SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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TeleCommunication Systems, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was
determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or schedule and the date of its
filing.
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Amount previously paid:
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Form, schedule or registration statement no.:
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Date filed:
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EXPLANATION:
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The Company is filing an Amended Schedule 14A to reflect certain corrections to the "2007 Grants of Plan-Based Awards" table.
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275 West
Street
Annapolis, Maryland 21401
May 1, 2008
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of TeleCommunication Systems, Inc.
(TCS)
to be held on Thursday,
June 12, 2008, at 10:00 a.m. local time, at The Westin
Annapolis hotel, 100 Westgate Circle, Annapolis, MD 21401.
The business to be conducted at the Annual Meeting is set forth
in the formal notice that follows.
The Board of Directors urges you to read the accompanying Notice
of Annual Meeting and Proxy Statement, and recommends that you
vote FOR the election of the directors nominated.
The vote of every stockholder is important. Whether or not you
plan to attend the Annual Meeting, it is important that your
shares be represented. We rely upon all stockholders to execute
and return their proxies in order to avoid costly proxy
solicitation. Therefore, in order to save TCS the unnecessary
expense of further proxy solicitation, I ask that you promptly
sign and return the enclosed proxy card in the envelope provided.
I look forward to seeing you at the Annual Meeting.
Sincerely,
Maurice B. Tosé
Chairman of the Board
Chief Executive Officer and President
TELECOMMUNICATION
SYSTEMS, INC.
275 West Street, Suite 400
Annapolis, Maryland 21401
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of TeleCommunication Systems, Inc. (TCS or the
Company), a Maryland corporation, will be held on
Thursday, June 12, 2008, at 10:00 A.M. local time, at
The Westin Annapolis hotel, 100 Westgate Circle, Annapolis,
MD 21401 for the following purposes:
1. To elect two Class I directors to hold office until
the Annual Meeting of Stockholders in 2011 and until their
respective successors are duly elected and qualified.
2. To transact such other business as may properly come
before the Annual Meeting or any adjournments or postponements
thereof.
Pursuant to the Second Amended and Restated Bylaws of the
Company (the Bylaws), its Board of Directors has
fixed the close of business on April 30, 2008 as the Record
Date for the determination of those stockholders who will be
entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. Therefore, only record
holders of TeleCommunication Systems, Inc. Class A Common
Stock and Class B Common Stock at the close of business on
that date are entitled to notice of and to vote shares held on
the Record Date at the Annual Meeting and any adjournments or
postponements thereof.
If you plan to attend the Annual Meeting, please be prepared to
present valid picture identification. If you hold your shares
through a broker or other nominee, the Company will accept proof
of ownership only if you bring either a copy of the voting
instruction card provided by your broker or nominee, or a copy
of a brokerage statement showing your share ownership in the
Company as of April 30, 2008.
Whether or not you expect to attend the Annual Meeting, we urge
you to carefully review the enclosed materials. Your vote is
important. All stockholders are urged to attend the Annual
Meeting in person or by proxy. If you receive more than one
proxy card because your shares are registered in different names
or at different addresses, please indicate your vote, sign, date
and return each proxy card so that all of your shares will be
represented at the Annual Meeting.
If you attend the Annual
Meeting, you may choose to vote in person even if you previously
have sent in your proxy card.
By Order of the Board of Directors
Bruce A. White
Secretary
Annapolis, Maryland
May 1, 2008
TeleCommunication
Systems, Inc.
275 West Street, Suite 400
Annapolis, Maryland 21401
PROXY
STATEMENT
GENERAL INFORMATION
Why Am I
Receiving this Proxy Statement and Proxy Card?
You are receiving this Proxy Statement and a proxy card because
you own shares of common stock, either Class A Common
Stock, par value $0.01 per share (the
Class A
Common Stock
), or Class B Common Stock, par
value $0.01 per share (the
Class B Common
Stock,
and together with the Class A Common
Stock, the
Common Stock
) of TCS. This
Proxy Statement describes the issues on which we would like you,
as a stockholder, to vote. It also gives you information on
these issues so that you can make an informed decision.
When you sign the proxy card, you appoint Thomas M.
Brandt, Jr. and Bruce A. White as your proxies at the
Annual Meeting. Messrs. Brandt and White will vote your
shares as you have instructed them on the proxy card at the
Annual Meeting. This way, your shares will be voted whether or
not you attend the Annual Meeting. Even if you plan to attend
the Annual Meeting, it is a good idea to complete, sign and
return your proxy card in advance of the Annual Meeting just in
case your plans change. This Proxy Statement is being mailed to
you on or about May 1, 2008.
If an issue comes up for vote at the Annual Meeting that is not
on the proxy card, Messrs. Brandt and White will vote your
shares, under your proxy, in accordance with their best judgment.
Who Is Soliciting
this Proxy?
The TCS Board of Directors is soliciting your proxy card in
connection with this Proxy Statement.
What Is the
Purpose of the Annual Meeting?
The business to be conducted at the Annual Meeting is set forth
in the formal notice. Specifically, the matter includes the
election of two directors to hold office until the Annual
Meeting of Stockholders that is to be held in 2011 and until
their respective successors are duly elected and qualify.
Who Is Entitled
to Vote?
Only stockholders of record at the close of business on the
record date, April 30, 2008 (the Record Date),
are entitled to receive notice of the Annual Meeting and to vote
the shares of Common Stock that they held on that date at the
Annual Meeting, or any adjournments or postponements thereof. At
the close of business on April 24, 2008,
35,026,535 shares of TCS Class A Common Stock and
7,301,334 shares of Class B Common Stock were
outstanding and entitled to vote at the Annual Meeting.
How Many Votes
Does Each Share of Common Stock Entitle its Holder to
Cast?
Each share of Class A Common Stock is entitled to one vote
per share at the Annual Meeting. Each share of Class B
Common Stock is entitled to three votes per share at the Annual
Meeting.
Who Can Attend
the Annual Meeting?
Only stockholders as of the Record Date, or their duly appointed
proxies, may attend the Annual Meeting. Registration and seating
will begin at 9:30 a.m. Stockholders may be asked to
present valid picture identification, such as a drivers
license or passport. Cameras, recording devices and other
electronic devices will not be permitted at the Annual Meeting.
Please note that if you hold your shares in street
name (that is, through a broker or other nominee), you
must bring either a copy of the voting instruction card provided
by your broker or nominee or a copy of a
brokerage statement reflecting your stock ownership as of the
Record Date and check in at the registration desk at the Annual
Meeting.
How Many Votes Do
We Need to Hold the Annual Meeting?
In order to conduct business at the Annual Meeting, our Bylaws
require the presence in person or by proxy of stockholders
entitled to cast a majority of all the votes entitled to be cast
on the matters to be presented at the Annual Meeting. This is
called a quorum. Proxy cards received by us but
marked WITHHOLD will be included in the calculation
of the number of shares considered to be present at the Annual
Meeting; but shares held by a broker that are not voted on any
matter will not be included in the calculations of whether a
quorum is present.
How Do I
Vote?
You May Vote by Mail.
You do this by signing your
proxy card and mailing it in the enclosed, prepaid and addressed
envelope. If you mark your voting instructions on the proxy
card, your shares will be voted as you instruct.
If you return a signed proxy card but do not provide voting
instructions, your shares will be voted to elect the two
directors listed in this Proxy Statement to hold office until
the Annual Meeting of Shareholders in 2011, and until their
respective successors are duly elected and qualified.
You May Vote in Person at the Annual
Meeting.
Written ballots will be passed out to
stockholders entitled to vote at the Annual Meeting. If you hold
your shares in street name (through a broker or
other nominee), you must request a legal proxy from your
stockbroker to vote at the Annual Meeting.
Can I Change My
Vote or Revoke My Proxy After I Return My Proxy Card?
Yes. Even after you have submitted your proxy card, you may
change your vote at any time before the proxy is voted at the
Annual Meeting by Messrs. Brandt and White by mailing to
Mr. White, the Secretary of TCS, either a written notice of
revocation or an executed proxy card with a later date than the
one you previously submitted, at TCSs offices,
275 West Street, Annapolis, Maryland 21401. Attendance at
the Annual Meeting will not by itself revoke a previously
granted proxy. You can also revoke your proxy at the Annual
Meeting on a form that we will provide at the Annual Meeting, or
you can appear in person at the Annual Meeting and vote, in
person, the shares to which your proxy relates.
What If I Wish to
Withhold Authority from Voting on the Election of a Particular
Director or Directors?
If you wish to withhold authority from voting on the election of
a particular director or directors, you may do so by marking
WITHHOLD AUTHORITY, as applicable, on the enclosed
proxy card.
Will My Shares Be
Voted If I Do Not Sign and Return My Proxy Card?
If your shares are held in your name, you must return your proxy
(or attend the Annual Meeting in person) in order to vote on the
proposals. If your shares are held in street name and you do not
vote your proxy, your brokerage firm may either: (i) vote
your shares on routine matters, or (ii) leave your shares
unvoted. Under the rules that govern brokers who have record
ownership of shares that are held in street name for
their clients, brokers may vote such shares on behalf of their
clients with respect to routine matters, but not
with respect to non-routine matters. If the proposals to be
acted upon at any meeting include both routine and non-routine
matters, the broker may turn in a proxy card for uninstructed
shares that votes FOR the routine matters, but expressly states
that the broker is not voting on non-routine matters. This is
called a broker non-vote. Broker non-votes will not
be counted for the purpose of determining the number of votes
cast.
We encourage you to provide instructions to your brokerage firm
if your shares are held in street name. This ensures that your
shares will be voted at the Annual Meeting.
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Who Pays the Cost
of Solicitation of My Proxy?
The expense of soliciting proxies and the cost of preparing,
assembling and mailing proxy materials in connection with the
solicitation of proxies will be paid for by TCS. In addition to
the use of mails, certain directors, officers or employees of
TCS, who receive no compensation for their services other than
their regular salaries, may solicit proxies. Arrangements may be
made with brokers and other custodians, nominees and fiduciaries
to send proxies and proxy materials to their principals and TCS
may reimburse them for reasonable out-of-pocket and clerical
expenses.
When are
Stockholder Proposals and Nominations for the Election of
Directors for the 2009 Annual Meeting of Stockholders
Due?
The Company provides all stockholders with the opportunity,
under certain circumstances and consistent with the Bylaws and
the rules of the Securities and Exchange Commission
(SEC)
, to participate in the
governance of the Company by submitting proposals that they
believe merit consideration and nominations for the election of
directors at the Annual Meeting of Stockholders to be held in
2009. To enable management adequately to analyze and respond to
proposals stockholders wish to have included in the Proxy
Statement and proxy card for that meeting, SEC
Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as
amended (the
Exchange Act
), requires
that any such proposal be received by the Company in writing no
later than January 1, 2009. Any stockholder proposal or
director nomination must also be in compliance with the Bylaws.
Pursuant to the Bylaws, any stockholder proposal or director
nomination for that meeting that is submitted outside the
processes of
Rule 14a-8
will be considered untimely if it is received by the
Company earlier than January 1, 2009 or later than
January 31, 2009.
Proxies solicited by the Board of Directors for the Annual
Meeting of Stockholders to be held in 2009 may confer
discretionary authority to vote on any untimely stockholder
proposals or director nominations without express direction from
stockholders giving such proxies. All stockholder proposals and
director nominations must be addressed to the attention of the
Secretary at 275 West Street, Annapolis, Maryland 21401.
The Chairman of the Annual Meeting may refuse to acknowledge the
introduction of any stockholder proposal or director nomination
not made in compliance with the Bylaws or the foregoing
procedures.
How Can I
Communicate with the Companys Board of
Directors?
Stockholders may send correspondence to the Board of Directors
or to any individual Director at the following address:
TeleCommunication Systems, Inc., 275 West Street,
Suite 400, Annapolis, MD 21401. The communication should
indicate that the sender is a stockholder. Based on procedures
approved by the Nominating Committee, the General Counsel and
Secretary will retain and not send to Directors communications
that are purely promotional or commercial in nature or other
topics that clearly are unrelated to Director responsibilities.
These types of communications will be logged and filed but not
circulated to Directors. The General Counsel and Secretary will
review and log all other communications and subsequently deliver
it to the specified Directors
What Are The
Boards Recommendations?
Unless you give other instructions on your proxy card,
Messrs. Brandt and White, in their respective capacity as
proxy holders, will vote in accordance with the recommendation
of the Board of Directors.
The Boards recommendation is to vote:
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to elect the two directors listed in this Proxy Statement to
hold office until the Annual Meeting of Shareholders in 2011 and
until their respective successors are duly elected and qualify.
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With respect to any other matter that properly comes before the
Annual Meeting, the proxy holders will vote in their own
discretion.
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What Vote Is
Required to Approve Each Item?
Election of
the Nominees for Director
If a quorum is present, the affirmative vote of a plurality of
all the votes cast at the Annual Meeting is required for the
election of directors. Plurality means that the
individuals who receive the largest number of votes cast are
elected as directors. Consequently, abstentions, including proxy
cards marked WITHHOLD AUTHORITY and broker non-votes
have no impact on the election of directors. Unless a properly
executed proxy card is marked WITHHOLD AUTHORITY,
the proxy given will be voted FOR the nominees for
director.
Transaction of
Other Business
If a quorum is present, the approval of any other proposal that
may come before the before the Annual Meeting properly,
generally requires an affirmative vote of a majority of all the
votes cast in person or by proxy and entitled to vote. A
properly executed proxy card marked ABSTAIN with
respect to the transaction of other business will not be voted.
Accordingly, abstentions and broker non-votes will have no
impact on the vote concerning the proposal.
ITEM 1
ELECTION OF DIRECTORS
At the Annual Meeting, two directors are to be elected to hold
office until the Annual Meeting of Stockholders in 2011 and
until their respective successors are duly elected and
qualified, except in the event of death, resignation or
removals. The number of directors which constitutes our Board of
Directors is currently set at eight. However there are two
vacancies on the Board of Directors.
Our Amended and Restated Articles of Incorporation provide that
our Board of Directors is divided into three classes based on
their terms of office: Class I, Class II and
Class III. Such classes shall be as nearly equal in number
of directors as possible. Each director shall serve for a term
ending on the third annual meeting of stockholders following the
annual meeting at which that director was elected.
Messrs. Heintzelman and Kozak were elected as a
Class I directors at the 2005 Annual Meeting of
Stockholders to hold office until the 2008 Annual Meeting of
Stockholders. If reelected, the Class I directors will
serve for a term that expires at the 2011 Annual Meeting of
Stockholders and until their respective successors are duly
elected and qualified.
Our Bylaws provide that a majority of the then existing Board of
Directors may fill a vacancy on the Board of Directors at any
time, and that such director elected by the Board of Directors
serves until the next annual meeting of stockholders and until
his or her successor is elected and qualifies. All current
directors have been duly elected by the stockholders.
Board
Meetings
The Board of Directors met in Committees a total of thirteen
times in 2007. In addition, the full Board met twice during 2007
to review the actions of the Committees and other TCS business.
All of the directors attended 100% meetings of the Board of
Directors and Board Committees of which they were a member. All
members of the Board of Directors attended the 2007 Annual
Meeting of Shareholders.
Board of
Directors Nominations
Nominating
Committee
The Board of Directors maintains a Nominating Committee, which
is currently comprised of Messrs. Marchant, Bethmann and
Latham. Mr. Marchant serves as the Chairman. The Board of
Directors has determined that each member of the Nominating
Committee is independent as defined by the listing
standards of The Nasdaq Global Market (Nasdaq) and
all applicable rules and regulations of the SEC governing the
qualifications of Nominating Committee members. The purpose of
the Nominating Committee is to recommend persons for membership
on the Board of Directors, including consideration of
shareholder nominations, and to establish criteria and
procedures for the selection of new directors. The Nominating
Committee met three times in 2007.
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The Nominating Committees Charter is available on the
Companys website at www.telecomsys.com and will be
provided to stockholders upon request.
Nominating
Process
The Nominating Committee uses a variety of criteria to evaluate
the qualifications and skills necessary for members of the Board
of Directors. Under these criteria, members of the Board of
Directors should have the highest professional and personal
ethics and values, consistent with longstanding values and
standards of the Company. Members of the Board of Directors
should have broad experience at the policy-making level in
business, government, technology or public interest. They should
be committed to enhancing stockholder value and should have
sufficient time to carry out their duties and to provide insight
and practical wisdom based on experience. In identifying
candidates for membership on the Board of Directors, the
Nominating Committee takes into account all factors it considers
appropriate, which may include strength of character, maturity
of judgment, career specialization, relevant skills, diversity
and the extent to which a particular candidate would fill a
present need on the Board of Directors. At a minimum, director
candidates must have unimpeachable character and integrity,
sufficient time to carry out their duties, the ability to read
and understand financial statements, experience at senior levels
in areas relevant to the Company and consistent with the
objective of having a diverse and experienced Board, the ability
and willingness to exercise sound business judgment, the ability
to work well with others and the willingness to assume the
responsibilities required of a director of the Company. Each
member of the Board of Directors must represent the interests of
the stockholders of the Company. The Nominating Committee also
reviews and determines whether existing members of the Board of
Directors should stand for reelection, taking into consideration
matters relating to the age and number of terms served by
individual directors and changes in the needs of the Board. Once
the Nominating Committee has selected appropriate candidates for
election as a director, it presents the candidates to the full
Board of Directors for election, if the selection has occurred
during the course of the year, or for nomination, if the
director is to be elected by the stockholders. Members of at
least one class of Directors are nominated each year for
election by the stockholders and are included in the
Companys Proxy Statement.
The Nominating Committee regularly assesses the appropriate size
of the Board of Directors, and whether any vacancies on the
Board of Directors are expected due to retirement or otherwise.
In the event that vacancies are anticipated, or otherwise arise,
the Nominating Committee considers various potential candidates
for director. Candidates may come to the attention of the
Nominating Committee through current members of the Board of
Directors, professional search firms, stockholders or other
persons. These candidates are evaluated at regular or special
meetings of the Nominating Committee, and may be considered at
any point during the year. The Nominating Committee will
consider stockholder recommendations for candidates for the
Board of Directors that are properly submitted in accordance
with the Bylaws. In evaluating such recommendations, the
Nominating Committee will use the qualifications standards
discussed above and seek to achieve a balance of knowledge,
experience and capability on the Board of Directors.
The Bylaws provide the procedure for stockholders to make
director nominations. A stockholders notice must be
delivered to or mailed and received by the Secretary at the
principal executive offices of the Company:
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in the case of an annual meeting, not more than 120 days
and not less than 90 days prior to the earliest of
(i) such annual meeting, (ii) the first anniversary of
the mailing date of the notice of the preceding years
annual meeting and (iii) the first anniversary of the
preceding years annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by
more than 30 days or delayed by more than 60 days from
the anniversary date of the preceding years annual
meeting, notice by the stockholder must be so delivered not
earlier than the 120th day prior to the annual meeting and
not later than the earlier of the close of business on the
90th day prior to the annual meeting or the tenth day
following the day on which public announcement of the date of
such meeting is first made; and
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in the case of a special meeting of stockholders called for the
purpose of electing directors, not later than the earlier of the
close of business on the tenth day following the day on which
notice of the date of the special meeting was mailed or public
announcement of the date of the special meeting was made,
whichever first occurs.
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A stockholders notice to the Secretary must be in writing
and set forth:
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as to each person whom the stockholder proposes to nominate for
election as a director, all information relating to such person
that is required to be disclosed in connection with
solicitations of proxies for election of directors pursuant to
Regulation 14A of the Exchange Act, and the rules and
regulations promulgated thereunder; and
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as to the stockholder giving the notice (i) the name and
address of such stockholder as they appear on the Company
s books and of the beneficial owner, if any, on whose
behalf the nomination is made, (ii) the class or series and
number of shares of capital stock of the Company which are owned
beneficially or of record by such stockholder and such
beneficial owner, (iii) a description of all arrangements
or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such
stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to
nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required
to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for
election of directors pursuant to Regulation 14A of the
Exchange Act, and the rules and regulations promulgated
thereunder.
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Such notice must be accompanied by a written consent of each
proposed nominee to be named as a nominee and to serve as a
director if elected. No person shall be eligible for election as
a director of the Company unless nominated in accordance with
the procedures set forth above. If the chairman of the meeting
determines that a nomination was not made in accordance with the
foregoing procedures, the chairman of the meeting shall declare
to the meeting that the nomination was defective and such
defective nomination shall be disregarded. No adjournment or
postponement of a meeting of stockholders shall commence a new
period for the giving of notice of a stockholder proposal
hereunder.
Nominees for
Director
At the Annual Meeting, two directors are to be elected to hold
office until the Annual Meeting of Stockholders in 2011 and
until their respective successors are duly elected and
qualified, except in the event of death, resignation or removal.
Unless otherwise specified, your proxy will be voted
FOR the election of the nominees listed below,
except that in the event any of those named should not continue
to be available for election, discretionary authority may be
exercised by the proxy holders to vote for a substitute of their
choice. However, TCS knows of no circumstances that would make
any nominee named herein unavailable. The nominees are each
currently members of the Board of Directors.
The following nominees for director will serve until the Annual
Meeting of Stockholders in 2011 and until their respective
successors are duly elected and qualified.
Class I
Directors Terms expiring in 2011
Clyde A. Heintzelman
, 69, Member of the Audit
Committee
Mr. Heintzelman joined the Board of Directors in December
1999. He is the Chairman of the Board of Citel, a company
focused on enabling enterprise IP telephony with existing PBX
infrastructure. Mr. Heintzelman was the Chairman of the
Board of Optelecom, Inc. from February 2000 to June 2003, also
serving as the interim President and Chief Executive Officer
during 2002. Prior to joining Optelecom, Mr. Heintzelman
was the President of Net2000 Communications, from November 1999
to May 2001. From December 1998 to November 1999,
Mr. Heintzelman was the President and Chief Executive
Officer of SAVVIS Communications Corporation, a networking and
Internet solutions company. From 1995 to 1998,
Mr. Heintzelman was the President and Chief Operating
Officer of DIGEX, Inc. Prior to joining DIGEX, Inc.,
Mr. Heintzelman was a General Manager for Bell Atlantic.
Mr. Heintzelman also serves on the Board of Directors of
SAVVIS Communications Corporation and ITC Deltacom.
Mr. Heintzelman holds a B.A. degree in Marketing from the
University of Delaware.
Richard A. Kozak
, 62, Chairman of the Audit
Committee
6
Mr. Kozak joined the Board of Directors in December 1999.
He is currently Chairman of R&D2 LLC, a company engaged in
helping early stage companies commercialize their intellectual
property assets. In 1998, Mr. Kozak founded and was the
Chief Executive Officer and Chairman of the Board of Directors
of 1eEurope, Ltd., formerly Galileo Communications, Ltd., a
portfolio of companies focused on providing integrated
e-business
solutions to mid and large-size companies throughout Europe.
From 1993 to 1997, Mr. Kozak was a co-founder and the
President, Chief Executive Officer and member of the Board of
Directors of American Communications Services, Inc., which
became e.spire Communications, Inc. Prior to forming American
Communications Services, Inc. in 1993, Mr. Kozak was the
President of the Southern Division of MFS Communications, which
was acquired by MCI WorldCom. From 1986 through 1989,
Mr. Kozak was Vice President and General Manager of Global
Messaging Services for GTE Telenet, now part of Sprint
International. He holds a B.S. degree in Engineering from Brown
University and an M.B.A. in Finance from The George Washington
University School of Government and Business Administration. He
is a member of the board of advisors for the Dingman School of
Entrepreneurship at the University of Maryland, and the
Chesapeake Innovation Center in Annapolis, Maryland
Directors
Continuing in Office
Class II
Directors Terms expiring in 2009
Weldon H. Latham
, 61, Member of the Compensation
and Nominating Committees
Weldon H. Latham joined the Board of Directors in December 1999.
Mr. Latham has been a senior partner with the law firm of
Davis Wright Tremaine since July 2004. From
2000-04,
he
was a senior partner at the law firm of Holland &
Knight. From
1992-2000,
Mr. Latham was a partner at the law firm of Shaw Pittman.
From
1986-92,
Mr. Latham was a managing partner of the Virginia office of
the law firm Reed Smith. From
1981-86,
Mr. Latham was the Vice President and General Counsel of
Sterling Systems Inc., a software company that was acquired by
Planning Research Corporation (PRC). Mr. Latham was
appointed Executive Assistant and Counsel to the PRC Chairman
and CEO. From
1979-81,
Mr. Latham served as General Deputy Assistant Secretary,
U.S. Department of Housing and Urban Development and
previously served as Assistant General Counsel, Executive Office
of the President (OMB) from
1973-76.
Previously, Mr. Latham served as a Captain, Office of the
Secretary, Air Force General Counsels Honors Program from
1971-73.
Mr. Latham holds a B.A. degree in Business Administration
from Howard University, a J.D. degree from Georgetown University
Law Center, and an executive management certificate from the
Amos Tuck Business School at Dartmouth College.
Byron F. Marchant
, 50, Chairman of the Nominating
Committee, Member of the Audit Committee
Mr. Marchant joined the Board of Directors in December
1999. He has been the Executive Vice President, General Counsel
and Chief Administrative Officer of Black Entertainment
Television, Inc. (BET) since 1997. Prior to joining BET,
Mr. Marchant was a partner in the law firm Patton Boggs,
LLP. From 1995 to 1996, Mr. Marchant was our Senior Vice
President and General Counsel. Additional positions that
Mr. Marchant has held include Senior Legal Advisor to an
FCC Commissioner and an attorney with the law firm
Sidley & Austin. Mr. Marchant also serves on the
Board of Directors of Cable Positive, American Red Cross of the
Washington Metropolitan Area and the U.S. Naval Academy
Foundation. He also is a member of the Advisory Committee to the
Sallie Mae Foundation. The Governor of Virginia appointed
Mr. Marchant to the Board of Visitors of George Mason
University for a four-year term that began in the Fall of 2003.
Mr. Marchant holds a B.S. degree from the U.S. Naval
Academy and a J.D. degree from the University of Virginia Law
School.
Class III
Directors Terms expiring in 2010
Maurice B. Tosé
, 51, Chairman of the Board,
President and Chief Executive Officer
Mr. Tosé founded TeleCommunication Systems (TCS) in
1987 and has been a director and Chairman of the Board of
Directors since then. Prior to founding TCS, Mr. Tosé
was the Director of Department of Defense Programs for
Techmatics, Inc., headquartered in Silver Spring, Maryland and
co-founder, chairman of the board, United States Naval Academy
Samuel P. Massie Education Endowment.
7
James M. Bethmann,
53, Chairman of the
Compensation Committee, Member of the Nominating Committee
Mr. Bethmann joined the Board of Directors in April 2006,
and currently serves as Chairman of the Compensation Committee
and is a member of the Nominating Committee. Mr. Bethmann
is a Managing Partner of Heidrick and Struggles following its
acquisition of Highland Partners where he was a Vice Chairman of
the firm. Heidrick and Struggles is a retained executive search
firm, and Mr. Bethmann is a partner in the Technology/IT
Services and Industrial sectors. Before joining Highland
Partners, Mr. Bethmann was Managing Director and co-led
Korn/Ferry Internationals Advanced Technology practice in
North America, and established and led the firms software
and emerging technologies practice. Prior to joining Korn/Ferry,
Mr. Bethmann led the Southwest Technology Practice of
Russell Reynolds Associates. Before executive search,
Mr. Bethmann served as a Corporate Officer and a President
of Recognition International, a supplier of high-performance
document recognition systems, image, and workflow software
solutions for leading businesses in the Americas, Pacific Rim,
and Europe. He began his career in the U.S. Navy, achieving
the rank of Lieutenant Commander. Mr. Bethmann holds a B.S.
degree from the U.S. Naval Academy where he currently is a
board trustee.
THE BOARD
RECOMMENDS A VOTE FOR THE NOMINEES.
Director
Compensation
For 2007, Directors who are not employees of TCS (that is, all
directors except for Mr. Tosé) were paid an annual
retainer of $10,000, and fee of $1,500 for each Board meeting
and $1,000 for each Committee meeting in which the director
participated. The Chairman of the Audit Committee was paid an
additional annual retainer of $9,000, and the Chairman of the
Compensation Committee was paid an additional annual retainer of
$4,500.
Generally, each director who is not an employee of TCS (that is,
all directors except for Mr. Tosé) is granted
restricted stock or options to purchase shares of Class A
Common Stock under our Fifth Amended and Restated 1997 Stock
Incentive Plan for each year of service on the Board. These
restricted shares or options vest in equal amounts at the end of
each semi-annual term of service on the Board. In addition,
non-employee directors are reimbursed for expenses incurred in
connection with their board service. The following Table
summarizes all amounts paid to non-employee Directors for fiscal
year 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
James M. Bethmann
|
|
$
|
25,500
|
|
|
$
|
17,500
|
|
|
$
|
43,000
|
|
Clyde A. Heintzelman
|
|
$
|
19,000
|
|
|
$
|
17,500
|
|
|
$
|
36,500
|
|
Richard A. Kozak
|
|
$
|
27,000
|
|
|
$
|
17,500
|
|
|
$
|
45,000
|
|
Weldon H. Latham
|
|
$
|
22,000
|
|
|
$
|
17,500
|
|
|
$
|
39,500
|
|
Byron F. Marchant
|
|
$
|
20,000
|
|
|
$
|
17,500
|
|
|
$
|
37,500
|
|
In January 2008, after reviewing industry comparable
compensation trends for Boards of Directors of comparably sized
companies in the industries in which TCS participates as
published in the Director
8
Compensation Report of the National Association of Corporate
Directors, the Board voted unanimously to revise Board annual
fees as follows:
|
|
|
|
|
Target Total Annual Compensation
|
|
$
|
55,000
|
|
Board retainer
|
|
$
|
15,000
|
|
Audit Committee Chairman retainer
|
|
$
|
11,000
|
|
Compensation Committee Chairman retainer
|
|
$
|
5,500
|
|
Nominating Committee Chairman retainer
|
|
$
|
4,500
|
|
Board per-meeting fee
|
|
$
|
3,000
|
|
Committee per-meeting fee
|
|
$
|
2,000
|
|
Non-cash compensation (value)
|
|
$
|
20,000
|
|
The Target Total Annual Compensation may be comprised of cash,
non-cash in the form of stock options or restricted shares with
a stated vesting schedule, or a combination of the two.
9
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial ownership is determined in accordance with
Rule 13d-3
under the Exchange Act. The number of shares beneficially owned
by a person includes shares of Class A Common Stock subject
to options held by that person that are currently exercisable or
exercisable within 60 days of April 30, 2008. The
shares issuable pursuant to these options are deemed outstanding
for computing the percentage ownership of the person holding
these options but are not deemed outstanding for the purposes of
computing the percentage ownership of any other person.
The following table lists the number of shares of Class A
Common Stock and Class B Common Stock beneficially owned by
directors and our named executive officers of the Company as of
April 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Percentage of Shares
|
|
Name and Address of
|
|
Beneficially Owned
|
|
|
Beneficially Owned
|
|
Beneficial Owner(1)
|
|
A Shares
|
|
|
B Shares(3)
|
|
|
A Shares
|
|
|
B Shares
|
|
|
Directors and executive officers
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maurice B. Tosé(2)
|
|
|
1,842,548
|
|
|
|
7,301,334
|
|
|
|
5.0
|
%
|
|
|
100
|
%
|
Richard A. Young(4)
|
|
|
1,138,183
|
|
|
|
|
|
|
|
3.2
|
%
|
|
|
|
|
Thomas M. Brandt, Jr.(5)
|
|
|
910,999
|
|
|
|
|
|
|
|
2.5
|
%
|
|
|
|
|
Drew A. Morin(6)
|
|
|
1,116,501
|
|
|
|
|
|
|
|
3.1
|
%
|
|
|
|
|
Timothy J. Lorello(7)
|
|
|
677,947
|
|
|
|
|
|
|
|
1.9
|
%
|
|
|
|
|
James M. Bethmann(8)
|
|
|
8,736
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Clyde A. Heintzelman(9)
|
|
|
101,562
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Richard A. Kozak(10)
|
|
|
85,173
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Weldon H. Latham(10)
|
|
|
106,173
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Byron F. Marchant(11)
|
|
|
55,956
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
All directors and executive officers as a group (10
persons)(12)
|
|
|
6,043,778
|
|
|
|
7,301,334
|
|
|
|
15.2
|
%
|
|
|
100
|
%
|
Five percent holders
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marathon Capital Management, LLC(13)
|
|
|
2,829,239
|
|
|
|
|
|
|
|
8.1
|
%
|
|
|
|
|
S Squared Technology LLC(14)
|
|
|
2,589,400
|
|
|
|
|
|
|
|
7.4
|
%
|
|
|
|
|
Renaissance Technologies Corp.(15)
|
|
|
1,961,300
|
|
|
|
|
|
|
|
5.6
|
%
|
|
|
|
|
|
|
|
*
|
|
Less than 1%.
|
|
(1)
|
|
Except as set forth herein, the business address of the named
beneficial owner is
c/o TeleCommunication
Systems, Inc., 275 West Street, Annapolis, Maryland 21401.
|
|
(2)
|
|
Includes 1,608,252 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008. Under the rules of the SEC,
Mr. Tosé is deemed to beneficially own
223,995 shares of Class A Common Stock owned by Teresa
M.S. Layden, Mr. Tosés wife, 215,753 shares
of Class B Common Stock held in a trust for the benefit of
Mr. Tosés and Ms. Laydens children,
and 43,142 shares of Class B Common Stock held by
Mr. Tosés minor children. Mr. Tosé
disclaims beneficial ownership of all of these shares.
|
|
(3)
|
|
The holders of Class B Common Stock are entitled to three
votes per share on all matters submitted to a vote of the
stockholders. Each share of our Class B Common Stock is
convertible at any time, at the option of the holder, into one
share of our Class A Common Stock.
|
|
(4)
|
|
Includes 981,705 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008. Under the rules of the SEC,
Mr. Young is deemed to beneficially own 30,000 shares
of Class A Common Stock held in a trust for the benefit of
Mr. Youngs wife and children. Mr. Young
disclaims beneficial ownership of all of these shares.
|
|
(5)
|
|
Includes 758,956 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008. Under the rules of the SEC,
Mr. Brandt is deemed to beneficially own 51,370 shares
of Class A Common Stock held in a trust for the benefit of
Mr. Brandts wife. Mr. Brandt disclaims
beneficial ownership of all the shares in the trust.
|
|
(6)
|
|
Includes 662,586 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008. Under the rules of the SEC,
Mr. Morin is deemed to beneficially own 165,354 shares
of Class A Common Stock held in a trust for the benefit of
Mr. Morins wife and child. Mr. Morin disclaims
beneficial ownership of all of these shares.
|
10
|
|
|
(7)
|
|
Includes 420,556 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008. Under the rules of the SEC,
Mr. Lorello is deemed to beneficially own
236,849 shares of Class A Common Stock held in a trust
for the benefit of Mr. Lorellos wife and children.
Mr. Lorello disclaims beneficial ownership of all these
shares.
|
|
(8)
|
|
Includes 2,166 shares of restricted Class A Common
Stock.
|
|
(9)
|
|
Includes 85,899 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008 and 2,166 shares of
restricted Class A Common Stock.
|
|
(10)
|
|
Includes 39,666 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2008 and 2,166 shares of
restricted Class A Common Stock.
|
|
(11)
|
|
Includes 53,791 shares of Class A Common Stock
issuable upon the exercise of stock options exercised within
60 days of April 30, 2008 and 2,166 shares of
restricted Class A Common Stock.
|
|
(12)
|
|
Includes an aggregate of 4,651,077 shares of Class A
Common Stock issuable upon the exercise of stock options
exercisable within 60 days of April 30, 2008 and
10,830 shares of restricted Class A Common Stock.
|
|
(13)
|
|
According to a Schedule 13G filed with the SEC on
February 6, 2008, the address of Marathon Capital
Management, LLC is 4 North Park Dr., Suite 106, Hunt
Valley, Maryland 21030.
|
|
(14)
|
|
According to a Schedule 13G filed with the SEC on
February 12, 2008, the address of Renaissance Technologies,
LLC is 800 Third Avenue, New York, New York 10022.
|
|
(15)
|
|
The address of each of S Squared Technology, LLC
(SST), S Squared Technology Partners, L.P.
(SSTP), Seymour L. Goldblatt and Kenneth A.
Goldblatt is 515 Madison Ave., New York, NY 10022. SST and SSTP
are registered investment advisers. Seymour Goldblatt is
the President of each of SST and SSTP and owns a majority of the
interests in SST. Kenneth Goldblatt owns a majority of the
interests in SSTP. The Schedule 13G dated January 15,
2008 and filed with the SEC states that the report relates to
shares held for the accounts of multiple private investment
funds for which SST or SSTP acts as investment adviser.
|
Executive
Officers
The Board has elected the executive officers to serve for
indefinite terms. The following table sets forth the name of
each executive officer as of December 31, 2007 and the
principal positions and offices he holds with the Company.
Unless otherwise indicated, each of these officers has served as
an executive officer of the Company for at least five years.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Information About Executive Officer
|
|
Maurice B. Tosé
|
|
|
51
|
|
|
Chairman of the Board of Directors, President and Chief
Executive Officer since 1987. Prior to founding TCS,
Mr. Tosé was the Director of Department of Defense
Programs for Techmatics, Inc., headquartered in Silver Spring,
Maryland.
|
Richard A. Young
|
|
|
61
|
|
|
Executive Vice President and Chief Operating Officer.
Mr. Young directs all day-to-day activities in the Company
including goal setting, performance monitoring, and deployment
of key personnel. Mr. Young joined TCS in 1992 and has
served in a chief operating management role throughout his
tenure.
|
Thomas M. Brandt, Jr.
|
|
|
56
|
|
|
Sr. Vice President and Chief Financial Officer. Mr. Brandt
joined the Company in 1997, assuming responsiblility for the
Companys financial management, reporting, controls,
accounting, and administration.
|
Drew A. Morin
|
|
|
47
|
|
|
Sr. Vice President and Chief Technology Officer. Mr. Morin
joined the company in 1988, assuming responsibility for the
technical direction and coordination of TCS development
activities across business units.
|
Timothy J. Lorello
|
|
|
50
|
|
|
Sr. Vice President, Commercial Sales and Chief Marketing
Officer, In 2007, Mr. Lorello assumed the additional
responsibility of Sales lead for our Commercial segment
offerings. In 2002. Lorello assumed responsibility for
positioning and product management, marketing communications,
branding activities, and product strategy for all of our
products and services. Mr. Lorello joined our company in
1995 to head our network intelligence application software group
where he was responsible for the marketing and development of
software applications and services sold to wireless carriers.
|
11
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our
directors and executive officers, and persons that beneficially
own more than 10% of our Class A Common Stock, file with
the SEC initial reports of ownership and reports of changes in
ownership of our Class A Common Stock and other equity
securities. Copies of these reports must be filed with us. Based
solely on our review of the copies of these reports filed with
us, and written representations that no other reports were
required, to our knowledge, all reports required by
Section 16(a) were timely filed in 2007 except as follows:
Messrs. Bethmann, Heintzelman, Latham, Marchant and Morin
filed one Form 4 one day late; Mr. Kozak filed two
Forms 4 one day late. All of the late Form 4 filings
resulted from administrative oversight.
CORPORATE
GOVERNANCE
Independence
The Board of Directors has determined that each member of the
Board of Directors, other than Mr. Tosé, is
independent as defined by the listing standards of
the Nasdaq.
Code of Ethics
and Business Conduct
The Board of Directors has adopted a written code of ethics and
business conduct, a copy of which is available on the
companys website at www.telecomsys.com. The Company
requires all officers, directors and employees to adhere to this
code in addressing the legal and ethical issues encountered in
conducting their work. The code requires that employees avoid
conflicts of interest, comply with all laws and other legal
requirements, conduct business in an honest and ethical manner
and otherwise act with integrity and in the companys best
interest. Employees are required to report any conduct that they
believe in good faith to be an actual or apparent violation of
the code. The Sarbanes-Oxley Act of 2002 requires companies to
have procedures to receive, retain and treat complaints received
regarding accounting, internal accounting controls or auditing
matters and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters. The Company currently has such
procedures in place.
Committees of the
Board of Directors
Audit
Committee
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors and its
members are Mr. Richard A. Kozak, Mr. Clyde A.
Heintzelman and Mr. Byron F. Marchant. The members of the
Audit Committee are independent as defined by the
listing standards of the Nasdaq. The Board of Directors has
determined that Mr. Kozak, Chairman of the Audit Committee,
is an audit committee financial expert as that term
is defined in Item 401(h) of
Regulation S-K
under the Securities Act of 1933, as amended.
The Board of Directors adopted and approved a written charter
for the Audit Committee in 2003, a copy of which may be found on
the TCS Web site
(http://www.telecomsys.com).
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed and discussed the audited financial
statements with management including a discussion of the
quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements. The Audit
Committee held four quarterly meetings in 2007 to review
quarterly operating results, and one additional meeting to
review other matters. The Audit Committee met in executive
session with Ernst & Young representatives
and/or
the
Companys internal auditor, without the presence of
management, three times during 2007.
12
For the fiscal years ended December 31, 2007 and 2006,
professional services were performed by Ernst & Young
LLP. Total fees paid to Ernst & Young LLP aggregated
$595,278 and $846,212 for the fiscal years ended
December 31, 2007 and 2006, respectively, and were composed
of the following:
|
|
|
|
|
|
|
|
|
|
|
Years ended
|
|
|
|
December 31 ($000)
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
581
|
|
|
$
|
621
|
|
Audit-Related Fees
|
|
|
14
|
|
|
|
223
|
|
Tax Fees
|
|
|
0
|
|
|
|
0
|
|
All Other Fees
|
|
|
0
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total Professional Services
|
|
$
|
595
|
|
|
$
|
846
|
|
|
|
|
|
|
|
|
|
|
Audit Fees:
The aggregate fees billed for the audit
of the annual financial statements for the fiscal years ended
December 31, 2007 and 2006, for reviews of the financial
statements included in the TCS Quarterly Reports on
Form 10-Q,
for testing and evaluating internal controls over financial
reporting and for assistance with and review of documents filed
with the SEC were $581,010 for 2007 and $621,481 for 2006.
Audit-Related Fees:
Audit related fees include:
attest services that are not required by statute or regulation,
internal control reviews and consultations concerning evaluating
internal controls over financial reporting and other financial
accounting/reporting matters. The aggregate fees billed for
audit-related services for the fiscal years ended
December 31, 2007 and 2006 was $14,268 and $222,731,
respectively. The reported fees relate primarily to carve-out
audit procedures for the Companys Mobile Asset Management
division that was held for sale.
Tax Fees:
Tax fees relate to fees billed for
professional services performed by Ernst & Young LLP
with respect to tax compliance, tax advice and tax planning. We
paid no fees to Ernst & Young for tax services for the
fiscal years ended December 31, 2007 and 2006.
All Other Fees:
All other fees consist of aggregate
fees billed by Ernst & Young LLP for products and
services other than the services reported above. The aggregate
fees billed under this category for the fiscal years ended
December 31, 2007 and 2006 were $0 and $2,000 respectively.
These fees were for access to Ernst & Youngs
on-line research tool.
Report of the
Audit Committee
The Committee reviewed and discussed with the independent
registered public accounting firm, who are responsible for
expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the
acceptability, of the TCS accounting principles and such other
matters as are required to be discussed with the Committee under
generally accepted auditing standards, as well as the matters
required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees), as amended.
The Committee discussed with the TCS independent registered
public accounting firm the overall scope and plans for their
respective audits. In addition, the Committee has discussed with
the independent registered public accounting firm, with and
without management present, the results of their examinations,
their evaluations of the TCS internal controls, and the overall
quality of the TCS financial reporting. The Committee received
from the independent registered public accounting firm written
disclosures regarding the auditors independence required
by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and the
Committee discussed with the independent registered public
accounting firm that firms independence and considered the
compatibility of non-audit services with the auditors
independence.
The Committee also discussed and assessed with management and
Ernst & Young LLP, managements report and
Ernst & Young LLPs report and attestation on
internal control over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act. The Companys
director of Internal Audit, who reports directly to the Audit
Committee, met in executive session with the Committee (without
management present) to report on his review of the
Companys system of internal controls.
13
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors and the
Board has approved the inclusion of the audited financial
statements in the Annual Report on
Form 10-K
for the year ended December 31, 2007 for filing with the
SEC. To assure auditor independence in their attest function,
the Committee has also approved the selection of
Ernst & Young LLP as TCSs independent registered
public accounting firm for 2008. Representatives of
Ernst & Young LLP are expected to be present at the
Annual Meeting of Stockholders on June 12, 2008 with the
opportunity to make a statement if they desire to do so, and
they will be available to respond to appropriate questions. The
Audit Committee considered whether the provision by
Ernst & Young LLP of the services entitled all
other fees as discussed below is compatible with
maintaining Ernst & Young LLPs independence.
The Audit Committee annually approves each years
engagement for audit services in advance. The Committee has also
established complementary procedures to require pre-approval of
all audit-related, tax and permitted non-audit services provided
by Ernst & Young LLP. Fees for any of these services
that will exceed the pre-approval fee limits or fees not
contemplated by the original pre-approval must be separately
approved by the Audit Committee. The Audit Committee may
delegate pre-approval authority to one or more of its members.
Any such fees pre-approved in this manner shall be reported to
the Audit Committee at its next scheduled meeting. All services
described above were pre-approved by the Audit Committee in
fiscal 2007.
The Audit Committee has designated Mr. Thomas M.
Brandt, Jr., Chief Financial Officer, to monitor the
performance of all services provided by the independent auditors
and to determine whether such services are in compliance with
this policy. Mr. Brandt reports to the Audit Committee on a
periodic basis the results of this monitoring. Any member of
executive management will immediately report to the chairman of
the Audit Committee any breach of this policy that comes to the
attention of any member of management.
AUDIT COMMITTEE
Richard A. Kozak, Chairman
Clyde A. Heintzelman
Byron F. Marchant
Compensation
Committee
The Compensation Committee, which met five times in 2007,
consists of Messrs. Bethmann and Latham.
Mr. Heintzelman served as Chairman of the Compensation
Committee until June of 2006, at which time Mr. Bethmann
assumed the position of Compensation Committee Chairman, and
Mr. Heintzelman subsequently resigned from the Compensation
Committee in March of 2007. The Compensation Committee
determines the compensation of our Chief Executive Officer and
President and the compensation of the other executive officers
and administers the Fifth Amended and Restated 1997 Stock
Incentive Plan, Amended and Restated Employee Stock Purchase
Plan and other executive officer compensation plans. The
Compensation Committees Charter is available on the
Companys website (www.telecomsys.com) and will be provided
to stockholders upon request.
Our executive compensation programs are designed to achieve the
following objectives:
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Attract and retain talented and experienced executives in the
highly competitive and dynamic wireless communications
technology industry;
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Motivate and reward executives whose knowledge, skills and
performance are critical to our success;
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Align the interests of our executive officers and shareholders
by motivating executive officers to increase shareholder value
and rewarding executive officers for meeting operational goals
designed to result in shareholder value increases;
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Ensure fairness among the executive management team by
recognizing the contributions each executive makes to our
success;
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Foster a shared commitment among executives by coordinating
their company and individual goals; and
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Motivate our executives to manage our business to meet our
long-range objectives.
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14
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
We provide what we believe is a competitive total compensation
package to our executive management team through a combination
of base salary, an annual cash incentive plan, a long-term
equity incentive compensation plan and broad-based benefits
programs.
We place significant emphasis on pay for performance-based
incentive compensation programs, which make compensation
contingent on the attainment of Company and individual goals.
This Compensation Discussion and Analysis explains our
compensation program with respect to our chief executive
officer, chief financial officer, and the other three most
highly-compensated executive officers, which are collectively
referred to as the named executive officers (NEO).
The Objectives of
our Executive Compensation Program
We use the following principles to guide our decisions regarding
executive compensation:
Provide compensation opportunities competitive with market
levels.
To attract and retain executives with the ability and the
experience necessary to lead us and deliver strong performance
to our shareholders, we strive to provide a total compensation
package that is competitive with total compensation provided by
our industry peer group, which we construct with the following
companies:
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Neustar
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Sybase
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NCI Information Systems
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Globecomm Systems
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Comverse Technology
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ViaSat
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Openwave Systems
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Syniverse Technologies
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We chose these companies because they are publicly traded
companies in the commercial and technology sectors in which we
operate and they are close to our size in terms of revenue and
market capitalization. We believe that such companies provide an
appropriate peer group because they consist of similar
organizations against whom we compete for executive talent. We
annually review the companies in our peer group and add or
remove companies as necessary to insure that our peer group
comparisons are meaningful. We changed our peer group slightly
from the one used in 2006 by removing InfoSpace, which sold its
comparable business line during 2007, and MapInfo, which was
purchased by Pitney Bowes during 2007. To keep our peer group a
consistent size, we added Globecomm and ViaSat for 2007. We used
this same peer group when constructing the performance
graph that appears in our Annual Report to Stockholders.
For each executive officer, we consider the relevance of data of
our peer group, considering:
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Our business need for the executive officers skills;
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The contributions that the executive officer has made or we
believe will make to our success;
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The transferability of the executive officers managerial
skills to other potential employers;
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The relevance of the executive officers experience to
other potential employers, particularly in the
telecommunications technology industry; and
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The readiness of the executive officer to assume a more
significant role with another potential employer.
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Base
Salaries
We target base salaries to approximate the market median
(50
th
percentile)
for our peer group. To arrive at the
50
th
percentile
for the base salaries of our named executive officers, we
consider the median of the data gathered from proxy statements
for the positions of the named executive officers in relation to
the named executive officers of our peer group for each
position. We also use data from publicly available surveys, when
available, in addition to our peer group, in order to have a
more complete overview of the competitive market for our
executive talent.
15
Cash
Incentives
Incentive award opportunities are targeted to result in Bonus
Opportunity Plan payments equal to the market median of cash
incentives paid by our peer group assuming our target business
objectives are achieved.
Long-Term
Equity Compensation
Annual equity grants are targeted at the
75
th
percentile
of market practices for the executive officer, but may be
adjusted based on individual performance. The allocation between
long-term and currently paid out compensation reflects
consideration of how our peer companies use long-term and
currently paid compensation to pay their executive officers
because we feel it is important to maintain parity with
competitors for our management team.
Total
Compensation
Total compensation is targeted at the 75th percentile of
our peer group, considering individual performance and
experience.
Require
performance goals to be achieved in order for the majority of
the target pay levels to be earned.
Our executive compensation program emphasizes pay for
performance. Performance is measured based on achievement of
company and individual performance goals that are aligned with
our business strategy and are approved by our board of directors
relative to its approved annual business plan. If the target
level for the performance goals is exceeded, executives have an
opportunity to earn cash incentive awards above the median of
the market of our peer group. If the target levels for the
performance goals are not achieved, executives may earn less or
no Bonus Opportunity Plan payments.
Offer the same
comprehensive benefits package to all full-time
employees.
We provide a competitive benefits package to all full-time
employees which includes health and welfare benefits, such as
medical, dental, vision care, disability insurance, life
insurance benefits, and a 401(k) savings plan. We have no
structured executive perquisite benefits (e.g., club memberships
or company vehicles) for any executive officer, including the
named executive officers, and we currently do not provide any
deferred compensation programs or supplemental pensions to any
executive officer, including the named executive officers.
Provide fair
and equitable compensation.
We provide a total compensation program that we believe will be
perceived by both our executive officers and our shareholders as
fair and equitable. In addition to conducting analyses of market
pay levels and considering individual circumstances related to
each executive officer, we also consider the pay of each
executive officer relative to each other executive officer and
relative to other members of the management team. We have
designed the total compensation programs to be consistent for
our executive management team.
Certain Policies
of our Executive Compensation Program
We have adopted the following material policies related to our
executive compensation program:
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Allocation between long-term and currently paid out
compensation:
The compensation we currently pay
consists of base pay and annual cash incentive compensation in
the form of the Bonus Opportunity Plan payments. The long-term
compensation consists entirely of awards of stock options or
restricted shares pursuant to our Fifth Amended and Restated
1997 Stock Incentive Plan, as amended. The allocation between
long-term and currently paid out compensation reflects
consideration of how our peer companies use long-term and
currently paid compensation to pay their executive officers
because we feel it is important to maintain parity with
competitors for our management team.
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Allocation between cash and non-cash
compensation:
It is our policy to allocate all
currently paid compensation in the form of cash and all
long-term compensation in the form of awards of options to
purchase our common stock or restricted shares of our
Class A common stock, because we believe that
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16
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this balance best serves our interests in retaining experienced
managers while also aligning their long-term compensation with
shareholder interests in long-term growth and success.
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Our Executive
Compensation Programs
The basic elements of our executive compensation programs are
summarized in the table below, followed by a more detailed
discussion of each compensation program.
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Element
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Characteristics
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Purpose
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Base salary
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Fixed annual cash compensation; all executives are eligible for
periodic increases in base salary based on performance; targeted
at the median market pay level.
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Keep our annual compensation competitive with the market for
skills and experience necessary to meet the requirements of the
executives role with us.
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Bonus Opportunity Plan awards
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Performance-based annual cash incentive earned based on company
and individual performance against target performance levels;
targeted at the median market pay level.
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Motivate and reward for the achievement and over-performance of
our critical financial and strategic goals. Amounts earned for
achievement of target performance levels based on our annual
budget is designed to provide a market-competitive pay package
at median performance; potential for lesser or greater amounts
are intended to motivate participants to achieve or exceed our
financial performance goals and to not reward if performance
goals are not met.
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Long-term equity incentive plan awards (stock options and
restricted shares)
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Performance-based equity award which has value to the extent our
common stock price increases over time; targeted at the
75
th
percentile
of market pay level
and/or
competitive practices at peer companies.
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Align interest of management with shareholders; motivate and
reward management to increase the shareholder value of the
company over the long term.
Vesting based on continued employment will facilitate retention;
amount realized from exercise of stock options rewards increased
shareholder value of the company; provides change in control
protection.
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Retirement savings opportunity
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Tax-deferred 401(k) plan in which all employees can choose to
defer compensation for retirement. We provide discretionary but
non-discriminatory matching contributions to all employees based
on operational performance; we do not allow employees to invest
these savings in company stock.
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Provide employees the opportunity to save for their retirement.
Account balances are affected by contributions and investment
decisions made by the employee.
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Health & welfare benefits
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Fixed component. The same/comparable health & welfare
benefits (medical, dental, vision, disability insurance and life
insurance) are available for all full-time employees.
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Provides benefits to meet the health and welfare needs of
employees and their families.
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17
In general, compensation or amounts realized by executives from
prior compensation from us, such as gains from previously
awarded stock options or options awards, are not taken into
account in setting other elements of compensation, such as base
pay, Bonus Opportunity Plan payments, or awards of stock options
or restricted shares under our long-term equity incentive
program, because we believe that the opportunity for additional
cash and equity compensation is a significant motivator and we
want our executives to be rewarded for contributing to our
success. With respect to new executive officers, we take into
account their prior base salary and annual cash incentive, as
well as the contribution expected to be made by the new
executive officer, the business needs and the role of the
executive officer with us.
Annual Cash
Compensation
Base
Salary
Annually we review salary ranges and individual salaries for our
executive officers. We establish the base salary for each
executive officer based on consideration of median pay levels of
our peer group and internal factors, such as the
individuals performance and experience, and the pay of
others on the executive team. For example, in the case of
Mr. Lorello, we considered the additional responsibilities
that he assumed in 2007.
We also consider business requirements for certain skills,
individual experience and contributions, the roles and
responsibilities of the executive and other factors. We believe
competitive base salary is necessary to attract and retain an
executive management team with the appropriate abilities and
experience required to lead us.
The base salaries paid to our named executive officers are set
forth below in the Summary Compensation Table. For the fiscal
year ended December 31, 2007, cash compensation to our
named executive officers was approximately $1.6 million,
with our chief executive officer receiving approximately
$452,917 of that amount. We believe that the base salary paid to
our executive officers during 2007 achieves our executive
compensation objectives, compares appropriately to our peer
group and is within our target of providing a base salary at the
market median.
In 2008, adjustments to our executive officers total
compensation were made based on an analysis of current market
pay levels of peer companies. In addition, we relied on the
judgment of the Committee members, using information available
to the Committee Chairman whose profession is executive
recruiting, to consider executive salary levels in companies
whose business intersects with certain facets of ours. In
addition to the pay levels of our peer group, factors taken into
account in making any changes for 2008 included the
contributions made by the executive officer, the performance of
the executive officer, the role and responsibilities of the
executive officer and the relationship of the executive
officers base pay to the base salary of our other
executives.
Bonus
Opportunity Plan Awards
Consistent with our emphasis on pay for performance incentive
compensation programs, we have established a written Bonus
Opportunity Plan pursuant to which our executive officers,
including our named executive officers, are eligible to receive
Bonus Opportunity Plan awards based upon annual established
performance targets, including financial measures and other
factors, including individual performance. The Bonus Opportunity
Plan is important to focus our executive officers efforts
and reward executive officers for annual operating results that
help create value for our shareholders. The Bonus Opportunity
Plan award represents approximately 30% to 65% of a named
executive officers total potential cash compensation,
depending on the executives role.
In 2007, our named executive officers exceeded some but not all
of the target business objectives, which result in an earned
aggregate of 75% of the potential cash bonuses under the Bonus
Opportunity Plan. The incentive plan targets for the Bonus
Opportunity Plan are determined through our annual planning
process, which generally begins in October before each fiscal
year.
For 2007, the financial measures used to determine annual
incentive cash payments included revenue (total revenue
and/or
specific revenue targets for the operating unit within the
executives control), EBITDA, cash on hand at year-end, a
goal tied to the tangible net worth covenants in our bank line
of credit, and, in the case of
18
our Chief Marketing and Chief Technology Officers, attainment of
certain operational and subjective goals related to the
executives role. We set individual goals for only our CMO
and CTO because their respective responsibilities include
matters for which the results are more directly within their
respective control and on which we want them to apply focused
efforts. For 2007, the individual goals included:
Chief
Marketing Officer
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Plan and execute speaking engagements designed to draw attention
to our business
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Produce Company-related articles in technical or trade
publications
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Generate patent licensing revenue
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Chief
Technology Officer
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Control research and development expenditures
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Generate customer satisfaction survey results
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Achieve days sales outstanding metrics
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The goals for our company and individual measures were
established so that target attainment was not assured. The
attainment of payment for performance at target or above would
have required significant effort on the part of our executives.
The revenue measure is designed to reflect our objective of
developing new products and markets, growing top line revenue,
and expanding our market share in existing markets. To ensure we
efficiently develop and expand our markets, the EBITDA measure
motivates our executives to manage our costs and to take into
account the appropriate level of expenses expected with our
growth. The cash on hand measure is designed to ensure that the
appropriate level of attention is paid to the need to fund our
operations and investments for the next rolling twelve-month
period. The tangible net worth goal provides focus on
maintaining our balance sheet in a manner that exceeds the
requirements of our bank arrangements to avoid liquidity issues
on an on-going basis. The operational and subjective goals
provide recognition for contributions made to the overall health
of the business and are intended to capture how the executive
officer has performed in areas that are not quantified in the
major metrics.
A business plan which contains annual financial and strategic
objectives is developed each year by management, reviewed and
recommended by the executive officers, presented to the board of
directors, and ultimately reviewed and approved by our board of
directors with such changes it deems appropriate. The Bonus
Opportunity Plan is presented to the Compensation Committee for
review and approval with such modifications it deems appropriate.
Bonus Opportunity Plan awards are determined at year-end based
on our performance against the approved Bonus Opportunity Plan
targets. The Compensation Committee also has the ability to
exercise discretion in adjusting awards based on its
consideration of each executive officers individual
performance and for each executive officer other than the chief
executive officer, based on a review of such executives
performance as communicated to the Compensation Committee by the
chief executive officer, and our overall performance during the
year. The committee may modify the Bonus Opportunity Plan awards
prior to their payment.
19
2007 Financial
Measures
Shown as a percentage of the total Bonus Opportunity Plan award
at target in the following table, is the weighting of the
measures used to determine award payments to the named executive
officers for the fiscal year ended December 31, 2007.
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2007 Measures
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CEO
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COO
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CFO
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CTO
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CMO
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Company/team performance
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Revenue
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20
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%
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30
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%
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20
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%
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25
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%
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20
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%
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EBITDA
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30
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%
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60
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%
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30
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%
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30
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%
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20
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%
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Cash at end of year
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20
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%
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20
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%
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Tangible Net Worth
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10
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%
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10
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%
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Net Income
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20
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%
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10
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%
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20
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%
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15
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%
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20
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%
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Individual performance
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30
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%
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40
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%
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100
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%
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100
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%
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100
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%
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100
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%
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100
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%
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The cash at end of year and tangible net
worth goals applied only to the CEO and CFO because those
executives have the most direct influence on the decisions that
produce these results. The EBITDA goal was significantly more
weighted with respect to our COO because he manages the
Companys operations and approves the expense and
investment decisions that most significantly influence the
EBITDA results.
Bonus Opportunity
Plan Payout
If a Named Executive Officer does not achieve 85% of all of his
goals, there is no payout of the bonus opportunity. If an NEO
meets 85%, but not 100% of his goals, the Compensation Committee
evaluates what percentage of his goals were met, and adjusts his
actual payment downward accordingly. If an NEO exceeds all of
his corporate goals and personal objectives, he receives his
target payment and is eligible to also receive
additional payments to the extent our EBITDA and Net Income
results exceed our targets. The payment opportunities under the
2007 annual Bonus Opportunity Plan were set based on competitive
market pay levels of our peer group and are shown as a
percentage of annual base salary at corresponding levels of
performance against our goals as shown in the following table:
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2007 Bonus Opportunity Plan Payout Level Based on Goal
Achievement
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Officer
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At 100% (Target)
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Bonus Adjustments Based on Performance
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CEO
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65% of base salary
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1% increase in bonus pool for every 2% EBITDA exceeds goal and
1% increase in bonus pool for every 1% Net Income exceeds goal.
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COO
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45% of base salary
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1% increase in bonus pool for every 2% EBITDA exceeds goal and
1% increase in bonus pool for every 1% Net Income exceeds goal.
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CFO
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40% of base salary
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1% increase in bonus pool for every 2% EBITDA exceeds goal and
1% increase in bonus pool for every 1% Net Income exceeds goal.
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CTO
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40% of base salary
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1% increase in bonus pool for every 2% EBITDA exceeds goal and
1% increase in bonus pool for every 1% Net Income exceeds goal.
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CMO
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30% of base salary
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1% increase in bonus pool for every 2% EBITDA exceeds goal and
1% increase in bonus pool for every 1% Net Income exceeds goal.
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20
The actual annual incentive payments made to our named executive
officers pursuant to our Bonus Opportunity Plan for the fiscal
year ended December 31, 2007 are set forth below in the
Summary Compensation Table. We believe that the annual incentive
payments made to our named executive officers for the fiscal
year ended December 31, 2007 achieved our executive
compensation objectives, compare appropriately to our peer group
and are within our target of providing total compensation at the
75
th
percentile
of the market with outstanding performance achievement.
Long-term Equity
Incentive Compensation
We award long-term equity incentive grants to executive
officers, including the named executive officers, as part of our
total compensation package. These awards are consistent with our
pay for performance principles and align the interests of the
executive officers to the interests of our shareholders. The
Compensation Committee reviews and approves the amount of each
award to be granted to each named executive officer. Long-term
equity incentive awards are made pursuant to our Fifth Amended
and Restated 1997 Stock Incentive Plan (the 1997
Plan).
Our long-term equity incentive compensation currently is
primarily in the form of options to acquire our common stock,
but some restricted shares also have been awarded. The value of
the stock options awarded is dependent upon the performance of
our common stock price. While the 1997 Plan allows for other
forms of equity compensation, the Compensation Committee and
management believe that currently stock options
and/or
restricted shares are the appropriate vehicle to provide
long-term incentive compensation to our executive officers
because their characteristics are readily understood by our
executives and investors, provide the long term incentive that
we believe is important, and there currently is no compelling
reason to develop more complex equity incentive programs. Other
types of long-term equity incentive compensation may be
considered in the future as our business strategy evolves.
Stock option awards provide our executive officers with the
right to purchase shares of our common stock at a fixed exercise
price for a period of up to ten years under the 1997 Plan. Stock
options are earned on the basis of continued service to us and
generally vest over three years, beginning with one-third
vesting at each one year anniversary of the date of grant.
The exercise price of each stock option granted 2007 is the fair
market value of our common stock on the grant date. We do not
have any program, plan or practice of setting the exercise price
based on a date or price other than the fair market value of our
common stock on the grant date.
Our executive officers and other employees are eligible to
receive annual awards of stock options based on the
companys performance in the prior fiscal year. In setting
individual grants, we consider our performance relative to the
financial and strategic objectives set forth in the annual
business plan, the previous years individual performance
of each executive officer, and the market pay levels for the
executive officer. Annual grants are targeted at the
75
th
percentile
of market practices for the executive officer, but may be
adjusted based on individual performance. This analysis is also
used to determine any new hire or promotion-related grants that
may be made during the year.
Generally, we do not consider an executive officers stock
holdings or previous stock option grants in determining the
number of stock options to be granted. We believe that our
executive officers should be fairly compensated each year
relative to market pay levels of our peer group and relative to
our other executive officers. Moreover, we believe that our
long-term incentive compensation program furthers our
significant emphasis on pay for performance compensation.
While the vast majority of stock option awards to our executive
officers have been made pursuant to our annual grant program or
in connection with their hiring or promotion, the Compensation
Committee retains discretion to make stock option awards to
executive officers at other times, including in connection with
the hiring of a new executive officer, the promotion of an
executive officer, to reward executive officers, for retention
purposes or for other circumstances recommended by management or
the Compensation Committee. The exercise price of any such grant
would be the fair market value of our stock on the grant date.
21
Other
Benefits
Retirement
Savings Opportunity
All employees, including our named executive officers, may
participate in our 401(k) Retirement Savings Plan, or 401(k)
Plan. Each employee may make before-tax contributions up to the
current Internal Revenue Service limits. We provide this plan to
help our employees save some amount of their cash compensation
for retirement in a tax efficient manner. We match contributions
made by our employees to the 401(k) Plan at discretionary
amounts. For 2007 we contributed 25% of each employees
contribution to the 401(k) plan and for 2008 we intend to
contribute 35% of each employees contribution to the
401(k) plan. We currently do not provide an option for our
employees to invest in our companys stock in the 401(k)
plan.
We do not currently offer a nonqualified deferred compensation
arrangement to any employees, including our named executive
officers.
Health and
Welfare Benefits
All full-time employees, including our named executive officers,
may participate in our health and welfare benefit programs,
including medical, dental and vision care coverage, disability
insurance and life insurance.
Employment
Agreements, Severance Benefits and Change in Control
Provisions
Except with respect to our Chairman and Chief Executive Officer,
Mr. Maurice B. Tosé, we have employment agreements in
effect with our named executive officers. We intend to enter
into an employment agreement with Mr. Tosé in 2008. No
assurance can be given that we will be successful in negotiating
such an agreement with Mr. Tosé. We entered into the
existing agreements to ensure the named executive officers would
perform the role for an extended period of time and we
considered the critical nature of the positions and our need to
retain the individuals.
The agreements with our named executive officers, except for
Mr. Tosé, provide that if the executive is terminated
for cause or terminates without good reason, we are obligated to
pay only those wages and bonuses pursuant to the terms of our
annual incentive plan and other compensation then vested. If
terminated without cause or if he terminates the employment
agreement for good reason, in addition to the payment of amounts
then vested, in exchange for a general release of all claims, he
is entitled to salary in an amount which is the greater of the
current annual salary for the remaining term of the agreement,
or six months salary.
In the alternative, if a named executive officers
employment with us is terminated because of a change in control,
as defined in the agreement, then he is entitled to one
years salary (except for Mr. Richard Young, Chief
Operating Officer, who is entitled to two years salary)
and all then outstanding stock options become immediately
vested. We believe these provisions are important to ensure that
our executives remain with us through the closing of any sale of
the business. The terms of these agreements are discussed in
greater detail in the Employment Agreements section below.
Stock Ownership
Guidelines
Stock ownership guidelines were not in effect in 2007. Effective
January 28, 2008, the Board adopted a guideline that Board
members should maintain equity ownership in the corporation of a
value equal to two times the annual retainer for Board members.
Current directors not owning equity in the recommended amount
will have three years from January 28, 2008 to accumulate
that amount, and new directors will have three years from the
date their service begins to accumulate the appropriate amount.
The guideline also provides that in accumulating the equity
ownership, a Director should strive to achieve at least
one-third of the guideline ownership amount in each year of the
three year period. We have chosen not to require stock ownership
by named executive officers given their long tenure and the
evolution of our company. We will continue to periodically
review best practices and re-evaluate our position with respect
to stock ownership guidelines.
22
Securities
Trading Policy
Our securities trading policy states that executive officers,
including the named executive officers, and directors may not
purchase or sell puts or calls to sell or buy our stock, or
engage in short sales with respect to our stock.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis contained in this proxy
statement with management. Based on these reviews and
discussions, the committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
companys proxy statement for the 2008 Annual Meeting of
Shareholders.
COMPENSATION COMMITTEE
James M. Bethmann (Chairman)
Weldon H. Latham
Compensation
Committee Interlocks
None of the members of the Compensation Committee is a current
or former officer or employee of the Company. During 2007, no
member of the Compensation Committee had any relationship with
the Company requiring disclosure under Item 404 of
Regulation S-K.
During 2007, none of the companys executive officers
served on the Compensation Committee (or its equivalent) or
board of directors of another entity any of whose executive
officers served on the Companys Compensation Committee or
Board of Directors.
Compensation of
the Named Executive Officers
The following table shows all compensation earned by our Chief
Executive Officer, Chief Financial Officer and our three other
most highly paid executive officers whose annual salary and
bonus exceeded $100,000 in the fiscal year ended
December 31, 2007:
Summary
Compensation Table
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Non-Equity
|
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Name and Principal
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Option
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Incentive
|
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All Other
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Position
|
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Year
|
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|
Salary
|
|
|
Awards(1)
|
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|
Comp. Plan(2)
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|
|
Compensation(3)
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Total
|
|
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Maurice B. Tosé
|
|
|
2007
|
|
|
$
|
452,917
|
|
|
$
|
835,094
|
|
|
$
|
246,179
|
|
|
$
|
50,283
|
|
|
$
|
1,584,473
|
|
Chief Executive
Officer, President,
and Chairman of
the Board
|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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Richard A. Young
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2007
|
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|
$
|
320,301
|
|
|
$
|
525,578
|
|
|
$
|
98,816
|
|
|
$
|
35,956
|
|
|
$
|
984,358
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|
Executive Vice
President, Chief
Operating Officer
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Thomas M.
Brandt, Jr.
|
|
|
2007
|
|
|
$
|
282,126
|
|
|
$
|
411,440
|
|
|
$
|
81,171
|
|
|
$
|
35,956
|
|
|
$
|
810,693
|
|
Senior Vice
President and Chief Financial Officer
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drew A. Morin
|
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|
2007
|
|
|
$
|
276,594
|
|
|
$
|
411,440
|
|
|
$
|
84,449
|
|
|
$
|
25,651
|
|
|
$
|
798,134
|
|
Senior Vice
President and Chief Technology Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Lorello
|
|
|
2007
|
|
|
$
|
230,000
|
|
|
$
|
171,719
|
|
|
$
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43,700
|
|
|
$
|
33,079
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|
|
$
|
478,498
|
|
Senior Vice
President Commercial Sales & Chief Marketing Officer
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|
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|
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23
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(1)
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Includes stock options and restricted shares granted in 2004,
2005, 2006 and 2007 to the extent the vesting period for such
grants fell in 2007. Please refer to footnote 17 to our
financial statements for a discussion of the assumptions related
to the calculation of such value.
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(2)
|
|
Represents amounts earned in 2007 under the Bonus Opportunity
Plan.
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(3)
|
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Represents payments made to each of these executive officers in
lieu of accrued vacation, plus matching contributions made by us
under our 401(k) plan and health and life insurance premiums
paid by us, as follows:
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|
|
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|
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|
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|
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All Other Compensation
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|
|
|
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|
|
401(k)
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|
|
|
|
|
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Vacation
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Matching
|
|
Insurance
|
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|
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Payout
|
|
Contribution
|
|
Premiums
|
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Total
|
|
Mr. Tosé
|
|
$
|
32,965
|
|
|
$
|
3,875
|
|
|
$
|
13,443
|
|
|
$
|
50,283
|
|
Mr. Young
|
|
$
|
23,220
|
|
|
$
|
3,000
|
|
|
$
|
13,443
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|
|
$
|
39,663
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|
Mr. Brandt
|
|
$
|
18,638
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|
|
$
|
3,875
|
|
|
$
|
13,443
|
|
|
$
|
35,956
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|
Mr. Morin
|
|
$
|
9,208
|
|
|
$
|
3,000
|
|
|
$
|
13,443
|
|
|
$
|
25,651
|
|
Mr. Lorello
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|
$
|
19,636
|
|
|
$
|
0
|
|
|
$
|
13,443
|
|
|
$
|
33,079
|
|
The following tables provide information about options granted,
exercised and held by the executive officers named in the
Summary Compensation Tables at December 31, 2007.
2007 Grants of
Plan-Based Awards
In this table, we provide information concerning each grant of
an award made to a named executive officer in the most recently
completed fiscal year. This includes cash compensation under the
Bonus Opportunity Plan and stock option awards under the
Companys Fifth Amended and Restated 1997 Stock Incentive
Plan, each of which is discussed in greater detail in this Proxy
Statement under the caption, Compensation Discussion and
Analysis. The threshold, target and maximum columns
reflect the range of estimated payouts under the Bonus
Opportunity Plan. In the
7
th
and
8
th
columns,
we report the number of shares of common stock underlying
options granted in the fiscal year and corresponding per-share
exercise prices. In all cases, the exercise price was equal to
the closing market price of our common stock on the date of
grant. Finally, in the last column, we report the aggregate
FAS 123(R) value of all awards made in 2007; in contrast to
how we present amounts in the Summary Compensation Table, we
report such figures here without apportioning such amount over
the service or vesting period.
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Option
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Awards:
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Grant Date
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|
|
Estimated Future Payouts
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|
Stock
|
|
Number of
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|
Exercise
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|
Fair Value
|
|
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|
|
Equity
|
|
Under Non-Equity Incentive
|
|
Awards:
|
|
Securities
|
|
Price of
|
|
of Stock
|
|
|
|
|
Award
|
|
Plan Awards
|
|
Number of
|
|
Underlying
|
|
Option
|
|
and Option
|
|
|
Award
|
|
Grant
|
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Threshold
|
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Target
|
|
Maximum
|
|
Securities
|
|
Options
|
|
Awards
|
|
Awards
|
Name
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Type
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/sh)
|
|
($)
|
|
Maurice B. Tosé
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
119,671
|
|
|
$
|
359,012
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
2/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,400
|
|
|
|
375,000
|
|
|
$
|
3.69
|
|
|
$
|
1,095,276
|
|
Richard A. Young
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
86,275
|
|
|
$
|
189,804
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
2/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,200
|
|
|
|
230,000
|
|
|
$
|
3.69
|
|
|
$
|
666,928
|
|
Thomas M. Brandt, Jr.
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
75,005
|
|
|
$
|
150,011
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
2/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,600
|
|
|
|
170,000
|
|
|
$
|
3.69
|
|
|
$
|
483,064
|
|
Drew A. Morin
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
73,750
|
|
|
$
|
147,501
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
2/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,600
|
|
|
|
170,000
|
|
|
$
|
3.69
|
|
|
$
|
483,064
|
|
Timothy J. Lorello
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
66,269
|
|
|
$
|
172,299
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
2/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,600
|
|
|
|
63,000
|
|
|
$
|
3.69
|
|
|
$
|
192,024
|
|
|
|
|
(1)
|
|
Information relates to the Bonus Opportunity Plan for 2008.
|
|
(2)
|
|
Granted under the TeleCommunication Systems, Inc. Fifth Amended
and Restated 1997 Stock Incentive Plan. The stock options
granted to the named executive officers in 2007 have a
10-year
term
and vest in equal increments in each of the three successive
anniversaries of the grant date. Stock options have no express
performance criteria other than continued employment (with
limited exceptions for termination of employment due to death,
disability, retirement,
reduction-in-force
and change in control). However, options have an implicit
performance criterion because the options have no value to the
executive until they vest and unless and until our stock price
exceeds the exercise price.
|
|
(3)
|
|
The Bonus Opportunity Plan provides for incremental increases in
the potential payout amount in the event certain performance
results exceed the specified goals, and does not specify a
maximum amount.
|
24
Outstanding
Equity Awards at Fiscal Year-End 2007
The following table provides information concerning unexercised
options, stock that has not vested, and equity incentive plan
awards for each named executive officer outstanding as of the
end of our most recently completed fiscal year. Each outstanding
award is represented by a separate row which indicates the
number of securities underlying the award, including awards that
have been transferred other than for value (if any).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Exercise
|
|
|
|
|
|
|
Options
|
|
Options
|
|
Price
|
|
Expiration
|
|
|
Grant Date
|
|
(#) Exercisable
|
|
(#) Unexercisable
|
|
($)
|
|
Date
|
|
Maurice B. Tosé
|
|
|
6/22/2001
|
|
|
|
318,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
136,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
135,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
436,404
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
177,903
|
|
|
|
88,952
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
94,996
|
|
|
|
189,994
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
0
|
|
|
|
375,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
Richard A. Young
|
|
|
6/22/2001
|
|
|
|
175,000
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
75,000
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
75,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
279,013
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
117,224
|
|
|
|
58,612
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
62,595
|
|
|
|
125,191
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
0
|
|
|
|
230,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
Thomas M. Brandt, Jr.
|
|
|
4/1/1999
|
|
|
|
96,370
|
|
|
|
0
|
|
|
$
|
1.28
|
|
|
|
4/1/2009
|
|
|
|
|
6/22/2001
|
|
|
|
87,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
63,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
157,392
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
101,453
|
|
|
|
50,727
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
54,174
|
|
|
|
108,348
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
0
|
|
|
|
170,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
Drew A. Morin
|
|
|
6/22/2001
|
|
|
|
87,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
63,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
157,392
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
101,453
|
|
|
|
50,727
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
54,174
|
|
|
|
108,348
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
0
|
|
|
|
170,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
Timothy J. Lorello
|
|
|
6/22/2001
|
|
|
|
87,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
63,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
100,158
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
50,000
|
|
|
|
25,000
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
9,699
|
|
|
|
53,398
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
0
|
|
|
|
63,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
25
|
|
|
(1)
|
|
Vesting dates of unvested option awards are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting
|
|
Mr. Tosé
|
|
Mr. Young
|
|
Mr. Brandt
|
|
Mr. Morin
|
|
Mr. Lorello
|
Date
|
|
# Options
|
|
# Options
|
|
# Options
|
|
# Options
|
|
# Options
|
|
2/6/2008
|
|
|
125,000
|
|
|
|
76,666
|
|
|
|
56,666
|
|
|
|
56,666
|
|
|
|
21,000
|
|
3/8/2008
|
|
|
94,997
|
|
|
|
62,595
|
|
|
|
54,174
|
|
|
|
54,174
|
|
|
|
26,696
|
|
6/9/2008
|
|
|
88,952
|
|
|
|
58,612
|
|
|
|
50,727
|
|
|
|
50,727
|
|
|
|
25,000
|
|
1/28/2009
|
|
|
133,333
|
|
|
|
83,333
|
|
|
|
66,666
|
|
|
|
66,666
|
|
|
|
33,333
|
|
2/6/2009
|
|
|
125,000
|
|
|
|
76,667
|
|
|
|
56,667
|
|
|
|
56,667
|
|
|
|
21,000
|
|
3/8/2009
|
|
|
94,997
|
|
|
|
62,596
|
|
|
|
54,174
|
|
|
|
54,174
|
|
|
|
26,699
|
|
1/28/2010
|
|
|
133,333
|
|
|
|
83,333
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
26,049
|
|
2/6/2010
|
|
|
125,000
|
|
|
|
76,667
|
|
|
|
56,667
|
|
|
|
56,667
|
|
|
|
21,000
|
|
1/28/2011
|
|
|
133,334
|
|
|
|
83,334
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
972
|
|
2007 Option
Exercises and Stock Vested
The following table provides information concerning exercises of
stock options and vesting of stock (restricted stock) during the
most recently completed fiscal year fore each named executive
officer on an aggregated basis. The restricted stock that vested
in the most recently completed fiscal year was granted in 2007.
The table reports the number of shares of stock that vested and
the aggregate dollar value realized upon vesting of the stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting(1)
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Maurice B. Tosé
|
|
|
0
|
|
|
|
0
|
|
|
|
20,400
|
|
|
$
|
76,898
|
|
Richard A. Young
|
|
|
0
|
|
|
|
0
|
|
|
|
7,471
|
|
|
$
|
29,912
|
|
Thomas M. Brandt, Jr.
|
|
|
0
|
|
|
|
0
|
|
|
|
5,600
|
|
|
$
|
21,108
|
|
Drew A. Morin
|
|
|
0
|
|
|
|
0
|
|
|
|
4,490
|
|
|
$
|
17,445
|
|
Timothy J. Lorello
|
|
|
17,000
|
|
|
$
|
26,860
|
|
|
|
4,964
|
|
|
$
|
19,009
|
|
|
|
|
(1)
|
|
We computed the aggregate dollar amount realized upon vesting by
multiplying the number of shares of stock by the market value of
the underlying shares on the vesting date.
|
Equity
Compensation Plan Information
The following table provides information for all equity
compensation plans at plans December 31, 2007, under which
our equity securities were authorized for issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of Securities to
|
|
|
Weighted Average
|
|
|
Equity Compensation
|
|
|
|
be Issued Upon Exercise
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
of Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders(1)
|
|
|
11,154,769
|
|
|
$
|
3.69
|
|
|
|
7,427,956
|
|
Equity compensation plans not approved by security holders
|
|
|
None
|
|
|
|
N/A
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11,154,769
|
|
|
$
|
3.69
|
|
|
|
7,427,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
(1)
|
|
As a result of the merger of XYPOINT Corporation
(XYPOINT
) with the Company effective
January 15, 2001 and the merger of ReachNet, Inc.
(ReachNet
) with the Company effective
February 14, 2001, the Company assumed the options issued
under the XYPOINT 1995, 1997 and 2000 Stock Option Plans and the
ReachNet 2000 Stock Incentive Plan. As of December 31,
2006, 86,548 shares of our Class A Common Stock were
reserved for future issuance upon the exercise of the
outstanding stock options assumed in the mergers at a weighted
average exercise price of $6.63. No further options may be
granted under the XYPOINT 1995, 1997 and 2000 Stock Option Plans
or the ReachNet 2000 Stock Incentive Plan.
|
Employment
Agreements
We have entered into employment agreements with
Messrs. Young, Brandt, Morin and Lorello which became
effective February 1, 2001. See also the Employment
Agreements, Severance Benefits and Change in Control
Provisions section of the Compensation Discussion and
Analysis portion of this Proxy Statement. The employment
agreements provide for their annual salaries as adjusted
annually by the Board of Directors, and give them the
opportunity to participate in bonus or incentive compensation
plans of the Company, if any. The agreements state an initial
term of one year from the effective date, and automatically
extend for additional one-year increments until terminated by us
or the individuals.
The individuals may resign their employment voluntarily by
giving 30 days notice to the Board of Directors. If we
terminate any of the individuals without cause or if the
individual resigns with good reason, he is entitled to receive
from us his earned bonus plus an amount equal to the greater of
the salary he would have received during the balance of the term
of the employment contract, or six months. Under the agreements,
cause means committing an act of gross negligence or
other willful act that materially adversely affects TCS, acts of
dishonesty involving fraud or embezzlement or being convicted or
pleading no contest to a felony involving theft or moral
turpitude. Under the agreements, good reason
includes circumstances that constitute a material diminution in
authority, require the individual to physically relocate more
than 75 miles and any material breach by the Company of its
obligations under the agreement. If we terminate an
individuals employment without cause, or if he resigns for
good reason, within 12 months of a change in control, he is
entitled to receive from us an amount based upon his annual
salary. Mr. Young is entitled to receive two times his
annual salary, and the other individuals are entitled to receive
one times their annual salary. The following table summarizes
estimated payments to the named executive officers upon
termination without cause or resignation for good reason after a
change in control assuming that the termination event was
effective as of the last day of the most recently completed
fiscal year, or December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon
|
|
|
|
Potential Payments Upon
|
|
|
Termination Without Cause
|
|
|
|
Termination Without Cause
|
|
|
or for Good Reason after
|
|
Name
|
|
or for Good Reason
|
|
|
a Change in Control
|
|
|
Richard A. Young
|
|
$
|
161,201
|
|
|
$
|
644,804
|
|
Thomas M. Brandt, Jr.
|
|
|
141,908
|
|
|
|
283,815
|
|
Drew A. Morin
|
|
|
139,125
|
|
|
|
278,250
|
|
Timothy J. Lorello
|
|
|
115,000
|
|
|
|
230,000
|
|
Pursuant to the agreements, vesting of any stock options awarded
to the individuals shall be immediately accelerated in the event
of a change of control as defined in the agreements. The
following table summarizes the intrinsic value of stock options
that would be accelerated upon a change of control, assuming
that a change of control event occurred on December 31, 2007
|
|
|
|
|
|
|
Intrinsic Value of
|
|
|
|
Stock Options Accelerated
|
|
Name
|
|
Upon Change in Control(1)
|
|
|
Richard A. Young
|
|
$
|
207,429
|
|
Thomas M. Brandt, Jr.
|
|
|
179,523
|
|
Drew A. Morin
|
|
|
179,523
|
|
Timothy J. Lorello
|
|
|
88,476
|
|
|
|
|
(1)
|
|
Intrinsic value was determined by subtracting the exercise price
of in-the-money stock options from the market price on
December 31, 2007, multiplied by the number of shares
underlying outstanding options.
|
27
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In February 2003, we entered into a lease with Annapolis
Partners LLC to explore the opportunity of relocating our
Annapolis offices to a planned new real estate development. Our
President and Chief Executive Officer owns a controlling voting
and economic interest in Annapolis Partners LLC and he also
serves as a member. The financial and many other terms of the
lease have not yet been established. The lease is subject to
several contingencies and rights of termination. For example,
the lease can be terminated at the sole discretion of our Board
of Directors if the terms and conditions of the development are
unacceptable to us, including without limitation the
circumstances that market conditions make the lease not
favorable to us or the overall cost is not in the best interest
of us or our shareholders, or any legal or regulatory
restrictions apply. Our Board of Directors will evaluate this
opportunity along with alternatives that are or may become
available in the relevant time periods and there is no assurance
that we will enter into a definitive lease at this new
development site.
OTHER
MATTERS
We do not know of any matters to be presented at the Annual
Meeting other than those mentioned in this Proxy Statement. If
any other matters are properly brought before the Annual
Meeting, it is intended that Messrs. Brandt and White will
vote the proxies in accordance with their best judgment.
SHAREHOLDERS
SHARING THE SAME ADDRESS
In accordance with notices previously sent to many stockholders
who hold their shares through a bank, broker or other holder of
record and share a single address, only one annual report and
proxy statement is being delivered to that address unless
contrary instructions from any stockholder at that address were
received. This practice, known as householding, is
intended to reduce our printing and postage costs. However, any
such street-name stockholder residing at the same address who
wishes to receive a separate copy of this Proxy Statement or
accompanying Annual Report to Stockholders may request a copy by
contacting the bank, broker or other holder of record, or the
Company by telephone at: 410.263.7616. The voting instruction
sent to a street-name stockholder should provide information on
how to request (1) householding of future Company materials
or (2) separate materials if only one set of documents is
being sent to a household. If it does not, a stockholder who
would like to make one of these requests should contact the
Company as indicated above.
ANNUAL REPORT TO
SHAREHOLDERS AND
FORM 10-K
The Annual Report of the Company, including financial statements
of the Company for the fiscal year ended December 31, 2007
is being mailed to the stockholders with this Proxy Statement.
You may request, without charge, a copy of the Companys
2007 Annual Report on
Form 10-K,
as filed with the SEC, by addressing a request to
TeleCommunication Systems, Inc., 275 West Street,
Annapolis, Maryland 21401 Attention: Investor Relations.
By Order of the Board of Directors,
Bruce A. White
Secretary
Annapolis, Maryland
May 1, 2008
28
ANNUAL MEETING OF STOCKHOLDERS OF
TELECOMMUNICATION SYSTEMS, INC.
June 12, 2008
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
ê
Please detach along perforated line and mail in the envelope provided.
ê
|
|
|
|
|
|
|
|
|
n
|
|
20200000000000000000 6
|
|
|
061208
|
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
|
|
|
|
|
|
|
|
|
1. Election of Directors.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOMINEES:
|
o
|
|
FOR ALL NOMINEES
|
|
¡
|
|
Clyde A. Heintzelman
|
|
|
|
|
¡
|
|
Richard A. Kozak
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
WITHHOLD AUTHORITY
FOR ALL NOMINEES
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
FOR ALL EXCEPT
(See instructions below)
|
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|
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|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTIONS:
|
|
To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT
and
fill in the circle next to each nominee you wish to withhold, as shown here:
l
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
To change the address on your account, please check the box at right and indicate your new address in the address
space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
|
|
o
|
|
|
|
2.
|
|
TO ACT UPON SUCH OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
|
The undersigned hereby acknowledges receipt of notice of said meeting
and the related Proxy Statement.
IF NO CHOICE IS INDICATED ABOVE, THE PROXIES WILL VOTE FOR ALL
DIRECTOR NOMINEES.
PLEASE MARK, SIGN AND RETURN THE PROXY PROMPTLY, USING THE ENCLOSED
POSTAGE PAID ENVELOPE
|
|
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|
|
|
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|
|
|
|
Signature of Stockholder
|
|
|
|
Date:
|
|
|
|
Signature of Stockholder
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
n
|
|
Note:
|
|
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
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TELECOMMUNICATION SYSTEMS, INC.
Annapolis, Maryland 21401
ANNUAL MEETING JUNE 12, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas M. Brandt, Jr. and Bruce A. White, and each of them,
proxies (and if the undersigned is a proxy, as substitute proxies) each with the power to appoint
his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse
side, all of the shares of Class A Common Stock and Class B Common Stock of TeleCommunication
Systems, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held on Thursday, June 12, 2008, at 10:00 a.m. local time, at the The Westin Annapolis, 100
Westgate Circle, Annapolis, MD 21401 and any adjournments or postponements thereof.
(Continued and to be signed on the reverse side)