UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 25, 2009
TeleCommunication Systems, Inc.
(Exact name of registrant as specified in its charter)
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MARYLAND
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000-30821
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52-1526369
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(State or other jurisdiction
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(Commission File Number)
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(IRS Employer
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of incorporation)
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Identification No.)
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275 West Street
Annapolis, Maryland 21401
(Address of principal executive offices, including zip code)
(410) 263-7616
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
On November 25, 2009, TeleCommunication Systems, Inc. (the Company) entered into a definitive
Agreement and Plan of Merger (the Merger Agreement) with Networks in Motion, Inc., a Delaware
corporation (NIM), Olympus Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary
of the Company (Merger Sub), and G. Bradford Jones, as stockholders representative. Pursuant to
the Merger Agreement, the Company will acquire NIM
upon the consummation of a merger (the Merger) of Merger Sub with and into NIM, with NIM
surviving the Merger. The consummation of the Merger is subject to the terms and conditions of the
Merger Agreement, including the approval of NIMs stockholders, customary regulatory clearance and
other closing conditions.
Under the terms of the Merger Agreement, immediately prior to the effective time of the Merger, (i)
shares of NIMs outstanding preferred stock will automatically convert into shares of NIM common
stock in accordance with the terms of NIMs Certificate of Incorporation, as amended, and (ii)
shares of NIMs outstanding common stock (other than shares of NIMs common stock that have not
been voted in favor of the Merger Agreement and with respect to which a demand for payment and
appraisal have been properly made in accordance with Section 262 of the Delaware General
Corporation Law), warrants and certain options will be converted and canceled in exchange for the
right to receive, following surrender of stock certificates, if applicable, and the execution and
delivery of certain other documents required by the Merger Agreement, the following: (i) an
aggregate amount in cash equal to (A) $110,000,000, (B)
plus
(y) if NIMs actual net
working capital at the closing of the Merger exceeds $9,100,000 by more than $750,000, the entire
amount of the excess, or
less
(z) if NIMs actual net working capital at the closing of the
Merger is less than $9,100,000 by more than $750,000, the entire amount of the decrease, if any,
plus
(C) the amount by which NIMs cash at
the closing of the Merger exceeds $1,000,000, (D)
any indebtedness for borrowed money as to which NIM has failed to pay in full prior to the
consummation of the Merger; (ii) an aggregate of $20,000,000 payable in the form of shares of Class
A common stock, par value $0.01 per share, of the Company (TCS Common Stock), provided that the
exact number of shares of TCS Common Stock to be issued pursuant to the Merger Agreement shall be
calculated by dividing (i) $20,000,000 by (ii) the Parent Designated Stock Price (as defined
below); (iii) an aggregate of $20,000,000 principal amount payable in promissory notes of the
Company which mature on the one year anniversary of the closing date of the Merger (the Twelve
Month Promissory Notes); and (iv) an aggregate of $20,000,000 principal amount payable in
promissory notes of the Company, $10,000,000 of which matures on the one year anniversary of the
closing date of the Merger, $5,000,000 of which matures on the date on which is eighteen months
following the closing date of the Merger and $5,000,000 of which matures on the second anniversary
of the closing date of the Merger (the Indemnification Promissory Notes).
Certain holders of NIM options will have their options terminated prior to the effective time of
the Merger and, promptly following the effective time of the Merger, receive solely cash
consideration in exchange for such terminated options and no other form of Merger consideration.
The Twelve Month Promissory Notes are subject to set-off to satisfy
working capital adjustments of NIM, if any, and
the Indemnification Promissory Notes are subject to set-off to satisfy indemnification obligations,
if any, of NIMs equity holders following completion of the Merger.
Parent Designated Stock Price means the volume weighted average closing sales price of the shares
of TCS Common Stock on the NASDAQ Global Market for the 10 business days prior to the closing date
of the Merger (the Closing Date VWAP);
provided
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however
, (i) if the Closing Date
VWAP is greater than 1.10 multiplied by Parent Average Signing Day Price, then the Parent
Designated Stock Price shall be an amount equal to the Parent Average Signing Day Price multiplied
by 1.10, or (ii) if the Closing Date VWAP is less than 0.90
multiplied by the Parent Average Signing Day Price, then the Parent Designated Stock Price shall be an amount equal to the
Parent Average Signing Day Price multiplied by 0.90. Parent Average Signing Day Stock Price
means $8.2958.
NIMs Board of Directors has unanimously adopted the Merger Agreement and approved the Merger and
recommended adoption of the Merger Agreement and approval of the Merger by NIMs stockholders.
If the Merger Agreement is terminated under certain circumstances specified in the Merger
Agreement, including the failure of NIM to deliver the requisite stockholder approval, NIM will be
required to pay the Company a termination fee of $25,000,000. The Merger is expected to close by
December 31, 2009.
Pursuant to the terms of the Merger Agreement, the Company granted to holders of NIM common stock,
warrants and certain options certain registration rights related to the shares of TCS Common Stock
to be issued in the Merger. The Company is required to use its commercially reasonable efforts to
file a registration statement for the resale of the shares of TCS Common Stock issued pursuant to
the Merger Agreement and cause such registration statement to become effective. The Company also
agreed to other customary obligations regarding registration, including indemnification and
maintenance of the registration statement.
The foregoing is a summary description of certain terms of the Merger Agreement does not purport to
be complete, and it is qualified in its entirety by reference to the full text of the Merger
Agreement which the Company intends to file as an exhibit to its Annual Report on Form 10-K for the
fiscal year ended December 31, 2009, with confidential terms redacted.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein
by reference.
Item 8.01. Other Events.
On December 1, 2009, the Company issued a press release announcing the execution of the Merger
Agreement. The full text of the press release is attached to this Current Report on Form 8-K as
Exhibit 99.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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99.1
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Press Release dated December 1, 2009, issued by TeleCommunication Systems, Inc.
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Forward-Looking Statements
This Current Report on Form 8-K and Exhibit 99.1 hereto contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are
statements other than historical information or statements of current condition. We generally
identify forward-looking statements by the use of terms such as believe, intend, expect,
may, should, plan, project, contemplate, anticipate, or other similar statements. For
example, the statement that the Merger is expected to close by December 31, 2009 is a
forward-looking statement.
These forward-looking statements relate to our plans, objectives and expectations for future
operations. In light of the risks and uncertainties inherent in all such projected operational
matters, the inclusion of forward-looking statements in this Current Report on Form 8-K and Exhibit
99.1 should not be regarded as a representation by us or any other person that our objectives or
plans will be achieved or that any of our operating expectations will be realized. Our actual
financial results realized could differ materially from the statements made herein, depending in
particular upon the risks and uncertainties described in our filings with the Securities and
Exchange Commission. These include without limitation risks and uncertainties relating to our
financial results and our ability to (i) reach and sustain profitability, (ii) continue to rely on
our customers and other third parties to provide additional products and services that create a
demand for our products and services, (iii) conduct our business in foreign countries, (iv) adapt
and integrate new technologies into our products, (v) expand our sales and business offerings in
the wireless communications industry, (vi) develop software without any errors or defects, (vii)
have sufficient capital resources to fund the Companys operations, (viii) protect our intellectual
property rights, (ix) implement our sales and marketing strategy, and (x) successfully integrate
the assets and personnel obtained in our acquisitions. These factors should not be considered
exhaustive; we undertake no obligation to release publicly the results of any future revisions we
may make to forward-looking statements to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events. We caution you not to put undue reliance on
these forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TeleCommunication Systems, Inc.
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By:
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/s/ Bruce A. White
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Name:
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Bruce A. White
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Title:
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Sr. Vice President, General Counsel and Secretary
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Dated: December 1, 2009