers were as follows after giving effect
to the Reverse Stock Split: (1) $7.50 (Ms. Penfold and Mr. Fegley--1,875
options each), (2) $5.375 (Mr. Maunder--6,250 options; Mr. Fegley--2,500
options) and (3) $3.75 (Mr. Maunder and Mr. Fegley--10,000 options each).
(2) Mr. Rahe's employment with the Company terminated on February 12, 1999.
II-11
<PAGE>
AGGREGATED SECURICOR OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of
Acquired Securities Underlying Value of Unexercised
on Value Unexercised Options In-The-Money Options
Exercise (#) Realized ($) at Fiscal Year End at Fiscal Year End($)(1)
------------ ------------ ------------------------- -------------------------
NAME Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew P. Maunder....... -0- -0- -0- 48,970 -0- $288,174
Greg R. Fegley.......... -0- -0- -0- 18,360 -0- $108,043
William J. Rahe, Jr..... 18,360 103,929 -0- -0- -0- -0-
</TABLE>
- --------
(1) All amounts reflect the conversion of British Pounds Sterling to U.S.
Dollars at the rate of 0.60 British Pounds Sterling to one U.S. Dollar,
the closing exchange rate reported by the Financial Times on September 30,
1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of Telesciences, Inc. (the "Committee") is
pleased to present its report on executive compensation. The report describes
the underlying philosophy and objectives of the Company's executive
compensation program, the various elements of the program, and the basis for
the compensation determinations made by the Committee with respect to
executive officers for Fiscal 1999.
Executive Compensation Philosophy and Objectives
The fundamental philosophy of the Company is to ensure that executive
compensation is linked directly to continuous improvements in corporate
performance, the achievement by officers of corporate objectives which are
linked to the Company's annual operating plan, and increases in long-term
stockholder value.
The compensation of the Company's top executives is established and reviewed
annually by the Committee, which is comprised entirely of non-employee
directors. The following guidelines have been adopted by the Committee in
making its compensation decisions:
. Providing a competitive total compensation package that enables the
Company to attract and retain key executives.
. Focusing executive behavior on fulfillment of both short and longer-term
business objectives and strategies.
. Emphasizing stockholders' interest by maintaining variable compensation
opportunities directly linked to corporate performance and stock
appreciation.
Compensation Program Elements for Fiscal 1999
The Company's executive compensation is comprised of three components, as
described below. Each component is intended to serve the Company's
compensation philosophy and guidelines.
Base Salary: Base salary levels are established each year through a review
of the executive's performance and experience, against industry comparisons
including telecommunications equipment companies and other comparable firms in
the Mid-Atlantic region. The Committee believes that salaries for the
Company's key executives are generally in the median range within this
comparison group. The base salaries of Messrs. Maunder, Moore, Fegley and Ms.
Penfold are established pursuant to employment agreements between these
executives and the Company.
II-12
<PAGE>
Annual Incentive Compensation: The executive officers of the Company are
eligible to receive annual incentive payments. The Compensation Committee
generally makes these decisions in October with respect to the upcoming fiscal
year. The objective of annual incentive compensation is to deliver competitive
levels of total cash compensation (base salary and incentive award) when
annual financial and operational accomplishments are made. The specific areas
used to measure key executive performance were changed in 1999 to be based
solely on the achievement in reaching the Company's goals for profitability.
This factor was considered in evaluating the performance of the Chief
Executive Officer ("CEO") and each executive officer. These performance
evaluations are reviewed by the Committee for final determination of incentive
awards. The performance of the CEO is evaluated by the Committee and based on
the overall progress of the CEO and the Company in the specific area described
above viewed retrospectively by the Committee. The Committee set actual
incentive awards for Fiscal 1999 at a maximum of 50% of base salary for the
CEO and 40% of base salary for other executive officers.
Stock Option Programs: The Committee strongly believes that the interests of
stockholders are best served by linking executives' financial success with the
Company's stock performance. Therefore, the Company maintains a stock option
program pursuant to which the Committee grants stock options to executives
with an exercise price equal to the fair market value on the date of grant.
The target award for each executive position is based on competitive norms for
awarding of stock options. Whether an individual receives more or less than
his target grant is based on the result of an individual performance review
which measures such individual's overall job performance.
Compensation of the CEO and Other Executive Officers
The salary levels for certain executive officers of the Company were
adjusted at various times during Fiscal 1999. The base salary of Mr. Maunder,
the Company's Chief Executive Officer and President, was reduced to $191,937
in April 1999 primarily to reflect the Company's commitment to reducing costs
in light of the Company's recent declines in operating results. Certain other
executive officers received increases in compensation to reflect promotions or
added responsibilities.
The Legislative Cap on Deductibility of Pay
The Internal Revenue Code of 1986, as amended imposes a $1 million dollar
limit on the deductibility of pay for executives. The Company's cash
compensation level is far below the limit. Therefore, this legislation will
not impact current pay levels.
The Company believes that the stock options granted to their executives are
exempt from the limitations of the regulation, because they are a form of
"qualified performance-based compensation."
The foregoing report has been furnished by the members of the Committee who
are listed below. No member of the Committee is a current officer or employee
of the Company.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
Robert B. Kelly Sammy W. Pearson Trevor Sokell
November 1, 1999
II-13
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the directors and certain
officers of the Company and persons who own more than ten percent of the
Common Stock to file with the Commission initial statements of beneficial
ownership and statements of changes in beneficial ownership of the Common
Stock. Such directors, officers and more than ten percent stockholders are
required by regulation to furnish the Company with copies of all Section 16(a)
statements they file.
To the Company's knowledge, based solely on a review of the copies of such
statements furnished to the Company and written representations of such
directors and officers that no other statements were required, all Fiscal 1999
Section 16(a) filing requirements applicable to its directors, officers and
more than ten percent stockholders were complied with, except that Michael
Moore and Frances Penfold each reported one transaction of Form 4 late with
respect to the return to the Company of Shares in accordance with certain
post-closing adjustments provided for in the Merger Agreement between the
Company and Innovative Data Technology dated May 15, 1998.
STOCK PERFORMANCE GRAPH
Regular-way trading in the Shares commenced in the Nasdaq National Market on
July 8, 1997. The Shares were listed on the Nasdaq National Market throughout
the periods reflected below until September 27, 1999 when the Shares ceased to
be listed on the Nasdaq National Market and became listed on the Nasdaq
SmallCap Market. The following graph compares the Company's cumulative total
stockholder return on the Shares for a 27 month period (July 8, 1997 to
September 30, 1999) with the cumulative total stockholder return of the Nasdaq
Composite Index and an index of peer group companies consisting of providers
of billing data systems and related products and services. This peer group is
one with which management believes the Company to be most aligned. The graph
assumes that $100 was invested in the Common Stock and each index at July 8,
1997 and that any dividends have been reinvested.
COMPARISON OF 27 MONTH CUMULATIVE TOTAL RETURN
AMONG TELESCIENCES INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP INDEX/1/
.
FISCAL YEAR ENDING
---------------------------------------------
7/08/1997 9/30/1997 9/30/1998 9/30/1999
Telesciences, Inc. 100.00 97.92 11.46 3.91
Peer Group Index 100.00 109.44 122.73 103.42
NASDAQ Market Index 100.00 116.59 121.17 196.02
- --------
(1) The Peer Group Index includes the common stock of the following companies:
ACE*COMM Corp., CSG Systems International, Inc., ITDS, Inc., LHS Group,
Inc., Lightbridge Inc. and Saville Systems plc. USCS International, Inc.
is no longer a part of the Peer Index because it was acquired by UST
Systems, Inc. in March 1999.
II-14
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of October 19, 1999, by and
among EDB Business Partner ASA, EDB 4tel Acquisition Corp. and
Telesciences, Inc. (incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K filed on October 20, 1999).
Exhibit 2 Escrow Agreement, dated as of October 19, 1999, by and among
Telesciences, Inc., EDB Business Partner ASA, EDB 4tel Acquisition
Corp. and First Union National Bank (incorporated by reference to
Annex B to Exhibit 2 to the Company's Current Report on Form 8-K
filed on October 20, 1999).
Exhibit 3 Shareholder Agreement, dated as of October 19, 1999, by EDB
Business Partner ASA, EDB 4tel Acquisition Corp. and Frances
Penfold.
Exhibit 4 Shareholder Agreement, dated as of October 19, 1999, by EDB
Business Partner ASA, EDB 4tel Acquisition Corp. and Michael Moore.
Exhibit 5 Confidentiality Letter executed by EDB 4tel, a division of EDB
Business Partner ASA, dated August 26, 1999
Exhibit 6 Form of Option Agreement between Telesciences, Inc. and Option
Holders.
Exhibit 7 Employment Agreement, between Securicor Telesciences Inc. and
Andrew Philip Maunder dated July 1, 1994 (incorporated by reference
to Exhibit 10.2 to the Company's Registration Statement on Form S-
1, File No. 333-25439).
Exhibit 8 Amendment, dated October 19, 1999, to Employment Agreement, between
Telesciences, Inc. and Andrew Philip Maunder dated July 1, 1994.
Exhibit 9 Employment Agreement, between Securicor Telesciences Inc. and
William J. Rahe, Jr., dated February 15, 1995 (incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement
on Form S-1, File No. 333-25439).
Exhibit 10 Severance Agreement and General Release dated February 12, 1999,
between the Company and William J. Rahe.
Exhibit 11 Employment Agreement between the Company and Michael L. Moore,
dated May 15, 1998 (incorporated by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998).
Exhibit 12 Employment Agreement between the Company and Frances Penfold, dated
May 15, 1998 (incorporated by reference to Exhibit 10.5 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998).
Exhibit 13 Consultant Agreement between the Company and C. Thomas Faulders
III, dated July 23, 1998 (incorporated by reference to the
Company's Quarterly Report of Form 10-Q for the quarter ended June
30, 1998).
Exhibit 14 Employment Agreement between the Company and Greg R. Fegley, dated
April 1, 1999.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
Exhibit 15 Exchange Agreement entered into as of September 30, 1999, by and
among the Company, Security Services plc and Securicor
Communications Limited (incorporated by reference to Exhibit 99.1
to the Company's Current Report on Form 8-K filed on October 14,
1999).
Exhibit 16 Press Release issued by Telesciences, Inc., dated October 19, 1999
(incorporated by reference to Exhibit 99 to the Company's Current
Report on Form 8-K filed on October 20, 1999).
Exhibit 17 Letter to Stockholders of Telesciences, Inc., dated November 1,
1999.*
Exhibit 18 Opinion of Brooks, Houghton & Company, Inc. dated October 19,
1999**.
</TABLE>
- --------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
** Included as Annex I to the Schedule 14D-9.
<PAGE>
EXHIBIT 3
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of October 19, 1999 (this
"Agreement"), among EDB Business Partner ASA, a Norwegian Public Limited Company
(the "Parent"), EDB 4tel Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of the Parent ("Purchaser"), and Frances Penfold (the
"Stockholder").
WHEREAS, concurrently with the execution and delivery of this
Agreement the Parent, Purchaser and Telesciences, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger dated as of
the date hereof (such Agreement and Plan of Merger, as amended from time to
time, the "Merger Agreement"), which provides, among other things, that
Purchaser shall make the Offer (as defined in the Merger Agreement) to purchase
at a price of $8.79 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.04 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record 97,837 shares
of Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, all on the terms and
conditions contained in this Agreement.
<PAGE>
2
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
Tender Offer
SECTION 1.1. Tender of Shares. (a) At least two business days prior to
the consummation by the Purchaser of the Offer, the Stockholder shall tender to
the Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law,
withdraw the tender effected in accordance with Section 1.1(a); provided,
however, that the Stockholder may decline to tender, or may withdraw, any and
all Shares owned by the Stockholder if the Purchaser amends the Offer to (w)
reduce the Offer Price to less than $8.79 in cash, net to the stockholders, (x)
reduce the number of shares of Company Common Stock subject to the Offer, (y)
change the form of consideration payable in the Offer or (z) amend or modify any
term or condition of the Offer in a manner adverse to the stockholders of the
Company (other than insignificant changes or amendments or other than to waive
any condition). The Stockholder shall give Purchaser at least two business days'
prior notice of any withdrawal of Shares owned by the Stockholder pursuant to
the immediately preceding proviso.
SECTION 1.2. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase. If all Shares validly tendered
and not withdrawn are not accepted for payment and paid for in accordance with
the terms of the Offer to Purchase, they shall be returned to the Stockholder,
whereupon they shall continue to be held by the Stockholder subject to the terms
and conditions of this Agreement.
<PAGE>
3
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, or Purchaser notifies Stockholder of its intent to
continue its Offer or a revised offer within 2 business days of termination of
the Merger Agreement the Stockholder hereby agrees (i) to vote all Shares now or
hereafter owned by such Stockholder or execute a consent or proxy and not revoke
any proxy, vote or consent, in favor of the Merger Agreement, the Merger and the
transactions contemplated thereby, and (ii) to oppose any Alternative
Acquisition and to vote all Shares now or hereafter owned by such Stockholder,
or execute a consent or proxy, against any Acquisition Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 97,837 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer or the Merger, as the
case may be, free and clear of any and all liens, restrictions, security
interests or any encumbrances whatsoever, other than restrictions under
applicable securities laws (collectively, "Liens"). None of the Shares owned by
the Stockholder is subject to any voting trust or other agreement, arrangement
or restriction with respect to the voting of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with
<PAGE>
4
any Lien any of the Shares, (ii) enter into any contract, option, put, call,
"collar" or other agreement or understanding with respect to any Transfer of any
or all of the Shares or any interest therein; (iii) grant any proxy,
power-of-attorney or other authorization or consent in or with respect to the
Shares; (iv) deposit the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares; or (v) take any other
action with respect to the Shares that would in any way restrict, limit or
interfere with the performance of its obligations hereunder.
(c) The Stockholder agrees to place the following legend on
any and all certificates evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF OCTOBER 19, 1999, BY AND AMONG
PARENT, PURCHASER AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES OF
COMMON STOCK IN VIOLATION OF THE TERMS OF SUCH AGREEMENT SHALL BE
NULL AND VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
<PAGE>
5
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and, except as set forth in the disclosure
schedule to the Merger Agreement, the Stockholder has no option to purchase or
right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
<PAGE>
6
SECTION 4.2. Binding Effect. This Agreement has been duly executed
and delivered by the Parent and Purchaser and is a valid and binding agreement
of the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer will be acquired by Parent for its own
account and not with a view to the public distribution thereof and will not be
transferred except in compliance with the Securities Act and the rules and
regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. From the date hereof, the Stockholder
shall not directly or indirectly (i) solicit, initiate or knowingly
encourage (or authorize any person to solicit, initiate or encourage)
any Alternative Acquisition, or (ii) participate in any discussion or
negotiations regarding, or furnish to any other person any information
with respect to, or otherwise knowingly cooperate in any way with, or
participate in, facilitate or encourage any effort or attempt by any
other person to do or seek the foregoing. The Stockholder shall
promptly advise the Purchaser of the terms of any communications it or
any of its affiliates may receive relating to any Alternative
Acquisition (including, without limitation, the identify of the party
making any such Alternative Acquisition).
(b) Adjustment upon Changes in Capitalization or Merger.
In the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights
hereunder, the number and kind of shares or securities subject to this
Agreement and the price set forth herein at which Shares may be
<PAGE>
7
purchased from the Stockholder pursuant to the Offer shall be
appropriately and equitably adjusted so that Parent and Purchaser
shall receive pursuant to the Offer the number and class of shares or
other securities or property that Parent or Purchaser, as the case may
be, would have received in respect of the Shares purchasable pursuant
to the Offer if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by Purchaser.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement and injunctive
relief shall be available to the Parent, Purchaser or the Stockholder for any
breach by the other party or parties of any agreement, covenant or
representation hereunder.
<PAGE>
8
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $8.79
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the later of (i) the Merger Agreement or (ii) termination of the
Offer or any revised Offer if Purchaser notifies Stockholder of its intent to
continue its Offer or a revised Offer within 2 business days after termination
of the Merger Agreement.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or
<PAGE>
9
transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effects as if the signatures thereto and thereof were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in
its capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
EDB BUSINESS PARTNER ASA
By: /s/ Eivind Kinck
--------------------------------------
Name:
Title:
Address for Notices:
<PAGE>
10
EDB 4TEL
By: /s/ Asbjorn Eide
--------------------------------------
Name:
Title:
Address for Notices:
/s/ Frances Penfold
-----------------------------------------
Address for Notices:
<PAGE>
EXHIBIT 4
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of October 19, 1999 (this
"Agreement"), among EDB Business Partner ASA, a Norwegian Public Limited Company
(the "Parent"), EDB 4tel Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of the Parent ("Purchaser"), and Michael Moore (the
"Stockholder").
WHEREAS, concurrently with the execution and delivery of this
Agreement the Parent, Purchaser and Telesciences, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger dated as of
the date hereof (such Agreement and Plan of Merger, as amended from time to
time, the "Merger Agreement"), which provides, among other things, that
Purchaser shall make the Offer (as defined in the Merger Agreement) to purchase
at a price of $8.79 per share, net to the sellers in cash, all of the issued
and outstanding shares of the Company's Common Stock, par value $0.04 per share
(the "Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record 100,760
shares of Company Common Stock (such shares of Company Common Stock being
collectively referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and
Purchaser to enter into the Merger Agreement, and as an inducement to them to
do so, the Stockholder has agreed for the benefit of the Parent and Purchaser
to tender the Stockholder Shares and any other shares of Company Common Stock
at any time during the term of this Agreement held by the Stockholder, pursuant
to the Offer, to vote all the Stockholder Shares and any other shares of
Company Common Stock owned by the Stockholder in favor of the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE>
2
ARTICLE I
Tender Offer
SECTION 1.1. Tender of Shares. (a) At least two business days prior
to the consummation by the Purchaser of the Offer, the Stockholder shall tender
to the Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities,
or by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law,
withdraw the tender effected in accordance with Section 1.1(a); provided,
however, that the Stockholder may decline to tender, or may withdraw, any and
all Shares owned by the Stockholder if the Purchaser amends the Offer to (w)
reduce the Offer Price to less than $8.79 in cash, net to the stockholders, (x)
reduce the number of shares of Company Common Stock subject to the Offer, (y)
change the form of consideration payable in the Offer or (z) amend or modify
any term or condition of the Offer in a manner adverse to the stockholders of
the Company (other than insignificant changes or amendments or other than to
waive any condition). The Stockholder shall give Purchaser at least two
business days' prior notice of any withdrawal of Shares owned by the
Stockholder pursuant to the immediately preceding proviso.
SECTION 1.2. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase. If all Shares validly tendered
and not withdrawn are not accepted for payment and paid for in accordance with
the terms of the Offer to Purchase, they shall be returned to the Stockholder,
whereupon they shall continue to be held by the Stockholder subject to the terms
and conditions of this Agreement.
<PAGE>
3
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, or Purchaser notifies Stockholder of its intent to
continue its Offer or a revised offer within 2 business days of termination of
the Merger Agreement the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Merger Agreement, the Merger
and the transactions contemplated thereby, and (ii) to oppose any Alternative
Acquisition and to vote all Shares now or hereafter owned by such Stockholder,
or execute a consent or proxy, against any Acquisition Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 100,760 Shares and that there
are no restrictions on voting rights or rights of disposition pertaining to
such Shares. The Stockholder will convey good and valid title to the Shares
owned by the Stockholder and being acquired pursuant to the Offer or the
Merger, as the case may be, free and clear of any and all liens, restrictions,
security interests or any encumbrances whatsoever, other than restrictions
under applicable securities laws (collectively, "Liens"). None of the Shares
owned by the Stockholder is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell,
sell short, transfer (including gift), assign, pledge or otherwise dispose of
or transfer (each, a "Transfer") any interest in or encumber with any Lien any
of the Shares, (ii) enter into any contract, option, put, call, "collar" or
<PAGE>
4
other agreement or understanding with respect to any Transfer of any or all of
the Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend on
any and all certificates evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT SHAREHOLDER
AGREEMENT, DATED AS OF OCTOBER 19, 1999, BY AND AMONG PARENT,
PURCHASER AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES OF COMMON STOCK
IN VIOLATION OF THE TERMS OF SUCH AGREEMENT SHALL BE NULL AND VOID AND
OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution,
delivery and performance by the Stockholder of this Agreement and the
consummation of the transactions contemplated hereby (i) are within the
Stockholder's power and authority, have been duly authorized by all necessary
action (including any consultation, approval or other action by or with any
other person), (ii) require no action by or in respect of, or filing with, any
Governmental Body (except as may be required under the HSR Act and under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act")), and (iii) do not and will not
contravene or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Stockholder or to a loss of any benefit of the Stockholder under, any provision
of applicable law or regulation or any agreement, judgment, injunction, order,
decree, or other instrument binding on the Stockholder or result in the
imposition of any Lien on any assets of the Stockholder. If the Stockholder is
married and the Shares constitute community property or otherwise are owned or
held in a manner that requires spousal or other approval for this Agreement to
be legal, valid and binding, this Agreement has been duly consented to and
delivered by the Stockholder's spouse or the person giving such approval,
enforceable against such spouse or person in accordance with its terms.
<PAGE>
5
SECTION 3.3. Binding Effect. This Agreement has been duly executed
and delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as
of the date hereof by the Stockholder and, except as set forth in the
disclosure schedule to the Merger Agreement, the Stockholder has no option to
purchase or right to subscribe for or otherwise acquire any securities of the
Company and has no other interest in or voting rights with respect to any other
securities of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder
is entitled to a commission or fee from Purchaser or the Company in respect of
this Agreement based upon any arrangement or agreement made by or on behalf of
the Stockholder, except as otherwise disclosed in the Merger Agreement.
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated
hereby (i) have been duly authorized by all necessary corporate action on the
part of the Parent and Purchaser, (ii) require no action by or in respect of,
or filing with, any Governmental Body (except as may be required under the HSR
Act and under the Exchange Act), or (iii) do not and will not contravene or
constitute a default under, the certificate of incorporation or by-laws of
Parent or Purchaser or any provision of applicable law or regulation or any,
judgment, injunction, order, decree, material agreement or other material
instrument binding on the Parent or Purchaser.
<PAGE>
6
SECTION 4.2. Binding Effect. This Agreement has been duly executed
and delivered by the Parent and Purchaser and is a valid and binding agreement
of the Parent and Purchaser, enforceable against each of them in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer will be acquired by Parent for its own
account and not with a view to the public distribution thereof and will not be
transferred except in compliance with the Securities Act and the rules and
regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. From the date hereof, the Stockholder
shall not directly or indirectly (i) solicit, initiate or knowingly
encourage (or authorize any person to solicit, initiate or
encourage) any Alternative Acquisition, or (ii) participate in any
discussion or negotiations regarding, or furnish to any other person
any information with respect to, or otherwise knowingly cooperate in
any way with, or participate in, facilitate or encourage any effort
or attempt by any other person to do or seek the foregoing. The
Stockholder shall promptly advise the Purchaser of the terms of any
communications it or any of its affiliates may receive relating to
any Alternative Acquisition (including, without limitation, the
identify of the party making any such Alternative Acquisition).
(b) Adjustment upon Changes in Capitalization or Merger.
In the event of any change in the Company's capital stock by reason
of stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights
hereunder, the number and kind of shares or securities subject to
this Agreement and the price set forth herein at which Shares may be
<PAGE>
7
purchased from the Stockholder pursuant to the Offer shall be
appropriately and equitably adjusted so that Parent and Purchaser
shall receive pursuant to the Offer the number and class of shares
or other securities or property that Parent or Purchaser, as the
case may be, would have received in respect of the Shares
purchasable pursuant to the Offer if such purchase had occurred
immediately prior to such event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by Purchaser.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary
in order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or
bound, to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement and injunctive
relief shall be available to the Parent, Purchaser or the Stockholder for any
breach by the other party or parties of any agreement, covenant or
representation hereunder.
<PAGE>
8
SECTION 6.5. Notices. All notices, requests, claims, demands and
other communications hereunder shall be deemed to have been duly given when
delivered in person, by telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) to such party at its address set forth on
the signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive
the acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer
or (ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than
$8.79 in cash, net to the sellers, (x) reduce the number of shares of Company
Common Stock subject to the Offer, (y) change the form of consideration payable
in the Offer or (z) amend or modify any term or condition of the Offer in a
manner adverse to the stockholders of the Company (other than insignificant
changes or amendments or other than to waive any condition). This Agreement
will also terminate upon the later of (i) the Merger Agreement or (ii)
termination of the Offer or any revised Offer if Purchaser notifies Stockholder
of its intent to continue its Offer or a revised Offer within 2 business days
after termination of the Merger Agreement.
SECTION 6.8. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that Purchaser
may assign its rights and obligations to another wholly-owned subsidiary of the
Parent which is the assignee of Purchaser's rights under the Merger Agreement;
and provided further that except as set forth in the prior clause, a party may
not assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties hereto and any
purported assignment, delegation or transfer without such consent shall be null
and void.
<PAGE>
9
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to
the principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effects as if the signatures thereto and thereof were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in
its capacity as the record holder and beneficial owner of the Shares and
nothing herein shall limit or affect any actions taken by the Stockholder in
his or her capacity as an officer, director, partner, employee or affiliate of
the Company and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible. To the extent that any provision
of this Agreement and the Merger Agreement conflict, the provisions of the
Merger Agreement shall control.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
EDB BUSINESS PARTNER ASA
By: /s/ Eivind Kinck
-------------------------------
Name:
Title:
Address for Notices:
EDB 4TEL
By: /s/ Asbjorn Eide
-------------------------------
Name:
Title:
Address for Notices:
/s/ Michael Moore
-----------------------------------
Name:
Address for Notices:
<PAGE>
EXHIBIT 5
BROOKS, HOUGHTON & COMPANY, INC.
444 MADISON AVENUE o 25TH FLOOR o NEW YORK, NY 10022 o
TELEPHONE: 212-753-1991 o FACSIMILE: 212-753-7730
- --------------------------------------------------------------------------------
EMAIL: [email protected]
JOHN Y. FREEMAN,
EXECUTIVE DIRECTOR
CONFIDENTIALITY LETTER
August 26, 1999
EDB 4tel AS
P.O. Box 6701, St. Olavs plass
N-0130 Oslo
Norway
Attention: Asbjorn Eide, CEO
Re: Possible investment by EDB 4tel AS in the equity of Telesciences, Inc. (the
"Transaction")
Gentlemen:
You have expressed an interest in a possible transaction (the "Transaction")
described above involving Telesciences, Inc. (the "Company") and have requested
certain information concerning the Company from the Company and Brooks, Houghton
& Company, Inc.("BHC"). As a condition to furnishing you with such information,
including certain non-public confidential information, the Company is requiring
that you agree, as set forth below, to treat confidentially such information and
any other information which the Company, BHC, or any of the Company's
representatives or agents furnish to you (collectively, the "Evaluation
Material").
You agree that the Evaluation Material will be used only in connection with the
Transaction, and that all Evaluation Material will be kept confidential by you
and your agents and employees, and shall not, except as hereinafter provided,
without the prior written consent of the Company, be disclosed by you or your
agents or employees in any manner whatsoever, and shall not be used by you or
your agents or employees other than for the purpose of evaluating the
Transaction. Moreover, you further agree to transmit the Evaluation Material
only to your directors, agents, and employees who need to know such information
for the purpose of evaluating the Transaction and who shall (i) be advised by
you of this agreement and (ii) agree with you to be bound by the provisions
hereof.
Without the prior written consent of the Company, you, your directors, agents
and employees who have knowledge of the Transaction will not disclose to any
person or entity who is not a direct participant in the Transaction any of the
terms, conditions or other facts with respect to the possible Transaction,
including without limitation the facts that the Company is considering a
possible Transaction or may be discussing a possible Transaction with you or
other parties.
In the event you are requested or required (by oral questions, interrogatories,
requests for information or documents subpoena, Civil Investigative Demand or
similar process) to disclose any of the Evaluation Material, it is agreed that
you will provide the Company with prompt notice of such request(s) so that the
Company may seek an appropriate protective order and/or waive your compliance
with the provisions of this Agreement. It is further agreed that, if in the
absence of a protective order or the receipt of a waiver hereunder you are
nonetheless, in the opinion of your counsel, compelled to disclose any of the
Evaluation Material to any tribunal or else stand liable for contempt or suffer
other censure or penalty, you may disclose such Evaluation Material to such
tribunal without liability hereunder.
In addition, you hereby acknowledge that you are aware (and, if applicable, that
your directors, officers, employees and representatives who are apprised of this
matter have been advised) that the United States
<PAGE>
Telesciences Confidentiality Agreement, Page 2
- --------------------------------------------------------------------------------
securities laws prohibit any person who has material non-public information
about a company from purchasing or selling securities of such company, and you
agree not to trade in the Company's securities while in possession of material
non-public information as a result of the information included in the Evaluation
Material or otherwise. You further agree that you will not acquire, directly or
indirectly, in any manner, or propose to acquire in any manner (including by
making any unilateral offer or proposal), for a period of two years from the
date of this Agreement, any securities or property of the Company, except
pursuant to a Transaction approved by the Company's Board of Directors. This
will not be valid if shareholders represented in the board of directors
initiates such a transaction.
Without the Company's prior written consent, you will not, for a period of two
years from the date hereof, directly or indirectly solicit for employment any
person who is now employed by the Company who becomes known to you as a result
of this investigation of the Company.
In the event that the Transaction is not effected after you have been furnished
with Evaluation Material, you will promptly upon the request of the Company
deliver to the Company the Evaluation Material, without retaining any copy
thereof.
The term "Evaluation Material" does not include information which (i) becomes or
has been generally available to the public other than as a disclosure by you or
your representative, (ii) was available to you on a non-confidential basis prior
to its disclosure to you by the Company or its representatives, or (iii) becomes
available to you on a non-confidential basis from a source other than the
Company or its representatives, provided however, that such source is not bound
by a confidentiality agreement with the Company or its representatives.
Although you understand that the Company and BHC have endeavored to include in
the Evaluation Material information believed to be relevant or the purpose of
your investigation, you further understand that, except as may otherwise be
agreed in writing, the Company and BHC do not make any representation or
warranty as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company, BHC nor any of the Company's representatives
shall have any liability to you or any of your representatives resulting from
the use of the Evaluation Material by you or such representatives.
You understand that in the event of a breach by you of this Agreement the
Company shall be entitled to specific performance as a remedy for such breach,
in addition to the remedies it may have at law.
You understand and agree that this Agreement is being entered into on behalf of
the Company and for its benefit, and that, accordingly the Company may enforce
this agreement as if it were a party hereto.
If you are in agreement with the foregoing, please sign and return one copy of
this letter which will constitute our agreement with respect to the subject
matter of this letter.
Very truly yours,
/s/ John Y. Freeman
- -----------------------------------
Brooks, Houghton & Company, Inc.
Confirmed and Agreed to as of this date:
EDB 4tel AS
By: /s/ Asbjorn Eide Title: CEO
------------------------------- ------------------------------
<PAGE>
EXHIBIT 6
OPTION AGREEMENT
----------------
OPTION AGREEMENT, dated as of the date set forth below (the "Option
Agreement"), by and among Telesciences, Inc., a Delaware corporation (the
"Company") and the undersigned holder of Options (the "Option Holder").
W I T N E S S E T H
-------------------
WHEREAS, the Company has entered into an Agreement and Plan of Merger (the
"Merger Agreement") with EDB Business Partner ASA, a Norwegian limited company
("Parent"), and EDB 4tel Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Purchaser"), dated as of October 19, 1999;
WHEREAS, the Merger Agreement provides that Purchaser shall offer to
purchase for cash any and all of the issued and outstanding shares of Common
Stock (the "Shares") of the Company at a price of $8.79 per Share (the "Offer
Price"); and
WHEREAS, the Merger Agreement provides that the holders of any options (the
"Options") of the Company issued and outstanding under the Company's 1997 Stock
Incentive Plan (the "Plan") (whether or not then currently exercisable) will be
entitled to receive, and shall receive, at the sole election of the holder of
such Option in settlement of each Option, where the amount is positive, a cash
payment from the Company in an amount equal to the product of the Offer Price
minus the exercise price per Share of the Option and the number of Shares
covered by such Option.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter contained and
intending to be bound hereby, the parties hereto agree as follows:
1. SETTLEMENT OF OPTIONS. Option Holder agrees to receive, in settlement
---------------------
of each Option held by Option Holder, where such amount is positive, a cash
payment from the Company in an amount equal to the product of the Offer Price
minus the exercise price per Share of each Option and the number of Shares
covered by such Option as set forth in Section 2.08 of the Merger Agreement (a
copy of this section is attached hereto as Exhibit A). Subject to any
applicable withholding taxes, such payment shall be made upon the date (the
"Payment Date") that is the latest of (i) the Completion of the Offer (as
defined in the Merger Agreement), (ii) the first business day of January 2000 or
(iii) the earlier of (A) 30 business days after the termination notice is given
in accordance with the terms of the Plan or (B) the date of this Option
Agreement.
2. CONFIRMATION OF OPTIONS. Option Holder confirms that the number of
-----------------------
Shares issuable upon exercise of Options held by the Option Holder and the
exercise price(s) of such Options are as set forth in Exhibit B attached hereto.
<PAGE>
3. TERMINATION OF OPTIONS. Option Holder agrees that, conditioned upon
----------------------
the Completion of the Offer all Options held by Option Holder shall be
terminated as of the Payment Date.
4. EXERCISE OF OPTIONS. Option Holder agrees to not exercise any Options
-------------------
unless and until the Merger Agreement is terminated.
5. TERMINATION OF THIS OPTION AGREEMENT. This Option Agreement shall
------------------------------------
terminate if and when the Merger Agreement is terminated.
IN WITNESS WHEREOF, each of the parties have signed this Agreement as of
the day, month and year first above written.
TELESCIENCES, INC.
By: ______________________________
Andrew P. Maunder
President and Chief Executive
Officer
Dated: _____________, 1999 ___________________________________
Signature of Option Holder
___________________________________
Print Name of Option Holder
<PAGE>
EXHIBIT A
---------
SECTION 2.08 Employee Stock Options. On the latest of (i) the Completion
----------------------
of the Offer (ii) the first business day of January 2000 or (iii) the
earlier of (A) 30 days after termination notice is given in accordance with
the terms of the plan governing the Options (as defined herein) or (B) the
date that the Option holder agrees to the treatment provided in this
Section 2.08, each holder of then outstanding options to purchase Shares
granted by the Company (whether or not then currently exercisable) (the
"Options") will be entitled to receive, and shall receive, at the sole
election of the holder of such Option in settlement of each Option where
the amount set forth in clause (i) below is positive, a cash payment from
the Company in an amount equal to the product of (i) the Transaction
Consideration minus the exercise price per Share of the Option and (ii) the
number of Shares covered by such Option. Such payment shall be reduced by
any applicable withholding taxes. If and to the extent required by the
terms of the plan governing such Options or pursuant to the terms of any
Option granted thereunder, each of Parent and the Company shall use its
best efforts to obtain the consent of each holder of outstanding Options to
the foregoing treatment of such Options, including without limitation,
giving the termination notice contemplated by the plan governing such
Options. The Company, acting through its Board of Directors or any
committee thereof, shall have the right at any time or from time to time
following the execution hereof to accelerate and vest, in full or in part,
any and all Options not currently exercisable in full. Effective as of the
Effective Time, the Company, acting through its Board or any committee
thereof, shall terminate those Options with an exercise price that is
greater than the Transaction Consideration.
<PAGE>
EXHIBIT B
---------
Name of Option Holder: _____________________
<TABLE>
<S> <C> <C>
Shares Issuable Upon Exercise of Option* Exercise Price Per Share* Date of Grant
- --------------------------------------- ------------------------ -------------
</TABLE>
_________________________
* Number of Shares and exercise price are adjusted to reflect the one-
for-four reverse stock split of the Telesciences, Inc. common stock
effective on October 15, 1999.
<PAGE>
EXHIBIT 8
TELESCIENCES, INC.
October 19, 1999
Andrew P. Maunder
Re: Amendment to Employment Agreement ("Employment Agreement") dated July
1, 1994 between Telesciences, Inc. (the "Company") and Andrew P.
Maunder ("APM")
----------------------------------------------------------------------
Dear Mr. Maunder:
In connection with the execution by the Company of an Agreement and Plan of
Merger dated as of October 14, 1999 by and among the Company, EDB Business
Partner ASA ("EDB") and a subsidiary of EDB (the "Merger Agreement"), the
Company and APM are hereby agreeing to amend the Employment Agreement as
follows:
1. Upon Completion of the Offer (as that phrase is defined in the Merger
Agreement), APM's employment with the Company shall terminate and APM
shall be paid $100,000 in cash on such date and an additional $100,000
in twelve equal monthly installments of $8,333.33 commencing thirty
days after the Completion of the Offer.
2. For a period of twelve months, APM shall be entitled to the health
insurance, dental insurance, life insurance, and other benefits
(excluding any automobile allowance) provided to Company executives as
identified on Exhibit B to the Disclosure Schedule to the Merger
Agreement.
3. All references to six months in Sections 6(b), (c) and (d) of the
Employment Agreement shall be changed hereby to twelve months.
Please sign below to confirm your agreement to the foregoing.
Very truly yours,
TELESCIENCES, INC.
By: /s/ C. Thomas Faulders
-------------------------------------
Name: C. Thomas Faulders III
Title: Chairman of the Board
AGREED TO:
/s/ Andrew P. Maunder
- ---------------------
Andrew P. Maunder
<PAGE>
EXHIBIT 10
February 12, 1999
William Rahe
21 Cattail Drive
Mt. Laurel, NJ 08054
Re: Severance Agreement and General Release
---------------------------------------
Dear Bill:
We are very interested in making your separation of employment with Axiom Inc.,
effective Friday, February 12, 1999, as amicable and comfortable as possible.
We value your service and hard work and wish you all the best in the future.
Toward this end, we propose the following Severance Agreement, which includes a
General Release.
You may consider our offer for twenty-one (21) days. If you need a reasonable
amount of additional time, it will be granted upon request. You are encouraged
to review this Agreement with an attorney.
The proposed terms and conditions of your separation from employment are as
follows:
1. In consideration for your General Release set forth below in Paragraph
2, the Company agrees, intending to be legally bound:
(a) To pay you until February 12, 2000 Agreed Severance Pay, less
withholding of taxes and other deductions required by law. You
will be paid in semi-monthly installments until February 12,
2000.
(b) To continue to cover you under your current health and insurance
benefits until February 12, 2000 with the exception of any
coverage under the Company's 401(k) Plan.
<PAGE>
(c) To do whatever may be required under the law to modify
subparagraph 2. (b) (1) of the Non-Qualified Stock Option dated
May 15, 1998 and subparagraph 2. (c) (1) of the Non-Qualified
Stock Option dated January 12, 1998, granted to you to read as
follows:
Expiration of two years from the date the Optionee's
employment or service with the Company or its Affiliates
terminates for any reason other than disability (as defined
in Section 22(e) of the Code) or death.
For those issued on January 12, all will be vested by July 12,
1999. For those issued on May 15, all will be vested by May 15,
2000.
(d) The severance mentioned in Paragraphs 1 and 3 is in exchange for
and in no way in addition to any severance you might have been
eligible for under any prior written or oral agreement, policy or
plan.
2. In consideration for the Company's undertakings set forth above in
Paragraph 1, you agree, intending to be legally bound, to release and
forever discharge the Company and its affiliates, their past, present
and future officers, directors, attorneys, employees, shareholders and
agents and their respective successors and assigns (collectively
"Releasees"), jointly and severally, from any and all actions,
charges, causes of action or claims of any kind (collectively
"claims"), known or unknown, which you, your heirs, agents, successors
or assigns ever had, now have or hereafter may have against Releasees
arising heretofore out of any matter, occurrence or event existing or
occurring prior to the execution hereof, including, without
limitation: any claims relating to or arising out of your employment
with and/or termination of employment by the Company and/or any of its
affiliates; any claims for unpaid or withheld wages, severance,
benefits, bonuses, and/or other compensation of any kind; any claims
for attorneys' fees, costs or expenses; any claims of discrimination
based on age, sex, race, religion, color, creed, disability, handicap,
citizenship, national origin, sexual preference or any other factor
prohibited by Federal, State or Local law (such as the Age
Discrimination in Employment Act and Title VII of the Civil Rights Act
of 1964 and the New Jersey Law Against Discrimination); and/or any
other statutory or common law claims, now existing or hereinafter
recognized, including, but not limited to, breach of contract, libel,
slander, fraud, wrongful discharge, promissory estoppel, equitable
estoppel and misrepresentation.
-2-
<PAGE>
3. Whether or not you execute this Agreement and General Release:
(a) Your last date of employment is February 12, 1999.
(b) You will receive all of the accrued, unused vacation time you
have accrued.
4. The General Release in Paragraph 2 above does not apply to any claims
to enforce this Agreement or to any claims arising out of any matter,
occurrence or event occurring after the execution of this Agreement.
5. You shall be eligible for benefits subsequent to the effective date of
the termination of your employment up until February 12, 2000, but you
shall not be eligible to participate in or accrue any benefits under
the Company's 401(k) Plan subsequent to February 12, 2000, but you
shall be eligible to receive any vested benefits to which you are
entitled pursuant to and in accordance with the provisions of that
Plan. As of February 13, 2000 your continued participation in the
Company's Group Health Plan shall be entirely at your expense, in
accordance with the Consolidated Omnibus Budget Reconciliation Act
("COBRA").
6. This Agreement embodies the complete understanding and agreement
between the parties hereto and supersedes any and all prior agreements
between the parties, oral or written, express or implied, except that
if you executed a Non-Disclosure/Confidentiality Agreement upon your
date of hire, it will survive the termination of your employment and
the Agreement is incorporated by reference.
7. You agree to pay any and all federal, state and local taxes assessed
against you with respect to any consideration received pursuant to
this Agreement to the extent not already withheld.
8. You agree that you will not, directly or indirectly, disparage any of
the Releasees to any third party for any reason.
9. The Company's obligations under Paragraph 1 above shall cease in the
event that you: (1) initiate an action against the Company with
respect to a claim that has been released pursuant to Paragraph 2
above; (2) fail to comply with the obligations set forth in Paragraph
8 above or (3) breach any Non-Disclosure/Confidentiality Agreement
referenced in Paragraph 6 above. The Company's obligations under
Paragraph 1(a) above are further governed by and subject to the terms,
conditions and restrictions set forth in the Company's Severance Pay
Policy.
-3-
<PAGE>
10. You agree that in order to receive any severance from the Company, you
must return all Company property/equipment, including but not limited
to your ID Badge, cell phone, Company keys, credit cards, computers
and related equipment.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, excluding those of that state and any other
relating to conflicts of laws. You expressly waive any rule or custom requiring
construction against the drafter of the document.
12. Nothing in this Agreement shall be construed as an admission or
concession of liability or wrongdoing by the Company or any other
Releasees. Rather, the proposed Agreement is being offered for the
sole purpose of settling amicably any and all possible disputes
between the parties.
13. If any provision of this Agreement is deemed unlawful or unenforceable
by a court of competent jurisdiction, the remaining provisions shall continue in
full force and effect.
14. You agree and represent that:
(a) you have read carefully the terms of this Agreement, including
the General Release;
(b) you have had an opportunity to and have been encouraged to review
this Agreement, including the General Release, with an attorney;
(c) you understand the meaning and effect of the terms of this
Agreement, including the General Release;
(d) you were given as much time and information as you needed to
determine whether you wished to enter into this Agreement,
including the General Release;
(e) the entry into and execution of this Agreement, including the
General Release, is of your own free and voluntary act without
compulsion of any kind; and
(f) no promise or inducement not expressed herein has been made to you.
-4-
<PAGE>
If you agree with the proposed terms as set forth above, please sign this letter
indicating your understanding and agreement.
Please note that if you sign this Agreement, you will retain the right to revoke
it for 7 days. The Agreement shall not be effective until the revocation period
has expired.
To revoke the Agreement, you must send a certified letter to my attention. The
letter must be post-marked within 7 days of your execution of this Agreement.
We wish you the best in the future.
Sincerely,
/s/ Andrew P. Maunder
------------------------------
Andrew P. Maunder
President and CEO
UNDERSTOOD AND AGREED,
INTENDING TO BE LEGALLY BOUND:
/s/ William J. Rahe
- ------------------------
Employee's Name
March 9, 1999
- ------------------------
Date
s/ Margaret E. Zeigler
- ------------------------
Witness
-5-
<PAGE>
EXHIBIT 14
Telesciences
===========
EMPLOYMENT AGREEMENT
---------------------
This AGREEMENT made this 1st day of April 1999, between Telesciences, Inc
(the Company) and Greg R. Fegley (the Employee).
WHEREAS, the Employee is desirous of obtaining the protections and benefits
contained in this Agreement, in return for which he agrees to the restrictive
covenants contained herein.
NOW THEREFORE in consideration of the facts, mutual promises, and covenants
contained herein, and intending to be legally bound hereby, the Company and the
Employee agree as follows:
1. Employment and Duties
---------------------
The Company hereby employs the Employee and the Employee hereby
accepts employment by the Company, to serve as Vice President
reporting to the President of the Company. In such capacity, the
Employee shall have such powers and shall perform duties and services
consistent with such capacity as may be assigned or delegated to him
from time to time by the President of the Company. The Employee shall
devote his full business time and attention to the business and
affairs of the Company exclusively and will use his best efforts to
promote the interests of the Company.
2. Compensation and Benefits
-------------------------
(a) The Company shall pay the Employee a base salary of $111,000 per
annum, payable in accordance with the regular payroll practices
in effect from time to time. This base salary will be reviewed
annually beginning on October 1, 1999.
(b) The Employee shall participate in any health insurance, life
insurance, accident or disability insurance, profit sharing, or
retirement plans or programs currently in effect or that may
hereafter be established by the Company, in accordance with and
to the extent so provided by these plans or programs, and to the
extent that other senior management employees are eligible to so
participate. Nothing in this Agreement shall preclude the
Company from amending or terminating any such insurance, program,
or plan on the condition that such amendment or terminations
applicable to the Company's senior management employees
generally.
<PAGE>
Employment Agreement
Greg R. Fegley
Page 2 of 6
(c) The Employee shall be entitled to paid vacation per year in accordance
with the Company's general policy for senior management employees.
3. Termination of Employment by the Company
----------------------------------------
Notwithstanding any other provision of this Agreement, Employee's
employment and any and all of the Company's obligations or liabilities
under this Agreement shall be terminated immediately, in any of the
following circumstances:
(a) Death
-----
If the Employee dies, the further accrual of all payments and benefits
thereunder shall cease at the end of the month in which Employee's
death shall occur. All payments and benefits thereunder which have
accrued prior to the end of such month shall be promptly paid to the
executor or administrator of Employee's estate or pursuant to such
other specific directions as Employee has previously provided to the
Company in writing.
(b) Discharge for Cause
-------------------
The Company may discharge the Employee at any time, for "cause", which
shall include but not be limited to criminal conduct (whether or not
related to the Employee's employment) other than minor traffic
offenses; any material breach by the Employee of this Agreement; gross
negligence or malfeasance by the Employee in the performance of his
duties for the Company; self-dealing; and/or any violation of any
expressed direction or any reasonable rule or regulation established
by the Company from time to time regarding the conduct of its
business.
(c) Discharge for Other Reasons
---------------------------
The Company may discharge the Employee at any time, for any or no
reason, by providing three (3) months prior written notice. At the
Company's option, the Company may elect to sever the employment
relationship with the Employee at any time during this three (3) month
period, in which event the Employee shall be compensated for the
remainder of said three (3) month period.
4. Termination of Employment by the Employee
-----------------------------------------
This Agreement may be terminated by the Employee upon not less than three
(3) months written notice to the Company. Upon the effective date of such
voluntary termination, any and all of the Company's obligations under this
Agreement shall terminate.
<PAGE>
Employment Agreement
Greg R. Fegley
Page 3 of 6
5. Proprietary Rights, Confidentiality, Non-Competition, Inventions, etc.
----------------------------------------------------------------------
The Company designs and manufactures various electronic equipment and
systems solutions (hereinafter referred to as "Products"), and the Company
is unique in that it possesses expertise and "Know-How" in the design,
manufacture, and sale of Products. During the course of Employee's
employment with the Company he will have access to trade secrets, and
proprietary and confidential information pertaining to the Company and its
Products, such as, but not limited to, its short and long range business
plans, its processes and procedures, sales and distribution methods,
suppliers and customer lists, customer prospects, personnel records,
research and development projects, manufacturing processes, and "Know-How"
(all the foregoing hereinafter referred to as "Proprietary Information").
This Proprietary Information was designed and developed by the Company, at
great expense and over lengthy periods of time, is unique, secret, and
confidential, and constitutes the exclusive property and trade secrets of
the Company, and any use of such property and trade secrets by the
Employee, other than for the sole benefit of the Company, would be wrongful
and would cause irreparable injury to the Company.
However, Proprietary Information shall not include information which has
become publicly known through no wrongful act of Employee, information
which has been rightfully received from a third party authorized to make
such information which has been rightfully received from a third party
authorized to make such information available without restriction,
information which has been approved for release by written authorization of
the Company, and information which must be disclosed pursuant to applicable
law or in connection with the enforcement of the Agreement.
(a) The Employee shall not, at any time, without the expressed written
consent of the Company, publish, disclose or divulge to any person,
firm, corporation, or use directly, indirectly or for his own benefit
or the benefit of any person, firm, or corporation other than the
Company, and Proprietary Information, property, trade secrets, or
confidential information of the Company, its subsidiaries, and its
affiliates learned or obtained by the Employee from the Company,
including, but not limited to, the information and things set forth
above. This obligation shall be continuing and shall not end with the
cessation of Employee's employment with the Company. Employee further
agrees that, immediately upon cessation of his employment with the
Company, whether voluntary or involuntary, he shall return to the
Company all property of the Company including, but not limited to,
Proprietary Information.
<PAGE>
Employment Agreement
Greg R. Fegley
Page 4 of 6
(b) The Employee shall not, during the course of his employment and for
twelve (12) months after:
(i) Directly or indirectly induce or attempt to influence any
employee to terminate his employment with the Company, who was
employed by the Company at the time of the termination of
Employee's employment or who terminated his employment for any
reason during the three (3) months preceding the termination of
Employee's employment with the Company.
(ii) Engage in (as a principal, partner, director, officer, agent,
employee, consultant, independent contractor, or otherwise) or be
financially interested in, any business which is involved in
business activities which are the same as, similar to, or in
competition with the Products. However, nothing contained in
this sub-paragraph shall prevent the Employee from being the
holder or beneficial owner for investment purposes only of any
class of equity securities of a company whose securities are
traded on a national securities exchange or NASDAQ if the
Employee (together with his spouse, children, siblings, and
parents) neither holds, nor is beneficially interested in, more
than five percent (5%) of any single class of the securities in
the Company.
(c) The Employee shall not, for twelve (12) months after the cessation of
his employment, whether voluntary or involuntary, without the prior
written approval of the Company, either solely or jointly with, or as
manager or agent for, any person, corporation, trust, joint venture,
partnership, or other business entity, directly or indirectly, solicit
any customers or accounts that were customers or accounts (or legal
successors to customers or accounts) of the Company during any period
of time that the Employee was employed by the Company.
(d) The Employee shall fully and promptly disclose and assign to the
Company for its sole benefit, to be utilized in any manner it sees
fit, and without additional compensation, all ideas, discoveries,
inventions and improvements, patentable or not, and all writings
(including the copyright) which are made, conceived or reduced to
practice by the Employee, alone or with others during or after working
hours, either on or off the job during the term of his employment, or
within twelve (12) months thereafter, which are related to the
Products, or which results from tasks assigned to the Employee by the
Company. The Company may, but it shall not be required to, obtain at
its own expense and for its
<PAGE>
Employment Agreement
Greg R. Fegley
Page 5 of 6
sole benefit, patents or statutory copyright for any patentable idea
or copyrightable writing referred to above, and he shall cooperate
with the Company in executing any documents required in connection
therewith.
(e) Except as delegated to do so by the President of the Company, the
Employee shall not make any statements to the media concerning the
Company's business.
(f) The employee acknowledges that the restrictions contained in this
Paragraph 5, in view of the nature of the business in which the
Company is engaged, are reasonable and necessary to protect the
legitimate interests of the Company, and that any violation of those
restrictions would result in irreparable injury to the Company. The
Employee, therefore, agrees that, in the event of his violation of any
of those restrictions, the Company shall be entitled to obtain from
any court of competent jurisdiction preliminary and permanent
injunctive relief against the Employee, in addition to damages from
the Employee and an equitable accounting of all commissions, earnings,
profits, and other benefits arising from such violation, which rights
shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled.
(g) The Employee agrees that if any or any portion of the foregoing
covenants or the application thereof, is construed to be invalid or
unenforceable, the remainder of such covenant or covenants or the
application thereof shall not be affected and the remaining covenant
or covenants will then be given full force and effect without regard
to the invalid or unenforceable portions. If any covenant is held to
be unenforceable because of the area covered, the duration thereof, or
the scope thereof, the Employee agrees that the court making such
determination shall have the power to reduce the area and/or the
duration, and/or limit the scope thereof, and the covenant shall then
be enforceable in its reduced form.
8. Complete Understanding
----------------------
This Agreement constitutes the complete understanding between the parties
in respect to the subject matter hereof and supersedes all prior and
contemporary agreements and understandings, inducements or conditions,
expressed or implied, written or oral, between the Company and the
Employee, and cannot be changed or modified except by written agreement
signed by the parties.
<PAGE>
Employment Agreement
Greg R. Fegley
Page 6 of 6
9. Binding Effect
--------------
This Agreement shall be binding upon and shall inure to the benefit of the
Company and its successors, and shall be binding upon the Employee, his
heirs and legal representatives.
10. No Assignment by the Employee
-----------------------------
This Agreement is personal to the Employee, and the Employee may not assign
or delegate any of his rights or obligations hereunder without first
obtaining the expressed written consent of the Company.
11. Waiver of Rights
----------------
If in one or more instances either party fails to insist that the other
party perform any of the terms of this Agreement, such failure shall not be
construed as a waiver by such party of any past, present, or future right
granted under this Agreement; the obligations of both parties under this
Agreement shall continue in full force and effect.
12. Presumptions
------------
This Agreement shall be interpreted without regard to any presumption or
rule requiring construction against the party who caused this Agreement to
be drafted.
13. Governing Law
-------------
This Agreement and all questions relating to its validity, interpretation,
performance, and enforcement shall be governed by and construed in
accordance with the law of New Jersey.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound, have
executed this Agreement as of the date first above written.
Signed for Telesciences, Inc
/s/ Andrew P. Maunder /s/ Greg R. Fegley
- ---------------------------------- ------------------------------------
Andrew P. Maunder Greg R. Fegley
<PAGE>
[Telesciences Logo]
November 1, 1999
To Our Common Stockholders:
I am pleased to inform you that, on October 19, 1999, Telesciences, Inc.
(the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with EDB Business Partner ASA ("Parent") and EDB 4tel Acquisition
Corp. ("Purchaser"), a wholly owned subsidiary of Parent. Upon the terms and
subject to the conditions set forth in the Offer to Purchase dated October 25,
1999 (the "Offer to Purchase") and the related materials, copies of which were
mailed to you on or about October 25, 1999, Purchaser has commenced a tender
offer (the "Offer") to purchase all of the outstanding shares of common stock,
par value $.04 per share (the "Shares"), of the Company at a price of $8.79
per Share in cash. Under the terms of the Merger Agreement, following the
successful completion of the Offer, Purchaser will be merged (the "Merger")
with and into the Company and all Shares not purchased in the Offer will be
converted into the right to receive $8.79 per Share in cash, without interest.
Your Board of Directors has approved the Merger Agreement, the Offer and the
Merger and has determined that the terms of the Merger Agreement are
advisable, fair to, and in the best interests of, the Company's stockholders.
The Board of Directors recommends that the Company's stockholders accept the
Offer and tender their Shares in the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Brooks, Houghton Securities,
Inc., the Company's financial advisor, that the $8.79 per share in cash to be
received by the holders of Shares in the Offer and the Merger is fair to such
holders from a financial point of view. A copy of the fairness opinion is
attached as Annex I to the Schedule 14D-9 which is enclosed, and all
stockholders are urged to read the opinion in its entirety.
Sincerely,
/s/ Andrew P. Maunder
Andrew P. Maunder
President and
Chief Executive Officer
