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As filed with the Securities and Exchange Commission on June 30, 2000
Registration No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_____________________________________
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
(Exact name of registrant as specified in its charter)
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Belgium 7372 Not Applicable
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
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Flanders Language Valley 50
B-8900 Ieper, BELGIUM
(011) 32-57-22-8888
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
___________________________________
Gaston Bastiaens, President
Lernout & Hauspie Speech Products USA, Inc.
52 Third Avenue
Burlington, Massachusetts 01803-4414
Tel: (781) 203-5000
Fax: (781) 203-5070
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
__________________________________
Copies to:
Lawrence M. Levy, Esquire
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, Massachusetts 02111
Tel: (617) 856-8200
Fax: (617) 856-8201
__________________________________
Approximate date of commencement of proposed sale to the public: From time to
Registration Statement. If the only securities being registered on this form are
being offered pursuant to dividend or interest reinvestment plans, please check
the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Amount Proposed Proposed
Title of Each Class Of To Be Maximum Offering Maximum Aggregate Amount Of Registration
Securities To Be Registered Registered Price Per Share Offering Price Fee (1)
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Common Stock, no par value 10,011,236 $41.56 $416,066,968 $109,842
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(1) Calculated pursuant to Rule 457(c) under the Securities Act.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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The information contained in this prospectus is not complete and may be changed.
A registration statement relating to the common stock has been filed with the
United States Securities and Exchange Commission. The common stock may not be
sold until this registration statement is declared effective by the SEC. This
prospectus is not an offer to sell the common stock and it is not seeking an
offer to buy the common stock in any state where the offer or sale is not
permitted.
Subject to completion; dated June 30, 2000
Prospectus
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
10,011,236 Shares of Common Stock
The selling stockholders identified on pages 21 and 22 of this prospectus may
offer and sell up to 10,011,236 shares of Lernout & Hauspie common stock under
this prospectus.
The selling stockholders may offer the common stock through public or private
transactions, at prevailing market prices, or at privately negotiated prices.
The common stock is traded on the Nasdaq National Market under the symbol
"LHSPF" and on the EASDAQ market in Europe under the symbol "LHSP". On June 26,
2000, the last reported sale price of the common stock on the Nasdaq National
Market was $41.50 per share.
An investment in the common stock offered under this prospectus involves a high
degree of risk. See "Risk Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We will not receive any of the proceeds from the sale of the common stock
offered under this prospectus.
The date of this prospectus is [.], 2000.
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SERVICE AND ENFORCEMENT OF LEGAL PROCESS
We are a Belgian corporation. Most of our officers and directors and experts
named in this prospectus are not residents of the United States. All or a
substantial portion of the assets belonging to these individuals are located
outside the United States. A substantial portion of our assets are located in
Belgium and other foreign countries. As a result, it may not be possible for
you to effect service of process within the United States on us or most of our
officers or directors or experts. It is possible that a Belgian court would not
enforce liabilities upon us or our officers and directors in original actions
predicated solely upon the federal securities laws of the United States. You
also may not be able to enforce judgments of United States courts in Belgium
that are based on the civil liability provisions of the federal securities laws
of the United States. Enforcing judgments of United States courts in Belgium
might be successful only if a Belgian court confirms that the judgment of the
United States court is substantively correct and is satisfied:
. that the judgment is not contrary to the principles of public policy in
Belgium or rules of Belgian public law;
. that the judgment did not violate the rights of the defendant;
. that the judgment is not subject to further appeal under United States
law;
. that the United States court did not accept its jurisdiction solely on
the basis of the nationality of the plaintiff; and
. as to the authenticity of the text of the judgment submitted to it.
We prepare our consolidated financial statements in United States dollars and in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP"). In this prospectus, references to "U.S. dollars" or "$" are to
United States currency. References to "Belgian franc" or "BEF" are references
to Belgian currency.
We have presented U.S. dollar amounts in this prospectus that are derived from
our Consolidated Financial Statements at the exchange rates used in our
financial statements. We have calculated the U.S. dollar amounts of the
purchase price for our shares of capital stock at the exchange rate at the time
the shares were issued. Except as otherwise indicated, we have calculated all
other U.S. dollar amounts at the exchange rate of BEF 40 per U.S. dollar.
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SUMMARY
This summary briefly describes our business and the proposed sale of common
stock pursuant to this prospectus.
Lernout & Hauspie Speech Products
We are a leading international developer, licensor and provider of advanced
speech and language technologies, products, solutions and services. Our core
technologies include automatic speech recognition, text-to-speech, digital
speech compression, text-to-text translation and linguistic components. In
1999, we operated our business in three customer-focused divisions:
. Speech and Language Technologies and Solutions;
. Speech and Language Applications; and
. Speech and Language Consulting and Services.
Our three divisions combine products and solutions with similar sales and
marketing models.
Speech and Language Technologies and Solutions Division. Our Technologies and
Solutions Division offers technologies that allow our customers to develop
products with a natural language interface for their end-users. Our
technologies enable products to recognize and respond to naturally spoken
speech, create speech from text and data, respond to commands with speech, and
efficiently store, transmit and replay speech. Our technologies and solutions
are available in numerous languages and for multiple computer chips and other
processors, including processors sold by Intel, Analog Devices, Hitachi, NEC,
Texas Instruments, Lucent Technologies, National Semiconductor and Thomson CST.
We license our technologies and software development tools to applications
developers, strategic partners, original equipment manufacturers, component
manufacturers and software vendors. Some of our strategic partners are
developing additional language versions for our core speech technology products.
We also sell customer specific solutions to corporate customers. Our customers
use our technologies in a broad range of applications in the following principal
markets: computers and multimedia; telecommunications; enterprise solutions;
automotive electronics; and consumer and industrial electronics.
Speech and Language Applications Division. Our Applications Division offers a
wide range of end-user applications, including dictation software that enables
users to dictate text and generate documents by speaking naturally without
pausing between words, PC -based translation software and educational software.
Our products also permit computer users to control many computer functions with
spoken commands rather than using a mouse or keyboard. We also license our
software kits and development tools for the development of additional
applications based on our technologies and products as well as additional
language versions for our applications products. We currently offer speech and
language applications products for the general personal computer market and for
a variety of healthcare, law enforcement and legal applications.
Speech and Language Consulting and Services Division. Our Consulting and
Services Division, recently renamed the Globalization and Internet Translation
Group, offers human and machine translation services, as well as a wide range of
speech and language-related consulting, localization, and technical and
electronic publishing services. Our translation services range from traditional
translation of general, technical and software materials to the adaptation of
these materials for different markets, languages and cultures. We have access
to extensive language databases and the services of hundreds of correspondent
linguists and translators throughout the world. Our machine translation
software translates text from one language to another and is designed to enhance
the efficiency of translation services provided by our linguists. This software
also enables us to provide Internet/intranet translation services. We recently
introduced iTranslator, an integrated translation solution that combines both
machine and human translation offered over the Internet.
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On May 5, 2000, we acquired all of the outstanding capital stock of
Dictaphone Corporation through a merger of Dictaphone into one of our
wholly-owned subsidiaries. Dictaphone Corporation, headquartered in Stratford,
Connecticut, is a leader in selected vertical markets in the development,
manufacture, marketing, service and support of integrated voice and data
management systems and software, including dictation, voice processing, voice
response, unified messaging, records management, call center monitoring systems
and communications recording. Dictaphone has two operating segments, System
Products and Services and Contract Manufacturing. The System Products and
Services segment consists of the sale and service of system-related products to
dictation and voice management and communications recording system customers in
selected vertical markets. The Contract Manufacturing segment consists of the
manufacturing operations which provides outside electronics manufacturing
services to original equipment manufacturers in the telecommunication, data
management, computer and electronics industries.
On June 7, 2000, we acquired Dragon Systems, Inc. through its merger with and
into one of our wholly-owned subsidiaries. Dragon, headquartered in Newton,
Massachusetts, is a leading supplier of speech and language technology. Dragon's
product offerings include continuous and discrete dictation products for
consumer, business and professional markets, command and control programs,
vertical market add-on vocabularies for specialized applications, such as legal
and medical, customized telephony solutions, and developers' tools.
We were incorporated in Belgium in December 1987. Our principal executive
offices are located in the Flanders Region of Belgium at Flanders Language
Valley 50, B-8900 Ieper, Belgium. Our telephone number is (011) 32-57-22-8888.
The offices of our United States subsidiary, Lernout & Hauspie Speech Products
USA, Inc., are located at 52 Third Avenue, Burlington, Massachusetts 01803-4414
and the telephone number is (781) 203-5000.
The Offering
The selling stockholders may offer and sell up to 10,011,236 shares of the
common stock under this prospectus. The selling stockholders presently hold
these shares. We will not receive any proceeds from the selling stockholders'
sales.
The selling stockholders are former holders of common stock of Dragon. On June
7, 2000, we acquired Dragon through its merger with and into one of our wholly-
owned subsidiaries. In connection with the merger, we issued the shares of our
common stock subject to this prospectus to Dragon stockholders in exchange for
all of the outstanding shares of Dragon common stock. We filed the registration
statement relating to this prospectus to satisfy the registration rights we
granted to the selling stockholders in connection with the merger. The
principal stockholders of Dragon have agreed not to sell approximately 4.69
million of the shares which they received in the merger for a period of four (4)
months, and an additional 4.69 million shares for a period of one (1) year.
These principal stockholders have also assigned certain voting rights to all the
shares subject to the restrictions on transfer to entities controlled by Messrs.
Jo Lernout and Pol Hauspie by agreeing to hold the shares through these
entities.
The selling stockholders have not held any position or office or had any
material relationship with us for the past three years.
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RISK FACTORS
Risks Related to our Business
Our business could be harmed if we do not successfully manage the integration of
businesses that we acquire.
As part of our business strategy, we have in the past and expect to continue to
acquire other businesses and technologies. Acquisitions involve a number of
risks, including:
. the difficulty of integrating the operations and personnel of the
acquired businesses;
. the potential disruption of our ongoing business and distraction of
management;
. the difficulty in incorporating acquired technology and rights into our
products and technology;
. unanticipated expenses and delays relating to completing acquired
development projects and technology integration;
. the management of geographically remote units;
. the maintenance of uniform standards, controls, procedures and policies;
. the impairment of relationships with employees and customers as a result
of any integration of new management personnel;
. risks of entering markets or types of businesses in which we have either
limited or no direct experience;
. the potential loss of key employees of the acquired companies; and
. potential unknown liabilities or other difficulties associated with
acquired businesses.
We have recently acquired Dictaphone and Dragon; these significant acquisitions
will require substantial integration and management efforts. As a result of
these and other risks, we may not realize anticipated benefits from the
acquisitions. Failure to achieve these benefits could materially harm our
business.
Our operating results may be harmed by the manner in which we are required to
account for our acquisitions.
We are currently required to account for acquisitions under the purchase method.
This approach has resulted and may continue to result in a significant amount of
goodwill and other intangible assets which create substantial ongoing
amortization charges to our income over the useful lives of the assets acquired.
Moreover, the inability to achieve expected results during the anticipated
useful life of acquired goodwill could result in unanticipated charges to income
and significant losses. For example, in 1998 we wrote off all of the goodwill
acquired from Berkeley Speech Technologies, Inc. as a result of our inability to
complete Berkeley's product line. As of December 31, 1999, we had approximately
$411 million of goodwill, as a result of our acquisitions.
Our business could be harmed by acquisitions we complete in the future.
We may not be able to identify and acquire suitable acquisition candidates on
reasonable terms, if at all. Acquisitions may involve expending significant
funds, incurring additional debt or the issuance of additional securities, which
may materially harm our business and dilute our stockholders. If we expend
significant funds or incur additional debt, our ability to obtain financing for
working capital or other purposes could decline and we may be more vulnerable to
economic down-turns and competitive pressures.
We may have difficulty managing our growing number of employees, our new
divisions and our planned new entities.
We have experienced a period of rapid growth. From December 31, 1997 through
December 31, 1999, the total number of our employees grew from approximately
1,100 to almost 1,900, and, following our recent acquisitions
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of Dictaphone, Dragon and companies in the transcription business, the total
number of our employees now exceeds 5,000. In addition, since September 1996,
through acquisitions and internal growth, we added three new divisions
(dictation technologies, translation services and language technologies) to our
core speech technologies division. In January 1999, we reorganized these
divisions into our present three division corporate structure. During 1999, we
announced plans to create separate entities for several of our key business
areas: Globalization and Internet Translation and Healthcare Applications &
Solutions, as well as Enterprise and Telephony Solutions and Automotive
Solutions. We also continue to review our business structure. Our changing
business will require considerable investment of our management resources. Our
failure to manage our growing and changing business effectively could result in
an interruption or loss of momentum that could materially harm our business. To
help manage our changing business, we intend to strengthen:
. management;
. financial and operational controls; and
. operational, financial and management information systems.
Any delay or failure to successfully implement these improvements could
materially harm our business.
We may not be able to sustain our recent profitability.
Although we have been able to achieve profitability for fiscal year 1999, we
have had a history of substantial losses and may not be able to sustain our
recent profitability. In 1997 and 1998, write-offs of in-process research and
development associated with acquisitions completed in those periods adversely
impacted our net income. Through December 31, 1999, we had accumulated net
losses of approximately $107.9 million, including net losses of approximately
$13.3 million in 1997, $52.7 million in 1998 and a net income of $41.7 million
in 1999. Expenses during these periods included write-offs of acquired in-
process research and development of approximately $33.8 million in 1997, and
$79.4 million in 1998. We intend to continue to acquire businesses, products
and technologies. Future acquisitions may result in additional significant
acquired in-process research and development write-offs, significant
amortization of goodwill and other charges related to acquisitions. Future
operating results could also be materially harmed by many other factors, both
known and unknown, including those risk factors described below.
We depend upon the continued services of our executive officers and key research
and development personnel with expertise in speech and language technologies and
with multilingual skills.
The loss of any of our executive officers or key research and development
personnel could have a material adverse effect on our business and prospects.
Our success will also depend upon our ability to attract and retain other
qualified managerial and technical personnel. Competition for personnel,
particularly software engineers, speech scientists and linguists, is intense.
We may not be able to attract and retain personnel necessary for the development
of our business. We do not have any key man life insurance for any of our
officers or other key personnel.
The speech and language technologies industry is relatively new, and a market
for our products may never fully develop.
Because the speech and language technologies industry is relatively new and
rapidly evolving, it is difficult to accurately predict demand and market
acceptance for our recently introduced products and products under development.
Increased acceptance of our products and technologies will depend upon:
. the development of our targeted markets;
. the performance and price of our products, our customers' and their
competitors' products;
. customer service; and
. customer reaction to those products.
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The development of the speech and language technologies markets also will depend
upon:
. the growth of third party applications incorporating our products and
technologies;
. the demand for new applications;
. the ability of our products and technologies to meet and adapt to these
needs; and
. continuing price and performance improvements in hardware technology
that we expect to reduce the cost and increase the performance of
products incorporating our products and technologies.
These markets may not develop further and our products may not achieve market
acceptance.
We must adapt to rapid changes in technology and customer requirements to remain
competitive.
The market for our products has been characterized by:
. rapid technological change;
. frequent product introductions; and
. evolving customer requirements.
We believe that these trends will continue into the foreseeable future. Our
success will depend, in part, upon our ability to:
. enhance our existing products;
. develop successfully new products that meet increasing customer
requirements; and
. gain market acceptance.
To achieve these goals, we will need to continue to make substantial investments
in product development and marketing. We may not:
. have sufficient resources to make these investments;
. be successful in developing product enhancements or new products on a
timely basis, if at all; or
. be able to market successfully these enhancements and new products once
developed.
Further, our products may be rendered obsolete or uncompetitive by new industry
standards or changing technology.
To succeed we must develop and integrate new products and enhance the
performance of existing products on a timely basis and within budget.
Developing and applying our technology has required, and will continue to
require, substantial technical innovations. Once we have developed, acquired or
licensed a technology, we must adapt that technology to meet the specific
requirements of the application in which it is to be integrated. The adaptation
process can be time-consuming and costly to both us and our customers. The
quality and resulting market acceptance of the end product may depend, to a
substantial extent, upon the success of this adaptation. We may not be
successful in developing new products, integrating new technologies, or
enhancing the performance of our existing products on a timely basis or within
budget, if at all.
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Our business could be harmed if our products contain undetected errors or
defects or do not meet customer specifications.
We are continuously developing new products and technologies and improving our
existing products and technologies. Newly introduced products and technologies
can contain undetected errors or defects. In addition, these products or
technologies may not meet their performance specifications under all conditions
or for all applications. If, despite our internal testing and testing by our
customers, any of our products or technologies contain errors or defects or any
of our products or technologies fail to meet customer specifications, then we
may be required to enhance or improve those products or technologies. We may
not be able to do so on a timely basis, if at all, and may only be able to do so
at considerable expense. Although we maintain general liability insurance,
including coverage for errors and omissions, we cannot guarantee that the
coverage will continue to be available on reasonable terms or will be available
in amounts sufficient to cover one or more large claims, or that the insurer
will not disclaim coverage as to any future claim. Despite the existence of the
insurance, any significant reliability problems could result in adverse customer
reaction and negative publicity and could materially harm our business.
We face significant competition which could result in decreased demand for our
products or services.
We may not be able to compete successfully. A number of companies have
developed, or are expected to develop, products that compete or will compete
with our products. Many of these competitors and potential competitors have
substantially greater resources than we do. Competitors in the speech and
language technologies markets include:
. Apple Computer, Inc.;
. Bowne International, Inc.;
. IBM;
. Lucent Technologies;
. Microsoft Corporation;
. Motorola;
. NEC Corp.;
. Nuance;
. Philips Electronics N.V.;
. SpeechWorks International, Inc.;
. Systran Corp.; and
. Texas Instruments Incorporated.
IBM and Philips have introduced dictation products which compete directly with
our dictation products. We also compete with other smaller companies which have
developed advanced speech and language technology products. Current and
potential competitors have established, or may establish, cooperative
relationships among themselves or with third parties to increase the abilities
of their advanced speech and language technology products to address the needs
of our prospective customers. Accordingly, new competitors or alliances among
competitors may emerge and rapidly acquire significant market share.
The translation services market is also highly competitive. Although none of
the current participants in this market has a significant market share, we have
numerous competitors with significant resources (such as Bowne International).
Our quarterly technologies revenue may fluctuate significantly because a
significant portion of these revenues has been attributable to up-front
payments.
A significant portion of our technologies revenue have been attributable to up-
front revenue, including up-front license fees from strategic partners for the
licensing of development tools for the development of additional language
versions and language translation pairs for our products. We recognized this
revenue upon execution of
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license agreements or upon acceptance by our customers of our technology under
these agreements. This revenue may significantly fluctuate each quarter. These
potential fluctuations will depend upon the number, size and nature of license
agreements into which we enter. We expect that ongoing license revenue from
sales of products incorporating our technology, as well as sales of our own
products, will also fluctuate each quarter. The fluctuations will be based on a
number of factors, including:
. the size and timing of individual license transactions by our customers;
. the potential for delay or deferral of customer implementation of our
technology;
. the timing of our introduction of new products or product enhancements;
. the timing of our competitors' introduction of new products or product
enhancements;
. seasonality of technology purchases; and
. other general economic conditions.
Our revenues from our consumer products for the personal computer market may be
seasonal with lower revenues in our first two quarters and higher revenues in
the fourth quarter, and may further fluctuate significantly based upon the
timing of new product introductions.
We recently introduced consumer products for the personal computer market,
including continuous dictation products. Our revenues from sales in this market
may be seasonal with higher revenues in the fourth quarter. Our revenues from
these products can also vary significantly depending upon the timing of new
product introductions.
Our revenues from the consulting and services division may be seasonal with
higher revenues in the third and fourth quarters.
Our consulting and services division derives significant revenue from the
computer, consumer, telephony and automotive industries. These revenues, which
tend to track the product release cycles of these industries, are somewhat
seasonal, with comparatively higher revenues in the third and fourth quarters.
We have significant fixed costs which are not easily reduced if revenues fall
below expectations.
A high percentage of our operating expenses is relatively fixed. We likely will
not be able to reduce spending to compensate for adverse fluctuations in
revenues. Accordingly, shortfalls in revenues are likely to materially
adversely affect our operating results.
Our business may be harmed by changes in the relative level of revenues among
our lines of business which have significantly different profit margins.
Changes in the relative level of revenues among our lines of business could
materially adversely affect our gross profit margins and other results of
operations. Our lines of business have different profit margins. For the year
ended December 31, 1999, gross profit margins in our three divisions were as
follows:
Division Gross Profit Margin
-------- -------------------
Technologies and
Solutions 85.8%
Applications 83.2%
Consulting and Services 39.4%
The growth of translation services revenues in relation to our other businesses
would result in a reduction in our overall gross profit margins.
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Our international business operations expose us to difficulties in coordinating
our international activities and dealing with multiple regulatory environments,
as well as to risks of international political and economic conditions.
Our worldwide business may be materially adversely affected by:
. difficulties in staffing and managing operations in multiple locations
in many countries;
. greater difficulties in trade accounts receivable collection;
. possibly adverse tax consequences;
. governmental currency controls;
. changes in various regulatory requirements;
. political and economic changes and disruptions;
. export/import controls; and
. tariff regulations.
In addition, a significant portion of our executive offices and our
research and development operations are located in Belgium. Therefore, our
operations and the market price of the common stock may also be affected by
economic conditions in Belgium. Likewise, we have recently substantially
increased our revenues in Korea and elsewhere in the Far East. Our ability to
continue to generate significant revenues in Korea and the Far East may be
affected by economic conditions or political instability in Korea or other
countries in the Far East, as well as other external business risks.
Fluctuations in the exchange rates, in relation to the U.S. dollar, of our
functional currency, the Belgian franc, the Euro and the other foreign
currencies in which we conduct our business may harm our operating results.
We generate sales primarily in U.S. dollars and incur expenses in a number of
currencies; principally in the U.S. dollar, the Belgian franc, the Euro and
other currencies. Fluctuations in the value of the Belgian franc, U.S. dollar
and foreign currencies have caused, and are likely to continue to cause, amounts
translated into U.S. dollars to fluctuate in comparison with previous periods.
In particular, an increase in the value of the Belgian franc in relation to the
U.S. dollar would likely increase our expenses relative to U.S. dollar sales and
could materially harm our business. Because our functional currency for our
Belgian operations is the Belgian franc, we recognize unrealized foreign
exchange gains with respect to our assets denominated in U.S. dollars when the
value of the U.S. dollar increases in relation to the Belgian franc.
Conversely, we recognize unrealized foreign exchange losses when the relative
value of the U.S. dollar decreases.
Since 1996, we have not entered into any exchange rate hedging transactions. We
may, however, enter into hedging contracts in the future. Our decision not to
enter into hedging transactions has been primarily attributable to:
. our perception of the strength of the U.S. dollar compared to the
Belgian franc; and
. our receipt of substantial sums of Belgian francs from capital
transactions, principally the exercise of warrants.
We cannot guarantee that the U.S. dollar will continue to be stronger than the
Belgian franc or that we will continue to receive revenues denominated in
Belgian francs or raise capital in Belgian francs. Exchange rate fluctuations,
whether or not we enter into hedge transactions, may materially harm our
business.
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We rely on our customers, some of whom are our competitors, to develop
applications for our products, market products incorporating our technology and
generate license revenues for us.
Many of our core speech products are licensed primarily to applications
developers, original equipment manufacturers, component manufacturers and
software vendors which incorporate our technology into applications developed by
them and sold to end-users. The success of these licensed products depends to a
substantial degree on the efforts of others in developing and marketing products
incorporating our technology. Our customers often require several months to
integrate our technologies into their products. Although we have entered into
numerous license agreements with customers, to date we have received significant
recurring license revenues from only a limited number of customers. Products
incorporating our technology will not necessarily be successfully implemented or
marketed by our customers.
Our customers, such as Microsoft, have also developed or acquired products or
technologies that compete with our technology. These customers may give higher
priority to the sale of these competitive products or technologies. Few of our
customers have any exclusive purchase obligations under their license agreements
with us.
Changes in our relationship with Microsoft, one of our largest customers and a
strategic partner, could harm our business.
An adverse change in our relationship with Microsoft could have a material
adverse effect on our business. On September 11, 1997, we announced a strategic
alliance with Microsoft to accelerate development of speech products in multiple
languages running on Microsoft Windows platforms. As part of this strategic
alliance, Microsoft now holds 7,515,124 shares of our common stock which
represented approximately 5.29% of our outstanding common stock on June 8, 2000.
Microsoft has also exercised its registration rights with respect to the shares
of common stock purchased under the Microsoft purchase agreement and issuable
under the warrants. Microsoft's representative, Bernard Vergnes, was elected to
our Board of Directors in May 1998 pursuant to Microsoft's right under the
purchase agreement to cause one Microsoft nominee to be elected to the Board of
Directors. In addition, we entered into a license agreement with Microsoft
under which we granted Microsoft exclusive licenses of patent rights, in defined
areas, and received a non-exclusive cross license of Microsoft patent rights.
Microsoft has the right to terminate the license if L&H Holding N.V. transfers
its control over L&H to a third party as a result of L&H Holding's transfer of
our common stock.
The relationship with Microsoft may preclude or limit our ability to enter into
similar license arrangements or relationships with others. Sales to Microsoft
accounted for 12% of our total revenues in 1998 and 9% of our total revenues in
1999. Microsoft has also entered into nonexclusive license agreements with us
for many of our core speech technologies. A reduction of revenues from
Microsoft could have a material adverse effect upon our business and prospects.
We may be overly dependent on our strategic partners, and the manner in which we
have structured these partnerships, including our exclusive licensing of
technology, could harm our business.
We are dependent on our strategic partners in connection with our research and
development efforts. Our agreements with our strategic partners may include an
exclusive license of our technology for the development of specified
technologies or products. For example, we are relying primarily on strategic
partners for the development of our technologies in new languages, including
Thai, Thamil, Hindi, Vietnamese, Urdu, Malay, Taiwanese, Arabic, Armenian,
Russian, Ukrainian, Polish, Czech, Greek, Bahassa, Turkish, and various
Scandinavian languages. Similarly we are relying primarily on strategic
partners to develop machine translation language pairs outside our core language
groups. Pursuant to the agreements relating to these ventures, we have
exclusively licensed our technology to our strategic partners. Our strategic
partners also have exclusive rights to develop, market and distribute products
incorporating the developed technology for specified languages. Further,
11
<PAGE>
subject to our underlying rights and our rights in jointly developed technology
or products, our strategic partners will own the technology and products
developed pursuant to these agreements.
We have also entered into a non-exclusive license and development agreement with
Sail Labs to support the long-term development of advanced speech and language
technologies and products based on our technologies.
We generally have limited or no control over the operations of our strategic
ventures, including with respect to the amount and timing of resources that our
strategic partners devote to these ventures. As a result, our strategic
partners may not perform their obligations as expected. In addition, in the
event that our strategic relationships are terminated, we may not be able to
continue to maintain or develop strategic relationships or to replace strategic
partners. Further, some of our partners are newly formed companies and do not
have any history of operations or development or commercialization of speech or
language technologies or products. Therefore, we cannot assure that our
strategic partnerships will be successful. If our strategic partnerships are
terminated or otherwise fail to meet our expectations, we may not be able to
sustain or grow our business as expected which may materially harm our business.
In addition, in cases where we have exclusively licensed rights or technology,
we may be precluded from developing products and technology internally. We may
also be precluded from owning or controlling developments to and new products
based on our technology, which may materially harm our business. Further, our
strategic partners may become competitors, which may lead to conflicts of
interest. We cannot assure you that we will be able to compete successfully, if
at all, with our strategic partners or that any conflicts with our strategic
partners will be resolved in our favor, which may also materially harm our
business.
We may be unable to adequately protect our proprietary technology.
We rely primarily on a combination of copyright and trademark laws, trade
secrets, patents, confidentiality procedures and contractual provisions to
protect our proprietary rights. Existing copyright laws afford only limited
protection. We have obtained patents and will continue to make efforts to
obtain patents, when available, in connection with our technologies. We seek to
protect our software and other written materials under trade secret and
copyright laws, which afford only limited protection.
Our pending patent applications or any future applications may not be approved.
Any patents may not provide us with competitive advantages and may be challenged
by third parties. Others may have filed, and in the future may file, patent
applications that are similar or identical to ours. To determine the priority of
inventions, we may have to participate in interference proceedings declared by
the United States Patent and Trademark Office or similar authorities in other
countries. These proceedings could result in substantial cost to us. Such
patent applications may have priority over our filed patent applications.
Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of our products or to obtain and use information that we
regard as proprietary. We have a significant international presence and the laws
of some foreign countries, including the laws of Belgium, may not protect our
proprietary rights to the extent of the laws of the United States. Our means of
protecting our proprietary rights may not be adequate.
Our operations or products could infringe upon the intellectual property rights
of others.
Others may assert that our technology and products infringe their patents or
other intellectual property rights. Any such assertion, if resolved adversely
to us, may require us to enter into royalty or licensing arrangements and may
materially harm our business.
Our obligations under our preferred income equity redeemable securities and our
debt facilities could prevent us from obtaining additional financing and harm
our liquidity.
12
<PAGE>
In June 1998, we completed the sale of $156 million of 4.75% preferred income
equity redeemable trust securities. In connection with the sale of these
securities, we incurred both distribution obligations and $156 million in
redemption obligations; approximately $125 million in principal amount of these
securities were still outstanding as of May 31, 2000.
In May 2000 we entered into various financing arrangements in connection with
the acquisition of Dictaphone, including a $200 million short-term facility due
March 31, 2001 and a five year declining balance facility of $230 million which
will be available to repay $200 million in senior subordinated notes of
Dictaphone which may be put to the company within 90 days of the closing by the
noteholders at 101% of par, pursuant to the terms of the notes. An aggregate of
$230 million is currently outstanding under these facilities.
These outstanding securities and our outstanding indebtedness could adversely
affect our ability to obtain additional financing for acquisitions, working
capital or other purposes. They could also make us more vulnerable to economic
downturns and competitive pressures. Our obligations under these securities and
debt facilities could also adversely affect our liquidity. In the event of a
cash shortfall, we could be forced to reduce other expenditures to be able to
meet our requirements with respect to these securities and our debt facilities.
Our ability to meet these obligations will be dependent upon our future
performance, which will be subject to financial, business and other factors
affecting our operations. Many of these factors are beyond our control. If we
are unable to generate sufficient cash flow from operations in the future to
meet our obligations under these securities and to service our debt, we may be
required to refinance all or a portion of these obligations or obtain additional
financing.
Our operating results could be harmed by our high balances of accounts
receivable, some of which we may not be able to collect.
We have historically had high balances of accounts receivable. These balances
are high because a significant portion of our revenues had been attributable to
nonrefundable, up-front license fees that generally have payment terms of up to
90 days. As of December 31, 1999, we had accounts receivable of $104 million,
net of an allowance for doubtful accounts of $9.3 million. We maintain credit
procedures to evaluate the creditworthiness of prospective customers and employ
personnel specifically for the purpose of monitoring and collecting accounts
receivable. Despite adherence to these procedures, we may not be able to collect
these receivables when they become payable and may further reduce the length of
deferral of payment of up-front fees.
An unfavorable outcome or prolonged litigation in class action lawsuits filed
against us, alleging that we improperly accounted for write-offs of in-process
research and development, could harm our business.
We are a defendant in a consolidated class action lawsuit which alleges, in
general, that we improperly accounted for write-offs of in-process research and
development. Plaintiffs filed these lawsuits on behalf of all purchasers of our
common stock during varying periods that range from as early as April 28, 1997
through December 4, 1998. We believe that the claims are groundless and we are
vigorously defending ourselves. Nevertheless, class action litigation can be
extremely expensive and time consuming. Furthermore, we cannot make any
guarantees regarding the outcome of these actions. An unfavorable outcome or
prolonged litigation in this lawsuit could materially harm our business.
Because our founding stockholders have rights to control Lernout & Hauspie,
decisions may be made by them that are detrimental to your interests.
As of June 7, 2000, Messrs. Jo Lernout and Pol Hauspie, the founders, Co-
Chairmen and Managing Directors of Lernout & Hauspie, controlled 43,667,208
shares of common stock (including outstanding rights to acquire common stock)
through various controlled entities (including (i) 9,064,329 shares of our
common stock which were issued as consideration for the Dictaphone merger
because the Stonington Fund has assigned certain voting rights to all the shares
it acquired in the merger for so long as it holds the shares by agreeing to hold
the shares
13
<PAGE>
through an entity controlled by Messrs. Lernout and Hauspie, (ii) 9,807,489
shares of our common stock which were issued to the principal stockholders of
Dragon as consideration for the Dragon merger because these stockholders have
assigned certain voting rights to all the shares they acquired in the merger for
so long as they hold the shares by agreeing to hold the shares through entities
controlled by Messrs. Lernout and Hauspie, and (iii) the securities acquired by
Intel Atlantic which are exchangeable at any time into shares of our
Automatically Convertible Stock held by a trust on behalf of Intel, as to which
the voting rights, which are equivalent to the voting rights of 1,791,864 shares
of our common stock, are controlled by Messrs. Lernout & Hauspie). As of that
date, these shares represented approximately 30.24% of our outstanding shares of
common stock.
Members of the L&H Holding Control Group have entered into forward sale
contracts with unaffiliated investment funds that require the members to
transfer, on August 31, 2001, or an earlier date on the occurrence of a default,
shares of common stock based upon the fair market value of the shares on the
date of transfer. Under our restated articles of incorporation for so long as
the L&H Holding Control Group owns at least 10% of our common stock, L&H Holding
N.V., an entity controlled by Messrs. Lernout and Hauspie, has the right to
nominate for election nine of our 17 directors. Accordingly, L&H Holding N.V.
is able to control our Board of Directors and the direction of our affairs. In
addition, by reason of L&H Holding Control Group's stock ownership, Messrs.
Lernout and Hauspie are able to exert substantial influence over other actions
requiring stockholders' approval, including amendments to our restated articles
of incorporation, mergers, sales of assets or other business acquisitions or
dispositions. The L&H Holding Control Group agreed not to approve, propose or
vote with respect to any capital increase of Lernout & Hauspie by way of a
rights offering to existing Lernout & Hauspie stockholders on a preemptive basis
or any resolution to pay a cash dividend on common stock, without the consent of
the purchasers in the forward sales.
The interest of Messrs. Lernout and Hauspie in ensuring that the L&H Holding
Control Group maintains a 10% equity interest could cause Messrs. Lernout and
Hauspie to cause us to take actions that may not be in your best interests, such
as declining opportunities to acquire businesses or raise funds through
issuances of our equity.
Our interests may be in conflict with the interests of a number of entities in
which our directors are involved; these conflicts could harm our business.
In 1995, the Government of Flanders, together with Lernout & Hauspie and others,
created the Flanders Language Valley V.Z.W., a not-for-profit entity, designed
to foster the establishment and growth of enterprises near our headquarters in
Flanders that seek to develop and commercialize products based upon advanced
speech and language technology. Messrs. Lernout and Hauspie have been active
promoters of the foundation but do not have any beneficial interest in the
assets of the foundation. At the time of the formation of the foundation, a
group of private investors formed the FLV Fund, a for-profit limited
partnership, to invest in high technology based companies that specialize in
speech- and language-based products. In connection with its investment in
Lernout & Hauspie, Microsoft has invested approximately $3.0 million in the FLV
Fund. The FLV Fund is now publicly traded on EASDAQ.
Lessius Management Consulting, N.V., Gewestelijke Investeringsmaatschappij
Vlaanderen N.V. ("GIMV") and S.A.I.L Trust V.Z.W. each hold a one-third interest
in the Flanders Language Valley Fund Management N.V., the manager of the FLV
Fund (the "FLV Fund Manager"). Lessius Management Consulting, N.V. is a
subsidiary of a Belgian-based investment bank, Lessius N.V. GIMV is one of our
stockholders and has rights under our restated articles of incorporation to
nominate one of our directors. S.A.I.L Trust V.Z.W. is a not-for-profit
foundation formed in May 1998 by Messrs. Lernout and Hauspie and Mr. Fernand
Cloet, one of our directors. The purpose of this foundation is to further
support the economic development and to assist in the financing of the
infrastructure and the enhancement of the educational system of the Flanders
Language Valley region. Messrs. Lernout and Hauspie have advised us that they
do not have a beneficial interest in the assets of this foundation. Messrs.
Lernout and Hauspie have used a portion of the purchase price received on their
forward sales of common stock by the L&H Holding Control Group to provide
initial funding for this foundation and may provide additional funding to the
foundation in the future. In April 1999, we provided a short-term bridge loan
of approximately $1.6 million
14
<PAGE>
to an affiliate of the foundation to support ongoing development and
construction projects in the Flanders region of Belgium so as to avoid possible
delays in the construction schedules; this loan was repaid in full in December
1999.
Messrs. Cloet, one of our current directors, and Philip Vermeulen, one of our
former directors, currently serve as two of the nine directors of the FLV Fund
Manager. Mr. Vermeulen also serves as an officer of the FLV Fund Manager.
Messrs. Lernout and Hauspie served as directors of the FLV Fund Manager from
its inception until their resignation on May 30, 1997. Pursuant to contractual
rights obtained in May 1998 to nominate five members for election to the Board
of Directors of the FLV Fund Manager, the S.AI.L Trust nominated two of the 10
members of the Board of Directors of the FLV Fund Manager, including its
current chairman and Mr. Vermeulen. The stockholders of the FLV Fund Manager
may increase the number of directors serving on the FLV Fund Manager's board
from 10 to 15. Messrs. Lernout and Hauspie have indicated that although they do
not plan to rejoin the Board of Directors of the FLV Fund Manager, they intend
to spend a portion of their time on the activities of the FLV Fund.
In October 1998, Messrs. Lernout and Hauspie formed L&H Investment Company N.V.
Messrs. Lernout and Hauspie beneficially own a controlling interest in and are
co-chairmen of L&H Investment Company. Another one of our directors, Mr.
Francis Vanderhoydonck, also serves as President and Managing Director of L&H
Investment Company. The principal purpose of L&H Investment Company is to
invest in high technology based companies that specialize in speech- and
language-based products. We do not have any interest as a stockholder, director
or otherwise in L&H Investment Company.
We have contractual rights with companies in which the FLV Fund and L&H
Investment Company have invested. In addition, the companies in which either
the FLV Fund or L&H Investment Company may invest in the future are likely to
have contractual relations with us or may be our competitors. As a result of
the conflicts of interest that may arise as a result of these overlapping
relationships, including for example, the influence Messrs. Lernout, Hauspie and
Cloet have over the Boards of Directors of these entities, our directors may
make decisions on behalf of us involving the FLV Fund, L&H Investment Company or
companies supported by them that are not in the best interest of us or our
stockholders. Companies funded in part by the FLV Fund and L&H Investment
Company accounted for approximately 3.7% of our revenues in 1998 and 0.3% of our
revenues in 1999.
The coordinated laws of commercial companies of Belgium do not permit Messrs.
Lernout, Hauspie and Cloet or any other member of Lernout & Hauspie or the FLV
Management N.V.'s Board of Directors to participate in deliberations and
decision making with respect to matters in which these individuals have a direct
or indirect conflict of interest with Lernout & Hauspie or FLV Management N.V.
Risks Related to Our Common Stock and Our Belgian Incorporation
Provisions of our charter and contracts and of Belgian law may discourage
takeover offers and may limit the price that investors would be willing to pay
for our common stock.
Laws and documents contain provisions that may discourage bids for Lernout &
Hauspie. These include:
. our restated articles of incorporation;
. Belgian company law;
. other provisions of Belgian law; and
. our contractual arrangements which contain rights adverse to us if there
is a change of control.
These laws and arrangements could discourage advantageous offers for our
business or common stock and limit the price that investors might be willing to
pay in the future for shares of the common stock. Our restated articles of
incorporation contain provisions permitting specified entities to nominate
members of the maximum 17 member Board of Directors of Lernout & Hauspie as
follows:
15
<PAGE>
. L&H Holding N.V...................................... 9 Members
. GIMV................................................. 1 Member
. Microsoft............................................ 1 Member
Microsoft may terminate our rights under our license agreement with it upon a
change in control of Lernout & Hauspie. Our Board of Directors is permitted to
issue preferred stock upon terms it deems appropriate without the prior approval
of the holders of the common stock. Our ability to issue preferred stock in
such a manner could enable our Board of Directors to prevent changes in our
management or control. Belgian company law and other Belgian laws provide that
takeover bids must be made for all outstanding voting securities of Lernout &
Hauspie and are subject to the supervision and approval of the Commission for
Banking and Finance in Belgium. In some instances, takeover bids must be
approved by the competent Belgian and European antitrust authorities.
Our incorporation in Belgium causes us to be governed by Belgian law which
provides for different and in some cases more limited stockholder rights than
the laws of jurisdictions in the United States.
We are a Belgian corporation and our corporate affairs are governed by our
restated articles of incorporation and Belgian company law. Although provisions
of Belgian company law resemble various provisions of the corporation laws of a
number of states of the United States, principles of law relating to such
matters as:
. the validity of corporate procedures;
. the fiduciary duties of management; and
. the rights of our stockholders
may differ from those that would apply if we were incorporated in a jurisdiction
within the United States. For example, there is no statutory right of appraisal
under Belgian law with respect to mergers, and the right for stockholders of a
Belgian corporation to sue derivatively, on the corporation's behalf, is
limited.
In addition, a provision of Belgian company law which recently became applicable
to us restricts our ability to sell shares of our stock for a cash purchase
price which is lower than the average price of our stock for the thirty days
prior to issuance of the new shares unless we also offer to sell shares at such
price to our existing stockholders. This restriction could inhibit our ability
to raise capital in the future.
You may be unable to serve legal process or enforce judgments against us and our
directors and officers.
We are a Belgian corporation and a substantial portion of our assets are located
in Belgium. Most of our officers and directors and our independent auditors are
not residents of the United States. Furthermore, all or a substantial portion
of the assets of these persons are located outside the United States. As a
result, you may not be able to effect service of process within the United
States upon these persons or to enforce any judgments of United States courts
upon these people or us predicated upon the civil liability provisions of the
securities or other laws of the United States. We have been advised by our
Belgian legal counsel, Loeff Claeys Verbeke, that civil liabilities under the
securities and other laws of the United States may not be enforceable in
original actions instituted in Belgium, or in actions instituted in Belgium to
enforce judgments of United States courts. Actions for enforcement of judgments
of United States courts might be successful only if the Belgian court confirms
the substantive correctness of the judgment of the United States court, and is
satisfied:
16
<PAGE>
. that the judgment is not contrary to the principles of public policy in
Belgium or rules of Belgian public law;
. that the judgment did not violate the rights of the defendant;
. that the judgment is not subject to further appeal under United States
law;
. that the United States court did not accept its jurisdiction solely on
the basis of the nationality of the plaintiff; and
. as to the authenticity of the text of the judgment submitted to it.
The volatility of our stock price could adversely affect your investment in our
stock.
The market price of the common stock has been, and may continue to be, highly
volatile. We believe that a variety of factors could cause the price of the
common stock to fluctuate, perhaps substantially, including:
. announcements of developments related to our business;
. quarterly fluctuations in our actual or anticipated operating results
and order levels;
. general conditions in the worldwide economy;
. announcements of technological innovations;
. new products or product enhancements by us or our competitors;
. developments in patents or other intellectual property rights and
litigation; and
. developments in our relationships with our customers and suppliers.
In addition, in recent years the stock market in general and the markets for
shares of small capitalization and "high-tech" companies in particular, have
experienced extreme price fluctuations which have often been unrelated to the
operating performance of affected companies. Any such fluctuations in the
future could adversely affect the market price of the common stock and the
market price of the common stock may decline.
17
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Until our acquisition of Dictaphone on May 5, 2000, we
were a foreign private issuer required to file annual reports on Form 20-F and
interim reports on Form 6-K with respect to our financial results and certain
other matters. On June 30, 2000 we filed an annual report on Form 20-F for our
fiscal year ended December 31, 1999. On June 30, 2000 we also voluntarily
filed:
. quarterly reports for the fiscal quarters ended June 30, 1999, September
30, 1999 and March 31, 2000; and
. our annual report on Form 10-K for our fiscal year ended December 31,
1999;
in order to be eligible to file this registration statement on Form S-3.
You may read and copy any document we file at the SEC's public reference rooms
at 450 Fifth Street, N.W., Washington, D.C., 20549, Chicago, Illinois and New
York, New York. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
on the SEC's Website at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, as amended, with respect to the common stock offered in
connection with this prospectus. This prospectus does not contain all of the
information set forth in the registration statement. We have omitted parts of
the registration statement in accordance with the rules and regulations of the
SEC. For further information with respect to us and our common stock, you
should refer to the registration statement. Statements contained in this
prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, you should refer to the copy of such
contract or document filed as an exhibit to or incorporated by reference in the
registration statement. Each statement as to the contents of such contract or
document is qualified in all respects by such reference. You may obtain copies
of the registration statement from the SEC's principal office in Washington,
D.C. upon payment of the fees prescribed by the SEC, or you may examine the
registration statement without charge at the offices of the SEC described above.
The SEC allows us to "incorporate by reference" the information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the following documents:
. Our Report on Form 6-K/A filed September 9, 2000;
. Our Annual Report on Form 10-K for the year ended December 31, 1999
filed June 30, 2000;
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
filed June 30, 2000;
. Our Current Report on Form 8-K filed May 22, 2000;
. Our Current Report on Form 8-K/A filed May 25, 2000;
. Our Current Report on Form 8-K/A/2 filed June 30, 2000; and
. The description of our common stock contained in our Registration
Statement on Form 8-A filed under the Securities Exchange Act of 1934,
as amended, dated November 30, 1995.
We also incorporate by reference any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the termination of the offering to which this prospectus
relates.
You may request a copy of any of these filings, at no cost, by writing or
telephoning us at the following address:
18
<PAGE>
Lernout & Hauspie Speech Products USA, Inc.
52 Third Avenue
Burlington, MA 01803-4414
Tel: (781) 203-5000
Attn: Investor Relations
You should rely only on the information contained in this document (or any
supplement) or that we have referred you to. We have not authorized anyone else
to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
19
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus and in the documents
incorporated by reference herein are forward-looking made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. In
essence, forward-looking statements are predictions of future events. Although
we would not make forward-looking statements unless we believe we have a
reasonable basis for doing so, we cannot guarantee their accuracy and actual
results may differ materially from those we anticipated due to a number of
uncertainties, many of which we are not aware. We urge you to consider the
risks and uncertainties discussed in the documents filed with the SEC that we
have incorporate by reference into this prospectus in evaluating our forward-
looking statements.
You should understand also that we have no plans to update our forward-looking
statements. Our forward-looking statements are accurate only as of the date of
this prospectus, or in the case of forward-looking statements in documents
incorporated by reference, as of the date of those documents.
We identify forward-looking statements with the words "plans," "expects,"
"anticipates," "estimates," "will," "should" and similar expressions. Examples
of our forward-looking statements may include statements related to:
. our plans, objectives, expectations and intentions;
. the timing of, availability, cost of development and functionality of
products under development or recently introduced; and
. the anticipated growth rate of the market for speech and language
technologies in general and our products in particular.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our common stock by the
selling stockholders.
20
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth:
. the number of shares of common stock that the selling stockholders
beneficially owned as of June 30, 2000;
. the maximum number of shares of common stock that the selling
stockholders may offer under this prospectus; and
. the number and percentage of shares of common stock that the selling
stockholders will beneficially own assuming all of the shares that may
be offered under this prospectus are sold.
The selling stockholders acquired all of the shares offered under this
prospectus in connection with our acquisition of Dragon on June 7, 2000.
The information with regard to the selling stockholders provided in the table
below is based upon information provided to us by the selling stockholders.
<TABLE>
<CAPTION>
Number of Shares Number of Shares
Beneficially Maximum Beneficially Percentage of
Owned as of Number of Shares Owned after Shares Owned
Name of Beneficial Owner June 30, 2000 (1) Being Offered Offering After Offering
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albina, Toffee A. 2,510 2,510 * *
-----------------------------------------------------------------------------------------------------------------------------
Albina, Toffee A. and Keith D. 1,424 1,424 * *
McNeil
Joint Tenants with Right of
Survivorship
-----------------------------------------------------------------------------------------------------------------------------
Baker, James K. 2,566,381 2,566,381 * 1.80
-----------------------------------------------------------------------------------------------------------------------------
Baker, Janet M. 2,543,332 2,543,332 * 1.79
-----------------------------------------------------------------------------------------------------------------------------
Bamberg, Cherry F. and Donald B. 113,876 113,876 * *
Fletcher, Jr., Trustees of the
Cherry F. Bamberg Trust, u/a
dated August 18, 1989, as
amended 10/20/93
-----------------------------------------------------------------------------------------------------------------------------
Bamberg, Paul G. and Donald B. 436,557 436,557 * *
Fletcher, Jr., Trustees of the
Paul G. Bamberg Trust u/a dated
August 18, 1989, as amended
10/20/93
-----------------------------------------------------------------------------------------------------------------------------
Blaney, Charles C. 268 268 * *
-----------------------------------------------------------------------------------------------------------------------------
Buechler, Peter 518 518 * *
-----------------------------------------------------------------------------------------------------------------------------
Chodrow, Don, Custodian under the 329 329 * *
Virginia Uniform Tranfers to
Minors Act for the benefit of
Philip S. Chodrow
-----------------------------------------------------------------------------------------------------------------------------
Cottam, Mark 411 411 * *
-----------------------------------------------------------------------------------------------------------------------------
Davey, John 3,292 3,292 * *
-----------------------------------------------------------------------------------------------------------------------------
Figueiredo, Irene L. 205 205 * *
-----------------------------------------------------------------------------------------------------------------------------
Fitch, Peter J. 205 205 * *
-----------------------------------------------------------------------------------------------------------------------------
Gadbois, Gregory J. and Lynn 3,704 3,704 * *
Marie Kistler
-----------------------------------------------------------------------------------------------------------------------------
Gillick, Laurence S. and Muriel 57,930 57,930 * *
R. Gillick
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------
Halstead, Gina and Donald 308 308 * *
Halstead, Joint Tenants with
Right of Survivorship
-----------------------------------------------------------------------------------------------------------------------------
Hayden, Charles W. 329 329 * *
-----------------------------------------------------------------------------------------------------------------------------
Hayden, Elisabeth H. 10,974 10,974 * *
-----------------------------------------------------------------------------------------------------------------------------
Hudson, Diane M. 30,539 30,539 * *
-----------------------------------------------------------------------------------------------------------------------------
Kempster, Edward B. 3,292 3,292 * *
-----------------------------------------------------------------------------------------------------------------------------
Maier, Richard 782 782 * *
-----------------------------------------------------------------------------------------------------------------------------
McDonald, Glenn 123 123 * *
-----------------------------------------------------------------------------------------------------------------------------
Parke, Joel W. & Janice E. 27,987 27,987 * *
ParkeJoint Tenants with Right of
Survivorship
-----------------------------------------------------------------------------------------------------------------------------
Parmenter, David W. and Jennifer 4,733 4,733 * *
A. Parmenter, Joint Tenants with
Right of Survivorship
-----------------------------------------------------------------------------------------------------------------------------
Platais, Rachel E. 123 123 * *
-----------------------------------------------------------------------------------------------------------------------------
Proferis, Amy 10,974 10,974 * *
-----------------------------------------------------------------------------------------------------------------------------
Roth, Robert 275,854 275,854 * *
-----------------------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc. 3,871,489 3,871,489 * 2.72
-----------------------------------------------------------------------------------------------------------------------------
Sturtevant, Dean Grant 38,618 38,618 * *
-----------------------------------------------------------------------------------------------------------------------------
Widmer-Schultz, Andreas E. 3,490 3,490 * *
-----------------------------------------------------------------------------------------------------------------------------
Reserved 658 * *
-----------------------------------------------------------------------------------------------------------------------------
* Less than one percent.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders, or their successors in interest, may sell the shares
from time to time. The distribution of the shares is not currently subject to
any underlying agreement. The selling stockholders or their successor(s) may
make these sales on one or more exchanges, or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The selling
stockholders may sell the shares by one or more of the following methods:
. a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction;
. purchases by a broker-dealer as principal and resale by such broker-
dealer for its account pursuant to this prospectus;
. an exchange distribution in accordance with the rules of such exchange;
and
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in the resales.
In connection with distributions of the shares or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered under this prospectus in the course of hedging the
positions they assume with the selling stockholders. The selling stockholders
may also sell shares short and redeliver the shares to close out their short
positions. The selling stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of the shares registered under this prospectus, which the broker-dealer may
resell or otherwise transfer pursuant to this prospectus. The selling
stockholders may also loan or pledge the shares registered under this prospectus
to a broker-dealer and the broker-dealer may sell the loaned shares or, upon a
default, the broker-dealer may effect sales of the pledged shares pursuant to
this prospectus.
The selling stockholders may pay broker-dealers or agents compensation in the
form of commissions, discounts or concessions in amounts to be negotiated in
connection with the sales. These broker-dealers and any other participating
broker-dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, in connection with such sales and any such
commissions, discount or concession may be deemed to be underwriting discounts
or commissions under the Act. In addition, any securities covered by this
prospectus that qualify for sale pursuant to Rule 144 may be sold under Rule 144
rather than pursuant to this prospectus.
We will bear all costs, expenses and fees in connection with the registration of
the shares. The selling stockholders will bear commissions and discounts, if
any, attributable to the sales of the shares. The selling stockholders may
agree to indemnify any broker-dealer, agent or other person that participates in
transactions involving sales of the shares against liabilities, including
liabilities arising under the Securities Act of 1933, as amended.
Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended, any person engaged in a distribution of the common stock may
be limited in its ability to engage in market activities with respect to the
common stock. In addition, the selling stockholders will be subject to
applicable provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations under the Securities Exchange Act of 1934, as amended,
which may limit the timing of purchases and sales of any of the common stock by
the selling stockholders.
23
<PAGE>
LEGAL MATTERS
For the purpose of this offering, Brown, Rudnick, Freed & Gesmer, Boston,
Massachusetts, our U.S. counsel, may pass upon U.S. legal matters in connection
with the offering. Loeff Claeys Verbeke, Brussels, Belgium, our Belgian
counsel, is giving an opinion as to the validity of the common stock. A member
of Brown, Rudnick, Freed & Gesmer, holds 90,000 shares of our common stock. An
entity controlled by a partner of Loeff Claeys Verbeke, holds 39,864 shares of
common stock and holds a minority interest in L&H Holding N.V.
EXPERTS
Our consolidated financial statements of as of December 31, 1998 and 1999 and
for each of the years in the three-year period ended December 31, 1999, have
been incorporated in this prospectus by reference in reliance on the report of
Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, independent public
accountants, appearing in our Annual Report on Form 10-K for the year ended
December 31, 1999 and upon the authority of said firm as experts in accounting
and auditing.
The financial statements of Brussels Translation Group N.V. as of December 31,
1998 and December 31, 1997 and for the twenty-two month period and the twelve
month period ended December 31, 1998 and the ten month period ended December 31,
1997, appearing in our Form 6-K/A filed with the SEC September 9, 1999 which is
referred to and made a part of this Registration Statement, have been audited by
Ernst & Young Reviseurs d'Entreprises S.C.C., independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such financial statements are incorporated in the prospectus by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Dictaphone Corporation and Subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1999 incorporated by reference (from the
Annual Report on Form 10-K of Dictaphone Corporation and subsidiaries for the
fiscal year ended December 31, 1999) into our Form 8-K/A filed with the SEC May
25, 2000 which is referred to and made a part of this Registration Statement,
have been audited by Deloitte & Touche LLP, independent auditors, as set forth
in their report thereon incorporated by reference therein and incorporated
herein by reference. Such financial statements are incorporated in the
prospectus by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
24
<PAGE>
This prospectus is part of a registration
statement we filed with the SEC. You
should rely only on the information or
representations provided in this
prospectus. We have authorized no one
to provide you with different information.
We are not making an offer in any
jurisdiction where the offer is not
permitted. You should not assume
that the information in this prospectus
is accurate as of any date other than
the date of this prospectus.
LERNOUT & HAUSPIE
SPEECH PRODUCTS N.V.
10,011,236 Shares
Common Stock
PROSPECTUS
[.], 2000
TABLE OF CONTENTS Page
Service and Enforcement of Legal Process.........
Summary..........................................
Risk Factors.....................................
Where You Can Find More Information..............
Special Note Regarding Forward-Looking
Statements.......................................
Dilution.........................................
Use of Proceeds..................................
Plan of Distribution.............................
Legal Matters....................................
Experts..........................................
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities
registered hereby. All amounts are estimated except the SEC and Nasdaq filing
fee. Costs of issuance and distribution will be borne by the Registrant as
follows:
SEC Registration Fee............................... $110,922
Nasdaq Filing Fee.................................. $ 17,500
Accounting Fees and Expenses....................... $250,000*
Legal Fees and Expenses............................ $300,000*
Miscellaneous...................................... $ 5,000*
--------
Total.......................................... $683,422
____________
*Estimated
Item 15. Indemnification of Directors and Officers
Under Belgian law, directors and the statutory auditor may be liable for
damages to us, a trustee in bankruptcy and third parties in case of improper
performance of their duties, violation of our Restated Articles of Association
or the Companies Act, or tortious misconduct. Under certain circumstances,
directors may also be criminally liable. One or more stockholders holding at
least one percent of our common stock (approximately 1,410,000 shares) or
holding shares representing a fractional value in our capital of at least BEF
50.0 million can, under certain conditions provided in the Companies Act, sue
the directors and the statutory auditor derivatively on behalf of us.
A simple majority of the stockholders at a duly convened stockholders
meeting may discharge directors and the statutory auditor from liability to us
relating to the performance of their respective duties after the presentation of
a management report and the annual accounts by our directors and presentation of
the statutory auditors' report to our stockholders. This discharge prohibits
stockholders from bringing derivative suits on behalf of us on such grounds. A
general discharge of director or auditor liability does not relieve such persons
from liability to third parties or for violations of the Companies Act or the
Restated Articles of Association. Violations of the Restated Articles of
Association may only be discharged if specifically identified by the
stockholders. Notwithstanding a general discharge, directors and auditors may be
held liable for willful misconduct and fraud in the performance of their duties
for us.
Our Restated Articles of Association include provisions permitting us to
indemnify our directors and officers to the fullest extent permitted by Belgian
law. We plan to enter into an indemnification agreement with each of our
directors, future directors and certain of our officers. Generally, each
indemnification agreement attempts to provide the maximum protection permitted
by Belgian law with respect to the indemnification of the director or officer.
The indemnification agreements will provide that we will pay certain amounts
incurred by a director or officer in connection with any civil or criminal
action or proceeding (excluding actions by us or in our name) i.e. derivative
suits) where the individual's involvement is by reason of the fact that he is or
was a director of officer. Such amounts include, to the maximum extent permitted
by law, attorneys fees, judgments, civil or criminal fines, settlement amounts
and other expenses customarily incurred in connection with legal proceedings.
Under the indemnification agreements, a director or officer will not receive
indemnification if he is found not to have acted in good faith in the reasonable
belief that his action was in our best interest.
We also maintain directors' and officers' liability insurance.
II-1
<PAGE>
Item 16. Exhibits
Exhibit
Number
------
2.01 Agreement and Plan of Merger, dated as of March 7, 2000, by and
among the Registrant, Dark Acquisition Corp., and Dictaphone
Corporation (filed as Exhibit 2.01 to the Current Report on Form 8-
K of the Registrant filed on May 22, 2000).
2.02 Asset Purchase Agreement, dated as of May 19, 1999, between the
Registrant, a Fonix Corporation and Fonix/ASI Corporation.**
2.03 Stock Purchase Agreement, dated as of September 9, 1999, by and
among the Registrant, Bumil Information and Communication Co., Ltd.
and Ju-Chul Seo, for the purchase of Bumil Information and
Communication Co., Ltd.**
2.04 Assets For Cash Purchase Agreement, dated as of December 22, 1999,
and amended on January 20, 2000, between the Registrant and OmniMed
Transcription, Inc., certain principal stockholders of OmniMed
Transcription, Inc. and L&H Medical Transcription USA, Inc.**
2.05 Asset Purchase Agreement, dated as of May 23, 2000, between the
Registrant and Rodeer Systems, Inc.**
2.06 Agreement and Plan of Merger, dated as of March 27, 2000, and
Amendment No. 1 dated May 25, 2000, between the Registrant, Dragon
Systems, Inc., L&H Holdings USA, Inc. and certain Principal
Stockholders of Dragon Systems, Inc. (filed as Exhibit 2.1 and 2.2
to the Current Report on Form 8-K of the Registrant filed on June
22, 2000 (the "June 22, 2000 8-K").
2.07 Agreement and Plan of Merger, dated July 20, 1998, between the
Registrant, Beach Acquisition Corporation and Globalink, Inc.
(filed as Exhibit 1 to the Registrant's Amendment No. 1 to its Form
13-D filed August 3, 1998 with respect to Globalink, Inc.).
2.08 Agreement for the acquisition of Dictation Consortium, dated May
29, 1998 (filed as Exhibit 2.16 to the Registrant's Form F-3 filed
August 19, 1998 (Registration No. 333-9306)).***
2.09 Agreement for the acquisition of Brussels Translation Group N.V.
dated June 23, 1999 (filed as Exhibit 2.20 to the Registrant's Form
20-F for the year ended December 31, 1998 (the "1998 Form 20-
F")).***
3.01 Restated Articles of Association of Registrant.** ***
4.01 Specimen Registered Certificate of Common Stock (filed as Exhibit
4.01 to the Registrant's Registration Statement on Form F-1, filed
November 30, 1995 (Registration No. 33-97928) (the "1995 Form F-
1")).
4.02 Specimen Bearer Certificate of Common Stock (filed as Exhibit 4.02
to the 1995 Form F-1).
4.03 Description of Capital Stock (included in the Registrant's Restated
Articles of Association in Exhibit 3.01).
4.04 Indenture, dated as of November 20, 1996, between the Registrant
and United States Trust Company of New York, including form of Note
(filed as Exhibit 4.05 to the Registrant's Registration Statement
on Form F-3, filed February 18, 1997 (Registration No. 333-6468)
(the "1997 Form F-3")).
4.05 Specimen Form of Note (filed as part of Exhibit 4.04 to the 1997
Form F-3).
4.06 Registration Rights Agreement, dated as of November 10, 1996, among
the Registrant, Lehman Brothers, Inc., Hambrecht & Quist, Cowen &
Company and Banque Indosuez (filed as Exhibit 4.07 to the
Registrant's 1997 Form F-3).
4.07 Share Purchase Agreement between Gesellschaft fur Multilinguale
Systeme GmbH and the Registrant (filed as Exhibit 4.11 to the
Registrant's Registration Statement on Form F-4, filed May 30, 1997
(Registration No. 333-6982)).
4.08 Warrant Agreement between the Registrant and Shoreline Pacific
(filed as Exhibit 4.16 to the Registrant's Registration Statement
on Form F-3, filed July 21, 1997 (Registration No. 333-7292)).
4.09 Subscription Agreement between the Registrant and Intel Atlantic,
Inc. (filed as Exhibit 10.45 to the Registrant's 1998 Form 20-F).
II-2
<PAGE>
Exhibit
Number
------
4.10 Registration Rights Agreement, dated April 14, 1998, relating to
sale of Common Stock by L&H Holding Control Group (filed as Exhibit
4.23 to the Registrant's Form 20-F for the year ended December 31,
1997).
4.11 Guarantee Agreement, dated May 27, 1998, between the Registrant and
Wilmington Trust Company (filed as Exhibit 4.24 to the Registrant's
Form F-3, filed June 9, 1998 (Registration No. 333-8922) (the "1998
Form F-3")).
4.12 Multiple Series Indenture, dated May 27, 1998, between the
Registrant and Wilmington Trust Company (filed as Exhibit 4.25 to
the 1998 Form F-3).
4.13 First Supplemental Indenture, dated May 27, 1998, between the
Registrant and Wilmington Trust Company (filed as Exhibit 4.26 to
the 1998 Form F-3).
4.14 Registration Rights Agreement, dated May 27, 1998 (filed as Exhibit
4.27 to the 1998 Form F-3).
4.15 Amended and Restated Declaration of Trust of the Registrant's
Delaware Trust, dated May 27, 1998 (filed as Exhibit 4.28 to the
1998 Form F-3).
4.16 Registration Rights Agreement, dated July 17, 1998, relating to
sale of Common Stock by L&H Holding Control Group (filed as Exhibit
2 to the Registrant's Form 6-K filed September 28, 1998).
4.17 Registration Rights Agreement, dated as of May 5, 2000, by and
among the Registrant, Stonington Holdings, LLC, Mellon Bank, N.A.,
as Trustee for the Bell Atlantic Master Trust, Merrill Lynch
KECALP, L.P. 1994, John Duerden, Robert G. Schwager, Joseph
Skrzypczak, Ronald Elwell, Thomas Hodge, Daniel Hart and Egon
Jungheim (filed as Exhibit 4.1 to the Registrant's Amendment to its
Current Report on Form 8-K/A filed on May 25, 2000).
4.18 Stockholders' Agreement, dated as of May 5, 2000, by and among the
Registrant, Stonington Holdings, LLC, LEHA, L&H Holding N.V., L&H
Holding III, Oldco N.V. and L&H Investment Company (filed as
Exhibit 4.2 to the Current Report on Form 8-K of the Registrant
filed on May 22, 2000).
4.19 Registration Rights Agreement, dated as of June 7, 2000,by and
among the Registrant, L&H Holdings USA, Inc., Dragon Systems, Inc.,
Janet M. Baker and Seagate Technology, Inc. on behalf of the
Principal Stockholders of Dragon Systems, Inc. (filed as Exhibit
4.1 to the June 22, 2000 8-K).
4.20 Stockholders' Agreement, dated as of June 7, 2000, by and between
the Registrant, LEHA, L&H Holding N.V., L&H Holding III, Oldco
N.V., L&H Investment Company, JK Baker LLC, JM Baker LLC, Seagate
LLC, Roth Special LLC, CFB Gilbert LLC, RGB Rumpole LLC, James K.
Baker, Janet M. Baker, Robert Roth, Seagate Technology, Inc., The
Paul G. Bamberg Trust, The Cherry F. Bamberg Trust (filed as
Exhibit 4.2 to the June 22, 2000 8-K).
5.01 Legal Opinion of Loeff Claeys Verbeke.*
23.01 Consent of Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren.*
23.02 Consent of Loeff Claeys Verbeke (contained in Exhibit 5.01 hereof).
23.03 Consent of Brown, Rudnick, Freed & Gesmer.*
23.04 Consent of Ernst & Young Reviseurs d'Entrepreises.*
23.05 Consent of Deloitte & Touche LLP.*
24.01 Power of Attorney (contained on pages II-6 and II-7 hereof).
_________________
* Filed herewith.
** Incorporated by reference to the Exhibit of the same number filed on the
Company's Form 20-F for the year ended December 31, 1999.
*** Translated in full or summary version; the original language version is
on file with the Registrant and is available upon request.
II-3
<PAGE>
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered ) and any deviation from the low or high end of
the estimated maximum offering ranges may be reflected in
the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the SEC by the Registrant pursuant to section 13 or section 15(d)
of the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(4) To file a post-effective amendment to the Registration Statement
to include any financial statements required by Rule 3-19 of Regulation S-X
at the start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section 10(a)(3)
of the Act need not be furnished, provided that the Registrant includes in
the prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other information
necessary to ensure that all other information in the prospectus is at
least as current as the date of those financial statements. Notwithstanding
the foregoing, a post-effective amendment need not be filed to include
financial statements and information required by Section 10(a)(3) of the
Act or Rule 3-19 of Regulation S-X if such financial statements and
information are contained in periodic reports filed with or furnished to
the SEC by the Registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Not applicable.
(d) Not applicable.
II-4
<PAGE>
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(i) The undersigned Registrant undertakes that:
(1) For purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of the registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b) (1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(j) Not applicable.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Ieper, Belgium, on June 30, 2000.
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
By: /s/ Gaston Bastiaens
---------------------------------------
Gaston Bastiaens
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gaston Bastiaens, Jo Lernout and Pol Hauspie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, and, in connection
with any registration of additional securities pursuant to Rule 462(b) under the
Securities Act, to sign any abbreviated registration statement and any and all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, in each case, with the SEC, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jo Lernout Co-Chairman and Managing Director June 30, 2000
---------------------------------------
Jo Lernout
/s/ Pol Hauspie Co-Chairman and Managing Director June 30, 2000
---------------------------------------
Pol Hauspie
/s/ Nico Willaert Vice Chairman and Managing Director June 30, 2000
---------------------------------------
Nico Willaert
/s/ Gaston Bastiaens President, Chief Executive Officer, June 30, 2000
---------------------------------------
Gaston Bastiaens Director (Principal Executive Officer)
/s/ Carl Dammekens Chief Financial Officer, Senior Vice June 30, 2000
---------------------------------------
Carl Dammekens President of Finance, Principal
Accounting Officer and Principal
Financial Officer
/s/ Fernand Cloet Director June 30, 2000
---------------------------------------
Fernand Cloet
Director _____________ _____, 2000
---------------------------------------
Jan Coene
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Marc De Pauw Director June 30, 2000
---------------------------------------
Marc De Pauw
/s/ Hubert Detremmerie Director June 30, 2000
---------------------------------------
Hubert Detremmerie
RDV SECURITIES N.V., represented by
Erwin Vandendriessche
Director _____________ _____, 2000
---------------------------------------
Erwin Vandendriessche
/s/ Dirk Cauwelier Director June 30, 2000
---------------------------------------
Dirk Cauwelier
_______________________________________ Director _____________ _____, 2000
Alex Vieux
/s/ Gerald Van Acker Director June 30, 2000
---------------------------------------
Gerard Van Acker
_______________________________________ Director _____________ _____, 2000
Bernard Vergnes
/s/ Francis Vanderhoydonck Director June 30, 2000
---------------------------------------
Francis Vanderhoydonck
/s/ Roel Pieper Director June 30, 2000
---------------------------------------
Roel Pieper
/s/ Albert J. Fitzgibbons, III Director June 30, 2000
---------------------------------------
Albert J. Fitzgibbons, III
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
Exhibit
Number
-------
2.01 Agreement and Plan of Merger, dated as of March 7, 2000, by and
among the Registrant, Dark Acquisition Corp., and Dictaphone
Corporation (filed as Exhibit 2.01 to the Current Report on
Form 8-K of the Registrant filed on May 22, 2000).
2.02 Asset Purchase Agreement, dated as of May 19, 1999, between the
Registrant, a Fonix Corporation and Fonix/ASI Corporation.**
2.03 Stock Purchase Agreement, dated as of September 9, 1999, by and
among the Registrant, Bumil Information and Communication Co., Ltd.
and Ju-Chul Seo, for the purchase of Bumil Information and
Communication Co., Ltd.**
2.04 Assets For Cash Purchase Agreement, dated as of December 22, 1999,
and amended on January 20, 2000, between the Registrant and OmniMed
Transcription, Inc., certain principal stockholders of OmniMed
Transcription, Inc. and L&H Medical Transcription USA, Inc.**
2.05 Asset Purchase Agreement, dated as of May 23, 2000, between the
Registrant and Rodeer Systems, Inc.**
2.06 Agreement and Plan of Merger, dated as of March 27, 2000, and
Amendment No. 1 dated May 25, 2000, between the Registrant, Dragon
Systems, Inc., L&H Holdings USA, Inc. and certain Principal
Stockholders of Dragon Systems, Inc. (filed as Exhibit 2.1 and 2.2
to the Current Report on Form 8-K of the Registrant filed on June
22, 2000 (the "June 22, 2000 8-K").
2.07 Agreement and Plan of Merger, dated July 20, 1998, between the
Registrant, Beach Acquisition Corporation and Globalink, Inc.
(filed as Exhibit 1 to the Registrant's Amendment No. 1 to its Form
13-D filed August 3, 1998 with respect to Globalink, Inc.).
2.08 Agreement for the acquisition of Dictation Consortium, dated May
29, 1998 (filed as Exhibit 2.16 to the Registrant's Form F-3 filed
August 19, 1998 (Registration No. 333-9306)).***
2.09 Agreement for the acquisition of Brussels Translation Group N.V.
dated June 23, 1999 (filed as Exhibit 2.20 to the Registrant's Form
20-F for the year ended December 31, 1998 (the "1998
Form 20-F")).***
3.01 Restated Articles of Association of Registrant.** ***
4.01 Specimen Registered Certificate of Common Stock (filed as Exhibit
4.01 to the Registrant's Registration Statement on Form F-1, filed
November 30, 1995 (Registration No. 33-97928) (the "1995
Form F-1")).
4.02 Specimen Bearer Certificate of Common Stock (filed as Exhibit 4.02
to the 1995 Form F-1).
4.03 Description of Capital Stock (included in the Registrant's Restated
Articles of Association in Exhibit 3.01).
4.04 Indenture, dated as of November 20, 1996, between the Registrant
and United States Trust Company of New York, including form of Note
(filed as Exhibit 4.05 to the Registrant's Registration Statement
on Form F-3, filed February 18, 1997 (Registration No. 333-6468)
(the "1997 Form F-3")).
4.05 Specimen Form of Note (filed as part of Exhibit 4.04 to the 1997
Form F-3).
4.06 Registration Rights Agreement, dated as of November 10, 1996, among
the Registrant, Lehman Brothers, Inc., Hambrecht & Quist, Cowen &
Company and Banque Indosuez (filed as Exhibit 4.07 to the
Registrant's 1997 Form F-3).
4.07 Share Purchase Agreement between Gesellschaft fur Multilinguale
Systeme GmbH and the Registrant (filed as Exhibit 4.11 to the
Registrant's Registration Statement on Form F-4, filed May 30, 1997
(Registration No. 333-6982)).
4.08 Warrant Agreement between the Registrant and Shoreline Pacific
(filed as Exhibit 4.16 to the Registrant's Registration Statement
on Form F-3, filed July 21, 1997 (Registration No. 333-7292)).
4.09 Subscription Agreement between the Registrant and Intel Atlantic,
Inc. (filed as Exhibit 10.45 to the Registrant's 1998 Form 20-F).
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<PAGE>
Exhibit
Number
-------
4.10 Registration Rights Agreement, dated April 14, 1998, relating to
sale of Common Stock by L&H Holding Control Group (filed as Exhibit
4.23 to the Registrant's Form 20-F for the year ended December 31,
1997).
4.11 Guarantee Agreement, dated May 27, 1998, between the Registrant and
Wilmington Trust Company (filed as Exhibit 4.24 to the Registrant's
Form F-3, filed June 9, 1998 (Registration No. 333-8922) (the "1998
Form F-3")).
4.12 Multiple Series Indenture, dated May 27, 1998, between the
Registrant and Wilmington Trust Company (filed as Exhibit 4.25 to
the 1998 Form F-3).
4.13 First Supplemental Indenture, dated May 27, 1998, between the
Registrant and Wilmington Trust Company (filed as Exhibit 4.26 to
the 1998 Form F-3).
4.14 Registration Rights Agreement, dated May 27, 1998 (filed as Exhibit
4.27 to the 1998 Form F-3).
4.15 Amended and Restated Declaration of Trust of the Registrant's
Delaware Trust, dated May 27, 1998 (filed as Exhibit 4.28 to the
1998 Form F-3).
4.16 Registration Rights Agreement, dated July 17, 1998, relating to
sale of Common Stock by L&H Holding Control Group (filed as Exhibit
2 to the Registrant's Form 6-K filed September 28, 1998).
4.17 Registration Rights Agreement, dated as of May 5, 2000, by and
among the Registrant, Stonington Holdings, LLC, Mellon Bank, N.A.,
as Trustee for the Bell Atlantic Master Trust, Merrill Lynch
KECALP, L.P. 1994, John Duerden, Robert G. Schwager, Joseph
Skrzypczak, Ronald Elwell, Thomas Hodge, Daniel Hart and Egon
Jungheim (filed as Exhibit 4.1 to the Registrant's Amendment to its
Current Report on Form 8-K/A filed on May 25, 2000).
4.18 Stockholders' Agreement, dated as of May 5, 2000, by and among the
Registrant, Stonington Holdings, LLC, LEHA, L&H Holding N.V., L&H
Holding III, Oldco N.V. and L&H Investment Company (filed as
Exhibit 4.2 to the Current Report on Form 8-K of the Registrant
filed on May 22, 2000).
4.19 Registration Rights Agreement, dated as of June 7, 2000,by and
among the Registrant, L&H Holdings USA, Inc., Dragon Systems, Inc.,
Janet M. Baker and Seagate Technology, Inc. on behalf of the
Principal Stockholders of Dragon Systems, Inc. (filed as Exhibit
4.1 to the June 22, 2000 8-K)
4.20 Stockholders' Agreement, dated as of June 7, 2000, by and between
the Registrant, LEHA, L&H Holding N.V., L&H Holding III, Oldco
N.V., L&H Investment Company, JK Baker LLC, JM Baker LLC, Seagate
LLC, Roth Special LLC, CFB Gilbert LLC, RGB Rumpole LLC, James K.
Baker, Janet M. Baker, Robert Roth, Seagate Technology, Inc., The
Paul G. Bamberg Trust, The Cherry F. Bamberg Trust (filed as
Exhibit 4.2 to the June 22, 2000 8-K).
5.01 Legal Opinion of Loeff Claeys Verbeke*
23.01 Consent of Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren.*
23.02 Consent of Loeff Claeys Verbeke (contained in Exhibit 5.01 hereof)
23.03 Consent of Brown, Rudnick, Freed & Gesmer*
23.04 Consent of Ernst & Young Reviseurs d'Entrepreises*
23.05 Consent of Deloitte & Touche LLP*
24.01 Power of Attorney (contained on pages II-6 and II-7 hereof)
_________________
* Filed herewith.
** Incorporated by reference to the Exhibit of the same number filed on the
Company's Form 20-F for the year ended December 31, 1999.
*** Translated in full or summary version; the original language version is
on file with the Registrant and is available upon request.
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