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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
SCHEDULE TO
TENDER OFFER STATEMENT
(Under Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934)
(Amendment No. 1)
--------------------
TELESOFT CORP.
(Name of Subject Company (issuer) and Filing Person (offeror))
COMMON STOCK
(Title of Class of Securities)
879924 10 8
(CUSIP Number of Class of Securities)
Michael F. Zerbib
President and Chief Executive Officer
Telesoft Corp.
3443 North Central Avenue
Suite 1800
Phoenix, Arizona 85012
(602) 308-2100
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Filing Person(s)
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Copy to:
Edward S. Best
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
(312) 782-0600
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February 4, 2000
(Date Tender Offer First Published, Sent or Given to Security Holders)
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Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee
---------------------- --------------------
$17,250,000 $3,450
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* Calculated solely for purposes of determining the filing fee, based upon the
purchase of 2,300,000 shares at the maximum tender offer price per share of
$7.50.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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[_] Check box if filing relates solely to preliminary communications made
before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] Third party tender offer subject to Rule 14d-1.
[X] Issuer tender offer subject to Rule 13e-4.
[_] Going-private transaction subject to Rule 13e-3.
[_] Amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [_]
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This Tender Offer Statement on Schedule TO relates to the tender offer by
Telesoft Corp., an Arizona corporation (the "Company"), to purchase up to
2,300,000 shares of its common stock at a price, net to the seller in cash, not
greater than $7.50 nor less than $7.00 per share, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated February 4, 2000, and
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "offer").
The information in the Offer to Purchase and the related Letter of
Transmittal, copies of which are filed herewith as Exhibits (a)(1)(A) and
(a)(1)(B) hereto, respectively, is incorporated herein by reference in answer to
Items 1 through 11 in this Tender Offer Statement on Schedule TO.
ITEM 12. Exhibits.
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Item Description
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(a)(1)(A) Form of Offer to Purchase dated February 4, 2000
(a)(1)(B) Form of Letter of Transmittal.
(a)(1)(C) Form of Notice of Guaranteed Delivery
(a)(1)(D) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(1)(F) Form of Letter to Stockholders dated February 4, 2000, from the
President and Chief Executive Officer of the Company
(a)(1)(G) Form Direction Form for participants in the Telesoft Corp. Profit
Sharing Plan
(a)(1)(H) Form of Option Election for stock option holders
(a)(1)(I) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
</TABLE>
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(a)(2) - (4) Not applicable.
(a)(5) Press Release issued by the Company dated February 3, 2000.*
(b) Not applicable.
(d) Stock Purchase Agreement dated as of February 2, 2000 between
Joseph W. Zerbib and Telesoft Corp.
(g) Not applicable.
(h) Not applicable.
</TABLE>
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*Previously filed.
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SIGNATURE
After due 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.
TELESOFT CORP.
By: /s/ Michael F. Zerbib
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Name: Michael F. Zerbib
Title: President & Chief Executive Officer
Dated: February 4, 2000
3
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INDEX TO EXHIBITS
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Item Description
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<S> <C>
(a)(1)(A) Form of Offer to Purchase dated February 4, 2000....................................
(a)(1)(B) Form of Letter of Transmittal.......................................................
(a)(1)(C) Form of Notice of Guaranteed Delivery...............................................
(a)(1)(D) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees......................................................................
(a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees..................................................
(a)(1)(F) Form of Letter to Stockholders dated February 4, 2000, from the President and
Chief Executive Officer of the Company..............................................
(a)(1)(G) Form Direction Form for participants in the Telesoft Corp. Profit Sharing Plan......
(a)(1)(H) Form of Option Election for stock option holders....................................
(a)(1)(I) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9............................................................................
(a)(2) - (4) Not applicable.
(a)(5) Press Release issued by the Company dated February 3, 2000.*
(b) Not applicable.
(d) Stock Purchase Agreement dated as of February 2, 2000 between Joseph W.
Zerbib and Telesoft Corp............................................................
(g) Not applicable.
(h) Not applicable.
</TABLE>
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*Previously filed.
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Offer to Purchase for Cash
by
Telesoft Corp.
of
Up to 2,300,000 Shares of its Common Stock
At a Purchase Price Not Greater Than $7.50 Nor Less Than $7.00 Per Share
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 6, 2000, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
Telesoft Corp., an Arizona corporation, invites you to tender your shares
of Telesoft common stock to Telesoft at a price not greater than $7.50 nor less
than $7.00 per share in cash, as specified by tendering stockholders, upon the
terms and subject to the conditions set forth in this Offer to Purchase and the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "offer").
Telesoft will, upon the terms and subject to the conditions of the offer,
determine a single per share price (not greater than $7.50 nor less than $7.00
per share), net to the seller in cash (the "Purchase Price"), that it will pay
for shares validly tendered and not withdrawn pursuant to the offer, taking into
account the number of shares so tendered and the prices specified by tendering
stockholders. Telesoft will select the lowest Purchase Price that will allow it
to buy 2,300,000 shares validly tendered and not withdrawn pursuant to the offer
(or such lesser number of shares as are validly tendered at prices not greater
than $7.50 nor less than $7.00 per share). Telesoft will pay the Purchase Price
for all shares validly tendered at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the offer including
the terms thereof relating to proration and conditional tenders. Telesoft
reserves the right, in its sole discretion, to purchase more than 2,300,000
shares pursuant to the offer. Shares tendered at prices in excess of the
Purchase Price and shares not purchased because of proration or conditional
tenders will be returned.
The offer is not conditioned on any minimum number of shares being
tendered. The offer is, however, subject to certain other conditions. See
Section 7.
The shares are listed and traded on the Nasdaq SmallCap Market under the
symbol "TSFT." On February 2, 2000, the last full trading day on the Nasdaq
SmallCap Market prior to announcement of the offer, the closing per share sales
price as reported on the Nasdaq SmallCap Market was $4.75. Telesoft urges you to
obtain current quotations on the market price of the shares. See Section 8.
The Board of Directors of Telesoft has approved the offer. However, you
must make your own decision whether to tender your shares and, if so, how many
shares to tender and the price or prices at which you are tendering your shares.
Neither Telesoft nor its Board of Directors makes any recommendation to any
stockholder as to whether to tender or refrain from tendering shares. See
Section 10 for information regarding the intentions of Telesoft's directors and
executive officers with respect to tendering shares pursuant to the offer.
_____________________________
The date of this Offer to Purchase is February 4, 2000.
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IMPORTANT
If you desire to tender all or any portion of your shares, you must:
(1) properly complete and duly execute the Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal, including any required signature guarantees, and mail or
deliver the Letter of Transmittal or such facsimile with your
certificate(s) for the shares you are tendering and any other
documents required by the Letter of Transmittal to Corporate Stock
Transfer, Inc. (the "Depositary"),
(2) deliver such shares pursuant to the procedures for book-entry transfer
set forth in Section 3, or
(3) request your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you.
If you have shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee, you must contact that broker, dealer, commercial
bank, trust company or other nominee you desire to tender such shares. If you
desire to tender shares and your share certificates are not immediately
available or you cannot comply with the procedure for book-entry transfer on a
timely basis or your other required documentation cannot be delivered to the
Depositary by the expiration of the offer, you should tender such shares by
following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to Beacon Hill Partners, Inc., 90 Broad Street, 20th
Floor, New York, New York 10004, Telephone: 800-755-5001 or 212-843-8500,
e-mail: [email protected].
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Offer to Purchase contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are statements other
than historical information or statements of current condition. Some forward-
looking statements may be identified by use of terms such as "believes,"
"anticipates," "intends," or "expects." These forward-looking statements may
relate to the plans and objectives of Telesoft for future operations. In light
of the risks and uncertainties inherent in all future projections, the inclusion
of forward-looking statements in this Offer to Purchase should not be regarded
as a representation by Telesoft or any other person that the objectives or plans
of Telesoft will be achieved. Numerous factors could cause Telesoft's actual
results to differ materially from such forward-looking statements. Telesoft
undertakes no obligation to release publicly the results of any future revisions
it may make to forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
2
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SUMMARY TERM SHEET
This summary highlights the most material information from this Offer to
Purchase. To understand the offer fully and for a more complete description of
the terms of the offer, you should read carefully this entire Offer to Purchase
and Letter of Transmittal. We have included section references to direct you to
a more complete description of the topics in this summary.
What securities is Telesoft offering
to purchase? (See Section 1.)....... Telesoft is offering to purchase
2,300,000 shares of its common stock
or any lesser number of shares that
stockholders properly tender in the
offer. If more than 2,300,000 shares
are tendered, all shares tendered at
or below the purchase price will be
purchased on a pro rata basis, except
for "odd lots" which will be
purchased on a priority basis.
How much will Telesoft pay me for my
shares and in what form of
payment? (See Section 5.)........... Telesoft is conducting the offer
through a procedure commonly called a
modified "Dutch Auction."
. This procedure allows you to select
the price within a specified price
range at which you are willing to
sell your shares. The price range
for this offer is $7.00 to $7.50
. Telesoft will determine the lowest
single per share price within the
price range that will allow it to
purchase 2,300,000 shares, or if
fewer shares are tendered, all shares
tendered.
. All shares purchased will be
purchased at the same price, even if
you have selected a lower price, but
no shares will be purchased above the
purchase price determined by
Telesoft.
. If you wish to maximize the chance
that your shares will be purchased,
you should check the box in the
section on the Letter of Transmittal
indicating that you will accept the
purchase price determined by Telesoft
under the terms of the offer. Note
that this election could result in
your shares being purchased at the
minimum price of $7.00 per share.
. Stockholders whose shares are
purchased in the offer will be paid
the purchase price, net in cash,
without interest, as soon as
practicable after the expiration of
the offer period. Under no
circumstances will Telesoft pay
interest on the purchase price,
including but not limited to, by
reason of any delay in making
payment.
3
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Does Telesoft have the financial
resources to pay me for my shares?
(See Section 11.)................... Telesoft intends to obtain all of the
approximately $17.25 million of funds
required to purchase the shares in
this offer from its available cash
and borrowings.
When does the tender offer expire?
Can Telesoft extend the offer, and
if so, how will I be notified? (See
Section 16.)........................ . The offer expires Monday, March 6,
2000, at 12:00 Midnight, New York
City time, unless it is extended by
Telesoft.
. Yes, Telesoft may extend the offer
at any time.
. Telesoft cannot assure you that the
offer will be extended or, if
extended, for how long.
. If the offer is extended, Telesoft
will make a public announcement of
the extension no later than 9:00
a.m., New York City time, on the next
business day following the previously
scheduled expiration of the offer
period.
What is the purpose of the offer?
(See Section 9.).................... . Telesoft has explored ways in which
to deploy the cash proceeds of the
1998 sale of its GoodNet subsidiary
and enhance stockholder value.
Telesoft's management believes that
its available cash is in excess of
its reasonably foreseeable need for
cash for research and development
purposes.
. Telesoft's management determined
that excess cash should be used to
repurchase shares, including shares
owned by Joseph W. Zerbib, our
Chairman and retiring Chief Executive
Officer and President, and our other
stockholders.
. This offer allows stockholders an
opportunity to exit all or part of
their investment in Telesoft shares
on potentially more favorable terms
than would otherwise be available.
However, stockholders who choose not
to tender their shares may also
benefit from these transactions.
Non-tendering stockholders will own a
greater interest in a company with a
potentially stronger earnings per
share growth rate.
What are the most significant
conditions to the offer? (See
Section 16.)........................ Telesoft's obligation to accept for
payment, purchase or pay for any
shares tendered depends upon a number
of conditions, including:
. No significant decrease in the price
of Telesoft's common stock or in the
price of equity securities generally,
or any adverse changes in
4
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the U.S. stock markets or credit
markets, shall have occurred during
this offer.
. No legal action shall have been
threatened, pending or taken, that
might adversely affect the offer.
. No one shall have proposed,
announced or made a tender or
exchange offer (other than this
offer), merger, business combination
or other similar transaction
involving Telesoft.
. No material change in the business,
condition (financial or otherwise),
assets, income, operations, prospects
or stock ownership of Telesoft shall
have occurred during this offer.
How do I tender my shares? (See
Section 3.)......................... . If you decide to tender your shares,
you must either:
. If you hold your shares through a
bank, brokerage firm, trust company
or other nominee, you must contact
the person responsible for your
account at such bank, brokerage firm,
trust company or other nominee and
instruct them to tender your shares
on your behalf.
. If your shares are held in
registered form, complete the Letter
of Transmittal and mail or hand
deliver it with your stock
certificate to the Depositary before
12:00 Midnight, New York City time,
on Monday, March 6, 2000; or
. If your share certificates are not
immediately available for delivery to
the Depositary, comply with the
guaranteed delivery procedure before
12:00 Midnight, New York City time,
on Monday, March 6, 2000.
. Contact the Information Agent or
your broker for assistance.
. Participants in the Telesoft Corp.
Profit Sharing Plan who wish to
tender any of their shares held in
that plan must instruct the plan
co-trustee to tender their shares by
following the separate instructions
and procedures described in Section
3.
Until what time can I withdraw
previously tendered shares? (See
Section 4.)......................... You may withdraw your tendered shares
at any time before 12:00 Midnight,
New York City time, on Monday, March
6, 2000, and, unless already accepted
for payment by Telesoft, at any time
after 12:00 Midnight, New York City
time, on Monday, April 3, 2000.
5
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In what order will tendered shares be
purchased? Will tendered shares be
prorated? (See Section 5.).......... . First, Telesoft will purchase shares
from all holders of "odd lots" of
less than 100 shares (not including
any shares attributable to individual
accounts under the Telesoft Corp.
Profit Sharing Plan) who properly
tender all of their shares at or
below the selected purchase price;
and
. Second, after purchasing all shares
from the "odd lot holders," Telesoft
will then purchase shares from all
other stockholders who properly
tender shares at or below the
selected purchase price, on a pro
rata basis, subject to the
conditional tender provisions
described in Section 6.
. Consequently, all of the shares that
you tender in the offer may not be
purchased even if they are tendered
at or below the purchase price.
What do Telesoft and its Board of
Directors think of the offer? (See
Section 9.)......................... . Neither Telesoft nor Telesoft's
Board of Directors makes any
recommendation to you as to whether
to tender or refrain from tendering
your shares or as to the purchase
price at which you may choose to
tender your shares.
. You must decide whether to tender
your shares and, if so, how many
shares to tender and the price or
prices at which you will tender them.
. Some of our directors and executive
officers have advised us that they do
intend to tender shares in the offer.
See Section 10.
What is the recent market price of
my shares? (See Section 8.)......... . On February 2, 2000, the last full
trading day before the announcement
of the offer, the last reported sale
price of the shares on the Nasdaq
SmallCap Market was $4.75.
. Stockholders are urged to obtain
current market quotations for their
shares.
Who do I contact if I have question
about the tender offer?............. . For additional information or
assistance, you may contact the
Information Agent:
Beacon Hill Partners, Inc.
90 Broad Street, 20th Floor
New York, New York 10004
212-843-8500 (collect)
800-755-5001 (toll-free)
e-mail: [email protected]
6
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Telesoft has not authorized any person to make any recommendation on behalf
of Telesoft as to whether stockholders should tender or refrain from tendering
shares pursuant to the offer. Telesoft has not authorized any person to give any
information or to make any representation in connection with the offer on behalf
of Telesoft other than those contained in this Offer to Purchase or in the
Letter of Transmittal. Do not rely on any such recommendation or any such
information or representation, if given or made, as having been authorized by
Telesoft.
7
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TABLE OF CONTENTS
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Section Page
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SUMMARY TERM SHEET.............................................................3
INTRODUCTION...................................................................9
THE OFFER.....................................................................10
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1. Number of Shares; Proration..........................................10
2. Tenders by Owners of Fewer Than 100 Shares...........................12
3. Procedure for Tendering Shares.......................................13
4. Withdrawal Rights....................................................18
5. Purchase of Shares and Payment of Purchase Price.....................18
6. Conditional Tender of Shares.........................................19
7. Certain Conditions of the Offer......................................20
8. Trading Market and Price Range of Shares.............................22
9. Background and Purpose of the Offer; Certain Effects of the Offer....22
10. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares...............................24
11. Source and Amount of Funds...........................................25
12. Certain Information About Telesoft...................................25
13. Effects of the Offer on the Market for Shares;
Registration under the Securities Exchange Act...................26
14. Certain Legal Matters; Regulatory Approvals..........................26
15. Certain U.S. Federal Income Tax Consequences.........................27
16. Extension of the Offer; Termination; Amendments......................29
17. Fees and Expenses....................................................30
18. Miscellaneous........................................................30
</TABLE>
SCHEDULE I CERTAIN TRANSACTIONS INVOLVING SHARES............................I-1
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To the Holders of Shares of Common Stock of
Telesoft Corp.:
INTRODUCTION
Telesoft invites you to tender your shares to Telesoft at a price not
greater than $7.50 nor less than $7.00 per share in cash, as specified by
tendering stockholders, upon the terms and subject to the conditions set forth
in the offer.
Telesoft will, upon the terms and subject to the conditions of the offer,
determine a single per share price (not greater than $7.50 nor less than $7.00
per share), net to the seller in cash (the "Purchase Price"), that it will pay
for shares validly tendered and not withdrawn pursuant to the offer, taking into
account the number of shares so tendered and the prices specified by tendering
stockholders. Telesoft will select the lowest Purchase Price that will allow it
to buy 2,300,000 shares validly tendered and not withdrawn pursuant to the offer
(or such lesser number of shares as are validly tendered at prices not greater
than $7.50 nor less than $7.00 per share). Telesoft will pay the Purchase Price
for all shares validly tendered at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the offer including
the terms thereof relating to proration and conditional tenders. Telesoft
reserves the right, in its sole discretion, to purchase more than 2,300,000
shares pursuant to the offer.
The offer is not conditioned on any minimum number of shares being
tendered. The offer is, however, subject to certain other conditions. See
Section 7.
If, by the Expiration Date (as defined in Section 1), more than 2,300,000
shares are validly tendered at or below the Purchase Price and not withdrawn (or
such greater number of shares as Telesoft may elect to purchase), Telesoft will,
upon the terms and subject to the conditions of the offer, purchase shares first
from all Odd Lot Owners (as defined in Section 2) who validly tender all their
shares at or below the Purchase Price and then on a pro rata basis from all
other stockholders who validly tender shares at prices at or below the Purchase
Price (and do not withdraw them prior to the Expiration Date), other than
stockholders who tender conditionally, and for whom the condition is not
satisfied. Telesoft will return at its own expense all shares not purchased
pursuant to the offer, including shares tendered at prices greater than the
Purchase Price and shares not purchased because of proration or conditional
tenders. The Purchase Price will be paid net to the tendering stockholder in
cash for all shares purchased. Tendering stockholders will not be obligated to
pay brokerage commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on Telesoft's purchase of shares
pursuant to the offer. Stockholders, however, may incur fees associated with the
tendering of shares in custodial or other beneficiary accounts. However, any
tendering stockholder or other payee who fails to complete, sign and return to
the Depositary the Substitute Form W-9 that is included as part of the Letter of
Transmittal or a Form W-8 obtained from the Depositary may be subject to
required backup U.S. federal income tax withholding of 31% of the gross proceeds
payable to such stockholder or other payee pursuant to the offer. See Sections 3
and 15. In addition, Telesoft will pay all fees and expenses of the Depositary
and Telesoft Corp. Profit Sharing Plan co-trustees in connection with the offer.
See Section 17.
The Board of Directors has approved the offer. However, you must make your
own decision whether to tender your shares and, if so, how many shares to tender
and the price or prices at which you are tendering your shares. Neither Telesoft
nor its Board of Directors makes any recommendation to any stockholder as to
whether to tender or refrain from tendering shares. See Section 10 for
information regarding the intentions of Telesoft's directors and executive
officers with respect to tendering shares pursuant to the offer.
9
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Telesoft is making the offer to afford to those stockholders of Telesoft
desiring liquidity an opportunity to sell all or a portion of their shares
without the usual transaction costs associated with open market sales and
because it believes that the repurchase of its shares of common stock is the
best use of its excess cash.
As of the close of business on November 30, 1999, there were 3,711,500
shares outstanding, and 588,325 shares issuable upon exercise of outstanding
stock options under the 1995 Incentive Stock Option Plan, the 1996 Incentive
Stock Option Plan and the 1997 Performance Equity Plan. The 2,300,000 shares
that Telesoft is offering to purchase represent approximately 62% of the
outstanding shares (approximately 53% assuming the exercise of all outstanding
options).
The Telesoft Corp. Profit Sharing Plan holds shares in accounts for
participants thereunder. Participants may instruct Joseph W. Zerbib, Thierry
Zerbib and Irene Loeb, as co-trustees of the trust that holds shares for the
Telesoft Corp. Profit Sharing Plan, to tender all or part of the shares
attributable to a participant's individual account under the Telesoft Corp.
Profit Sharing Plan (including fractional shares, if any) by following the
instructions set forth in "Procedure for Tendering Shares -- Telesoft Corp.
Profit Sharing Plan" in Section 3.
Telesoft is not offering, as part of the offer, to purchase any of the
options outstanding under the stock option plans, and tenders of such options
will not be accepted. Holders of options may instruct Telesoft to tender shares
issuable upon exercise of options by following the instructions set forth in
"Procedure for Tendering Shares -- Stock Option Plans" in Section 3 or to
otherwise exercise options during the offer.
The shares are listed and traded on the Nasdaq SmallCap Market under the
symbol "TSFT." On February 2, 2000, the last full trading day on the Nasdaq
SmallCap Market prior to the announcement of the offer, the closing per share
sales price as reported on the Nasdaq SmallCap Market was $4.75. Telesoft urges
stockholders to obtain current quotations on the market price of the shares.
THE OFFER
1. Number of Shares; Proration.
Upon the terms and subject to the conditions of the offer, Telesoft will
accept for payment (and thereby purchase) 2,300,000 shares or such lesser number
of shares as are validly tendered before the Expiration Date (and not withdrawn
in accordance with Section 4) at a net cash price (determined in the manner set
forth below) not greater than $7.50 nor less than $7.00 per share. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Monday, March 6,
2000, unless and until Telesoft in its sole discretion shall have extended the
period of time during which the offer is open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the offer, as
so extended by Telesoft, shall expire. See Section 16 for a description of
Telesoft's right to extend the time during which the offer is open and to delay,
terminate or amend the offer. Subject to Section 2, if the offer is
oversubscribed, shares tendered at or below the Purchase Price before the
Expiration Date will be eligible for proration, subject to the provisions for
conditional tenders described in Section 6. The proration period also expires
on the Expiration Date.
Telesoft will, upon the terms and subject to the conditions of the offer,
determine a single per share Purchase Price that it will pay for shares validly
tendered and not withdrawn pursuant to the offer, taking into account the number
of shares so tendered and the prices specified by tendering stockholders.
Telesoft will select the lowest Purchase Price that will allow it to buy
2,300,000 shares validly tendered and not withdrawn pursuant to the offer (or
such lesser number as are validly tendered at prices not greater than $7.50 nor
less than $7.00 per share). Telesoft will pay the Purchase Price for all shares
validly tendered at prices at or below the Purchase Price and not withdrawn,
upon the terms and subject to the conditions of the offer including the terms
thereof relating to proration and conditional tenders. Shares tendered at
prices in excess of the Purchase Price and shares
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not purchased because of proration or conditional tender will be returned.
Telesoft reserves the right, in its sole discretion, to purchase more than
2,300,000 shares pursuant to the offer, but does not currently plan to do so.
The offer is not conditioned on any minimum number of shares being tendered. In
accordance with applicable regulations of the Securities and Exchange
Commission, Telesoft may purchase pursuant to the offer an additional amount of
shares not to exceed 2% of the outstanding shares without amending or extending
the offer. If (1) Telesoft increases or decreases the price to be paid for
shares, Telesoft increases the number of shares being sought, and such increase
in the number of shares being sought exceeds 2% of the outstanding shares, or
Telesoft decreases the number of shares being sought, and (2) the offer is
scheduled to expire at any time earlier than the tenth business day from and
including the date that notice of such increase or decrease is first published,
sent or given in the manner specified in Section 16, the offer will be extended
until the expiration of ten business days. For purposes of the offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The offer is not conditioned on any minimum number of shares being
tendered. The offer is, however, subject to certain other conditions. See
Section 7.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender shares must (1) specify the price (not greater
than $7.50 nor less than $7.00 per share) at which such stockholder is willing
to have Telesoft purchase shares or (2) elect to have such stockholder's shares
purchased at a price determined by the Dutch auction tender process, which could
result in such shares being purchased at the minimum price of $7.00 per share.
As promptly as practicable following the Expiration Date, Telesoft will, in its
sole discretion, determine the Purchase Price (not greater than $7.50 nor less
than $7.00 per share) that it will pay for shares validly tendered and not
withdrawn pursuant to the offer, taking into account the number of shares so
tendered and the prices specified by tendering stockholders. Telesoft will pay
the Purchase Price for all shares validly tendered prior to the Expiration Date
at prices at or below the Purchase Price and not withdrawn, upon the terms and
subject to the conditions of the offer, including the proration and conditional
tender provisions. All shares not purchased pursuant to the offer, including
shares tendered at prices greater than the Purchase Price and shares not
purchased because of proration or conditional tenders, will be returned to the
tendering stockholders at Telesoft's expense as promptly as practicable
following the Expiration Date.
If the number of shares validly tendered at or below the Purchase Price and
not withdrawn prior to the Expiration Date is less than or equal to 2,300,000
shares (or such greater number of shares as Telesoft may elect to purchase
pursuant to the offer), Telesoft will, upon the terms and subject to the
conditions of the offer, purchase at the Purchase Price all shares so tendered.
Priority. Upon the terms and subject to the conditions of the offer, in the
event that prior to the Expiration Date more than 2,300,000 shares (or such
greater number of shares as Telesoft may elect to purchase pursuant to the
offer) are validly tendered at or below the Purchase Price and not withdrawn,
Telesoft will purchase such validly tendered shares in the following order of
priority:
(1) all shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Date by any Odd Lot Owner (as defined in
Section 2) who:
(a) tenders all shares (excluding shares attributable to
individual accounts under the Telesoft Corp. Profit Sharing Plan)
beneficially owned by such Odd Lot Owner at or below the Purchase
Price (partial tenders will not qualify for this preference); and
(b) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
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(2) after purchase of all of the foregoing shares, all shares
conditionally tendered in accordance with Section 6, for which the condition
was satisfied without regard to the procedure set forth in clause (3) below,
and all other shares tendered properly and unconditionally, in each case, at
prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date, on a pro rata basis, if necessary, as described below; and
(3) if necessary to permit Telesoft to purchase 2,300,000 shares,
shares conditionally tendered, for which the condition was not initially
satisfied, at or below the Purchase Price and not withdrawn prior to the
Expiration Date, selected by random lot in accordance with Section 6.
Proration. In the event that proration of tendered shares is required,
Telesoft will determine the final proration factor as promptly as practicable
after the Expiration Date. Proration for each stockholder tendering shares
(other than Odd Lot Owners satisfying clause (1) above) will be based on the
ratio of the number of shares tendered by such stockholder at or below the
Purchase Price to the total number of shares tendered by all stockholders (other
than Odd Lot Owners satisfying clause (1) above) at or below the Purchase Price,
subject to the conditional tender provisions described in Section 6. This ratio
will be applied to stockholders tendering shares (other than Odd Lot Owners
satisfying clause (1) above) to determine the number of shares (in certain
cases, rounded up to the nearest whole share) that will be purchased from each
such stockholder pursuant to the offer. Although Telesoft does not expect to be
able to announce the final results of such proration until approximately seven
business days after the Expiration Date, it will announce preliminary results of
proration by press release as promptly as practicable after the Expiration Date.
Stockholders can obtain such preliminary information from Telesoft and may be
able to obtain such information from their brokers.
As described in Section 15, the number of shares that Telesoft will
purchase from a stockholder may affect the U.S. federal income tax consequences
to the stockholder of such purchase and therefore may be relevant to a
stockholder's decision whether to tender shares. The Letter of Transmittal
affords each tendering stockholder the opportunity to designate the order of
priority in which shares tendered are to be purchased in the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of shares as of February 4, 2000, and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on Telesoft's stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of shares.
2. Tenders by Owners of Fewer Than 100 Shares.
Telesoft, upon the terms and subject to the conditions of the offer, will
accept for purchase, without proration, all shares validly tendered at or below
the Purchase Price and not withdrawn on or prior to the Expiration Date by or on
behalf of stockholders who beneficially own an aggregate of fewer than 100
shares, excluding shares attributable to individual accounts under the Telesoft
Corp. Profit Sharing Plan ("Odd Lot Owners"). See Section 1. To avoid
proration, however, an Odd Lot Owner must validly tender at or below the
Purchase Price all such shares (excluding shares attributable to individual
accounts under the Telesoft Corp. Profit Sharing Plan) that such Odd Lot Owner
beneficially owns. This preference is not available to partial tenders or to
owners of 100 or more shares in the aggregate (excluding shares attributable to
individual accounts under the Telesoft Corp. Profit Sharing Plan), even if such
owners have separate stock certificates for fewer than 100 such shares. Any Odd
Lot Owner wishing to tender all such shares beneficially owned by such
stockholder pursuant to this offer must complete the box captioned "Odd Lots" in
the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery and must properly indicate in the section entitled "Price (In Dollars)
Per share At Which Shares Are Being Tendered" in the Letter of Transmittal the
price at which such shares are being tendered, or may elect to have all of such
stockholder's shares (excluding shares attributable to individual accounts under
the Telesoft Corp. Profit Sharing Plan) purchased at the Purchase Price
determined by the Dutch
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auction tender process. See Section 3. Stockholders owning an aggregate of less
than 100 shares whose shares are purchased pursuant to the offer will avoid both
the payment of brokerage commissions and any applicable odd lot discounts
payable on a sale of their shares in transactions on a stock exchange, including
the Nasdaq SmallCap Market.
As of January 12, 2000, there were 50 holders of record of shares.
Approximately 14% of these holders of record held individually fewer than 100
shares and held in the aggregate 239 shares. Because of the number of shares
held in the names of brokers and nominees, Telesoft is unable to estimate the
number of beneficial owners of fewer than 100 shares or the aggregate number of
shares they own.
Telesoft also reserves the right, but will not be obligated, to purchase
all shares duly tendered by any stockholder who tendered any shares beneficially
owned at or below the Purchase Price and who, as a result of proration, would
then beneficially own an aggregate of fewer than 100 shares. If Telesoft
exercises this right, it will increase the number of shares that it is offering
to purchase in the offer by the number of shares purchased through the exercise
of such right.
3. Procedure for Tendering Shares.
Proper Tender of Shares. For you to validly tender your shares pursuant to
the offer, you must either:
(1) properly complete and duly execute a Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions of the Letter of
Transmittal, with any required signature guarantees and deliver it along
with your certificates for shares to be tendered and any other documents
required by the Letter of Transmittal to the Depositary prior to the
Expiration Date at one of its addresses set forth on the back cover of this
Offer to Purchase;
(2) deliver such shares pursuant to the procedures for book-entry
transfer described below (and a confirmation of such delivery received by
the Depositary, including an Agent's Message (as defined below) if you do
not deliver a Letter of Transmittal) or pursuant to ATOP (as defined below)
prior to the Expiration Date; or
(3) comply with the guaranteed delivery procedures set forth below.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility (as defined below) to, and received by, the Depositary and
forming a part of a Book-Entry Confirmation (as defined below), which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the participant in the Book-Entry Transfer Facility tendering the shares
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that Telesoft may enforce such agreement against the
participant.
As specified in Instruction 5 of the Letter of Transmittal, if you desire
to tender shares pursuant to the offer, you must either (1) check the box in the
section of the Letter of Transmittal captioned "Shares Tendered at Price
Determined by Dutch Auction" or (2) check one of the boxes in the section of the
Letter of Transmittal captioned "Shares Tendered at a Price Determined by
Stockholder."
If you wish to maximize the chance that your shares will be purchased at
the relevant Purchase Price, you should check the box on the Letter of
Transmittal marked "Shares Tendered at Price Determined by Dutch Auction." Note
that this election could result in your shares being purchased at the minimum
price of $7.00 per share. If you wish to indicate a specific price (in multiples
of $0.05) at which your shares are being tendered, you must check a box under
the section captioned "Shares Tendered at Price Determined by Stockholder" of
the Letter of Transmittal in the table labeled "Price (in Dollars) Per Share at
Which You Are Tendering Shares." If
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you wish to tender shares at more than one price, you must complete a separate
Letter of Transmittal for each price at which you are tendering shares. You
cannot tender the same shares at more than one price.
Your tender of shares will be proper if, and only if, on the Letter of
Transmittal you have checked either the box in the section captioned "Shares
Tendered at Price Determined by Dutch Auction" or one of the boxes in the
section captioned "Shares Tendered at Price Determined by Stockholder."
Odd Lot Owners who tender all shares must complete the section entitled
"Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery, in order to qualify for the preferential treatment
available to Odd Lot Owners as set forth in Section 2.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if (1) the Letter of Transmittal is signed
by the registered holder of the shares (which term, for purposes of this
Section, includes any participant in The Depository Trust Company (the "Book-
Entry Transfer Facility") whose name appears on a security position listing as
the holder of the shares) tendered therewith and payment and delivery are to be
made directly to such registered holder, or (2) shares are tendered for the
account of a financial institution (including most commercial banks, savings and
loan associations and brokerage houses) that is a member of a recognized
signature guarantee medallion program within the meaning of Rule 17Ad-15 under
the Securities Exchange Act (an "Eligible Institution"). In this regard, see
Section 5 for information with respect to applicable stock transfer taxes. In
all other cases, all signatures on the Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If
a certificate representing shares is registered in the name of a person other
than the signer of a Letter of Transmittal, or if payment is to be made, or
shares not purchased or tendered are to be returned, to a person other than the
registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name of the
registered holder appears on the certificate, with the signature on the
certificate or stock power guaranteed by an Eligible Institution. In all cases,
payment for shares tendered and accepted for payment pursuant to the offer will
be made only after timely receipt by the Depositary of certificates for such
shares (or a timely confirmation of a book-entry transfer of such shares into
the Depositary's account at the Book-Entry Transfer Facility as described
below), a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), or an Agent's Message in connection with a book-entry
transfer, or a proper tender through the Book-Entry Transfer Facility's
Automated Tender Offer Program ("ATOP"), together with any other documents
required by the Letter of Transmittal.
The method of delivery of all documents, including share certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering stockholder. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended.
Book-Entry Delivery. The Depositary will establish an account with respect
to the shares at the Book-Entry Transfer Facility for purposes of the offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of the shares by causing the Book-Entry Transfer
Facility to transfer such shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedure for such transfer. Even though
delivery of shares may be effected through book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof), with any
required signature guarantees, or an Agent's Message or, in the case of a tender
through ATOP, the specific acknowledgment, in each case together with any other
required documents, must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the guaranteed delivery procedure set
forth below must be followed. The confirmation of a book-entry transfer of
shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." Delivery
of the Letter of Transmittal and any
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other required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary.
Participants in the Book-Entry Transfer Facility may tender their shares in
accordance with ATOP, to the extent it is available to such participants for the
shares they wish to tender. A stockholder tendering through ATOP must expressly
acknowledge that the stockholder has received and agreed to be bound by the
Letter of Transmittal and that the Letter of Transmittal may be enforced against
such stockholder.
Guaranteed Delivery. If you desire to tender your shares pursuant to the
offer and you cannot deliver your share certificates to the Depositary prior to
the Expiration Date (or the procedures for book-entry transfer cannot be
completed on a timely basis) or time will not permit all required documents to
reach the Depositary before the Expiration Date, you may nevertheless tender
your shares, provided that all of the following conditions are satisfied:
(1) your tender is made by or through an Eligible Institution;
(2) the Depositary receives (by hand, mail, overnight courier or
facsimile transmission), on or prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in
the form Telesoft has provided with this Offer to Purchase (indicating the
price at which the shares are being tendered), including (where required) a
signature guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery; and
(3) the certificates for all tendered shares in proper form for
transfer (or confirmation of book-entry transfer of such shares into the
Depositary's account at the Book-Entry Transfer Facility or a proper tender
through ATOP), together with a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof) and any required signature
guarantees (or, in the case of book-entry transfer, an Agent's Message or,
in the case of a tender through ATOP, the specific acknowledgment) and any
other documents required by the Letter of Transmittal, are received by the
Depositary no later than 5:00 p.m., New York City time, on the third Nasdaq
SmallCap Market trading day after the date the Depositary receives such
Notice of Guaranteed Delivery.
Return of Unpurchased Shares. If any tendered shares are not purchased, or
if less than all shares evidenced by a stockholder's certificates are tendered,
certificates for unpurchased shares will be returned as promptly as practicable
after the expiration or termination of the offer or, in the case of shares
tendered by book-entry transfer at the Book-Entry Transfer Facility, such shares
will be credited to the appropriate account maintained by the tendering
stockholder at the Book-Entry Transfer Facility, in each case without expense to
such stockholder.
Backup Federal Income Tax Withholding. To prevent backup federal income
tax withholding equal to 31% of the gross payments made to stockholders for
shares purchased pursuant to the offer, each stockholder who does not otherwise
establish an exemption from such withholding must provide the Depositary with
the stockholder's correct taxpayer identification number and provide certain
other information by completing the Substitute Form W-9 included as part of the
Letter of Transmittal. For a further discussion of backup withholding, see
Section 15.
Telesoft Corp. Profit Sharing Plan. As of November 30, 1999, the Telesoft
Corp. Profit Sharing Plan held 5,100 shares, all of which were attributable to
the individual accounts of the Telesoft Corp. Profit Sharing Plan participants,
respectively, beneficiaries of deceased participants and alternate payees
pursuant to qualified domestic relations orders (collectively referred to in
this section as "participants"). Such shares will, subject to the limitations
of the Employee Retirement Income Security Act of 1974 and applicable
regulations thereunder, be tendered (or not tendered) by Joseph W. Zerbib,
Thierry Zerbib and Irene Loeb, as co-trustees of the Telesoft
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Corp. Profit Sharing Plan (the "co-trustees"), according to the instructions of
participants to the co-trustees. In accordance with the terms of the Telesoft
Corp. Profit Sharing Plan, the co-trustees will determine in their discretion
whether and at what prices to tender shares for which they have not received
timely instructions from participants. The co-trustees will make available to
participants whose shares are attributable to individual accounts under the
Telesoft Corp. Profit Sharing Plan all documents furnished to stockholders
generally in connection with the offer. Each such participant will also receive
a "Direction Form" upon which the participant may instruct the co-trustees
regarding the offer. Each participant may direct that all, some or none of the
shares attributable to such participant's account under the Telesoft Corp.
Profit Sharing Plan (including fractional shares, if any) be tendered. Each
participant may also direct (1) the price at which such shares are to be
tendered, (2) that the price at which such shares are to be tendered shall be
determined by the co-trustees, in their sole discretion, or (3) that the
Purchase Price be determined by the Dutch auction tender process. Participants
in the Telesoft Corp. Profit Sharing Plan may not use the Letter of Transmittal
to direct the tender of the shares attributable to their individual accounts
under the Telesoft Corp. Profit Sharing Plan, but must use the Telesoft Corp.
Profit Sharing Plan Direction Form sent to them. Participants in the Telesoft
Corp. Profit Sharing Plan are urged to read the Telesoft Corp. Profit Sharing
Plan Direction Form and related materials carefully. Although the tender offer
is not scheduled to expire until 12:00 Midnight, New York City time, on Monday,
March 6, 2000, unless extended, in order for the co-trustees to timely tender
shares held under the Telesoft Corp. Profit Sharing Plan, participants in the
Telesoft Corp. Profit Sharing Plan must return their Direction Forms to Kris
Cecil, Telesoft's Controller, as agent for the co-trustees, so that she receives
them no later than 5:00 p.m., Phoenix time, on Friday, March 3, 2000, unless
extended.
All proceeds received by the co-trustees on account of shares purchased
from the Telesoft Corp. Profit Sharing Plan shall be credited to participants'
individual accounts under the Telesoft Corp. Profit Sharing Plan and invested in
the Merrill Lynch Retirement Preservation Trust. Participants may contact
Michelle Brice in Telesoft's Payroll Department at 602-308-1126 after the
account reconciliation is complete, which is expected to be no earlier than
three business days after the co-trustees receive the proceeds to have the
proceeds of the sale of shares invested in other investment options offered
under the Telesoft Corp. Profit Sharing Plan.
Stock Option Plans. The Company is not offering, as part of the offer, to
purchase any of the options outstanding under the stock option plans, and
tenders of such options will not be accepted. All option exercises must be
effected through the Company. A holder of options who wishes to participate in
the offer may submit to the Company an Option Election to either:
(a) tender shares issuable upon exercise of outstanding and vested
options held by such holder, specifying the number of shares subject to
such options to be tendered and the price or prices at which such shares
are to be tendered or electing to accept the Purchase Price determined by
the Dutch auction process, and authorizing the Company to (i) exercise such
holder's options (but only to the extent that such shares are accepted for
purchase pursuant to the offer) and deliver such shares to the Depositary,
provided that any such exercise of an option and tender of shares is in
accordance with the terms of the stock option plans and the options, (ii)
remit to the Company the option exercise price for such shares and
applicable withholding taxes and (iii) remit to such holder the remaining
net cash proceeds received pursuant to the offer for such shares; or
(b) exercise such holder's options to purchase shares of the Company's
common stock, provided that any such exercise of an option and tender of
shares is in accordance with the terms of the stock option plans and the
options, and then tender such shares pursuant to the offer. An exercise of
an option cannot be revoked even if shares received upon the exercise
thereof and tendered in the offer are not purchased in the offer for any
reason.
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Regardless of the method used to exercise options, a holder of options will
not be permitted to exercise options from the date hereof until the tenth day
following the termination of the offer. In addition, for those holders of
options selecting the conditional exercise method described in paragraph (a)
above for some portion of the options held by them, options which such holders
conditionally exercise in the offer, but which are not accepted in the offer and
therefore are deemed unexercised, cannot be exercised by such holders until
after Monday, March 20, 2000, unless extended.
In no event are any options to be delivered to the Depositary in connection
with a tender of shares hereunder.
The Company will mail to holders of options an Option Election, which
contains information concerning the exercise of options and the tender of shares
issuable upon exercise of options. Holders should use the Option Election to
exercise options and, if desired, to tender shares issuable upon exercise of
options pursuant to methods (a) and (b) described above. Holders of options may
not use the Letter of Transmittal to direct the tender of shares issuable upon
exercise of options. Questions with respect to tendering shares issuable upon
exercise of options, should be directed to Telesoft Corp., 3443 North Central
Avenue, Suite 1800, Phoenix, Arizona 85012, Attention: Kris Cecil; Telephone:
602-308-2100.
In order for the Company to timely tender shares issuable upon exercise of
options, except as set forth in the Option Election, holders of options must
complete and return the Option Election so that it is received by the Company no
later than 5:00 p.m., Phoenix time, on Friday, March 3, 2000, unless extended.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. It is a violation of Rule 14e-4 promulgated under the
Securities Exchange Act for a person acting alone or in concert with others,
directly or indirectly, to tender shares for such person's own account unless at
the time of tender and at the Expiration Date such person has a "net long
position" equal to or greater than the amount tendered in (1) the shares and
will deliver or cause to be delivered such shares for the purpose of tender to
Telesoft within the period specified in the offer or (2) other securities
immediately convertible into, exercisable for or exchangeable into shares
("Equivalent Securities") and, upon the acceptance of such tender, will acquire
such shares by conversion, exchange or exercise of such Equivalent Securities to
the extent required by the terms of the offer and will deliver or cause to be
delivered such shares so acquired for the purpose of tender to Telesoft within
the period specified in the offer. Rule 14e-4 also provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. A tender of shares made pursuant to any method of delivery set
forth herein will constitute the tendering stockholder's representation and
warranty to Telesoft that (1) such stockholder has a "net long position" in
shares or Equivalent Securities being tendered within the meaning of Rule 14e-4
and (2) such tender of shares complies with Rule 14e-4. Telesoft's acceptance
for payment of shares tendered pursuant to the offer will constitute a binding
agreement between the tendering stockholder and Telesoft upon the terms and
subject to the conditions of the offer.
Determinations of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of shares
to be accepted, the price to be paid therefor and the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of shares will be determined by Telesoft, in its sole discretion, which
determination shall be final and binding on all parties. Telesoft reserves the
absolute right to reject any or all tenders it determines not to be in proper
form or the acceptance of or payment for which may, in the opinion of Telesoft's
counsel, be unlawful. Telesoft also reserves the absolute right to waive any of
the conditions of the offer and any defect or irregularity in the tender of any
particular shares or any particular stockholder. No tender of shares will be
deemed to be properly made until all defects or irregularities have been cured
or waived. None of Telesoft, the Depositary or any other person is or will be
obligated to give notice of any defects or irregularities in tenders, and none
of them will incur any liability for failure to give any such notice.
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Certificates for shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal, must
be delivered to the Depositary and not to Telesoft. Any such documents delivered
to Telesoft will not be forwarded to the Depositary and therefore will not be
deemed to be validly tendered.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4, tenders of shares pursuant
to the offer are irrevocable. Shares tendered pursuant to the offer may be
withdrawn at any time before the Expiration Date and, unless accepted for
payment by Telesoft as provided in this Offer to Purchase, may also be withdrawn
after 12:00 Midnight, New York City time, on Monday, April 3, 2000.
For a withdrawal to be effective, the Depositary must receive (at its
address set forth on the back cover of this Offer to Purchase) a notice of
withdrawal in written or facsimile transmission form on a timely basis. Such
notice of withdrawal must specify the name of the person who tendered the shares
to be withdrawn, the number of shares tendered, the number of shares to be
withdrawn and the name of the registered holder, if different from that of the
person who tendered such shares. If the certificates have been delivered or
otherwise identified to the Depositary, then, prior to the release of such
certificates, the tendering stockholder must also submit the serial numbers
shown on the particular certificates evidencing the shares and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution (except
in the case of shares tendered by an Eligible Institution). If shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
3, the notice of withdrawal must specify the name and the number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn shares and
otherwise comply with the procedures of such facility.
If Telesoft extends the offer, is delayed in its purchase of shares or is
unable to purchase shares pursuant to the offer for any reason, then, without
prejudice to Telesoft's rights under the offer, the Depositary may, subject to
applicable law, retain on behalf of Telesoft all tendered shares, and such
shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4, subject to Rule
13e-4(f)(5) under the Securities Exchange Act, which provides that the issuer
making the tender offer shall either pay the consideration offered, or return
the tendered securities, promptly after the termination or withdrawal of the
tender offer.
Participants in the Telesoft Corp. Profit Sharing Plan are not subject to
the foregoing procedures with respect to shares attributable to their individual
accounts under the Telesoft Corp. Profit Sharing Plan and instead should follow
the procedures for withdrawal included in the applicable letter furnished to
such participants.
All questions as to the form and validity, including time of receipt, of
notices of withdrawal will be determined by Telesoft, in its sole discretion,
which determination shall be final and binding on all parties. None of
Telesoft, the Depositary or any other person is or will be obligated to give any
notice of any defects or irregularities in any notice of withdrawal, and none of
them will incur any liability for failure to give any such notice. Withdrawals
may not be rescinded, and any shares properly withdrawn will thereafter be
deemed not tendered for purposes of the offer. However, withdrawn shares may be
re-tendered before the Expiration Date by again following any of the procedures
described in Section 3.
5. Purchase of Shares and Payment of Purchase Price.
Upon the terms and subject to the conditions of the offer, and as promptly
as practicable after the Expiration Date, Telesoft will determine a single per
share Purchase Price that it will pay for shares validly tendered and not
withdrawn pursuant to the offer, taking into account the number of shares so
tendered and the prices specified by tendering stockholders, and will accept for
payment and pay for (and thereby purchase) shares
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<PAGE>
validly tendered at or below the Purchase Price and not withdrawn as soon as
practicable after the Expiration Date. For purposes of the offer, Telesoft will
be deemed to have accepted for payment (and therefore purchased), subject to
proration and the conditional tender provisions of the offer, shares that are
validly tendered at or below the Purchase Price and not withdrawn when, as and
if it gives oral or written notice to the Depositary of its acceptance of such
shares for payment pursuant to the offer.
In all cases, payment for shares tendered and accepted for payment pursuant
to the offer will be made promptly (subject to possible delay in the event of
proration or conditional tenders) but only after timely receipt by the
Depositary of certificates for shares (or of a timely Book-Entry Confirmation of
such shares into the Depositary's account at the Book-Entry Transfer Facility),
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), or, in the case of a book-entry transfer, an Agent's Message, or, in
the case of a tender through ATOP, the specific acknowledgment, in each case
together with any other required documents.
Payment for shares purchased pursuant to the offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from Telesoft and transmitting payment to the tendering stockholders. In the
event of proration, Telesoft will determine the proration factor and pay for
those tendered shares accepted for payment as soon as practicable after the
Expiration Date. However, Telesoft does not expect to be able to announce the
final results of any such proration until approximately seven business days
after the Expiration Date. Under no circumstances will Telesoft pay interest on
the Purchase Price including, without limitation, by reason of any delay in
making payment. Certificates for all shares not purchased, including all shares
tendered at prices greater than the Purchase Price and shares not purchased due
to proration or conditional tenders, will be returned (or, in the case of shares
tendered by book-entry transfer, such shares will be credited to the account
maintained with the Book-Entry Transfer Facility by the participant who so
delivered such shares) as promptly as practicable following the Expiration Date
or termination of the offer without expense to the tendering stockholder. In
addition, if certain events occur, Telesoft may not be obligated to purchase
shares pursuant to the offer. See Section 7.
Telesoft will pay or cause to be paid all stock transfer taxes, if any,
payable on the transfer to it of shares purchased pursuant to the offer;
provided, however, that if payment of the Purchase Price is to be made to, or
(in the circumstances permitted by the offer) if unpurchased shares are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered holder or such other person),
payable on account of the transfer to such person will be deducted from the
Purchase Price unless evidence satisfactory to Telesoft of the payment of such
taxes or exemption therefrom is submitted. See Instruction 7 of the Letter of
Transmittal.
Any tendering stockholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included as part of the
Letter of Transmittal an IRS Form W-8 or an IRS Form W-8 BEN obtained from the
Depositary may be subject to required backup U.S. Federal income tax withholding
of 31% of the gross proceeds payable to such stockholder or other payee pursuant
to the offer. See Sections 3 and 15.
6. Conditional Tender of Shares.
Under certain circumstances and subject to the exceptions set forth in
Section 1, Telesoft may prorate the number of shares purchased pursuant to the
offer. As discussed in Section 15, the number of shares to be purchased from a
particular stockholder may affect the tax treatment of such purchase to such
stockholder and such stockholder's decision whether to tender. Each stockholder
is urged to consult with his or her own tax advisor. Accordingly, a stockholder
may tender shares subject to the condition that a specified minimum
19
<PAGE>
number of such stockholder's shares tendered pursuant to a Letter of Transmittal
or Notice of Guaranteed Delivery must be purchased if any such shares so
tendered are purchased, and any stockholder desiring to make such a conditional
tender must so indicate in the box captioned "Conditional Tender" in such Letter
of Transmittal or, if applicable, the Notice of Guaranteed Delivery. The
conditional tender alternative is made available so that a stockholder may seek
to structure the purchase of shares from the stockholder pursuant to the offer
in such a manner that it will be treated as a sale of such shares by the
stockholder, rather than the payment of a dividend to the stockholder, for
federal income tax purposes.
Any tendering stockholder wishing to make a conditional tender must
calculate and appropriately indicate such minimum number of shares. If the
effect of accepting tenders on a pro rata basis would be to reduce the number of
shares to be purchased from any stockholder (tendered pursuant to a Letter of
Transmittal or Notice of Guaranteed Delivery) below the minimum number so
specified, such tender will automatically be regarded as withdrawn (except as
provided in the next paragraph) and all shares tendered by such stockholder
pursuant to such Letter of Transmittal or Notice of Guaranteed Delivery will be
returned as promptly as practicable thereafter.
If conditional tenders would otherwise be so regarded as withdrawn and
would cause the total number of shares to be purchased to fall below 2,300,000,
then, to the extent feasible, Telesoft will select enough of such conditional
tenders that would otherwise have been so withdrawn to permit Telesoft to
purchase 2,300,000 shares. In selecting among such conditional tenders, Telesoft
will select by lot and will limit its purchase in each case to the designated
minimum number of shares to be purchased.
In the event of proration, any shares tendered pursuant to a conditional
tender for which the minimum requirements are not satisfied may not be accepted
(except as provided above) and will thereby be deemed withdrawn.
7. Certain Conditions of the Offer.
Notwithstanding any other provision of the offer, Telesoft shall not be
required to accept for payment, purchase or pay for any shares tendered, and may
terminate or amend the offer or may postpone the acceptance for payment of, or
the purchase of and the payment for, shares tendered, subject to Rule 13e-4(f)
promulgated under the Securities Exchange Act, if at any time on or after
February 4, 2000, and prior to the time of payment for any such shares (whether
any shares have theretofore been accepted for payment, purchased or paid for
pursuant to the offer) any of the following events shall have occurred (or shall
have been determined by Telesoft to have occurred) that, in Telesoft's judgment
in any such case and regardless of the circumstances giving rise thereto
(including any action or omission to act by Telesoft), makes it inadvisable to
proceed with the offer or with such acceptance for payment or payment:
(1) there shall have been threatened or instituted or be pending
before any court, agency, authority or other tribunal any action, suit or
proceeding by any government or governmental, regulatory or administrative
agency or authority or by any other person, domestic, foreign or
supranational, or any judgment, order or injunction entered, enforced or
deemed applicable by any such court, authority, agency or tribunal, which
(a) challenges or seeks to make illegal, or to delay or otherwise directly
or indirectly to restrain, prohibit or otherwise affect the making of the
offer or the acquisition of shares pursuant to the offer or is otherwise
related in any manner to, or otherwise affects, the offer or (b) could, in
the sole judgment of Telesoft, materially affect the business, condition
(financial or otherwise), income, operations or prospects of Telesoft and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of Telesoft and its
subsidiaries, taken as a whole, or materially impair the offer's
contemplated benefits to Telesoft; or
20
<PAGE>
(2) there shall have been any action threatened or taken, or any
approval withheld, or any statute, rule or regulation invoked, proposed,
sought, promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the offer or Telesoft or any of its subsidiaries, by any
government or governmental regulatory or administrative authority or agency
or tribunal, domestic, foreign or supranational, which, in the sole
judgment of Telesoft, would or might directly or indirectly result in any
of the consequences referred to in clause (a) or (b) of paragraph (1)
above; or
(3) there shall have occurred (a) the declaration of any banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory); (b) any general suspension of trading
in, or limitation on prices for, securities on any U.S. national securities
exchange or in the over-the-counter market; (c) the commencement of a war,
armed hostilities or any other national or international crisis directly or
indirectly involving the United States; (d) any limitation (whether or not
mandatory) by any governmental, regulatory or administrative agency or
authority on, or any event which, in the sole judgment of Telesoft might
materially affect, the extension of credit by banks or other lending
institutions in the United States; (e) any significant decrease in the
market price of the shares or in the market prices of equity securities
generally in the United States or any change in the general political,
market, economic or financial conditions in the United States or abroad
that could have in the sole judgment of Telesoft a material adverse effect
on the business, condition (financial or otherwise), income, operations or
prospects of Telesoft and its subsidiaries, taken as a whole, or on the
trading in the shares; (f) in the case of any of the foregoing existing at
the time of the announcement of the offer, a material acceleration or
worsening thereof; or (g) any decline in the Dow Jones Industrial Average
or the S&P 500 Composite Index or the Nasdaq Composite Index by an amount
in excess of 10% measured from the close of business on February 3, 2000;
or
(4) any change shall occur or be threatened in the business, condition
(financial or otherwise), income, operations or prospects of Telesoft and
its subsidiaries, taken as a whole, which in the sole judgment of Telesoft
is or may be material to Telesoft and its subsidiaries taken as a whole; or
(5) a tender or exchange offer with respect to some or all of the
shares (other than the offer), or a merger or acquisition proposal for
Telesoft, shall have been proposed, announced or made by another person or
shall have been publicly disclosed, or Telesoft shall have learned that (a)
any person or "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act) has acquired or proposes to acquire beneficial
ownership of more than 5% of the outstanding shares, whether through the
acquisition of stock, the formation of a group, the grant of any option or
right, or otherwise (other than as disclosed in a Schedule 13D or 13G (or
an amendment thereto) on file with the Securities and Exchange Commission
on February 3 2000) or (b) any such person or group that on or prior to
February 3, 2000, had filed such a Schedule with the Securities and
Exchange Commission thereafter shall have acquired or shall propose, to
acquire whether through the acquisition of stock, the formation of a group,
the grant of any option or right, or otherwise, beneficial ownership of
additional shares representing 2% or more of the outstanding shares; or
(6) any person or group shall have filed a Notification and Report
Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
reflecting an intent to acquire Telesoft or any of its shares.
The foregoing conditions are for Telesoft's sole benefit and may be
asserted by Telesoft regardless of the circumstances giving rise to any such
condition (including any action or inaction by Telesoft) or may be waived by
Telesoft in whole or in part. Telesoft's failure at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time. In certain circumstances, if Telesoft waives any of the
foregoing conditions, it may be required to extend the Expiration Date of the
offer. Any determination by Telesoft concerning the events
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<PAGE>
described above and any related judgment or decision by Telesoft regarding the
inadvisability of proceeding with the purchase of or payment for any shares
tendered will be final and binding on all parties.
8. Trading Market and Price Range of Shares.
The shares are listed and traded on the Nasdaq SmallCap Market under the
symbol "TSFT." The high and low closing sales prices per share on the Nasdaq
SmallCap Market as compiled from published financial sources are listed below:
<TABLE>
<CAPTION>
High Low
------- --------
<S> <C> <C>
1998 (fiscal year ended November 30, 1998)
First Quarter $5.125 $2.65625
Second Quarter 5.75 4.25
Third Quarter 6.75 3.375
Fourth Quarter 5.25 3.5625
1999 (fiscal year ended November 30, 1999)
First Quarter $6.00 $4.875
Second Quarter 5.00 4.1875
Third Quarter 4.75 4.375
Fourth Quarter 4.6875 4.0625
2000 (fiscal year ending November 30, 2000)
First Quarter (through February 3, 2000) $6.3125 $3.75
</TABLE>
On February 2, 2000, the last full trading day before the announcement of
the offer, the closing per share sales price as reported on Nasdaq SmallCap
Market was $4.75. Telesoft urges stockholders to obtain current quotations of
the market price of the shares.
9. Background and Purpose of the Offer; Certain Effects of the Offer.
On January 15, 1998, Telesoft completed the sale of its GoodNet subsidiary,
an Arizona-based internet service provider, to WinStar Communications Inc. for
$3.5 million in cash and 479,387 WinStar restricted common shares. Substantially
all of such WinStar shares were sold in 1998 resulting in net cash proceeds to
Telesoft of approximately $13.7 million. Telesoft has explored ways in which to
deploy such excess cash and enhance stockholder value, including by making
investments in its existing business, acquiring complementary or new businesses
or by distributing cash to stockholders in the form of dividends or through
repurchases of shares. During 1999, Telesoft invested significantly in its core
business and expects to continue to invest in its software development
initiatives. However, Telesoft's management believes that its available cash is
still in excess of its reasonably foreseeable need for cash for research and
development purposes. Telesoft's management has established strategic and
financial criteria that potential acquisitions must meet for consideration. To
date, Telesoft's management has been unable to identify any potential
acquisition candidates meeting such criteria.
As a result of the foregoing, Telesoft's management determined to recommend
to the Board of Directors that excess cash be used to repurchase shares of its
common stock including the shares owned by Joseph W. Zerbib, Telesoft's Chairman
and retiring Chief Executive Officer and President, and from Telesoft's other
stockholders.
On February 2, 2000, Telesoft agreed to purchase from Joseph W. Zerbib,
Telesoft's Chairman and retiring Chief Executive Officer and President, 293,750
shares, constituting all of Mr. Zerbib's shares, at the earlier of (1) the time
Telesoft is deemed to have accepted for payment (and therefore purchased) shares
in the offer and (2) March 31, 2000. The purchase price for such shares will be
$7.25, the average of the high and low
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<PAGE>
purchase prices in the offer. The Board of Directors agreed to repurchase Mr.
Zerbib's shares in connection with Mr. Zerbib's retirement as Chief Executive
Officer and President of Telesoft. The Board of Directors believes that
repurchase of Mr. Zerbib's shares will eliminate a potentially significant
overhang with respect to the shares and the potentially adverse effects thereof
on the trading of the shares and that such repurchase is fair to and in the best
interests of Telesoft's other stockholders. Mr. Zerbib did not take part in any
of the deliberations or voting of the Board of Directors regarding the
repurchase of his shares. Mr. Zerbib will not be tendering shares in the offer.
The offer provides stockholders who are considering a sale of all or a
portion of their shares the opportunity to determine the price or prices (not
greater than $7.50 nor less than $7.00 per share) at which they are willing to
sell their shares and, if any of such shares are purchased pursuant to the
offer, to sell those shares for cash to Telesoft without the usual costs
associated with a market sale. The offer gives stockholders an opportunity to
sell their shares at a price greater than the prevailing market prices of the
shares immediately prior to the announcement of the offer. The offer would also
allow Odd Lot Owners whose shares are purchased pursuant to the offer to avoid
both the payment of brokerage commissions and any applicable odd lot discounts
payable on sales of odd lots on a securities exchange. To the extent the
purchase of shares in the offer results in a reduction in the number of
stockholders of record, the costs to Telesoft for services to stockholders
should be reduced. Stockholders who determine not to accept the offer will
increase their proportionate interest in Telesoft's equity, and therefore in
Telesoft's future earnings and assets, subject to Telesoft's right to issue
additional shares and other equity securities in the future.
The Board of Directors has approved the offer. However, you must make your
own decision whether to tender your shares and, if so, how many shares to tender
and the price or prices at which you are tendering your shares. Neither Telesoft
nor its Board of Directors makes any recommendation to any stockholder as to
whether to tender or refrain from tendering shares. See Section 10 for
information regarding the intentions of Telesoft's directors and executive
officers with respect to tendering shares pursuant to the offer.
Shares that Telesoft acquires pursuant to the offer will become authorized
and issued, but not outstanding, shares and will be available for sale by
Telesoft without further stockholder action (except as may be required by
applicable law or the rules of the securities exchanges on which the shares are
listed) for purposes including, but not limited to, the acquisition of other
businesses, raising of additional capital for use in Telesoft's businesses, and
satisfaction of obligations under existing or future employee benefit plans.
Except as disclosed in this Offer to Purchase, Telesoft currently has no
plans or proposals that relate to or would result in:
. the acquisition by any person of additional securities of Telesoft or
the disposition of securities of Telesoft;
. an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Telesoft or any or all of its
subsidiaries;
. a sale or transfer of a material amount of assets of Telesoft or any
of its subsidiaries;
. any change in the present Board of Directors or management of
Telesoft;
. any material change in the present dividend rate or policy, or
indebtedness or capitalization of Telesoft;
. any other material change in Telesoft's corporate structure or
business;
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<PAGE>
. any change in Telesoft's Certificate of Incorporation or By-Laws or
any actions which may impede the acquisition of control of Telesoft by
any person;
. a class of equity security of Telesoft being delisted from a national
securities exchange;
. a class of equity security of Telesoft becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act; or
. the suspension of Telesoft's obligation to file reports pursuant to
Section 15(d) of the Securities Exchange Act.
10. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares.
As of November 30, 1999, there were 3,711,500 shares outstanding, and
588,325 shares issuable upon the exercise of all outstanding options. As of
November 30, 1999, directors and executive officers of Telesoft as a group (6
persons) beneficially owned 2,021,250 shares, which constituted approximately
47% of the outstanding shares (including shares issuable upon the exercise of
options held by Telesoft's directors and executive officers exercisable within
60 days of such date) at such time. In order for Telesoft to purchase 2,300,000
shares pursuant to the offer, directors and executive officers must tender at
least 609,750 shares (excluding shares issuable upon exercise of options)
pursuant to the offer. Telesoft's directors and executive officers are
permitted to tender their shares to Telesoft pursuant to the offer, which shares
will be accepted and purchased on the same terms as all shares accepted and
purchased from stockholders pursuant to the offer. Telesoft has been advised
that Thierry E. Zerbib, Brian H. Loeb and Michael F. Zerbib currently intend to
tender at $7.00 per share in the aggregate the same percentage of their shares
as the percentage of all of other shares tendered as of 5:00 p.m., New York City
time, on Friday, March 3, 2000. For example, if unaffiliated stockholders
tender as of 5:00 p.m., New York City time, on Friday, March 3, 2000, 50% of the
Telesoft shares held by them, Messrs, Zerbib, Loeb and Zerbib will tender 50% of
the Telesoft shares held by them. Telesoft will issue a press release after
5:00 p.m., New York City time, on Friday March 3, 2000 indicating the number of
Telesoft shares tendered by unaffiliated stockholders and the number of shares
to be tendered by Messrs. Zerbib, Loeb and Zerbib. Messrs. Zerbib, Loeb and
Zerbib reserve the right to change the number of Telesoft shares to be tendered
by them and the price at which they tender Telesoft shares. Any such change
will be publicly announced by Telesoft.
Joseph W. Zerbib has previously agreed to sell his shares to Telesoft and
will not be tendering shares in the offer. See Section 9.
Cecile Silverman and Kalvan Swanky, directors of Telesoft, do not own
shares and will not be tendering shares in the offer.
Based on Telesoft's records and information provided to Telesoft by its
directors, executive officers, associates and subsidiaries, except as set forth
on Schedule I hereto, neither Telesoft nor any of its associates or subsidiaries
or persons controlling Telesoft nor, to the best of Telesoft's knowledge, any of
the directors or executive officers of Telesoft, nor any associates of such
directors or executive officers, has effected any transactions in the shares
during the 40 business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither Telesoft nor any
person controlling Telesoft nor, to Telesoft's knowledge, any of its directors
or executive officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
offer with respect to any securities of Telesoft including, but not limited to,
any contract, arrangement, understanding or relationship
24
<PAGE>
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans, guarantees
against loss or the giving or withholding of proxies, consents or
authorizations.
11. Source and Amount of Funds.
Assuming that Telesoft purchases 2,300,000 shares pursuant to the offer at
the maximum specified purchase price of $7.50 per share, Telesoft expects the
amount of funds required to purchase those shares to be $17.25 million and the
maximum aggregate cost, including all fees and expenses applicable to the offer,
to be approximately an additional $75,000. Telesoft anticipates that all of the
funds necessary to pay such amounts will be provided from cash and a $3 million
line of credit from Bank One N.A. See Section 9. Telesoft has no alternative
financing arrangements or alternative financing plans in the event that these
financing plans fall through.
12. Certain Information About Telesoft.
Telesoft provides telecommunications billing and customer care solutions to
educational institutions, corporations and government agencies. Telesoft offers
the following integrated hardware and proprietary software systems and services:
the STS Outsourcing Program, Customized Billing Outsourcing Services, TelMaster
Telemanagement System, Distribution Control System and RATEX Bookstore Solution.
Telesoft also assists large organizations in analyzing, recovering and
optimizing their telecommunications expenditures.
The principal executive office of Telesoft is located at 3443 North Central
Avenue, Suite 1800, Phoenix, Arizona 85012.
Where You Can Find More Information
Telesoft is subject to the informational filing requirements of the
Securities Exchange Act and, in accordance therewith, is obligated to file
reports and other information with the Securities and Exchange Commission
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning Telesoft's directors and officers, their
remuneration, options granted to them, the principal holders of Telesoft's
securities and any material interests of such persons in transactions with
Telesoft is required to be disclosed in proxy statements distributed to
Telesoft's stockholders and filed with the Securities and Exchange Commission.
Telesoft has also filed a Tender Offer Statement on Schedule TO with the
Securities and Exchange Commission, which includes additional information with
respect to the offer. Such reports, proxy statements and other information can
be inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549; and at its regional offices located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048. Copies of such material may also be obtained by mail, upon payment of
the Securities and Exchange Commission's customary charges, from the Public
Reference Section of the Securities and Exchange Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The Securities and Exchange
Commission also maintains a Web site on the World Wide Web at http://www.sec.gov
that contains reports, proxy statements and other information regarding
registrants that file electronically with the Securities and Exchange
Commission. Such reports, proxy statements and other information concerning
Telesoft also can be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Telesoft's Schedule TO may not be available at the Securities and Exchange
Commission's regional offices.
The Securities and Exchange Commission allows Telesoft to "incorporate by
reference" information into this Offer to Purchase. This means that Telesoft
can disclose important information to you by referring you to another document
filed separately with the Securities and Exchange Commission. The information
incorporated by reference is considered to be a part of this Offer to Purchase,
except for any information that is superseded by information that is included
directly in this document.
25
<PAGE>
This Offer to Purchase incorporates by reference the documents listed below
that Telesoft has previously filed with the Securities and Exchange Commission.
The documents contain important information about Telesoft and its financial
condition.
<TABLE>
<CAPTION>
Telesoft's Filings with the Commission Period
- -----------------------------------------------------------------------------
<S> <C>
Annual Report on Form 10-KSB Fiscal year ended November 30, 1998
Quarterly Reports on Form 10-QSB Quarters ended:
. February 28, 1999
. May 31, 1999
. August 31, 1999
</TABLE>
Telesoft incorporates by reference additional documents that it may file
with the Securities and Exchange Commission between the date of this Offer to
Purchase the date the offer, proration period and withdrawal rights expire.
Those documents include periodic reports, such as Annual Reports on Form 10-KSB,
Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K, as well as
proxy statements.
You can obtain any of the documents incorporated by reference in this
document through Telesoft or from the Securities and Exchange Commission's web
site at the address described above. Documents incorporated by reference are
available from Telesoft without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by reference as an
exhibit in this proxy statement/prospectus. You can obtain documents
incorporated by reference in this Offer to Purchase by requesting them in
writing or by telephone from Telesoft at 3443 North Central Avenue, Suite 1800,
Phoenix, Arizona 85012, Telephone: 602-308-2100. Please be sure to include your
complete name and address in your request. If you request any incorporated
documents, we will mail them to you by first class mail, or another equally
prompt means, within one business day after we receive your request.
13. Effects of the Offer on the Market for Shares; Registration under the
Securities Exchange Act.
Telesoft's purchase of shares pursuant to the offer will reduce the number
of shares that might otherwise trade publicly and is likely to reduce the number
of stockholders. Nonetheless, Telesoft believes that there will still be a
sufficient number of shares outstanding and publicly traded following the offer
to ensure a continued trading market in the shares. Based on the published
guidelines of the Nasdaq SmallCap Market, Telesoft does not believe that its
purchase of shares pursuant to the offer will cause its remaining shares to be
delisted from any such market quotation system.
The shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the shares. Telesoft believes that,
following the purchase of shares pursuant to the offer, the shares will continue
to be "margin securities" for purposes of the Federal Reserve Board's margin
regulations.
The shares are registered under the Securities Exchange Act, which
requires, among other things, that Telesoft furnish certain information to its
stockholders and to the Securities and Exchange Commission and comply with the
Securities and Exchange Commission's proxy rules in connection with meetings of
Telesoft's stockholders. Telesoft believes that its purchase of shares pursuant
to the offer will not result in the shares becoming eligible for deregistration
under the Securities Exchange Act.
14. Certain Legal Matters; Regulatory Approvals.
Telesoft is not aware of any license or regulatory permit material to its
business that might be adversely affected by its acquisition of shares as
contemplated in the offer, or of any approval or other action by any government
or governmental, administrative or regulatory authority or agency, domestic,
foreign or
26
<PAGE>
supranational, that would be required for Telesoft's acquisition or ownership of
shares as contemplated by the offer. Should any such approval or other action be
required, Telesoft currently contemplates that it will seek such approval or
other action. Telesoft cannot predict whether it may determine that it is
required to delay the acceptance for payment of, or payment for, shares tendered
pursuant to the offer pending the outcome of any such matter. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions, or that the failure to
obtain any such approval or other action might not result in adverse
consequences to Telesoft's business. Telesoft's obligations under the offer to
accept for payment and pay for shares are subject to certain conditions. See
Section 7.
15. Certain U.S. Federal Income Tax Consequences.
The following discussion summarizes certain U.S. federal income tax
consequences to holders of shares relevant to the offer. The discussion
contained in this summary is based upon the Internal Revenue Code of 1986, as
amended, temporary and final Treasury Regulations promulgated thereunder,
proposed Treasury Regulations, published rulings, notices and other
administrative pronouncements of the Internal Revenue Service ("IRS"), and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, judicial, or administrative action. Any such changes may be
applied retroactively in a manner that could materially affect the tax
consequences described herein.
This summary assumes that the shares are held as capital assets, within the
meaning of Section 1221 of the Internal Revenue Code. This summary does not
address all of the tax consequences that may be relevant to particular
stockholders in light of their personal circumstances, or to certain types of
stockholders (such as certain financial institutions, dealers in securities or
commodities, securities traders that elect to mark to market, foreign persons,
insurance companies, tax-exempt organizations or persons who hold shares as a
position in a "straddle" or as a part of a "hedging" or "conversion" transaction
for U.S. federal income tax purposes). In particular, the discussion of the
consequences of an exchange of shares for cash pursuant to the offer applies
only to a United States Holder. For purposes of this summary, a "United States
Holder" is a holder of shares that is (a) a citizen or resident of the United
States, (b) a corporation, partnership or other entity created or organized in
or under the laws of the United States, any state or any political subdivision
thereof, (c) an estate the income of which is subject to U.S. federal income
taxation regardless of its source or (d) a trust whose administration is subject
to the primary supervision of a U.S. court and which has one or more U.S.
persons who have the authority to control all substantial decisions of the
trust. Additional or alternative tax consequences may apply with respect to
shares acquired as compensation (including shares acquired upon the exercise of
options or which were or are subject to forfeiture restrictions).
The summary does not address the state, local, or foreign tax consequences
of participating in the offer. Each stockholder should consult its own tax
advisor concerning the decision to participate in the offer as well as the
specific tax consequences (foreign, federal, state, and local) applicable to it.
United States Holders Who Receive Cash Pursuant to the Offer. An exchange
of shares for cash pursuant to the offer by a United States Holder will be a
taxable transaction for U.S. federal income tax purposes. As a consequence of
the exchange, a United States Holder will, depending on such holder's particular
circumstances, be treated either as having sold such holder's shares or as
having received a dividend distribution from Telesoft, with the tax consequences
described below.
Under Section 302 of the Internal Revenue Code, a United States Holder
whose shares are exchanged for cash pursuant to the offer will be treated as
having sold such holder's shares, rather than as having received a dividend, if
the exchange (a) results in a "complete termination" of such holder's equity
interest in Telesoft, (b) is "substantially disproportionate" with respect to
such holder or (c) is "not essentially equivalent to a dividend" with respect to
the holder, each as discussed below. In applying constructive ownership rules,
in addition to shares actually owned by a United States Holder, such holder will
be deemed to constructively own shares
27
<PAGE>
actually or constructively owned by certain related entities and individuals.
For purposes of these constructive ownership rules, a holder of options to
acquire shares is generally deemed to constructively own those shares even if
the option is not exercised.
If a United States Holder sells shares to persons other than Telesoft at or
about the time such holder also sells shares to Telesoft pursuant to the offer,
and the various sales effected by the holder are part of an overall plan to
reduce or terminate such holder's proportionate interest in Telesoft, then the
sales to persons other than Telesoft may, for U.S. federal income tax purposes,
be integrated with the holder's sale of shares pursuant to the offer and, if
integrated, should be taken into account in determining whether the holder
satisfies any of the three tests described below.
A United States Holder will satisfy the "complete termination" test if all
shares actually or constructively owned by such holder are exchanged for cash
pursuant to the offer.
A United States Holder will satisfy the "substantially disproportionate"
test if immediately after the exchange such holder owns less than 50% of the
total voting power in Telesoft and such holder's percentage interest in Telesoft
(i.e., the number of shares actually and constructively owned by such holder
divided by the number of shares outstanding) is less than 80% of such holder's
percentage interest in Telesoft prior to the exchange.
A United States Holder will satisfy the "not essentially equivalent to a
dividend" test if the reduction in such holder's percentage interest in
Telesoft, as described above, constitutes a "meaningful reduction of the
shareholder's proportionate interest" given such holder's particular facts and
circumstances. The Internal Revenue Service has indicated in published rulings
that any reduction in the percentage interest of a stockholder whose relative
stock interest in a publicly held corporation is minimal (an interest of less
than 1% should satisfy this requirement) and who exercises no control over
corporate affairs should constitute such a "meaningful reduction."
Telesoft cannot predict whether or to what extent the offer will be
oversubscribed. If the offer is oversubscribed, proration of tenders pursuant
to the offer will cause Telesoft to accept fewer shares than are tendered.
Therefore, a holder can be given no assurance that a sufficient number of such
holder's shares will be exchanged pursuant to the offer to ensure that such
exchange will be treated as a sale, rather than as a dividend, for U.S. federal
income tax purposes pursuant to the rules discussed above. A holder may wish to
condition the tender on a minimum number of shares being redeemed as described
in Section 6 above, so that none of such holder's shares are redeemed unless
Telesoft accepts a sufficient number of his shares so that he satisfies one or
more of the tests described above. While such a conditional tender may ensure
that a redemption of a holder's shares would be treated as an exchange for
federal income tax purposes, a conditional tender may result in no shares being
accepted by Telesoft. In determining the minimum number of shares to be
accepted for purchase in a conditional tender, a holder should take into account
shares constructively owned by the holder pursuant to the rules discussed above.
Stockholders considering a conditional tender are urged to consult with their
tax advisors regarding the relative advantages and disadvantages of such a
tender.
If a United States Holder is treated as having sold such holder's shares
under the tests described above, such holder will recognize gain or loss equal
to the difference between the amount of cash received and such holder's tax
basis in the shares exchanged. Any capital gain or loss so recognized generally
will be long-term capital gain or loss if the holding period for the holder's
shares surrendered exceeds one year. In the case of a United States Holder that
is an individual, estate, or trust, such long term capital gain or loss will be
taxed at a maximum rate of 20%. The federal income tax rates applicable to
capital gains for taxpayers other than individuals, estates, and trusts are
currently the same as those applicable to ordinary income. A United States
Holder's ability to deduct capital losses from ordinary income is limited.
Capital losses generally may be used
28
<PAGE>
by a corporate taxpayer only to offset capital gains, and by an individual
taxpayer only to the extent of capital gains plus $3,000 of ordinary income per
year.
If a United States Holder who exchanges shares pursuant to the offer is not
treated under Section 302 as having sold such holder's shares for cash, the
entire amount of cash received by such holder will be treated as a dividend to
the extent of Telesoft's current and accumulated earnings and profits, which
Telesoft anticipates will be sufficient to cover the amount of any such dividend
and will be includible in the holder's gross income as ordinary income in its
entirety, without reduction for the tax basis of the shares exchanged. No loss
will be recognized. As to an exchange which is treated as a dividend, a United
States Holder's tax basis in the shares exchanged generally will be added to
such holder's tax basis in such holder's remaining shares. To the extent that
cash received in exchange for shares is treated as a dividend to a corporate
United States Holder, such holder will be (i) eligible for a dividends-received
deduction (subject to applicable limitations) and (ii) subject to the
"extraordinary dividend" provisions of the Internal Revenue Code. To the
extent, if any, that the cash received by a United States Holder exceeds
Telesoft's current and accumulated earnings and profits, it will be treated
first as a tax-free return of such holder's tax basis in the shares and
thereafter as capital gain.
Stockholders Who Do Not Receive Cash Pursuant to the Offer. Stockholders
whose shares are not exchanged pursuant to the offer will not incur any tax
liability as a result of the consummation of the offer.
Backup Federal Income Tax Withholding. Under the U.S. federal income tax
backup withholding rules, 31% of the gross proceeds payable to a stockholder or
other payee pursuant to the offer must be withheld by the Depositary and
remitted to the U.S. Treasury unless such holder (i) is a corporation, foreign
person, or other exempt recipient, and when required, establishes this exemption
or (ii) provides its taxpayer identification number, certifies that it is not
currently subject to backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A United States Holder may
generally avoid backup withholding by furnishing a completed Substitute IRS Form
W-9 included as part of the Letter of Transmittal. In order for a foreign
individual to qualify as an exempt recipient, such an individual must submit a
completed IRS Form W-8 which is available from the Depositary upon request. See
Instructions 11 and 12 of the Letter of Transmittal. Backup withholding is not
an additional tax; any amount withheld under these rules will be creditable
against the United States federal income tax liability of the beneficial holder
subject to the withholding, and may entitle such holder to a refund provided
that the required information is furnished to the Internal Revenue Service.
Participants in the Telesoft Corp. Profit Sharing Plan may have different
tax considerations. See the applicable Direction Form(s) and related materials
sent under separate cover to such participants.
The tax discussion set forth above is included for general information
only. Each stockholder should consult its own tax advisor concerning the
decision to participate in the offer as well as the specific tax consequences
(foreign, federal, state, and local) applicable to it.
16. Extension of the Offer; Termination; Amendments.
Telesoft expressly reserves the right, in its sole discretion, at any time
and from time to time, and regardless of whether or not any of the events set
forth in Section 7 shall have occurred or shall be deemed by Telesoft to have
occurred, to extend the period of time during which the offer is open and
thereby delay acceptance for payment of, and payment for, any shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. Telesoft also expressly reserves the right, in its sole
discretion, to terminate the offer and not accept for payment or pay for any
shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for shares upon the occurrence of any of the
conditions specified in Section 7 hereof by giving oral or written notice of
such termination or postponement to the Depositary and making a public
announcement thereof. Additionally, in certain circumstances, if Telesoft
waives any of the conditions of the offer set forth in Section 7, it may be
required to extend the Expiration Date
29
<PAGE>
of the offer. Telesoft's reservation of the right to delay payment for shares
that it has accepted for payment is limited by Rule 13e-4(f)(5) promulgated
under the Securities Exchange Act, which requires that Telesoft must pay the
consideration offered or return the shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law,
Telesoft further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 7 shall have occurred or shall be
deemed by Telesoft to have occurred, to amend the offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the offer to holders of shares or by decreasing or increasing the
number of shares being sought in the offer). Amendments to the offer may be made
at any time and from time to time by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the last previously scheduled
or announced Expiration Date. Any public announcement made pursuant to the offer
will be disseminated promptly to stockholders in a manner reasonably designed to
inform stockholders of such change. Without limiting the manner in which
Telesoft may choose to make any public announcement, except as provided by
applicable law (including Rule 13e-4(e)(2) promulgated under the Securities
Exchange Act), Telesoft shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If Telesoft makes a material change in the terms of the offer or the
information concerning the offer, or if it waives a material condition of the
offer, Telesoft will extend the offer to the extent required by Rules 13e-
4(d)(2) and 13e-4(e)(2) promulgated under the Securities Exchange Act, which
require that the minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the offer
(other than a change in price or a change in percentage of securities sought)
will depend upon the facts and circumstances, including the relative materiality
of such terms or information. If (1) Telesoft increases or decreases the price
to be paid for shares, Telesoft increases the number of shares being sought and
such increase in the number of shares being sought exceeds 2% of the outstanding
shares or Telesoft decreases the number of shares being sought, and (2) the
offer is scheduled to expire at any time earlier than the tenth business day
from, and including, the date that notice of such increase or decrease is first
published, sent or given, the offer will be extended until the expiration of
such ten business days.
17. Fees and Expenses.
Telesoft has retained Corporate Stock Transfer, Inc. as Depositary and
Beacon Hill Partners, Inc. as Information Agent in connection with the offer.
The Depositary, the Information Agent, as well as the co-trustees of the
Telesoft Corp. Profit Sharing Plan, will receive reasonable and customary
compensation for their services. Telesoft will also reimburse the Depositary for
out-of-pocket expenses, including reasonable attorneys' fees, and has agreed to
indemnify the Depositary against certain liabilities in connection with the
offer, including certain liabilities under the federal securities laws. The
Depositary has not been retained to make solicitations or recommendations in
connection with the offer.
Telesoft will not pay fees or commissions to any broker, dealer, commercial
bank, trust company or other person for soliciting any shares pursuant to the
offer. Telesoft will, however, on request, reimburse such persons for customary
handling and mailing expenses incurred in forwarding materials in respect of the
offer to the beneficial owners for which they act as nominees. No such broker,
dealer, commercial bank or trust company has been authorized to act as
Telesoft's agent for purposes of the offer. Telesoft will pay (or cause to be
paid) any stock transfer taxes on its purchase of shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
18. Miscellaneous.
Telesoft is not aware of any jurisdiction where the making of the offer is
not in compliance with applicable law. If Telesoft becomes aware of any
jurisdiction where the making of the offer is not in compliance
30
<PAGE>
with any valid applicable law, Telesoft will make a good faith effort to comply
with such law. If, after such good faith effort, Telesoft cannot comply with
such law, the offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the offer to be
made by a licensed broker or dealer, the offer is being made on Telesoft's
behalf by one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Telesoft in connection with the offer other than
those contained in this Offer to Purchase or in the related Letter of
Transmittal. If given or made, such information or representation must not be
relied upon as having been authorized by Telesoft.
TELESOFT CORP.
February 4, 2000
31
<PAGE>
SCHEDULE I
CERTAIN TRANSACTIONS INVOLVING SHARES
Based upon Telesoft's records and upon information provided to Telesoft by
its directors, executive officers, associates and subsidiaries, except as
described below, neither Telesoft nor any of its associates or subsidiaries or
persons controlling Telesoft (of which Telesoft believes there are none) nor, to
the best of Telesoft's knowledge, any of the directors or executive officers of
Telesoft, nor any associates of such directors or executive officers, has
effected any transactions in the shares during the 40 business days prior to
February 4, 2000.
On February 1, 2000, Telesoft agreed to purchase from Joseph W. Zerbib,
President and Chief Executive Officer of Telesoft, 293,750 shares, constituting
all of Mr. Zerbib's shares, at the earlier of (1) the time Telesoft is deemed to
have accepted for payment (and therefore purchased) shares in the offer and (2)
March 31, 2000. The purchase price for such shares will be $7.25, the average of
the high and low purchase prices in the offer.
I-1
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for the shares and any
other required documents should be sent or delivered by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at its address set forth below:
The Depositary for the Offer is:
Corporate Stock Transfer, Inc.
By Facsimile By Hand/Overnight Delivery
Transmission Number: or
(For Eligible Institutions Only) Registered or Certified Mail:
303-282-5800
Corporate Stock Transfer, Inc.
Confirm Receipt of 3200 Cherry Creek Drive South
Facsimile by Telephone: Suite 430
303-282-4800 Denver, Colorado 80209
For Information Telephone:
303-282-4800
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the address, telephone
number or e-mail address below. Stockholders may also contact their brokers,
dealers, commercial banks or trust companies for assistance concerning the
offer.
The Information Agent for the Offer is:
Beacon Hill Partners, Inc.
90 Broad Street, 20th Floor
New York, New York 10004
212-843-8500 (collect)
800-755-5001 (toll-free)
e-mail: [email protected]
<PAGE>
LETTER OF TRANSMITTAL
to Tender Shares of Common Stock
of
Telesoft Corp.
Pursuant to the Offer to Purchase for Cash Dated February 4, 2000
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 6, 2000, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Depositary for the Offer is:
Corporate Stock Transfer, Inc.
By Facsimile Transmission Number:
(For Eligible Institutions Only)
303-282-5800
Confirm Receipt of
Facsimile by Telephone:
303-282-4800
By Hand/Overnight Delivery or
Registered or Certified Mail:
Corporate Stock Transfer, Inc.
3200 Cherry Creek Drive South
Suite 430
Denver, Colorado 80209
For Information Telephone:
303-282-4800
------------------------------
Delivery of this Letter of Transmittal and all other documents to an
address or transmission of instructions to a facsimile number other than as set
forth above does not constitute a valid delivery.
Please read the entire Letter of Transmittal, including the accompanying
instructions, carefully before checking any box below.
This Letter of Transmittal is to be used only if certificates are to be
forwarded herewith or if delivery of shares (as defined below) is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility" or "DTC") pursuant to the procedures set
forth in Section 3 of the Offer to Purchase (as defined below). This Letter of
Transmittal may not be used for tendering shares attributable to individual
accounts under the Telesoft Corp. Profit Sharing Plan. See Instruction 15. This
Letter of Transmittal may not be used for directing the exercise of options (as
defined below) through the Telesoft 1995 Incentive Stock Option Plan, the
Telesoft 1996 Incentive Stock Option Plan or the Telesoft 1997 Performance
Equity Plan. See Instruction 16.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ----------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
Please Fill in, if Blank, Exactly as Shares Tendered
Name(s) Appear(s) on Certificate(s) (Attach Signed Additional List if Necessary)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Number
of Shares Number
Certificate Represented by of Shares
Number(s) (1) Certificate(s) (1) Tendered (2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Total
Shares
Tendered
- ----------------------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which your shares are to be purchased in the event of proration. (3)
(Attach additional signed list if necessary.) See Instruction 16.
1st: 2nd: 3rd: 4th:
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed if you are tendering your shares by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all shares represented by each share certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
(3) If you do not designate an order, then in the event less than all shares tendered are purchased due to proration, shares
will be selected for purchase by the Depositary. See Instruction 18.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE: SIGNATURE MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
If you desire to tender shares pursuant to the offer (as defined below)
and you cannot deliver your share certificates (or you are unable to comply with
the procedures for book-entry transfer on a timely basis) and all other
documents required by the Letter of Transmittal to the Depositary at or before
the Expiration Date (as defined in the Offer to Purchase), you may tender your
shares according to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. See Instruction 2. Delivery of documents to the Book-
Entry Transfer Facility does not constitute delivery to the Depositary.
- -------------------------------------------------------------------------------
THIS BOX IS FOR USE BY ELIGIBLE INSTITUTIONS ONLY
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------
(Please Print)
DTC Account No.:
-----------------------------------------------------------
Transaction Code No.:
------------------------------------------------------
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------
(Please Print)
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution that Guaranteed Delivery:
------------------------------
DTC Account No.:
-----------------------------------------------------------
Transaction Code No.:
------------------------------------------------------
- -------------------------------------------------------------------------------
2
<PAGE>
Ladies and Gentlemen:
You hereby tender to Telesoft Corp., an Arizona corporation, the shares of
Telesoft common stock described on page 1 of this Letter of Transmittal at the
price per share indicated in this Letter of Transmittal, net to you in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated February 4, 2000, receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended from time to time, together constitute
the "offer").
Subject to, and effective upon, acceptance for payment of and payment for
the shares tendered herewith in accordance with the terms and subject to the
conditions of the offer (including, if the offer is extended or amended, the
terms and conditions of any such extension or amendment), you hereby sell,
assign and transfer to, or upon the order of, Telesoft all right, title and
interest in and to all the shares that you are tendering hereby (and any and all
other shares or other securities issued or issuable in respect thereof
(collectively, "Distributions")), or order the registration of such shares
tendered by book-entry transfer that are purchased pursuant to the offer to or
upon the order of Telesoft and hereby irrevocably constitute and appoint the
Depositary as your true and lawful agent and attorney-in-fact with respect to
such shares and Distributions, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to:
(1) deliver your certificates for such shares and Distributions, or
transfer ownership of such shares and Distributions on the account
books maintained by the Book-Entry Transfer Facility, together, in any
such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of Telesoft upon receipt by the
Depositary, as your agent, of the Purchase Price (as defined below)
with respect to such shares;
(2) present certificates for such shares for cancellation and transfer on
the books of Telesoft; and
(3) receive all benefits and otherwise exercise all rights of beneficial
ownership of such shares, all in accordance with the terms of the
offer.
You hereby represent and warrant to Telesoft that you have full power and
authority to tender, sell, assign and transfer the shares you are tendering
hereby and all Distributions and that, when and to the extent the same are
accepted for payment by Telesoft, Telesoft will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to the
sale or transfer thereof, and the same will not be subject to any adverse
claims. You will, upon request, execute and deliver any additional documents
deemed by the Depositary or Telesoft to be necessary or desirable to complete
the sale, assignment and transfer of the shares you are tendering hereby and any
Distributions.
You represent and warrant to Telesoft that you have read and agree to all
of the terms of the offer. All authority herein conferred or agreed to be
conferred shall not be affected by, and shall survive, your death or incapacity,
and any of your obligations hereunder shall be binding upon your heirs, personal
representatives, successors and assigns. Except as stated in the offer, this
tender is irrevocable.
You understand that tenders of shares pursuant to any one of the procedures
described in Section 3 of the Offer to Purchase and in the Instructions will
constitute your acceptance of the terms and conditions of the offer, including
your representation and warranty to Telesoft that (1) you have a net long
position in the shares or equivalent securities you are tendering within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934 and
(2) your tender of such shares complies with Rule 14e-4. Telesoft's acceptance
for payment of shares you tender pursuant to the offer will constitute a binding
agreement between you and Telesoft upon the terms and subject to the conditions
of the offer.
You understand that Telesoft will determine a single per share price (not
greater than $7.50 nor less than $7.00 per share), net to the seller in cash,
that it will pay for shares validly tendered and not withdrawn pursuant to the
offer (the "Purchase Price"), taking into account the number of shares so
tendered and the prices specified by
3
<PAGE>
tendering stockholders. You understand that Telesoft will select the lowest
Purchase Price that will allow it to purchase 2,300,000 shares (or such lesser
number of shares as are validly tendered at prices not greater than $7.50 nor
less than $7.00 per share) validly tendered and not withdrawn pursuant to the
offer.
You understand that all shares validly tendered at prices at or below the
Purchase Price and not withdrawn will be purchased at the Purchase Price, net to
the seller in cash, upon the terms and subject to the conditions of the offer,
including the proration and conditional tender provisions, and that Telesoft
will return all other shares, including shares tendered at prices greater than
the Purchase Price and not withdrawn and shares not purchased because of
proration or conditional tender.
You recognize that, under certain circumstances set forth in the Offer to
Purchase, Telesoft may terminate or amend the offer or may postpone the
acceptance for payment of, or the payment for, shares tendered or may not be
required to purchase any of the shares you are tendering hereby or may accept
for payment fewer than all of the shares you are tendering hereby.
Unless otherwise indicated under "Special Payment Instructions," the check
for the Purchase Price of any shares purchased will be issued in your name(s) or
any shares not tendered or not purchased will be returned to you. Similarly,
unless otherwise indicated under "Special Delivery Instructions," the check for
the Purchase Price of any shares purchased or any certificates for shares not
tendered or not purchased (and accompanying documents, as appropriate) will be
mailed to you at the address shown below your signature(s) on page 8 of this
Letter of Transmittal. In the event that both "Special Payment Instructions"
and "Special Delivery Instructions" are completed, the check for the Purchase
Price of any shares purchased or any shares not tendered or not purchased will
be issued in the name(s) of, and mailed to, the person(s) you indicate. You
recognize that Telesoft has no obligation, pursuant to the "Special Payment
Instructions," to transfer any shares from the name of the registered holder(s)
thereof if Telesoft does not accept for payment any of the shares so tendered.
4
<PAGE>
- -------------------------------------------------------------------------------
ODD LOTS
(See Instruction 9)
This section is to be completed ONLY if shares are being tendered by or on
behalf of a person who owns beneficially an aggregate of fewer than 100 shares
(excluding shares attributable to individual accounts under the Telesoft Corp.
Profit Sharing Plan).
You either (check one box):
[_] own beneficially an aggregate of fewer than 100 shares (excluding shares
allocated to accounts in the Telesoft Corp. Profit Sharing Plan), all of
which are being tendered; or
[_] are a broker, dealer, commercial bank, trust company or other nominee that
(1) is tendering, for the beneficial owners thereof, shares with respect to
which you are the record owner and (2) believes, based upon representations
made to you by each such beneficial owner, that such beneficial owner owns
beneficially an aggregate of fewer than 100 shares (excluding shares
attributable to individual accounts under the Telesoft Corp. Profit Sharing
Plan) and is tendering all of such shares.
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CONDITIONAL TENDERS
(See Instruction 10)
You may condition the tender of your shares upon the purchase by Telesoft
of a specified minimum number of the shares you are tendering hereby, all as
described in the Offer to Purchase, particularly in Section 6 thereof. Except as
set forth in Section 6 of the Offer to Purchase, unless at least such minimum
number of shares is purchased by Telesoft pursuant to the terms of the offer,
none of the shares you are tendering hereby will be purchased. It is the
tendering stockholder's responsibility to calculate and appropriately indicate
such minimum number of shares, and each stockholder is urged to consult a tax
advisor. Unless this box has been completed and a minimum number specified, the
tender will be deemed unconditional.
Minimum number of shares
that must be purchased,
if any are purchased: shares
----------------------
- -------------------------------------------------------------------------------
5
<PAGE>
- -------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 6, 7 and 8)
To be completed ONLY if certificates for shares not tendered or not
purchased or any check for the aggregate Purchase Price of shares purchased are
to be issued in the name of and sent to someone other than the undersigned.
Issue:
[_] Check to:
[_] Certificates to:
Name(s)
------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(Zip Code)
- -------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 6 and 8)
To be completed ONLY if certificates for shares not tendered or not
purchased or any check for the aggregate Purchase Price of shares purchased,
issued in the name of the undersigned, are to be mailed to someone other than
the undersigned or to the undersigned at an address other than that shown on
page 1 of this Letter of Transmittal.
Mail:
[_] Check to:
[_] Certificates to:
Name(s)
------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(Zip Code)
- -------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(See Instruction 5)
IF YOU ARE TENDERING SHARES AT MORE THAN ONE PRICE,
YOU MUST USE A SEPARATE INSTRUCTION FORM FOR EACH PRICE SPECIFIED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF YOU CHECK MORE THAN ONE BOX OR IF YOU DO NOT CHECK A BOX,
YOU HAVE NOT VALIDLY TENDERED YOUR SHARES.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
[_] You want to maximize the chance of having Telesoft Corp. purchase all the
shares you are tendering (subject to the possibility of proration).
Accordingly, by checking this box INSTEAD OF ONE OF THE PRICE BOXES BELOW,
you hereby tender shares and are willing to accept the Purchase Price
resulting from the Dutch auction tender process. This action could result
in your receiving a price per share as low as $7.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, you hereby tender
your shares at the price checked. This action could result in none of your
shares being purchased if the Purchase Price for your shares is less than the
price checked. If you desire to tender shares at more than one price, you must
complete a separate Instruction Form for each price at which you are tendering
shares. You cannot tender the same shares at more than one price.
Price (in Dollars) per Share at Which You Are Tendering Your Shares:
<TABLE>
<S> <C> <C> <C>
[_] $7.00 [_] $7.20 [_] $7.35
[_] $7.05 [_] $7.25 [_] $7.40
[_] $7.10 [_] $7.30 [_] $7.45
[_] $7.15 [_] $7.50
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(To be Completed by All Stockholders)
(Please Also Complete and Return the Attached Substitute Form W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with the
Letter of Transmittal. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or another person acting in
a fiduciary capacity, please set forth full title and see Instruction 6.)
Signature(s) of Owner(s):
________________________________________________________________________________
________________________________________________________________________________
Dated:___________________, 2000
Name(s): _______________________________________________________________________
(Please Print)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code(s) and Telephone Number(s): __________________________________________
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 6)
Name of Firm: __________________________________________________________________
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
(Please Print)
Title: _________________________________________________________________________
Address: _______________________________________________________________________
(Include Zip Code)
Area Code(s) and Telephone Number(s): __________________________________________
Dated: ___________________,2000
- --------------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act (an
"Eligible Institution"), unless (a) this Letter of Transmittal is signed by the
registered holder(s) of the shares (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of shares) tendered herewith
and such holder(s) have not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this Letter
of Transmittal, or (b) such shares are tendered for the account of an Eligible
Institution. See Instruction 6.
2. Delivery of Letter of Transmittal and Share Certificates; Guaranteed
Delivery Procedures. This Letter of Transmittal is to be used either if you are
forwarding share certificates herewith or if you are delivering shares by book-
entry transfer pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. The Depositary must receive (a) a properly completed and duly
executed Letter of Transmittal or a facsimile thereof in accordance with the
instructions of the Letter of Transmittal, including any required signature
guarantees, shares certificates to be tendered, and any other documents required
by the Letter of Transmittal, on or prior to the Expiration Date at one of its
addresses set forth on the back cover of the Offer to Purchase, (b) such shares
must be delivered pursuant to the procedures for book-entry transfer described
in Section 3 of the Offer to Purchase (and a confirmation of such delivery
received by the Depositary, including an Agent's Message if the tendering
stockholder has not delivered a Letter of Transmittal) or (c) such shares are
validly tendered through the Book-Entry Transfer Facility's Automated Tender
Offer Program ("ATOP"), prior to the Expiration Date. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility (as
defined in Section 3 of the Offer to Purchase) to, and received by, the
Depository and forming a part of a Book-Entry Confirmation (as defined in
Section 3 of the Offer to Purchase), which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against the participant. If
certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery.
Participants in the Book-Entry Transfer Facility may tender their shares in
accordance with ATOP, to the extent it is available to such participants for the
shares they wish to tender. If you are tendering through ATOP, you must
expressly acknowledge that you have received and agreed to be bound by the
Letter of Transmittal and that the Letter of Transmittal may be enforced against
you.
If your share certificates are not immediately available, you cannot
deliver your shares and all other required documents to the Depositary or you
cannot complete the procedure for delivery by book-entry transfer prior to the
Expiration Date, you may tender your shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by Telesoft (with any required signature
guarantees) must be received by the Depositary prior to the Expiration Date and
(c) the certificates for all physically delivered shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all shares delivered
electronically, in each case together with a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message or, in the case of a tender through ATOP, the specified
acknowledgment) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three Nasdaq SmallCap Market trading
days after the date the Depositary receives such Notice of Guaranteed Delivery,
all as provided in Section 3 of the Offer to Purchase.
9
<PAGE>
The method of delivery of all documents, including share certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering stockholder, and the delivery will be deemed made only
when actually received by the Depositary. If delivery is by mail, registered
mail with return receipt requested, properly insured, is recommended. In all
cases, sufficient time should be allowed to ensure timely delivery.
Except as specifically permitted by Section 6 of the Offer to Purchase, no
alternative or contingent tenders will be accepted. By executing this Letter of
Transmittal (or facsimile thereof), you waive any right to receive any notice of
the acceptance for payment of the shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers or the number of shares should be listed on a separate
signed schedule and attached to this Letter of Transmittal.
4. Partial Tenders (Not Applicable to Stockholders Who Tender by Book-Entry
Transfer). If you wish to tender fewer than all the shares represented by any
certificate delivered to the Depositary, fill in the number of shares that are
to be tendered in the box entitled "Number of Shares Tendered." In such case, a
new certificate for the remainder of the shares represented by the old
certificate will be sent to you, unless otherwise provided in the "Special
Payment Instructions" or "Special Delivery Instructions" boxes on this Letter of
Transmittal, as promptly as practicable following the expiration or termination
of the offer. All shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Indication of Price at Which Shares are Being Tendered. For your shares
to be validly tendered by this Letter of Transmittal, you must either:
(a) check the box under "Shares Tendered at Price Determined by Dutch
Auction"; or
(b) check the box indicating the price per share at which you are
tendering your shares under "Shares Tendered at Price Determined by
Stockholder."
By checking the box under "Shares Tendered at Price Determined by Dutch
Auction," you agree to accept the Purchase Price that results from the Dutch
auction tender process, which could be as low as $7.00. By checking a box under
"Shares Tendered at Price Determined by Stockholder," you acknowledge that doing
so could result in none of your shares being purchased if the Purchase Price for
such shares is less than the price you check. You may only check one box. If you
check more than one box, or if you do not check a box, you have not validly
tendered your shares. If you wish to tender portions of your shares at different
prices, you must complete a separate Letter of Transmittal for each price at
which you wish to tender each such portion of your shares. You cannot tender the
same shares (unless previously validly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal. If any of the
shares tendered hereby are registered in different names on different
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of certificates.
10
<PAGE>
If this Letter of Transmittal is signed by the registered holder(s) of the
shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the Purchase Price is to be made to, or shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s), in which case the certificate(s) evidencing
the shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such certificates. Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the shares tendered hereby, certificates evidencing the
shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on such certificate(s). Signature(s) on any such
certificates or stock powers must be guaranteed by an Eligible Institution. See
Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Telesoft of the authority of such person so to act must be submitted.
7. Stock Transfer Taxes. Telesoft will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any shares to it or its
order pursuant to the offer. If, however, payment of the aggregate Purchase
Price is to be made to, or shares not tendered or not purchased are to be
registered in the name of, any person other than the registered holder(s), or if
tendered shares are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person or
otherwise) payable on account of the transfer to such person will be deducted
from the Purchase Price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted. See Section 5 of the Offer to
Purchase. Except as provided in this Instruction 7, it will not be necessary to
affix transfer tax stamps to the certificates representing shares tendered
hereby.
8. Special Payment and Delivery Instructions. If a check for the Purchase
Price of any shares tendered hereby is to be issued in the name of, or any
shares not tendered or not purchased are to be returned to, a person other than
the person(s) signing this Letter of Transmittal, or if the check or any
certificates for shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to an
address other than that shown above in the box captioned "Description of Shares
Tendered," then the boxes captioned "Special Payment Instructions" or "Special
Delivery Instructions" on this Letter of Transmittal should be completed.
Stockholders tendering shares by book-entry transfer will have any shares not
accepted for payment returned by crediting the account maintained by such
stockholder at the Book-Entry Transfer Facility.
9. Odd Lots. As described in Section 1 of the Offer to Purchase, if fewer
than all shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Date are to be purchased, the shares purchased
first will consist of all shares tendered by any stockholder who owns
beneficially an aggregate of fewer than 100 shares (excluding shares
attributable to individual accounts under the Telesoft Corp. Profit Sharing
Plan) and who validly tendered all such shares at or below the Purchase Price.
Partial tenders of shares will not qualify for this preference and this
preference will not be available unless the box captioned "Odd Lots" in this
Letter of Transmittal and the Notice of Guaranteed Delivery, if any, is
completed.
10. Conditional Tenders. As described in Section 6 of the Offer to
Purchase, you may tender shares subject to the condition that a specified
minimum number of your shares tendered must be purchased if any such shares so
tendered are purchased. Under certain circumstances and subject to the
exceptions set forth in Section 1, Telesoft may prorate the number of shares
purchased pursuant to the offer. In such a case, the Depositary will perform a
preliminary proration, and any shares tendered at or below the Purchase Price
pursuant to a conditional tender for which the condition was not satisfied will
automatically be regarded as withdrawn, subject to reinstatement if such
conditionally tendered shares are subsequently selected by lot for purchase
subject to Section 6
11
<PAGE>
of the Offer to Purchase. If conditional tenders would otherwise be so regarded
as withdrawn and would cause the total number of shares to be purchased to fall
below 2,300,000 then, to the extent feasible, Telesoft will select enough of
such conditional tenders that would otherwise have been so withdrawn to permit
Telesoft to purchase 2,300,000 shares. In selecting among such conditional
tenders, Telesoft will select by lot and will limit its purchase in each case to
the designated minimum number of shares to be purchased.
All tendered shares will be deemed unconditionally tendered unless the
"Conditional Tenders" box is completed. As discussed in Section 15 of the Offer
to Purchase, the number of shares to be purchased from a particular stockholder
may affect the tax treatment of such purchase to such stockholder and such
stockholder's decision whether to tender. Each stockholder is urged to consult
with his or her own tax advisor.
Any tendering stockholder wishing to make a conditional tender must
calculate and appropriately indicate such minimum number of shares. Odd Lot
shares, which will not be subject to proration, cannot be conditionally
tendered.
11. Substitute IRS Form W-9. Under U.S. federal income tax law, a holder
who tenders shares pursuant to the offer is required to provide the Depositary
with such holder's correct taxpayer identification number ("TIN") on Substitute
Form W-9 below. If the holder is an individual, the TIN is his or her social
security number. If the Depositary is not provided with the correct TIN,
payments that are made to such holder or other payee with respect to offer may
be subject to 31% backup withholding. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute IRS Form W-9" for
more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the holder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld, provided that the
required information is given to the Internal Revenue Service. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute IRS Form W-9 may be checked if the
submitting holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
holder if a TIN is provided to the Depositary within 60 days.
The holder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the shares. If the shares are registered in more than one name or
are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
12. IRS Form W-8. Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, the holder must submit an IRS Form W-8 or an IRS
Form W-8 BEN signed under penalties of perjury, attesting to that individual's
exempt status. A Form W-8 or Form W-8 BEN can be obtained from the Depositary.
Foreign stockholders are urged to consult their tax advisors regarding the
application of U.S. federal income tax withholding, including eligibility for a
withholding tax reduction or exemption and refund procedures.
12
<PAGE>
13. Requests for Assistance or Additional Copies. Any questions or requests
for assistance or for additional copies of the Offer to Purchase, this Letter of
Transmittal or other tender offer materials may be directed to Beacon Hill
Partners, Inc., 90 Broad Street, 20th Floor, New York, New York 10004,
Telephone: 800-755-5001 or 212-843-8500, e-mail: [email protected] and such
copies will be furnished promptly at Telesoft's expense.
Stockholders may also contact their local broker, dealer, commercial bank
or trust company for documents relating to, or assistance concerning, the offer.
14. Irregularities. All questions as to the number of shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of shares
will be determined by Telesoft, in its sole discretion, which determination
shall be final and binding on all parties. Telesoft reserves the absolute right
to reject any or all tenders it determines not to be in proper form or the
acceptance of or payment for which may, in the opinion of Telesoft's counsel, be
unlawful. Telesoft also reserves the absolute right to waive any of the
conditions of the offer and any defect or irregularity in the tender of any
particular shares or any particular stockholder. No tender of shares will be
deemed to be validly made until all defects or irregularities have been cured or
waived. None of Telesoft, the Depositary or any other person is or will be
obligated to give notice of any defects or irregularities in tenders, and none
of them will incur any liability for failure to give any such notice.
15. Telesoft Corp. Profit Sharing Plan. Participants in the Telesoft Corp.
Profit Sharing Plan may not use this Letter of Transmittal to direct the tender
of shares (including fractional shares, if any) reflecting interests
attributable to such participant's individual account(s) under the Plan, but
must use the separate Direction Form sent to them by the co-trustees. See
Section 3 of the Offer to Purchase.
16. Telesoft 1995 Incentive Stock Option Plan, Telesoft 1996 Incentive
Stock Option Plan and Telesoft 1997 Performance Equity Plan. Holders of options
to purchase shares through the Telesoft 1995 Incentive Stock Option Plan,
Telesoft 1996 Incentive Stock Option Plan and Telesoft 1997 Performance Equity
Plan may not use this Letter of Transmittal to direct the exercise of options
and the tender of shares issuable upon exercise of such options, but must use
the separate Option Election sent to them by the Company. See Section 3 of the
Offer to Purchase.
17. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, you may designate the order in which your shares are to
be purchased in the event of proration. The order of purchase may affect whether
any capital gain or loss recognized on the shares purchased is long-term or
short-term (depending on the holding period for the shares purchased) and the
amount of gain or loss recognized for federal income tax purposes. See Sections
1 and 15 of the Offer to Purchase.
18. Lost, Stolen or Destroyed Certificates. If your certificate(s)
representing shares have been lost, stolen or destroyed, so indicate above. The
Depositary will send you additional documentation that will need to be completed
to effectively surrender such lost, stolen or destroyed certificates.
IMPORTANT: This Letter of Transmittal (or a manually signed facsimile
thereof) together with share certificates or confirmation of
Book-Entry Transfer or, in the case of a tender through ATOP a
specific acknowledgment, and all other required documents must
be received by the Depositary, or the Notice of Guaranteed
Delivery must be received by the Depositary, prior to the
Expiration Date.
13
<PAGE>
PAYOR'S NAME: CORPORATE STOCK TRANSFER, INC.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR Social Security
FORM W-9 TIN IN THE BOX AT RIGHT AND Number
CERTIFY BY SIGNING AND OR Employer
Department of the DATING BELOW. Identification Number
Treasury Internal
Revenue Service ____________________
Payer's Request for
Taxpayer Identification
Number (TIN)
---------------------------------------------------------------------------
<S> <C>
Part 2 -- CERTIFICATION -- Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I
am exempt from backup withholding or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
---------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You Part 3 --
must cross out item (2) above if
you have been notified by the IRS that Awaiting TIN [_]
you are currently subject to backup
withholding because of under reporting
interest or dividends on your tax return.
However, if after being notified by the
IRS that you are subject to backup
withholding, you received another
notification from the IRS that you are
no longer subject to backup
withholding, do not cross out such item
(2).
SIGNATURE______________________
DATE ____________________, 2000
- -------------------------------------------------------------------------------------------------------
</TABLE>
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
____________________________________ ___________________________, 2000
Signature Date
- --------------------------------------------------------------------------------
14
<PAGE>
NOTICE OF GUARANTEED DELIVERY
(Not to Be Used for Signature Guarantees)
Pursuant to the Offer to Purchase for Cash
by
Telesoft Corp.
of
Up to 2,300,000 Shares of its Common Stock
This form, or a form substantially equivalent to this form, must be used to
accept the offer (as defined below) if certificates for the shares of common
stock of Telesoft Corp. are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all other documents required by the Letter of Transmittal to be delivered
to the Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase, defined below). This form may be delivered by hand or
transmitted by mail or overnight courier, or, for Eligible Institutions (as
defined below), by facsimile transmission, to the Depositary. See Section 3 of
the Offer to Purchase.
The Depositary for the offer is:
Corporate Stock Transfer, Inc.
By Facsimile By Hand/Overnight Delivery
Transmission Number: or
(For Eligible Institutions Only) Registered or Certified Mail:
303-282-5800
Corporate Stock Transfer, Inc.
Confirm Receipt of 3200 Cherry Creek Drive South
Facsimile by Telephone: Suite 430
303-282-4800 Denver, Colorado 80209
For Information Telephone:
303-282-4800
------------------------------
Delivery of this instrument to an address, or transmission of instructions
via a facsimile number, other than as set forth above will not constitute a
valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
You hereby tender to Telesoft Corp., an Arizona corporation, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated February
4, 2000, and the related Letter of Transmittal (which, as amended from time to
time, together constitute the "offer"), receipt of which is hereby acknowledged,
the number of shares of common stock of Telesoft listed below, pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
ODD LOTS
(See Instruction 9 of the Letter of Transmittal)
This section is to be completed ONLY if shares are being tendered by or on
behalf of a person who beneficially owns an aggregate of fewer than 100 shares
(excluding shares attributable to individual accounts under the Telesoft Corp.
Profit Sharing Plan).
You either (check one box):
[ ] own beneficially an aggregate of fewer than 100 shares (excluding
shares allocated to accounts in the Telesoft Corp. Profit Sharing
Plan), all of which are being tendered, or
[ ] are a broker, dealer, commercial bank, trust company or other nominee
that (i) is tendering, for the beneficial owners thereof, shares with
respect to which you are the record owner and (ii) believes, based
upon representations made to you by each such beneficial owner, that
such beneficial owner owns beneficially an aggregate of fewer than 100
shares (excluding shares attributable to individual accounts under the
Telesoft Corp. Profit Sharing Plan) and is tendering all of such
shares.
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDERS
(See Instruction 10 of the Letter of Transmittal)
You may condition the tender of your shares upon the purchase by Telesoft
of a specified minimum number of the shares you are tendering hereby, all as
described in the Offer to Purchase, particularly in Section 6 thereof. Except as
set forth in Section 6 of the Offer to Purchase, unless at least such minimum
number of shares is purchased by Telesoft pursuant to the terms of the offer,
none of the shares you are tendering hereby will be purchased. It is the
tendering stockholder's responsibility to calculate and appropriately indicate
such minimum number of shares, and each stockholder is urged to consult a tax
advisor. Unless this box has been completed and a minimum number specified, the
tender will be deemed unconditional.
Minimum number of shares
that must be purchased,
if any are purchased: shares
---------------------
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(See Instruction 5 of the Letter of Transmittal)
IF YOU ARE TENDERING SHARES AT MORE THAN ONE PRICE,
YOU MUST USE A SEPARATE INSTRUCTION FORM FOR EACH PRICE SPECIFIED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF YOU CHECK MORE THAN ONE BOX OR YOU DO NOT CHECK A BOX,
YOU HAVE NOT VALIDLY TENDERED YOUR SHARES.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
[ ] You want to maximize the chance of having Telesoft Corp. purchase all the
shares you are tendering (subject to the possibility of proration).
Accordingly, by checking this box INSTEAD OF ONE OF THE PRICE BOXES BELOW,
you hereby tender your shares and are willing to accept the Purchase Price
resulting from the Dutch auction tender process. This action could result
in your receiving a price per share as low as $7.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, you hereby tender
your shares at the price checked. This action could result in none of your
shares being purchased if the Purchase Price for your shares is less than the
price checked. If you desire to tender shares at more than one price, you must
complete a separate Instruction Form for each price at which you are tendering
shares. You cannot tender the same shares at more than one price.
Price (in Dollars) per Share at Which You Are Tendering Your Shares:
[ ] $7.00 [ ] $7.20 [ ] $7.35
[ ] $7.05 [ ] $7.25 [ ] $7.40
[ ] $7.10 [ ] $7.30 [ ] $7.45
[ ] $7.15 [ ] $7.50
- --------------------------------------------------------------------------------
Number of shares:
--------------------------------
Certificate Nos. (if available):
- -------------------------------------------------
- -------------------------------------------------
Name(s)
- -------------------------------------------------
Area Code(s) and Telephone Number(s)
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
Address(es)
3
<PAGE>
- -------------------------------------------------
STOCKHOLDER MUST SIGN HERE
- -------------------------------------------------
- -------------------------------------------------
Signature(s)
Dated: , 2000
------------------------------------
- -------------------------------------------------
- -------------------------------------------------
If shares will be tendered by book-entry transfer,
enter The Depositary Trust Company Account
Number below:
Account
Number:
------------------------------------------
- -------------------------------------------------
The method of delivery of this document is at the election and risk of the
tendering stockholders. If delivery is by mail, registered mail with return
receipt requested is recommended. In all cases, sufficient time should be
allowed to assure delivery.
-----------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
a financial institution that is a member of a recognized signature guarantee
medallion program within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution"), hereby guarantees (1) that the above-named person(s)
has a net long position in the shares being tendered within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, (2) that such
tender of shares complies with Rule 14e-4 and (3) the delivery to the
Depositary, at one of its addresses set forth above, of certificate(s) for the
shares tendered hereby, in proper form for transfer, or a confirmation of the
book-entry transfer of the shares tendered hereby into the Depositary's account
at The Depository Trust Company, in each case together with a properly completed
and duly executed Letter(s) of Transmittal (or a facsimile(s) thereof), with any
required signature guarantee(s), or an Agent's Message (as defined in the Offer
to Purchase) or through ATOP (as defined in the Offer to Purchase), and any
other required documents, all within three Nasdaq SmallCap Market trading days
after the date of receipt by the Depositary.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for shares to the Depositary within the time shown herein. Failure
to do so could result in a financial loss to such eligible institution.
- ------------------------------------ --------------------------------------
Authorized Signature Address
- ------------------------------------ --------------------------------------
Name (Please Print)
- ------------------------------------ --------------------------------------
Title (Including Zip Code)
- ------------------------------------ --------------------------------------
Name of Firm Area Code and Telephone Number
Date: , 2000
-------------------------
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS FORM. YOUR SHARE CERTIFICATES
MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
4
<PAGE>
Offer to Purchase for Cash
by
Telesoft Corp.
of
Up to 2,300,000 Shares of its Common Stock
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 6, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
February 4, 2000
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We are enclosing the material listed below relating to our offer to
purchase up to 2,300,000 shares of our common stock at a price not greater than
$7.50 nor less than $7.00 per share, net to the seller in cash, as specified by
tendering stockholders, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated February 4, 2000, and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"offer").
We will determine a single price (not greater than $7.50 nor less than
$7.00 per share), net to the seller in cash, that it will pay for shares validly
tendered and not withdrawn pursuant to the offer (the "Purchase Price"), taking
into account the number of shares so tendered and the prices specified by
tendering stockholders. Telesoft will select the lowest Purchase Price that will
allow it to purchase 2,300,000 shares (or such lesser number of shares as is
validly tendered at prices not greater than $7.50 nor less than $7.00 per share)
validly tendered and not withdrawn pursuant to the offer. Telesoft will purchase
all shares validly tendered at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the offer, including
the provisions relating to proration and conditional tenders described in the
Offer to Purchase. See Sections 1 and 6 of the Offer to Purchase.
The Purchase Price will be paid in cash, net to the seller, with respect to
all shares purchased. Shares tendered at prices in excess of the Purchase Price
and shares not purchased because of proration or conditional tenders will be
returned.
The offer is not conditioned on any minimum number of shares being
tendered. The offer is, however, subject to certain other conditions. See
Section 7 of the Offer to Purchase.
We are asking you to contact your clients for whom you hold shares
registered in your name (or in the name of your nominee) or who hold shares
registered in their own names. Please bring the offer to their attention as
promptly as possible. Telesoft will, upon request, reimburse you for reasonable
and customary handling and mailing expenses incurred by you in forwarding any of
the enclosed materials to your clients.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal for your use and for the information of your
clients.
<PAGE>
3. A letter to Telesoft stockholders from the President and Chief
Executive Officer of Telesoft.
4. The Notice of Guaranteed Delivery to be used to accept the offer if
the shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (each as defined in the Offer to
Purchase).
5. A letter that may be sent to your clients for whose accounts you hold
shares registered in your name or in the name of your nominee with
space for obtaining such clients' instructions with regard to the
offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing
information relating to backup federal income tax withholding.
7. A return envelope addressed to Corporate Stock Transfer, Inc., the
Depositary.
We urge you to contact your clients as promptly as possible.
The offer, proration period and withdrawal rights expire at 12:00 Midnight,
New York City time, on Monday, March 6, 2000, unless the offer is extended.
Telesoft will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of shares pursuant to the offer. Telesoft
will, upon request, reimburse brokers, dealers, commercial banks and trust
companies for reasonable and customary handling and mailing expenses incurred by
them in forwarding materials relating to the offer to their customers. Telesoft
will pay all stock transfer taxes applicable to its purchase of shares pursuant
to the offer, subject to Instruction 7 of the Letter of Transmittal.
As described in the Offer to Purchase, if more than 2,300,000 shares have
been validly tendered at or below the Purchase Price and not withdrawn prior to
the Expiration Date, as defined in Section 1 of the Offer to Purchase, we will
purchase shares in the following order of priority:
(1) all shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Date by any stockholder who owns
beneficially an aggregate of fewer than 100 shares (excluding shares
attributable to individual accounts under the Telesoft Corp. Profit Sharing
Plan) and who validly tenders all of such shares (partial tenders will not
qualify for this preference) and completes the box captioned "Odd Lots" in
the Letter of Transmittal and, if applicable, the Notice of Guaranteed
Delivery;
(2) after purchase of all of the foregoing shares, all shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other shares
tendered properly and unconditionally at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date on a pro rata basis as
described in Section 1 of the Offer to Purchase; and
(3) if necessary to permit us to purchase 2,300,000, shares, shares
conditionally tendered, for which the condition was not initially
satisfied, at or below the Purchase Price and not withdrawn prior to the
Expiration Date, selected by random lot in accordance with Section 6 of the
Offer to Purchase.
Our Board of Directors has approved the offer. However, stockholders must
make their own decisions whether to tender shares and, if so, how many shares to
tender and the price or prices at which shares should be tendered. Neither we
nor our Board of Directors makes any recommendation to any stockholder as to
whether to tender or refrain from tendering shares. See Section 10 of the Offer
to Purchase for information regarding the intentions of our directors and
executive officers with respect to tendering shares pursuant to the offer.
2
<PAGE>
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to Beacon Hill Partners, Inc., 90 Broad
Street, 20th Floor, New York, New York 10004, Telephone: 800-755-5001 or 212-
843-8500, e-mail: [email protected].
Very truly yours,
TELESOFT CORP.
- --------------------------------------------------------------------------------
Nothing contained herein or in the enclosed documents shall constitute you or
any person as agent of Telesoft or the Depositary, or authorize you or any other
person to use any document or make any statement on behalf of any of them in
connection with the offer other than the documents enclosed herewith and the
statements contained herein.
- --------------------------------------------------------------------------------
3
<PAGE>
Offer to Purchase for Cash
by
Telesoft Corp.
of
Up to 2,300,000 Shares of its Common Stock
- -----------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 6, 2000, UNLESS THE OFFER IS EXTENDED.
- -----------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
4, 2000, and the related Letter of Transmittal (which, as amended from time to
time, together constitute the "offer") setting forth an offer by Telesoft Corp.,
an Arizona corporation, to purchase up to 2,300,000 shares of its common stock
at a price not greater than $7.50 nor less than $7.00 per share, net to the
seller in cash, as specified by tendering stockholders, upon the terms and
subject to the conditions of the offer. Also enclosed herewith is certain other
material related to the offer, including a letter to stockholders from Michael
F. Zerbib, President and Chief Executive Officer of Telesoft.
Telesoft will determine a single per share price (not greater than $7.50
nor less than $7.00 per share) that it will pay for the shares validly tendered
pursuant to the offer and not withdrawn (the "Purchase Price"), taking into
account the number of shares so tendered and the prices specified by tendering
stockholders. Telesoft will select the lowest Purchase Price that will allow it
to purchase 2,300,000 shares (or such lesser number of shares as are validly
tendered at prices not greater than $7.50 nor less than $7.00 per share) validly
tendered and not withdrawn pursuant to the offer. Telesoft will purchase all
shares validly tendered at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the offer, including
the provisions thereof relating to proration and conditional tenders. See
Sections 1 and 6 of the Offer to Purchase.
We are the holder of record of shares held for your account. As such, a
tender of such shares can be made only by us as the holder of record and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender shares held by us for
your account.
Please instruct us as to whether you wish us to tender any or all of the
shares held by us for your account, upon the terms and subject to the conditions
set forth in the Offer to Purchase and the Letter of Transmittal. Your attention
is directed to the following:
1. You may tender shares at either the price determined by you (in
multiples of $0.05), not greater than $7.50 nor less than $7.00 per share, or
the price determined by the "Dutch auction" tender process as indicated in the
attached Instruction Form, net to you in cash. You should mark the box entitled
"Shares Tendered at Price Determined by Dutch Auction" if you are willing to
accept the Purchase Price resulting from the Dutch auction tender process. This
could result in your receiving the minimum price of $7.00 per share.
<PAGE>
2. The offer is for up to 2,300,000 shares. Although Telesoft has no
present intention of doing so, Telesoft reserves the right, in its sole
discretion but subject to certain applicable legal requirements, to purchase
more than the 2,300,000 shares pursuant to the offer. The offer is not
conditioned on any minimum number of shares being tendered. The offer is,
however, subject to certain other conditions set forth in Section 7 of the Offer
to Purchase.
3. The offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Monday, March 6, 2000, unless the offer is
extended. Your instructions to us should be forwarded to us in ample time to
permit us to submit a tender on your behalf.
4. As described in the Offer to Purchase, if more than 2,300,000 shares
have been validly tendered at or below the Purchase Price and not withdrawn
prior to the Expiration Date, as defined in Section 1 of the Offer to Purchase,
Telesoft will purchase shares in the following order of priority:
a. all shares validly tendered at or below the Purchase Price and
not withdrawn prior to the Expiration Date by any stockholder who owns
beneficially an aggregate of less than 100 shares (excluding shares
attributable to individual accounts under the Telesoft Corp. Profit Sharing
Plan) who validly tenders all of such shares (partial tenders will not
qualify for this preference) and completes the box captioned "Odd Lots" in
the Letter of Transmittal and, if applicable, the Notice of Guaranteed
Delivery;
b. after purchase of all of the foregoing shares, all shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other shares
tendered properly and unconditionally at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date on a pro rata basis as
described in Section 1 of the Offer to Purchase; and
c. if necessary to permit Telesoft to purchase 2,300,000 shares,
shares conditionally tendered, for which the condition was not initially
satisfied, at or below the Purchase Price and not withdrawn prior to the
Expiration Date, selected by random lot in accordance with Section 6 of the
Offer to Purchase.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions or solicitation fees on Telesoft's purchase of shares in the offer.
Stockholders, however, may incur fees associated with the tendering of shares
held in custodial or other beneficiary accounts. Any stock transfer taxes
applicable to the purchase of shares by Telesoft pursuant to the offer will be
paid by Telesoft, except as otherwise provided in Instruction 7 of the Letter of
Transmittal.
6. If you wish to tender portions of your shares at different prices you
must complete a separate Instruction Form for each price at which you wish to
tender each portion of your shares. We must submit separate Letters of
Transmittal on your behalf for each price you will accept. You may not tender
the same shares at more than one price.
7. If you own beneficially an aggregate of fewer than 100 shares
(excluding shares attributable to individual accounts under the Telesoft Corp.
Profit Sharing Plan), and you instruct us to tender at or below the Purchase
Price on your behalf all such shares prior to the Expiration Date and check the
box captioned "Odd Lots" in the Instruction Form, all such shares will be
accepted for purchase before proration, if any, of the purchase of other
tendered shares.
8. You may instruct us to tender shares on your behalf subject to the
condition that a specified minimum number of your tendered shares must be
purchased if any such tendered shares are purchased, as described in Section 6
of the Offer to Purchase. It is your responsibility to calculate such minimum
number and you
2
<PAGE>
are urged to consult a tax advisor. If you wish us to make a conditional tender
on your behalf, you must complete the box captioned "Conditional Tenders" in the
Instruction Form.
Telesoft's Board of Directors has approved the offer. However, you must
make your own decision whether to tender shares and, if so, how many shares to
tender and the price or prices at which you are tendering your shares. Neither
Telesoft nor its Board of Directors makes any recommendation to any stockholder
as to whether to tender or refrain from tendering shares. See Section 10 of the
Offer to Purchase for information regarding the intentions of Telesoft's
directors and executive officers with respect to tendering shares pursuant to
the offer.
If you wish to have us tender any or all of your shares held by us for your
account upon the terms and subject to the conditions set forth in the Offer to
Purchase, please so instruct us by completing, executing and returning to us the
attached Instruction Form. An envelope to return your instructions to us is
enclosed. If you authorize tender of your shares, all such shares will be
tendered unless otherwise specified on the Instruction Form. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf prior to the expiration of the offer.
The offer is being made to all holders of shares. Telesoft is not aware of
any jurisdiction where the making of the offer is not in compliance with
applicable law. If Telesoft becomes aware of any jurisdiction where the making
of the offer is not in compliance with any valid applicable law, Telesoft will
make a good faith effort to comply with such law. If, after such good faith
effort, Telesoft cannot comply with such law, the offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of shares residing in
such jurisdiction. In any jurisdiction in which the securities or blue sky laws
require the offer to be made by a licensed broker or dealer, the offer is being
made on Telesoft's behalf by or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
3
<PAGE>
INSTRUCTION FORM
Offer to Purchase for Cash
by
Telesoft Corp.
of
Up to 2,300,000 Shares of its Common Stock
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated February 4, 2000, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "offer") in
connection with the offer by Telesoft Corp. to purchase up to 2,300,000 shares
of its common stock at a price not greater than $7.50 nor less than $7.00 per
share, net to the seller in cash, as specified by tendering stockholders, upon
the terms and subject to the conditions of the offer.
Telesoft will determine a single price (not greater than $7.50 nor less
than $7.00 per share), net to the seller in cash, that it will pay for shares
validly tendered and not withdrawn pursuant to the offer (the "Purchase Price"),
taking into account the number of shares so tendered and the prices specified by
tendering stockholders. Telesoft will select the lowest Purchase Price that will
allow it to purchase 2,300,000 shares (or such lesser number of shares as is
validly tendered at prices not greater than $7.50 nor less than $7.00 per share)
validly tendered and not withdrawn pursuant to the offer.
This will instruct you to tender to Telesoft the number of shares indicated
below (or, if no number is indicated below, all shares) that are held by you for
the account of the undersigned, at the price per share indicated below, upon the
terms and subject to the conditions of the offer.
- -------------------------------------------------------------------------------
SHARES TENDERED
[ ] If fewer than all shares are to be tendered, please check this box and
indicate below the aggregate number of shares to be tendered by us.
shares
------------
Unless otherwise indicated, it will be assumed that all shares held by us
for your account are to be tendered.
- -------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
ODD LOTS
(See Instruction 9 of the Letter of Transmittal)
[ ] By checking this box, the undersigned represent(s) that the undersigned
owns beneficially an aggregate of fewer than 100 shares (excluding shares
attributable to individual accounts under the Telesoft Corp. Profit Sharing
Plan) and is tendering all of such shares.
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDERS
(See Instruction 10 of the Letter of Transmittal)
A tendering stockholder may condition the tender of shares upon the
purchase by Telesoft of a specified minimum number of the shares tendered
hereby, all as described in the Offer to Purchase, particularly in Section 6
thereof. Except as set forth in Section 6 of the Offer to Purchase, unless at
least such minimum number of shares is purchased by Telesoft pursuant to the
terms of the offer, none of the shares tendered hereby will be purchased. It is
the tendering stockholder's responsibility to calculate and appropriately
indicate such minimum number of shares, and each stockholder is urged to consult
a tax advisor. Unless this box has been completed and a minimum number
specified, the tender will be deemed unconditional.
Minimum number of shares
that must be purchased,
if any are purchased: shares
- --------------------------------------------------------------------------------
5
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(See Instruction 5 of the Letter of Transmittal)
IF THE UNDERSIGNED IS TENDERING SHARES AT MORE THAN ONE PRICE, THE
UNDERSIGNED MUST USE A SEPARATE INSTRUCTION FORM FOR EACH PRICE SPECIFIED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF YOU CHECK MORE THAN ONE BOX OR IF YOU DO NOT CHECK A BOX,
YOU HAVE NOT VALIDLY TENDERED YOUR SHARES.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having Telesoft Corp.
purchase all the shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this box INSTEAD OF
ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders shares and
is willing to accept the Purchase Price resulting from the Dutch auction
tender process. This action could result in the undersigned receiving a
price per share as low as $7.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders shares at the price checked. This action could result in none of
the undersigned's shares being purchased if the Purchase Price for such shares
is less than the price checked. If the undersigned desires to tender shares at
more than one price, the undersigned must complete a separate instruction form
for each price at which the undersigned is tendering shares. The undersigned
cannot tender the same shares at more than one price.
Price (In Dollars) per Share at Which the Undersigned Is Tendering the
Undersigned's Shares:
- --------------------------------------------------------------------------------
[ ] $7.00 [ ] $7.20 [ ] $7.35
[ ] $7.05 [ ] $7.25 [ ] $7.40
[ ] $7.10 [ ] $7.30 [ ] $7.45
[ ] $7.15 [ ] $7.50
- --------------------------------------------------------------------------------
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF THE
TENDERING STOCKHOLDERS. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY.
6
<PAGE>
SIGN HERE
Signature(s):
----------------------------------------
- -----------------------------------------------------
Name(s):
---------------------------------------------
- -----------------------------------------------------
(Please Print)
- -----------------------------------------------------
(Taxpayer Identification or Social Security Number)
Address:
---------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:
----------------------
- -----------------------------------------------------
Date: , 2000
------------------------------------------
7
<PAGE>
February 4, 2000
Dear Stockholder:
Telesoft Corp. is offering to purchase up to 2,300,000 shares of its common
stock at a price not greater than $7.50 nor less than $7.00 per share. Telesoft
is conducting the offer through a procedure commonly referred to as a "Dutch
auction." This procedure allows you to select the price within the specified
price range at which you are willing to sell all or a portion of your shares to
Telesoft. Alternatively, this procedure allows you to elect to sell all or a
portion of your shares to Telesoft at a price determined by the "Dutch auction"
process.
Based upon the number of shares tendered and the prices specified by the
tendering stockholders, Telesoft will determine the single per share price
within that range that will allow it to buy 2,300,000 shares (or such lesser
number of shares that are properly tendered). All of the shares that are
properly tendered at prices at or below that purchase price (and are not
withdrawn) will - subject to possible proration and provisions relating to the
tender of "odd lots" and conditional tenders - be purchased for cash at that
purchase price, net to the selling stockholder. All other shares that have been
tendered and not purchased will be returned to the stockholder.
If you do not wish to participate in the offer, you do not need to take any
action.
The offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. If you wish to tender your shares, instructions on how to
tender shares are provided in the enclosed materials. I encourage you to read
these materials carefully before making any decision with respect to the offer.
Neither Telesoft nor its Board of Directors makes any recommendation to any
stockholder whether or not to tender any or all shares. As set forth in Section
10 of the Offer to Purchase, certain of the directors and executive officers of
Telesoft intend to tender shares pursuant to the offer.
Please note that the offer is scheduled to expire at 12:00 Midnight, New
York City time, on Monday, March 6, 2000, unless extended by Telesoft.
Questions regarding the offer should be not be directed to Telesoft, but should
instead be directed to Beacon Hill Partners, Inc., 90 Broad Street, 20th Floor,
New York, New York 10004, Telephone: 800-755-5001 or 212-843-8500, e-mail:
[email protected].
Sincerely,
MICHAEL F. ZERBIB
President and Chief Executive Officer
<PAGE>
DIRECTION FORM
To Tender Shares of Common Stock
of
Telesoft Corp.
------------------------------
SIGNATURE REQUIRED ON PAGE 4
------------------------------
February 4, 2000
Re: Telesoft Corp. Profit Sharing Plan (the "Plan")
Dear Plan Participant:
As you may have heard, Telesoft Corp. (the "Company") has made an offer to
purchase up to 2,300,000 shares of common stock of the Company at a price not in
excess of $7.50 nor less than $7.00 per share. The offer is commonly referred to
as a "Dutch auction" tender offer. The enclosed Offer to Purchase dated February
4, 2000 and the related Letter of Transmittal enclosed with this Direction Form
(which, together with the Offer to Purchase, constitute the "offer"), describe
the offer in greater detail.
When reviewing the enclosed materials, please keep the following points in
mind:
As a Plan participant, you have the right, under the terms of the Plan, to
decide whether or not to direct Joseph W. Zerbib, Thierry Zerbib and Irene Loeb,
as co-trustees for the Plan (the "co-trustees"), to tender shares reflecting
your interest in the Plan credited to your individual account. Only the co-
trustees can actually tender the shares attributable to your individual account.
If you decide to direct the co-trustees to tender any or all of the shares
attributable to your interest in the Plan, you will be entitled:
. to specify the price or prices (within the limits of the tender
offer) at which they should be tendered;
. to accept the price to be paid to all stockholders whose shares will
be purchased; or
. to authorize the co-trustees to determine a price (which could be as
low as $7.00 per share).
If you do not direct the co-trustees whether to tender your shares, they will
make the decision on your behalf. Refer to the instructions below.
Although the offer is not scheduled to expire until 12:00 Midnight, New
York City time, on Monday, March 6, 2000, unless extended, in order for the co-
trustees to timely render shares attributable to your interest in the Plan, Kris
Cecil, Telesoft's Controller, who is acting as agent in tabulating the Direction
Forms, must receive this Direction Form by 5:00 p.m., Phoenix time, on Friday,
March 3, 2000, unless the deadline is extended. See Section 16 of the Offer to
Purchase.
If Kris Cecil does not receive a completed, dated and signed original
Direction Form by 5:00 p.m., Phoenix time, on Friday, March 3, 2000, unless
extended, then, in accordance with the terms of the Plan, the co-trustees will
determine in their sole discretion whether and at what prices to tender shares
for which they have not received timely instructions from participants.
<PAGE>
If you require additional information concerning the terms and conditions
of the offer, please call or e-mail Beacon Hill Partners, Inc., the Information
Agent, at 800-755-5001, 212-843-8500 or [email protected]. If you require
additional information concerning the procedure for tendering the shares
attributable to your individual account or the Plan, please call Kris Cecil,
Telesoft's Controller, at 602-308-2100.
Before completing this Direction Form, please read carefully the
accompanying Offer to Purchase and all other enclosed materials.
IMPORTANT: If you direct the co-trustees to tender Plan shares attributable
to your individual account and they are purchased by the Company, any proceeds
will be reinvested in the Merrill Lynch Retirement Preservation Trust under the
Plan as soon as administratively practicable and such investment will be
credited to your individual Plan account. Only then will you be able to instruct
the co-trustees to invest any proceeds of the sale of shares attributable to
your individual account in other investment options offered under the Plan.
You may call Michelle Brice in Telesoft's Payroll Department at
602-308-1126 after the account reconciliation is complete, which is expected to
be no earlier than three business days after the co-trustees receive the
proceeds, to have the proceeds of the sale of shares invested in other
investment options offered under the Plan.
While you will not recognize any immediate tax gain or loss as a result of
this tender offer, the tax treatment of your future withdrawals or distributions
from the Plan may be adversely impacted by a tender and sale of shares in the
Plan. Specifically, under current federal income tax rules, if you receive a
distribution from the Plan of shares that have increased in value while they
were held by the Plan, under certain circumstances you may have the option of
not paying tax on this increase in value, which is called "net unrealized
appreciation," until you sell the shares. When the shares are sold, any gain up
to the amount of the untaxed net unrealized appreciation is taxed as long-term
capital gain. If shares attributable to your individual account are purchased by
the Company in the offer, you will no longer be able to take advantage of this
tax benefit.
Each Direction Form received by our agent, Kris Cecil, will be held in
confidence and will not be released or divulged to any directors, officers,
employees or other representatives of the Company. Please contact Michael F.
Zerbib at 602-308-2100 if you have been subject to pressure or coercion by any
party or if you are concerned about the confidentiality of instructions to Kris
Cecil or us.
The Board of Directors of the Company has approved the offer. However, you
must make your own decision whether to tender shares, the number of shares to
tender and the price or prices at which shares should be tendered. Neither the
Company, its Board of Directors, the co-trustees, Kris Cecil, as our agent in
tabulating the Direction Forms, nor any other party makes any recommendations to
you as to whether or not to tender shares or the price or prices at which to
tender.
______________________
INSTRUCTIONS
Carefully complete this Direction Form below. To assure that your Direction
Form can be processed on time, please be sure to sign and date the form and
return it to Telesoft Corp., 3443 North Central Avenue, Suite 1800, Phoenix,
Arizona 85012, Attention: Kris Cecil, not later than 5:00 p.m., Phoenix time on
Friday, March 3, 2000, unless extended. Even if you decide not to participate in
the offer, you should complete and return this Direction Form. If Kris Cecil
does not receive a completed, dated and signed original Direction Form from you
by such deadline, then, in accordance with the terms of the Plan (as defined
herein), the co-trustees (as defined herein) will determine in their sole
discretion whether and at what price to tender shares for which they have not
received timely instructions from participants.
2
<PAGE>
The method of delivery of this document is at the election and risk of the
Plan participant. No facsimile transmissions of this Direction Form will be
accepted. If delivery is by mail, registered mail with return receipt requested
is recommended. In all cases, sufficient time should be allowed to assure
delivery by 5:00 p.m., Phoenix time, on Friday March 3, 2000.
Withdrawal
If you submit a Direction Form to Kris Cecil directing the co-trustees to
tender Plan shares attributable to your individual account and later decide to
withdraw your tender, you must follow the following procedures for your
withdrawal to be effective. Kris Cecil must receive a written notice of
withdrawal by 5:00 p.m., Phoenix time, on Friday, March 3, 2000, unless
extended. See Section 16 of the Offer to Purchase. Such notice of withdrawal
must specify your name, the number of Plan shares attributable to your
individual account which you directed the co-trustees to tender, the number of
such shares withdrawn and the name of the Plan in which you participate.
Further Information
If you have any questions after reviewing the materials, contact Beacon
Hill Partners, Inc., the Information Agent for the tender offer, at 212-843-
8500, 800-755-5001 or [email protected] with respect to questions on the
procedure for tendering the shares attributable to your individual account or
the terms and conditions of the offer. Questions with respect to the Plan should
be directed to Kris Cecil, Telesoft's Controller, at 602-308-2100.
The approximate number of shares reflecting your interest in the Plan
attributable to your individual account as of January 12, 2000, is shown to the
right of your address.
- --------------------------------------------------------------------------------
[ ] 1. Please DO NOT TENDER, but continue to HOLD all shares credited to my
individual Plan account.
[ ] 2. Please TENDER ________________ shares (including fractional shares, if
any) credited to my individual Plan account at the purchase price
determined by the "Dutch auction" tender process as described in the
Offer to Purchase. If this box is checked and no number is entered in
the blank, all shares which are credited to your individual Plan
account will be tendered in accordance with the previous sentence.
[ ] 3. Please TENDER ________________ shares (including fractional shares, if
any) credited to my individual Plan account at the price or prices
determined by the co-trustees of the Plan in their sole discretion. If
this box is checked and no number is entered in the blank, all shares
which are credited to your individual Plan account will be tendered in
accordance with the previous sentence.
[ ] 4. Please TENDER shares (including fractional shares, if any) credited to
my individual Plan account in the quantities indicated below for each
of the prices provided. A blank space before a given price will be
taken to mean that no shares reflecting your interest in the Plan will
be tendered at that price. FILL IN THE TABLE ON THE NEXT PAGE ONLY IF
YOU HAVE CHECKED BOX 4.
The total number of shares to be tendered which you indicate after boxes 2
and 3 above and in the table on the next page may NOT exceed the number of
shares credited to your individual Plan account as shown to the right of your
address, but it may be less than or equal to such number. If the total number of
shares to be tendered which you indicate after boxes 2 and 3 above and in the
table on the next page is less than the number of shares attributable to your
individual Plan account, you will be deemed to have directed the co-trustees of
the Plan NOT to tender the remaining shares.
- --------------------------------------------------------------------------------
3
<PAGE>
FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX 4
ON THE PREVIOUS PAGE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Number of Number of
Number of Shares Shares Shares
Tendered Price Tendered Price Tendered Price
- ---------------- ----- --------- ----- --------- -----
<S> <C> <C> <C> <C> <C>
________ $7.00 ________ $7.20 ________ $7.35
________ $7.05 ________ $7.25 ________ $7.40
________ $7.10 ________ $7.30 ________ $7.45
________ $7.15 ________ $7.50
- ------------------------------------------------------------------------------
</TABLE>
The undersigned hereby directs Joseph W. Zerbib, Thierry Zerbib and Irene
Loeb, as co-trustees of the Telesoft Corp. Profit Sharing Plan, to tender to
Telesoft Corp., in accordance with the Offer to Purchase, dated February 4,
2000, and the related Letter of Transmittal, copies of which I have received and
read, the indicated number of shares of the Company's common stock, reflecting
my interest in the Plan credited to my individual Plan account, or to hold such
shares, in either case as provided on this form.
Signature:__________________________________
Please print name:__________________________
Date:_________________________________, 2000
4
<PAGE>
OPTION ELECTION
To Exercise Options and to Tender Shares of Common Stock
of
Telesoft Corp.
- -------------------------------------------------------------------------------
SIGNATURE REQUIRED IN BOX 4
- -------------------------------------------------------------------------------
February 4, 2000
Re: Telesoft Corp. 1995 Incentive Stock Option Plan
Telesoft Corp. 1996 Incentive Stock Option Plan
Telesoft Corp. 1997 Performance Equity Plan
Dear Option Holder:
As you may have heard, Telesoft Corp. (the "Company") has made an offer to
purchase up to 2,300,000 shares of common stock of the Company at a price not in
excess of $7.50 nor less than $7.00 per share. The offer is commonly referred to
as a "Dutch auction" tender offer. The enclosed Offer to Purchase dated February
4, 2000 and the related Letter of Transmittal enclosed with this Option Election
(which, together with the Offer to Purchase, constitute the "offer"), describe
the offer in greater detail.
As a holder of options to purchase shares under one or more of the plans
listed above (each, a "Plan" or, collectively, the "Plans"), you have the
following alternatives in connection with the offer: (1) you may submit to the
Company an Option Election instructing the Company to conditionally exercise
some or all of your outstanding and vested options (but only to the extent that
the shares issuable upon exercise of such options ("option shares") are accepted
in the offer), provided that any such exercise of an option and tender of shares
is in accordance with the terms of the applicable Plan, as more fully described
below under "Method 1: Conditional Exercise/Tender"; (2) you may submit to the
Company an Option Election exercising all or a portion of your outstanding and
vested options for shares which you may tender in the offer, sell as you would
any other shares that you own, or continue to hold, provided that any exercise
of an option and tender of shares must be in accordance with the terms of the
applicable Plan, as more fully described below under "Method 2: Standard
(Unconditional) Exercise"; or (3) you may continue to hold your options.
The offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Monday, March 6, 2000, unless the Company
extends the offer. To assure that your Option Election can be processed on time,
please execute this Option Election and deliver it to the Company according to
the instructions set forth below, before 5:00 p.m., Phoenix time, on Friday,
March 3, 2000, unless the offer is extended.
If you require additional information concerning the terms and conditions
of the offer, please call or e-mail Beacon Hill Partners, Inc., the Information
Agent, at 800-755-5001, 212-843-8500 or [email protected]. If you require
additional information concerning the procedure to tender option shares or the
completion of this Option Election, please call Kris Cecil, Telesoft's
Controller, at 602-308-2100.
Before completing this Option Election, please read carefully the
accompanying Offer to Purchase and all other enclosed materials.
The Board of Directors of the Company has approved the offer. However, you
must make your own decision whether to exercise options and/or tender shares
and, if so, which options to exercise, how many options to exercise, the number
of shares to tender and the price or prices at which shares should be tendered.
Neither the Company nor its Board of Directors makes any recommendation to any
holder of options or any stockholder as to whether to exercise or refrain from
exercising options or tender or refrain from tendering shares. See Section 10 of
the Offer to Purchase for information regarding the intention of the Company's
Board of Directors and executive officers with respect to tendering shares
pursuant to the offer.
<PAGE>
INSTRUCTIONS
Carefully complete this Option Election below. To assure that your Option
Election can be processed on time, please be sure to sign and date this Option
Election and return it to Telesoft Corp., 3443 North Central Avenue, Suite 1800,
Phoenix, Arizona 85102, Attention: Kris Cecil, not later than 5:00 p.m., Phoenix
time, on Friday, March 3, 2000, unless the offer is extended. The method of
delivery of this document is at the election and risk of the tendering holder.
No facsimile transmissions of this Option Election will be accepted. If delivery
is by mail, registered mail with return receipt requested is recommended.
If your Option Election and related documents, if any (including, unless
you are making a cashless exercise, a check in the amount of the exercise
price), are not received by the applicable deadline set forth below, or if they
are not fully or properly completed, the Company will reject this Option
Election and the Company will neither exercise your options nor tender the
related option shares. The Company reserves the absolute right to waive any
defect or irregularity in the exercise of any option or the tender of any
shares. No exercise of options and tender of option shares will be deemed to be
properly made until all defects or irregularities have been cured or waived.
None of the Company, the Depositary, the Information Agent or any other person
is or will be obligated to give notice of any defects or irregularities in
tenders of exercises of options and option shares, and none of them will incur
any liability for failure to give any such notice.
The method of delivery of this document is at the election and risk of the
tendering holder of options. No facsimile transmissions of the Option Election
will be accepted. If delivery is by mail, registered mail with return receipt
requested is recommended. In all cases, sufficient time should be allowed to
assure delivery by 5:00 p.m., Phoenix time, on Friday, March 3, 2000.
Method 1: Conditional Exercise/Tender
If you want to participate in the offer, but not exercise your options
unless the related option shares are purchased in the offer, follow the
instructions below. If you wish to use Method 1 to exercise some of your options
and Method 2 to exercise some of your options, you must complete and submit two
Option Elections, one for each method of exercise.
To properly complete your Option Election, you must do the following:
(1) Complete Box 1 on this Option Election for each grant date for
which you are the holder of options for which you wish to conditionally
tender the option shares. In column (a), enter the number of shares subject
to options held by you as set forth on the enclosed Optionee Statement. In
column (b), enter the number of option shares for each grant date that you
wish to tender at a price per option share to be selected in Box 2 as
described below. At the bottom of column (b), add up the number of option
shares specified in the column. In the event that not all option shares
that you tender are purchased (due to proration or if a portion), specify
in the far left column the order (by grant date) in which option shares are
to be purchased. Do not fill in any numbers in column (c).
(2) Use Box 2 to select the price (in dollars) per share at which
option shares listed in Box 1 are to be tendered. You have two choices. You
should mark the box entitled "Shares Tendered at Price Determined by Dutch
Auction" if you are willing to accept the Purchase Price resulting from the
Dutch auction tender process. This could result in your receiving the
minimum price of $7.00 per share.
In all other cases, you should insert in front of each of the prices
specified under "Option Shares Tendered at Price Determined by Holder of
Options" the number of option shares that you are tendering at that price.
This action will result in none of the option shares that you tender at a
price higher than the Purchase Price being purchased (in which event the
related options will not be exercised).
You may not tender the same option shares at more than one price, therefore
the total number of shares specified in Box 2 must not exceed the total
number of shares specified in column (b) in Box 1. If it does, the Company
will reject your Option Election as described above.
2
<PAGE>
If you desire to tender a portion of your option shares at the Purchase
Price determined by the Dutch auction tender process and to specify one or
more tender prices for another portion of your option shares, you must
submit two Option Elections. In that case, you should only include in Box 1
of the relevant form those option shares being tendered pursuant to that
form.
(3) Complete Box 3 if you want to impose the condition that a
specified minimum number of your tendered shares must be purchased if any
such tendered shares are purchased (as described below).
(4) Complete, date and sign the Option Election in Box 4.
(5) Return the Option Election in the enclosed return envelope so
that it is received by the Company at the address on the return envelope
not later than 5:00 p.m., Phoenix time, on Friday, March 3, 2000, unless
extended. No facsimile transmittals of the Option Election will be
accepted.
Method 2: Standard (Unconditional) Exercise
If you want to unconditionally exercise your options (a standard exercise)
and tender the related option shares in the offer, sell such option shares in
the open market or hold such option shares, follow the instructions below. If
you wish to use Method 1 to exercise some of your options and Method 2 to
exercise some of your options, you must complete and submit two Option
Elections, one for each method of exercise.
Option Elections received after 5:00 p.m., Phoenix time, on Friday, March
3, 2000, unless extended, that exercise options but do not specify that such
options are to be tendered in the offer will continue to be honored. If you
select Method 1: "Conditional Exercise/Tender" for some portion of the options
held by you, options which you conditionally exercise in the offer, but which
represent option shares that are not accepted in the offer, will be deemed
unexercised, but because of the time required to complete those procedures, you
will not be able to exercise those unexercised options until the tenth day
following the termination of the offer.
To properly complete your Option Election, you must do the following:
(1) Complete Box 1 on this Option Election for each grant date for
which you are the holder of options which you wish to exercise. In column
(a), enter the number of shares subject to options held by you as set forth
on the enclosed Optionee Statement. In column (c), list the number of
options that you wish to exercise. At the bottom of column (c), add up the
number of option shares specified in the column. Do not fill in any numbers
in column (b).
(2) If you do not wish to tender option shares in the offer, skip Box
2.
(3) If you wish to tender option shares in the offer, use Box 2 to
select the price (in dollars) per share at which option shares listed in
Box 1 are to be tendered. You have two choices. You should mark the box
entitled "Shares Tendered at Price Determined by Dutch Auction" if you are
willing to accept the Purchase Price resulting from the Dutch auction
tender process. This could result in your receiving the minimum price of
$7.00 per share. This action could also result, in the case of options with
exercise prices higher than the minimum price of $7.00, in your receiving a
Purchase Price for your option shares less than the exercise price for the
related option, resulting in a loss to you.
In all other cases, you should insert in front of each of the prices
specified under "Option Shares Tendered at Price Determined by Holder of
Options" the number of option shares that you are tendering at that price. This
action will result in none of the option shares that you tender at a price
higher than the Purchase Price being purchased.
You may not tender the same option shares at more than one price, therefore
the total number of shares specified in Box 2 must not exceed the total number
of shares specified in column (c) in Box 1. If it does, the Company will reject
your Option Election as described above. If you desire to tender a portion of
your option shares at the Purchase Price determined by the Dutch auction tender
process and to specify one or more tender prices for another
3
<PAGE>
portion of your option shares, you must submit two Option Elections. In that
case, you should only include in Box 1 of the relevant form those option shares
being tendered pursuant to that form.
(4) Complete Box 3 if you want to impose the condition that a
specified minimum number of your tendered shares must be purchased if any
such tendered shares are purchased (as described below).
(5) Complete, date and sign the Option Election in Box 4. Be sure to
check one of the three boxes in Box 4 relating to the payment of the option
exercise price and, upon written notification from the Company, any
required related withholding taxes.
(6) Return the Option Election (and a check for the option exercise
price, unless you are making a cashless exercise) in the enclosed return
envelope so that it is received by the Company at the address on the return
envelope not later than 5:00 p.m., Phoenix time, on Friday, March 3, 2000,
unless extended, if you wish to tender your option shares in the offer.
Option Elections received after that date that do not purport to tender
option shares in the offer will continue to be honored. If you select
Method 1: "Conditional Exercise/Tender" for some portion of the options
held by you, options which you conditionally exercise in the offer, but
which represent option shares that are not accepted in the offer, will be
deemed unexercised, but because of the time required to complete those
procedures, you will not be able to exercise those unexercised options
until the tenth day following the termination of the offer. No facsimile
transmittals of this Option Election will be accepted. If you are not
making a cashless exercise and the amount of the check is insufficient to
cover the exercise price, the Company will reject your option exercise
request.
Withdrawal
If completely and properly submitted, your direction to exercise options
will be deemed irrevocable upon receipt by the Company unless withdrawn prior to
the Expiration of the offer, unless extended. In order to make an effective
withdrawal, you must submit a new Option Election which may be obtained by
calling Kris Cecil, Telesoft's Controller, at 602-308-2100 (or use a photocopy
of an Option Election). Your new Option Election must be signed and dated in Box
4. You must also write "WITHDRAW" in the space beneath the signature block on
Box 4. Upon receipt of a new, signed, dated and properly completed Option
Election, your previous direction will be deemed canceled. You may re-tender any
of your option shares by obtaining another Option Election from Kris Cecil (or
use a photocopy of an Option Election) and repeating the previous instructions
for directing exercises and tenders as set forth above.
Election of Condition for Tender
If you want the Company to tender your shares pursuant to Method 1 or
Method 2 subject to the condition that a specified minimum number of your
tendered shares must be purchased if any such tendered shares are purchased, as
described in Section 6 of the Offer to Purchase, you must complete Box 3,
captioned "Conditional Tenders." It is your responsibility to calculate such
minimum number and you are urged to consult a tax advisor.
Further Information
If you require additional information concerning the terms and conditions
of the offer, please call or e-mail Beacon Hill Partners, Inc., the Information
Agent, at 800-755-5001, 212-843-8500 or [email protected]. If you require
additional information concerning the procedure to tender shares receivable upon
exercise of your options or the completion of this Option Election, please call
Kris Cecil, Telesoft's Controller, at 602-308-2100.
4
<PAGE>
BOX 1 MUST BE COMPLETED BY OPTION HOLDERS USING
EITHER METHOD 1 OR METHOD 2 TO EXERCISE OPTIONS.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BOX 1: OPTION EXERCISE INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Number of Options to be Exercised (Fill in either
column (b) or column (c), but not both. The number
entered in column (b) or column (c) cannot exceed the
corresponding number in column (a).)
- -----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
Number of Shares Subject
to Options (to be completed Number of Option Number of Option Shares
based on enclosed Optionee Shares to be Tendered Which You Wish to Exercise
Order* Date of Grant Option Price Statement) Pursuant to Method 1 Pursuant to Method 2
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$
- -----------------------------------------------------------------------------------------------------------------------------------
$
- -----------------------------------------------------------------------------------------------------------------------------------
$
- -----------------------------------------------------------------------------------------------------------------------------------
$
- -----------------------------------------------------------------------------------------------------------------------------------
$
- -----------------------------------------------------------------------------------------------------------------------------------
$
- -----------------------------------------------------------------------------------------------------------------------------------
$
- -----------------------------------------------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------------------------------------
*If you have included any option shares in Column (a), indicate in this
column, by inserting a number from 1 to 9, the order (by grant date) in
which option shares are to be purchased in the event of proration or if a
portion of your option shares are not purchased because you specified a
tender price higher for such option shares than the Purchase Price.
If you do not designate an order, if less than all option shares tendered
are purchased due to proration, option shares will be purchased based on
the option exercise price beginning with those option shares with the
lowest option exercise price increasing to those with the highest
exercise price.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
BOX 2 MUST BE COMPLETED BY OPTION HOLDERS USING
METHOD 1 TO EXERCISE OPTIONS AND OPTION HOLDERS USING
METHOD 2 WHO DESIRE TO TENDER OPTION SHARES IN THE OFFER.
- --------------------------------------------------------------------------------
BOX 2: OPTION SHARE TENDER INSTRUCTIONS
- --------------------------------------------------------------------------------
SELECT ONLY ONE CHOICE.
- --------------------------------------------------------------------------------
IF MORE THAN ONE CHOICE IS SELECTED, OR IF NO CHOICE IS SELECTED,
THERE IS NO VALID TENDER OF OPTION SHARES. IF YOU WISH TO TENDER SOME OPTION
SHARES PURSUANT TO CHOICE 1 AND SOME OPTION SHARES PURSUANT TO CHOICE 2, YOU
MUST SUBMIT TWO OPTION ELECTIONS. THE SAME OPTION SHARES MAY NOT BE
TENDERED UNDER BOTH CHOICES.
- --------------------------------------------------------------------------------
CHOICE 1
OPTION SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having Telesoft Corp.
purchase all the option shares that the undersigned is tendering.
Accordingly, by checking this box INSTEAD OF COMPLETING THE PRICE BOX
BELOW, the undersigned hereby tenders option shares and is willing to
accept the Purchase Price resulting from the Dutch auction tender process.
This action could result in receiving a price per share as low as $7.00.
OR
CHOICE 2
OPTION SHARES TENDERED AT PRICES DETERMINED BY HOLDER OF OPTIONS
By completing the chart below INSTEAD OF CHECKING THE BOX ABOVE, the
undersigned hereby tenders option shares at the prices marked. This action could
result in none of your options being exercised and no option shares being
purchased if the Purchase Price for the shares is less than the price checked.
Insert in front of each of the prices below, the number of option shares that
the undersigned is tendering at that price. The sum of the number of option
shares listed below MUST EQUAL THE TOTAL OF THE NUMBERS IN COLUMN (b) (IN THE
CASE OF METHOD 1 EXERCISES) OR COLUMN (c) (IN THE CASE OF METHOD 2 EXERCISES) IN
BOX 1.
Price (In Dollars) per Share at Which Option Shares Are Being Tendered:
<TABLE>
<CAPTION>
Number of Option Number of Option Number of Option
Shares Tendered Price Shares Tendered Price Shares Tendered Price
- ---------------- ----- ---------------- ----- ---------------- -----
<S> <C>
______ $7.00 ______ $7.20 ______ $7.35
______ $7.05 ______ $7.25 ______ $7.40
______ $7.10 ______ $7.30 ______ $7.45
______ $7.15 ______ $7.50
- -------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
BOX 3: CONDITIONAL TENDERS
- --------------------------------------------------------------------------------
You may condition the tender of your option shares upon the purchase by the
Company of a specified minimum number of such shares tendered hereby, all as
described in the Offer to Purchase, particularly in Section 6 thereof. Except as
set forth in Section 6 of the Offer to Purchase, unless at least such minimum
number of your option shares is purchased by the Company pursuant to the terms
of the offer, none of such shares tendered hereby will be purchased. It is your
responsibility to calculate and appropriately indicate such minimum number of
option shares, and you are urged to consult a tax advisor. Unless this box has
been completed and a minimum number specified, the tender will be deemed to be
made without regard to this condition.
Minimum number of option shares
that must be purchased,
if any are purchased: shares
---------------------------
- --------------------------------------------------------------------------------
7
<PAGE>
BOX 4 MUST BE COMPLETED BY ALL OPTION HOLDERS.
- --------------------------------------------------------------------------------
BOX 4: SIGNATURE (REQUIRED)
- --------------------------------------------------------------------------------
The undersigned acknowledges receipt of the Offer to Purchase, dated
February 4, 2000, from the Company and the related Letter of Transmittal and
represents that the undersigned has carefully read such documents. The
undersigned hereby instructs the Company, subject to the terms and conditions
set forth in this option Election, the Offer to Purchase and the Letter of
Transmittal, to carry out the instructions contained in this form.
If the undersigned is relying on Method 1 to exercise options, the Company
is hereby authorized, in accordance with the instructions contained in this
Option Election, to (i) exercise the undersigned's options (but only to the
extent that the related option shares are accepted for purchase pursuant to the
offer) and deliver such option shares to Corporate Stock Transfer, Inc., as
Depositary for the offer, (ii) retain from the net cash proceeds received
pursuant to the offer from the purchase of the option shares the option exercise
price for such option shares and related withholding taxes and (iii) remit to
the undersigned the remaining net cash proceeds. The undersigned agrees that if
the net cash proceeds from the purchase of the undersigned's option shares is
insufficient to cover the related option exercise price and to pay applicable
withholding taxes that the undersigned will, immediately upon request of the
Company, forward to the Company a check in an amount sufficient to cover any
such shortfall.
If the undersigned is relying on Method 2 to exercise options, the Company
is hereby authorized to exercise the options specified in Box 1 and, if so
indicated, to tender option shares as directed in Box 2 and (check one of the
following boxes):
[ ] A check payable to the Company equal to the exercise price of the
options is enclosed.
[ ] The Company is hereby authorized to sell in the open market all of the
option shares specified in Box 1 and to use the net proceeds from such
sale to pay the Company the option exercise price and any required
related withholding taxes. Any remaining net proceeds should be
returned to the undersigned at the address below.
[ ] The Company is hereby authorized to sell in the open market only the
number of option shares as are necessary to pay the option exercise
price and any required withholding taxes, to remit such amounts to the
Company and, if not directed to tender such option shares, to deliver
the remaining option shares to the undersigned at the address set
forth below.
The undersigned understands that withholding taxes, at the minimum rate or
the rate specified in Form B tax election previously filed with the Company,
will be withheld from any proceeds received by the undersigned (unless the
undersigned has submitted with this form, or pursuant to subsequent notification
from the Company, a check in an amount sufficient to cover such amount). The
undersigned further agrees that, if such proceeds are insufficient to cover
applicable withholding taxes, option shares will not be credited to his or her
account until he or she has, upon request of the Company, forwarded to the
Company a check in an amount sufficient to cover such taxes. In lieu of
withholding at such amounts, the undersigned instructs the Company to withhold
taxes in the amount at the following rates (which may not be less than the
minimum federal, state or local tax rates applicable to you, nor in excess of
such amounts):
Federal: __________%; State: __________%; Local:__________%.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF THE
UNDERSIGNED.
Signature: Date: , 2000
----------------------------- --------------------------
Social Security
Name: Number:
---------------------------------- --------------------------------
Please Print
Address:
- --------------------------------------------------------------------------------
(Street Address, including Apartment Number -- Please Print)
- --------------------------------------------------------------------------------
(City) (State) (Zip Code)
- --------------------------------------------------------------------------------
8
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer --
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
For this type of account: Give the
SOCIAL SECURITY
number of--
- ----------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, the first individual
on the account (1)
3. Custodian account The minor (2)
of a minor (Uniform
Gift to Minors Act)
4. a. The usual The grantor-trustee (1)
revocable savings
trust (grantor is
also trustee)
b. So-called trust The actual owner (1)
account that is not
a legal or valid
trust under State law
5. Sole proprietorship The owner (3)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
For this type of account: Give the
EMPLOYER
IDENTIFICATION
number of--
- ----------------------------------------------------------------------
6. Sole proprietorship The owner (3)
7. A valid, trust, estate, Legal entity (4)
or pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable
educational or other
tax-exempt
organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- ----------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 who regularly acts as a broker are exempt. Payments subject to
reporting under sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except a
corporation that provides medical and health care services or bills and collects
payments for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan or custodial account under section 403(b)(7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
an agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times under the Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc. Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by an ESOP.
Interest payments that are generally exempt from back-up withholding
include:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage or student loan interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, royalties, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. -- If you
fail to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to Withholding. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of February 1,
2000, is between Joseph W. Zerbib (the "Seller") and Telesoft Corp., an Arizona
corporation ("Telesoft").
WHEREAS, Telesoft obtained approximately $15 million from the sale of its
Goodnet subsidiary and desires to use such proceeds to repurchase shares of its
common stock, no par value per share ("Shares") from the Seller and from its
other stockholders;
WHEREAS, Telesoft desires to purchase Seller's Shares, and Seller desires
to sell to Telesoft his Shares, upon the terms and conditions specified herein;
and
WHEREAS, Telesoft intends to commence a tender offer for Shares under the
Securities Exchange Act of 1934, as amended (the "Issuer Tender Offer"), to
purchase Shares from its other stockholders.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
agreements, representations, warranties and covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Telesoft and Seller hereby agree as follows:
1. Purchase and Sale. Upon the terms and subject to the conditions
hereof, Telesoft hereby agrees to purchase from Seller, and Seller hereby agrees
to sell to Telesoft, 293,750 Shares for a purchase price per Share equal to
$7.25 on the earlier of:
(a) at the time Telesoft is deemed to have accepted for payment (and
therefore purchased) Shares in the Issuer Tender Offer (the
"Closing"); and
(b) on March 31, 2000 or such later date as the Issuer Tender Offer shall
have been terminated.
2. Representations and Warranties of Seller. The Seller represents and
warrants that this Agreement has been duly executed and delivered by the Seller
and constitutes a legal, valid and binding agreement of the Seller, enforceable
against the Seller in accordance with its terms except as may be limited by (a)
the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights or remedies of creditors or (b)
the effect of general principles of equity, whether enforcement is considered in
a proceeding in equity or at law and the discretion of the court before which
any proceeding therefor may be brought. The Seller also represents and warrants
that he has full power and authority to transfer the Shares sold hereby and that
Telesoft will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim when the Shares are accepted for purchase by Telesoft. The Seller will,
upon request, execute and deliver
<PAGE>
any additional documents necessary and desirable to complete the transfer of the
Shares sold hereby.
3. Representations and Warranties of Telesoft. Telesoft represents and
warrants that this Agreement has been duly authorized, executed and delivered by
Telesoft and constitutes a legal, valid and binding agreement of Telesoft,
enforceable against Telesoft in accordance with its terms except as may be
limited by (a) the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights or remedies of
creditors or (b) the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or at law and the discretion of the
court before which any proceeding therefor may be brought.
4. Governing Law. This Agreement shall be construed in accordance with
and governed by the substantive laws of the State of Arizona.
5. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only in a writing which is executed by Seller and Telesoft.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
TELESOFT CORP.
By: /s/ Michael F. Zerbib
---------------------------------------------
Name: Michael F. Zerbib
Title: President and Chief Executive Officer
/s/ Joseph W. Zerbib
------------------------------------------------
Joseph W. Zerbib
