SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
x Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
x Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
TELESOFT CORP.
---------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: {Set forth the amount on which
the filing fee is calculated and state how it was determined.}
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[blank]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
TELESOFT CORP.
3443 NORTH CENTRAL AVENUE, SUITE 1800
PHOENIX, ARIZONA 85012
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders ("Annual
Meeting") of Telesoft Corp., an Arizona corporation ("Company"), will be held
at the Company's executive offices at 3443 North Central Avenue, Suite 1800,
Phoenix, Arizona 85012, on Monday, April 24, 2000 at 9:00 a.m., Mountain
Standard Time, for the following purposes, all as more fully described in the
attached Proxy Statement:
1. To elect six directors to hold office until the next Annual Meeting of
Shareholders and until their respective successors have been duly elected and
qualified; and
2. To transact such other business as may properly come before the Annual
Meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 24, 2000,
as the record date for the determination of shareholders entitled to notice
of, and to vote at, the meeting or any adjournment thereof. The list of
shareholders entitled to vote at the Annual Meeting is available at the
Company's executive offices, 3443 North Central Avenue, Suite 1800, Phoenix,
Arizona 85012, for examination by any shareholder.
YOU ARE EARNESTLY REQUESTED TO DATE, SIGN AND RETURN THE ACCOMPANYING
FORM OF PROXY IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE (TO WHICH NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES) WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING IN PERSON. THE PROXY IS REVOCABLE BY YOU AT ANY TIME PRIOR
TO ITS EXERCISE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT
YOU ATTEND THE MEETING OR ANY ADJOURNMENT THEREOF. THE PROMPT RETURN OF THE
PROXY WILL BE OF ASSISTANCE IN PREPARING FOR THE MEETING AND YOUR COOPERATION
IN THIS RESPECT WILL BE APPRECIATED.
By Order of the Board of Directors
Thierry E. Zerbib, Secretary
Phoenix, Arizona
March 29, 2000
<PAGE>
TELESOFT CORP.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 2000
This Proxy Statement and the accompanying form of proxy are furnished to
shareholders of Telesoft Corp., an Arizona corporation ("Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use in voting at the Annual Meeting of Shareholders to be held at
the Company's executive offices, 3443 North Central avenue, Suite 1800,
Phoenix, Arizona 85012, on Monday, April 24, 2000, at 9:00 a.m., Mountain
Standard Time, and at any and all adjournments thereof. Any proxy given
pursuant to this solicitation may be revoked by the shareholder at any time
before it is exercised by written notification delivered to the Secretary of
the Company, by voting in person at the Annual Meeting, or by delivering
another proxy bearing a later date. Attendance by a shareholder at the Annual
Meeting does not alone serve to revoke his or her proxy. Unless otherwise
specified in the form of proxy, shares represented by proxies will be voted
"FOR" the election of the nominees below under Proposal I, and, in the
discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Annual Meeting and any adjournments
thereof. In such unanticipated event that any other matters are properly
presented at the Annual Meeting for action, the persons named in the proxy
will vote the proxies in accordance with their best judgment.
The Company's executive offices are located at 3443 North Central Avenue,
Suite 1800, Phoenix, Arizona 85012. On or about March 29, 2000, this Proxy
Statement and the accompanying form of proxy, together with a copy of the
Annual Report to Shareholders for the fiscal year ended November 30, 1999, are
to be mailed to each shareholder of record at the close of business on March
24, 2000.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 24, 2000
as the record date for the determination of shareholders of the Company who
are entitled to receive notice of, and to vote at, the Annual Meeting. Only
shareholders of record at the close of business on that date will be entitled
to vote at the Annual Meeting or any and all adjournments thereof. As of
March 24, 2000, the Company had issued and outstanding 1,468,231 shares of
Common Stock, the Company's only class of voting securities outstanding. Each
shareholder of the Company will be entitled to one vote for each share of
Common Stock registered in his or her name on the record date, except for the
election of directors, in which case cumulative voting is permitted. The
presence, in person or by proxy, of a majority of the votes entitled to be
cast will constitute a quorum at the Annual Meeting. Proxies that are marked
"abstain" and proxies relating to "street name" shares that are returned to
the Company but marked by brokers as "not voted" ("broker non-votes") will be
treated as shares present for purposes of determining the presence of a quorum
on all matters unless authority to vote is completely withheld on the proxy.
The election of directors requires a plurality of votes cast at the Annual
Meeting with respect to the election of directors. "Plurality" means that the
six nominees who receive the highest number of votes cast "FOR" will be
elected as directors. Pursuant to the provisions of Arizona General
Corporation Law, at each election for directors, shareholders are entitled to
cumulate their votes by multiplying the number of votes they are entitled to
cast by the number of directors for whom they are entitled to vote and casting
the product for a single candidate or distributing the product among two or
more candidates. Accordingly, abstentions and broker non-votes will not
affect the outcome of the election of directors. All other matters to be
considered and acted upon by the shareholders at the Annual Meeting must be
approved by a majority of the shares represented at the Annual Meeting and
entitled to vote. On any such matter, abstentions will have the same effect
as a vote against the proposal. In contrast, broker non-votes will not be
counted in determining the number of votes required for a majority and will
therefore have no effect on the outcome.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 24, 2000,
with respect to (1) those persons or groups known to the Company to
beneficially own more than 5% of the Company's Common Stock, (2) each director
and nominee, (3) each executive officer whose compensation exceeded $100,000
in the fiscal year ended November 30, 1999, and (4) all directors and
executive officers as a group. The information is determined in accordance
with Rule 13d-3 promulgated under the Securities Exchange Act of 1934
("Exchange Act") based upon information furnished by the persons listed or
contained in filings made by them with the Securities and Exchange Commission
("Commission"). A person is deemed to be the beneficial owner of voting
securities that can be acquired by such person within 60 days from March 24,
2000 upon the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants or convertible securities that are held by such person (but
not those held by any other person) and which are exercisable within 60 days
of March 24, 2000, have been exercised. Except as indicated below, the
shareholders listed possess sole voting and investment power with respect to
their shares. The address of each of the persons listed is c/o Telesoft
Corp., 3443 North Central Avenue, Suite 1800, Phoenix, Arizona 85012.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
- ------------------------------------- --------------------- ---------
<S> <C> <C>
Thierry E. Zerbib . . . . . . . . . . 265,667 (1) 16.6%
Brian H. Loeb . . . . . . . . . . . . 265,667 (2) 16.6%
Michael F. Zerbib . . . . . . . . . . 265,768 (3) 16.6%
Joseph W. Zerbib. . . . . . . . . . . 33,714 (4) 2.1%
Nicholas Zerbib . . . . . . . . . . . 118,756 7.4%
Cecile Silverman. . . . . . . . . . . 1,213 (5) *
Kalvan Swanky . . . . . . . . . . . . 1,213 (5) *
All executive officers and directors. 951,998(6) 59.5%
as a group (six persons)
- -------------------------------------
<FN>
______________________________
* Less than 1%.
(1) Includes 32,198 shares of Common Stock issuable upon exercise of
currently exercisable options. Does not include 14,250 shares of Common Stock
underlying options, 7,750 of which vest in October 2000 and 6,500 of which
vest in October 2001.
(2) Represents 233,469 shares of Common Stock which are owned jointly by
Mr. Loeb and his spouse and 32,198 shares of Common Stock issuable upon
exercise of currently exercisable options. Does not include 14,250 shares of
Common Stock underlying options, 7,750 of which vest in October 2000 and 6,500
of which vest in October 2001.
(3) Includes 34,321 shares of Common Stock issuable upon exercise of
currently exercisable options. Does not include 16,000 shares of Common Stock
underlying options, 9,500 of which vest in October 2000 and 6,500 of which
vest in October 2001.
(4) Includes 33,714 shares of Common Stock issuable upon exercise of
currently exercisable options. Does not include 15,500 shares of Common Stock
underlying options, 9,000 of which vest in October 2000 and 6,500 of which
vest in October 2001.
(5) Includes 1,213 shares of Common Stock issuable upon exercise of
currently exercisable options.
(6) Includes those shares of Common Stock deemed to be included in the
respective beneficial ownership of Messrs. Thierry E. Zerbib, Brian H. Loeb,
Michael F. Zerbib, Joseph W. Zerbib, Kalvan Swanky and Ms. Cecile Silverman as
described in notes 1-5 above.
</TABLE>
<PAGE>
PROPOSAL I: ELECTION OF DIRECTORS
The Board of Directors consists of the following six members: Joseph W.
Zerbib, Thierry E. Zerbib, Brian H. Loeb, Michael F. Zerbib, Cecile Silverman
and Kalvan Swanky. The term of the directors will expire on the date of this
year's Annual Meeting. Each director serves from the date of his election
until the end of his term and until his successor is elected and qualified.
Six persons will be elected at the Annual Meeting to serve as directors
for a term of one year and until their successors have been duly elected and
qualified. The Board of Directors has nominated Joseph W. Zerbib, Thierry E.
Zerbib, Brian H. Loeb, Michael F. Zerbib, Cecile Silverman and Kalvan Swanky
as the candidates for election. Pursuant to the provisions of Arizona General
Corporation Law, at each election for directors, shareholders are entitled to
cumulate their votes by multiplying the number of votes they are entitled to
cast by the number of directors for whom they are entitled to vote and casting
the product for a single candidate or distributing the product among two or
more candidates. In case any of the nominees become unavailable for election
to the Board of Directors, an event which is not anticipated, the persons
named as proxies, or their substitutes, shall have full discretion and
authority to vote or refrain from voting for any other candidate in accordance
with their judgment.
<TABLE>
INFORMATION ABOUT THE NOMINEES
<CAPTION>
<S> <C> <C>
NAME AGE POSITION
- ----------------------- --- --------------------------------------------------
Joseph W. Zerbib. . . . 64 Chairman of the Board
Michael F. Zerbib(1)(2) 33 President, Chief Executive Officer, Chief
Financial Officer, Treasurer and Director
Thierry E. Zerbib . . . 38 Vice President-Technologies, Secretary and
Director
Brian H. Loeb . . . . . 38 Vice President-Marketing, Sales and Operations
and Director
Cecile Silverman(1)(2). 75 Director
Kalvan Swanky(1)(2) . . 36 Director
<FN>
______________________________________
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
</TABLE>
Joseph W. Zerbib was Chairman of the Board, President, Chief Executive
Officer and a director of the Company from 1982 until February 2000. In
February 2000, he retired from his positions as President and Chief Executive
Officer of the Company, but remains the Company's Chairman of the Board.
Michael F. Zerbib has been Chief Financial Officer, Treasurer and a
director of the Company since 1990. In February 2000, he became the Company's
President and Chief Executive Officer upon the retirement of Joseph Zerbib
from such positions. He holds a Bachelor of Science degree in finance and a
Master's degree in taxation and financial accounting from Arizona State
University. Mr. Zerbib also holds a certification from the Arizona State
Board of Accountancy.
Thierry E. Zerbib has been Vice President-Technologies, Secretary and a
director of the Company since 1982. He holds dual degrees in computer science
and math from Tel Aviv University, Israel.
Brian H. Loeb has been Vice President-Marketing, Sales and Operations
since 1982 and a director of the Company since 1992.
Cecile Silverman has been a director of the Company since June 1995. Ms.
Silverman is a certified public accountant and has been self employed since
1989. From 1975 to 1989, she was a partner at the firm of Schwartz, Cohen &
Co. Ms. Silverman specializes in tax planning for corporations and
individuals, as well as representing clients before various governmental
agencies. She graduated from Syracuse University with a degree in public
accounting.
Kalvan Swanky has been a director of the Company since June 1995. Since
1986, he has been employed by Storage Technology Corporation ("STC"), which
develops, manufactures and distributes computer memory devices. Mr. Swanky
has held a number of positions with STC, most recently as Direct Sales Manager
for Arizona and Nevada. He received a Bachelor of Science degree from the
University of Colorado.
<PAGE>
Joseph W. Zerbib is the father of Thierry E. Zerbib and Michael F. Zerbib
and the father-in-law of Brian H. Loeb. Accordingly, Thierry E. Zerbib and
Michael F. Zerbib are brothers and Brian H. Loeb is the brother-in-law of
Thierry E. Zerbib and Michael F. Zerbib.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
During the fiscal year ended November 30, 1999, the Board of Directors
held three meetings. All directors attended these meetings.
Audit Committee. The Board of Directors currently maintains an Audit
Committee, which currently is composed of Cecile Silverman, Kalvan Swanky and
Michael Zerbib. The responsibilities of the Audit Committee include, in
addition to such other duties as the Board of Directors may specify, (i)
receiving reports with respect to loss contingencies, the public disclosure or
financial statement notation of which may be legally required, (ii) annually
reviewing and examining those matters that relate to a financial and
performance audit of the Company's stock option plans, (iii) recommending to
the Board of Directors the selection, retention and termination of the
Company's independent accountants, (iv) reviewing the professional services,
proposed fees and independence of such accountants, and (v) providing for the
periodic review and examination of management performance in selected aspects
of corporate responsibility. The Audit Committee held one meeting during the
fiscal year ended November 30, 1999.
Compensation Committee. The Board of Directors currently maintains a
Compensation Committee, which currently is composed of Cecile Silverman,
Kalvan Swanky and Michael Zerbib. The responsibilities of the Compensation
Committee include, in addition to such other duties as the Board of Directors
may specify, (i) reviewing and recommending to the Board of Directors the
salaries, compensation and benefits of the Company's executive officers and
key employees, (ii) reviewing any related party transactions on an ongoing
basis for potential conflicts of interest, and (iii) administering the
Company's stock plans. The Compensation Committee held two meetings during
the fiscal year ended November 30, 1999.
The members of the Board of Directors do not receive any cash
compensation for serving as directors. However, the Company may reimburse the
independent directors for their reasonable out-of-pocket expenses in
connection with their attendance at meetings. In April 1996, the Company
granted immediately exercisable options to purchase 1,000 shares of Common
Stock to each of Ms. Silverman and Mr. Swanky. The options are exercisable at
a price of $4.75 per share through April 2001 and were not granted pursuant to
any stock option plan. In October 1996, the Company granted each of Ms.
Silverman and Mr. Swanky immediately exercisable options to purchase 1,000
shares of Common Stock at a price of $3.00 per share through October 2001. In
October 1997, the Company granted each of Ms. Silverman and Mr. Swanky
immediately exercisable options to purchase 1,000 shares of Common Stock at a
price of $2-15/16 per share. None of the options granted were pursuant to any
stock option plan.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, as amended, requires the Company's
officers, directors and persons who beneficially own more than ten percent of
the Company's Common Stock to file reports of ownership and changes in
ownership with the Commission. These reporting persons also are required to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on its review of the copies of such forms
furnished to it and representations that no other reports were required, the
Company believes that all Section 16(a) reporting requirements were complied
with during the fiscal year ended November 30, 1999.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to the Company's
Chief Executive Officer and each of the other most highly paid executive
officers whose compensation exceeded $100,000 for the last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation received by the
chief executive officer and each additional executive officer whose
compensation exceeded $100,000, paid to the named individuals and group for
services rendered in all capacities to the Company and its subsidiaries for
the fiscal years ended November 30, 1999, 1998, and 1997.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation (1)
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ---------------------- ----------------
Other Securities All
Annual Restricted Underlying Other
Name and . . . . . . Compen- Stock Options/ LTIP Compen-
Principal Position . Year Salary(2) Bonus sation Awards SARs Payouts sation
- -------------------- ---- ------------ --------- ------- ---------- ---------- ------- -------
Joseph W. Zerbib . . 1999 $ 144,000 -0- -0- -0- -0- -0- -0-
President and Chief
Executive Officer
1998 $ 144,000 $ 150,000 -0- -0- -0- -0- -0-
1997 $ 144,000 -0- -0- -0- 26,000 -0- -0-
- -------------------- ---- ------------ --------- ------- ---------- ---------- ------- -------
Thierry E. Zerbib. . 1999 $ 154,000 -0- -0- -0- -0- -0- -0-
Vice President -
Technologies and
Secretary
1998 $ 144,000 $ 150,000 -0- -0- -0- -0- -0-
1997 $ 144,000 -0- -0- -0- 26,000 -0- -0-
- -------------------- ---- ------------ --------- ------- ---------- ---------- ------- -------
Michael F. Zerbib. . 1999 $ 144,000 -0- -0- -0- -0- -0- -0-
Chief Financial
Officer
and Treasurer
1998 $ 144,000 $ 150,000 -0- -0- -0- -0- -0-
1997 $ 104,000 -0- -0- -0- 26,000 -0- -0-
- -------------------- ---- ------------ --------- ------- ---------- ---------- ------- -------
Brian H. Loeb. . . . 1999 $ 144,000 -0- -0- -0- -0- -0- -0-
Vice President -
Marketing, Sales and
Operations
1998 $ 144,000 $ 150,000 -0- -0- -0- -0- -0-
1997 $ 144,000 -0- -0- -0- 26,000 -0- -0-
- -------------------- ---- ------------ --------- ------- ---------- ---------- ------- -------
<FN>
(1) See "Security Ownership of Certain Beneficial Owners and Management" below for additional information
relating to options which were granted to these executive officers.
</TABLE>
The executive officers of the Company named above routinely receive other
benefits from the Company, the amounts of which are customary in the
industry. The Company has concluded, after reasonable inquiry, that the
aggregate amounts of such benefits during the years ended November 30, 1999
and 1998 did not exceed the lesser of $50,000 or 10% of the compensation
set forth above as to any named individual.
<PAGE>
OPTION GRANTS IN FISCAL 1999
No options were granted to the Company's executive officers during fiscal
1999.
OPTION EXERCISES IN FISCAL 1999
<TABLE>
<CAPTION>
Number of securities Value of unexercised
Underlying unexercised in-the-money options
Shares Options at Fiscal Year at Fiscal Year-End
acquired on Value End Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- ---------------------- ---------------------- ------------------ ------------------------ --------------------
<S> <C> <C> <C> <C>
Joseph Zerbib. . . . . -0- -0- 73,500 / 19,500 $21,650 / $16,588
Thierry Zerbib . . . . -0- -0- 69,750 / 18,250 $17,853 / $15,322
Michael Zerbib . . . . -0- -0- 75,000 / 20,000 $23,169 / $17,094
Brian H. Loeb. . . . . -0- -0- 69,750 / 18,250 $17,853 / $15,322
</TABLE>
STOCK OPTION PLANS
1995 and 1996 Incentive Stock Option Plans. The Board of Directors
adopted the 1995 Incentive Stock Option Plan ("1995 ISO Plan") on February 1,
1995 and the 1996 Incentive Stock Option Plan ("1996 ISO Plan" and, together
with the 1995 ISO Plan, the "Plans") on April 15, 1996. The Plans
subsequently were approved by the shareholders. The terms and conditions of
the Plans are substantively similar.
There are 264,000 shares authorized for grant under the 1995 ISO Plan.
As of November 30, 1999, options to purchase 264,000 shares of Common Stock
were outstanding under the 1995 ISO Plan, which includes options to purchase
(i) 164,000 shares currently held by executive officers at an exercise price
of $6.60 per share and (ii) 100,000 shares currently held by certain employees
of the Company at an exercise price of $6.00 per share. The exercise price of
the options granted to the executive officers exceeded the fair market value
of the Common Stock on the date of grant.
There are 260,000 shares authorized for grant under the 1996 ISO Plan.
As of November 30, 1999, options to purchase 237,400 shares of Common Stock
were outstanding under the 1996 ISO Plan, which includes options to purchase
(i) 96,000 shares currently held by executive officers at exercise prices
ranging from $3.30 to $5.23 per share and (ii) 141,400 shares currently held
by certain employees of the Company at exercise prices ranging from $3.00 to
$4.75 per share. The exercise price of the options granted to the executive
officers exceeded the fair market value of the Common Stock on the date of
grant.
Each of the Plans authorizes the Company to grant to key employees both
incentive options and non-qualified options. Incentive options are qualified
options under the Internal Revenue Code. The objectives of the Plans are to
provide incentives to key employees to achieve financial results aimed at
increasing stockholder value and attracting talented individuals to the
Company. Persons eligible to participate in the Plans will be those employees
of the Company whose performance, in the judgment of the Compensation
Committee, can have significant effect on the success of the Company.
The Plans are administered by the Compensation Committee, which has the
authority to interpret their provisions, to establish and amend rules for
their administration, to determine the types and amounts of awards to be made
pursuant to the Plans, subject to the Plans' limitations, and to approve
recommendations made by management of the Company as to who should receive
awards.
Incentive stock options may be granted under the Plans for terms of up to
ten years and at an exercise price at least equal to 100% of the fair market
value of the Common Stock as of the date of grant, and 85% of the fair market
value in the case of non-statutory options, except that incentive options
granted to any person who owns stock possessing more than 10% of the combined
voting power of all classes of the Company's stock or of any parent or
subsidiary corporation must have an exercise price at least equal to 110% of
the fair market value of the Common Stock on the date of grant. The aggregate
fair market value, determined as of the time an incentive stock option is
granted, of the Common Stock with respect to which incentive stock options are
exercisable by an employee for the first time during any calendar year shall
not exceed $100,000. There is no aggregate dollar limitation on the amount of
non-statutory stock options which may be exercisable for the first time by an
employee during any calendar year. Payment of the exercise price is to be in
cash, although the Compensation Committee may, in its discretion, allow
payment in the form of shares of the Common Stock under certain circumstances.
Any option granted under the Plans will expire at the time fixed by the
Committee, which will not be more than ten years after the date it is granted.
Any employee receiving a grant must remain continuously employed by the
<PAGE>
Company for a period of twelve months after the date of the grant, as a
condition to the exercise of the option. The Compensation Committee may also
specify when all or part of an option becomes exercisable, but in the absence
of such specification, the option will ordinarily be exercisable in whole or
part at any time during its term. In addition, optionees who are directors or
executive officers of the Company may not exercise any portion of an option
within six months of the date of grant. Subject to the foregoing, the
Compensation Committee may accelerate the exercisability of any option in its
discretion.
Options granted under the Plans are not assignable. Options may be
exercised only while the optionee is employed by the Company or within twelve
months after termination by reason of death, within twelve months after the
date of disability, or within ten days after termination for any other reason.
The Company may assist optionees in paying the exercise price of options
granted under the Plans by either the extension of a loan by the Company for
payment by the optionee of the exercise price in installments, or a guarantee
by the Company of a loan obtained by the optionee from a third party. The
terms of any loan, installment payments or guarantees, including the interest
rate and terms of repayment and collateral requirements, if any, shall be
determined by the Board of Directors in its sole discretion.
1997 Performance Equity Plan. On October 2, 1997, the Board of Directors
adopted the 1997 Plan. On May 15, 1998, the Board of Directors amended the
1997 Plan. The 1997 Plan subsequently was approved by the shareholders on
July 20, 1998. The Board of Directors has authorized 1,000,000 shares for
grant under the 1997 Plan. In October 1997, the Company granted options under
the 1997 Plan to purchase an aggregate of 233,500 shares of Common Stock,
129,500 shares of which were granted to certain employees of the Company at an
exercise price of $2.9375 per share and 104,000 shares of which were granted
to the Company's executive officers at an exercise price of $3.23 per share.
The exercise price of the options granted to the executive officers exceeded
the fair market value of the Common Stock on the date of grant. In February
1998, the Company granted 14,600 options to employees at an exercise price of
$4.25 per share, the fair market value of the Common Stock on the date of
grant.
1995, 1996 and 1997 Restricted Stock Plans. The Board of Directors
adopted the 1995 Restricted Stock Plan on February 1, 1995, the 1996
Restricted Stock Plan on April 15, 1996 and the 1997 Restricted Stock Plan on
April 10, 1997. The 1995 Restricted Stock Plan was approved by the
shareholders at a Special Meeting of Shareholders held on February 1, 1995.
The 1996 Restricted Stock Plan was approved by the shareholders at the 1996
Annual Meeting held on August 7, 1996. The 1997 Restricted Stock Plan has not
yet been approved by the shareholders. No shares have been granted under any
of the Restricted Stock Plans. Accordingly, on May 15, 1998, in connection
with the amendments to the 1997 Plan (which permits grants of restricted stock
awards), the Board of Directors determined that it was in the best interests
of the Company to terminate the 1995, 1996 and 1997 Restricted Stock Plans.
Any restricted stock awards that the Company may wish to make in the future
may be made pursuant to the 1997 Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leased 13,500 square feet of office space from Joseph W.
Zerbib, an officer, director and principal shareholder of the Company. The
Company leased this office in fiscal 1996 and 1997 on a month-to-month basis
for $6,978 per month. The Company vacated this space in January 1998, but
continued to pay rent until July 1998.
Effective February 1, 2000, Joseph Zerbib retired his position as the
Company's president and chief executive officer. He will remain chairman of
the board. The board of directors appointed Michael Zerbib as president and
chief executive officer of the Company. In connection with his retirement,
Joseph Zerbib sold all of his 293,750 shares of the Company's common stock
back to the Company at a price of $7.25 per share concurrently with the Tender
Offer described below.
The Company completed a "Dutch auction" self-tender offer ("Tender
Offer") representing an aggregate of 2.3 million shares of its common stock
on March 24, 2000. The Tender Offer price was $7.25 per share in cash. Three
directors of the Company, Thierry E. Zerbib, Brian H. Loeb and Michael F.
Zerbib tendered, respectively, 577,500, 577,500 and 572,500 shares each, for
an aggregate of 1,727,500 Telesoft shares, at a price of $7.25 each. They
also tendered an additional 214,500 Telesoft shares (69,750, 69,750, 75,000,
respectively) subject to vested options at a price of $7.00 each. These
shares represented approximately 50 percent of the total Telesoft shares
outstanding prior to the Tender Offer, and represented all Telesoft shares
owned and subject to option and available for tender by the affiliates of
Telesoft. Pursuant to the rules of the Tender Offer, 59.57% of these shares
and options were purchased by the Company.
<PAGE>
The Board of Directors has adopted a policy that all future material
transactions and loans between the Company and its executive officers,
directors, employees and affiliates will be subject to the approval of the
majority of independent and disinterested directors and that such transactions
and loans, and any forgiveness of loans, will be on terms that are no less
favorable to the Company than those that are generally available from
unaffiliated third parties.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE ELECTION OF THE SIX DIRECTOR NOMINEES.
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the independent accounting firm of
BDO Seidman, LLP as the auditors of the Company for the fiscal year ending
November 30, 2000. A representative of BDO Seidman, LLP, the auditors of the
Company for the fiscal year ended November 30, 1999, is expected to be present
at the Annual Meeting. The representative will have the opportunity to make a
statement and will be available to respond to appropriate questions from
shareholders.
2001 SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 2001 Annual Meeting of
Shareholders to be eligible for inclusion in the Company's Proxy Statement,
they must be received by the Company at its principal office in Phoenix,
Arizona not later than December 24, 2000.
SOLICITATION OF PROXIES
The solicitation of proxies in the enclosed form is made on behalf of the
Company and the cost of this solicitation is being paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or telephone using the services of directors, officers and regular
employees of the Company at nominal cost. Banks, brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
expenses incurred in sending proxy material to beneficial owners of the
Company's stock.
OTHER MATTERS
The Board of Directors knows of no matter which will be presented for
consideration at the Annual Meeting other than the matters referred to in this
Proxy Statement. Should any other matter properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
Thierry E. Zerbib, Secretary
Phoenix, Arizona
March 29, 2000
<PAGE>
TELESOFT CORP. - PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING TO BE HELD ON APRIL 24, 2000
The undersigned shareholder(s) of TELESOFT CORP., an Arizona corporation
("Company"), hereby appoints Joseph W. Zerbib and Michael F. Zerbib, and each
of them, with full power of substitution and to act without the other, as the
agents, attorneys and proxies of the undersigned, to vote the shares standing
in the name of the undersigned at the Annual Meeting of Shareholders of the
Company to be held on April 24, 2000 and at all adjournments thereof. This
proxy will be voted in accordance with the instructions given below. If no
instructions are given, this proxy will be voted FOR all of the following
proposals:
1. Election of the following Directors:
Joseph W. Zerbib Michael F. Zerbib
Thierry E. Zerbib Cecile Silverman
Brian H. Loeb Kalvan Swanky
FOR all nominees listed above except
as marked to the contrary below
CUMULATIVE VOTES for one or more nominees as follows:
Joseph W. Zerbib ______ Michael F. Zerbib _____
Thierry E. Zerbib ______ Cecile Silverman _____
Brian H. Loeb ______ Kalvan Swanky _____
WITHHOLD AUTHORITY to vote
for all nominees listed above
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below.
_____________________________________________________
2. In their discretion, the proxies are authorized to vote upon such
other business as may come before the meeting or any adjournment thereof.
Dated____________________________, 2000
________________________________________
Signature
________________________________________
Signature if held jointly
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
