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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 1999
REGISTRATION NO. 333-79839
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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INTERVOICE, INC.
(Exact name of registrant as specified in its charter)
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TEXAS 3661 75-1927578
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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17811 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
(972) 454-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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DANIEL D. HAMMOND
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
17811 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
(972) 454-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
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SAM P. BURFORD, JR. THOMAS P. GARRETSON
DAVID E. MORRISON TRIPLETT, WOOLF & GARRETSON, LLC
THOMPSON & KNIGHT, P.C. 2959 NORTH ROCK ROAD, SUITE 300
1700 PACIFIC AVENUE, SUITE 3300 WICHITA, KANSAS 67226
DALLAS, TEXAS 75201 (316) 630-8100
(214) 969-1700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement and the
effective time of the merger (the "Merger") of InterVoice Acquisition Subsidiary
III, Inc., a Nevada corporation ("Merger Sub") and a wholly owned subsidiary of
InterVoice, Inc., a Texas corporation ("InterVoice"), with and into Brite Voice
Systems, Inc., a Kansas corporation ("Brite"), pursuant to the Acquisition
Agreement and Plan of Merger, dated as of April 27, 1999 (the "Merger
Agreement"), among InterVoice, Brite and Merger Sub attached as Annex A to the
Prospectus/Proxy Statement forming part of this Registration Statement.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this Form is a post effective amendment filed pursuant to Rule 462(d)
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. [ ]
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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 OR UNTIL THIS 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 IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY DRAFT DATED JULY 13, 1999 SUBJECT TO COMPLETION
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LOGO OF INTERVOICE, INC. LOGO OF BRITE VOICE SYSTEMS, INC.
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July 13, 1999
To the stockholders of Brite Voice Systems, Inc.:
We invite you to attend the special meeting of Brite stockholders to be held
on August 12, 1999, at 9:30 a.m., local time at Brite's offices at 7309 E. 21st
Street North, Wichita, Kansas 67206.
At the meeting, you will be asked to consider and vote upon a proposal to
adopt the Acquisition Agreement and Plan of Merger dated as of April 27, 1999
among InterVoice, Inc., a Texas corporation, InterVoice Acquisition Subsidiary
III, Inc., a Nevada corporation and a wholly-owned subsidiary of InterVoice, and
Brite. Under the terms of the merger agreement, such InterVoice subsidiary will
merge with and into Brite and Brite will become a wholly-owned subsidiary of
InterVoice. As a result of the merger, each share of common stock of Brite will
be converted into the right to receive that number of shares of InterVoice
common stock equal to $13.40 divided by the average of the per share closing
price of InterVoice common stock on the Nasdaq National Market for the 25
trading days immediately preceding the effective time of the merger. Such 25-day
average closing price must be at least $8.00 and no higher than $14.00. The
InterVoice common stock is listed on Nasdaq and the Chicago Stock Exchange under
the symbol "INTV."
The merger agreement and the merger are discussed in more detail in the
accompanying prospectus/proxy statement. A copy of the merger agreement is
included as Annex A to the prospectus/proxy statement. You should read these
documents carefully.
The merger is the second and final step in the acquisition of Brite by
InterVoice pursuant to the terms of the merger agreement. The first step
provided for in the merger agreement was a tender offer by a wholly-owned
subsidiary of InterVoice for 9,158,155 shares of Brite common stock. The tender
offer was consummated on June 9, 1999. If the merger is consummated, InterVoice
intends to submit to its shareholders at its 1999 annual meeting a proposal to
change its name to "InterVoice-Brite, Inc."
The affirmative vote of the holders of a majority of the outstanding shares
of Brite common stock on the proposal to adopt the merger agreement is a
condition to the consummation of the merger. InterVoice, through its
wholly-owned subsidiary, owns and has the right to vote at the meeting 9,158,155
shares of Brite common stock, which is sufficient to cause the merger agreement
to be adopted without the affirmative vote of any other stockholder.
Brite retained the investment banking firm of U.S. Bancorp Piper Jaffray
Inc. to act as its financial advisor in connection with the tender offer and the
merger. U.S. Bancorp Piper Jaffray delivered to the board of directors of Brite
a written opinion dated April 26, 1999 that, as of such date and based upon and
subject to certain matters stated in such opinion, the consideration to be
received by the holders of Brite common stock (other than InterVoice and its
affiliates) in the tender offer and the merger was fair, from a financial point
of view, to such holders. A copy of the opinion of U.S. Bancorp Piper Jaffray,
which sets forth, among other things, assumptions made, matters considered and
limitations on the review undertaken, is included in the enclosed
prospectus/proxy statement as Annex B thereto, and you are urged to, and should,
read such opinion carefully in its entirety.
After careful consideration, the Brite board of directors has determined
that the transactions contemplated by the merger agreement are fair to, and in
the best interests of, Brite's stockholders and unanimously recommends that
stockholders vote for adoption of the merger agreement.
Your vote is important. The affirmative vote of a majority of the
outstanding shares of Brite common stock is required to adopt the merger
agreement, so failure to vote your shares will have the same effect as a vote
against the adoption of the merger agreement. Accordingly, we urge you to
complete, sign and date the enclosed proxy card and return it in the enclosed
return envelope, whether or not you plan to attend the meeting.
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Sincerely, Sincerely,
/s/ DANIEL D. HAMMOND /s/ STANLEY G. BRANNAN
Daniel D. Hammond Stanley G. Brannan
Chairman and Chief Executive Officer Chairman, Chief Executive Officer and President
InterVoice, Inc. Brite Voice Systems, Inc.
Dallas, Texas Heathrow, Florida
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE MERGER DESCRIBED IN THIS PROSPECTUS/PROXY STATEMENT
OR THE INTERVOICE COMMON STOCK TO BE ISSUED IN THE MERGER, NOR HAVE THEY
DETERMINED IF THIS PROSPECTUS/PROXY STATEMENT IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SEE "RISK FACTORS" ON PAGE 12 FOR CERTAIN MATTERS YOU SHOULD CONSIDER.
This prospectus/proxy statement is dated July 13, 1999 and is first being
mailed to stockholders on or about July 15, 1999.
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REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about each of InterVoice and Brite that is not included in or delivered with
this document. You may obtain documents that are filed with the Securities and
Exchange Commission and incorporated by reference in this document without
charge by requesting them in writing or by telephone from the appropriate party
at the following addresses:
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For InterVoice documents: For Brite documents:
InterVoice, Inc. Brite Voice Systems, Inc.
17811 Waterview Parkway 250 International Parkway, Suite 300
Dallas, Texas 75252 Heathrow, Florida 32746
Attention: Corporate Secretary Attention: Corporate Secretary
Telephone: (972) 454-8000 Telephone: (407) 357-1000
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IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM EITHER COMPANY, YOU SHOULD DO
SO BY AUGUST 4, 1999 IN ORDER TO RECEIVE THEM BEFORE THE BRITE SPECIAL MEETING.
See "Additional Information for InterVoice Shareholders and Brite
Stockholders -- Where You Can Find More Information" (pages 78-80).
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LOGO OF BRITE VOICE SYSTEMS, INC.
250 International Parkway, Suite 300
Heathrow, Florida 32746
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 12, 1999
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To the stockholders of
Brite Voice Systems, Inc.:
A special meeting of stockholders of Brite Voice Systems, Inc., a Kansas
corporation, will be held at Brite's offices at 7309 E. 21st Street North,
Wichita, Kansas 67206 on August 12, 1999, at 9:30 a.m., local time, for the
following purposes:
1. To consider and vote upon a proposal to adopt the Acquisition Agreement
and Plan of Merger, dated as of April 27, 1999 among InterVoice, Inc., a
wholly-owned subsidiary of InterVoice, and Brite, and the transactions
contemplated by the merger agreement including, among other things, that:
- Brite will become a wholly-owned subsidiary of InterVoice; and
- each share of Brite common stock will be converted into the right to
receive approximately $13.40 worth of InterVoice common stock, subject to
adjustments described in the accompanying prospectus/proxy statement.
2. To transact such other business as may properly come before the meeting
or any adjournment or postponement of the meeting.
Only stockholders of record at the close of business on July 9, 1999 will
be entitled to notice of, and to vote at, the meeting or at any adjournments or
postponements of the meeting. A list of Brite stockholders entitled to vote at
the meeting will be available for inspection by any stockholder during usual
business hours at Brite's principal offices.
/s/ STANLEY G. BRANNAN
Chairman, Chief Executive Officer
and President
Heathrow, Florida
July 13, 1999
Your vote is important. Whether or not you expect to attend the meeting,
please complete, date, sign and return the enclosed proxy card promptly in the
enclosed postage-prepaid envelope in order to ensure your representation at the
meeting. Even if you have given your proxy, you may still vote in person if you
attend the meeting. Please note, however, that if your shares are held in
"street name," you must instruct your broker in order to vote. If you fail to
vote or fail to instruct your broker to vote your shares, the effect will be the
same as a vote against the merger agreement. Please do not send stock
certificates with your proxy card.
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 2
The Companies............................................. 2
Risk Factors.............................................. 3
Special Meeting of Stockholders of Brite.................. 3
Recommendation to Brite Stockholders...................... 3
Opinion of Brite's Financial Advisor...................... 3
The Merger................................................ 4
Certain Federal Income Tax Consequences................... 6
Comparative Per Share Market Price Information............ 6
Comparison of Stockholder and Shareholder Rights.......... 6
Selected Historical Financial Data........................ 7
Selected Historical Consolidated Financial Data of
InterVoice............................................. 7
Selected Historical Consolidated Financial Data of
Brite.................................................. 8
Selected Unaudited Pro Forma Combined Condensed Financial
Data................................................... 9
Comparative Per Share Data................................ 10
RISK FACTORS................................................ 12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... 18
SPECIAL MEETING OF BRITE STOCKHOLDERS....................... 21
General................................................... 21
Date, Time, and Place..................................... 21
Matters to be Considered at the Meeting................... 21
Record Date............................................... 21
Stock Entitled to Vote; Quorum............................ 21
Vote Required............................................. 22
Share Ownership of InterVoice Subsidiary.................. 22
Voting of Proxies......................................... 22
Revocability of Proxies................................... 22
Solicitation of Proxies................................... 22
Appraisal Rights.......................................... 23
THE MERGER.................................................. 23
General................................................... 23
Background of the Merger.................................. 25
Brite's Reasons for the Merger; Recommendation of Brite's
Board of Directors..................................... 31
Opinion of Brite's Financial Advisor...................... 33
Financing Arrangements Related to the Merger.............. 38
Certain Federal Income Tax Consequences................... 40
Accounting Treatment...................................... 41
Interests of Certain Persons in the Merger................ 41
Federal Securities Law Consequences....................... 41
Conversion of Shares; Procedures for Exchange of
Certificates........................................... 41
Appraisal Rights.......................................... 42
Nasdaq and Chicago Stock Exchange Listing................. 42
Delisting and Deregistration of Brite Common Stock........ 42
OTHER TERMS OF THE MERGER AGREEMENT......................... 42
Designation of Directors.................................. 42
Approval of the Merger at the Stockholder Meeting......... 43
Director of InterVoice.................................... 43
Brite Stock Option Plans.................................. 43
Acquisition Proposals..................................... 43
Indemnification and Insurance............................. 44
Representations and Warranties............................ 44
Termination............................................... 45
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Fees and Expenses......................................... 45
Amendments and Modifications.............................. 45
AT&T Warrant.............................................. 45
Conditions to Consummation of the Merger.................. 45
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS........... 47
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND
INFORMATION............................................... 54
DESCRIPTION OF INTERVOICE CAPITAL STOCK..................... 55
COMPARISON OF STOCKHOLDER AND SHAREHOLDER RIGHTS............ 55
General................................................... 55
Size and Classification of the Board of Directors......... 55
Removal of Directors; Filling Vacancies on the Board of
Directors.............................................. 55
Duties of Directors....................................... 56
Limitation on Directors' Liability........................ 56
Indemnification of Officers and Directors................. 57
Cumulative Voting......................................... 58
Shareholder and Stockholder Action by Written Consent..... 58
Special Meetings of Stockholders.......................... 58
Required Vote for Authorization of Certain Actions........ 59
Amendment of Corporate Articles of Incorporation and
Bylaws................................................. 59
Appraisal and Dissenters' Rights.......................... 59
Conflict-of-Interest Transactions......................... 61
Dividends and Other Distributions......................... 61
State Anti-Takeover Statutes.............................. 61
CERTAIN SHAREHOLDERS OF INTERVOICE.......................... 64
CERTAIN STOCKHOLDERS OF BRITE............................... 65
MANAGEMENT OF INTERVOICE AND EXECUTIVE COMPENSATION......... 65
Executive Officers and Directors of InterVoice............ 65
Compensation of Directors................................. 68
Committees of the Board of Directors...................... 68
Report of the Compensation Committee of the Board of
Directors.............................................. 69
Summary Compensation Table................................ 73
Option Grants............................................. 74
Options Exercised and Holdings............................ 74
Agreements with Executive Officers........................ 75
Stock Performance Graph................................... 77
LEGAL MATTERS............................................... 78
EXPERTS..................................................... 78
ADDITIONAL INFORMATION FOR INTERVOICE SHAREHOLDERS AND BRITE
STOCKHOLDERS.............................................. 78
Future Proposals.......................................... 78
Where You Can Find More Information....................... 78
ANNEXES TO THE PROSPECTUS/PROXY STATEMENT................... 81
ANNEX A -- Acquisition Agreement and Plan of Merger....... A-1
ANNEX B -- Opinion of U.S. Bancorp Piper Jaffray Inc. .... B-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: When and where is the Brite stockholder meeting?
A: Brite's meeting will take place at 9:30 a.m., local time, on August 12, 1999
at Brite's offices at 7309 E. 21st Street North, Wichita, Kansas 67206.
Q: What will I receive in the merger?
A: As a result of the merger, each share of Brite common stock that you own at
the effective time of the merger will be converted into the right to receive
that number of shares of InterVoice common stock equal to $13.40 divided by the
average of the per share closing price of InterVoice common stock on Nasdaq for
the 25 trading days immediately preceding the effective time of the merger. Such
25-day average closing price must be at least $8.00 and no higher than $14.00.
InterVoice will not issue fractional shares. You will instead be paid cash based
on such 25-day average closing price for any fractional shares of InterVoice
common stock that you would otherwise have received.
Q: What are the tax consequences of the merger to me?
A: We expect the exchange of shares by Brite stockholders to be a taxable event
for federal income tax purposes for most stockholders. In addition, the exchange
may also be a taxable transaction under applicable state, local or foreign tax
laws. A stockholder who receives InterVoice common stock in the merger will
recognize gain or loss for federal income tax purposes equal to the difference
between the fair market value of the InterVoice common stock at the effective
time of the merger (plus the amount of any cash received in lieu of fractional
shares) and such stockholder's adjusted tax basis in the shares of Brite common
stock exchanged in the merger.
Q: What do I need to do now?
A: Just mail your signed proxy card in the enclosed return envelope as soon as
possible, so that your shares may be represented at the stockholder meeting. In
order to assure that your vote is obtained, please give your proxy as instructed
on your proxy card even if you currently plan to attend the meeting in person.
The board of directors of Brite recommends you vote in favor of the merger.
Q: What do I do if I want to change my vote?
A: Just send in a later-dated, signed proxy card to Brite's Secretary before the
meeting. Alternatively, you can attend the stockholder meeting in person and
vote. You may also revoke your proxy by sending a notice of revocation to
Brite's Secretary at the address under "Summary -- The Companies" on page 2.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be permitted to vote them on the
merger. You should therefore be sure to provide your broker with instructions on
how to vote your shares. If you do not give voting instructions to your broker,
you will, in effect, be voting against the merger unless you appear in person at
the meeting and have made arrangements with your broker to, and in fact do, vote
in favor of the merger.
Q: Should I send in my stock certificates now?
A: No. If the merger is completed, we will send you written instructions for
exchanging your share certificates.
Q: When do you expect the merger to be completed?
A: We are working to complete the merger as quickly as possible. We hope to
complete the merger by August 13, 1999.
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SUMMARY
This summary highlights selected information from this prospectus/proxy
statement and may not contain all of the information that is important to you.
Accordingly, we recommend that you carefully read this entire document and the
documents to which we have referred you.
THE COMPANIES
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INTERVOICE, INC. BRITE VOICE SYSTEMS, INC.
INTERVOICE ACQUISITION SUBSIDIARY III, 250 INTERNATIONAL PARKWAY, SUITE 300
INC. HEATHROW, FLORIDA 32746
17811 WATERVIEW PARKWAY (407) 357-1000
DALLAS, TEXAS 75252
(972) 454-8000
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InterVoice develops, sells and services call automation systems with a
traditional emphasis on interactive voice response applications, which allow
individuals a self help facility using the keys on their touch-tone telephones,
the dials on their rotary telephones, the keyboards of their personal computers,
credit card terminals or their voices to access and/or provide information to
computer data bases utilized by businesses.
More recently, InterVoice has focused on systems for telecommunications
service providers to offer a variety of automated services such as processing
collect, debit and credit card calls, and advanced calling features such as
prepaid calling cards, voice and text messaging, one number personal numbering
plans and voice dialing. InterVoice has recently increased its emphasis on
customer relationship management systems which provide companies automated
customer service, telemarketing capabilities and the ability to generate sales
without human interaction (i.e., v-commerce and e-commerce).
InterVoice's systems are sold under the trade names "OneVoice(R),"
"AgentConnect(R)" and "InControl(R)." OneVoice(R) systems are used by a variety
of enterprises to disseminate and receive information efficiently, allowing
multiple callers simultaneous access to computer data bases without the expense
of maintaining an agent and workstation for each telephone line. AgentConnect(R)
systems improve call center efficiency by automating routine customer service
requests and by automatically dialing phone numbers and only transferring a call
to an agent if the call is answered and the called party remains on the phone.
InterVoice's customers also utilize AgentConnect(R) systems in v-commerce and
e-commerce environments to automate the processing and filling of orders.
OneVoice(R) and AgentConnect(R) applications currently function in a wide range
of industries, including insurance, banking and financial services,
telecommunications, higher education, help desk, government, utilities,
healthcare, insurance, cable TV, retail and wholesale distribution,
transportation and manufacturing. InterVoice's InControl(R) systems provide
enhanced services for telecommunications networks by automating calls which
utilize alternate billing methods, and provide new, revenue generating calling
features and services. InterVoice's products also include software development
tools designed to support a number of diverse product applications and to
simplify system customization.
InterVoice Acquisition Subsidiary III, Inc. is a corporation newly formed
by InterVoice for the purpose of effecting the tender offer and the merger.
InterVoice owns all of the outstanding capital stock of the subsidiary. It is
not anticipated that the subsidiary will engage in any activities other than
those incident to the tender offer and the merger and the related financing.
Brite designs, integrates, assembles, markets and supports voice processing
and call processing systems and services which incorporate prepaid/postpaid
applications, voice response, voice recognition, voice/ facsimile messaging,
audiotex and interactive computer applications into both standard products and
customized market solutions.
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RISK FACTORS
See "Risk Factors" for a description of certain risks to be considered in
deciding how to vote upon the matters to be presented at the Brite special
meeting.
SPECIAL MEETING OF STOCKHOLDERS OF BRITE
TIME, PLACE AND DATE
The special meeting of stockholders of Brite will be held at Brite's
offices at 7309 E. 21st Street North, Wichita, Kansas 67206 on August 12, 1999,
at 9:30 a.m., local time.
PURPOSES OF THE SPECIAL MEETING
At the special meeting, holders of shares of Brite common stock will
consider and vote upon a proposal to adopt the merger agreement. As a result of
the merger, Brite will become a wholly-owned subsidiary of InterVoice and shares
of Brite common stock will be converted into the right to receive approximately
$13.40 worth of InterVoice common stock, subject to adjustments described in
more detail elsewhere in this prospectus/proxy statement. Stockholders will also
consider and vote upon any other matter that may properly come before the
special meeting.
VOTE REQUIRED; RECORD DATE
The adoption of the merger agreement will require approval by the
affirmative vote of the holders of a majority of the outstanding shares of Brite
common stock entitled to vote thereon. Holders of shares of Brite common stock
are entitled to one vote per share. Only holders of shares of Brite common stock
at the close of business on July 9, 1999 will be entitled to notice of and to
vote at the special meeting. As of the record date, a wholly-owned subsidiary of
InterVoice owns and has the right to vote at the special meeting 9,158,155
shares of Brite common stock, which is sufficient to cause the merger agreement
to be adopted without the affirmative vote of any other stockholder.
QUORUM
The presence in person or by properly executed proxy of holders of a
majority of all of the outstanding shares of Brite common stock entitled to vote
at the Brite special meeting is necessary to constitute a quorum at the meeting.
RECOMMENDATION TO BRITE STOCKHOLDERS
The Brite board of directors has unanimously approved the merger agreement
and determined that the merger is fair to, and in the best interests of, Brite's
stockholders. Accordingly, the Brite board of directors unanimously recommends
that you vote for the approval of the merger agreement and the merger.
OPINION OF BRITE'S FINANCIAL ADVISOR
U.S. Bancorp Piper Jaffray Inc., financial advisor to Brite, has delivered
its written opinion to the Brite board of directors, dated April 26, 1999, to
the effect that, as of such date and based upon and subject to certain matters
in such opinion, the consideration to be received by the holders of shares of
Brite common stock (other than InterVoice and its affiliates) in the tender
offer and the merger is fair, from a financial point of view, to such holders.
The full text of U.S. Bancorp Piper Jaffray's written opinion, which sets forth
among other things, assumptions made, matters considered and limitations on the
review undertaken, is attached to this prospectus/proxy statement as Annex B.
You should read such opinion carefully in its entirety. The opinion of U.S.
Bancorp Piper Jaffray is directed only to the matters set forth therein and does
not constitute a recommendation to you as to how you should vote at the special
meeting.
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THE MERGER
GENERAL
A wholly-owned subsidiary of InterVoice will merge into Brite. As a result,
Brite will become a wholly-owned subsidiary of InterVoice.
The merger agreement is attached as Annex A to this prospectus/proxy
statement. We encourage you to read the merger agreement as it is the legal
document that governs the merger.
WHAT BRITE STOCKHOLDERS WILL RECEIVE
As a result of the merger, each share of Brite common stock will be
converted into the right to receive that number of shares of InterVoice common
stock equal to $13.40 divided by the average of the per share closing price of
InterVoice common stock on Nasdaq for the 25 trading days immediately preceding
the effective time of the merger. Such 25-day average closing price must be at
least $8.00 and no higher than $14.00. You will receive cash in lieu of any
fractional shares of InterVoice common stock. The amount of cash that you will
receive will be determined by multiplying any fractional share of InterVoice
common stock you are entitled to receive by the 25-day average closing price of
InterVoice common stock.
As long as the 25-day average closing price of InterVoice common stock is
at least $8.00 and does not exceed $14.00 at the effective time of the merger,
the value of the merger consideration, based on the 25-day average closing
price, will equal approximately $13.40. If, however, such 25-day average closing
price drops below $8.00 or exceeds $14.00, the value of the merger
consideration, based on the 25-day average closing price, at the effective time
of the merger may be less or greater than the $13.40 in cash per Brite share
that was paid in the tender offer.
Example:
- On May 15, 1999, the 25-day average closing price of InterVoice common
stock was $10.14. Based on this average closing price, the exchange ratio
in the merger is approximately 1.3215 ($13.40 / $10.14) shares of
InterVoice common stock for each share of Brite common stock. Applying
this exchange ratio, each outstanding share of Brite common stock at the
effective time of the merger would be exchanged for that number of shares
of InterVoice common stock and cash in lieu of fractional shares of
InterVoice common stock with a value, based on the 25-day average closing
price of $10.14, of approximately $13.40, and the maximum number of
shares of InterVoice common stock that InterVoice would be required to
issue is 4,114,848. This assumes that all stock options outstanding under
Brite's stock option plans are cancelled as contemplated by the merger
agreement and that there are 3,113,773 shares of Brite common stock
outstanding, excluding shares owned by InterVoice or its subsidiaries,
immediately prior to the effective time of the merger.
For additional examples of the calculation of the merger consideration
under various scenarios, including when the 25-day average closing price of
InterVoice common stock is below $8.00 or exceeds $14.00, see "The
Merger -- General."
APPRAISAL RIGHTS
Holders of Brite common stock are not entitled to dissenters' appraisal
rights under Kansas law in connection with the merger because, except for cash
in lieu of fractional shares, such holders will receive consideration in the
merger solely consisting of shares of InterVoice common stock that will be
listed on Nasdaq and the Chicago Stock Exchange as of the closing of the merger.
4
<PAGE> 11
ACCOUNTING TREATMENT
The acquisition of Brite by InterVoice, which includes the merger, will be
accounted for under the "purchase" method of accounting in accordance with
generally accepted accounting principles.
STOCK EXCHANGE LISTINGS
Pursuant to applications filed by InterVoice, the shares of InterVoice
common stock to be issued in the merger have been authorized for listing on
Nasdaq and the Chicago Stock Exchange, subject to official notice of issuance.
CONDITIONS TO THE MERGER
InterVoice and Brite will complete the merger only if certain conditions,
including the following, are satisfied or waived:
- there is no statute, rule, order or injunction prohibiting the merger;
- the Registration Statement on Form S-4, of which this prospectus/proxy
statement is a part, is declared effective by the Securities and Exchange
Commission; and
- Brite stockholders approve the merger.
TERMINATION OF THE MERGER AGREEMENT
InterVoice and Brite can mutually agree to terminate the merger agreement
at any time without completing the merger. The merger agreement may also be
terminated in certain other circumstances, including the following:
(1) by either InterVoice or Brite if a court or governmental authority
has acted to prevent the merger; or
(2) by Brite if InterVoice or its wholly-owned subsidiary materially
breaches any of its representations, warranties or covenants under the
merger agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the merger by the Brite board of
directors, holders of Brite common stock should be aware that the directors of
Brite may have certain interests that are different from or in addition to those
interests of the holders of Brite common stock generally. These interests
include Brite's repurchase for cash of stock options held by the directors of
Brite as contemplated by the merger agreement as well as an agreement with
Stanley G. Brannan, Brite's Chairman and Chief Executive Officer, regarding his
service as a director of InterVoice following the closing of the merger. For a
more detailed description of these interests, see "The Merger -- Interests of
Certain Persons in the Merger."
REGULATORY MATTERS
Both InterVoice and Brite have made filings with the Antitrust Division of
the Department of Justice and the Federal Trade Commission, as required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Under that act, the
companies could not have completed the merger unless a required waiting period
had expired or early termination was granted by the Department of Justice and
the Federal Trade Commission. These two agencies granted early termination to
InterVoice and Brite on May 14, 1999.
5
<PAGE> 12
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of shares of InterVoice common stock will be a taxable event
for federal income tax purposes and may also be a taxable transaction under
applicable state, local or foreign tax laws. A stockholder who receives
InterVoice common stock in the merger will recognize gain or loss for federal
income tax purposes equal to the difference between the fair market value of the
InterVoice common stock at the effective time of the merger, plus the amount of
any cash received in lieu of fractional shares, and such stockholder's adjusted
tax basis in the shares of Brite common stock exchanged in the merger.
The tax consequences discussed above may not apply to certain categories of
holders of shares of Brite common stock, such as foreign holders. You are urged
to consult your tax advisor to determine the specific tax consequences of the
merger under federal, state, local or other tax laws, including any tax return
filing or other tax reporting requirements. See "The Merger -- Certain Federal
Income Tax Consequences" for more information regarding the tax consequences of
the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
InterVoice and Brite are both listed on Nasdaq, and InterVoice is also
listed on the Chicago Stock Exchange. On April 26, 1999, the last day of trading
prior to the public announcement of the merger agreement, InterVoice common
stock closed on Nasdaq at $11.03 and Brite common stock closed at $10.56. On
July 12, 1999, the most recent practicable date prior to the printing of this
prospectus/proxy statement, InterVoice common stock closed on Nasdaq at $14.69
and Brite common stock closed at $14.13.
COMPARISON OF STOCKHOLDER AND SHAREHOLDER RIGHTS
The rights of stockholders of Brite currently are governed by Kansas law
and the Articles of Incorporation and the Bylaws of Brite. Upon consummation of
the merger, stockholders of Brite will become shareholders of InterVoice, which
is a Texas corporation, and their rights as shareholders of InterVoice will be
governed by Texas law and the Articles of Incorporation and the Bylaws of
InterVoice. For a discussion of various differences between the rights of
stockholders of Brite and the rights of shareholders of InterVoice, see
"Comparison of Stockholder and Shareholder Rights."
6
<PAGE> 13
SELECTED HISTORICAL FINANCIAL DATA
The following tables present selected historical financial data of
InterVoice and Brite. We derived this information from the audited financial
statements of InterVoice for the fiscal years 1995 through 1999, the audited
financial statements of Brite for the years 1994 through 1998, and the unaudited
financial statements of Brite for the three months ended March 31, 1998 and
1999. You should read the following information in conjunction with the
historical financial statements of InterVoice and Brite incorporated by
reference in this prospectus/proxy statement.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF INTERVOICE
The following selected consolidated financial data are derived from
InterVoice's consolidated financial statements. You should not rely on the
historical results as being indicative of the results that may be expected for
any future period. You should read this consolidated data in conjunction with
the consolidated financial statements and related notes contained in
InterVoice's annual reports and other information that we have filed with the
SEC and incorporated in this prospectus/proxy statement by reference. Share and
per share data have been restated to reflect InterVoice's two-for-one stock
split effective January 11, 1999. In reading this data, you should note the
following:
- Fiscal 1998 net sales, loss from operations and net loss were impacted by
adoption of the American Institute of Certified Public Accountants'
Statement of Position 97-2 (SOP 97-2), tightening of certain of the
Company's credit practices, and non-recurring expenses of $7.4 million.
Non-recurring expenses include: $1.0 million associated with certain
personnel matters, including the resignation of the Company's former
President and Chief Operating Officer, $1.8 million of in-process
research and development relating to the purchase of the ESP product line
from Integrated Telephony Products, Inc., $0.6 million of accounts
receivable write-offs related to certain cancellations of service
contracts (classified in selling, general, and administrative expenses),
and $4.0 million of asset write-offs (classified in cost of goods sold),
including $1.0 million for inventory obsolescence in light of a migration
of the Company's customers to its NSP-5000 platform and $3.0 million for
the impairment of certain intangible assets. Without these items, net
sales in fiscal 1998 would have been $107.8 million, income from
operations would have been $2.6 million, and net income would have been
$2.4 million, or $0.08 per share.
- Fiscal 1997 income from operations and net income were impacted by
charges totaling approximately $1.8 million and $1.3 million,
respectively, or $0.04 per share, resulting from a non-recurring
litigation settlement. Without this charge, net income for fiscal 1997
would have been $0.43 per share.
- Fiscal 1995 income from operations and net income were impacted by a
non-recurring charge totaling approximately $10.5 million, or $0.32 per
share, associated with a significant portion of the purchase price of
VoicePlex Corporation having been attributed to in-process research and
development. Without this charge, earnings for fiscal 1995 would have
been $0.40 per share.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net Sales............................. $136,904 $102,308 $104,846 $97,103 $76,265
Income (loss) from operations......... 29,148 (8,427) 17,549 25,055 9,304
Net income (loss)..................... 20,193 (5,140) 12,760 17,259 2,534
Net income (loss) per share:
Basic.............................. 0.72 (0.17) 0.40 0.55 0.08
Diluted............................ 0.68 (0.17) 0.39 0.53 0.08
</TABLE>
7
<PAGE> 14
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets......................... $111,530 $ 84,893 $109,240 $89,727 $62,719
Long-term debt....................... 5,000 -- -- -- --
Stockholders' equity................. 82,572 56,631 86,191 69,561 46,847
</TABLE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF BRITE
The following selected consolidated financial data are derived from Brite's
consolidated financial statements. You should not rely on the historical results
as being indicative of the results that may be expected for any future period.
In reading this data, you should note the following:
- The 1998 results include an after tax gain of $9,122,000 relating to the
sale of Brite's TSL division, which was consummated effective December 1,
1998. The operating results of this division, and the gain, have been
reclassified and reported in discontinued operations for each of the
years presented below. The 1998 results also include charges of
$1,410,000 related to the termination of certain executives. These
charges are included in operating income (loss).
- The 1997 results include a pre-tax gain of $29,091,000 relating to the
sale of certain assets of Brite's electronic publishing business, which
was consummated on October 30, 1997. The operating results of this
division and the gain on the sale are included in net income from
continuing operations. The 1997 results also include $10,980,000 in
charges related to the restructuring of operations and the relocation of
Brite's headquarters to Heathrow, Florida. These charges are included in
operating income (loss).
- The 1995 results include costs associated with the acquisition of the TSL
division of $8,630,000, which are reported in discontinued operations.
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
--------------------- ------------------------------------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996 1995 1994
--------- --------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues.................. $36,573 $25,375 $135,715 $103,373 $94,166 $81,287 $66,304
Operating income (loss)... 1,888 249 2,218 (10,737) 7,339 7,170 6,878
Net income (loss):
Continuing operations... 1,377 381 1,773 10,437 5,837 5,785 5,569
Discontinued
operations............ -- 315 11,344 1,245 2,718 (1,835) (1,144)
------- ------- -------- -------- ------- ------- -------
Total............... $ 1,377 $ 696 $ 13,117 $ 11,682 $ 8,555 $ 3,950 $ 4,425
Diluted earnings per
share:
Continuing operations... $ 0.11 $ 0.03 $ 0.15 $ 0.87 $ 0.48 $ 0.48 $ 0.48
Discontinued
operations............ -- $ 0.03 0.92 0.10 0.23 (0.15) (0.10)
------- ------- -------- -------- ------- ------- -------
Total............... $ 0.11 $ 0.06 $ 1.07 $ 0.97 $ 0.71 $ 0.33 $ 0.38
Weighted average shares
used in computation... 12,324 12,200 12,310 12,068 12,127 11,925 11,526
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------------------
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995 1994
----------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................... $ 62,569 $ 62,037 $ 52,879 $37,671 $26,934 $23,772
Total assets....................... 115,644 122,119 104,226 74,493 58,577 51,888
Long-term debt..................... -- -- -- -- -- --
Stockholders' equity............... 85,350 84,913 70,114 54,181 40,446 35,547
</TABLE>
8
<PAGE> 15
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following unaudited pro forma combined condensed financial data have
been prepared to give effect to the following transactions, which are
collectively referred to as the "pro forma transactions," using the purchase
method of accounting:
- the tender offer;
- the funding of the debt financing;
- the merger of a wholly-owned subsidiary of InterVoice with and into Brite
whereby Brite becomes a wholly-owned subsidiary of InterVoice at an
assumed exchange ratio of 1.3215 shares of InterVoice common stock for
each share of Brite common stock;
- the repurchase by Brite of the Common Stock Purchase Warrant dated
December 12, 1997 issued by Brite to AT&T Corp.;
- the repurchase by Brite of all outstanding stock options under Brite's
stock option plans as contemplated by the merger agreement; and
- the costs and expenses incurred in consummating the pro forma
transactions.
The actual exchange ratio used for purposes of determining the number of
shares of InterVoice common stock to be issued at the closing of the merger may
be different at the effective time of the merger as described in "The
Merger -- General." The unaudited pro forma combined condensed financial data do
not reflect any cost savings or other synergies anticipated by InterVoice or
Brite management as a result of the merger. You should not rely on the unaudited
pro forma combined condensed financial data as being indicative of future
operations or the actual results that would have occurred had the pro forma
transactions been consummated at the beginning of the periods presented.
The unaudited pro forma combined condensed financial data of InterVoice
give effect to the consummation of the pro forma transactions, as if they had
been consummated: (1) on March 1, 1998, in the case of the operating data and
(2) on February 28, 1999, in the case of the balance sheet data. In making the
pro forma adjustments to InterVoice's and Brite's historical year end financial
data to prepare the pro forma combined condensed financial data, no adjustment
has been made to take into account the two companies' differing fiscal periods.
You should read the following information in conjunction with the
historical financial statements of InterVoice incorporated by reference in this
prospectus/proxy statement. See "Unaudited Pro Forma Combined Financial
Statements" included elsewhere in this prospectus/proxy statement for additional
pro forma information.
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
FISCAL YEAR ENDED
FEB. 28, 1999
---------------------------------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C>
OPERATING DATA:
Net sales........................................... $272,619
Income from operations.............................. 14,299
Income from continuing operations................... 3,359
Income from continuing operations per share
Basic............................................. .11
Diluted........................................... .10
</TABLE>
9
<PAGE> 16
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
FISCAL YEAR ENDED
FEB. 28, 1999
----------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Total assets................................................ $323,724
Long-term debt, less current portion........................ 130,000
Stockholders' equity........................................ 104,173
</TABLE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain per share data for InterVoice on an
historical basis, for InterVoice and Brite on a pro forma combined basis, for
Brite on an historical basis and for Brite on a per share equivalent pro forma
combined basis. This information gives effect to the proposed merger at an
assumed exchange ratio of 1.3215 shares of InterVoice common stock for each
share of Brite common stock. Historical book value per common share amounts are
computed by dividing stockholders' equity by the number of outstanding shares of
Brite common stock or InterVoice common stock, as the case may be, at the end of
each period. Pro forma combined book value (unaudited) per InterVoice common
share is computed by dividing pro forma stockholders' equity by the pro forma
number of shares of InterVoice common stock outstanding as of February 28, 1999,
assuming the issuance of 4,114,848 shares of InterVoice common stock in
connection with the pro forma transactions. The pro forma combined per Brite
equivalent common share amounts are calculated by multiplying the InterVoice
unaudited pro forma combined per common share amounts by the assumed exchange
ratio. The unaudited pro forma combined and equivalent financial data do not
reflect any cost savings or other synergies anticipated by InterVoice or Brite
management as a result of the merger. You should not rely on the pro forma
information as being indicative of future results. In making the pro forma
adjustments to InterVoice's and Brite's historic per common share data to
prepare the pro forma combined InterVoice common share data and the pro forma
combined per Brite equivalent common share data, no adjustment has been made to
take into account the two companies' differing year ends. Neither InterVoice nor
Brite has ever paid cash dividends.
You should read the information below together with the historical
financial statements (and related notes) of each of the companies contained in
their reports and other information filed with the SEC and incorporated by
reference.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
FEBRUARY 28, 1999
-----------------
(UNAUDITED)
<S> <C>
InterVoice Historic per Common Share Data:
Net income -- assuming dilution........................... $ .68
Book value................................................ 2.87
Pro Forma Combined per InterVoice Common Share Data
(unaudited):
Income from continuing operations -- assuming dilution.... $ .10
Book value................................................ 3.17
</TABLE>
10
<PAGE> 17
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31, 1998
-----------------
(UNAUDITED)
<S> <C>
Brite Historic per Common Share Data:
Income from continuing operations -- assuming dilution.... $0.15
Book value................................................ 6.93
Pro Forma Combined per Brite Equivalent Common Share Data
(unaudited):
Income from continuing operations -- assuming dilution.... $ .13
Book value................................................ 4.19
</TABLE>
11
<PAGE> 18
RISK FACTORS
You should carefully consider the following risk factors and warnings
before making an investment decision. If any of the following risks actually
occurs, InterVoice's business, financial condition or results of operations
could be negatively affected in a material way, the price of InterVoice common
stock could decline, and you may lose all or part of your investment in
InterVoice common stock resulting from the merger. You should also refer to the
other information contained in this prospectus/proxy statement and incorporated
in this prospectus/proxy statement by reference, including InterVoice's
consolidated financial statements and the notes to these financial statements
and the unaudited pro forma combined financial statements and the notes to these
pro forma financial statements.
A SIGNIFICANT DECLINE IN THE MARKET PRICE OF INTERVOICE COMMON STOCK COULD
RESULT IN THE VALUE OF THE CONSIDERATION RECEIVED FOR EACH SHARE OF BRITE COMMON
STOCK EXCHANGED IN THE MERGER TO BE LESS THAN THE $13.40 PER SHARE PAID FOR
SHARES OF BRITE COMMON STOCK IN THE TENDER OFFER
The number of shares of InterVoice common stock into which Brite common
stock will be converted in the merger is based on the 25-day average closing
price, which must be at least equal to $8.00 and no higher than $14.00. As long
as InterVoice's 25-day average closing price is at least $8.00 at the effective
time of the merger, the market value of InterVoice common stock received for
each share of Brite common stock at such time should be at least equal to
$13.40, based on the 25-day average closing price. If, however, the 25-day
average closing price of InterVoice common stock were to drop below $8.00, the
market value of the shares of InterVoice common stock, based on the 25-day
average closing price, that stockholders of Brite would receive for each share
of Brite common stock exchanged in the merger would be less than the $13.40 cash
per share paid for shares of Brite common stock in the tender offer. The price
of InterVoice common stock at the effective time of the merger may vary
significantly from the price on the date the merger agreement was signed, and at
the date of this prospectus/proxy statement and at the date of the special
meeting of Brite stockholders. Such variations may be the result of changes in
the business, operations or prospects of InterVoice or Brite, market assessments
of the likelihood that the merger will be consummated and the timing thereof,
regulatory considerations, general market and economic conditions and other
factors. Stockholders of Brite are urged to obtain current market quotations for
InterVoice common stock.
THE BANK LOAN TO FINANCE THE BRITE ACQUISITION PUTS INTERVOICE AT FINANCIAL RISK
InterVoice borrowed $135 million under a credit agreement with Bank of
America National Trust and Savings Association to finance the acquisition of
Brite. On a pro forma basis as of February 28, 1999 giving effect to the pro
forma transactions, InterVoice's total long-term debt, including the current
portion of its long-term debt, would have been $135 million, and its total
stockholders' equity would have been $104 million. The ability of InterVoice to
service its debt obligations is dependent upon its future operating performance
and its ability to raise additional capital through bank financing or through
debt and/or equity offerings, which in turn are subject to economic, financial,
competitive, business and other factors including factors beyond InterVoice's
control. Our substantial indebtedness could have important consequences. For
example it could:
- limit our ability to obtain additional financing for working capital
expenditures, debt service requirements and other general corporate
purposes;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing our funds
available for other purposes, including working capital, capital
expenditures, acquisitions and general corporate purposes;
- make us more vulnerable to economic downturns, limiting our ability to
withstand competitive pressures and reduce our flexibility in responding
to changing business and economic conditions;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
12
<PAGE> 19
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit our ability to borrow additional funds.
FAILURE OR INABILITY TO SUCCESSFULLY INTEGRATE THE OPERATIONS AND PRODUCTS OF
BRITE COULD NEGATIVELY IMPACT INTERVOICE'S BUSINESS
Management believes that InterVoice will be able to achieve certain cost
savings and other synergies as a result of combining InterVoice and Brite in the
merger. However, there can be no assurance that such synergies will be realized.
Regardless of the level of savings actually realized, the level of savings in
InterVoice's fiscal year ending February 28, 2000 will be affected by
transaction costs, presently expected to aggregate approximately $10.8 million
for InterVoice and Brite.
Additionally, the future success of InterVoice will depend in part upon our
ability to integrate and operate Brite successfully with our business. The
inability to integrate the products of InterVoice and Brite while maintaining or
increasing the market share that such products had prior to the merger could
decrease the revenues historically generated from such products. The integration
process will require the dedication of management resources, which may
temporarily distract attention from the day-to-day business of InterVoice. The
future success of InterVoice will also depend in part on our ability to retain
and assimilate certain key employees of Brite. There can be no assurance that
InterVoice will be able to efficiently integrate and operate Brite and its
products with our business or retain or assimilate key employees of Brite. A
failure to do so could have a material adverse effect on InterVoice's results of
operations or financial condition.
YOU MAY BE VOTING ON THE MERGER WHEN THE MOST RECENT QUARTERLY FINANCIAL
INFORMATION IS NOT AVAILABLE
This prospectus/proxy statement will be mailed on or about July 12, 1999
and you will have until August 12, 1999 to vote with respect to the merger.
Neither InterVoice's financial results for its second quarter ending August 31,
1999 nor Brite's financial results for its second quarter ended June 30, 1999 or
any portion of its partially completed third quarter will be available to you
when you vote upon the merger. InterVoice's quarterly results could be
negatively affected by a variety of factors, including those set forth in this
"Risk Factors" section.
INTERVOICE OPERATES IN THE HIGHLY COMPETITIVE TELECOMMUNICATIONS INDUSTRY; OUR
FAILURE TO MEET
RAPIDLY CHANGING MARKET DEMANDS COULD NEGATIVELY IMPACT OUR COMPETITIVE POSITION
The call automation industry is fragmented and highly competitive.
Technological advances are critical to industry leadership, and InterVoice
competes primarily on the basis of its products having a broad range of
capabilities and features, professional services such as customizing systems for
a customer's particular needs, and customer support services. The principal
competitors for InterVoice's OneVoice(R) systems include Lucent Technologies
(formerly part of AT&T Corp.), Periphonics and Edify. The principal competitors
for InterVoice's AgentConnect(R) systems include Davox, EIS and Lucent
Technologies (formerly Mosaix). The principal competitors for InterVoice's
telecommunications products include Lucent Technologies (including the former
Octel), Comverse Technology (including the former Boston Technology), Glenayre
Technologies and Periphonics. We expect that competition from existing
competitors will continue to intensify. We may also face market entry from
non-traditional competitors, including telephone switching equipment
manufacturers and independent call automation service bureaus. Many of
InterVoice's competitors have greater financial, technological and marketing
resources than InterVoice has. These competitors may be able to use their
resources to adapt more quickly to new or emerging technologies or to devote
greater resources to the promotion and sale of their products and services.
INTERVOICE'S ABILITY TO MEET CHANGES IN TECHNOLOGY COULD BE EXPENSIVE AND, IF WE
DO NOT KEEP UP WITH
THESE CHANGES, WE COULD LOSE EXISTING CUSTOMERS AND BE UNABLE TO ATTRACT NEW
CUSTOMERS
InterVoice experiences ever-increasing demands from our existing and
prospective customers for our products to be Year 2000 compliant and compatible
with a variety of rapidly proliferating computing,
13
<PAGE> 20
telephony and computer networking technologies and standards. The ultimate
success of InterVoice's products is dependent, to a large degree, on InterVoice
allocating resources to developing and improving products compatible with those
technologies, standards and functionalities that ultimately become widely
accepted by InterVoice's actual and prospective customers. Our success is also
dependent, to a large degree, on our ability to implement arrangements with
other vendors with complementary product offerings to provide actual and
prospective customers greater functionality and to ensure that our products are
Year 2000 compliant and compatible with the increased variety of technologies
and standards. InterVoice has committed substantial resources to enhance our
existing products and to develop and market new products. We cannot guarantee
that we will be successful in maintaining and developing products and services
that incorporate new technology and standards on a timely basis. We also cannot
guarantee that we will continue to be able to deliver the products and services
demanded by the marketplace.
YEAR 2000 PROBLEMS FOR US OR OUR CUSTOMERS COULD INCREASE OUR LIABILITIES AND
EXPENSES AND DECREASE OUR
REVENUES AND PROFITABILITY
Many currently-installed computer systems and software products are coded
to accept only two-digit entries in year code fields. These year code fields
will need to accept four-digit entries to distinguish 21st century dates from
20th century dates. As a result, telecommunications equipment, computer systems
and/or software used by many companies may need to be upgraded or replaced to
comply with such "Year 2000" requirements. Significant uncertainty exists in the
telecommunications and software industries concerning potential effects
associated with such compliance.
InterVoice has reviewed our products and believes that the versions
currently offered to InterVoice customers are Year 2000 compliant. However,
InterVoice's assessment of InterVoice's current products is dependent upon the
accuracy of disclosures and representations of vendors of component parts of
InterVoice's products. Also, many of InterVoice's customers are using earlier
versions of InterVoice's software products and other products that may not be
Year 2000 compliant. InterVoice's products are generally integrated with a
customer's enterprise system, which involves software products developed by
other vendors. A customer may mistakenly believe that Year 2000 problems with
its enterprise system are attributable to InterVoice products. Consequently,
InterVoice may be subject to claims based on Year 2000 compliance issues related
to a customer's enterprise systems, third party products, custom modifications
to InterVoice's products by third parties, a customer's use of earlier products
which may not be completely Year 2000 compliant, InterVoice's warranty
obligations under customer contracts, issues arising from a customer's unique
application or the integration of InterVoice products with other products.
InterVoice has not been a party to any legal proceeding involving products or
services in connection with Year 2000 compliance issues; however, there is no
assurance that InterVoice will not in the future be required to defend its
products or services in such proceedings, and any resulting liability for
damages could negatively impact InterVoice's business, operating results and
financial condition.
InterVoice believes that the purchasing patterns of customers and potential
customers may be significantly affected by Year 2000 issues. Many companies are
expending significant resources to correct or replace their current software
systems to achieve Year 2000 compliance. These expenditures may result in
reduced funds available to purchase products such as those offered by
InterVoice. Many customers and potential customers may also defer installing or
purchasing Year 2000 compliant products until they believe it is absolutely
necessary, thus resulting in potentially deferred sales. Conversely, Year 2000
issues may cause other companies to accelerate installations or purchases,
thereby causing an increase in short-term revenues and a consequent decrease in
long-term revenues from products. Additionally, Year 2000 issues could cause a
significant number of companies, including current customers of InterVoice, to
reevaluate their current system needs and, as a result, consider switching to
other systems or suppliers. InterVoice's business could also be adversely
affected if potential new customers decide not to purchase InterVoice's products
and services because they are focusing their information technology resources on
Year 2000 issues in their own organizations. These Year 2000 issues could
materially adversely affect InterVoice's business, financial condition and
results of operations.
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InterVoice anticipates that its testing and remediation program for Year
2000 issues with respect to InterVoice's existing mission critical systems
should be substantially completed by August 1999. Because most of the
expenditures to replace and upgrade these systems have been made and will be
incurred in the ordinary course of business (i.e., on a non-accelerated basis),
InterVoice does not anticipate that it will incur material incremental expenses
in connection with our Year 2000 remedial efforts. As a result of the program to
replace and upgrade InterVoice's existing internal systems, and the efforts of
the Year 2000 project team, InterVoice believes that these systems will be
century-compliant prior to the Year 2000. However, there is no assurance that
InterVoice will identify and resolve any and all century compliance problems
with InterVoice's existing internal systems in a timely manner, that the
expenses associated with such remedial efforts will not be significant, or that
such problems will not have a material adverse effect on InterVoice's business,
operating results and financial condition.
IF SUITABLE NON-PROPRIETARY COMPUTING PLATFORMS AND SYSTEM OPERATING SOFTWARE
THAT ARE COMPATIBLE WITH
INTERVOICE'S PRODUCTS BECOME UNAVAILABLE IN THE FUTURE, INTERVOICE'S OPERATING
RESULTS COULD BE NEGATIVELY IMPACTED
InterVoice's hardware and software products are designed to be independent
of the host computer platform and the system operating software. InterVoice's
products have the capability to operate on computer platforms produced by a
variety of manufacturers. InterVoice delivers systems integrated with the
computer platform of customers' choice instead of dictating a specific computer
platform. InterVoice's InterSoft(R) run-time software, which is utilized by
InterVoice's OneVoice(R), AgentConnect(R) and InControl(R) systems, is
simultaneously compatible with the Windows NT, UNIX and OS/2 operating systems.
This operating software independence allows InterVoice to avoid the expense of
maintaining multiple versions of our run-time software. Nevertheless, there is
no commitment on the part of computer manufacturers or software companies to
continue to release platforms and system operating software compatible with
InterVoice's products. Any failure by these computer manufacturers or software
companies to supply suitable platforms and system operating software could cause
InterVoice to make significant expenditures to adapt products for future
computer platforms and system operating software, and could have a significant
negative impact on InterVoice's operating results.
INTERVOICE'S RELIANCE ON SIGNIFICANT VENDOR RELATIONSHIPS COULD RESULT IN
SIGNIFICANT EXPENSE OR INABILITY TO SERVE OUR CUSTOMERS IF WE LOSE THESE
RELATIONSHIPS
Although InterVoice generally uses standard parts and components for its
products, some of our components, including semi-conductors and, in particular,
digital signal processors manufactured by Texas Instruments and AT&T Corp., are
available only from a small number of vendors. To date, InterVoice has been able
to obtain adequate supplies of needed components in a timely manner. If
InterVoice's significant vendors are unable or cease to supply components at
current levels, we may not be able to obtain these components from another
source. Consequently, we would be unable to provide products and to service our
customers, which would negatively impact our business and operating results.
LOSS OF SIGNIFICANT CUSTOMERS COULD HURT INTERVOICE'S BUSINESS BY REDUCING OUR
REVENUES AND PROFITABILITY
InterVoice's success depends substantially on retaining our significant
customers. The loss of one of InterVoice's significant customers could
negatively impact InterVoice's results of operations. As a part of our sales and
marketing strategy, InterVoice will attempt to diversify our end-user sales and
continue to broaden our distribution channels and, as a result, lessen our
dependence on any one customer. However, there can be no assurance that
InterVoice will be successful in these efforts.
INTERVOICE'S DEPENDENCE ON DISTRIBUTION CHANNELS COULD NEGATIVELY IMPACT OUR
BUSINESS
InterVoice sells products directly to end-users and through more than 85
distributors in the United States. During fiscal 1999, approximately 47% of
InterVoice's domestic sales were attributable to distributors. In addition,
InterVoice offers products outside the United States through a network of more
than 45 distributors, as well as through InterVoice's own sales personnel. Our
existing relationships with
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these distributors are non-exclusive and can be terminated by either party
without cause. Our distributors also sell or can potentially sell products
offered by our competitors. To the extent that our competitors offer our
distributors more favorable terms, such distributors may decline, de-emphasize
or discontinue carrying our products. In the future, we may not be able to
retain or attract a sufficient number of qualified distributors. Further, such
distributors may not recommend, or continue to recommend, our products. The
inability to establish or maintain successful relationships with distributors or
to expand our distribution channels could negatively impact our business,
financial condition or results of operations.
INTERVOICE'S INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY AGAINST INFRINGEMENT
AND INFRINGEMENT CLAIMS COULD NEGATIVELY IMPACT OUR BUSINESS
InterVoice's protection of our patent, copyright, license and other
proprietary rights in our products and technologies is critical to the continued
success of our business. Although InterVoice's proprietary rights are protected
by a combination of intellectual property laws, nondisclosure safeguards and
license agreements, it is technologically possible for InterVoice's competitors
to copy aspects of InterVoice's products in violation of these protected rights.
Even in cases where patents protect aspects of InterVoice's technology, the
detection and policing of the unauthorized use of the patented technology is
difficult. Further, judicial enforcement of trademarks and copyrights may be
uncertain, particularly in foreign countries. Unauthorized use of InterVoice's
proprietary technology by our competitors could negatively impact our business,
operating results and financial condition.
If third parties assert claims that InterVoice's products or services
infringe on their technology and related intellectual property rights,
InterVoice could incur substantial costs to defend these claims. If any of these
claims are ultimately successful, a third party could require InterVoice to pay
substantial damages, discontinue the use and sale of infringing products, expend
significant resources to acquire non-infringing alternatives, and/or obtain
licenses to use the infringed intellectual property rights.
Commencing in fiscal 1997, Lucent Technologies has suggested in
correspondence to InterVoice that InterVoice should consider licensing certain
Lucent patents for a substantial payment. InterVoice has an opinion from its
outside legal counsel that InterVoice does not infringe the Lucent patents by
reason of non-infringement and/or invalidity. InterVoice has suggested to Lucent
that Lucent should consider licensing certain patents of InterVoice, and that a
mutual cross-license might be in the best interests of both parties. The parties
have discussed the possibility of negotiations for a mutually satisfactory
cross-license agreement which would resolve the matter. There is no assurance
that InterVoice will negotiate a cross-license agreement based on mutually
satisfactory terms. Lucent has not threatened litigation against InterVoice, and
InterVoice and Lucent did not have any discussions or exchange any
correspondence concerning their respective patent portfolios during fiscal 1999.
InterVoice is not currently involved in any material intellectual property
litigation, but could be in the future to protect our technology or defend
ourselves against alleged infringement claims.
INTERVOICE IS EXPOSED TO RISKS RELATED TO ITS INTERNATIONAL OPERATIONS WHICH
COULD INCREASE OUR COSTS AND HURT OUR BUSINESS
InterVoice's products are currently sold in 52 countries. InterVoice's
international sales, as a percentage of total InterVoice sales, were 18% in
fiscal 1999 and 21% in fiscal 1998. International sales are subject to certain
risks, including:
- fluctuations in currency exchange rates;
- the difficulty and expense of maintaining foreign offices and
distribution channels;
- tariffs and other barriers to trade;
- greater difficulty in protecting and enforcing intellectual property
rights;
- general economic conditions in each country;
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- loss of revenue, property and equipment from expropriation;
- import and export licensing requirements; and
- additional expenses and risks inherent in conducting operations in
geographically distant locations, including customers speaking different
languages and having different cultural approaches to the conduct of
business.
FAILURE TO RETAIN AND ATTRACT HIGH-TECH PERSONNEL AND SKILLED MANAGEMENT COULD
ADVERSELY AFFECT OUR ABILITY TO DIRECT GROWTH AND MANAGE OUR BUSINESS
InterVoice's success depends to a significant extent upon our ability to
attract, retain and motivate highly skilled and qualified personnel. If we fail
to attract, train and retain sufficient numbers of these technically-skilled
people, our business, financial condition and results of operations will be
materially and adversely affected. Competition for personnel is intense in the
telecommunications industry, and recruiting and training personnel requires
substantial resources. InterVoice must continue to grow by hiring and training
technically skilled people to perform services under our existing contracts and
new contracts that we enter into. The people capable of filling these positions
are in great demand. We have to pay an increasing amount to hire and retain a
technically-skilled workplace. InterVoice's business also experiences a
significant turnover of technically-skilled people.
InterVoice's success also depends on the skills, experience and performance
of key members of our current management team and key members of Brite's
management team. The loss of any key employee could have an adverse effect on
our business, financial condition and results of operations and prospects.
INTERVOICE'S INABILITY TO PROPERLY ESTIMATE COSTS UNDER FIXED PRICE CONTRACTS
COULD NEGATIVELY IMPACT OUR PROFITABILITY
Some of InterVoice's contracts to develop application software and
customize systems provide for the customer to pay a fixed price for our products
and services regardless of whether our costs to perform under the contract
exceed the amount of the fixed price. If we are unable to estimate accurately
the amount of future costs under these fixed price contracts, or if unforeseen
additional costs must be incurred to perform under these contracts, our
profitability will decline.
INCREASING CONSOLIDATION IN THE TELECOMMUNICATIONS AND FINANCIAL INDUSTRIES
COULD AFFECT OUR REVENUES AND PROFITABILITY
Several of our significant customers are in the telecommunications and
financial industries, which are undergoing increasing consolidation as a result
of merger and acquisition activity. This activity involving our significant
customers could decrease the number of customers purchasing our products and/or
delay purchases of our products by customers that are in the process of
reviewing their strategic alternatives in light of a pending merger or
acquisition. If we have fewer customers or our customers delay purchases of our
products as a result of merger and acquisition activity, our revenues and
profitability would decline.
GOVERNMENT ACTION AND, IN PARTICULAR, ACTION WITH RESPECT TO THE
TELECOMMUNICATIONS ACT OF 1996 REGULATING THE TELECOMMUNICATIONS INDUSTRY COULD
HAVE A NEGATIVE IMPACT ON INTERVOICE'S BUSINESS
Future growth in the markets for InterVoice's products will depend in part
on privatization and deregulation of certain telecommunication markets
worldwide. Any reversal or slow down in the pace of this privatization or
deregulation could negatively impact the markets for InterVoice's products.
Moreover, the consequences of deregulation are subject to many uncertainties,
including judicial and administrative proceedings that affect the pace at which
the changes contemplated by deregulation occur, and other regulatory, economic
and political factors. Any invalidation, repeal or modification of the
requirements imposed by the Telecommunication Act of 1996 could negatively
impact InterVoice's business, financial condition and results of operations.
Furthermore, the uncertainties associated with deregulation could cause our
customers to delay purchasing decisions pending the resolution of such
uncertainties.
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INTERVOICE'S STOCK PRICE IS SUBJECT TO MARKET VOLATILITY
The trading price of InterVoice's shares may be affected by the risk
factors described in this prospectus/proxy statement as well as prevailing
economic and financial trends and conditions in the public securities markets.
Stock prices of companies in technology businesses tend to exhibit a high degree
of volatility. Shortfalls in revenues and earnings from the levels anticipated
by the public markets could have an immediate and significant adverse affect on
the trading price of our shares in any given period. Such shortfalls may result
from events that are beyond our immediate control and can be unpredictable. In
addition, since the quantity and size of large sales (sales valued at
approximately $1 million or more) may vary substantially during any fiscal
quarter, our sales and earnings in one fiscal quarter may be significantly
higher or lower than a preceding or subsequent fiscal quarter which, in turn,
can contribute to the volatility of the trading price of our shares regardless
of our long-term prospects. The trading price of our shares may also be affected
by developments, including reported financial results and fluctuations in
trading prices of the shares of other publicly-held companies in the computer
and telecommunications industry generally, and in our industry in particular,
which may not have any direct relationship with InterVoice's business,
operations or prospects.
CERTAIN ARRANGEMENTS MAY HAVE INFLUENCED THE DECISION OF BRITE'S BOARD OF
DIRECTORS TO RECOMMEND THE MERGER
In considering the recommendation of the merger by the Brite board of
directors, holders of Brite common stock should be aware that the directors of
Brite may have certain interests that are different from or in addition to those
interests of the holders of Brite common stock generally. These interests
include Brite's repurchase for cash of stock options held by the directors of
Brite as contemplated by the merger agreement as well as an agreement with
Stanley G. Brannan, Brite's Chairman and Chief Executive Officer, regarding his
service as a director of InterVoice following the closing of the merger.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document that are subject
to risks and uncertainties. Forward-looking statements include the information
in this document regarding:
<TABLE>
<CAPTION>
<S> <C>
- - synergies - assimilation of Brite into InterVoice
- - growth - economic conditions
- - cost savings - fair market value of Brite's assets
- - the merger consideration - the timetable for closing the merger
- - operating performance
</TABLE>
The sections of this document which contain forward-looking statements
include "Questions and Answers About the Merger," - "Summary," - "Risk
Factors," - "The Merger -- Background of the Merger," - "Summary -- Selected
Unaudited Pro Forma Combined Condensed Financial Data," - "The Merger -- Opinion
of Brite's Financial Advisor" and - "Unaudited Pro Forma Combined Financial
Statements." Our forward-looking statements are also identified by words such as
"believes," "expects," "anticipates," "intends," "estimates" or similar
expressions.
For those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
You should understand that the following important factors, in addition to
those discussed in "Risk Factors" and elsewhere in this document and in the
documents which are incorporated by reference, could affect the future results
of InterVoice and Brite, and our future results after the effective date of the
merger, and could cause those results or other outcomes to differ materially
from those expressed in our forward-looking statements:
- A price decline in InterVoice common stock could cause the value of the
merger consideration received to be less than $13.40 paid in the tender
offer.
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- InterVoice is highly leveraged as a result of indebtedness incurred to
finance the tender offer and merger.
- We may be unable to successfully integrate the businesses and products of
InterVoice and Brite after the merger.
- Our failure to meet rapidly changing market demands in the highly
competitive telecommunications industry could negatively impact our
competitive position.
- If we are unable to keep up with rapid changes in technology, we could
lose customers and be unable to attract new customers.
- Year 2000 problems for us, our suppliers or our customers could increase
our liabilities and expenses and decrease our revenues and profitability.
- We depend upon the continued availability of suitable non-proprietary
computing platforms and system operating software that are compatible
with our products.
- Certain of the components for our products are available from limited
suppliers. Our operating results could be adversely affected if we were
unable to obtain such components in the future.
- We may be unable to retain our customer base and, in particular, our more
significant customers because such customers generally are not
contractually obligated to place future orders with us.
- Our industry will face increasing litigation with respect to the
enforcement of patents, copyrights and other intellectual property.
- International distribution and sales of our products involve special
risks, including unexpected changes in regulatory requirements,
unexpected changes in exchange rates, the difficulty and expense of
maintaining foreign offices and distribution channels, tariffs and other
barriers to trade, difficulty in protecting intellectual property rights,
and foreign governmental regulations that may limit or restrict sales of
call automation systems and systems for telecommunications service
providers. Additionally, changes in foreign credit markets and currency
exchange rates may result in requests by many international customers for
extended payment terms and may have an adverse impact on our cash flow
and our level of accounts receivable.
- The quantity and size of large sales (sales valued at approximately $1
million or more) during any fiscal quarter will fluctuate, which can
cause wide variations in our sales and earnings on a quarter to quarter
basis.
- We must hire and retain, within our compensation parameters, qualified
technical talent and outside contractors in highly competitive markets
for the services of such personnel.
- Our fixed price contracts require that we properly estimate costs of
developing application software and otherwise tailoring our systems to
customer-specific requests.
- Other mergers and acquisitions between companies in the
telecommunications and financial industries which could result in fewer
customers purchasing our products for telecommunications and banking
applications, and/or delay such purchases by customers that are in the
process of reviewing their strategic alternatives in light of a merger or
acquisition.
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- We expect continuing legislative, judicial and administrative changes
and, in particular, changes affecting the telecommunications industry,
such as the Telecommunications Act of 1996. While many industry analysts
expect the Telecommunications Act of 1996 ultimately to result in at
least a temporary surge in the procurement of telecommunications
equipment and related software and other products, there is no assurance
that we can estimate with sufficient accuracy those products which will
ultimately be purchased, the timing of any such purchases or the
quantities to be purchased.
- Extreme price and volume trading volatility in the stock market has had a
substantial effect on the market prices of securities of many high
technology companies, frequently for reasons other than the operating
performance of such companies. These broad market fluctuations could
adversely affect the market price of our common stock.
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SPECIAL MEETING OF BRITE STOCKHOLDERS
GENERAL
This prospectus/proxy statement is furnished to holders of Brite common
stock in connection with the solicitation of proxies by the Brite board of
directors for use at the special meeting of Brite stockholders.
This prospectus/proxy statement and accompanying form of proxy will be
mailed to stockholders of Brite on or about July 15, 1999.
DATE, TIME, AND PLACE
The Brite special meeting will be held on August 12, 1999 at 9:30 a.m.,
local time, at Brite's offices at 7309 E. 21st Street North, Wichita, Kansas
67206.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Brite special meeting, the holders of record of Brite common stock
will be asked to consider and vote on proposals to:
- approve and adopt the merger agreement and the transactions contemplated
thereby; and
- transact any other business which may be properly brought before the
special meeting or any adjournment or postponement of the meeting.
AFTER CAREFUL CONSIDERATION, THE BRITE BOARD OF DIRECTORS DETERMINED THAT
THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE IN THE BEST INTERESTS
OF THE STOCKHOLDERS OF BRITE. ACCORDINGLY, THE BRITE BOARD OF DIRECTORS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT ALL BRITE
STOCKHOLDERS VOTE FOR ITS APPROVAL. See "The Merger -- Background of the Merger"
and "-- Brite's Reasons for the Merger; Recommendation of the Brite Board of
Directors." In considering the recommendation of the Brite board of directors
with respect to the merger agreement, Brite stockholders should be aware that
certain members of the Brite board of directors have interests in the merger
that are different from and in addition to the interests of the stockholders of
Brite generally. See "The Merger -- Interests of Certain Persons in the Merger."
RECORD DATE
The close of business on July 9, 1999, is the record date for the
determination of stockholders of Brite entitled to receive notice of and to vote
at the Brite special meeting and any adjournment or postponement of the meeting.
Accordingly, only stockholders of Brite of record at the close of business on
that date will be entitled to notice of and to vote at the meeting. A list of
the holders of Brite common stock entitled to vote at the meeting will be
available for inspection by any stockholder of Brite during usual business hours
at the principal offices of Brite.
STOCK ENTITLED TO VOTE; QUORUM
As of the record date, there were 12,275,803 shares of Brite common stock
issued and outstanding and entitled to vote at the meeting. The holders of a
majority of the Brite common stock issued and outstanding, present in person, or
represented by proxy, will constitute a quorum at the meeting. The attendance by
a wholly-owned subsidiary of InterVoice which owns 9,158,155 shares of Brite
common stock will be determinative of whether there is a quorum. In the event
that a quorum is not present at the meeting, it is expected that such meeting
will be adjourned or postponed. Holders of record of Brite common stock on the
record date are each entitled to one vote per share on each matter to be voted
on at the meeting.
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VOTE REQUIRED
The approval of the merger agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Brite common stock entitled
to vote at the Brite special meeting. The approval of the merger agreement is a
condition to the closing of the merger. Because the required vote of the holders
of Brite common stock with respect to the merger agreement is based on the total
number of outstanding shares of Brite common stock and not on the number of
shares which are actually voted, failure of a holder of record of Brite common
stock to vote such shares will have the same effect as a vote "against" the
merger agreement.
SHARE OWNERSHIP OF INTERVOICE SUBSIDIARY
A wholly-owned subsidiary of InterVoice owns and has the right to vote at
the meeting 9,158,155 shares of Brite common stock. The subsidiary acquired
these shares in a tender offer for 9,158,155 shares of Brite common stock which
was consummated on June 9, 1999. The subsidiary will vote all of its shares of
Brite common stock for the approval of the merger agreement, which is sufficient
to cause the merger agreement to be adopted without the affirmative vote of any
other stockholder.
VOTING OF PROXIES
The shares of Brite common stock represented by properly completed proxies
received at or before the time for the meeting will be voted as directed by the
holders of such shares unless revoked as described below. If no instructions are
given, executed proxies will be voted for approval of the merger agreement.
Brokers who hold shares in street name for customers who are the beneficial
owners of such shares are prohibited from giving a proxy to vote such customers'
shares on non-routine matters in the absence of specific instructions from such
customers. This is commonly referred to as a broker nonvote. With respect to the
meeting, the approval of the merger agreement will be deemed a non-routine
matter. A broker nonvote will, therefore, have the same effect as a vote against
the merger agreement.
The Brite board of directors is not aware of any business to be brought
before the meeting other than as described in this prospectus/proxy statement.
If, however, other matters are properly brought before the meeting or any
adjournment or postponement of the meeting, the persons appointed as proxies
will have discretionary authority to vote the shares represented by duly
executed proxies in accordance with their discretion and judgment as to the best
interest of Brite.
REVOCABILITY OF PROXIES
The grant of a proxy on the accompanying Brite proxy card does not preclude
a stockholder from voting in person. A stockholder of record may revoke a proxy
at any time prior to its exercise by taking any of the following actions:
- filing with the Secretary of Brite, at Brite's principal executive
offices, a duly executed revocation of proxy;
- submitting a duly executed proxy bearing a later date; or
- appearing at the meeting and voting in person.
Attendance at the meeting will not, in and of itself, constitute revocation
of a proxy.
SOLICITATION OF PROXIES
InterVoice will pay for the cost of printing and mailing this
prospectus/proxy statement and the fees associated with the filing of this
prospectus/proxy statement with the SEC. Except for the fees and costs discussed
in the preceding sentence, Brite will bear its own costs in connection with the
solicitation of proxies. In addition to solicitation by mail, the directors,
officers and employees of Brite and its subsidiaries may solicit proxies from
stockholders by telephone or in person. Arrangements will also be
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<PAGE> 29
made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of record of
stock held by those persons. Brite will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in connection therewith.
Holders of Brite common stock are requested to complete, date, sign and
return as soon as possible the accompanying proxy in the provided envelope using
the instructions set forth on the accompanying proxy card. Please do not send
stock certificates with the proxy card.
APPRAISAL RIGHTS
Holders of Brite common stock are not entitled to dissenters' appraisal
rights under Kansas law in connection with the merger because, except for cash
in lieu of fractional shares, such holders will receive consideration in the
merger solely consisting of shares of InterVoice common stock that will be
listed on Nasdaq and the Chicago Stock Exchange. See "Comparison of Stockholder
and Shareholder Rights -- Appraisal and Dissenters' Rights."
THE MERGER
The following summary of material terms of the merger and the merger
agreement is qualified in its entirety by reference to the merger agreement, a
copy of which is attached as Annex A to this prospectus/ proxy statement.
GENERAL
The merger agreement provides that the merger will be consummated if the
stockholders of Brite approve the adoption of the merger agreement and all other
conditions to the merger are satisfied or waived. Upon consummation of the
merger, InterVoice's wholly-owned subsidiary, InterVoice Acquisition Subsidiary
III, Inc. ("Merger Sub"), will be merged with and into Brite and Brite, as the
surviving corporation, will become a wholly-owned subsidiary of InterVoice.
At the effective time of the merger, each share of Brite common stock then
outstanding, other than shares owned by InterVoice, Merger Sub, any other
subsidiary of InterVoice, Brite and any of Brite's subsidiaries, will be
cancelled and converted into the right to receive that number of shares of
InterVoice common stock, including associated preferred stock purchase rights,
equal to $13.40 divided by the average per share closing price of InterVoice
common stock on Nasdaq for the 25 trading days immediately preceding the
effective time of the merger. The 25-day average closing price shall be at least
equal to $8.00 and shall not exceed $14.00.
As illustrated by the examples set forth below, as long as the 25-day
average closing price is at least $8.00 and does not exceed $14.00 at the
effective time of the merger, the value of the merger consideration, based on
the 25-day average closing price, will equal approximately $13.40. If, however,
the 25-day average closing price drops below $8.00 or exceeds $14.00, the value
of the merger consideration, based on the 25-day average closing price, at the
effective time of the merger may be less or greater than the $13.40 in cash per
share payable pursuant to the tender offer as illustrated below:
EXAMPLES OF CALCULATING THE MERGER CONSIDERATION
- On May 15, 1999, the 25-day average closing price of InterVoice common
stock was $10.14. Based on this 25-day average closing price, the
exchange ratio in the merger is approximately 1.3215 ($13.40 / $10.14)
shares of InterVoice common stock for each share of Brite common stock.
Applying this exchange ratio, each outstanding share of Brite common
stock at the effective time of the merger would be exchanged for
InterVoice common stock and cash in lieu of fractional shares of
InterVoice common stock with a value, based on the 25-day average closing
price of $10.14, of approximately $13.40, and the maximum number of
shares of InterVoice common stock that
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<PAGE> 30
InterVoice would be required to issue is 4,114,848. This assumes that all
stock options outstanding under Brite's stock option plans are cancelled
as contemplated by the merger agreement and that there are 3,113,773
shares of Brite common stock outstanding, excluding shares owned by
InterVoice or its subsidiaries, immediately prior to the effective time
of the merger.
- If the 25-day average closing price of InterVoice common stock is $7.50,
the exchange ratio in the merger would be 1.675 ($13.40 / the lower
collar of $8.00) shares of InterVoice common stock for each share of
Brite common stock. Applying this exchange ratio, each outstanding share
of Brite common stock at the effective time of the merger would be
exchanged for InterVoice common stock and cash in lieu of fractional
shares of InterVoice common stock with a value, based on the 25-day
average closing price of $7.50, of approximately $12.56, and the maximum
number of shares of InterVoice common stock that InterVoice would be
required to issue is 5,215,569. This assumes that all stock options
outstanding under Brite's stock option plans are cancelled as
contemplated by the merger agreement and that there are 3,113,773 shares
of Brite common stock outstanding, excluding shares owned by InterVoice
or its subsidiaries, immediately prior to the effective time of the
merger.
- If the 25-day average closing price of InterVoice common stock is $15.00,
the exchange ratio in the merger would be approximately 0.9571 ($13.40 /
the upper collar of $14.00) of a share of InterVoice common stock for
each share of Brite common stock. Applying this exchange ratio, each
outstanding share of Brite common stock at the effective time of the
merger would be exchanged for InterVoice common stock and cash in lieu of
fractional shares of InterVoice common stock with a value, based on the
25-day average closing price of $15.00, of approximately $14.36 and the
maximum number of shares of InterVoice common stock that InterVoice would
be required to issue is 2,980,325. This assumes that all outstanding
stock options under Brite's stock option plans are cancelled as
contemplated by the merger agreement and that there are 3,113,773 shares
of Brite common stock outstanding, excluding shares owned by InterVoice
or its subsidiaries, immediately prior to the effective time of the
merger.
The table below illustrates the number of shares of InterVoice common stock
issuable in the merger and the corresponding value of the merger consideration
per share of Brite common stock at various assumed 25-day average closing
prices. For purposes of calculating the approximate exchange ratio, the 25-day
average closing price must be at least equal to $8.00 and may not exceed $14.00.
The calculations are based on the assumption that all stock options outstanding
under Brite's stock option plans are cancelled as contemplated by the merger
agreement and that 3,113,773 shares of Brite common stock are outstanding,
excluding shares owned by InterVoice or its subsidiaries, as of the effective
time of the merger.
<TABLE>
<CAPTION>
INTERVOICE APPROXIMATE VALUE OF AGGREGATE INTERVOICE
25-DAY AVERAGE APPROXIMATE MERGER CONSIDERATION COMMON STOCK
CLOSING PRICE($) EXCHANGE RATIO PER BRITE SHARE ($)* ISSUABLE
- ---------------- -------------- -------------------- --------------------
<S> <C> <C> <C>
16 0.9571 15.31 2,980,325
15 0.9571 14.36 2,980,325
14 0.9571 13.40 2,980,325
13 1.0308 13.40 3,209,581
12 1.1167 13.40 3,477,046
11 1.2182 13.40 3,793,141
10 1.3400 13.40 4,172,455
9 1.4889 13.40 4,636,062
8 1.6750 13.40 5,215,569
7 1.6750 11.73 5,215,569
6 1.6750 10.05 5,215,569
</TABLE>
- ---------------
* Based on the corresponding 25-day average closing price.
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<PAGE> 31
The merger will be effective when the companies file a Certificate of
Merger with the Secretary of State of Kansas and Articles of Merger or Exchange
with the Secretary of State of Nevada. The companies will file the Certificate
of Merger and the Articles of Merger or Exchange as soon as practicable
following the closing of the merger, which is expected to occur on the second
business day after the satisfaction or waiver of the conditions set forth in the
merger agreement.
BACKGROUND OF THE MERGER
The timing, terms and conditions of the merger agreement are the result of
arms-length negotiations between representatives of InterVoice and Brite. Set
forth below is a summary of the negotiations.
During the last several years, Brite's board of directors and its
executives had discussed the growing consolidation of companies within the
industry, and considered whether Brite could continue to compete effectively in
an industry where the number of participants was shrinking and the relative size
of its principal competitors was increasing through consolidation. In
particular, Brite noted the acquisition of VMX by Octel, and the subsequent
acquisition of Octel by Lucent Technologies; the acquisition of Boston
Technology and Amarex by Comverse Technology; the acquisition of Voicetek by
Aspect Technology; the acquisition of Summa IV by Cisco Systems; and the various
merger activities by Syntellect. From time to time, Brite has had meetings with
various participants within the industry, although none of the discussions have
gone beyond the consideration of publicly available data.
In late 1997 David W. Brandenburg, a director of InterVoice, and Daniel D.
Hammond, InterVoice's Chairman and Chief Executive Officer, discussed the
possibility of considering a business combination with Brite. Following up on
such discussions, on December 2, 1997, Mr. Hammond held a meeting in Dallas with
representatives of InterVoice and Brite to determine if there were any interest
between the two companies for a strategic combination. Representatives of
InterVoice included Mr. Hammond, Michael W. Barker, then President of
InterVoice, and Rob-Roy J. Graham, Chief Financial Officer. Representatives of
Brite included David S. Gergacz, then President of Brite, Glenn A. Etherington,
Chief Financial Officer, and Ray S. Naeini, Executive Vice President. The
parties executed a confidentiality agreement with respect to matters that would
be discussed at the meeting. During the meeting, the participants discussed
broad corporate direction, mix of business, and the complementary nature of the
companies' operations. The discussion centered around the fact that InterVoice
derived 70% of its business from customer premises equipment, and 30% from its
telecom business, while Brite derived 60% of its business from the telecom
business and 40% of its revenues from the sale of customer premises equipment.
The companies concluded that, because there was very little overlap in the
customer base, significant synergies could result from a business combination
between the two companies.
On February 13, 1998, Mr. Graham and Mr. Etherington met in Orlando to
further discuss the synergies that would result from a business combination. The
executives compared and contrasted the two companies' organizational structure
and size and discussed redundant activities that could be eliminated in a
business combination. The executives concluded that the product direction and
strategies of each company were very similar, and that each was incurring costs
in administration, engineering, marketing and sales that could be leveraged in a
larger organization. Mr. Graham observed that the TSL division of Brite did not
seem to fit with Brite's current direction, and Mr. Etherington stated that
Brite was actively marketing this division so that it could focus on the voice
and call processing industry.
Subsequent to the February 13, 1998 meeting, Mr. Gergacz and Mr.
Etherington discussed the results of the meeting with Mr. Graham and the
likelihood of a possible business combination. Mr. Gergacz concluded that
Brite's value in any business combination would be increased if Brite could
continue to show improved operating performance, and that additional merger
discussions would be a distraction from that goal, particularly given the need
for Brite to focus on delivering a large contract it had recently entered into
with AT&T Corp.
In January 1999 InterVoice, as part of its corporate strategic planning
process, concluded that it should explore potential strategic combinations or
technology alliances with third parties in order to further
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<PAGE> 32
enhance shareholder value. InterVoice engaged Banc of America Securities LLC
(formerly known as NationsBanc Montgomery Securities LLC) to identify potential
candidates for such strategic combinations and/or technology alliances. It was
during this process that InterVoice decided to determine if Brite had any
interest in resuming discussions. Mr. Hammond called Stanley G. Brannan, Brite's
Chairman and Chief Executive Officer, on January 15, 1999 and inquired if there
were any interest on the part of Brite in resuming discussions concerning a
potential strategic combination of InterVoice and Brite. Subsequent discussions
between Mr. Brannan and Brite's senior management team led to the conclusions
that the combination of the two companies would create a substantial competitor
in the voice and call processing industry, would result in significant increases
in scale, and would accelerate development in planned activities in areas such
as internet, call center development and natural speech recognition. The
combination would also give Brite a significant presence in Dallas, and thus,
access to a large base of telecommunications software development engineers,
which Brite had trouble locating in the Orlando area.
On January 28, 1999, Mr. Brannan traveled to Dallas to hold preliminary
discussions with Mr. Hammond and Mr. Graham. At this meeting, the parties
discussed the potential acquisition of Brite by InterVoice, cost savings to be
achieved by such a combination and other potential operating synergies. Mr.
Graham prepared a pro forma consolidation of the two companies using historical
data, including the synergies that had been discussed at the February 1998
meeting between Mr. Graham and Mr. Etherington. Additional discussions were held
regarding the pooling versus purchase accounting rules and the impact these
would have on a transaction. At the conclusion of the meeting, Messrs. Hammond
and Brannan agreed that they would each convey their interests in pursuing such
combination to their respective boards of directors to determine if there were
further interest in pursuing more discussions. Messrs. Hammond and Brannan
agreed to hold an additional meeting in Orlando assuming the respective boards
of directors desired for management to pursue further discussions.
On February 9, 1999, at a regularly scheduled meeting of InterVoice's board
of directors, the board discussed the potential combination of the operations of
InterVoice and Brite and concluded it would be desirable to continue discussions
between the two companies.
On February 19, 1999, Mr. Etherington contacted a potential financial
advisor to assist Brite in the preparation of a preliminary valuation analysis
to be presented to Brite's board of directors at a regularly scheduled meeting
to be held on February 24, 1999.
Mr. Hammond, Mr. Graham and David A. Berger, InterVoice's current President
and Chief Operating Officer, attended a meeting in Orlando on February 22, 1999.
Brite was represented by Messrs. Brannan, Naeini and Etherington. The parties
discussed the two companies' organizational structure, markets served,
development plans and the proposed structure of a combined company. Significant
time was spent on sales and expense synergies and potential margin improvement.
The companies also discussed the accounting implications of the transaction and
whether or not the pooling of interests method of accounting for business
combinations could be used for the merger. At this meeting, the parties
expressed a continuing interest in pursuing a combination of InterVoice and
Brite pursuant to which InterVoice would acquire all of the outstanding common
stock of Brite in exchange for InterVoice common stock, although no further
specifics regarding consideration were discussed.
At the regularly scheduled February 24, 1999 Brite board of directors
meeting, Mr. Brannan presented an overview of the discussions that had been held
with InterVoice, and also discussed contacts that had been made by other
potential merger candidates in the industry. Mr. Brannan stated that Brite's
sale of its electronic publishing and TSL divisions in 1997 and 1998,
respectively had significantly reduced the number of areas on which Brite was
focused, made Brite's business easier to understand, and increased the
likelihood of a product fit with other industry participants. Mr. Brannan noted
that the lack of a permanent CEO was prominent in the discussions with other
potential merger candidates, and increased the likelihood that Brite would not
be the surviving corporation in any of the transactions that were being
contemplated. A potential financial advisor presented its proposal to provide
investment banking services, which contained information regarding the value of
Brite in a potential transaction, indicating that the most likely selling price
would be between $11.00 and $14.00 per share. The Brite board of directors
expressed concern about
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<PAGE> 33
accepting this valuation range in the form of InterVoice common stock given its
volatility in the last year. The Brite board of directors concluded that further
discussions should be held, but that Mr. Brannan should follow up on the other
contacts that had been made. The Brite board of directors also authorized
management to retain an investment banking firm to represent Brite with respect
to possible business combination transactions.
On February 26, 1999, InterVoice engaged Banc of America Securities
specifically to advise InterVoice with respect to a proposed combination of
InterVoice and Brite. After discussions with, and advice from, Banc of America
Securities, InterVoice decided that an all cash acquisition of Brite would be
preferable to a stock for stock acquisition.
During the week following the February Brite board of directors meeting,
Brite held discussions with four investment banking firms to discuss
representation in a business combination transaction. On March 5, 1999, Brite
engaged U.S. Bancorp Piper Jaffray Inc.
On March 8, 1999, Mr. Hammond called Mr. Brannan and stated that, after
detailed discussion with InterVoice's advisors, Mr. Hammond felt that a stock
for stock merger using pooling accounting was not possible. Mr. Hammond
indicated that this would be discussed in detail at the meeting in Atlanta
scheduled for March 10, 1999, but that the current plan was a cash tender offer
for all outstanding shares.
On March 9, 1999, Mr. Brannan, Mr. Etherington and representatives from
U.S. Bancorp Piper Jaffray met with another participant in Brite's industry
(Company A) and its investment banking firm regarding a possible business
combination. The discussion was restricted to publicly available information.
Company A proposed a merger of equals in a pooling transaction, with Company A
as the survivor, which would provide no premium to Brite's stockholders. On
March 9 and March 10, 1999, U.S. Bancorp Piper Jaffray contacted two other
possible merger candidates.
On March 10, 1999, representatives of InterVoice and Brite met in Atlanta
to discuss in more detail each party's interest in pursuing a business
combination. Management representatives from both InterVoice and Brite attended
the meeting along with representatives from Banc of America Securities, and
representatives from U.S. Bancorp Piper Jaffray. Also in attendance were
representatives from Thompson & Knight, P.C., InterVoice's legal advisors, and
Triplett, Woolf & Garretson, LLC, Brite's legal advisors. At this meeting, the
parties discussed the potential structure of a combination of InterVoice and
Brite whereby InterVoice would acquire all of the outstanding common stock of
Brite for cash in two steps: (1) a cash tender offer for all shares of Brite
followed by (2) a cash merger for any shares not tendered. Brite indicated that
it would be interested in exploring such a combination with several conditions,
including that any transaction proposed would need to offer a premium for Brite.
The parties discussed a range of prices that InterVoice, subject to due
diligence and other conditions, would be willing to pay for Brite. These
discussions covered a range from $12.00 to $14.00 for each share of Brite common
stock. By the end of the meeting, the parties narrowed the range to between
$13.00 and $14.00 per share.
On March 12, 1999, the Brite board of directors met by teleconference. Mr.
Brannan explained that the offer had been changed from an all stock offer to an
all cash transaction in the range of $13.00 to $14.00 per share. The board of
directors considered the transaction and instructed the management team to
continue negotiations. In addition, the board of directors instructed U.S.
Bancorp Piper Jaffray to determine if there were any other potential merger
candidates which Brite should consider.
During the next few days, U.S. Bancorp Piper Jaffray continued discussions
with the three companies previously contacted, following which U.S. Bancorp
Piper Jaffray indicated to Mr. Brannan that none of such companies were
interested in pursuing a transaction with Brite at that time.
On March 15, 1999, the parties executed a confidentiality agreement in
which both parties agreed to negotiate exclusively with the other for a 45-day
period provided that Brite could meet with a third party strategic candidate at
a meeting already scheduled to be held March 18, 1999 and provided further that,
prior to the close of business on March 19, 1999 Brite would notify InterVoice
that Brite had ceased and terminated such other discussions or that it intended
to continue such discussions, in which latter event the confidentiality and
exclusive negotiation agreement would terminate. Brite ended such discussions
with the
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<PAGE> 34
third party on March 19, 1999 after U.S. Bancorp Piper Jaffray concluded the
party was not interested in pursuing a transaction.
On March 15 and 16, 1999, management groups from both InterVoice and Brite
met in Orlando to begin discussions and the conduct of preliminary due diligence
concerning research and development plans, manufacturing plans and sales plans
with respect to each company's products. The representatives of InterVoice were
Daniel D. Hammond, Mr. Graham, Mr. Berger, and Dwain H. Hammond, Senior Vice
President of Research and Development, Phillip C. Walden, Vice President of
Manufacturing, and M. Gregory Smith, Senior Vice President of Sales and
Marketing. Representatives of Brite included Mr. Brannan, Mr. Etherington and
Donald R. Walsh, Executive Vice President of Sales, and Leon Ferber, Vice
President of Special Projects. The due diligence meetings continued among the
above representatives with additional management representatives from both
companies in Orlando on March 19, 20, and 21, 1999. The parties discussed in
some detail the potential of combining operations and effecting cost savings by
reducing and/or avoiding expenses, as well as cost reductions in materials used
to manufacture products. InterVoice and Brite agreed to begin legal and
accounting and tax due diligence as soon as reasonably practicable. Messrs.
Hammond and Brannan agreed that final pricing of the transaction within the
$13.00 to $14.00 range would be determined by the outcome of the due diligence
reviews and further negotiations. Additional members of InterVoice's management
team met with counterparts from Brite's management team to discuss
post-transaction organization, staffing requirements and product development
plans. Representatives of Banc of America Securities and U.S. Bancorp Piper
Jaffray attended the meeting on March 21, 1999.
On March 24, 1999, in Orlando representatives of the parties' legal
advisors, tax advisors and accounting advisors initiated due diligence in their
respective areas. Due diligence continued in Orlando with respect to the books
and records of Brite for approximately one week. Following commencement of the
Orlando due diligence, InterVoice's representatives commenced due diligence
relating to Brite's operations in Manchester, England. InterVoice and its legal
advisors also distributed a preliminary draft of the definitive merger agreement
to Brite and its legal and financial advisors.
On March 27, 1999, InterVoice held a special board of directors meeting in
Dallas to discuss the status of discussions and negotiations, due diligence, and
financing for the acquisition by InterVoice. In addition, representatives of
Banc of America Securities, Thompson & Knight, Ernst & Young LLP, InterVoice's
independent auditors, Fulbright & Jaworski L.L.P., InterVoice's intellectual
property legal advisors, and representatives from Bank of America National Trust
and Savings Association from which InterVoice was seeking acquisition financing,
attended the meeting. The discussion included the results of due diligence to
date and an overview of Brite, as well as a description of various aspects of
its operations, financial condition and market position. InterVoice's board of
directors engaged in extensive discussions concerning the anticipated synergies
that might be realized from a combination with Brite, consisting primarily of
certain corporate and operational overhead reductions, marketing cost reductions
and enhanced staff utilization. Representatives of Bank of America NT&SA
discussed its ability to finance the proposed acquisition and reported that
available bank financing would not be sufficient to support a transaction
calling for all cash consideration. Extensive discussions with the bank
representatives were conducted by the board of directors and various alternative
structures for the proposed acquisition were discussed, including consideration
consisting of part cash and part InterVoice common stock. Management was
directed to continue negotiations with Bank of America NT&SA to attempt to
obtain an acceptable financing commitment. Management was also directed to
continue to negotiate with Brite to attempt to find an acceptable structure for
the transaction within the confines of the available financing.
On April 1, 1999, Daniel D. Hammond called Mr. Brannan to propose a
modified structure to the all cash transaction the parties had been previously
discussing. By this time, InterVoice had concluded that it would be able to
obtain sufficient financing from Bank of America NT&SA to offer the
consideration for the proposed acquisition in the range between $13.00 and
$14.00 per share as previously agreed by limiting the cash portion of the
proposed consideration to approximately $9.00 to $10.00 per share with the
remaining consideration to consist of InterVoice common stock. Mr. Hammond said
that InterVoice would still be prepared to conduct a tender offer for the cash
portion of the transaction followed by a merger in
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<PAGE> 35
which holders of shares that had not been purchased in the tender offer would
receive InterVoice common stock or a combination of any remaining cash and
InterVoice common stock.
On April 2, 1999, InterVoice offered Brite $13.00 per share consisting of
$10.00 per share in cash and $3.00 per share in InterVoice common stock. This
offer was relayed to Brite through representatives of U.S. Bancorp Piper Jaffray
during a telephone call from a representative of Banc of America Securities. At
a telephonic meeting that evening, Brite's board of directors authorized
management to continue negotiations and requested that additional details of any
proposal be provided. Further board of directors discussions were held on April
5, 1999, and Brite's board of directors authorized management to continue to
negotiate for a higher price and to begin conducting its own due diligence of
InterVoice. On April 6, 1999, Mr. Graham sent Mr. Etherington an e-mail whereby
InterVoice offered $13.50 per share, consisting of $9.00 to $9.50 in cash and
$4.50 to $4.00 in InterVoice common stock. The proposed offer assumed that a
warrant issued by Brite to AT&T Corp. and all outstanding stock options would be
repurchased or canceled by Brite.
From April 9 to April 13, 1999, Brite conducted due diligence with respect
to InterVoice in Dallas. Participants in these sessions included representatives
of Brite's management and financial, legal and accounting advisors. In addition,
representatives from InterVoice's proposed lending group, Bank of America NT&SA,
participated in due diligence of Brite as well as due diligence of InterVoice.
During these meetings, InterVoice, Brite and their respective legal and
financial advisors continued negotiating the merger agreement with the principal
issues being the aggregate consideration, the mix of cash and stock to be
delivered, and the range of high and low prices for the InterVoice common stock
which would be utilized for purposes of determining the exchange ratio to be
used in the merger.
Extensive negotiations were conducted from March 31 through April 14, 1999,
the date prior to InterVoice's regularly scheduled board of directors meeting.
At the April 15, 1999 board of directors meeting, management made a presentation
to the board of directors about the progress of the negotiations and the
probable structure of the transaction which would be in the form of a cash
tender offer to the extent of InterVoice's available cash from its lending group
(and its own resources) followed by a merger utilizing InterVoice common stock
and any remaining cash for the shares of Brite common stock not purchased in the
tender offer. Drafts of the merger agreement and related documents were
distributed to board members and extensive discussion ensued concerning the
terms and conditions negotiated to date. InterVoice's legal advisors answered
questions of board members with respect to certain issues involved in the
proposed transaction and discussed extensively other aspects of the proposed
transaction. The board of directors preliminarily approved the transaction
structure as had been negotiated to date and directed management to continue
negotiations with Brite in an attempt to finalize the terms of the proposed
agreement, including the mix of the cash and stock components of the
consideration. At the meeting, representatives of Banc of America Securities
discussed the financial aspects of the proposed transaction. Also at the board
of directors meeting, representatives of Bank of America NT&SA delivered to
InterVoice a signed commitment letter subject to completion of due diligence,
which provided for acquisition financing. Management was directed to continue
negotiations with Brite to attempt to finalize the terms of the merger
agreement, including negotiations with respect to price and the mix of
consideration between cash and InterVoice common stock.
On the evening of April 15, 1999, Brite's board of directors met to discuss
the status of the negotiations. The board of directors expressed concern about
the asymmetrical structure of the collar. The board of directors was advised
that the warrant issued to AT&T Corp. was affecting Brite's ability to finalize
an acceptable structure, and that management would negotiate with AT&T Corp. for
either a repurchase or conversion of the warrant. The board of directors
instructed management to continue to negotiate these issues.
Following the April 15, 1999 board of directors meetings, further extensive
negotiations concerning the terms of the acquisition agreement, the actual
consideration for Brite's shares of common stock and the mix of the cash and
stock components of the consideration were conducted. In a telephone conference
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<PAGE> 36
on April 21, 1999 among Messrs. Daniel D. Hammond, Graham, Brannan and
Etherington, it was agreed that the price to be paid to AT&T Corp. in
cancellation of its outstanding warrant to purchase Brite common stock would be
split, in part, by the two companies, resulting in a revised offer price of
$13.40 per Brite share, and when the tender offer and the merger are viewed
together, would consist of $10.00 per Brite share in cash and $3.40 per Brite
share in InterVoice common stock. The transaction was still structured as a
tender offer whereby the cash portion of the consideration would be distributed
followed by a merger in which the Brite shares not purchased in the tender offer
would receive InterVoice common stock or a combination of any remaining cash and
InterVoice common stock.
Based on 12,271,928 shares of Brite common stock outstanding, InterVoice
agreed to pay $122,719,280 to purchase 9,158,155 Brite shares in the tender
offer for $13.40 cash per share. The number of shares of InterVoice common stock
to be issued in exchange for the remaining Brite shares in the merger would be
determined by an exchange ratio based on the trailing 25-day average price of
InterVoice common stock collared between $8.00 and $14.00. The $8.00 lower
collar was fixed so that InterVoice would in no event have to issue more than
approximately 19.9% of its outstanding common stock. Under Nasdaq listing
standards, InterVoice would be required to separately obtain approval of its
shareholders if the transaction required InterVoice to issue more than 20% of
its outstanding stock. This would delay and add an additional element of
uncertainty to the transaction which was unacceptable to Brite. The $8.00 collar
assumed that all outstanding stock options under Brite's stock option plans
would be cancelled prior to exercise as contemplated by the merger agreement.
If, however, Brite was unable to repurchase all outstanding stock options and
the exercise of the unrepurchased options by optionees prior to the effective
time of the merger would otherwise cause InterVoice to have to issue more than
approximately 19.9% of its outstanding stock in connection with the transaction,
the parties agreed that the $8.00 lower collar would be adjusted upward so that
the maximum number of shares InterVoice would have to issue in such event would
be 5,719,877, representing approximately 19.9% of the outstanding InterVoice
common stock. If InterVoice decided to waive the condition that at least
9,158,155 Brite shares be tendered in the tender offer and agreed to purchase a
lesser number of shares, the cash not used in tender offer would be applied
toward the purchase of the remaining Brite shares outstanding on a pro rata
basis and the exchange ratio would be adjusted to take into account the amount
of cash to be distributed per Brite share in determining the number of shares of
InterVoice common stock to be issued in the merger.
On April 22, 1999, at a telephone meeting of the board of directors of
InterVoice, Daniel D. Hammond discussed the status of the negotiations to date
and informed the board of directors that there were several remaining open
issues that needed to be negotiated prior to the parties reaching agreement with
respect to the merger agreement. Mr. Hammond emphasized that the issues related
primarily to certain due diligence items and price collar mechanisms with
respect to the merger consideration. The board of directors authorized
management to proceed with negotiations through the weekend to attempt to
finalize the merger agreement.
After resolving the remaining open issues, on April 26, 1999, at a
telephone meeting of the board of directors of InterVoice, the board of
directors unanimously approved the merger agreement and the transactions
contemplated thereby, including the tender offer and the merger.
At a meeting of the board of directors of Brite held during the evening of
April 26, 1999, the board of directors unanimously approved the merger agreement
and the transactions contemplated thereby, including the tender offer and the
merger, and determined that the terms of the tender offer and the merger are
fair to, and in the best interests of, the holders of the common stock, and
unanimously recommended that stockholders of Brite accept the tender offer and
tender their shares. On April 26, 1999, based upon and subject to certain
matters stated in its opinion, U.S. Bancorp Piper Jaffray delivered to Brite's
board of directors its oral opinion, subsequently confirmed by its written
opinion dated that date, to the effect that the consideration to be received by
the holders of common stock pursuant to the tender offer and under the terms of
the merger agreement is fair to such holders (other than InterVoice and its
affiliates), from a financial point of view as of the date of the opinion. The
written opinion of U.S. Bancorp Piper Jaffray is set forth in full as Annex B to
this prospectus/proxy statement. Stockholders of Brite are urged to read that
opinion in its entirety.
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<PAGE> 37
Following the approval of each company's board of directors, InterVoice,
Merger Sub and Brite executed and delivered the merger agreement as of April 27,
1999.
On May 3, 1999, Merger Sub and InterVoice commenced the tender offer. The
tender offer was consummated on June 9, 1999, at which time Merger Sub purchased
9,158,155 shares of Brite common stock.
BRITE'S REASONS FOR THE MERGER; RECOMMENDATION OF BRITE'S BOARD OF DIRECTORS
(a) Recommendation of Brite's Board of Directors
On April 26, 1999, Brite's board of directors met by teleconference.
Members of Brite's management, U.S. Bancorp Piper Jaffray, and Triplett, Woolf &
Garretson updated the board of directors on the status of negotiations and the
proposed resolution of the remaining issues regarding the merger agreement.
Triplett, Woolf & Garretson reviewed with the board of directors the revisions
to the draft of the merger agreement that had previously been distributed to the
directors. U.S. Bancorp Piper Jaffray rendered to the board of directors its
oral opinion (which opinion was subsequently confirmed by delivery of a written
opinion dated April 26, 1999) as to the fairness as of such date, from a
financial point of view, of the consideration to be received in the tender offer
and the merger by the holders of Brite common stock (other than InterVoice and
its affiliates). The board of directors unanimously approved the merger
agreement and the transactions contemplated thereby, including the tender offer
and the merger, and determined that the terms of the tender offer and the merger
are fair to, and in the best interests of, Brite's stockholders, and unanimously
recommended that the stockholders accept the tender offer and tender their
shares.
(b) Reasons for the Recommendation of Brite's Board of Directors
During the last several years, Brite's board of directors and its
executives had discussed the growing consolidation of companies within the
industry, and considered whether Brite could continue to compete effectively in
an industry where the number of participants was shrinking and the relative size
of its principal competitors was increasing through consolidation. In
particular, Brite noted the acquisition of VMX by Octel, and the subsequent
acquisition of Octel by Lucent Technologies; the acquisition of Boston
Technology and Amarex by Comverse Technology; the acquisition of Voicetek by
Aspect Technology; the acquisition of Summa IV by Cisco Systems; and the various
merger activities by Syntellect. From time to time, Brite has had meetings with
various participants within the industry, although none of the discussions has
gone beyond the consideration of publicly available data.
Through its various meetings and negotiations with InterVoice, a number of
factors surrounding the merger were considered by Brite's board of directors.
Among these were the following:
1. the financial and other terms and conditions of the tender offer,
the merger and the merger agreement;
2. the familiarity of the board of directors with and review of the
business, financial condition, results of operations and prospects of
Brite, including the highly competitive nature of Brite's business and the
size and strength of Brite's competitors resulting from a number of recent
mergers;
3. the belief of the board of directors, after considering the
possible alternatives to the tender offer and the merger, that no other
buyer would be likely to provide a comparable value to the stockholders, in
light of InterVoice's financial condition, the particular synergies that
would be created for InterVoice as a result of Brite's business combination
with InterVoice, and InterVoice's growth plans;
4. the historical market price performance of the shares of Brite
common stock, the fact that the consideration to be paid in the tender
offer represents a substantial premium over the recent price of shares of
Brite common stock, and the likelihood that the present value of the future
market price of shares of Brite common stock would exceed $13.40 per share;
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5. the fact that, in the event that the board of directors decided to
accept a Superior Proposal (as defined in the merger agreement) of a third
party, the board of directors may terminate the merger agreement and pay
InterVoice the termination fee of $4,975,000 plus documented out-of-pocket
expenses not in excess of $1,000,000 (relating to the transactions
contemplated by the merger agreement). The board of directors believed that
such termination provision would not be a significant deterrent to a higher
offer by a third party interested in acquiring Brite;
6. the fact that the terms of the merger agreement should not unduly
discourage third parties from making bona fide proposals subsequent to the
execution of the merger agreement and if any such proposals were made that
were deemed to be Superior Proposals, Brite, in the exercise of its
fiduciary duties, could determine to provide information to and engage in
negotiations with any such third party; and
7. the presentation of U.S. Bancorp Piper Jaffray at the April 26,
1999 board of directors meeting, including the opinion of such firm, dated
April 26, 1999, to the effect that, as of such date, and based upon and
subject to certain matters stated in such opinion, the consideration to be
received in the tender offer and the merger by holders of shares of Brite
common stock (other than InterVoice and its affiliates) was fair, from a
financial point of view, to such stockholders. The full text of U.S.
Bancorp Piper Jaffray's opinion, which sets forth the assumptions made,
matters considered and limitations on the review undertaken by U.S. Bancorp
Piper Jaffray, is attached to this prospectus/ proxy statement as Annex B.
U.S. Bancorp Piper Jaffray's opinion is directed only to the fairness, from
a financial point of view, of the consideration to be received in the
tender offer and the merger by holders of shares of Brite common stock
(other than InterVoice and its affiliates) and is not intended to
constitute, and does not constitute, a recommendation to any stockholder of
Brite. HOLDERS OF BRITE COMMON STOCK ARE ENCOURAGED TO READ U.S. BANCORP
PIPER JAFFRAY'S OPINION CAREFULLY IN ITS ENTIRETY.
Brite's board of directors also considered the detriments of the merger,
namely:
1. the purchase of shares of Brite common stock by Merger Sub pursuant
to the tender offer will reduce the number of holders of shares of Brite
common stock and the number of shares of Brite common stock that might
otherwise trade publicly and, depending upon the number of shares of Brite
common stock so purchased, could adversely affect the liquidity and market
value of the remaining shares of Brite common stock held by the public;
2. if, as a result of the purchase of the shares of Brite common stock
pursuant to the tender offer or otherwise, the shares of Brite common stock
no longer meet the requirements of Nasdaq for continued inclusion in Nasdaq
and the shares of Brite common stock are no longer included in Nasdaq, the
market for, and value of, the shares of Brite common stock could be
adversely affected; and
3. the sale of shares of Brite common stock in the tender offer and
the conversion of shares of Brite common stock in the merger would be
taxable to stockholders for federal income tax purposes.
However, the board of directors determined that such detriments were
inherent in proceeding with the tender offer and the merger and were offset by
the benefits of the tender offer and the merger summarized above.
The board of directors did not find it necessary or practical to assign
relative weights to the factors or determine that any factor was determinative
or of more importance than other factors. Rather, the board of directors viewed
its position and recommendation as being based on the totality of the
information presented to and considered by it. Furthermore, individual directors
may have given different weights to different factors.
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<PAGE> 39
OPINION OF BRITE'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated March 8, 1999, Brite retained U.S.
Bancorp Piper Jaffray to act as its exclusive financial advisor and, if
requested, to render to the board of directors an opinion as to the fairness,
from a financial point of view, of the consideration to be received by Brite
stockholders in the tender offer and the merger, other than InterVoice and its
affiliates. The tender offer and the merger are collectively referred to as the
"transaction."
U.S. Bancorp Piper Jaffray delivered to the board of directors of Brite on
April 26, 1999 its opinion, that as of that date and based upon and subject to
the assumptions, factors and limitations set forth in the written opinion and
described below, the consideration proposed to be received by Brite stockholders
(other than InterVoice and its affiliates) in the proposed transaction with
InterVoice was fair, from a financial point of view, to those stockholders. A
copy of U.S. Bancorp Piper Jaffray's written opinion is attached to this
prospectus/proxy statement as Annex B and is incorporated into this
prospectus/proxy statement by reference.
While U.S. Bancorp Piper Jaffray rendered its opinion and provided certain
analyses to the board of directors, U.S. Bancorp Piper Jaffray was not requested
to and did not make any recommendation to the board of directors as to the
specific form or amount of the consideration to be received by Brite
stockholders in the proposed transaction with InterVoice, which was determined
through negotiations between Brite and InterVoice. U.S. Bancorp Piper Jaffray's
written opinion, which was delivered for use and considered by the board of
directors, is directed only to the fairness, from a financial point of view, of
the proposed consideration to be received by Brite stockholders in the proposed
transaction, does not address the value of a share of Brite common stock or
InterVoice common stock, does not address Brite's underlying business decision
to participate in the transaction and does not constitute a recommendation to
any Brite stockholder as to whether a stockholder should have tendered in the
tender offer or how a stockholder should vote with respect to the merger.
In arriving at its opinion, U.S. Bancorp Piper Jaffray reviewed:
- a draft of the merger agreement dated April 22, 1999;
- publicly available financial, operating and business information related
to InterVoice and Brite;
- publicly available market and securities data of InterVoice, Brite and
selected public companies deemed comparable to InterVoice and Brite;
- analyst reports relating to InterVoice and Brite;
- to the extent publicly available, financial information relating to
selected transactions in the computer telephony industry; and
- internal financial information of Brite prepared for financial planning
purposes and furnished by Brite management.
In addition, U.S. Bancorp Piper Jaffray visited facilities of Brite and
conducted discussions with members of senior management of both InterVoice and
Brite concerning the financial condition, current operating results and business
outlook of InterVoice, Brite and the combined company following the transaction.
In delivering its opinion to the board of directors of Brite, U.S. Bancorp
Piper Jaffray prepared and delivered to the Brite board of directors written
materials containing various analyses and other information material to the
opinion. Here is a summary of the analyses contained in the materials.
Implied Consideration
Giving effect to the range of exchange ratios within the upper and lower
collars of $14.00 and $8.00 and resulting implied value of InterVoice common
stock consideration of $13.40 per share of Brite common stock, U.S. Bancorp
Piper Jaffray calculated the aggregate implied value of the stock and cash
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<PAGE> 40
consideration payable in the transaction for Brite common stock to be
approximately $164.4 million or $13.40 per outstanding common share. U.S.
Bancorp Piper Jaffray calculated the aggregate equity value of Brite to be
approximately $176.7 million by adding to the common stock consideration the
additional approximately $12.2 million in consideration payable to holders of
common stock equivalents consisting of options and warrants. U.S. Bancorp Piper
Jaffray also calculated the implied "company value" (equity value plus debt less
cash) of Brite to be approximately $165.4 million.
Company Market Analysis
U.S. Bancorp Piper Jaffray reviewed the stock trading history and published
analyst estimates of Brite common stock. U.S. Bancorp Piper Jaffray presented
the recent Brite common stock trading information contained in the following
table:
<TABLE>
<S> <C>
Closing price on April 26, 1999............................. $10.56
30 calendar day closing average............................. 9.16
60 calendar day closing average............................. 9.09
90 calendar day closing average............................. 9.32
180 calendar day closing average............................ 8.80
52 week high trade.......................................... 14.00
52 week low trade........................................... 7.00
</TABLE>
Comparable Company Analysis
U.S. Bancorp Piper Jaffray compared financial information and valuation
ratios relating to Brite to corresponding data and ratios from four
publicly-traded companies deemed comparable to Brite (Boston Communications
Group, Edify Corporation, InterVoice and Periphonics Corporation). This group
was selected from companies that are in the computer telephony industry and have
a market capitalization of between $50 million and $1 billion.
This analysis produced multiples of selected valuation data as follows:
<TABLE>
<CAPTION>
COMPARABLE COMPANIES
---------------------------------
BRITE(1) LOW MEAN MEDIAN HIGH
-------- -------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Company value to latest 12 months revenue.......... 1.1x 0.8x 1.4x 1.3x 2.3x
Company value to estimated calendar year 1999
revenue(2)....................................... 1.0x 0.7x 1.1x 1.0x 1.9x
Company value to estimated calendar year 2000
revenue(2)....................................... 0.8x 0.6x 0.9x 0.8x 1.5x
Common stock value per share to latest 12 months
net income per share............................. 44.7x negative 20.7x 20.7x 25.2x
Common stock value per share to estimated calendar
1999 net income per share(2)..................... 22.3x 12.7x 25.5x 23.1x 43.3x
Common stock value per share to estimated calendar
2000 net income per share(2)..................... 15.1x 10.6x 15.0x 13.4x 22.5x
</TABLE>
- ---------------
(1) Based on consideration offered in transaction.
(2) Estimated revenue and net income for Brite are based on management estimates
and for the comparable companies on analysts' estimates.
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<PAGE> 41
Merger and Acquisition Analysis
U.S. Bancorp Piper Jaffray reviewed certain merger and acquisition
transactions selected by searching SEC filings, public company disclosures,
press releases, industry and popular press reports, databases and other sources
and by applying the following criteria:
- transactions that were announced or completed between January 1, 1996 and
April 23, 1999;
- transactions in which the acquiring company purchased 100% of the target;
- transactions in which the target company operates in the computer
telephony industry; and
- transactions with a value of $10 million to $2 billion.
This search yielded eight acquisitions as follows:
<TABLE>
<CAPTION>
ACQUIROR TARGET
- -------- ------
<S> <C>
Comverse Technology Inc. Amarex Technology
Oracle Corp. Versatility Inc.
Cisco Systems Inc. Summa Four Inc.
Aspect Telecommunications Voicetek Corp.
Davox Corp. AnswerSoft Inc.
Comverse Technology Inc. Boston Technology Inc.
Lucent Technologies Inc. Octel Communications Corp.
Syntellect Inc. Pinnacle Investment Associates
</TABLE>
U.S. Bancorp Piper Jaffray compared the resulting multiples of selected
valuation data to multiples for Brite derived from the implied value payable in
the transaction.
<TABLE>
<CAPTION>
COMPARABLE COMPANIES
---------------------------------
BRITE LOW MEAN MEDIAN HIGH
----- -------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Company value to latest 12 months revenue........... 1.1x 0.8x 3.6x 2.6x 12.6x
Company value to latest 12 months operating
income............................................ 31.2x negative 29.5x 25.3x 50.4x
Equity value to latest 12 months net income......... 53.0x negative 35.8x 34.2x 50.7x
</TABLE>
Premiums Paid Analysis
U.S. Bancorp Piper Jaffray reviewed publicly available information for
selected completed merger and acquisition transactions fulfilling the following
criteria:
- transactions completed between January 1, 1997 and April 23, 1999;
- transactions in which the target company operated in select industries
with SIC codes similar to Brite;
- transactions in which the acquiring company purchased 100% of a public
target; and
- transactions with a value of $50.0 million to $2.0 billion
U.S. Bancorp Piper Jaffray performed its analysis on 58 transactions that
satisfied the criteria, and the table below shows a comparison of those premiums
paid to the premium that would be paid to Brite
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<PAGE> 42
stockholders based on the implied value payable in the transaction. The premium
calculations for Brite stock are based upon an assumed announcement date of
April 27, 1999.
<TABLE>
<CAPTION>
IMPLIED PREMIUM (DISCOUNT)
----------------------------------------
COMPARABLE TRANSACTIONS
--------------------------------
BRITE LOW MEAN MEDIAN HIGH
----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
One day before announcement....................... 26.9% (11.1%) 34.7% 29.0% 125.6%
One week before announcement...................... 33.2% (6.7%) 41.3% 37.8% 119.6%
One month before announcement..................... 67.5% (4.0%) 47.9% 41.0% 163.7%
</TABLE>
Pro Forma Analysis
U.S. Bancorp Piper Jaffray analyzed pro forma effects resulting from the
impact of the transaction on the projected earnings per share of the combined
company for InterVoice's fiscal years ending February 2000 and 2001 using
management estimates for Brite and analyst estimates for InterVoice. Without
taking into account certain operating cost synergies that the combined company
may realize following consummation of the transaction, U.S. Bancorp Piper
Jaffray determined that the transaction could be dilutive in each of 2000 and
2001. Taking into account operating cost synergies that management estimates the
combined company may realize following consummation of the transaction, U.S.
Bancorp Piper Jaffray determined that the transaction could be dilutive in 2000
and accretive in 2001.
Brite Discounted Cash Flow Analysis
U.S. Bancorp Piper Jaffray performed a discounted cash flow analysis for
Brite in which it calculated the present value of the projected future cash
flows of Brite using internal financial planning data prepared by Brite
management. U.S. Bancorp Piper Jaffray estimated a range of theoretical values
for Brite based on the net present value of its implied annual cash flows and a
terminal value for Brite in 2002 calculated based upon a multiple of operating
income. U.S. Bancorp Piper Jaffray applied a range of discount rates of 20% to
24% and a range of terminal value multiples of 9.0x to 11.0x forecasted 2002
operating income. This analysis yielded the following results:
<TABLE>
<S> <C>
PER SHARE EQUITY VALUE OF BRITE
Low......................................................... $ 12.23
Mid......................................................... 13.85
High........................................................ 15.65
AGGREGATE EQUITY VALUE OF BRITE
(IN THOUSANDS)
Low......................................................... $155,029
Mid......................................................... 179,153
High........................................................ 206,094
</TABLE>
Analysis of InterVoice Common Stock
U.S. Bancorp Piper Jaffray reviewed general background information
concerning InterVoice, including publicly available analyst estimates and
ratings of InterVoice common stock, the price performance of InterVoice common
stock over the previous 12 months relative to the Nasdaq Composite Index and to
a comparable company group and the stock price and volume over the previous 12
months. U.S. Bancorp
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<PAGE> 43
Piper Jaffray also reviewed the stock trading history of InterVoice common stock
at the dates or for the periods indicated below.
<TABLE>
<S> <C>
Closing price on April 26, 1999............................. $11.03
30 calendar day closing average............................. 10.73
60 calendar day closing average............................. 11.49
90 calendar day closing average............................. 12.03
180 calendar day closing average............................ 13.39
52 week high trade.......................................... 18.13
52 week low trade........................................... 5.50
</TABLE>
In addition, U.S. Bancorp Piper Jaffray compared selected financial data
and ratios for InterVoice to the corresponding data and ratios for the same
comparable company group described above, except Brite was substituted for
InterVoice. The InterVoice stock price used in the calculations was its closing
price of $11.03 on April 26, 1999.
This analysis produced multiples of selected valuation data as follows:
<TABLE>
<CAPTION>
COMPARABLE COMPANIES
------------------------------
INTERVOICE MIN MEAN MEDIAN MAX
---------- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Company value to latest 12 months revenue............ 2.3x 0.8x 1.1x 1.1x 1.4x
Company value to estimated calendar year 1999
revenue............................................ 1.9x 0.7x 0.8x 0.8x 1.0x
Company value to estimated calendar year 2000
revenue............................................ 1.5x 0.6x 0.7x 0.7x 0.8x
Common stock value per share to latest 12 months net
income per share................................... 16.2x 25.2x 30.2x 30.2x 35.2x
Common stock value per share to estimated calendar
1999 net income per share.......................... 12.7x 13.7x 26.8x 25.1x 43.3x
Common stock value per share value to estimated
calendar 2000 net income per share................. 10.6x 11.6x 15.3x 13.5x 22.5x
</TABLE>
In reaching its conclusion as to the fairness of the transaction
consideration and in its presentation to the board of directors, U.S. Bancorp
Piper Jaffray did not rely on any single analysis or factor described above,
assign relative weights to the analyses or factors considered by it, or make any
conclusion as to how the results of any given analysis, taken alone, supported
its opinion. The preparation of a fairness opinion is a complex process and not
necessarily susceptible to partial analysis or summary description. U.S. Bancorp
Piper Jaffray believes that its analyses must be considered as a whole and that
selection of portions of its analyses and of the factors considered by it,
without considering all of the factors and analyses, would create a misleading
view of the processes underlying the opinion.
The analyses of U.S. Bancorp Piper Jaffray are not necessarily indicative
of actual values or future results, which may be significantly more or less
favorable than suggested by the analyses. Analyses relating to the value of
companies do not purport to be appraisals or valuations or necessarily reflect
the price at which companies may actually be sold. No company or transaction
used in any analysis for purposes of comparison is identical to Brite,
InterVoice or the transaction. Accordingly, an analysis of the results of the
comparisons is not mathematical; rather, it involves complex considerations and
judgments about differences in the companies to which Brite and InterVoice were
compared and other factors that could affect the public trading value of the
companies.
For purposes of its opinion, U.S. Bancorp Piper Jaffray relied upon and
assumed the accuracy and completeness of the financial statements and other
information provided to it by Brite and InterVoice and otherwise made available
to it and did not assume responsibility for the independent verification of that
information. Information prepared for financial planning purposes was not
prepared with the expectation of public disclosure. U.S. Bancorp Piper Jaffray
relied upon assurances from management of Brite and InterVoice that the
information provided to it by the respective companies was prepared on a
reasonable basis in accordance with industry practice, and with respect to
financial planning data, reflects the best
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<PAGE> 44
currently available estimates and judgment of management of Brite and
InterVoice, and such management was not aware of any information or facts that
would make the information provided to U.S. Bancorp Piper Jaffray incomplete or
misleading.
For purposes of its opinion, U.S. Bancorp Piper Jaffray assumed that the
transaction will be taxable for federal income tax purposes. U.S. Bancorp Piper
Jaffray also assumed that, in the course of obtaining the necessary regulatory
approvals and consents for the transaction, the purchase price for Brite would
not be changed.
In arriving at its opinion, U.S. Bancorp Piper Jaffray did not perform any
appraisals or valuations of any specific assets or liabilities of Brite or
InterVoice, and was not furnished with any such appraisals or valuations. U.S.
Bancorp Piper Jaffray analyzed Brite as a going concern and accordingly
expressed no opinion as to the liquidation value of any entity. U.S. Bancorp
Piper Jaffray expressed no opinion as to the price at which shares of Brite or
InterVoice common stock have traded or at which the shares of Brite, InterVoice
or the combined company may trade at any future time. The opinion is based on
information available to U.S. Bancorp Piper Jaffray and the facts and
circumstances as they existed and were subject to evaluation on the date of the
opinion. Events occurring after that date could materially affect the
assumptions used in preparing the opinion. U.S. Bancorp Piper Jaffray has not
undertaken to and is not obligated to affirm or revise its opinion or otherwise
comment on any events occurring after the date it was given.
U.S. Bancorp Piper Jaffray, as a customary part of its investment banking
business, evaluates businesses and their securities in connection with mergers
and acquisitions, underwritings and secondary distributions of securities,
private placements and valuations for estate, corporate and other purposes.
Brite's board of directors selected U.S. Bancorp Piper Jaffray because of its
expertise, reputation and familiarity with the computer telephony industry in
general and with Brite in particular. U.S. Bancorp Piper Jaffray maintains a
market in the common stock of Brite and InterVoice. In the ordinary course of
its business, U.S. Bancorp Piper Jaffray and its affiliates may actively trade
securities of Brite or InterVoice for their own accounts or the accounts of
their customers and, accordingly, may at any time hold a long or short position
in those securities. U.S. Bancorp Piper Jaffray has in the past provided
investment banking services to Brite unrelated to the proposed tender offer and
merger, for which services U.S. Bancorp Piper Jaffray has received compensation.
Under the terms of the engagement letter dated March 8, 1999, Brite has
agreed to pay U.S. Bancorp Piper Jaffray a fee of $400,000 for rendering its
fairness opinion. Such fee is to be credited against the financial advisory fee
and is not contingent upon completion of the tender offer and the merger.
Pursuant to the terms of U.S. Bancorp Piper Jaffray's engagement letter, Brite
agreed to pay U.S. Bancorp Piper Jaffray a financial advisory fee equal to
0.625% of the aggregate consideration payable in the tender offer and the
merger. Brite also has agreed to reimburse U.S. Bancorp Piper Jaffray for travel
and other reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of its legal counsel, and to indemnify U.S. Bancorp Piper Jaffray
and related parties against certain liabilities, including liabilities under the
federal securities laws, arising out of U.S. Bancorp Piper Jaffray's engagement.
FINANCING ARRANGEMENTS RELATED TO THE MERGER
In addition to the consideration in the merger consisting of InterVoice
common stock, the total amount of funds required by Merger Sub to consummate the
tender offer and to pay fees and expenses of InterVoice and Merger Sub related
to the tender offer and the merger is estimated to be approximately $135
million.
InterVoice has entered into a credit agreement with Bank of America
National Trust and Savings Association, Banc of America Securities LLC and
certain other financial institutions pursuant to which, subject to the terms and
conditions thereof, Bank of America NT&SA will provide Merger Sub financing in
an aggregate amount of up to $150 million.
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<PAGE> 45
The financing is guaranteed by InterVoice and each material existing and
future direct and indirect domestic subsidiary of InterVoice, excluding Merger
Sub; provided that Brite and its subsidiaries will not be required to guarantee
the financing until the consummation of the merger.
The financing consists of: (i) a $125 million tender facility which was
available to Merger Sub in order to fund the tender offer and the merger and
(ii) a $25 million revolving credit facility.
The following is a summary of the principal terms of the credit agreement.
This summary is qualified in its entirety by reference to the credit agreement,
a copy of which has been filed as an exhibit to the registration statement of
which this prospectus/proxy statement is a part.
The financing will mature on August 29, 2003, and the tender facility is
subject to quarterly amortization with the first payment due on May 31, 2000. In
addition, the financing is subject to certain mandatory prepayments and
commitment reductions tied to the sale of assets, the issuance of debt, the
issuance of equity and the generation of excess cash flow for a fiscal year.
Certain of these prepayment and commitment reduction requirements are limited
upon the satisfaction of certain financial ratios.
The amounts borrowed pursuant to the revolving credit facility and the
tender facility bear interest at a rate equal to either LIBOR plus the
applicable margin or the Alternate Base Rate (defined as the higher of (i) the
Bank of America NT&SA prime rate or (ii) the federal funds rate plus 0.50%) plus
the applicable margin. The applicable margin during the period from the closing
of the financing until receipt by the lenders of InterVoice's Form 10-Q for the
quarter ended November 30, 1999 will be 2.50% and 1.25% for LIBOR and Alternate
Base Rate loans, respectively. Thereafter, the applicable margin in each case
will be determined by reference to a ratio of InterVoice's funded debt to EBITDA
(as defined in the credit agreement) of not less than 1.75% and .50% for LIBOR
and Alternate Base Rate loans, respectively, and of not more than 2.50% and
1.25% for LIBOR and Alternate Base Rate loans, respectively.
The credit agreement contains certain representations and warranties,
certain negative and affirmative covenants, certain conditions and events of
default which are customarily required for similar financings. Such covenants
include, among others:
- restrictions and limitations on liens and negative pledges;
- limitations on mergers, consolidations and sales of assets;
- limitations on incurrence of debt;
- limitations on dividends, stock redemptions and the redemption and/or
prepayment of other debt;
- limitations on investments and acquisitions (other than the acquisition
of Brite); and
- limitations on capital expenditures.
Key financial covenants based on InterVoice's consolidated financial
statements include minimum net worth, maximum leverage ratio and minimum fixed
charge coverage ratio.
The financing requires a first priority perfected security interest in:
- all of the capital stock of each of the material domestic subsidiaries of
InterVoice (including, without limitation, Merger Sub), and 65% of the
capital stock of each first tier foreign subsidiary of InterVoice, which
capital stock shall not be subject to any other lien or encumbrance; and
- subject to permitted liens, all other present and future material assets
and properties of InterVoice and its material domestic subsidiaries
(including, without limitation, accounts receivable and proceeds,
inventory, real property, machinery and equipment, contracts, trademarks,
copyrights, patents, license rights and general intangibles), including,
without limitation, Brite and its subsidiaries; provided that Brite and
its subsidiaries shall not be required to pledge such assets and
properties until completion of the merger.
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<PAGE> 46
Without limiting the foregoing, but subject to the requirements of Regulation U
of the Federal Reserve Board, all capital stock of Brite owned by Merger Sub or
InterVoice is required to be pledged as collateral for the financing.
Regulations of the Federal Reserve Board, including Regulation U, restrict the
extension or maintenance of credit for the purpose of buying or carrying margin
stock, including the Brite shares, if the credit is secured directly or
indirectly by margin stock. Such secured credit may not be extended or
maintained in an amount that exceeds the maximum loan value of all the direct
and indirect collateral securing the credit, including margin stock and other
collateral. All financing for the tender offer and the merger was structured so
as to be in full compliance with these regulations.
In connection with the financing, Merger Sub has agreed to pay the lenders
certain fees, to reimburse the lenders for reasonable out-of-pocket fees and
expenses and to provide certain indemnities, as are customary for similar
financings.
InterVoice anticipates that indebtedness incurred through borrowings under
the financing in connection with the tender offer and the merger will be repaid
from a variety of sources, which may include funds generated internally by
InterVoice and its subsidiaries and following the merger, funds generated by
Brite, bank financing, and the public or private sale of debt or equity
securities. No decision has been made concerning the method InterVoice will
employ to repay such indebtedness. Such decision will be made based on
InterVoice's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial, market and other economic
conditions and such other factors as InterVoice may deem appropriate.
Upon consummation of the merger, Merger Sub will be merged into Brite,
which will then be obligated as the borrower under the financing.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is for general information purposes only and is
based on the U.S. federal income tax law now in effect, which is subject to
change, possibly retroactively. This summary does not discuss all aspects of
U.S. federal income taxation which may be important to particular stockholders
in light of their individual investment circumstances or to certain types of
stockholders subject to special tax rules (e.g., financial institutions,
broker-dealers, insurance companies, tax-exempt organizations and foreign
taxpayers), nor does it address specific state, local, or foreign tax
consequences. This summary assumes that stockholders have held their shares of
Brite common stock as "capital assets" (generally property held for investment)
under the Internal Revenue Code of 1986. EACH HOLDER OF SHARES OF BRITE COMMON
STOCK IS URGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE SPECIFIC U.S.
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE
MERGER.
The receipt of shares of InterVoice common stock or of both shares of
InterVoice common stock and cash in lieu of fractional shares if the merger is
carried out as contemplated by the merger agreement will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. In such event, a
stockholder who receives InterVoice common stock pursuant to the merger will
recognize gain or loss for federal income tax purposes equal to the difference
between the fair market value of the InterVoice common stock at the effective
time of the merger (plus the amount of any cash received in lieu of fractional
shares) and such stockholder's adjusted tax basis in the shares of Brite common
stock exchanged in the merger. Thus, a stockholder recognizing a gain under the
foregoing rule generally would incur tax liability as a result of the merger
without the corresponding receipt of cash (other than cash previously received
in the tender offer if the stockholder tendered Brite shares).
Gain or loss recognized with respect to the receipt of the shares of
InterVoice common stock or both shares of InterVoice common stock and cash in
lieu of fractional shares pursuant to the merger generally will be capital gain
or loss. Gain or loss will be calculated separately for each block of shares of
Brite common stock (i.e., a group of shares of Brite common stock with the same
tax basis and holding period) exchanged in the merger. Any such capital gain
will be long term if the stockholder has held the shares of Brite common stock
for more than one year at the time of the sale. The deductibility of capital
losses is
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<PAGE> 47
limited. The initial tax basis of InterVoice common stock received pursuant to
the merger will be the fair market value of such stock at the effective time of
the merger.
ACCOUNTING TREATMENT
The acquisition of Brite by InterVoice, which includes the merger, will be
accounted for under the "purchase" method of accounting with InterVoice treated
as the acquiror. As a result, InterVoice will record the assets and liabilities
of Brite at their estimated fair values and will record as goodwill the excess
of the purchase price over such estimated fair values. The operating results of
Brite will be combined with the results of InterVoice from the date of the
merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In connection with the merger, the directors of Brite may have certain
interests that differ from the interests of Brite's stockholders generally.
These interests include the repurchase for cash of the stock options held by
such directors and an arrangement pursuant to which Stanley G. Brannan, the
Chairman, Chief Executive Officer and President of Brite, would be elected as
Vice Chairman and a director of InterVoice. In addition, David W. Brandenburg, a
director of InterVoice, owned 100,000 shares of Brite common stock at the time
the merger agreement was negotiated, with 81,072 of such shares having been
purchased in the tender offer.
FEDERAL SECURITIES LAW CONSEQUENCES
The shares of InterVoice common stock to be received by most Brite
stockholders in the merger will be freely transferable. Shares of InterVoice
common stock received by persons who are deemed to be "affiliates" of Brite
prior to the merger or to be affiliates of InterVoice after the merger may be
sold by them only in transactions permitted by the resale provisions of Rule 145
under the Securities Act or as otherwise permitted under the Securities Act.
All directors and certain officers and stockholders of Brite may be deemed
to be affiliates of Brite within the meaning of these rules. Persons who may be
deemed affiliates of Brite or InterVoice generally include individuals or
entities that control, are controlled by, or are under common control with, such
party, and may include certain officers and directors of such party as well as
principal shareholders of such party. We recommend that any such person obtain
advice of securities counsel prior to effecting any resales.
The merger agreement provides that, on or prior to the effective date of
the registration statement of which this prospectus/proxy statement is a part,
Brite will deliver to InterVoice a letter identifying all persons who are
"affiliates" of Brite for purposes of Rule 145 under the Securities Act. Brite
has agreed to use its reasonable best efforts to deliver a written agreement of
each person who is an affiliate regarding compliance with Rule 145.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
The conversion of shares of Brite common stock into the right to receive
shares of InterVoice common stock will occur automatically at the effective time
of the merger.
Promptly after the effective time of the merger, InterVoice will instruct
the exchange agent to mail a transmittal letter to each holder of record of
shares of Brite common stock other than holders of shares purchased in the
tender offer or otherwise owned by InterVoice and any of its subsidiaries or by
Brite and any of its subsidiaries, informing such stockholder of the procedures
to follow in forwarding his or her Brite stock certificates to the exchange
agent. On receipt of such certificates and transmittal letter, the exchange
agent will deliver full shares of InterVoice common stock that such shareholder
is entitled to receive, and cash in lieu of fractional shares pursuant to the
terms of the merger agreement.
If any issuance of shares of InterVoice common stock is to be made to a
person other than the Brite stockholder in whose name the certificate is
registered at the effective time of the merger, it will be a
41
<PAGE> 48
condition to the transfer that the certificate surrendered be properly endorsed
for transfer with the signature of the transferor being guaranteed by a
participant in the Security Transfer Agent's Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program and that the Brite stockholder requesting such issuance either
pay any transfer or other tax required or establish to the satisfaction of
InterVoice and the exchange agent that such tax has been paid or is not
applicable.
After the effective time of the merger, there will be no further transfers
of Brite common stock on the stock transfer books of Brite. If a certificate
representing Brite common stock is presented for transfer, it will be canceled
and a certificate representing the appropriate number of full shares of
InterVoice common stock and cash in lieu of fractional shares will be issued in
exchange therefor.
After the effective time of the merger and until surrendered, shares of
Brite common stock will be deemed to evidence ownership of the number of full
shares of InterVoice common stock into which such shares of Brite common stock
were converted and cash in lieu of any fractional shares as contemplated by the
merger agreement.
STOCKHOLDERS OF BRITE SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. STOCKHOLDERS OF BRITE SHOULD
NOT SEND STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
APPRAISAL RIGHTS
Holders of Brite common stock are not entitled to dissenters' appraisal
rights under Kansas law in connection with the merger because, except for cash
in lieu of fractional shares, such holders will receive consideration in the
merger solely consisting of shares of InterVoice common stock that will be
listed on Nasdaq and the Chicago Stock Exchange. See "Comparison of Stockholder
and Shareholder Rights -- Appraisal and Dissenters' Rights."
NASDAQ AND CHICAGO STOCK EXCHANGE LISTING
Pursuant to applications filed by InterVoice, the shares of InterVoice
common stock to be issued in connection with the merger have been authorized for
listing on Nasdaq and the Chicago Stock Exchange, subject to official notice of
issuance.
DELISTING AND DEREGISTRATION OF BRITE COMMON STOCK
Applications will be made by InterVoice to delist the Brite common stock
from Nasdaq and deregister the Brite common stock under the Securities Exchange
Act of 1934 immediately following the effective time of the merger.
OTHER TERMS OF THE MERGER AGREEMENT
As of April 27, 1999, InterVoice, Merger Sub and Brite entered into the
merger agreement, pursuant to which Merger Sub agreed to make the tender offer.
The following is a description of certain terms of the merger agreement that are
applicable following the consummation of the tender offer and before the closing
of the merger, and the steps InterVoice and Brite have taken to implement the
terms of the merger agreement. The description of these terms of the merger
agreement is qualified by reference to the merger agreement, a copy of which is
attached as Annex A to this prospectus/proxy statement.
DESIGNATION OF DIRECTORS
The merger agreement provides that, promptly after the purchase of
9,158,155 shares of Brite common stock pursuant to the tender offer, InterVoice
became entitled to designate such number of members of Brite's board of
directors as will give InterVoice representation proportionate to its ownership
interest. To this end, on June 21, 1999 Brite fixed the size of its board of
directors at ten members and
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<PAGE> 49
John F. Kelsey, III, Alan C. Maltz and Scott A. Maltz resigned as directors of
Brite. The remaining directors of Brite, Stanley G. Brannan, C. MacKay Ganson,
Jr. and J. Darrell Kelley, thereafter elected seven officers of InterVoice to
Brite's board of directors. The new directors are David A. Berger, Gordon H.
Givens, Rob-Roy J. Graham, Daniel D. Hammond, Dwain H. Hammond, Dean C. Howell
and M. Gregory Smith. Brite's board of directors must include at least one
director who was a director as of the date of execution of the merger agreement
and who is neither an officer of Brite nor a designee, stockholder, affiliate or
associate of InterVoice. If the number of such independent directors is reduced
below two, the remaining independent director shall be entitled to designate
another independent director to fill such vacancy. Any action to amend or
terminate the merger agreement on behalf of Brite, to exercise or waive any of
Brite's rights, benefits or remedies thereunder, to extend the time for the
performance of Merger Sub's obligations thereunder, to amend Brite's Articles of
Incorporation or Bylaws or to take other action by Brite under the merger
agreement shall be effected only by the action of a majority of the directors of
Brite then in office who are independent directors.
APPROVAL OF THE MERGER AT THE STOCKHOLDER MEETING
Subject to applicable law and the terms of the merger agreement, Brite has
also agreed that the Brite board of directors will recommend that the
stockholders of Brite adopt the merger agreement and will take all lawful action
to solicit such adoption.
DIRECTOR OF INTERVOICE
Stanley G. Brannan, currently one of the members of Brite's board of
directors, will become Vice Chairman and a member of the board of directors of
InterVoice following the effective time of the merger.
BRITE STOCK OPTION PLANS
In accordance with the merger agreement Brite has entered into agreements
with optionees to cancel substantially all outstanding stock options, whether or
not then exercisable, under the 1984 Incentive Stock Option Plan, the 1990
Non-Employee Director Stock Option Plan, the 1994 Stock Option Plan and the
Perception Technology Corporation Stock Option Plan, which collectively
constitute all of the plans of Brite under which any stock options are
outstanding. Brite has also terminated the Employee Stock Purchase Plan and
refunded in cash to participants their respective account balances.
ACQUISITION PROPOSALS
Brite has agreed that neither it nor any of its officers, directors,
employees, investment bankers, attorneys, agents, accountants or other agents
will enter into an agreement regarding or, directly or indirectly, initiate,
solicit, encourage, or otherwise facilitate the making of any proposal or offer
with respect to a merger, reorganization, consolidation or other business
combination involving, or any tender offer or exchange offer for or other
purchase of, a substantial portion of Brite's assets or a substantial equity
interest in its voting securities. Such a transaction is referred to as an
"Acquisition Proposal."
Brite has further agreed that neither it nor any of its representatives
will enter into any negotiations or discussions with or provide information or
data to anyone relating to an Acquisition Proposal. The merger agreement does
not, however, prevent Brite or the Brite board of directors from responding to a
tender offer in compliance with the Exchange Act.
The merger agreement also does not prevent Brite or the Brite board of
directors from negotiating or furnishing information to a party with respect to
an Acquisition Proposal if:
- the party has submitted an unsolicited bona fide written proposal which
the board of directors determines in good faith upon advice from a
nationally recognized investment banking firm represents a superior
transaction to the tender offer and the merger;
- the board of directors has received written advice from outside legal
counsel that such action is necessary for the board of directors to
satisfy its fiduciary duty under applicable law; and
43
<PAGE> 50
- the party receiving such information shall have signed a confidentiality
agreement with terms no less favorable to Brite than the confidentiality
agreement between Brite and InterVoice.
In addition, Brite has agreed to notify InterVoice within 24 hours if any
Acquisition Proposals are received by, information is sought from, or
negotiations are sought to be entered into with, Brite or any of its
representatives. This notice should indicate the name of the person making the
Acquisition Proposal and the terms and conditions of any Acquisition Proposal.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that for five years after the effective time
of the merger, InterVoice and Brite, as the surviving corporation, shall, to the
fullest extent permitted under Kansas law or the terms of Brite's Articles of
Incorporation or Bylaws as in effect at the effective time of the merger,
indemnify, defend and hold harmless the present and former officers and
directors of Brite and its subsidiaries against all losses, claims, damages,
liabilities, costs, fees and expenses, including reasonable attorneys' fees and
disbursements of attorneys and judgments, fines, losses, claims, liabilities and
amounts paid in settlement, arising out of actions or omissions occurring at or
prior to the effective time of the merger. The merger agreement also provides
that InterVoice or the surviving corporation will maintain Brite's existing
directors' and officers' liability insurance or a substantially equivalent
policy, for at least five years after the effective time of the merger.
InterVoice is not, however, required to pay total premiums for insurance in
excess of $250,000. If InterVoice or the surviving corporation is unable to
obtain substantially equivalent coverage for an aggregate premium not to exceed
$250,000, then InterVoice or the surviving corporation will obtain as much
insurance as can be obtained for $250,000.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties of Brite,
InterVoice and Merger Sub relating to, among other things:
- corporate existence, good standing, and similar corporate matters;
- financial statements;
- public filings;
- conduct of business;
- employee benefit plans;
- intellectual property;
- employment matters;
- compliance with laws;
- tax matters;
- litigation;
- environmental matters;
- material contracts;
- potential conflicts of interest;
- brokers' fees;
- real property;
- insurance;
- accounts receivable and inventory;
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<PAGE> 51
- the vote required to approve the merger agreement;
- undisclosed liabilities;
- information in this prospectus/proxy statement; and
- the absence of any material adverse event with respect to Brite or
InterVoice.
TERMINATION
InterVoice and Brite can mutually agree to terminate the merger agreement
at any time without completing the merger. The merger agreement may also be
terminated in certain other circumstances, including the following:
(1) by either InterVoice or Brite if a court or governmental authority
has acted to prevent the merger; or
(2) by Brite if InterVoice or Merger Sub materially breaches any of
its representations, warranties or covenants under the merger agreement.
FEES AND EXPENSES
The merger agreement provides that all fees, costs and expenses incurred in
connection with the merger agreement and the transactions contemplated by the
merger agreement shall be paid by the party incurring such fees, costs and
expenses.
AMENDMENTS AND MODIFICATIONS
Brite, InterVoice and Merger Sub may, by written agreement, modify or amend
the merger agreement, provided, that after the approval of the merger agreement
by the stockholders of Brite, no such amendment, modification or supplement
shall reduce or change the consideration to be received by Brite's stockholders
in the merger.
AT&T WARRANT
Brite has repurchased for $7,500,000 in cash the Common Stock Purchase
Warrant dated December 12, 1997 issued by Brite to AT&T Corp.
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of Brite, InterVoice and Merger Sub to effect the merger
are subject to the satisfaction or waiver of the following conditions:
(a) the merger and the merger agreement shall have been duly approved
and adopted by the Brite stockholders;
(b) no statute, rule or regulation shall have been enacted or
promulgated by any governmental entity which prohibits the consummation of
the merger; and there shall be no order or injunction of a court of
competent jurisdiction in effect precluding consummation of the merger; and
(c) the registration statement of which this prospectus/proxy
statement is a part shall have been declared effective by the SEC under the
Securities Act, no stop order suspending the effectiveness of the
registration statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of this
prospectus/proxy statement shall have been initiated or threatened by the
SEC.
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<PAGE> 52
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following pro forma combined financial information is filed as a part
of this prospectus/proxy statement:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Unaudited Pro Forma Combined Financial Statements........... 47
Unaudited Pro Forma Combined Balance Sheet as of February
28, 1999.................................................. 49
Unaudited Pro Forma Combined Statement of Operations for the
Fiscal Year ended February 28, 1999....................... 50
Notes to Unaudited Pro Forma Combined Financial
Statements................................................ 51
</TABLE>
46
<PAGE> 53
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements have been
prepared to give effect to the following transactions, which are collectively
referred to as the "pro forma transactions," using the purchase method of
accounting:
- the tender offer;
- the funding of the debt financing;
- the merger of Merger Sub with and into Brite whereby Brite becomes a
wholly-owned subsidiary of InterVoice at an assumed exchange ratio of
1.3215 shares of InterVoice common stock for each share of Brite common
stock;
- the repurchase by Brite of the Common Stock Purchase Warrant dated
December 12, 1997 issued by Brite to AT&T Corp.;
- the repurchase by Brite of all outstanding stock options under Brite's
stock option plans as contemplated by the merger agreement; and
- the costs and expenses incurred in consummating the pro forma
transactions.
The unaudited pro forma combined financial statements of InterVoice give
effect to the consummation of the pro forma transactions, as if the pro forma
transactions had been consummated: (i) on February 28, 1999, in the case of the
Unaudited Pro Forma Combined Balance Sheet and (ii) on March 1, 1998, in the
case of the Unaudited Pro Forma Combined Statement of Operations for the fiscal
year ended February 28, 1999.
The unaudited pro forma combined financial statements are presented for
illustrative purposes only and are not necessarily indicative of what
InterVoice's actual financial position or results of operations would have been
had the pro forma transactions been consummated on such dates, nor is it
necessarily indicative of future financial position or results of operations.
Additionally, these financial statements do not give effect to (i) any
transactions other than the pro forma transactions and those described in the
accompanying notes to unaudited pro forma combined financial statements of
InterVoice, (ii) InterVoice's results of operations since February 28, 1999,
(iii) Brite's results of operations since December 31, 1998, (iv) any one-time
charges that may result from the restructuring of InterVoice's existing business
due to the pro forma transactions, or (v) any cost savings or other synergies
anticipated by InterVoice or Brite management as a result of the pro forma
transactions. The actual exchange ratio used for purposes of determining the
number of shares of InterVoice common stock to be issued may be different at the
effective time of the merger as described in "The Merger -- General."
InterVoice's management is evaluating and planning for restructuring
activities directly related to the pro forma transactions. Any charges which may
be incurred in connection with restructuring activities have not been included
in the unaudited pro forma combined financial statements. Such restructuring
costs, should they occur, would be expected to be incurred in the fiscal quarter
ending August 31, 1999. Although InterVoice's management is still in the process
of evaluating the nature, scope and extent of any restructuring costs, it
currently estimates that the related charges would be in the range of $5 million
to $7 million.
The unaudited pro forma combined financial statements do not purport to be
indicative of InterVoice's financial position or results of operations as of the
date hereof or for any period ended on the date hereof, as of the closing date
of the merger, or for any period ending at the closing date, or as of or for any
other future date or period.
The following unaudited pro forma combined financial statements are based
upon the historical financial statements of InterVoice and Brite and should be
read in conjunction with such historical financial statements, the related
notes, and the other information included or incorporated by reference in
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<PAGE> 54
this prospectus/proxy statement. In making the pro forma adjustments to
InterVoice's and Brite's historical financial information to prepare the
unaudited pro forma combined financial statements, no adjustment has been made
to take into account the two companies' differing fiscal periods. InterVoice has
retained independent valuation professionals to determine the fair value of the
assets and liabilities of Brite, including intangible assets, as of the
effective time. Although such determination of fair value is not presently
expected to result in values that are materially greater or less than the values
assumed in the preparation of the following unaudited pro forma combined
financial statements, there can be no assurance with respect thereto.
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<PAGE> 55
INTERVOICE, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
FEBRUARY 28, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
INTERVOICE BRITE
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
2/28/99 3/31/99 ADJUSTMENTS COMBINED
---------- ---------- ------------ ---------
(SEE NOTE 2)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 12,196 $ 12,432 $ (12,500)(a) $ 12,128
Accounts and notes receivable, net........... 42,156 49,512 -- 91,668
Inventory.................................... 11,704 22,557 -- 34,261
Prepaid expenses and other current assets.... 4,498 6,172 -- 10,670
Deferred income taxes........................ 4,514 732 -- 5,246
-------- -------- --------- --------
Total current assets................. 75,068 91,405 (12,500) 153,973
Property and equipment, net.................... 27,055 16,831 -- 43,886
Intangibles and other assets, net.............. 9,407 7,408 (2,000)(a) 93,415
78,600(b)
Goodwill....................................... -- -- 32,450(b) 32,450
Investment in Brite............................ -- -- 175,200(c) --
(72,550)(d)
(102,650)(b)
-------- -------- --------- --------
Total assets......................... $111,530 $115,644 $ 96,550 $323,724
======== ======== ========= ========
Current liabilities:
Accounts payable and accrued expenses........ $ 7,651 $ 9,869 $ 3,500(c) $ 21,020
Accrued compensation......................... 3,018 2,971 -- 5,989
Other accrued expenses....................... 1,188 4,813 -- 6,001
Customer deposits............................ 4,096 2,957 -- 7,053
Deferred income.............................. 5,626 5,042 -- 10,668
Income taxes payable......................... 1,022 3,184 (1,700)(a) 2,506
Current portion of long-term obligations..... -- -- 5,000(c) 5,000
-------- -------- --------- --------
Total current liabilities............ 22,601 28,836 6,800 58,237
Deferred income................................ -- 1,458 1,458
Deferred income taxes.......................... 1,356 -- 28,500(b) 29,856
Long-term obligations, less current portion.... 5,000 -- 125,000(c) 130,000
Stockholders' equity:
Common stock, no par value................... 14 45,325 2(c) 16
(45,325)(d)
Additional capital........................... 1,720 -- 41,698(c) 43,418
Unearned Compensation........................ (649) -- -- (649)
Cumulative foreign translation adjustment.... -- (1,089) 1,089(d) --
Retained earnings............................ 81,488 41,114 (12,800)(a) 61,388
(28,314)(d)
(20,100)(b)
-------- -------- --------- --------
82,573 85,350 (63,750) 104,173
-------- -------- --------- --------
Total liabilities and stockholders' equity..... $111,530 $115,644 $ 96,550 $323,724
======== ======== ========= ========
</TABLE>
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<PAGE> 56
INTERVOICE, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INTERVOICE BRITE
HISTORICAL HISTORICAL
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
2/28/99 12/31/98 ADJUSTMENTS COMBINED
----------- ---------- ------------ -----------
(SEE NOTE 3)
<S> <C> <C> <C> <C>
Sales.................................... $ 136,904 $135,715 $ $ 272,619
Cost of goods sold....................... 54,191 73,105 127,296
----------- -------- -------- -----------
82,713 62,610 -- 145,323
Research and development expenses........ 13,285 15,795 29,080
Selling, general and administrative
expenses............................... 40,279 43,187 17,068(a) 100,534
Nonrecurring expenses.................... -- 1,410 1,410
----------- -------- -------- -----------
53,564 60,392 17,068 131,024
Income (loss) from operations............ 29,149 2,218 (17,068) 14,299
Other income (expense), net.............. (353) 628 (10,300)(b) (10,025)
----------- -------- -------- -----------
Income before income taxes............... 28,796 2,846 (27,368) 4,274
Income taxes............................. 8,603 1,073 (8,761)(c) 915
----------- -------- -------- -----------
Income from continuing operations........ $ 20,193 $ 1,773 $(18,607) $ 3,359
=========== ======== ======== ===========
Earnings per share:
Basic.................................. $.72 $.11
=========== ===========
Diluted................................ $.68 $.10
=========== ===========
Weighted average shares outstanding:
Basic.................................. 27,990,907 4,114,848 32,105,755
Diluted................................ 29,772,504 4,114,848 33,887,352
</TABLE>
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<PAGE> 57
INTERVOICE, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. GENERAL
The pro forma transactions will be accounted for as a purchase business
combination by InterVoice. These unaudited, pro forma combined financial
statements reflect the payment of approximately $122.7 million in cash and the
issuance of 4,114,848 shares of InterVoice common stock in exchange for
3,113,773 shares of Brite common stock (amount of Brite common stock outstanding
as of April 27, 1999, excluding shares owned by InterVoice or its subsidiaries).
The pro forma adjustments assume a payment of $13.40 in cash per share of Brite
common stock for 9,158,155 shares and the issuance of 4,114,848 shares of
InterVoice common stock in exchange for the remaining 3,113,773 shares of Brite
common stock as set forth in the following table:
<TABLE>
<S> <C>
Assumed number of shares of Brite common stock outstanding
at effective time of merger (excluding shares owned by
InterVoice and its subsidiaries).......................... 3,113,773
Assumed exchange ratio...................................... 1.3215
---------
Assumed number of shares of InterVoice common stock issued
in merger................................................. 4,114,848
</TABLE>
The exchange ratio to be used in determining the actual number of shares of
InterVoice common stock to be issued in exchange for Brite common stock will be
determined at the effective time based on the actual number of shares of Brite
common stock outstanding on that date, excluding shares owned by InterVoice or
its subsidiaries, and the average of the per share closing price of InterVoice
common stock on Nasdaq for the 25 trading days immediately preceding the
effective time of the merger. The actual exchange ratio used for purposes of
determining the number of shares of InterVoice common stock to be issued may be
different at the effective time of the merger as described in "The
Merger -- General." For purposes of determining the assumed exchange ratio
above, the 25-day average closing price as of May 15, 1999 was used ($10.14 per
share).
The accompanying unaudited pro forma combined financial statements reflect
an aggregate purchase price of approximately $175.2 million, consisting of
$13.40 in cash paid per share for 9,158,155 shares of Brite common stock in the
tender offer, 4,114,848 shares of InterVoice common stock issued to Brite
stockholders (valued at approximately $10.14 per share of InterVoice common
stock) of InterVoice common stock, and costs of InterVoice directly related to
the transactions as follows (in thousands):
<TABLE>
<S> <C>
Cash paid to Brite stockholders in tender offer............. $122,700
InterVoice common stock issued in the merger................ 41,700
Investment advisor, legal, accounting and other professional
fees and expenses......................................... 5,200
Other costs related to the pro forma transactions........... 5,600
--------
$175,200
========
</TABLE>
For purposes of preparing the accompanying unaudited pro forma combined
balance sheet, the aggregate purchase price has been allocated to the net assets
acquired, with the remainder recorded as goodwill on the basis of preliminary
estimates of fair value. These preliminary estimates of fair value were
determined by InterVoice's management based primarily on information furnished
by management of Brite and preliminary results of an independent appraisal of
the assets acquired.
While the pro forma information has been presented based on the best
information currently available to InterVoice's management, the final allocation
of the purchase price will be based on a completed appraisal of the assets and
liabilities of Brite. Although the final valuation of the assets to be acquired
is not presently expected to result in values that are significantly different
from management's estimates as included in the unaudited pro forma combined
balance sheet, there can be no assurance with respect thereto.
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<PAGE> 58
INTERVOICE, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. UNAUDITED PRO FORMA COMBINED BALANCE SHEET
The accompanying unaudited pro forma combined balance sheet assumes the pro
forma transactions were consummated on February 28, 1999 and reflects the
following pro forma adjustments:
(a) in connection with the pro forma transactions, Brite will make cash
payments prior to the effective time of $12.5 million as follows: (1)
$7.5 million to repurchase from AT&T Corp. the Common Stock Purchase
Warrant dated December 12, 1997 issued by Brite to AT&T Corp., and (2)
approximately $5 million as consideration to Brite optionees for
canceling all outstanding Brite stock options in connection with the
pro forma transactions. A pro forma adjustment has been recorded to
reduce Brite's retained earnings by $12.8 million to reflect the
charge, net of a $1.7 million tax benefit, associated with the cash
payments and the write off of a $2 million deferred asset reflected in
Brite's historical balance sheet related to the AT&T warrant;
(b) to record the estimated allocation of the purchase price for the pro
forma transactions to the fair value of assets and liabilities acquired
as follows (in thousands):
<TABLE>
<S> <C>
Working capital........................................ $ 51,769
Property and equipment................................. 16,831
Other assets........................................... 5,408
Other liabilities...................................... (1,458)
--------
Fair value of Brite's historical net assets -- as
adjusted......................................... 72,550
Identified intangible assets........................... 78,600
Purchased in-process research and development to be
charged to expense upon consummation of the pro forma
transactions.......................................... 20,100
Deferred income tax liability related to identified
intangible assets..................................... (28,500)
Goodwill............................................... 32,450
--------
$175,200
========
</TABLE>
The historical book value of Brite's net assets as of March 31, 1999
reconciles with the fair value of the net assets included in the
purchase price allocation above as follows:
<TABLE>
<S> <C>
Book value of Brite's historical net assets............ $85,350
Pro forma adjustment (a):
- to reduce working capital for cash payments.......... (12,500)
- to increase working capital for income tax benefit... 1,700
- to reduce other assets for write off of deferred
asset................................................. (2,000)
-------
Fair value of Brite's historical net assets -- as
adjusted.............................................. $72,550
=======
</TABLE>
The amounts identified as intangible assets were categorized as follows
(in thousands):
<TABLE>
<CAPTION>
ALLOCATED
CATEGORY VALUE
- -------- ---------
<S> <C>
Existing product technology............................ 22,000
Customer relationships................................. 38,500
Assembled workforce.................................... 8,300
Tradename.............................................. 9,800
-------
Total intangibles............................ $78,600
=======
</TABLE>
(c) to record the aggregate cost of the pro forma transactions as described
in Note 1 above. In connection with the pro forma transactions,
InterVoice has obtained a credit facility up to an
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<PAGE> 59
INTERVOICE, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
aggregate amount of $150 million. See "The Merger -- Financing
Arrangements Related to the Merger." InterVoice anticipates that $135
million of the new financing will be utilized as of the effective time
of the merger, and $5 million of the new financing will be used to pay
off existing InterVoice long-term debt. Accordingly, the pro forma
transactions will result in $130 million of additional indebtedness on
a pro forma combined basis. In addition, approximately $3.5 million is
reflected as an accrued liability for certain costs directly related to
the pro forma transactions that will not be paid at the effective time
of the merger; and
(d) to eliminate Brite's historical equity balances after considering
adjustment (a) above.
3. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
The accompanying unaudited pro forma combined statement of operations has
been prepared as if the pro forma transactions were consummated as of March 1,
1998, and reflect the following pro forma adjustments:
(a) to record amortization of identified intangibles acquired in the pro
forma transactions computed using the straight-line method over their
estimated economic lives (three to ten years) and amortization of
goodwill over its estimated economic life (ten years);
(b) to record estimated interest expense incurred as if the pro forma
transactions had been completed on March 1, 1998. As described in "The
Merger -- Financing Arrangements Related to the Merger," the applicable
interest rate for the debt financing relating to the pro forma
transactions is a variable rate indexed to LIBOR. The pro forma
interest expense adjustment assumes an interest rate of 7.9% on the
additional long-term borrowings of $130 million in connection with the
pro forma transactions. An increase of 1/8% in this assumed interest
rate would have the effect of reducing pro forma net income by
approximately $105,000; and
(c) to adjust the provision for income taxes to reflect the impact on the
results of operations of the pro forma transactions and related pro
forma adjustments. The effective tax rate on the pro forma adjustment
to income taxes is lower than the statutory tax rate due to
non-deductible goodwill amortization expense recorded as part of the
adjustment described in Note 3(a).
4. UNAUDITED PRO FORMA COMBINED EARNINGS PER COMMON SHARE DATA
The unaudited pro forma combined basic net income per common share is
computed by dividing pro forma combined net income by the weighted average
number of shares of InterVoice common stock outstanding during the period plus
4,114,848, the number of shares of InterVoice common stock currently anticipated
to be issued in the merger to complete the pro forma transactions. The unaudited
pro forma combined diluted net income per common share is computed by dividing
pro forma combined net income by the weighted average number of shares of
InterVoice common stock outstanding during the period, as adjusted for the
effect of dilutive stock options, plus the number of shares of InterVoice common
stock currently anticipated to be issued in the merger to complete the pro forma
transactions.
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<PAGE> 60
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
InterVoice common stock and Brite common stock are each listed on Nasdaq.
InterVoice common stock is also listed on the Chicago Stock Exchange.
InterVoice's ticker symbol on Nasdaq and the Chicago Stock Exchange is "INTV"
and Brite's ticker symbol on Nasdaq is "BVSI." The following table shows, for
the periods indicated, the high and low of the last reported sales prices per
share of InterVoice common stock and Brite common stock, as reported on Nasdaq.
InterVoice prior period share prices are restated to reflect a two-for-one stock
split effective January 11, 1999.
<TABLE>
<CAPTION>
BRITE
COMMON STOCK
---------------
HIGH LOW
------ ------
<S> <C> <C>
1997
First Quarter............................................. $18.00 $10.50
Second Quarter............................................ 10.88 6.75
Third Quarter............................................. 11.63 7.00
Fourth Quarter............................................ 12.25 8.38
1998
First Quarter............................................. $11.25 $ 7.63
Second Quarter............................................ 14.00 8.81
Third Quarter............................................. 13.25 7.13
Fourth Quarter............................................ 10.13 7.00
1999
First Quarter............................................. $12.00 $ 7.50
Second Quarter............................................ 14.00 8.00
Third Quarter
(through July 12, 1999)................................... 14.38 13.38
</TABLE>
<TABLE>
<CAPTION>
INTERVOICE
COMMON STOCK
---------------
HIGH LOW
------ ------
<S> <C> <C>
1998
First Quarter............................................. $ 6.25 $ 4.19
Second Quarter............................................ 5.69 4.19
Third Quarter............................................. 5.31 4.44
Fourth Quarter............................................ 5.38 3.38
1999
First Quarter............................................. $ 7.44 $ 4.38
Second Quarter............................................ 11.94 6.50
Third Quarter............................................. 15.09 7.25
Fourth Quarter............................................ 18.13 10.19
2000
First Quarter............................................. $14.06 $ 8.94
Second Quarter
(through July 12, 1999)................................... 15.00 11.00
</TABLE>
On April 26, 1999, the last full trading day before InterVoice and Brite
issued a joint press release announcing the merger agreement, the last reported
per share closing prices were $11.03 for InterVoice common stock and $10.56 for
Brite common stock. On July 12, 1999, the most recent practicable date prior to
the printing of this prospectus/proxy statement, the last reported closing price
was $14.69 for InterVoice common stock and $14.13 for Brite common stock. WE
URGE YOU TO OBTAIN CURRENT MARKET QUOTATIONS PRIOR TO MAKING ANY DECISION WITH
RESPECT TO THE MERGER.
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<PAGE> 61
DESCRIPTION OF INTERVOICE CAPITAL STOCK
The information required herein describing the InterVoice capital stock is
hereby incorporated by reference to pages 2 through 6 of InterVoice's Form 8-A
filed with the SEC on May 27, 1999.
COMPARISON OF STOCKHOLDER AND SHAREHOLDER RIGHTS
GENERAL
As a result of the merger, holders of Brite common stock will become
holders of InterVoice common stock and the rights of all such former holders of
Brite common stock will thereafter be governed by InterVoice's Articles of
Incorporation and Bylaws and the Texas Business Corporation Act. The rights of
the holders of Brite common stock are presently governed by Brite's Articles of
Incorporation and Bylaws and the Kansas General Corporation Code. The following
summary, which does not purport to be a complete statement of the general
differences among the rights of shareholders of InterVoice and stockholders of
Brite, sets forth certain differences between the TBCA and the KGCC, between
InterVoice's Articles of Incorporation and Brite's Articles of Incorporation and
between InterVoice's Bylaws and Brite's Bylaws. This summary is qualified in its
entirety by reference to the full text of each of such documents, the TBCA and
the KGCC. For information as to how such documents may be obtained, see
"Information for InterVoice Shareholders and Brite Stockholders -- Where You Can
Get More Information."
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
Under the TBCA, shareholders or the board of directors may change the
authorized number of directors by an amendment to the articles of incorporation
or bylaws if fixed therein, or in such manner as may be provided therein, but no
decrease in the number of directors may have the effect of shortening the term
of any incumbent director. Under the KGCC, the number of directors may be fixed
or changed by the stockholders or by the directors in the manner provided in the
bylaws, unless the articles of incorporation specify the number of directors, in
which case that number can be changed only by amending the articles of
incorporation.
InterVoice. InterVoice's Articles of Incorporation provide that the number
of directors may be fixed by or in the manner provided in InterVoice's Bylaws.
Brite. Brite's Bylaws provide that the number of directors of Brite will be
fixed from time to time by the board of directors, provided that no decrease in
the number of directors shall have the effect of shortening the term of any
incumbent director.
Pursuant to the merger agreement, the board of directors of the surviving
corporation will consist of the current directors of Merger Sub. See "The
Merger."
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
The TBCA provides that the bylaws or articles of incorporation may provide
that any director or the entire board of directors of a corporation may be
removed at any meeting of shareholders called expressly for that purpose with or
without cause by a vote of a specific portion, but not less than a majority, of
the shares entitled to vote for the election of directors. Vacancies on the
board of directors may be filled by an election of shareholders or by a majority
of the board of directors remaining in office. Any vacancy created by an
increase in the size of the board of directors may only be filled by an election
of shareholders.
The KGCC provides that a director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, except:
- in the case of a classified board of directors, in which case directors
may only be removed for cause (unless otherwise provided for in the
articles of incorporation); and
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<PAGE> 62
- in the case of a corporation having cumulative voting, in which case no
director may be removed without cause if the votes cast against the
removal would be sufficient to elect such director cumulatively at an
election of the entire board of directors.
InterVoice. InterVoice's Bylaws provide that a director may be removed
either for or without cause at any special or annual meeting of the shareholders
by the affirmative vote of a majority of the shareholders present, in person or
by proxy and entitled to vote for the election of such director. InterVoice's
Bylaws provide that any vacancies may be filled by a majority of the directors
then in office. Any vacancies that may be filled by the directors but are not so
filled may be filled by the shareholders by a majority of shares entitled to
vote at a meeting at which a quorum is present.
Brite. Subject to the provisions of the KGCC, Brite's Bylaws provide that a
director may be removed for or without cause at any special meeting of the
stockholders called and held for such purpose. Brite's Bylaws provide that
vacancies and newly created directorships resulting from an increase in the
authorized number of directors may be filled by a majority of the directors then
in office.
DUTIES OF DIRECTORS
InterVoice. The TBCA does not contain a specific provision elaborating on
the duties of a board of directors. Texas courts have imposed various duties on
directors of a corporation including a duty of obedience (preventing a director
from committing an ultra vires act), a duty of loyalty (requiring a director to
act in good faith and not allow his personal interest to prevail over the
interest of the corporation) and a duty of care (requiring a director to
undertake his or her duties with such care as an ordinary prudent man would use
under similar circumstances).
Brite. The KGCC does not contain a specific provision elaborating on the
duties of a board of directors. Kansas courts have imposed various duties on
directors of a corporation including a strict fiduciary duty, a duty of honesty
and good faith, a duty of care, a duty to disclose information and a duty to
work for the general interest of the corporation.
LIMITATION ON DIRECTORS' LIABILITY
Texas law allows a corporation to limit or eliminate the personal liability
of directors for acts or omissions except for:
- breaches of the director's duty of loyalty to the corporation or its
shareholders;
- an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
- a transaction from which the director received an improper benefit; or
- an act or omission for which the liability of a director is expressly
provided for by statute (including in certain circumstances, liability
for distributions not made in accordance with the TBCA).
The KGCC provides that a corporation may limit or eliminate the personal
liability of directors for acts or omissions except for:
- breaches of the director's duty of loyalty to the corporation or its
shareholders;
- an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law; or
- a transaction from which the director received an improper benefit.
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<PAGE> 63
InterVoice. InterVoice's Articles of Incorporation contain a provision
providing that directors shall not be liable for monetary damages for an act or
omission except that a director's liability will not be limited or eliminated
for:
- any breach of the director's duty of loyalty to InterVoice or its
shareholders;
- acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- any transaction from which such director derives an improper personal
benefit;
- an act or omission for which liability for a director is expressly
provided by statute; or
- an act related to an unlawful stock repurchase or dividend.
Brite. Brite's Articles of Incorporation provide that a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for a breach of fiduciary duty as a director,
provided that the liability of a director will not be eliminated or limited:
- for any breach of the director's duty of loyalty to the corporation or
its stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law;
- under the provisions of Section 17-6424 of the KGCC relating to liability
of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions; or
- for any transaction from which the director derived an improper benefit.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The TBCA and the KGCC provide that a corporation may indemnify a director
who was or is a party to any action, suit or proceeding by reason of the fact
that he or she was a director of the corporation, provided that such director
acted in good faith and in a manner such director reasonably believed to be in
or not opposed to the best interests of the corporation, and in the case of a
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The TBCA and KGCC expand the list of persons a corporation may
indemnify to include officers, employees and agents of the corporation.
InterVoice. InterVoice's Bylaws provide that a director, officer, employee
or agent of InterVoice or a person serving at the request of InterVoice as a
director, officer, employee or agent of another corporation, will be indemnified
and held harmless by InterVoice in a derivative suit if:
- he or she is successful on the merits; and
- acted in good faith, and in a manner he or she reasonably believed to be
in or not opposed to the best interest of the corporation, but he or she
will not be indemnified for any claim as to which he or she was adjudged
liable for negligence or misconduct unless the court determines that
under the circumstances he or she is entitled to indemnification.
The same category of persons will be indemnified in a non-derivative suit only
if:
- each such person is successful on the merits; and
- each such person acted in good faith, and in a manner he or she
reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful.
Brite. Brite's Bylaws provide, in substance, that any person made a party,
or threatened to be made a party, to any type of proceeding, by reason of the
fact that he or she is or was a director, officer, employee or agent of Brite or
that, being or having been such a director, officer, employee or agent of Brite,
he or
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<PAGE> 64
she is or was serving at the request of Brite as a director, officer, employee
or other agent of another corporation, will be indemnified and held harmless by
such corporation, provided that the person acted in good faith, and in a manner
he or she reasonably believed to be in or not opposed to the best interest of
the corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
CUMULATIVE VOTING
In an election of directors governed by cumulative voting rights, each
share of stock otherwise having one vote is entitled to a number of votes equal
to the number of directors to be elected. A stockholder may then cast all such
votes for a single nominee or may allocate them among as many nominees as the
stockholder may choose. Without cumulative voting rights, the holders of a
majority of the shares present at an annual meeting or any special meeting held
to elect directors would have the power to elect all the directors to be elected
at that meeting, and it is possible that no person could be elected without the
support of holders of a majority of the shares voting at such meeting. Under the
TBCA, shareholders are allowed to cumulate their votes unless the articles of
incorporation provide that cumulative voting is not permitted. Under the KGCC,
the articles of incorporation may provide for cumulative voting.
InterVoice. InterVoice's Articles of Incorporation prohibit cumulative
voting.
Brite. Brite's Bylaws provide that stockholders may cumulate their votes.
SHAREHOLDER AND STOCKHOLDER ACTION BY WRITTEN CONSENT
Under the TBCA and the KGCC, shareholders or stockholders may take action
without a meeting, without prior notice and without a vote, upon the written
consent of all shareholders or stockholders who would be entitled to vote with
respect to the action to be taken. The TBCA also provides that the articles of
incorporation may provide that shareholders may take action without a meeting,
without prior notice and without a vote, upon the written consent of the holders
of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all shares
were present and voted.
InterVoice. The InterVoice Bylaws provide that, any action which may be
taken at a meeting of shareholders may be taken by written consent of all
holders of outstanding stock entitled to vote with respect to the subject matter
thereof.
Brite. The Brite Bylaws specifically provide that any action which may be
taken at a meeting of stockholders may be taken by written consent of all
holders of outstanding stock entitled to vote thereon.
SPECIAL MEETINGS OF STOCKHOLDERS
Under the TBCA, special shareholder meetings may be called by the
president, the board of directors, any person(s) authorized by the articles of
incorporation or the bylaws, or the holders of at least 10% of the shares
entitled to vote at a special meeting (unless the articles of incorporation
provide for a different percent of shares, which percent may not be less than
10% nor greater than 50%). Under the KGCC, a special meeting of stockholders may
be called by the board of directors or by such person(s) as may be authorized by
the articles of incorporation or bylaws.
InterVoice. InterVoice's Bylaws permit a special meeting of shareholders to
be called for any purpose other than the election of directors.
Brite. Pursuant to Brite's Bylaws, a special meeting of stockholders may be
called for any purpose or purposes at any time by the president or by the
president or secretary at the request of a majority of the Brite board of
directors or at the written request of stockholders owning at least 10% of the
entire capital stock issued and outstanding and entitled to vote.
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<PAGE> 65
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
Under the TBCA, the recommendation of the board of directors and, with
certain exceptions, the approval of two-thirds of the shares of a corporation
entitled to vote thereon present or represented by proxy are required to effect
a merger or consolidation or to sell, lease or exchange substantially all of a
corporation's assets.
Under the KGCC, the recommendation of the board of directors and, with
certain exceptions, the approval of a majority of the shares of a corporation
entitled to vote thereon present or represented by proxy are required to effect
a merger or consolidation or to sell, lease or exchange substantially all of a
corporation's assets.
InterVoice. InterVoice's Articles of Incorporation and Bylaws do not
contain any specific provisions relating to such matters.
Brite. Brite's Articles of Incorporation and Bylaws do not contain any
specific provisions relating to such matters.
AMENDMENT OF CORPORATE ARTICLES OF INCORPORATION AND BYLAWS
Under the TBCA, an amendment to the articles of incorporation generally
requires the recommendation of the board of directors, the approval of the
holders of at least two-thirds of all shares entitled to vote thereon, voting
together as a single class, and the holders of at least two-thirds of the
outstanding stock of each class entitled to vote thereon. The TBCA further
provides that unless provided otherwise in the articles of incorporation or in a
bylaw adopted by the shareholders, a corporation's shareholders may amend the
bylaws of the corporation, in addition to the authority of the board of
directors to amend such bylaws. The KGCC permits the adoption of amendments to
the articles of incorporation if such amendments are recommended by the board of
directors and approved by the holders of a majority of all outstanding stock
entitled to vote and a majority of all outstanding stock in each class entitled
to vote. The KGCC provides that the stockholders entitled to vote may amend the
bylaws. The board of directors may also amend the bylaws if such authority is
granted to the directors in the articles of incorporation.
InterVoice. Under InterVoice's Bylaws, the board of directors may alter,
amend, repeal or adopt new bylaws by an affirmative vote of a majority of
directors present at a meeting of the board of directors at which a quorum is
present. InterVoice's Bylaws provide that InterVoice's Articles of Incorporation
may be altered, amended or repealed or new Articles of Incorporation may be
adopted by an affirmative vote of two-thirds of all shares entitled to vote
thereon, voting together as a single class, and the holders of at least
two-thirds of the outstanding stock of each class entitled to vote thereon.
Brite. Brite's Articles of Incorporation reserve to stockholders the right
to amend or repeal any provision contained in such Articles of Incorporation and
grant all rights conferred to stockholders subject to the reservation. In
addition, Brite's Articles of Incorporation authorize the board of directors to
amend Brite's Bylaws. Brite's Bylaws may be altered, amended, repealed or new
bylaws may be adopted by the board of directors, subject to the right of the
stockholders to repeal or change any action of the directors.
APPRAISAL AND DISSENTERS' RIGHTS
The TBCA provides appraisal rights for certain mergers and sales, leases,
exchanges or other dispositions of all or substantially all the assets of the
corporation. Appraisal rights are not available in the case of a merger if:
(a) the shares held by the shareholder are part of a class or series,
shares of which are on the record date fixed to determine the shareholders
entitled to vote on the plan or merger of plan or exchange:
(i) are listed on a national securities exchange;
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<PAGE> 66
(ii) listed on Nasdaq or designated as a national market security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc.; or
(iii) held of record by not less than 2,000 stockholders;
(b) the shareholder is not required by the terms of the plan of merger to
accept for the shareholder's shares any consideration that is different than the
consideration to be provided to any other holder of shares of the same class or
series of shares held by such shareholder; and
(c) the shareholder is not required by the plan of merger to accept for the
shareholder's shares, any consideration other than:
(i) shares of stock of a corporation that immediately after the merger
will be part of a class or series, shares of which are:
(A) listed or authorized for listing on a national securities
exchange;
(B) approved for quotation as a national market security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc.; or
(C) held of record by not less than 2,000 holders;
(ii) cash in lieu of fractional shares otherwise entitled to be
received; or
(iii) any combination of securities and cash described in (i) and (ii)
above.
The KGCC also provides appraisal rights for certain mergers, except where
the shares entitled to vote for the merger were:
(a) registered on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc.; or
(b) held of record by not less than 2,000 stockholders.
Appraisal rights are also not granted to the stockholders of the surviving
corporation if stockholder approval of the merger was not required under Kansas
law. Appraisal rights are not available to stockholders who are not required by
the terms of the merger to accept for the stockholders' shares, anything other
than:
(i) stock or stock and cash in lieu of fractional shares of the
surviving corporation;
(ii) stock of any other corporation that as of the record date for the
merger was:
(A) registered on a national securities exchange; or
(B) held of record by not less than 2,000 holders; or
(iii) any combination of stock or stock and cash in lieu of fractional
shares described in (i) and (ii) above.
InterVoice. Under the TBCA, the holders of shares of InterVoice common
stock are not entitled to any appraisal rights with respect to the Brite merger
since nothing is being exchanged for the InterVoice holders' shares.
Brite. Under the KGCC, holders of Brite common stock are not entitled to
dissenters' appraisal rights in connection with the merger because, except for
cash in lieu of fractional shares, such holders will receive consideration in
the merger solely consisting of shares of InterVoice common stock that will be
listed on Nasdaq and the Chicago Stock Exchange at the closing.
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<PAGE> 67
CONFLICT-OF-INTEREST TRANSACTIONS
The TBCA and the KGCC generally permit transactions involving a corporation
and an interested director or officer of such corporation if:
- the material facts are disclosed and a majority of disinterested
directors consents;
- the material facts are disclosed and a majority of shares entitled to
vote thereon consents; or
- the transaction is fair to the corporation as of the time it is
authorized by the board of directors, a committee of the board of
directors or the shareholders.
InterVoice. InterVoice's Bylaws provide that transactions involving a
corporation and an interested director or officer of such corporation will be
valid if (a) the material facts are disclosed and a majority of disinterested
directors consents, (b) the material facts are disclosed and a majority of
shares entitled to vote thereon consents, or (c) the transaction is fair to the
corporation as of the time it is authorized by the board of directors, a
committee of the board of directors or the shareholders.
Brite. Brite's Articles of Incorporation and Bylaws do not contain any
provisions relating to transactions between Brite and its directors or other
related parties.
DIVIDENDS AND OTHER DISTRIBUTIONS
The TBCA provides that the board of directors may authorize dividends or
distributions so long as the dividend or distribution would not cause the
corporation to be insolvent and would not exceed the surplus of the corporation.
The KGCC allows the board of directors to authorize dividends or distributions
so long as such dividends or distributions come from:
- the corporation's surplus; or
- the corporation's net profits from the current or preceding fiscal year.
InterVoice and Brite. InterVoice's and Brite's Bylaws both provide that
dividends may be declared by the board of directors, provided that the board of
directors sets aside a sum the board of directors in its discretion determines
is proper as a reserve for certain purposes, including but not limited to
meeting contingencies, equalizing dividends, or repairing or maintaining any
property of the corporation.
STATE ANTI-TAKEOVER STATUTES
A number of states have adopted "takeover" statutes that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or places of business in such states.
Texas Business Combination Law. The TBCA prevents an issuing public
corporation from entering into any business combination with an "affiliated
shareholder" (defined generally as a person that is the beneficial owner of 20%
or more of the issuing public corporation's outstanding voting shares) during
the three-year period following the affiliated shareholder's share acquisition
date unless the board of directors of the issuing public corporation approves
the business combination before the affiliated shareholder's share acquisition
date or the business combination is approved by the vote of at least two-thirds
of the outstanding voting shares not beneficially owned by the affiliated
shareholder or an affiliate or associate of the affiliated shareholder at a
meeting called not less than six months after the affiliated shareholder's share
acquisition date.
Kansas Business Combination Statute. Sections 17-12,100 through 17-12,104
of the KGCC (the "Kansas Business Combination Statute"), in general, prohibit a
Kansas corporation such as Brite from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers, as set forth below)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15%
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or more of a corporation's outstanding voting stock) for a period of three years
following the date that such person became an Interested Stockholder, unless:
- prior to the date such person became an Interested Stockholder, the board
of directors of the corporation approved either the Business Combination
or the transaction that resulted in the stockholder becoming an
Interested Stockholder;
- upon consummation of the transaction that resulted in the stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding stock held by directors who are also
officers of the corporation and employee stock ownership plans that do
not provide employees with the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or
- on or subsequent to the date such person became an Interested
Stockholder, the Business Combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders,
and not by written consent, by the affirmative vote of the holders of a
least 66 2/3% of the outstanding voting stock of the corporation not
owned by the Interested Stockholder.
Under Section 17-12,102 of the KGCC, the restrictions described above do
not apply if, among other things:
- the corporation's original articles of incorporation contain a provision
expressly electing not to be governed by Section 17-12,101 of the KGCC;
- the corporation, by action of its board of directors, adopts an amendment
to its bylaws within one year of the effective date of Section 17-12,101
of the KGCC expressly electing not to be governed by the section, which
amendment shall not be further amended by the board of directors;
- the corporation, by action of its stockholders, adopts an amendment to
its articles of incorporation or bylaws expressly electing not to be
governed by Section 17-12,101 of the KGCC, provided that, in addition to
any other vote required by law, such amendment of the articles of
incorporation or bylaws must be approved by the affirmative vote of a
majority of the shares entitled to vote, which amendment would not be
effective until 12 months after the adoption of such amendment and would
not apply to any Business Combination between the corporation and any
person who became an Interested Stockholder of the corporation on or
prior to the date of such adoption;
- the corporation does not have a class of voting stock that is:
(1) listed on a national securities exchange;
(2) authorized for quotation on an interdealer quotation system of a
registered national securities association; or
(3) held of record by more than 2,000 stockholders, unless any of the
foregoing results from action taken, directly or indirectly, by an
Interested Stockholder or from a transaction in which a person became
an Interested Stockholder; or
- a stockholder becomes an Interested Stockholder "inadvertently" and as
soon as possible thereafter divests itself of a sufficient number of
shares so that such stockholder ceases to be an Interested Stockholder
and would not, at any time within the three-year period immediately prior
to a Business Combination between the corporation and such Interested
Stockholder, have been an Interested Stockholder, but for the inadvertent
acquisition.
Under Section 17-12,102 of the KGCC, the restrictions described above also
do not apply to certain Business Combinations proposed by an Interested
Stockholder following the announcement or notification of one of certain
extraordinary transactions involving the corporation and a person who had not
been an
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Interested Stockholder during the previous three years or who became an
Interested Stockholder with the approval of a majority of the corporation's
directors.
Section 17-12,101 of the KGCC provides that, during such three-year period,
the corporation may not merge or consolidate with an Interested Stockholder or
any affiliate or associate thereof and also may not engage in certain other
transactions with an Interested Stockholder or any affiliate or associate
thereof, including, without limitation:
- any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding
stock of a corporation;
- any transaction that results in the issuance or transfer by the
corporation or by certain subsidiaries thereof of any stock of the
corporation or such subsidiaries to the Interested Stockholder, except
pursuant to a transaction which effects a pro rata distribution to all
stockholders of the corporation;
- any transaction involving the corporation or certain subsidiaries thereof
which has the effect of increasing the proportionate share of the stock
of any class or series, or securities convertible into the stock of any
class or series, of the corporation or any such subsidiary which is owned
directly or indirectly by the Interested Stockholder (except as a result
of immaterial changes due to fractional share adjustments or as a result
of any purchase or redemption of any shares of stock not caused, directly
or indirectly, by the Interested Stockholder); or
- any receipt by the Interested Stockholder of the benefit (except
proportionately as a stockholder of such corporation) of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
Control Share Acquisition Statute. Sections 17-1286 through 17-1298 of the
KGCC (the "Kansas Control Share Acquisition Statute") apply to any acquisition
in which a person acquires, directly or indirectly, the power to direct the
exercise of one-fifth or more of the voting power of an "issuer public
corporation." An "issuer public corporation" is defined to mean a Kansas
corporation which has 100 or more stockholders, whose principal place of
business is in Kansas and either:
- more than 10% of whose stockholders are resident in Kansas; or
- more than 10% of whose shares are owned by Kansas residents.
Subject to certain exceptions described below, shares acquired in an
acquisition falling under the Kansas Control Share Acquisition Statute will only
have the voting rights accorded such shares before the acquisition if approved
by both:
- a majority of all outstanding shares entitled to vote in an election of
directors; and
- a majority of all outstanding shares entitled to vote in an election of
directors, excluding all interested shares. If, before the acquisition,
however, a corporation's articles of incorporation or bylaws provide that
the Kansas Control Share Acquisition Statute does not apply, the acquired
shares will have the same voting rights such shares were accorded before
the acquisition, without the requirement of a stockholder vote.
InterVoice. The anti-takeover provisions of the TBCA will not apply to the
merger.
Brite. Brite has represented in the merger agreement that the provisions of
the Kansas Business Combination Statute and the Kansas Control Share Acquisition
Statute are not applicable to any of the transactions contemplated by the merger
agreement. Prior to approval of the merger agreement, Brite's Bylaws were
amended to provide that the Kansas Control Share Acquisition Statute does not
apply to acquisitions of Brite common stock.
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CERTAIN SHAREHOLDERS OF INTERVOICE
The table below sets forth certain information with respect to the
beneficial ownership of shares of InterVoice common stock, as of July 6, 1999,
of each director and nominee for director of InterVoice, each executive officer
listed in the Summary Compensation Table included elsewhere in this prospectus/
proxy statement, all directors and executive officers as a group and the only
shareholders who were known by InterVoice to be beneficial owners of more than
5% of the outstanding shares of InterVoice common stock. As of July 6, 1999
there were 28,922,526 shares of InterVoice common stock outstanding.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
-----------------------
NUMBER PERCENT
OF SHARES OF CLASS
---------- ---------
<S> <C> <C>
DIRECTORS AND NOMINEES FOR DIRECTOR
Daniel D. Hammond......................................... 1,577,048(2) 5.4%
David W. Brandenburg...................................... 689,802(3) 2.4%
Joseph J. Pietropaolo..................................... 16,000(4) *
George C. Platt........................................... 54,200(4) *
Grant A. Dove............................................. 52,000(4) *
Stanley G. Brannan........................................ --(5) *
NAMED EXECUTIVE OFFICERS (WHO ARE NOT DIRECTORS NAMED ABOVE)
Rob-Roy J. Graham......................................... 143,524(6) *
Dwain H. Hammond.......................................... 95,806(7) *
M. Gregory Smith.......................................... 42,542(8) *
Eric L. Pratt............................................. 28,332(9) *
ALL DIRECTORS, NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
AS A GROUP (17 PERSONS)................................... 3,101,003(10) 10.3%
BENEFICIAL OWNERS OF AT LEAST 5% OF INTERVOICE COMMON STOCK
(WHO ARE NOT NAMED ABOVE)
FMR Corp.................................................. 1,815,400(11) 6.3%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise indicated, all shares listed are directly held with sole
voting and investment power.
(2) Includes 514,600 shares not outstanding but subject to currently
exercisable stock options, and 342 shares held in InterVoice's 401(k)
Employee Savings Plan.
(3) Includes 66,800 shares held in Mr. Brandenburg's wife's IRA and 8,000
shares not outstanding but subject to currently exercisable stock options.
(4) Shares are not outstanding but are subject to currently exercisable stock
options, other than 22,000 shares held by Mr. Dove, and 3,200 shares held
in Mr. Platt's IRA.
(5) At the effective time of the merger, it is expected that Mr. Brannan will
beneficially own approximately 293,075 shares of InterVoice common stock
based on an assumed exchange ratio of 1.3215 shares of InterVoice common
stock for each share of Brite common stock.
(6) Includes 125,132 shares not outstanding but subject to currently
exercisable stock options, and 318 shares held in InterVoice's 401(k)
Employee Savings Plan.
(7) Includes 52,434 shares not outstanding but subject to currently exercisable
stock options, and 318 shares held in InterVoice's 401(k) Employee Savings
Plan.
(8) Includes 31,582 shares not outstanding but subject to currently exercisable
stock options, and 102 shares held in InterVoice's 401(k) Employee Savings
Plan.
(9) All such shares are not outstanding but subject to currently exercisable
stock options.
(10) Includes 70,000 shares held in an IRA of a director or a director's spouse,
1,160,407 shares not outstanding but subject to currently exercisable stock
options and 2,372 shares held in InterVoice's 401(k) Employee Savings Plan.
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(11) A Schedule 13G dated February 1, 1999 was filed by FMR Corp., disclosing
the ownership as of December 31, 1998 (prior to the payment in January 1999
of a 100% stock dividend) of 907,700 shares of InterVoice common stock as a
result of acting as investment advisor to various investment companies
registered under Section 8 of the Investment Company Act of 1940 (the
"Funds"). The shares of InterVoice common stock disclosed in the table are
adjusted to reflect the 100% stock dividend issued on shares of InterVoice
common stock in January 1999. Fidelity Management and Research Company
("Fidelity") is a wholly-owned subsidiary of FMR Corp. FMR Corp., through
its control of Fidelity, and Edward C. Johnson III, Chairman of FMR Corp.,
and certain Fidelity Funds each has sole power to dispose of the 1,815,400
shares. Neither FMR Corp. nor Edward C. Johnson III has the sole power to
vote or direct the voting of shares owned directly by the Fidelity Funds,
which power resides with the Funds' Boards of Trustees. Fidelity carries
out the voting of the shares under the written guidelines established by
the Funds' Boards of Trustees. Beneficial ownership of the securities of an
issuer may be reported on a Schedule 13G only in the event that the
reporting person has acquired such securities in the ordinary course of
business and not with the purpose nor with the effect of changing or
influencing the control of the issuer, nor in connection with or as a
participant in any transaction having such purpose or effect.
CERTAIN STOCKHOLDERS OF BRITE
The information concerning beneficial ownership of Brite common stock prior
to the consummation of the tender offer is hereby incorporated by reference to
page 45 of Brite's annual report on Form 10-K405 filed with the SEC on March 31,
1999 and pages 2 through 3 of Brite's Proxy Statement (which is incorporated by
reference into the Form 10-K405) filed with the SEC on April 9, 1999. See
"Additional Information for InterVoice Shareholders and Brite
Stockholders -- Where You Can Find More Information." Subsequent to the
preparation of the beneficial ownership table in the Proxy Statement, each of
the directors and officers listed on such table sold approximately 81.07% of his
shares to InterVoice in the tender offer.
MANAGEMENT OF INTERVOICE AND EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS AND DIRECTORS OF INTERVOICE
The business and affairs of InterVoice are managed by and under the
direction of the InterVoice board of directors, which exercises all corporate
powers of InterVoice and establishes broad corporate policies. The Articles of
Incorporation of InterVoice provide that the number of directors constituting
the InterVoice board of directors shall not be less than three nor more than
nine as from time to time shall be fixed and determined by a vote of a majority
of InterVoice's directors serving at the time of such vote. The number of
director positions presently constituting the board of directors is five, which
will be increased from five to six as of the date of the next annual meeting of
shareholders of InterVoice.
The six directors, constituting the entire InterVoice board of directors,
are to be elected at the InterVoice annual meeting to serve until the next
annual meeting of shareholders or until their successors have been elected and
qualified. Stanley G. Brannan, Chairman, Chief Executive Officer and President
of Brite (InterVoice owns approximately 75% of the common stock of Brite), is a
nominee for director. The other five nominees for director are the current
directors of InterVoice. During the fiscal year ended February 28, 1999, the
InterVoice board of directors held 12 meetings. All members of the board of
directors attended at least 75% of the meetings of the board of directors during
the last fiscal year.
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Following is certain information regarding the directors, nominees for
director and executive officers of InterVoice:
Directors and Nominees for Director
Daniel D. Hammond, age 47, a founder of InterVoice, is currently the
Chairman of the Board, a position he has held since December 1990, and the Chief
Executive Officer of InterVoice, a position he has held since July 1986. Mr.
Hammond currently serves as a director of Brite. Mr. Hammond has served as a
director of InterVoice since 1984.
Joseph J. Pietropaolo, age 43, is currently an independent consultant who
has been providing consulting services related to on-line lottery systems since
March 1998. He is the former Chief Financial Officer of Transactive Corporation,
a company that specializes in electronic benefits transfers, a position he held
from August 1994 to March 1997. Mr. Pietropaolo is also the former Vice
President and Treasurer of GTECH Corporation, a company specializing in on-line
lottery systems, positions he held from 1990 to August 1994. Mr. Pietropaolo has
served as a director since 1989.
George C. Platt, age 58, is currently the President and Chief Executive
Officer of InteCom Inc., a wholly owned subsidiary of Matra-Hachette, a company
engaged in the manufacture and sale of telephone switching systems. He has held
this position since January 1991. Mr. Platt has served as a director since 1991.
Grant A. Dove, age 71, is currently a Managing Partner of Technology
Strategies and Alliances, a firm which provides investment banking and
consulting services, a position he has held since January 1993. Mr. Dove
currently serves as a director of Media One Group, Cooper Cameron Corp., Control
Systems International, Inc., Microelectronics and Computer Technology Corp.,
Optek Technology, Inc., Object Space, Inc., Vocal Data Inc. and Spotcast
Communications, Inc. Mr. Dove has served as director since 1996.
David W. Brandenburg, age 54, is President of the Brandenburg Life
Foundation, a position he has held since October 1996. From November 1997 to May
1998 Mr. Brandenburg served as President and Chief Executive Officer of
AnswerSoft, Inc. Mr. Brandenburg served as Vice Chairman of InterVoice from
December 1994 to May 1995. Prior thereto, Mr. Brandenburg served as President of
InterVoice from July 1990 to December 1994. Mr. Brandenburg has served as a
director since 1997, and from 1990 to 1995.
Stanley G. Brannan, age 50, the founder of Brite, served as Chairman, Chief
Executive Officer and President of Brite from its inception until resigning as
Chief Executive Officer and President in December 1996. Mr. Brannan subsequently
resigned as Chairman of the Board in January 1998. In November 1998 Mr. Brannan
resumed his role as Chairman, Chief Executive Officer and President on an
interim basis. Prior to founding Brite, Mr. Brannan founded Mycro-Tek, Inc., a
company specializing in the manufacture of microprocessor-based products used in
electronic newsroom systems and television character generators. When Mycro-Tek,
Inc. was acquired by Allied Corporation in 1980, Mr. Brannan was employed by
Allied and eventually became president of that company's Merganthaler USA
Division. Mr. Brannan has not previously served as a director of InterVoice.
Executive Officers
Daniel D. Hammond -- See biographical information under "Directors" above.
David A. Berger, age 54, is currently President and Chief Operating
Officer, a position he has held since August 1998. From June 1995 to August
1998, he served as President of the Satellite Networks Division of Scientific
Atlanta, a company that designs, manufactures, sells and installs satellite
communications networks worldwide. From February 1994 to June 1995, he served as
President of the Satellite Communications Division of Scientific Atlanta. Prior
thereto, from November 1993 to February 1994, he served as Strategy Consultant
for Scientific Atlanta.
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Rob-Roy J. Graham, age 46, is currently Chief Financial Officer and
Secretary, positions he has held since August 1994; Chief Accounting Officer of
InterVoice, a position he has held since April 1994; and Controller of
InterVoice, a position he has held since August 1992.
Dwain H. Hammond, age 42, is currently Senior Vice President, Engineering,
a position he has held since March 1997. From September 1994 to March 1997, Mr.
Hammond served as Vice President of Research and Development. Prior thereto, he
served InterVoice as Vice President -- Research and Development, Core Systems
from September 1993 to September 1994, and as Director of Hardware Development
from 1990 to September 1993. Mr. Hammond, who has been an employee of InterVoice
since 1984, is the brother of Daniel D. Hammond, Chairman of the Board and Chief
Executive Officer.
Gordon H. Givens, age 56, is currently Senior Vice President, Custom
Products Line of Business, a position he has held since July 1998. From July
1996 to July 1998, Mr. Givens served as Managing Director of European Strategic
Business Unit. From March 1994 to July 1996, he served as Vice
President -- Technical Services. Prior thereto, he served as Vice
President -- Professional Services from March 1993 to March 1994. Mr. Givens has
been an employee of InterVoice since 1987.
M. Gregory Smith, age 51, is currently Senior Vice President -- Sales, the
Americas and Asia Pacific, a position he has held since August 1996. From July
1994 to May 1996, he served as Vice President and General Manager of SRX
Corporation, a company that engaged in the manufacture and sale of
telecommunications equipment. Prior thereto, from May 1992 to July 1994, Mr.
Smith served as Regional Sales Manager of Rockwell International, a manufacturer
and contractor in the telecommunications industry.
Eric L. Pratt, age 34, is Vice President of Telco Sales and Systems
Engineering, a position he has held since October 1997. From October 1995 to
October 1997, he served as Senior Director, Sales for DSC Communications
Corporation, a company that designs, manufactures, and markets
telecommunications equipment. Prior thereto, he served as Senior Account
Director, Sales for DSC Communications Corporation from June 1993 to October
1995.
Michael J. Polcyn, age 41, is Vice President -- Packaged Products Line of
Business, a position he has held since March 1998. From December 1995 to March
1998, Mr. Polcyn served as InterVoice's Vice President, Business Development and
Product Marketing. Prior thereto, he served as Director, Product Marketing from
March 1994 to December 1995, and as Director, Call Center Engineering from March
1992 to March 1994. Mr. Polcyn has been an employee of InterVoice since 1987.
Phillip C. Walden, age 54, is Vice President -- Manufacturing, a position
he has held since July 1987.
Manuel Victor James, age 46, is Vice President -- Network Services Line of
Business, a position he has held since July 1998. From January 1997 to June
1998, Mr. James served as a Senior Director for DSC Communications Intelligent
Networks Division, a company that designs, manufactures, and markets
telecommunications equipment. From June 1997 to December 1997, Mr. James served
as the General Manager for the DSC Telecom Systems Group acquired from Texas
Instruments, Incorporated. Prior thereto, Mr. James served as General Manager
for the Telecom Systems Division of Texas Instruments, a company that designs,
manufactures and markets voice dialing, fax messaging and wireless antenna
equipment, from June 1996 to May 1997 and Director of Business Development from
June 1995 to May 1996. From June 1993 to June 1995, Mr. James served as Director
Product Management AIN/PCS Products for DSC Communications.
Dean C. Howell, age 41, is Vice President and Corporate Counsel, a position
he has held since March 1996. From October 1992 to February 1996, he served as
Legal Counsel.
Harold Don Brown, age 43, is Vice President -- Human Resources, a position
he has held since September 1995. From November 1994 to August 1995, Mr. Brown
served as Director of Human Resources. From August 1992 to September 1994, he
served as Manager of Human Resources for the Permian Basin business unit of
Unocal Corporation, a company that produces and sells energy resources and
specialty minerals.
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COMPENSATION OF DIRECTORS
All directors who are not employees of InterVoice receive a fee of $1,000
per month for serving as a director of InterVoice. InterVoice also reimburses
all directors for travel, lodging and related expenses incurred in attending
board of directors and committee meetings. Directors who are not employees of
InterVoice also receive a fee of $500 for each board of directors or committee
meeting attended. In addition, if the 1999 Stock Option Plan is approved by the
shareholders at the next annual meeting of shareholders of InterVoice, all
directors will be eligible for stock option grants under the 1999 Stock Option
Plan. Pursuant to InterVoice's 1990 Nonqualified Stock Option Plan, on August 1,
1998 each of Messrs. Pietropaolo, Dove, Platt and Brandenburg were automatically
granted an option to purchase 8,000 shares of InterVoice common stock at $9.00
per share, which options can be exercised commencing on the date of the next
annual meeting of shareholders at the closing market price of InterVoice common
stock on the date of grant.
COMMITTEES OF THE BOARD OF DIRECTORS
The InterVoice board of directors has established committees which deal
with certain specific areas of the board of directors' responsibility. These
committees include the Audit Committee, Compensation Committee, Executive
Committee and Nominating Committee.
The Audit Committee, which held nine meetings during fiscal 1999, has the
primary responsibility to ensure the integrity of the financial information
reported by InterVoice. Its functions are to: (a) make recommendations on the
selection of independent auditors; (b) review the scope of the annual audit to
be performed by the independent auditors prior to commencement of the audit; (c)
review the results of those audits; (d) review the organization and scope of
InterVoice's internal system of audit and financial controls; (e) meet
periodically with management and the independent public accountants to review
financial, accounting and internal control matters; and (f) meet periodically
with the independent public accountants to discuss the results of their audit
work and their opinions as to the adequacy of internal accounting controls and
the quality of financial reporting. Its current members are Joseph J.
Pietropaolo, Chairman, George C. Platt, David W. Brandenburg, and Grant A. Dove.
The Compensation Committee, which held six meetings during fiscal 1999, has
the authority to determine and approve all the terms of the employment,
compensation and benefits payable to officers of InterVoice, including those
officers who are also directors. InterVoice's management is from time to time
directed by the Compensation Committee to review certain compensation matters
and make recommendations to the Compensation Committee concerning such matters.
The Compensation Committee also has the authority to administer and award stock
options and restricted stock under the 1990 Incentive Stock Option Plan, the
1998 Stock Option Plan and the Restricted Stock Plan. The Compensation Committee
also administers the Employee Stock Purchase Plan. The Compensation Committee is
composed of George C. Platt, Chairman, Joseph J. Pietropaolo, David W.
Brandenburg and Grant A. Dove.
The Executive Committee, which did not hold monthly meetings during fiscal
1999, may, to the extent permitted by law, exercise the power of the board of
directors when the Board is not in session. It also has the responsibility for
reviewing long-range plans, capital expenditure programs, acquisitions and
general corporate financing matters and making related recommendations to the
board of directors. Its only current member is Daniel D. Hammond, Chairman.
The Nominating Committee, which met two times during fiscal 1999, has the
function to identify and propose to the full board of directors nominees to fill
vacancies on the board of directors. Although the Nominating Committee has no
formal policy on the subject, it will consider persons brought to its attention
by officers, directors and shareholders. The names of proposed nominees should
be sent to InterVoice at the address shown in "Summary -- The Companies,"
Attention: Nominating Committee. The current members of the Nominating Committee
are Grant A. Dove, Chairman, and Daniel D. Hammond.
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
To the Shareholders of InterVoice, Inc.:
COMPENSATION POLICY. The goal of InterVoice's executive compensation
policy is to ensure that an appropriate relationship exists between
executive pay and the creation of shareholder value, while at the same time
motivating and retaining key employees. To achieve this goal, officers are
offered compensation opportunities that are linked to InterVoice's business
objectives and performance, individual performance and contributions to
InterVoice's success and enhanced shareholder value. InterVoice's
compensation programs are designed and revised from time to time to be
competitive within the software and data industry and the
telecommunications industry.
For fiscal 1999, InterVoice's executive compensation program consisted
primarily of (i) base salary, (ii) incentive cash bonus opportunities based
upon individual and corporate performance, and (iii) long-term equity based
incentives. All officers were eligible for and did participate in
InterVoice's incentive cash bonus and equity based incentive programs
during fiscal 1999. InterVoice generally targets the aggregate of annual
base salary, bonus opportunities and long-term equity based incentives made
available to officers, who successfully perform their responsibilities,
above the mid-point level for officers with similar positions in companies
of comparable size in the software, data and telecommunications industries.
The Compensation Committee believes that compensation opportunities above
the mid-point for its comparison group are appropriate based on
InterVoice's above average long term historical growth in revenue and
earnings.
Generally, both cash bonus and equity-based incentive
compensation opportunities for officers increased at a greater rate
than their base salaries from fiscal 1996 through fiscal 1999. The
Compensation Committee determined to put a greater emphasis on
incentive compensation commencing with fiscal 1995 to encourage
further the achievement of corporate and individual objectives. In
order to help implement InterVoice's compensation policy, Ernst &
Young LLP was hired to serve as an independent compensation consultant
for fiscal 1995 through fiscal 1999. In this capacity, Ernst & Young
analyzed the compensation paid to officers of InterVoice based on
market surveys of executive compensation for software and
data/telecommunications companies, particularly companies with sales
of less than $200 million per year. These surveys included a separate
study of companies within the SIC code for Telephone and Telegraph
Apparatus used in "Management of InterVoice and Executive
Compensation -- Stock Performance Graph."
STOCK OWNERSHIP GUIDELINES. In April 1995, the Compensation
Committee established stock ownership guidelines for key executives of
InterVoice. These guidelines provide that executives should hold
shares in varying amounts as a multiple of salary, currently ranging
from a minimum of three and one-half times annual salary for the
Chairman of the Board and Chief Executive Officer to one-half times
annual salary for key executives below the vice president level.
Although some executives are already at or above the prescribed
levels, the Compensation Committee recognizes that newer employees or
those recently promoted may require some period of time to achieve
these levels. Therefore, the guidelines have provided for a transition
period of approximately five years for the suggested levels to be met.
The Compensation Committee monitors each executive's progress toward
achieving these guidelines when deciding on future stock option awards
and other equity incentive opportunities.
FISCAL 1999 COMPENSATION.
Base Salary. The Compensation Committee annually reviews and sets
base salaries for each of InterVoice's officers at levels within the
range of those persons holding comparable positions at other companies
in InterVoice's comparison group. In establishing base salaries for
officers, the Compensation Committee reviewed the compensation surveys
provided by Ernst & Young.
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Annual salaries, including increases to salaries, for fiscal 1999 were
reviewed and approved on the basis of the individual performance of the
executive, as determined through a formal written evaluation by the
officer's immediate supervisor in consultation with InterVoice's executive
management, by the executive's tenure and level of responsibility,
InterVoice's expected financial performance, and changes in competitive pay
levels. Raises to annual base salaries for officers of InterVoice,
including executive officers, for fiscal 1999, ranged from 1.9% to 23%.
Most of the officers received a raise of between 5% and 6%.
InterVoice entered into an employment agreement with the Chairman
of the Board and Chief Executive Officer of InterVoice, Daniel D.
Hammond, during fiscal 1997 which required the Compensation Committee
to conduct an annual review of Mr. Hammond's base salary. Mr. Hammond
recommended to the Compensation Committee that he not receive an
increase to his base salary for fiscal 1999. The Compensation
Committee accepted Mr. Hammond's recommendation. Moreover, for the
eight-month period commencing October 1, 1997, Mr. Hammond voluntarily
elected to reduce his monthly base salary by 20% from $28,470 to
$22,776, to evidence his commitment to improving InterVoice's ratio of
expenses to revenues. Mr. Hammond reinstated his full base salary of
$341,640 only after InterVoice's revenues and earnings increased 32%
and 138%, respectively, from fourth quarter fiscal 1998 to first
quarter fiscal 1999. The Compensation Committee analyzed the
compensation surveys provided by Ernst & Young pertaining to base
salaries for chief executive officers of corporations in InterVoice's
comparison group as part of its review of Mr. Hammond's base salary.
The Compensation Committee believes that this salary level, which was
slightly above the median base salary for chief executive officers in
InterVoice's comparison group, was appropriate based upon Mr.
Hammond's individual performance and InterVoice's performance during
his tenure as Chief Executive Officer. See "Management of InterVoice
and Executive Compensation -- Agreements with Executive Officers" for
a discussion of the employment agreements with Mr. Hammond and Messrs.
Berger, Graham and Pratt.
Annual Incentives. InterVoice has a bonus program that provides
for the payment of periodic cash bonuses to executive officers and
other key employees contingent upon the achievement of certain
earnings targets and/or other individual and corporate performance
targets. The program is intended to reward the accomplishment of
corporate objectives, reflect InterVoice's priority on maintaining
growth and stability of earnings, and to provide a fully competitive
compensation package which will attract, reward and retain quality
individuals. Targets and objectives vary for the specific officers
involved. For example, bonus opportunities for the Chairman of the
Board and Chief Executive Officer, the President and Chief Operating
Officer, and the Chief Financial Officer and Secretary, were based on
formulas designed to compensate such officers for any increases to
revenues and earnings per share achieved for fiscal 1999. These
officers are responsible for making and implementing strategic
decisions concerning how InterVoice plans to achieve its long-term
goals for growth and stability of earnings and revenues. The
Compensation Committee believes that the amount of growth in
InterVoice's annual earnings per share and revenues should continue to
serve as a basis for a significant component of the total compensation
for these officers.
The other officers were eligible to receive annual incentive
bonuses and in some cases quarterly incentive bonuses for fiscal 1999
established in connection with their annual performance reviews, based
upon the attainment of one or more associated individual performance
goals. A significant amount of the annual bonuses for these other
executive officers was generally contingent upon InterVoice attaining
a targeted annual earnings per share objective determined by the
Compensation Committee, which was achieved for fiscal 1999. The
performance goals for officers were based on factors such as sales
volume, receipt of purchase orders and expense containment. The
aggregate of quarterly and annual bonuses paid to officers, including
executive officers, for fiscal 1999 ranged from approximately 30% to
158% of base salary.
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Pursuant to his employment agreement, the bonus payable to the
Chairman of the Board and Chief Executive Officer, Daniel D. Hammond,
was modified from his prior agreement primarily to reward Mr. Hammond
for increases to InterVoice's earnings per share and revenues. Under
his prior employment agreement, Mr. Hammond had received a bonus for
each cent of earnings per share, irrespective of InterVoice's earnings
or revenues for the prior fiscal year. Specifically, Mr. Hammond's
annual bonus opportunity was revised so as to be based 50% on earnings
per share, primarily increases to earnings per share, and 50% on any
increase to revenue, in each case as compared to the immediately
preceding fiscal year unless revenues or earnings per share are less
than they were for fiscal 1996. Based on this revised formula, Mr.
Hammond received a bonus of $512,460 for fiscal 1999. Mr. Hammond's
bonus reflected a 34% increase in revenues, and a 31% increase in
earnings, for fiscal 1999 as compared to fiscal 1998. Mr. Berger,
InterVoice's President, and Mr. Graham, InterVoice's Chief Financial
Officer, have employment agreements similar to Mr. Hammond's
agreement, with similar provisions governing their bonuses.
The employment agreement with Mr. Hammond also permits payment of
an additional discretionary bonus if the Compensation Committee
determined that such a bonus is appropriate. No such discretionary
bonus was paid to Mr. Hammond for fiscal 1999.
Long-Term Equity-Based Incentives. Long-term equity based
incentive awards strengthen the ability of InterVoice to attract,
motivate and retain executives of superior capability and more closely
align the interests of management with those of shareholders. The
Compensation Committee believes that such equity-based compensation
provides executives with a continuing stake in the long term success
of InterVoice, and will assist them to achieve the share ownership
targeted under the stock ownership guidelines discussed above.
Long-term awards granted in fiscal 1999 consisted of incentive stock
options granted under InterVoice's 1990 Incentive Stock Option Plan,
nonqualified stock options granted under InterVoice's 1998 Stock
Option Plan and restricted stock under InterVoice's Restricted Stock
Plan. Unlike cash, the value of a stock option will not be immediately
realized and does not result in a current expense to InterVoice.
The stock options are granted at the market price on the date of
grant and will only have value if InterVoice's stock price increases,
resulting in a commensurate benefit to InterVoice's shareholders.
Generally, grants vest in equal amounts over a three-year to five-year
period. Executives generally must be employed by InterVoice at the
time of vesting in order to exercise the options. Shares of restricted
stock (which were granted to certain executive officers during fiscal
1996, 1997 and 1999) will only have value to the employee if the
employee remains with InterVoice until any conditions to issuance have
been satisfied, and the restrictions have lapsed, which was two years
in the case of all restricted stock awards for fiscal 1996 and 1997.
The Compensation Committee determines from time to time the
executive officers who shall receive options or shares of restricted
stock under InterVoice's employee stock option plans and restricted
stock plan, the timing of such awards, the number of shares of
InterVoice common stock to be subject to each award and the other
terms of each award. During fiscal 1999, stock option awards were made
in light of a compensation review and recommendations prepared by
Ernst & Young comparing stock option awards to officers by InterVoice
to awards made by 11 companies in the Telephone and Telegraph
Apparatus industry whose description of business and revenues most
closely approximated those of InterVoice. These companies are included
in InterVoice's peer group index set forth in the section entitled
"Management of InterVoice and Executive Compensation -- Stock
Performance Graph."
Grants to individual officers during fiscal 1999 by the
Compensation Committee were based on their annual performance
evaluations, relative salary levels, the number of shares under
options previously granted, and their potential contribution to the
long-term performance of InterVoice. The emphasis placed on
equity-based incentive opportunities was also considered by the
Compensation Committee in determining stock option awards. The
Compensation Committee
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<PAGE> 78
issued 46,914 shares of restricted stock to certain executive officers of
InterVoice during fiscal 1999 pursuant to restricted stock awards made
during fiscal 1996, and a restricted stock award made during fiscal 1999 to
InterVoice's new President and Chief Operating Officer, David A. Berger.
Mr. Hammond was awarded up to 92,290 shares of restricted stock during
fiscal 1996. Pursuant to the award, InterVoice agreed to issue Mr. Hammond
20% of the maximum number of shares awarded to him if and when the closing
price per share of InterVoice common stock as quoted on Nasdaq first equals
or exceeds each of the following targets for 20 consecutive market days:
$9.46; $11.82; $14.77; $18.47; and $23.13. InterVoice issued 18,458 shares
of restricted stock to Mr. Hammond under this award during fiscal 1996, and
issued 18,458 additional shares during fiscal 1997, and 18,458 shares
during fiscal 1999.
The Compensation Committee granted stock options covering 1,848,700
shares of InterVoice common stock to officers of InterVoice during fiscal
1999. Options covering 120,000 shares of InterVoice common stock were
granted to Mr. Hammond during fiscal 1999. All references to the restricted
stock awards and stock options reflect automatic adjustments to account for
a 100% stock dividend issued during January 1999.
The Compensation Committee believes that linking executive
compensation to corporate performance results in a better alignment of
compensation with corporate goals and shareholder interest. As performance
goals are met or exceeded, resulting in an increased value to shareholders,
executives are rewarded commensurately. The Compensation Committee believes
that compensation levels during fiscal 1999 adequately reflect InterVoice's
compensation goals and policies.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
George C. Platt
Joseph J. Pietropaolo
David W. Brandenburg
Grant A. Dove
June 10, 1999
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<PAGE> 79
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning the
compensation paid or awarded to the Chief Executive Officer and the other four
most highly compensated executive officers of InterVoice in fiscal 1999, (the
"Named Officers") for services rendered in all capacities to InterVoice and its
subsidiaries for the fiscal years ended February 28, 1999, February 28, 1998 and
February 28, 1997.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS(1) ALL OTHER COMPENSATION
------------------------- -----------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES INTERVOICE
NAME AND PRINCIPAL --------------------- STOCK UNDERLYING ALL OTHER CASH COMMON
POSITION YEAR SALARY (2) BONUS ISSUANCES(3) OPTIONS COMPENSATION(4) STOCK(1)(5)
- ------------------ ---- ---------- -------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel D. Hammond.................. 1999 $326,776(6) $512,460 $316,926 120,000 $9,154 --
Chairman of the Board and 1998 313,170(6) 85,410 -- 60,000 7,882 342
Chief Executive Officer 1997 341,640 85,410 271,679 360,000 5,544 --
Rob-Roy J. Graham.................. 1999 193,576 196,267 158,463 100,000 6,534 --
Chief Financial Officer,
Secretary 1998 185,000 72,650 -- 50,000 5,597 318
Chief Accounting Officer,
Controller 1997 163,542 42,500 135,825 33,000 5,523 --
M. Gregory Smith(7)................ 1999 157,419 114,128 -- 40,000 7,163 --
Senior Vice President, Sales 1998 150,001 83,117 -- 25,000 6,308 102
1997 56,250 29,802 -- 60,000 1,655 --
Dwain H. Hammond................... 1999 192,985 57,093 158,463 60,000 3,305 --
Senior Vice President of 1998 180,001 22,176 -- 104,800 3,197 318
Engineering 1997 150,000 18,900 135,825 19,300 2,917 --
Eric L. Pratt(8)................... 1999 132,772 144,178 -- 40,000 7,024 --
Vice President, Telco Sales -- 1998 49,760 62,500 -- 60,000 63 --
Systems Engineering 1997 -- -- -- -- -- --
</TABLE>
- ---------------
(1) The stock option and restricted stock awards, together with the
contributions of shares of InterVoice common stock to InterVoice's 401(k)
Employee Savings Plan in this table for fiscal 1997, 1998 and 1999 have been
adjusted to reflect a 100% stock dividend issued on shares of InterVoice
common stock in January 1999.
(2) Includes amounts deferred at the Named Officer's election pursuant to
InterVoice's 401(k) Employee Savings Plan.
(3) Three of the Named Officers were issued shares of restricted InterVoice
common stock under InterVoice's Restricted Stock Plan on April 2, 1996 and
on January 11, 1999. The following Named Officers were issued the following
amounts of restricted shares on April 2, 1996: 18,458 shares to Daniel D.
Hammond and 9,228 shares to each of Rob-Roy J. Graham and Dwain H. Hammond.
The same three Named Officers were issued the following amount of restricted
shares on January 11, 1999: 18,458 to Daniel D. Hammond and 9,228 to each of
Rob-Roy J. Graham and Dwain H. Hammond. Any restricted shares awarded to a
Named Officer will be forfeited if the Named Officer's employment with
InterVoice voluntarily or involuntarily terminates for any reason (including
death, disability or retirement) within two years after the date upon which
the restricted shares were issued to such Named Officer. The value of
restricted shares is based on the closing price of InterVoice common stock
on Nasdaq on April 2, 1996, for those shares issued during fiscal 1997 and
January 11, 1999 for those shares issued during fiscal 1999. At February 28,
1999, the aggregate restricted share holding in shares (and dollars) were
36,916 ($401,462) for Daniel D. Hammond and 18,456 ($200,710) for each of
Rob-Roy J. Graham and Dwain H. Hammond, based on the closing price of
InterVoice common stock on February 28, 1999. The restricted shares
disclosed in this table will earn dividends when, as, and if dividends are
declared on the common stock by the board of directors, subject to vesting
of the shares of common stock.
(4) Represents InterVoice contributions on behalf of the Named Officers under
InterVoice's 401(k) Employee Savings Plan and amounts includable in
compensation for InterVoice-paid group term life insurance and spousal
travel.
(5) Represents InterVoice contributions of common stock to InterVoice's 401(k)
Employee Savings Plan.
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<PAGE> 80
(6) Mr. Hammond voluntarily elected to reduce his monthly base salary 20%, from
$28,470 to $22,776, to evidence his commitment to improving InterVoice's
ratio of expenses to revenues, for the eight-month period commencing October
1, 1997.
(7) Mr. Smith became employed by InterVoice during August 1996.
(8) Mr. Pratt became employed by InterVoice during October 1997.
OPTION GRANTS
The following table sets forth certain information with respect to grants
of stock options pursuant to InterVoice's 1990 Incentive Stock Option Plan and
1998 Stock Option Plan during fiscal 1999 to the Named Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------ POTENTIAL
% OF TOTAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES PRICE FOR OPTION TERM(2)
OPTIONS IN FISCAL (PER EXPIRATION -----------------------------
NAME GRANTED (1) 1999 SHARE) DATE 5% 10%
- ---- ----------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Daniel D. Hammond......... 120,000 6.5% $4.875 3/25/08 $1,540,707 $2,799,834
Rob-Roy J. Graham......... 100,000 5.4% 4.875 3/25/08 1,283,923 2,333,195
M. Gregory Smith.......... 40,000 2.2% 4.875 3/25/08 513,569 933,278
Dwain H. Hammond.......... 60,000 3.2% 4.875 3/25/08 770,354 1,399,917
Eric L. Pratt............. 40,000 2.2% 4.875 3/25/08 513,569 933,278
</TABLE>
- ---------------
(1) All options were granted at fair market value (the closing price of
InterVoice common stock on Nasdaq) on the date of grant and expire ten years
from the date of grant. The options become exercisable in three equal
amounts on the first three annual anniversaries of the date of grant.
(2) The assumed 5% and 10% rates of stock price appreciation are specified by
the proxy rules and do not reflect expected appreciation. The amounts shown
represent the assumed value of the stock options (less exercise price) at
the end of the ten-year period beginning on the date of grant and ending on
the option expiration date. For a ten-year period beginning February 26,
1999, based on the closing price on Nasdaq of InterVoice common stock of
$10.875 on such date, a share of InterVoice common stock would have a value
on February 28, 2009 of approximately $17.71 at an assumed appreciation rate
of 5% and approximately $28.21 at an assumed appreciation rate of 10%.
OPTIONS EXERCISED AND HOLDINGS
The following table provides information concerning option exercises in
fiscal 1999 and the value of unexercised options held by each of the Named
Officers at the end of fiscal 1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT
YEAR END FISCAL YEAR END(1)
----------------- -------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Daniel D. Hammond............... 360,000 $3,146,400 339,600/285,000 $223,998/1,044,375
Rob-Roy J. Graham............... 73,968 537,703 68,300/148,500 24,431/820,313
M. Gregory Smith................ 30,250 228,450 0/94,750 0/490,781
Dwain H. Hammond................ 48,432 573,438 0/132,368 0/785,162
Eric L. Pratt................... 15,000 111,563 0/85,000 0/507,188
</TABLE>
- ---------------
(1) Values stated are based on the closing price ($10.875) of InterVoice common
stock as reported on Nasdaq on February 26, 1999 and the exercise price of
the options.
74
<PAGE> 81
AGREEMENTS WITH EXECUTIVE OFFICERS
Employment Agreement with Daniel D. Hammond. On June 21, 1996 InterVoice
renewed and extended the employment agreement with Daniel D. Hammond for the
three-year period from March 1, 1996 through February 28, 1999. Mr. Hammond and
the Compensation Committee are currently negotiating a new employment agreement
and hope to have the agreement negotiated prior to InterVoice's 1999 annual
meeting of shareholders. By its terms, the 1996 agreement will remain in effect
until the new employment agreement is negotiated. Under the 1996 agreement, Mr.
Hammond's salary was increased for the first time in two years to $341,640. Mr.
Hammond did not receive any increases to his base salary during the term of his
1996 agreement. In addition, Mr. Hammond voluntarily elected to reduce his
monthly base salary 20% from $28,470 to $22,776, to evidence his commitment to
improving InterVoice's ratio of expenses to revenues, for the eight-month period
commencing October 1, 1997. Mr. Hammond reinstated his full salary as of June 1,
1998, based on improvements to InterVoice's expenses to revenues ratio,
particularly for the first quarter of fiscal 1999. Mr. Hammond's annual bonus
opportunity was revised under his 1996 employment agreement so as to be based
50% on earnings per share, particularly increases to earnings per share, and 50%
on any increase in revenues, in each case as compared to the immediately
preceding fiscal year unless revenues or earnings per share are less than they
were for fiscal 1996. If revenues or earnings per share, as the case may be, for
the immediately preceding fiscal year are less than they were for fiscal 1996,
then such change would be compared to fiscal 1996. With respect to earnings per
share, Mr. Hammond's bonus opportunity under his 1996 agreement ranged from 10%
of his base salary if earnings per share did not decrease more than 10% from the
base fiscal year to 125% of his base salary if earnings per share increased by
40% or more. With respect to revenues, Mr. Hammond's bonus opportunity ranged
from 25% of his base salary if revenues were flat or increased by less than 10%
to 125% of his base salary if revenues increased by 40% or more.
Mr. Hammond received a bonus of $512,460 for fiscal 1999. See "Management
of InterVoice and Executive Compensation -- Summary Compensation Table" for a
discussion of the bonuses and salary paid to Mr. Hammond for the three-year
period ended February 28, 1999. Finally, in connection with the renewal and
extension of Mr. Hammond's employment agreement, he was awarded a stock option
during fiscal 1997 covering 360,000 shares of common stock under InterVoice's
1990 Incentive Stock Option Plan.
Except as discussed below, Mr. Hammond's 1996 agreement requires that he
not compete with InterVoice while he renders services under the agreement and
for a period of 18 months thereafter. The 1996 agreement also provides that
InterVoice can pay Mr. Hammond an additional discretionary bonus in an amount to
be approved by the board of directors of InterVoice. No such discretionary bonus
was paid for fiscal 1999. The agreement further provides that InterVoice can
only terminate Mr. Hammond for cause or because he becomes disabled (as such
terms are defined in the agreement). If Mr. Hammond is terminated for cause,
InterVoice would have no liability for further payments to him. If Mr. Hammond
becomes completely disabled, InterVoice is obligated to pay him an amount equal
to his base salary in effect at the time of disability through the expiration
date of the agreement. If, however, following a change of control of InterVoice
(defined as a triggering event in the agreement), Mr. Hammond's employment is
terminated without cause, if Mr. Hammond terminates his employment for good
reason (as defined in the agreement), or if he terminates his employment without
good reason by giving 12 months' prior notice, InterVoice would have to pay him
a lump sum amount (the "Change in Control Amount") equal to 2.99 multiplied by
an amount of salary and bonus which he would have received for the year in which
he was terminated (as determined in accordance with the agreement). The
agreement also provides that, if the Change in Control Amount is subject to
certain federal excise taxes, InterVoice would "gross-up" the Change in Control
Amount such that Mr. Hammond would receive a net amount after such taxes, equal
to the Change in Control Amount that he would have received had such taxes not
been imposed. In addition, following a change in control of InterVoice, Mr.
Hammond can terminate his employment for any reason by giving 12 months' prior
written notice. Mr. Hammond would be released from his covenant not to compete
if he is terminated by InterVoice without cause and without being disabled, or
if he elects to terminate his employment after a default by InterVoice prior to
a triggering event or after a triggering
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<PAGE> 82
event for good reason. If Mr. Hammond's employment is terminated without cause,
InterVoice would be obligated to pay him an amount equal to the remaining
compensation he would have received under the agreement (as determined in
accordance with the agreement), and the option to purchase 360,000 shares of
common stock that Mr. Hammond was granted in connection with his agreement would
become completely exercisable, to the extent that the option was not already
exercisable as of such date.
On October 27, 1998 InterVoice's board of directors accepted an offer from
Mr. Hammond to purchase at that date's Nasdaq closing price 120,000 of his
shares of InterVoice common stock (as adjusted for the 100% stock dividend paid
in January 1999). Mr. Hammond abstained from voting on the matter.
Employment Agreement with David A. Berger. David A. Berger joined
InterVoice as President and Chief Operating Officer on August 31, 1998. In
connection with his employment, InterVoice and Mr. Berger entered into an
employment agreement for the two-and-one-half year period commencing September
1, 1998. Under the agreement, Mr. Berger's salary is $250,000 per year.
Additionally, Mr. Berger's annual bonus opportunity is based 50% on any increase
to earnings per share and 50% on any increase to revenues for each fiscal year
under his agreement, in each case as compared to the immediately preceding
fiscal year unless revenues or earnings per share are less than they were for
fiscal 1996. If revenues or earnings per share, as the case may be, for the
immediately preceding fiscal year are less than they were for fiscal 1996, then
such change will be compared to fiscal 1996. With respect to earnings per share,
Mr. Berger's bonus opportunity ranges from 10% of his base salary if earnings
per share do not decrease more than 10% from the base fiscal year to 100% of his
base salary if revenues were increased by 40% or more. Other than the matters
discussed in this paragraph, Mr. Berger's employment agreement (including the
terms governing any termination of his employment with InterVoice) are
substantially the same as Mr. Hammond's 1996 employment agreement, which is
discussed above. Mr. Berger received a bonus of $125,000 for fiscal 1999.
Furthermore, in connection with Mr. Berger's employment agreement, he was
awarded during fiscal 1999 an option covering 300,000 shares of common stock
under the 1998 Stock Option Plan; and an opportunity to receive up to 30,000
shares of restricted stock under InterVoice's Restricted Stock Plan.
Employment Agreement with Rob-Roy J. Graham. Rob-Roy J. Graham,
InterVoice's Chief Financial Officer and Secretary, entered into an employment
agreement with InterVoice for the two-and-one-half-year term commencing on
September 1, 1998. Under the agreement, Mr. Graham's salary is $196,267 per
year. Mr. Graham received a bonus of $196,267 for fiscal 1999. See "Management
of InterVoice and Executive Compensation -- Summary Compensation Table" for a
discussion of the salary and bonus paid to Mr. Graham. The agreement did not
provide for Mr. Graham to receive any stock options or restricted stock in
connection with the execution of his new agreement. Other than the matters
discussed in this paragraph, Mr. Graham's employment agreement (including the
terms governing any termination of his employment with InterVoice) are
substantially the same as Mr. Berger's employment agreement, which is discussed
above.
Employment Agreement with Eric L. Pratt. Eric L. Pratt joined InterVoice as
Vice President of Telco Sales and System Engineering in October 1997. In
connection with his employment, InterVoice and Mr. Pratt entered into an
employment agreement for the two-year period commencing October 8, 1997. Under
the agreement, Mr. Pratt's salary started at $125,000 and was raised to $132,772
during fiscal 1999. Additionally, Mr. Pratt's agreement provides an opportunity
for him to earn quarterly and annual cash bonuses based on a sales incentive
plan provided by InterVoice for each fiscal year. Mr. Pratt's bonus opportunity
for fiscal 1999 was based on certain InterVoice and departmental objectives,
including sales bookings, sales revenues and expense containment. Mr. Pratt
received incentive cash bonuses of $144,178 for fiscal 1999. See "Management of
InterVoice and Executive Compensation -- Summary Compensation Table" for a
discussion of the bonuses and salary paid to Mr. Pratt. Other than the matters
discussed in this paragraph, Mr. Pratt's employment agreement (including the
terms governing any termination of his employment with InterVoice) are
substantially the same as Mr. Hammond's 1996 employment agreement, except for
the change of control provisions in Mr. Hammond's agreement. Mr. Pratt's
agreement does not include any provisions which award him any special
compensation in the event of a change of control of
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<PAGE> 83
InterVoice (defined as a triggering event in Mr. Hammond's agreement).
Furthermore, in connection with Mr. Pratt's employment agreement, he was awarded
during fiscal 1998 an option to receive 60,000 shares of InterVoice common stock
under InterVoice's 1990 Incentive Stock Option Plan.
The discussion of stock options and restricted stock awards granted to
Messrs. Hammond, Berger, Graham and Pratt reflects automatic adjustments made to
the stock options in connection with a 100% stock dividend paid on InterVoice
common stock during fiscal 1999. The number of unexercised shares under each of
the referenced stock options and restricted stock awards was doubled as a result
of the 100% stock dividend.
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to InterVoice's shareholders during the
five-year period ended February 28, 1999, as well as an overall broad stock
market index, the Nasdaq Market Index, and a peer group index for InterVoice
which is the index for SIC Code 3661 Telephone and Telegraph Apparatus. The
stock performance graph assumes $100 was invested on March 1, 1994 in InterVoice
common stock and each such index.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
[GRAPH]
<TABLE>
<CAPTION>
TELEPHONE,
MEASUREMENT PERIOD INTERVOICE TELEGRAPH NASDAQ
(FISCAL YEAR COVERED) INC. APPARATUS MARKET INDEX
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 134.44 113.69 95.47
1996 212.22 164.19 131.83
1997 97.78 203.41 158.24
1998 80.00 266.07 215.21
1999 193.33 284.02 278.09
</TABLE>
ASSUMES $100 INVESTED ON MARCH 1, 1994
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED FEBRUARY 28, 1999
77
<PAGE> 84
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of
InterVoice common stock offered hereby will be passed upon for InterVoice by
Thompson & Knight, P.C., Dallas, Texas.
EXPERTS
The consolidated financial statements of InterVoice appearing in
InterVoice's Annual Report on Form 10-K, as amended, for the year ended February
28, 1999, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
The consolidated financial statements and schedules of Brite appearing in
Brite's Annual Report on Form 10-K for the year ended December 31, 1998,
incorporated by reference in this prospectus/proxy statement and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in giving said reports.
ADDITIONAL INFORMATION FOR INTERVOICE SHAREHOLDERS
AND BRITE STOCKHOLDERS
FUTURE PROPOSALS
InterVoice
If a shareholder intends to present a proposal for action at the 2000
InterVoice annual meeting and wishes to have such proposal considered for
inclusion in InterVoice's proxy materials in reliance on Rule 14a-8 under the
Exchange Act, the proposal must be submitted in writing and received by
InterVoice by February 29, 2000. Such proposals must also meet the other
requirements of the rules of the SEC relating to shareholders' proposals.
In addition, if a shareholder submits a proposal outside of Rule 14a-8 for
the 2000 annual meeting, then InterVoice's proxy may confer discretionary
authority on the persons being appointed as proxies on behalf of management to
vote on the proposal. Proposals and nominations should be addressed to the
Secretary of InterVoice, 17811 Waterview Parkway, Dallas, Texas 75252.
Brite
Brite will hold an annual meeting in 2000 only if the merger has not
already been completed. If such meeting is held and a stockholder intends to
present a proposal considered for inclusion in Brite's proxy materials in
reliance on Rule 14a-8 under the Exchange Act, the proposal must be submitted in
writing and received by Brite by December 15, 1999. Such proposals must also
meet the other requirements of the rules of the SEC relating to stockholders'
proposals.
In addition, if a stockholder submits a proposal outside of Rule 14a-8,
then Brite's proxy may confer discretionary authority on the persons being
appointed as proxies on behalf of management to vote on the proposal. Proposals
and nominations should be addressed to the Secretary of Brite, 250 International
Parkway, Suite 300, Heathrow, Florida 32746.
WHERE YOU CAN FIND MORE INFORMATION
InterVoice and Brite file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, at 7 World Trade
Center, Suite 1300, New York, New York 10048, and at Citicorp Center, 500 West
Madison Street, Suite 1400,
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<PAGE> 85
Chicago, Illinois 60661-2511. 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 from commercial document retrieval services and at the web site
maintained by the SEC at "http://www.sec.gov."
InterVoice filed a registration statement on Form S-4 to register with the
SEC the InterVoice common stock to be issued to Brite stockholders in the
merger. This prospectus/proxy statement is a part of that registration statement
and constitutes a prospectus of InterVoice in addition to being a proxy
statement of Brite for the special meeting. As allowed by SEC rules, this
prospectus/proxy statement does not contain all the information you can find in
the registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
prospectus/proxy statement, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be a part of
this prospectus/proxy statement, except for any information superseded by
information in, or incorporated by reference in, this prospectus/proxy
statement. This prospectus/proxy statement incorporates by reference the
documents set forth below that we have previously filed with the SEC. These
documents contain important information about our companies and their finances.
<TABLE>
<CAPTION>
INTERVOICE SEC FILINGS (FILE NO. 000-13616) PERIOD
- ------------------------------------------- ------
<S> <C>
Annual Report on Form 10-K, as amended by Fiscal Year ended February 28, 1999
Form 10-K/A (Amendments No. 1 and 2)
The description of common stock set forth Filed on May 27, 1999
in the Registration Statement on Form 8-A
Current Report on Form 8-K Filed on June 23, 1999
</TABLE>
<TABLE>
<CAPTION>
BRITE SEC FILINGS (FILE NO. 000-17920) PERIOD
- -------------------------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter Ended March 31, 1999
Current Report on Form 8-K Filed on June 22, 1999
</TABLE>
We are also incorporating by reference any additional documents that we
file with the SEC between the date of this prospectus/proxy statement and the
date of the special meeting.
InterVoice has supplied all information contained or incorporated by
reference in this prospectus/ proxy statement relating to InterVoice, and Brite
has supplied all information relating to Brite.
If you are a shareholder of InterVoice or a stockholder of Brite, we may
have sent you some of the documents incorporated by reference, but you can
obtain any of them through us or the SEC. Documents incorporated by reference
are available from us without charge, excluding all exhibits unless we have
specifically incorporated by reference an exhibit in this prospectus/proxy
statement. Stockholders may obtain documents incorporated by reference in this
prospectus/proxy statement by requesting them in writing or by telephone from
the appropriate party at the following addresses:
<TABLE>
<S> <C>
InterVoice, Inc. Brite Voice Systems, Inc.
17811 Waterview Parkway 250 International Parkway, Suite 300
Dallas, Texas 75252 Heathrow, Florida 32746
Attention: Corporate Secretary Attention: Corporate Secretary
Telephone: (972) 454-8000 Telephone: (407) 357-1000
</TABLE>
If you would like to request documents from us, please do so by August 4,
1999, in order to receive them before the special meeting.
You can also get more information by visiting InterVoice's web site at
"http://www.intervoice.com/" and Brite's web site at "http://www.brite.com." Web
site materials are not part of this prospectus/proxy statement.
79
<PAGE> 86
You should rely only on the information contained or incorporated by
reference in this prospectus/ proxy statement to vote on the merger. We have not
authorized anyone to provide you with information that is different from what is
contained in this prospectus/proxy statement. This prospectus/proxy statement is
dated July 13, 1999. You should not assume that the information contained in
this prospectus/proxy statement is accurate as of any date other than such date,
and neither the mailing of this prospectus/proxy statement to stockholders of
Brite nor the issuance of InterVoice common stock in the merger shall create any
implication to the contrary.
80
<PAGE> 87
INTERVOICE, INC.
AND
BRITE VOICE SYSTEMS, INC.
ANNEXES TO THE PROSPECTUS/PROXY STATEMENT
Annex A -- Acquisition Agreement and Plan of Merger
Annex B -- Opinion of U.S. Bancorp Piper Jaffray Inc.
81
<PAGE> 88
ANNEX A
ACQUISITION AGREEMENT AND PLAN OF MERGER
A-1
<PAGE> 89
ACQUISITION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INTERVOICE, INC.
INTERVOICE ACQUISITION SUBSIDIARY III, INC.
AND
BRITE VOICE SYSTEMS, INC.
DATED AS OF
APRIL 27, 1999
A-2
<PAGE> 90
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I -- THE OFFER AND MERGER........................................... A-9
Section 1.1 The Offer................................................... A-9
Section 1.2 The Company Actions......................................... A-11
Section 1.3 Directors................................................... A-12
Section 1.4 The Merger.................................................. A-13
Section 1.5 Effective Time.............................................. A-13
Section 1.6 Closing..................................................... A-13
Section 1.7 Directors and Officers of the Surviving Corporation......... A-13
Section 1.8 Effect of the Merger........................................ A-13
Section 1.9 Subsequent Actions.......................................... A-14
Section 1.10 Stockholders' Meeting....................................... A-14
Section 1.11 Proxy Statement/Registration Statement...................... A-14
Section 1.12 Directors of InterVoice..................................... A-15
ARTICLE II -- CONVERSION OF SECURITIES...................................... A-15
Section 2.1 Conversion of Capital Stock................................. A-15
Section 2.2 Dissenting Shares........................................... A-16
Surrender of All Shares of Common Stock; Stock Transfer
Section 2.3 Books....................................................... A-16
Section 2.4 The Company Stock Plans..................................... A-18
Section 2.5 Repurchase of Warrant....................................... A-18
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ A-18
Section 3.1 Organization; Qualification; Charter and Bylaws............. A-19
Section 3.2 Capitalization.............................................. A-20
Section 3.3 Authorization; Validity of Agreement; Company Action........ A-21
Section 3.4 Consents and Approvals; No Violations....................... A-21
Section 3.5 SEC Reports and Financial Statements........................ A-22
Section 3.6 Absence of Certain Changes.................................. A-22
Section 3.7 No Undisclosed Liabilities.................................. A-22
Section 3.8 Claims...................................................... A-23
Section 3.9 Employee Benefit Plans; ERISA............................... A-23
Section 3.10 Taxes....................................................... A-25
Section 3.11 Contracts................................................... A-27
Section 3.12 Real Property and Leased Property........................... A-28
Section 3.13 Intellectual Property....................................... A-29
Section 3.14 Year 2000 Compliance........................................ A-31
Section 3.15 Labor Matters............................................... A-32
Section 3.16 Compliance with Laws........................................ A-33
Section 3.17 Environmental Matters....................................... A-33
Section 3.18 Product Liability........................................... A-34
Section 3.19 Information in Disclosure Documents......................... A-34
Section 3.20 Potential Conflict of Interest.............................. A-35
Section 3.21 Insurance................................................... A-35
Section 3.22 Suppliers and Customers..................................... A-35
Section 3.23 Accounts Receivable; Inventory.............................. A-35
Section 3.24 Title and Condition of Properties........................... A-36
Section 3.25 Illegal Payments............................................ A-36
Section 3.26 Phoenix Acquisition......................................... A-36
</TABLE>
A-3
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER....
A-36
Section 4.1 Organization; Qualification; Charter and Bylaws............. A-37
Section 4.2 Capitalization.............................................. A-37
Authorization; Validity of Agreement; Necessary Corporate
Section 4.3 Action...................................................... A-38
Section 4.4 Consents and Approvals; No Violations....................... A-39
Section 4.5 SEC Reports and Financial Statements........................ A-39
Section 4.6 Absence of Certain Changes.................................. A-40
Section 4.7 No Undisclosed Liabilities.................................. A-40
Section 4.8 Claims...................................................... A-40
Section 4.9 Employee Benefit Plans; ERISA............................... A-40
Section 4.10 Taxes....................................................... A-43
Section 4.11 Contracts................................................... A-44
Section 4.12 Real Property and Leased Property........................... A-45
Section 4.13 Intellectual Property....................................... A-46
Section 4.14 Year 2000 Compliance........................................ A-49
Section 4.15 Labor Matters............................................... A-49
Section 4.16 Compliance with Laws........................................ A-50
Section 4.17 Environmental Matters....................................... A-50
Section 4.18 Product Liability........................................... A-50
Section 4.19 Information in Disclosure Documents......................... A-51
Section 4.20 Potential Conflict of Interest.............................. A-51
Section 4.21 Insurance................................................... A-51
Section 4.22 Suppliers and Customers..................................... A-51
Section 4.23 Accounts Receivable; Inventory.............................. A-52
Section 4.24 Title and Condition of Properties........................... A-52
Section 4.25 Illegal Payments............................................ A-52
Section 4.26 Financing................................................... A-52
Section 4.27 Shares Owned by Parent, Purchaser and Affiliates............ A-53
ARTICLE V -- CONDUCT OF BUSINESS PENDING THE MERGER......................... A-53
Section 5.1 Acquisition Proposals....................................... A-53
Section 5.2 Interim Operations of the Company........................... A-53
Section 5.3 No Solicitation and Fiduciary Out........................... A-55
ARTICLE VI -- ADDITIONAL AGREEMENTS......................................... A-56
Section 6.1 Additional Agreements....................................... A-56
Section 6.2 Notification of Certain Matters............................. A-56
Section 6.3 Access; Confidentiality..................................... A-56
Section 6.4 Consents and Approvals...................................... A-57
Section 6.5 Brokers or Finders.......................................... A-57
Section 6.6 Publicity................................................... A-58
Section 6.7 Directors' and Officers' Insurance and Indemnification...... A-58
Section 6.8 Purchaser Compliance........................................ A-58
Section 6.9 Nasdaq National Market Listing and De-Listing............... A-59
Section 6.10 Agreement of Affiliates..................................... A-59
Section 6.11 Reasonable Best Efforts..................................... A-59
Section 6.12 No Repurchase of Parent Common Stock........................ A-59
Section 6.13 Company Stock Plan Amendments............................... A-59
ARTICLE VII -- CONDITIONS................................................... A-60
Conditions to Each Party's Obligation to Effect the
Section 7.1 Merger...................................................... A-60
Conditions to Obligations by Parent and the Purchaser to
Section 7.2 Effect the Merger........................................... A-60
</TABLE>
A-4
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VIII -- TERMINATION................................................. A-60
Section 8.1 Termination................................................. A-60
Section 8.2 Effect of Termination....................................... A-61
ARTICLE IX -- MISCELLANEOUS................................................. A-62
Section 9.1 Amendment and Modification.................................. A-62
Section 9.2 Non-survival of Representations and Warranties.............. A-62
Section 9.3 Expenses.................................................... A-63
Section 9.4 Notices..................................................... A-63
Section 9.5 Interpretation.............................................. A-63
Section 9.6 Counterparts................................................ A-64
Section 9.7 Entire Agreement; No Third Party Beneficiaries.............. A-64
Section 9.8 Severability................................................ A-64
Section 9.9 Governing Law............................................... A-64
Section 9.10 Assignment.................................................. A-64
Exhibit A -- Stockholders' Agreement........................................ A-68
Exhibit B -- Affiliate Letter............................................... A-78
</TABLE>
A-5
<PAGE> 93
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM SECTION NO.
- ------------ -----------
<S> <C>
1984 Plan................................................... 2.4
1994 Plan................................................... 2.4
Acquisition Proposal........................................ 5.1
Acquisition Proposal Interest............................... 5.1
Affiliate Agreement......................................... 6.10
Affiliate Letter............................................ 6.10
Agreement................................................... Recitals
Appointment Date............................................ 5.2
Articles of Incorporation................................... 1.4
Audit....................................................... 3.10(b)
Average Trading Price....................................... 2.1(b)(1)
Bank........................................................ 4.26
By-Laws..................................................... 1.2(a)
Cash Amount................................................. 2.1(b)(2)
Cash Share Number........................................... 2.1(b)(1)
Certificates................................................ 2.3(b)
Claims...................................................... 3.8
Closing..................................................... 1.6
Closing Date................................................ 1.6
Code........................................................ 3.9(b)(vii)
Commitment Letter........................................... 4.26
Common Stock................................................ Recitals
Company..................................................... Recitals
Company Agreements.......................................... 3.4
Company Balance Sheet....................................... 3.23(a)
Company's Board of Directors................................ Recitals
Company Disclosure Schedules................................ Article III
Company Material Adverse Effect............................. 3.1(a)
Company SEC Documents....................................... 3.5
Company Stock Plans......................................... 2.4
Company Year 2000 Representations........................... 3.14(b)
Computer Software........................................... 3.13(b)
Confidentiality Agreement................................... 5.3(b)
D&O Insurance............................................... 6.7(b)
Date-Sensitive Data......................................... 3.14(c)
Date-Sensitive System....................................... 3.14(d)
Debt Financing.............................................. 4.26
Director Plan............................................... 2.4
Dissenting Shares........................................... 2.1(b)
Dissenting Stockholders..................................... 2.1(b)
Effective Time.............................................. 1.5
Encumbrances................................................ 3.2(b)
Environmental Claim......................................... 3.17(c)
Environmental Laws.......................................... 3.17(a)
ERISA Affiliate............................................. 3.9(a)
ERISA Plans................................................. 3.9(a)
ESPP........................................................ 2.4
Exchange Act................................................ 1.1(a)
Exchange Agent.............................................. 2.3(a)
</TABLE>
A-6
<PAGE> 94
<TABLE>
<CAPTION>
DEFINED TERM SECTION NO.
- ------------ -----------
<S> <C>
Excluded Shares............................................. 2.1(b)
Exercise/No Dissenters Presumption.......................... 2.1(b)
Financial Statements........................................ 3.5
GAAP........................................................ 3.5
Governmental Entity......................................... 3.4
HSR Act..................................................... 3.4
Indebtedness................................................ 3.2(d)
Indemnified Party........................................... 6.7(a)
Independent Directors....................................... 1.3(c)
Intellectual Property....................................... 3.13(d)
KGCC........................................................ Recitals
Lanham Act.................................................. 3.13(n)
Licensed Product Software................................... 3.13(d)
Lower Collar................................................ 2.1(b)
Major Stockholders.......................................... Recitals
Materials of Environmental Concern.......................... 3.17(a)
Merger...................................................... 1.4
Merger Consideration........................................ 2.1(b)
Minimum Condition........................................... 1.1(a)
NGCL........................................................ Recitals
Offer....................................................... Recitals
Offer Documents............................................. 1.1(c)
Offer Price................................................. Recitals
Offer to Purchase........................................... 1.1(a)
Other Products.............................................. 3.14(b)
Parent...................................................... Recitals
Parent Agreements........................................... 4.4
Parent Balance Sheet........................................ 4.23(a)
Parent Claims............................................... 4.8
Parent Common Stock......................................... 2.1(b)(1)
Parent Computer Software.................................... 4.13(b)
Parent Disclosure Schedules................................. Article IV
Parent ERISA Affiliate...................................... 4.9(a)
Parent ERISA Plans.......................................... 4.9(a)
Parent Financial Statements................................. 4.5
Parent Intellectual Property................................ 4.13(d)
Parent Licensed Product Software............................ 4.13(d)
Parent Material Adverse Effect.............................. 4.1(a)
Parent Other Products....................................... 4.14(b)
Parent Plans................................................ 4.9(a)
Parent Preferred Stock...................................... 4.2(a)
Parent Product Software..................................... 4.13(c)
Parent Real Property........................................ 4.12(a)
Parent SEC Documents........................................ 4.5
Parent SPD.................................................. 4.9(b)(vi)
Parent Stock Plans.......................................... 4.2(a)
Parent Voting Debt.......................................... 4.2(a)
Parent Work For Hire Agreements............................. 4.13(g)
Parent Year 2000 Representations............................ 4.14(b)
Payment Fund................................................ 2.3(a)
PBGC........................................................ 3.9(c)
Person...................................................... 9.5
</TABLE>
A-7
<PAGE> 95
<TABLE>
<CAPTION>
DEFINED TERM SECTION NO.
- ------------ -----------
<S> <C>
Plans....................................................... 3.9(a)
Preferred Stock............................................. 3.2(a)
Product Software............................................ 3.13(c)
Proxy Statement............................................. 1.11(a)
PTSOP....................................................... 2.4
Purchaser................................................... Recitals
Purchaser Common Stock...................................... 2.1
Real Property............................................... 3.12(a)
Registration Statement...................................... 1.11(a)
Rights...................................................... 1.11
Schedule 14D-1.............................................. 1.1(c)
Schedule 14D-9.............................................. 1.2(b)
SEC......................................................... 1.1(c)
Secretaries of State........................................ 1.5
Securities Act.............................................. 1.11(a)
Shares...................................................... Recitals
Software Acquisition Agreements............................. 3.13(g)
SPD......................................................... 3.9(b)(iv)
Special Meeting............................................. 1.10(a)
Spread...................................................... 2.4(i)
Stockholders' Agreement..................................... Recitals
Subsidiary.................................................. 3.1(a)
Superior Proposal........................................... 5.3(b)
Surviving Corporation....................................... 1.4
Tax Authority............................................... 3.10(b)
Tax or Taxes................................................ 3.10(b)
Tax Returns................................................. 3.10(b)
Termination Fee............................................. 8.2(e)
Transactions................................................ 1.2(a)
Voting Debt................................................. 3.2(a)
WARN Act.................................................... 3.15(b)
Warrant..................................................... 2.5
Work For Hire Agreements.................................... 3.13(g)
Year 2000 Compliant......................................... 3.14(e)
</TABLE>
A-8
<PAGE> 96
ACQUISITION AGREEMENT AND PLAN OF MERGER
THIS ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of April 27, 1999, is made by and among InterVoice, Inc., a Texas corporation
("Parent"), InterVoice Acquisition Subsidiary III Inc., a Nevada corporation and
a wholly owned subsidiary of Parent (the "Purchaser"), and Brite Voice Systems,
Inc., a Kansas corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser make a cash
tender offer (the "Offer") to acquire 9,158,155 shares of the issued and
outstanding common stock, no par value per share (the "Shares" or "Common
Stock"), of the Company, for Thirteen and 40/100s Dollars ($13.40) per share,
net to the seller in cash (such price, or any such higher price per Share as may
be paid in the Offer, being referred to herein as the "Offer Price");
WHEREAS, also in furtherance of such acquisition, the Board of Directors of
each of Parent, the Purchaser and the Company have each approved the Merger (as
hereinafter defined) following the Offer in accordance with the Kansas General
Corporation Code (the "KGCC") and the Nevada General Corporation Law (the
"NGCL") and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Company's Board of
Directors") has determined that the consideration to be paid for each Share in
the Offer and in the Merger is fair to the holders of such Shares and has
resolved to recommend that the holders of such Shares accept the Offer and
approve this Agreement and each of the transactions contemplated hereby upon the
terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
Stanley G. Brannan, Sue Brannan, Glenn A. Etherington, Leon A. Ferber, John F.
Kelsey, III, Alan C. Maltz, Scott A. Maltz, Ray S. Naeini and Donald R. Walsh
(the "Major Stockholders") concurrently herewith are entering into a
Stockholders' Agreement (the "Stockholders' Agreement"), dated as of the date
hereof, with Parent and the Purchaser, in the form attached hereto as Exhibit A,
pursuant to which the Major Stockholders have agreed, among other things, to
tender any Shares held by each such Major Stockholder in the Offer, to agree to
the cancellation of any stock options each such Major Stockholder holds on the
date hereof and receive the Spread (as hereinafter defined) per Share in payment
therefor, and to grant Parent a proxy with respect to the voting of such Shares
in favor of the Merger upon the terms and subject to the conditions set forth
therein; and
WHEREAS, the Company, Parent and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
shall have occurred and be existing, as promptly as practicable (but in no event
later than five (5) business days after the public announcement of the execution
of this Agreement), the Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) the Offer at the Offer Price and, subject to there being validly tendered
and not withdrawn prior to the expiration of the Offer,
A-9
<PAGE> 97
9,158,155 shares (including Shares owned by Parent, the Purchaser or any
affiliates thereof) (the "Minimum Condition") and to the other conditions set
forth in Annex I hereto, shall use its best efforts to consummate the Offer in
accordance with its terms. The obligations of the Purchaser to accept for
payment and to pay for any Shares validly tendered on or prior to the expiration
of the Offer and not withdrawn shall be subject only to the Minimum Condition
and the other conditions set forth in Annex I hereto. The Offer shall be made by
means of an offer to purchase (the "Offer to Purchase") subject to the Minimum
Condition and the other conditions set forth in Annex I hereto and reflecting,
where appropriate, the other terms set forth in this Agreement. The Purchaser
shall not amend or waive the Minimum Condition (other than, at Purchaser's
option, to lower the Minimum Condition to a majority of the issued and
outstanding Common Stock on a fully diluted basis) and shall not decrease, or
change the form of, the Offer Price or decrease the number of Shares sought, or
amend any other condition of the Offer in any manner adverse to the holders of
the Shares or impose any condition to the consummation of the Offer beyond the
Minimum Condition and the conditions set forth in Annex I hereto without the
written consent of the Company; provided, however, that if on the initial
scheduled expiration date of the Offer, which shall be twenty-one (21) business
days after the date the Offer is commenced, all conditions to the Offer will not
have been satisfied or waived, the Purchaser may, from time to time, in its sole
discretion, extend the expiration date and; provided further, however, that if
on the initial scheduled expiration date of the Offer any conditions to the
Offer that are reasonably capable of being satisfied within ten (10) business
days, including the Minimum Condition, will not have been satisfied or waived,
the Purchaser shall extend the expiration date for a minimum of ten (10)
business days. In no event shall the Purchaser be obligated to extend the Offer
beyond June 30, 1999. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as it is legally permitted to do so under
applicable law.
(b) If more than 9,158,155 shares are validly tendered prior to the
expiration date, as may be extended pursuant to Section 1.1(a), and not
withdrawn, the Purchaser will, upon the terms and subject to the conditions of
the Offer, accept for payment (and thereby purchase) the Shares purchased in the
Offer on a pro rata basis, with adjustments to avoid purchases of fractional
shares of Common Stock, based on the number of Shares validly tendered prior to
the expiration date and not withdrawn by each tendering stockholder. Subject to
the terms of this Agreement, the Purchaser reserves the right (but shall not be
obligated) to accept for payment more than 9,158,155 shares pursuant to the
Offer.
(c) As soon as practicable on the date the Offer is commenced, Parent and
the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). The Offer Documents will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published or sent to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information furnished by the Company expressly
for inclusion in the Offer Documents. The information supplied by the Company
expressly for inclusion in the Offer Documents and by Parent or the Purchaser
expressly for inclusion in the Schedule 14D-9 (as hereinafter defined) will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(d) Each of Parent and the Purchaser will take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and the Purchaser, on the one hand, and the
Company, on the other hand, will promptly correct any information provided by it
for use in the
A-10
<PAGE> 98
Schedule 14D-1 or the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect, and the Purchaser further
will take all steps necessary to cause the Schedule 14D-1 or the Offer Documents
as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the reasonable
opportunity to review the initial Schedule 14D-1 before it is filed with the
SEC. In addition, Parent and the Purchaser will provide the Company and its
counsel with any comments or other communications, whether written or oral,
Parent, the Purchaser or their counsel may receive from time to time from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments or other communications.
SECTION 1.2 The Company Actions.
(a) The Company hereby approves of and consents to the Offer and represents
that the Company's Board of Directors, at a meeting duly called and held prior
to the execution hereof (i) has unanimously determined that each of this
Agreement, the Offer and the Merger (as hereinafter defined) are fair to and in
the best interests of the stockholders of the Company, (ii) has duly and
unanimously approved this Agreement, the Stockholder Agreement, and the
transactions contemplated hereby and thereby, including the Offer and the Merger
(collectively, the "Transactions"), and such approval constitutes approval of
the Offer, this Agreement, the Stockholder Agreement, and the transactions
contemplated hereby and thereby, including the Merger, for purposes of Section
17-12,101 of the KGCC, such that Section 17-12,101 of the KGCC will not apply to
the transactions contemplated hereby or thereby, (iii) has unanimously resolved
to recommend that the stockholders of the Company accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt this Agreement and the
Merger, and (iv) has unanimously resolved to amend the By-laws of the Company
(the "By-Laws") to ensure that the provisions of Sections 17-1286 through
17-1298 of the KGCC do not apply to the Company, the rights of its stockholders
and the Transactions contemplated by this Agreement.
(b) As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments or supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions
of Section 5.3(c) hereof, contain the recommendation referred to in clause (iii)
of Section 1.2(a) hereof. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published or sent to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information furnished by Parent or the Purchaser
expressly for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of the Shares, in each case, as and to the
extent required by applicable federal securities laws. The Company shall mail,
or cause to be mailed, such Schedule 14D-9 to the stockholders of the Company at
the same time the Offer Documents are first mailed to the stockholders of the
Company. Each of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that it shall have become false
or misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case, as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, the Purchaser
and their counsel with any comments, whether written or oral, that the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments or
other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of all record holders of Shares, each as of a recent date, and shall
promptly furnish
A-11
<PAGE> 99
the Purchaser with such additional information (including, but not limited to,
updated mailing labels, security position listings and available listings or
computer files containing the names and addresses of all recordholders of
Shares, or any of such other information and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares).
SECTION 1.3 Directors.
(a) Promptly upon the purchase of and payment for any Shares by the
Purchaser pursuant to the Offer, and from time to time thereafter as Shares are
acquired by the Purchaser, Parent shall, subject to meeting the Minimum
Condition, be entitled to designate such number of directors, rounded down to
the next whole number, on the Company's Board of Directors as is equal to the
product of the total number of directors on such Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the number of Shares that the Purchaser or any affiliate of the
Purchaser owns beneficially bears to the total number of shares of Common Stock
then issued and outstanding. In furtherance thereof, the Company shall, within
twenty-four (24) hours of written request of Parent, either increase the size of
its Board of Directors or use its best efforts to secure the resignations of
such number of its incumbent directors, or both as is directed by Parent to
enable Parent's designees to be elected to the Company's Board of Directors and
shall take all actions available to the Company to cause Parent's designees to
be so elected. At such time, the Company shall, if requested by Parent, also
cause persons designated by Parent to constitute at least the same percentage
(rounded down to the next whole number) as is on the Company's Board of
Directors of (i) each committee of the Company's Board of Directors, (ii) each
board of directors (or similar body), of each Subsidiary (as hereinafter
defined) of the Company (to the extent such action is feasible and reasonable),
and (iii) each committee (or similar body) of each such board (to the extent
such action is feasible and reasonable).
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a) hereof, and shall include in the
Schedule 14D-9 mailed to stockholders promptly after the commencement of the
Offer (or an amendment thereof or an information statement pursuant to Rule
14f-1 if the Purchaser has not theretofore designated directors) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under Section 1.3(a) hereof. Parent or the Purchaser shall supply the Company
such information with respect to either of them and their nominees, officers,
directors and affiliates as is required by such Section 14(f) and Rule 14f-1.
The provisions of this Section 1.3 are in addition to and shall not limit any
rights which Parent, the Purchaser or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company's Board
of Directors subject to the other terms of this Agreement and until the
Effective Time (as hereinafter defined), the Company's Board of Directors shall
have at least one (1) director who is a director on the date hereof and who is
neither an officer of the Company nor a designee, stockholder, affiliate or
associate (within the meaning of the federal securities laws) of Parent (one (1)
or more of such directors, the "Independent Directors"); provided that, in such
event, if the number of Independent Directors shall be reduced below two (2) for
any reason whatsoever, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall be deemed an Independent
Director for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate one (1) person to fill one (1) of
the vacancies who shall not be a stockholder, affiliate or associate of Parent
or the Purchaser and such person shall be deemed to be an Independent Director
for purposes of this Agreement. Notwithstanding anything in this Agreement to
the contrary, in the event that Parent's designees are elected to the Company's
Board of Directors, after the acceptance for payment of Shares pursuant to the
Offer and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (a) amend or terminate this Agreement
on behalf of the Company, (b) exercise or waive any of the Company's rights,
benefits or remedies hereunder, (c) extend the time for performance of the
Purchaser's obligations hereunder, (d) amend the Company's Articles of
Incorporation (as hereinafter defined) or By-Laws, or
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(e) take any other action by the Company's Board of Directors under or in
connection with this Agreement.
SECTION 1.4 The Merger. Upon the terms and subject to the conditions of
this Agreement at the Effective Time, the Company and the Purchaser shall
consummate a merger (the "Merger") pursuant to which (a) the Purchaser shall be
merged with and into the Company and the separate corporate existence of the
Purchaser shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Kansas, and (c) the separate corporate existence of the Company with
all of its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Section 1.4. Pursuant to
the Merger, (x) Article III of the Articles of Incorporation of the Company (the
"Articles of Incorporation"), shall be amended in its entirety to read as
follows:
ARTICLE III
CAPITAL STOCK
The aggregate number of shares which the corporation shall have
authority to issue is twenty-five thousand (25,000), no par value per
share, to be designated "Common Stock"."
As so amended, the Articles of Incorporation shall be the articles of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation and (y) the By-Laws, as in effect
immediately prior to the Effective Time (as hereinafter defined), shall be the
By-Laws of the Surviving Corporation until thereafter amended as provided by
law, by such Articles of Incorporation or by such By-Laws.
SECTION 1.5 Effective Time. Parent, the Purchaser and the Company shall
cause (i) a Certificate of Merger the content of which shall comply with the
KGCC and (ii) Articles of Merger or Exchange, the content of which shall comply
with the NGCL, each to be executed and filed on the Closing Date (as hereinafter
defined) (or on such other date as Parent and the Company may agree) with each
of the Secretary of State of Kansas and the Secretary of State of Nevada (the
"Secretaries of State"), as the case may be, in such form as required by, and
executed in accordance with, the relevant provisions of the KGCC and the NGCL.
The Merger shall become effective on the date on which the Certificate of Merger
and the Articles of Merger or Exchange are duly filed with the Secretaries of
State or such time as is agreed upon by the parties and specified in the
Certificate of Merger and the Articles of Merger or Exchange, and such time is
hereinafter referred to as the "Effective Time."
SECTION 1.6 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second (2nd) business day after satisfaction or waiver of all of
the conditions set forth in Article VII hereof (the "Closing Date"), at the
offices of Thompson & Knight, P.C., 1700 Pacific Avenue, Suite 3300, Dallas,
Texas 75201, unless another date or place is agreed to in writing by the parties
hereto.
SECTION 1.7 Directors and Officers of the Surviving Corporation. The
directors and officers of the Purchaser at the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and the By-Laws. If, at the Effective Time, a
vacancy shall exist on the Company's Board of Directors or in any office of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
SECTION 1.8 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the KGCC and the
NGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and the Purchaser shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and the Purchaser shall become
the debts, liabilities and duties of
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the Surviving Corporation including, without limitation, the Debt Financing (as
hereinafter defined) referred to in Annex I and Section 4.26.
SECTION 1.9 Subsequent Actions. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
rights, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.10 Stockholders' Meeting.
(a) In order to consummate the Merger, the Company, acting through its
Board of Directors, shall, in accordance with applicable law duly call, give
notice of, convene and hold a special meeting of its stockholders (the "Special
Meeting") as promptly as practicable following the acceptance for payment and
purchase of the Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the adoption
of this Agreement. Subject to its fiduciary obligations, the Company's Board of
Directors shall recommend such approval, and the Company shall take all lawful
action to solicit such approval. Parent shall vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the approval and adoption
of this Agreement.
SECTION 1.11 Proxy Statement/Registration Statement.
(a) As promptly as practicable after the date hereof, the Company and
Parent shall prepare and file with the SEC under the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, a proxy
statement/prospectus (the "Proxy Statement") with respect to the Special
Meeting, including a registration statement, together with all amendments and
supplements thereto, if any (the "Registration Statement"), on an appropriate
form for the purpose of registering under the Securities Act the offering, sale,
and delivery of Parent Common Stock (as hereinafter defined), together with
preferred share purchase rights issuable pursuant to Parent's Amended and
Restated Rights Agreement dated as of December 12, 1994 (the "Rights"), to be
issued to the stockholders of the Company pursuant to the Merger. Parent and the
Company shall use all reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after the
filing thereof. Parent or the Company, as the case may be, shall notify the
other promptly of the receipt of any comments on, or any requests for amendments
or supplements to, the Proxy Statement or the Registration Statement by the SEC,
and each shall supply the other with copies of all correspondence between it and
its representatives, on the one hand, and the SEC or members of its staff, on
the other, with respect to the Proxy Statement or the Registration Statement.
Parent or the Company, as the case may be, after consultation with and the
consent of the other, shall use its reasonable best efforts to respond promptly
to any comments made by the SEC with respect to the Proxy Statement or the
Registration Statement. The Company shall obtain the approval of Parent, and
Parent shall obtain the approval of the Company, before making any filings with
the SEC pertaining to the Proxy Statement or the Registration Statement or any
matter pertaining to this Agreement.
(b) Parent, the Purchaser and the Company each agrees promptly to correct
any information provided by it for use in the Proxy Statement or the
Registration Statement if and to the extent that such information shall have
become false or misleading in any material respect, and Parent and the Company
further agree to take all steps necessary to cause the Proxy Statement or the
Registration Statement as so corrected to be filed with the SEC and to be
disseminated promptly to holders of shares of Company Stock, in each case as and
to the extent required by applicable law. Parent shall also take any action
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reasonably required to be taken under any applicable state securities laws in
connection with the issuance of the Parent Common Stock pursuant to the Merger,
and the Company shall furnish all information concerning the Company and its
stockholders as may be reasonably requested in connection with any such action.
(c) As promptly as practicable after the Registration Statement has been
declared effective by the SEC, the Company shall mail the Proxy Statement to its
stockholders as of the record date for the Special Meeting.
SECTION 1.12 Directors of InterVoice. Promptly following the Effective
Time, Parent will cause its Board of Directors to fill one (1) vacant position
on its Board of Directors with Stanley G. Brannan.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, no par value per share, of the Purchaser
("Purchaser Common Stock"):
(a) Each share of Purchaser Common Stock issued and outstanding immediately
before the Effective Time shall be converted into, and shall thereafter
represent, one validly issued, fully paid and nonassessable share of common
stock, no par value per share, of the Surviving Corporation.
(b) Each share of Common Stock issued and outstanding immediately prior to
the Effective Time (other than (i) Shares purchased in the Offer or otherwise
owned by Parent, the Purchaser or any other direct or indirect Subsidiary (as
hereinafter defined) of Parent, (ii) Shares that are owned by the Company or any
direct or indirect Subsidiary of the Company and in each case not held on behalf
of third parties, or (iii) Shares ("Dissenting Shares") that are owned by
stockholders ("Dissenting Stockholders") that have properly exercised appraisal
rights pursuant to Section 17-6712 of the KGCC (collectively, the "Excluded
Shares")) shall be converted into the right to receive the merger consideration
(the "Merger Consideration") calculated under either method (1) or method (2),
as applicable:
(1) If the Purchaser purchases 9,158,155 shares in the Offer (the "Cash
Share Number") or, in the sole discretion of Purchaser, more than the Cash
Share Number, each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than Excluded Shares) will be converted
into the right to receive that number of fully paid and nonassessable
shares of common stock, no par value per share, of Parent (the "Parent
Common Stock") equal to the quotient of (x) the Offer Price divided by (y)
the average of the per share closing price of the Parent Common Stock on
the Nasdaq National Market for the twenty-five (25) trading days
immediately preceding the Effective Time (the "Average Trading Price"),
provided that, for purposes of this Agreement, the Average Trading Price
shall be at least equal to the Lower Collar (as hereinafter defined) and
shall not exceed $14.00 per share; or
(2) If the Purchaser lowers the Minimum Condition as provided in Section
1.1(a) and the number of Shares purchased in the Offer is less than the
Cash Share Number, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than Excluded Shares) will
be converted into the right to receive (a) an amount in cash equal to the
quotient of (w) the difference between (i) the product of the Offer Price
multiplied by the Cash Share Number and (ii) the aggregate purchase price
payable pursuant to this Agreement for the number of Shares actually
purchased in the Offer, divided by (x) a number of shares equal to (A) the
total number of shares of Common Stock issued and outstanding immediately
prior to the Effective Time (B) less the Excluded Shares (C) plus the
Dissenting Shares (such quotient referred to as the "Cash Amount"), plus
(b) that number of shares of Parent Common Stock equal to the quotient of
(y) the difference between the Offer Price and the Cash Amount, divided by
(z) the Average Trading Price.
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For purposes of this Section 2.1(b), the "Lower Collar" is $8.00, provided,
however, if a Lower Collar of $8.00 would result in the issuance of more than
5,719,877 shares of Parent Common Stock in the Merger (assuming for purposes of
this calculation that all outstanding stock options under the Company Stock
Plans (as hereinafter defined) that shall not have been cancelled or repurchased
by the Company pursuant to Section 2.4 hereof at or prior to the completion of
the Offer are exercised in full immediately prior to the Effective Time and that
there are no Dissenting Shares (the "Exercise/No Dissenters Presumption")), the
Lower Collar shall be an amount per share equal to the product of (i) $8.00
multiplied by (ii) a fraction of which (A) the numerator is the total number of
shares of Parent Common Stock that would be issued in the Merger if the Lower
Collar were $8.00, assuming the Exercise/No Dissenters Presumption, and (B) the
denominator is 5,719,877.
All calculations under this Section 2.1 shall be made to the nearest cent
or to the nearest one ten-thousandth of a share of Parent Common Stock.
(c) All shares of Common Stock issued and outstanding immediately prior to
the Effective Time shall no longer be outstanding and shall be canceled and
retired and shall cease to exist (in the case of Excluded Shares other than
Dissenting Shares, without the payment of any consideration therefor), and each
certificate formerly representing any of such Shares, other than Excluded
Shares, shall thereafter represent only the right to receive the Merger
Consideration and the right, if any, to receive cash in lieu of fractional
shares pursuant to Section 2.3(e) hereof, without interest, upon the surrender
of such certificate in accordance with Section 2.3(b) hereof.
(d) The number of shares of Parent Common Stock to be delivered in the
Merger, as determined pursuant to Section 2.1(b) hereof, shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into shares of
Parent Common Stock), reorganization, recapitalization or other like change with
respect to Parent Common Stock the record date for which shall occur after the
date hereof and prior to the Effective Time.
SECTION 2.2 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder who has demanded and perfected his demand for appraisal
of his Shares in accordance with Section 17-6712 of the KGCC, and as of the
Effective Time has neither effectively withdrawn nor lost his right to such
appraisal, shall not be converted into or represent a right to receive the
Merger Consideration pursuant to Section 2.1 hereof, but the holder thereof
shall be entitled to only such rights as are granted by the KGCC.
(b) Notwithstanding the provisions of Section 2.2(a) above, if any holder
of Shares who demands appraisal of such holder's Shares under the KGCC
effectively withdraws or loses (through failure to perfect or otherwise) such
holder's right to appraisal, then as of the Effective Time or the occurrence of
such event, whichever later occurs, such holder's Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration
and the right, if any, to receive cash in lieu of fractional shares pursuant to
Section 2.3(e) hereof, without interest, upon surrender of the certificate or
certificates representing such Shares pursuant to Section 2.3 hereof and such
Shares shall not constitute Excluded Shares.
(c) The Company shall give Parent (i) prompt notice of any written demands
for appraisal or payment of the fair value of any Shares, withdrawals of such
demands, and any other instruments served pursuant to the KGCC and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the KGCC. The Company shall not voluntarily make any payment
with respect to any demands for appraisal and shall not, except with the prior
written consent of Parent, settle or offer to settle any such demands.
SECTION 2.3 Surrender of All Shares of Common Stock; Stock Transfer Books.
(a) Before the Effective Time, the Purchaser shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
holders of Shares in connection with the Merger (the
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"Exchange Agent"). Parent shall deposit, or cause to be deposited, in trust with
the Exchange Agent for the benefit of holders of Shares (other than the Excluded
Shares), certificates representing Parent Common Stock and (if applicable) cash
comprising the aggregate Merger Consideration pursuant to Section 2.1(b) hereof
(the "Payment Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, make the payments or deliveries referred to in this Section 2.3(a)
out of the Payment Fund. The Payment Fund shall not be used for any other
purpose except as expressly provided in this Agreement.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted pursuant to
Section 2.1(b) hereof into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected and
that the risk of loss of and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions not inconsistent with this Agreement as Parent may
specify) and (ii) instructions for use in effecting the surrender of
Certificates in exchange for (A) certificates representing shares of Parent
Common Stock comprising the Merger Consideration, (B) if applicable, cash
comprising the Merger Consideration and (C) cash in lieu of fractional shares.
Upon surrender of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing that
number of whole shares of Parent Common Stock that such holder is entitled to
receive pursuant to Section 2.1(b) hereof, and (y) a check in the amount (after
giving effect to any required tax withholdings) of (A) any cash comprising the
Merger Consideration, plus (B) any cash in lieu of fractional shares, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock, together with a check for any cash to be paid upon due surrender
of the Certificate, may be issued and/or paid to such a transferee if the
Certificate formerly representing such Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid, in form and substance reasonably satisfactory to Parent and the Exchange
Agent. If any check or any certificate for shares of Parent Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the person requesting such exchange shall have paid any transfer and other taxes
required by reason of the issuance of certificates for shares of Parent Common
Stock in a name other than that of the registered holder of the Certificate
surrendered, or shall have established to the satisfaction of Parent and the
Exchange Agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.3, each Certificate (other than
certificates for Excluded Shares) shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration.
(c) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall not be any further registration of transfers of shares of
any class of capital stock thereafter on the records of the Company. From and
after the Effective Time, the holders of certificates evidencing ownership of
the Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided for
herein or by applicable law.
(d) Promptly following the date that is one (1) year after the Effective
Time, Parent shall be entitled to require the Exchange Agent to deliver to it
any portion of the Payment Fund (including the proceeds of any investments
thereof and any Parent Common Stock) that remains unclaimed by the stockholders
of the Company, Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to Parent and the Surviving
Corporation (subject to abandoned property, escheat or similar laws) only as
general creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest
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thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation nor the Exchange Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(e) Notwithstanding any other provision of this Agreement, no fractional
shares of Parent Common Stock will be issued and any holder of Shares entitled
to receive a fractional share of Parent Common Stock but for this Section 2.3(e)
shall be entitled to receive a cash payment in lieu thereof, which payment shall
represent such holder's proportionate interest in a share of Parent Common Stock
based on the Average Trading Price.
SECTION 2.4 The Company Stock Plans.
Schedule 2.4 of the Company Disclosure Schedules (as hereinafter defined)
sets forth the number of optionees and the number of shares of Common Stock
covered by outstanding options for each of the 1984 Incentive Stock Option Plan
(the "1984 Plan"), the 1990 Non-Employee Director Stock Option Plan (the
"Director Plan"), the 1994 Stock Option Plan (the "1994 Plan"), and the
Perception Technology Corporation Stock Option Plan (the "PTSOP"), which
collectively constitute all of the plans of the Company under which any stock
options are outstanding (collectively, the "Company Stock Plans"). The Company
will take, or cause to be taken, the following actions with respect to the
Company Stock Plans and the Employee Stock Purchase Plan (the "ESPP"):
(i) Promptly upon commencement of the Offer, the Company will use its
best efforts to enter into agreements with optionees to cancel, prior to
the completion of the Offer, all outstanding stock options under the
Company Stock Plans, whether or not then exercisable and whether or not "in
the money" or "underwater." Except as otherwise provided in the
Stockholders' Agreement, in consideration for the cancellation of the
outstanding "in the money" stock options pursuant to this Section 2.4, the
Company shall pay to the holders of such stock options an amount, in cash,
equal to the product of (A) the difference between the Offer Price and the
per share exercise price of such stock options multiplied by (B) the number
of shares of Common Stock covered by such stock options (the "Spread"), and
with respect to all outstanding "underwater" options, if any, to be
canceled pursuant to this Section 2.4, the Company shall pay, in cash, such
amounts as the Parent and the Company mutually agree to be appropriate.
(ii) The payments for outstanding stock options under the 1984 Plan,
the Director Plan, the 1994 Plan and the PTSOP will be (i) made by the
Company subject to the Purchaser having completed the Offer and (ii) paid
at or prior to the completion of the Offer.
(iii) Effective upon completion of the Offer (but in any event prior
to June 30, 1999 unless the Offer is extended past such date), the Company
will terminate the ESPP and refund in cash to participants their respective
account balances.
SECTION 2.5 Repurchase of Warrant. The Company has entered into a binding
agreement with AT&T Corp. pursuant to which the Company will repurchase and
cancel for $7,500,000 in cash, subject to and promptly after consummation of the
Offer, the Common Stock Purchase Warrant dated December 12, 1997 and related
Warrant Purchase Agreement of even date therewith (collectively, the "Warrant")
issued by the Company to AT&T Corp.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedules delivered to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedules") setting forth,
among other things, specific exceptions to the Company's representations and
warranties set forth herein, the Company represents and warrants to Parent and
the Purchaser as set forth below. Each exception set forth in the Company
Disclosure Schedules is identified by reference to, or has been grouped under a
heading referring to, a specific individual section of this
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Agreement and, except as otherwise specifically stated with respect to such
exception, relates only to such section.
SECTION 3.1 Organization; Qualification; Charter and Bylaws.
(a) The Company and each of its Subsidiaries is a corporation, partnership
or other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such governmental
approvals would not, individually or in the aggregate, have a Company Material
Adverse Effect (as hereinafter defined). As used in this Agreement, the term
"Subsidiary" shall mean, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated or domestic or foreign to
the United States of which (i) such party or any other Subsidiary of such party
is a general partner (excluding such partnerships where such party or any
Subsidiary of such party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. As used in this Agreement, a "Company Material
Adverse Effect" means any event, change in or effect on the business of the
Company or its Subsidiaries, taken as a whole, that is or would be expected to
be materially adverse to (i) the business, operations, properties (including
intangible properties), financial condition or results of operations or
prospects of the Company or its Subsidiaries, taken as a whole, or (ii) the
ability of the Company to consummate any of the Transactions or to perform its
obligations under this Agreement, but such definition shall not include (A) any
material adverse change due to the transactions contemplated by this Agreement,
(B) any material adverse change in the Company's established industry as a
whole, or (C) a material adverse change in the general economic conditions of
the United States of America. The exception of clause (A), (B) and (C) from the
definition of Company Material Adverse Effect shall not otherwise affect the
conditions set forth in Annex I or Article VII hereof. Set forth in Schedule
3.1(a) of the Company Disclosure Schedules is a complete list of the Company's
Subsidiaries, including the respective jurisdictions in which such Subsidiaries
are organized and the Company's ownership of each.
(b) The Company and each of its Subsidiaries is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not individually or in
the aggregate have a Company Material Adverse Effect. Except as set forth in
Schedule 3.1(b) of the Company Disclosure Schedules, the Company does not own
(i) any equity interest in any corporation or other entity or (ii) marketable
securities where the Company's equity interest in any entity exceeds five
percent (5%) of the outstanding equity of such entity on the date hereof.
(c) The Company has made available to Parent accurate and complete copies
of (i) the Articles and/or Certificates of Incorporation and By-Laws of the
Company and each of its Subsidiaries (certified by the respective Secretaries of
State of the Company's, and each of its Subsidiaries' jurisdiction of
incorporation and the secretary or an assistant secretary of the Company, and
each of its Subsidiaries, respectively) as currently in effect, (ii) the stock
records of the Company, and each of its Subsidiaries and (iii) (A) the minutes
of all meetings of the Company's, and its United Kingdom Subsidiary's, Boards of
Directors, any committees of such Boards, and the Company's, and its United
Kingdom Subsidiary's, shareholders (and all consents in lieu of such meetings,
each for the past five (5) years and (B) the minutes of all meetings of the
remaining Subsidiaries' Boards of Directors, and committees of such Boards, and
each of such Subsidiaries' shareholders (and all consents in lieu of such
meetings) each for the past two (2) years. Such records, minutes, and consents
accurately reflect the stock ownership of the Company, and each of its
Subsidiaries and all actions taken by the Company at such meetings, and each of
its Subsidiaries' Boards, any committees of such Boards, and the Company's, and
each of its Subsidiaries', shareholders. Neither the Company nor any of its
Subsidiaries is in violation of any provision
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of its respective Articles of Incorporation or By-Laws, except where such
violation would not result in a Company Material Adverse Effect.
SECTION 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 30,000,000
shares, and 10,000,000 of preferred stock, no par value per share (the
"Preferred Stock"). As of the date hereof, (i) 12,271,928 shares are issued and
outstanding, (ii) no shares of Preferred Stock are issued and outstanding),
(iii) no Shares are issued and held in the treasury of the Company, and (iv) a
total of 3,783,451 shares are reserved for issuance pursuant to the 1984 Plan,
the Directors Plan, the 1994 Plan, the PTSOP, the ESPP and the Warrant. Schedule
3.2(a)(i) of the Company Disclosure Schedules sets forth the number of shares of
Common Stock reserved for future issuance or purchase pursuant to each of the
1984 Plan, the Directors Plan, the 1994 Plan, the PTSOP, the ESPP and the
Warrant. Schedule 3.2(a)(ii) of the Company Disclosure Schedules sets forth the
number of shares subject to each outstanding option, and the exercise price
thereof. All the outstanding shares of the Company's capital stock are, and all
shares of Common Stock which may be issued pursuant to the exercise of
outstanding options will be, when issued in accordance with the terms thereof,
duly authorized, validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except as disclosed in this
Section 3.2 or as set forth in Schedule 3.2(a)(ii) of the Company Disclosure
Schedules, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, and
(iii) there are no outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company or any Subsidiary or affiliate of the Company or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity. The Company
has no obligation to grant any options in the future other than pursuant to the
Company Stock Plans.
(b) Except as set forth in Schedule 3.2(b) of the Company Disclosure
Schedules, all of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by Company, directly or indirectly, and all
such shares have been validly issued and are fully paid and nonassessable and
are owned by either the Company or one of its Subsidiaries free and clear of all
liens, charges, security interests, options, claims, mortgages, pledges,
transfer restrictions or other encumbrances and restrictions of any nature
whatsoever ("Encumbrances"), except for those directors' qualifying shares of
capital stock of such Subsidiaries not material in amount and subject to
repurchase or cancellation arrangements.
(c) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
(d) Other than as set forth on Schedule 3.2(d) of the Company Disclosure
Schedules or the Company's Financial Statements (as hereinafter defined), there
is no outstanding Indebtedness (as hereinafter defined) of the Company or any of
its Subsidiaries. Except as identified in Schedule 3.2(d) of the Company
Disclosure Schedules, no Indebtedness of the Company or its Subsidiaries
contains any restriction upon (i) the prepayment of such Indebtedness, (ii) the
incurrence of Indebtedness (including the Debt Financing) by the Company or its
Subsidiaries, respectively, (iii) the ability of the Company or its Subsidiaries
to grant any liens on their properties or assets, or (iv) the ability of the
Company to enter into this Agreement or to consummate the Merger. For purposes
of this Agreement, "Indebtedness" shall
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include (v) all indebtedness for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (w) any other indebtedness which is evidenced by a note, bond,
debenture or similar instrument, (x) all obligations under financing leases, (y)
all liabilities secured by any lien on any property and (z) all guarantee
obligations.
(e) Except as set forth in Schedule 3.2(e) of the Company Disclosure
Schedules, since January 1, 1995, the Company has not entered into any material
agreement involving the acquisition, sale or disposition of any class of capital
stock or assets of the Company or any of its Subsidiaries, by merger or
otherwise; and except as disclosed on Schedule 3.2(e) of the Company Disclosure
Schedules, to the best of knowledge of the Company, none of the Company or any
of its Subsidiaries is in breach of, or subject to a claim of default under, any
such agreements listed on such Schedule.
SECTION 3.3 Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and corporate authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by the Company of this Agreement, and the consummation
by it of the Transactions, have been duly and validly authorized by its Board of
Directors and, except for obtaining the approval of its stockholders as
contemplated by Section 1.10 hereof, no other corporate action on the part of
the Company is necessary to authorize the execution and delivery by the Company
of this Agreement, and the consummation by it of the Transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company and,
assuming due and valid authorization, execution and delivery hereof by Parent
and the Purchaser, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
SECTION 3.4 Consents and Approvals; No Violations. Except as set forth in
Schedule 3.4 of the Company Disclosure Schedules and for such filings, permits,
authorizations, consents and approvals as are contemplated by this Agreement or
may be required under, and other applicable requirements of, the Exchange Act
and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), none of the execution, delivery or performance of this Agreement by
the Company, the consummation by the Company of the Transactions or compliance
by the Company with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the Articles of Incorporation, the
By-Laws or similar organizational documents of the Company or any of its
Subsidiaries, state securities laws or blue sky laws and the KGCC, (ii) require
any filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
other regulatory authority or agency (a "Governmental Entity"), (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound (collectively, the "Company Agreements") or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of its Subsidiaries or any of their properties or assets, except in the case of
clause (ii), (iii) or (iv) where failure to obtain such permits, authorizations,
consents or approvals or to make such filings, or where such violations,
breaches or defaults which would not, individually or in the aggregate, have a
Company Material Adverse Effect. Schedule 3.4 of the Company Disclosure
Schedules sets forth a list of all third party consents and approvals required
to be obtained in connection with this Agreement under the Company Agreements
prior to the consummation of the transactions contemplated by this Agreement.
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SECTION 3.5 SEC Reports and Financial Statements. The Company has filed
with the SEC, and has heretofore made available to Parent, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1996 under the Exchange Act or the Securities
Act (as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"). As of their respective dates, or if
amended, as of the date of the last such amendment, the Company SEC Documents,
including, without limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements included in the Company SEC
Documents (the "Financial Statements") (i) have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, (ii) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (iii) have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and (iv) fairly present in all material respects the consolidated financial
position and the consolidated results of operations and cash flows (and changes
in financial position, if any) of the Company and its consolidated Subsidiaries
as of the times and for the periods referred to therein.
SECTION 3.6 Absence of Certain Changes. Except as set forth in Schedule
3.6 of the Company Disclosure Schedules or in the Company SEC Documents filed
prior to the date hereof, since December 31, 1998, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course. From December 31, 1998 through the date of this Agreement, there
has not occurred (i) any event, change or effect (including the incurrence of
any liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Company Material Adverse Effect,
(ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the equity
interests of the Company or any of its Subsidiaries or (iii) any change in
accounting principles or methods, except insofar as may be required by a change
in GAAP. Since December 31, 1998 neither the Company nor any of its Subsidiaries
has taken any of the actions prohibited by Section 5.2 hereof that would have a
Company Material Adverse Effect.
SECTION 3.7 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice since December 31,
1998, (ii) created pursuant to the terms of this Agreement or (iii) as disclosed
in Schedule 3.7 of the Company Disclosure Schedules or (iv) as disclosed in
Schedule 3.8(a) of the Company Disclosure Schedules, neither the Company nor any
of its Subsidiaries, to the best of its knowledge, has incurred any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
that have, or would be reasonably likely to have, a Company Material Adverse
Effect and would be required to be reflected or reserved against on a
consolidated balance sheet of the Company and its Subsidiaries (including the
notes thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1998. Schedule 3.7 of the Company Disclosure Schedules sets forth the amount
of principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of the Company and its Subsidiaries which will accelerate or become
due or result in a right of redemption or repurchase on the part of the holder
of such Indebtedness (with or without due notice or lapse of time) as a result
of this Agreement, the Merger or the other Transactions contemplated hereby or
thereby. For purposes of this Agreement, "to the best of its knowledge" (or
similar reference to the subject entity's knowledge) means the knowledge of or
receipt of notice (oral or written) by any of the executive officers (who have
worked on the Transactions) or directors of the entity in question, as such
knowledge has been obtained in the normal conduct of the business of the entity
in question or in connection with the schedules to this Agreement and the
furnishing of information to the other party or parties, as applicable, to the
Transactions as contemplated by this
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Agreement after having made a reasonable investigation and due inquiry of the
accuracy of the representations and warranties made by such entity in question,
to the extent feasible given confidentiality considerations, in this Agreement
or in any document, certificate or other writing furnished by such entity
pursuant hereto or in connection herewith.
SECTION 3.8 Claims. Except as set forth on Schedule 3.8(a) of the Company
Disclosure Schedules or in the Company SEC Documents, as of the date hereof,
there is no suit, written claim, written demand, action, proceeding, including,
without limitation, any arbitration proceeding or alternative dispute resolution
proceeding, or to the best knowledge of the Company, investigation pending or,
to the best knowledge of the Company, threatened against or affecting, the
Company or any of its Subsidiaries (collectively, "Claims"), that would
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth on Schedule 3.8(b) of the Company Disclosure Schedules or in the Company
SEC Documents, there is no Claim or Claims that, either individually or in the
aggregate, if adversely determined, would have a Company Material Adverse
Effect.
SECTION 3.9 Employee Benefit Plans; ERISA.
(a) Schedule 3.9(a) of the Company Disclosure Schedules contains a true and
complete list of each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or any of its Subsidiaries, or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), that together with
the Company or any of its Subsidiaries would be deemed a "single employer"
within the meaning of Section 4001(b)(1) of ERISA, for the benefit of any
current or former employee or director of the Company, or any of its
Subsidiaries or any ERISA Affiliate (the "Plans"). Schedule 3.9(a) of the
Company Disclosure Schedules identifies each of the Plans that is an "employee
welfare benefit plan," or "employee pension benefit plan" as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). Except as required by applicable
law, none of the Company, any of its Subsidiaries nor any ERISA Affiliate has
any formal plan or commitment, whether legally binding or not, to create any
additional Plan or modify or change any existing Plan that would affect any
current or former employee or director of the Company, any of its Subsidiaries
or any ERISA Affiliate.
(b) With respect to each of the Plans, the Company has heretofore delivered
to the Purchaser true and complete copies of each of the following documents, as
applicable:
(i) a copy of the Plan documents (including all amendments thereto)
for each written Plan or a written description of any Plan that is not
otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service Form 5500
Series, if required under ERISA, with respect to each ERISA Plan for the
last three (3) Plan years ending prior to the date of this Agreement for
which such a report was required to be filed;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three (3) Plan years ending prior
to the date of this Agreement;
(iv) a copy of the most recent Summary Plan Description ("SPD"),
together with all Summaries of Material Modification issued with respect to
such SPD, if required under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
(v) if the Plan is funded through a trust or any other funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any;
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(vi) all contracts relating to the Plans with respect to which the
Company, any of its Subsidiaries or any ERISA Affiliate may have any
liability, including insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements;
and
(vii) the most recent determination letter received from the IRS with
respect to each Plan that is intended to be qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
(c) No liability under Title IV of ERISA has been incurred by the Company,
any of its Subsidiaries or any ERISA Affiliate since the effective date of ERISA
that has not been satisfied in full, and no condition exists that presents a
material risk to the Company, or any of its Subsidiaries or any ERISA Affiliate
of incurring any liability under such Title, other than liability for premiums
due the Pension Benefit Guaranty Corporation ("PBGC"), which payments have been
or will be made when due. To the extent this representation applies to Sections
4064, 4069 or 4204 of Title IV of ERISA, it is made not only with respect to the
ERISA Plans but also with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which the Company, any
of its Subsidiaries or any ERISA Affiliate made, or was required to make,
contributions during the past six (6) years.
(d) The PBGC has not instituted proceedings pursuant to Section 4042 of
ERISA to terminate any of the ERISA Plans subject to Title IV of ERISA, and no
condition exists that presents a material risk that such proceedings will be
instituted by the PBGC.
(e) With respect to each of the ERISA Plans that is subject to Title IV of
ERISA, the present value of accumulated benefit obligations under such ERISA
Plan, as determined by the ERISA Plan's actuary based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Plan's actuary with respect to such ERISA Plan, did not, as of
its latest valuation date, exceed then current value of the assets of such Plan
allocable to such accumulated benefit obligations.
(f) None of the Company, any of its Subsidiaries, any ERISA Affiliate, any
of the ERISA Plans, any trust created thereunder, nor to best knowledge of the
Company, any trustee or administrator thereof has engaged in a transaction or
has taken or failed to take any action in connection with which the Company, any
of its Subsidiaries or any ERISA Affiliate could be subject to any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Sections 4975(a) or (b), 4976 or 4980B of
the Code.
(g) All contributions and premiums that the Company, any of its
Subsidiaries or any ERISA Affiliate is required to pay under the terms of each
of the ERISA Plans and Section 412 of the Code, have, to the extent due, been
paid in full or properly recorded on the financial statements or records of the
Company or its Subsidiaries, and none of the ERISA Plans or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the ERISA
Plans ended prior to the date of this Agreement. No lien has been imposed under
Section 412(n) of the Code or Section 302(f) of ERISA on the assets of the
Company, any of its Subsidiaries or any ERISA Affiliate, and no event or
circumstance has occurred that is reasonably likely to result in the imposition
of any such lien on any such assets on account of any ERISA Plan.
(h) With respect to any ERISA Plan that is a "multi-employer plan," as such
term is defined in Section 3(37) of ERISA, (i) neither the Company, any of its
Subsidiaries nor any ERISA Affiliate has, since September 26, 1980, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, (ii) no event has
occurred that presents a material risk of a complete or partial withdrawal,
(iii) none of the Company, any of its Subsidiaries or any ERISA Affiliate has
any contingent liability under Section 4204 of ERISA, (iv) no circumstances
exist that present a material risk that any such multi-employer plan will go
into reorganization, and (v) the aggregate withdrawal liability of the Company,
each of its Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by the Company, each of its Subsidiaries and all
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of its ERISA Affiliates had occurred under each such multi-employer plan on the
date hereof, would be zero.
(i) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code.
(j) Each of the ERISA Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified. The Company has applied
for and received a currently effective determination letter from the IRS stating
that it is so qualified, and no event has occurred which would affect such
qualified status.
(k) Each of the ERISA Plans that is intended to qualify under Section
501(c)(9) of the Code is so qualified and meets the requirements of Section
505(c) of the Code and the regulations thereunder.
(l) Except as set forth in Schedule 3.9(l) of the Company Disclosure
Schedules, no amounts payable under any of the Plans or any other contract,
agreement or arrangement with respect to which the Company or any of its
Subsidiaries may have any liability could fail to be deductible for federal
income tax purposes by virtue of Section 162(m) or Section 280G of the Code.
(m) Except as set forth in Schedule 3.9(m) of the Company Disclosure
Schedules, no Plan provides death or medical benefits (whether or not insured),
with respect to current or former employees of the Company, its Subsidiaries or
any ERISA Affiliate after retirement or other termination of service (other than
(i) coverage mandated by applicable laws, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of the Company, any of its Subsidiaries or an ERISA Affiliate, or (iv)
benefits, the full direct cost of which is borne by the current or former
employee (or beneficiary thereof)).
(n) Except as set forth in Schedule 3.9(n) of the Company Disclosure
Schedules and as provided in Section 2.4 hereof, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee, officer or director of the Company, any of its Subsidiaries or
any ERISA Affiliate to severance pay, unemployment compensation or any other
similar termination payment, or (ii) accelerate the time of payment or vesting,
or increase the amount of or otherwise enhance any benefit due any such
employee, officer or director.
(o) There are no pending or, to the best knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan by any employee or
beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefits).
(p) Except as set forth in Schedule 3.9(p) of the Company Disclosure
Schedules, no Plan is currently under examination by, and there are no issues
related to the Plans currently pending before, the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or any court.
(q) There are no material liabilities under any foreign laws with respect
to the Plans.
SECTION 3.10 Taxes.
(a) Except as set forth in Schedule 3.10 of the Company Disclosure
Schedules:
(i) the Company and its Subsidiaries have (A) duly filed (or there
have been filed on their behalf) with the appropriate Tax Authorities (as
hereinafter defined) all Tax Returns (as hereinafter defined) required to
be filed by them on or prior to the date hereof (except where the failure
to file a Tax Return would not have a material adverse effect on the entity
failing to file such Tax Return), and such Tax Returns are true, correct
and complete in all material respects, and (B) duly paid in full or made
provision in accordance with GAAP (or there has been paid or provision has
been made on their behalf) for the payment of all Taxes (as hereinafter
defined) for all periods (or portions thereof) ending on or prior to the
date hereof;
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(ii) there are no liens for Taxes upon any property or assets of the
Company or any Subsidiary thereof, except for liens for Taxes not yet due
and for which adequate reserves have been established in accordance with
GAAP;
(iii) within the past three (3) years, neither the Company nor any of
its Subsidiaries has made any change in tax reporting method, received a
ruling from any Tax Authority or signed an agreement with regard to Taxes;
(iv) no federal, state, local or foreign Audits (as hereinafter
defined) are pending with regard to any Taxes or Tax Returns of the Company
or its Subsidiaries and, to the best knowledge of the Company and its
Subsidiaries, no Audit is threatened;
(v) the Tax Returns of the Company and its Subsidiaries have been
examined by the applicable Taxing Authorities (or the applicable statutes
of limitation for the assessment of Taxes for such periods have expired)
for all periods through and including December 31, 1994, and no material
adjustments were asserted as a result of such examinations which have not
been resolved and fully paid, and no issue has been raised by any Tax
Authority in any Audit of the Company or its Subsidiaries that, if raised
with respect to any other period not so audited, could be expected to
result in a proposed material deficiency for any period not so audited;
(vi) there are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any of its
Subsidiaries, and no power of attorney granted by either the Company or any
of its Subsidiaries with respect to any Taxes is currently in force;
(vii) neither the Company nor any of its Subsidiaries is a party to
any agreement providing for the allocation, indemnification, or sharing of
Taxes;
(viii) neither the Company nor any of its Subsidiaries is a party to
any agreement, contract or arrangement that could result, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code or in payments that will not be
deductible under Section 162(m) of the Code;
(ix) neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or made or filed an election
under Sections 108, 441 or 1017 of the Code;
(x) neither the Company nor any of its Subsidiaries is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as
in effect prior to amendment by the Tax Equity and Fiscal Responsibility
Act of 1982;
(xi) neither the Company nor any of its Subsidiaries is liable for any
material Taxes to any foreign Tax Authority. The Company and its
Subsidiaries do not have and have not had a permanent establishment in any
foreign country, as defined in the applicable Tax treaty or convention
between the United States and such foreign country;
(xii) neither the Company nor any of its Subsidiaries is required to
include in income any adjustment under Section 481(a) of the Code by reason
of a change in accounting method initiated by the Company or any of its
Subsidiaries and the Internal Revenue Service has not proposed any such
adjustment or change in accounting method;
(xiii) neither the Company nor any of its Subsidiaries is a partner in
any joint venture, partnership or other arrangement or contract that could
be treated as a partnership for federal income tax purposes;
(xiv) other than as a result of the Transactions contemplated herein,
none of the Company's tax attributes are subject to the limitations of
Sections 382, 383 or 384 of the Code or Section 1.1502-21(c) of the
Treasury Regulations (as hereinafter defined); and
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(xv) since its formation, the Company has been a member of an
affiliated group of corporations within the meaning of Section 1504 of the
Code, with respect to which the Company is and at all times has been the
common parent, and has joined in or expects to join in the filing of a
consolidated federal income tax return for all its Tax periods ending on or
prior to the Effective Time. Neither the Company nor any of its
Subsidiaries has been a member of any other affiliated group of
corporations within the meaning of Section 1504 of the Code.
(b) "Audit" means any audit, assessment, or other examination relating to
Taxes by any Tax Authority or any judicial or administrative proceedings
relating to Taxes. "Tax" or "Taxes" means all federal, state, local, and foreign
taxes, and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or penalties
applicable thereto, imposed by any Tax Authority. "Tax Authority" means the
Internal Revenue Service and any other domestic or foreign governmental
authority responsible for the administration of any Taxes. "Tax Returns" mean
all federal, state, local and foreign tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto.
"Treasury Regulations" means one or more treasury regulations promulgated under
the Code by the Treasury Department of the United States.
SECTION 3.11 Contracts.
For purposes of this Agreement, the Company Agreements consist of the
following:
(a) all sales and distribution contracts of the Company or its
Subsidiaries with respect to which at least an aggregate of $500,000 in
revenues and/or orders were received or revenued thereunder since January
1, 1998, which sales and distribution contracts are identified (to the best
knowledge of the Company) on Schedule 3.11(a) of the Company Disclosure
Schedules;
(b) all supply agreements material to the business of the Company
under which products were bought or licensed since January 1, 1998 for
resale or relicense, which supply agreements are identified (to the best
knowledge of the Company) in Schedule 3.11(b) to the Company Disclosure
Schedules;
(c) all supply agreements for the purchase of goods, software (other
than commercially available or "shrink wrap" software) or other products
for the Company's or its Subsidiaries' internal use under which orders
aggregating at least $250,000 were placed thereunder since January 1, 1998,
which internal supply agreements are identified in Schedule 3.11(c) of the
Company Disclosure Schedules;
(d) the form of confidentiality agreement that has customarily been
used between the Company and its employees, a copy of which is included as
Schedule 3.11(d) of the Company Disclosure Schedules;
(e) the form of agreement generally used by the Company in engaging
independent contractors, a copy of which is included as Schedule 3.11(e) of
the Company Disclosure Schedules;
(f) all agreements (irrespective of date of execution) pursuant to
which the Company has escrowed source code, which agreements are identified
(to the best knowledge of the Company) in Schedule 3.11(f) of the Company
Disclosure Schedules; and
(g) all powers of attorney (irrespective of date of execution) of a
material nature (excluding usual and customary powers of attorney for
filing trademarks and patents, and usual and customary powers of attorney
for filing documents with governmental authorities and otherwise complying
with corporate formalities in foreign jurisdictions) executed by the
Company or its Subsidiaries in favor of one or more third parties, which
powers of attorney are identified (to the best knowledge of the Company) in
Schedule 3.11(g) of the Company Disclosure Schedules.
To the best knowledge of the Company, each Company Agreement is a valid and
binding agreement in full force and effect, except where the failure to be valid
and binding and in full force and effect would not have a Company Material
Adverse Effect. To the best knowledge of the Company, there are no defaults, or
events which, with notice or the lapse of time, or both, would result in a
default under any of
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the Company Agreements, except such defaults and events that would not, in the
aggregate, have a Company Material Adverse Effect.
SECTION 3.12 Real Property and Leased Property.
(a) Schedule 3.12(a) of the Company Disclosure Schedules sets forth a
complete list of all real property owned by the Company or its Subsidiaries (the
"Real Property"). Except as set forth in Schedule 3.12(a) of the Company
Disclosure Schedules, the Company or its Subsidiaries has good and marketable
title to the Real Property, free and clear of all Encumbrances. Copies of (i)
all deeds, title insurance policies and surveys of the Real Property and (ii)
all documents evidencing all Encumbrances upon the Real Property have been
furnished to Parent. There are no proceedings, claims, disputes or conditions
affecting any Real Property that might curtail or interfere with the use of such
property, nor is an action of condemnation or eminent domain pending or to the
best knowledge of the Company, threatened for all or any portion of the Real
Property. Except as disclosed in Schedule 3.12(a) of the Company Disclosure
Schedules, neither the Company nor any of its Subsidiaries is a party to any
lease, assignment or similar arrangement under which the Company or a Subsidiary
is a lessor, assignor or otherwise makes available for use by any third party
any portion of the Real Property.
(b) Within the prior twelve (12) months of the date of this Agreement,
neither the Company nor any of its Subsidiaries has received any notice of or
other writing referring to any requirements or recommendations by any insurance
company that has issued a policy covering any part of the Real Property or by
any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of the Real
Property. The plumbing, electrical, heating, air conditioning, ventilating and
all other structural or material mechanical systems in the buildings upon the
Real Property are in working order and working condition, so as to be adequate
for the operation of the business of the Company and its Subsidiaries as
heretofore conducted, and the roof, basement and foundation walls of all
buildings on the Real Property are free of leaks and other material defects,
except for any matter otherwise covered by this sentence which does not have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) The Company and its Subsidiaries have obtained all appropriate
licenses, permits, easements and rights of way, including proofs of dedication,
required to use and operate the Real Property, as well as the properties listed
on Schedule 3.12(e) of the Company Disclosure Schedules, in the manner in which
the Real Property is currently being used and operated, except for such
licenses, permits or rights of way the failure of which to have obtained does
not have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries has received
notification that the Company or a Subsidiary is in violation of any applicable
building, zoning, anti-pollution, health or other law, ordinance or regulation
in respect of the Real Property or structures or their operations thereon and,
to the best knowledge of the Company, no such violation exists.
(e) Set forth on Schedule 3.12(e) of the Company Disclosure Schedules is a
list of all real property leases to which the Company or any of its Subsidiaries
is a party and that extend for a more than one (1) year after the date of this
Agreement. The Company and each of its Subsidiaries has a good and valid
leasehold interest in all properties held by them under lease listed on Schedule
3.12(e) of the Company Disclosure Schedules. The lessee under each such lease
and its predecessor under each such lease, if any, has been in peaceable
possession (or remedied any claims relating thereto) of the property covered
thereby since the commencement of the original term of such lease. No waiver,
indulgence or postponement of the lessee's material obligations under any such
lease has been granted by the lessor, and no waiver, indulgence or postponement
of the lessor's obligations thereunder has been granted by the lessee. The
lessee under each such lease is not in breach of or in default under such lease,
nor has any event occurred which (with or without the giving of notice or the
passage of time or both) would constitute a default by the lessee under such
lease or cause a the Company Material Adverse Effect, and the lessee has not
received any notice from, or given any notice to, the lessor indicating that the
lessee or the lessor is in breach of or in default under such lease that would
cause a Company Material Adverse Effect. To the best
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knowledge of the Company and each of its Subsidiaries, none of the lessors under
such leases is in breach thereof or in default thereunder.
SECTION 3.13 Intellectual Property.
(a) Schedule 3.13(a) of the Company Disclosure Schedules is a true and
complete list of all (i) patents and patent applications, (ii) trademark
registrations and applications, (iii) service mark registrations and
applications, (iv) Product Software (as hereinafter defined), (v) copyright
registrations and applications, (vi) material unregistered trademarks and
service marks, and (vii) Internet domain names used or held for use in
connection with the business of the Company or any of its Subsidiaries, together
with all material licensing, sub-licensing, distribution, consignment and
similar agreements related to the foregoing (whether the Company or any of its
Subsidiaries is the licensee or licensor thereunder) other than distribution and
licensing agreements relating to Product Software and Computer Software (as
hereinafter defined) entered into in the ordinary course of business. Other than
as listed in Schedule 3.11(f) of the Company Disclosure Schedules, and for
contracts covered by that provision, no agreement licensing the Intellectual
Property (as hereinafter defined) of the Company to any licensee creates an
option for such licensee to purchase any of the Intellectual Property owned by
the Company, its Subsidiaries or affiliates, or would in any other way require
the transfer of the Intellectual Property owned by the Company, its Subsidiaries
or any affiliate of the Company to such licensee. The Company or one of its
Subsidiaries currently is listed in the records of the appropriate United
States, state or foreign agency as the sole owner of record for each application
and registration listed in Schedule 3.13(a) of the Company Disclosure Schedules.
(b) The term "Computer Software" shall mean, other than off-the-shelf
applications and Product Software, the following as used in the current business
of the Company or any of its Subsidiaries and which are material to the current
business of the Company: (i) any and all computer programs and applications
consisting of sets of statements and instructions to be used directly or
indirectly in computer software or firmware whether in source code or object
code form, (ii) databases and compilations, including without limitation any and
all data and collections of data, whether machine readable or otherwise, (iii)
all currently used versions of the foregoing including, without limitation, all
screen displays and designs thereof, and all component modules of source code or
object code or natural language code therefor, and whether recorded on papers,
magnetic media or other electronic or non-electronic device, (iv) all
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, (v) all documentation, including without
limitation all technical and user manuals and training materials, relating to
the foregoing, and all content contained on all World Wide Web sites of the
Company or any of its Subsidiaries.
(c) The term "Product Software" shall mean the following as currently used
in as part of the products of the Company and any of its Subsidiaries: (i) any
and all computer programs and applications consisting of sets of statements and
instructions to be used directly or indirectly in computer software or firmware
whether in source code or object code form, included in or with any products
currently or heretofore sold, licensed or leased or offered for sale, license or
lease by the Company or any of its Subsidiaries (excluding software developed
specifically and solely for a customer or distributor of the Company or any of
its Subsidiaries and which is not offered to any other customers or distributors
of the Company or any of its Subsidiaries), (ii) databases and compilations for
or of any of the foregoing, including without limitation any and all data and
collections of data, whether machine readable or otherwise, (iii) all versions
of the foregoing including, without limitation, all screen displays and designs
thereof, and all component modules of source code or object code or natural
language code therefor, and whether recorded on papers, magnetic media or other
electronic or non-electronic device, (iv) all descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, (v) all documentation, including without limitation all technical and
user manuals and training materials, relating to the foregoing, and all content
contained on all World Wide Web sites of the Company or any of its Subsidiaries.
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(d) Except as set forth on Schedule 3.13(d)(1) of the Company Disclosure
Schedules, the Company and its Subsidiaries, to the best knowledge of the
Company, own or have the right to use all patents, patent applications, patent
rights, copyrights, trademarks, trademark rights, trade names, trade name
rights, and service marks, and all goodwill of the business associated
therewith, trade secrets, technology and know-how, Computer Software other than
off-the-shelf applications, Product Software, Internet domain names,
registrations for and applications for registration of trademarks, service marks
and copyrights, and other confidential or proprietary rights and information and
all technical and user manuals and documentation made or used in connection with
any of the foregoing, used anywhere in the world in connection with the
businesses of the Company or any of its Subsidiaries as currently conducted
(collectively, the "Intellectual Property"), free and clear of all Encumbrances
of any nature. Except as set forth on Schedule 3.13(d)(2) of the Company
Disclosure Schedules, the Company and its Subsidiaries own the Product Software
or have a valid right or with respect to prior agreements had a valid right at
the time of such agreement to grant the rights and licenses in and to the
Product Software currently or heretofore set forth in the agreements between the
Company or any of its Subsidiaries and their respective customers, licensors,
lessees, distributors and other resellers. Schedule 3.13(d)(3) of the Company
Disclosure Schedules sets forth a true and complete list of all Product Software
which is not completely and solely owned by the Company and/or its Subsidiaries
which is material to the current business of the Company (collectively,
"Licensed Product Software"). The agreements described on Schedule 3.13(d)(3) of
the Company Disclosure Schedules set forth all of the rights and licenses of the
Company and each of its Subsidiaries in and to the Licensed Product Software,
and all restrictions and obligations (including, without limitation, royalty and
other payment obligations) associated with such rights and licenses, and each
such contract is in full force and effect and neither Company nor any of its
Subsidiaries is in material breach of any of its obligations under any such
Agreement. Any Encumbrances set forth on Schedule 3.13(d) of the Company
Disclosure Schedules do not materially detract from the value of the
Intellectual Property subject thereto and do not materially impair the
operations of any of the Company and its Subsidiaries.
(e) All patent, trademark and copyright registrations and applications for
Intellectual Property, whether registered or pending, that are currently used or
planned to be used in and are material to the conduct of the businesses of the
Company and its Subsidiaries as currently conducted, are listed on Schedule
3.13(a) of the Company Disclosure Schedules. To the best knowledge of the
Company, such patents, trademarks and copyright registrations and applications
(i) are valid, subsisting, in proper form and enforceable, subject to the rights
of third parties, and have been duly maintained, including the submission of all
necessary filings and fees in accordance with the legal and administrative
requirements of the appropriate jurisdictions and (ii) have not lapsed, expired
or been abandoned, and no patent, trademark, copyright, registration or
application for any of the foregoing is the subject of any opposition,
interference, cancellation proceeding or other legal or governmental proceeding
before any governmental, registration or other authority in any jurisdiction.
(f) To the best knowledge of the Company, the conduct of the businesses of,
and/or the use of the Intellectual Property, by the Company and its Subsidiaries
as currently conducted does not conflict with or infringe in any way on any
proprietary right of any third party. Other than as set forth in Schedule
3.13(f) of the Company Disclosure Schedules there is no claim, suit, action,
correspondence, proceeding or negotiation pending or, to the best knowledge of
the Company, threatened against the Company or any of its Subsidiaries (i)
alleging any conflict or infringement with any third party's proprietary rights,
(ii) asserting the Company or any of its Subsidiaries should consider licensing
rights to a third party's patent or other proprietary rights or (iii)
challenging the ownership, use, validity or enforceability of the Intellectual
Property. Each of the Company and its Subsidiaries owns or has the valid right
to use all of the material Intellectual Property used by it or held for use by
it in connection with its business. To the best knowledge of the Company, there
are no conflicts with or infringements of any Intellectual Property or products
of the Company or its Subsidiaries by any third party.
(g) Except as set forth on Schedule 3.13(g) of the Company Disclosure
Schedules, the Computer Software and Product Software used by the Company or any
of its Subsidiaries in the conduct of their
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businesses was either: (i) developed by employees of the Company or such
Subsidiary of the Company within the scope of their employment; (ii) developed
on behalf of the Company or any of its Subsidiaries by a third party, and all
ownership rights therein and in any other associated Intellectual Property have
been assigned or otherwise transferred to or vested in the Company or such
Subsidiary of the Company, as the case may be, pursuant to written agreements
("Work for Hire Agreements"); (iii) acquired from a third party pursuant to a
written assignment or other contract ("Software Acquisition Agreements") which
is in full force and effect and of which neither the Company nor any of its
Subsidiaries is in material breach, or (iv) licensed from a third party pursuant
to a written license or other contract which is in full force and effect and of
which neither the Company nor any of its Subsidiaries is in material breach.
Except as set forth on Schedule 3.13(g)(2) of the Company Disclosure Schedules,
(x) no third party has had access to any of the source code for any of the
Product Software described in clause (i) or (ii) hereof and (y) no act has been
done or omitted to be done by the Company or any of its Subsidiaries to impair
or dedicate to the public or entitle any Governmental Entity to hold abandoned
any of such Computer Software or Product Software.
(h) To the best knowledge of the Company, no consents, filings, and
authorizations by or with governmental authorities or third parties are
necessary with respect to the consummation of the Transactions contemplated
hereby as they may affect the Intellectual Property.
(i) Neither the Company nor any of its Subsidiaries has entered into any
material consent, forbearance to sue, settlement agreement or cross-licensing
arrangement with any person relating to the Intellectual Property or the
intellectual property of any third party other than as may be contained in the
agreements listed in Schedule 3.13(i) of the Company Disclosure Schedules, or
which is not material to the current business or products of the Company.
(j) To the best knowledge of the Company, except as set forth on Schedule
3.13(j) of the Company Disclosure Schedules, the Company and its Subsidiaries
are not, nor will any of them be as a result of the execution and delivery of
this Agreement or the performance of the Company's obligations under this
Agreement, in breach of any material license, sub-license or other agreement
relating to the Intellectual Property.
(k) No former or present employees, officers or directors of the Company or
any of its Subsidiaries hold any right, title or interest directly or
indirectly, in whole or in part, in or to any Intellectual Property.
(l) No trade secret or confidential know-how or other confidential
information relating to the Company or its Subsidiaries has been disclosed or
authorized to be disclosed to any third party, other than pursuant to a
non-disclosure agreement that fully protects the Company's and its Subsidiaries'
interests in and to such confidential information, except to the extent that the
failure to comply with any of the foregoing could not have, individually or in
the aggregate, a Company Material Adverse Effect.
(m) As delivered to customers and as modified by the Company, the Company's
Product Software and Other Products (as hereinafter defined) conform to their
respective applicable specifications in all material respects, except to the
extent that the failure to comply with any of the foregoing could not have,
individually or in the aggregate, a the Company Material Adverse Effect.
(n) To the best knowledge of the Company, the conduct of the businesses of
the Company and its Subsidiaries, the use of the Intellectual Property and/or
any advertising or marketing materials used by the Company and its Subsidiaries
in connection with the Product Software or Other Products do not violate any
provision of the Trademark Act of 1946, as amended (the "Lanham Act"), including
without limitation Section 43 thereof, and there are no material misstatements
or omissions in any such materials which would violate any provision of the
Lanham Act, except to the extent that the failure to comply with any of the
foregoing could not have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 3.14 Year 2000 Compliance.
(a) As of the date hereof, all Date-Sensitive Data and Date-Sensitive
Systems that are material to the business of the Company (each as hereinafter
defined) owned or used by, licensed or sold to the
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Company or any of its Subsidiaries other than those set forth in Schedule
3.14(a) of Company Disclosure Schedules, have been or will be evaluated for Year
2000 Compliance issues and are Year 2000 Compliant or will be Year 2000
Compliant on or before January 1, 2000, except to the extent that the failure to
comply with any of the foregoing could not have, individually or in the
aggregate, a Company Material Adverse Effect. The Company has requested
representations from each entity that (i) provides Date-Sensitive Data to the
Company or any of its Subsidiaries which is material to the business of the
Company or (ii) processes in any way Date-Sensitive Data or software (including
the Computer Software or the Product Software) for the Company or any of its
Subsidiaries. The Company has obtained or will use reasonable efforts to obtain
written representations from each entity that provides any material product or
service to the Company or any of its Subsidiaries that is dependent on Year 2000
Compliant Date-Sensitive Data or Year 2000 Compliant Date-Sensitive Systems,
that any of such entity's Date-Sensitive Data and/or Date-Sensitive Systems that
are used for, or on behalf of, the Company or any of its Subsidiaries are Year
2000 Compliant, except to the extent that the failure to comply with any of the
foregoing in this Section 3.14 could not have, individually or in the aggregate,
a Company Material Adverse Effect.
(b) As of the date hereof, all Product Software and all other products
sold, licensed or leased by the Company or any of its Subsidiaries which are, or
are used with, Date-Sensitive Systems or which process Date-Sensitive Data (the
"Other Products"), when used in accordance with their associated specifications
and other documentation, are Year 2000 Compliant subject to the express terms
and conditions of the Company's documentation attached as Schedule 3.14(b) of
the Company Disclosure Schedules (the "Company Year 2000 Representations"),
except to the extent that the failure to comply with any of the foregoing could
not have, individually or in the aggregate, a Company Material Adverse Effect.
To the best knowledge of Company, (a) the Company and its Subsidiaries have made
reasonable efforts not to make written representations concerning any Product
Software or other products of the Company or its Subsidiaries, which are in
addition to or inconsistent with the Company Year 2000 Representations and (b)
any such representations which are in addition to or inconsistent with the
Company Year 2000 Representations, will not, individually or in the aggregate,
have a Company Material Adverse Effect.
(c) "Date-Sensitive Data" means any data of any type that includes date
information or which is otherwise derived from or dependent on date information.
(d) "Date-Sensitive System" means any software or hardware system or
component, including any electronic or electronically controlled system, that
processes any Date-Sensitive Data and that is installed, in development or on
order.
(e) "Year 2000 Compliant" means (x) with respect to Date-Sensitive Data,
that such data is in proper four digit CCYY format (or windowed around an
appropriate 100-year period which includes dates on, before and after January 1,
2000) and accurate for all dates in the twentieth and twenty-first centuries
without ambiguity, and (y) with respect to Date-Sensitive Systems, that such
Systems at all times accurately exchange, recognize, report and process all
Date-Sensitive Data, including for the twentieth and twenty-first centuries,
including but not limited to calculating, comparing, sequencing and storing such
Date Sensitive Data (including all leap year considerations), when used as a
stand-alone system or in combination with other software or hardware.
SECTION 3.15 Labor Matters.
(a) Except as set forth on Schedule 3.15(a) of the Company Disclosure
Schedules, (i) there is no labor strike, dispute, slowdown, stoppage or lock-out
pending, or to the best knowledge of the Company, threatened against or
affecting the Company and during the past two (2) years from the date of this
Agreement there has not been any such action, (ii) the Company is not a party to
or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company, (iii) none of
the employees of the Company is represented by any labor organization and the
Company does not have any knowledge of any union organizing activities among the
employees of the Company within the past two (2) years, nor does any question
concerning representation exist concerning such employees,
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(iv) there are no written personnel policies, rules or procedures applicable to
employees of the Company, other than those set forth on Schedule 3.15(a) of the
Company Disclosure Schedules, true and correct copies of which have heretofore
been delivered to Parent, (v) to the best of its knowledge, the Company is, and
has at all times been, in compliance, in all material respects, with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable laws that would cause a Company
Material Adverse Effect, (vi) there is no unfair labor practice charge or
written complaint against the Company pending or, to the best knowledge of the
Company, threatened before the National Labor Relations Board or any similar
state, local or foreign agency, (vii) there is no grievance arising out of any
collective bargaining agreement or other grievance procedure, (viii) no charges
with respect to or relating to the Company are pending before the Equal
Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices, (ix) the Company has not received
notice of the intent of any federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws to conduct an investigation with
respect to or relating to the Company and no such investigation is in progress,
and (x) there are no complaints, lawsuits or other proceedings pending or, to
the best knowledge of the Company, threatened in any forum by or on behalf of
any present or former employee of the Company, any applicant for employment or
classes of the foregoing alleging breach of any express or implied contract for
employment, any laws governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship.
(b) The Company represents and warrants that (i) any liabilities under the
Worker Adjustment and Retraining Notification Act (the "WARN Act") arising out
of the Asset Purchase Agreement dated September 23, 1997, with IT Network, Inc.,
were covered by an indemnification provision that terminated on April 23, 1999,
and as of the date of this Agreement, the Company has not been advised of any
WARN Act claims arising out of that transaction that would have given rise to IT
Network Inc.'s indemnification obligation; (ii) to the best knowledge of the
Company, neither ProfitSource Corporation nor TSL Services, Inc. has effectuated
a "plant closing" or "mass layoff" (as defined by the WARN Act) since December
14, 1998, which is the effective date of the Stock Purchase Agreement between
the Company and BVS Investco, Inc., TSL Services, Inc., and ProfitSource
Corporation; (iii) except for those matters addressed in subparts (i) and (ii)
of this paragraph, the Company has not experienced an "employment loss" (as
defined by the WARN Act) at any site of employment that would qualify as a
"plant closing" or "mass layoff" (as defined by the WARN Act) since the
enactment of the WARN Act; and (iv) during the three-month period ending March
31, 1999, the individuals whose employment with the Company terminated at each
single site of employment (as defined by 20 C.F.R. Section 639.3(i)) are as set
forth on Schedule 3.15(b) of the Company Disclosure Schedules.
SECTION 3.16 Compliance with Laws. To the best of its knowledge, the
Company and each of its Subsidiaries has complied in a timely manner and in all
material respects with all laws, rules and regulations, ordinances, judgments,
decrees, orders, writs and injunctions of all United States federal, state,
local and foreign governments and agencies thereof which affect the business,
properties or assets of the Company and its Subsidiaries, and no notice, charge,
claim, action or assertion has been received by the Company or any of its
Subsidiaries or has been filed, commenced or, to the best knowledge of the
Company, threatened against the Company or any of its Subsidiaries alleging any
violation of any of the foregoing. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except where
the failure to be in full force and effect would not have a Company Material
Adverse Effect.
SECTION 3.17 Environmental Matters.
(a) Except as set forth in Schedule 3.17(a) of the Company Disclosure
Schedules, each of the Company and its Subsidiaries is in full compliance with
all federal, state, local and foreign laws and regulations relating to pollution
or protection of human health or the environment, including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata, and
natural resources (together "Environmental Laws" and including, without
limitation, laws and regulations relating
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to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances or wastes,
petroleum and petroleum products, polychlorinated biphenyls (PCBs), or asbestos
or asbestos-containing materials ("Materials of Environmental Concern")), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern,
except where the failure so to comply would not cause a Company Material Adverse
Effect. Such compliance includes, but is not limited to, the possession by the
Company and each of its Subsidiaries of all permits and other governmental
authorizations required under all applicable Environmental Laws, and compliance
with the terms and conditions thereof. All permits and other governmental
authorizations currently held by the Company and each of its Subsidiaries
pursuant to the Environmental Laws are identified in Schedule 3.17(a) of the
Company Disclosure Schedules.
(b) Except as set forth in Schedule 3.17(b) of the Company Disclosure
Schedules, neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority or
citizens group that alleges that the Company or any of its Subsidiaries is not
in full compliance with any Environmental Laws. The Company has provided to
Parent such information, if any, that is in the possession of or reasonably
available to the Company regarding environmental matters pertaining to or the
environmental condition of the business of the Company and its Subsidiaries, or
the compliance (or noncompliance) by the Company and its Subsidiaries with any
Environmental Laws.
(c) Except as set forth in Schedule 3.17(c) of the Company Disclosure
Schedules, there is no claim, action, cause of action, investigation or notice
(written or oral) (together, "Environmental Claim") by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, death, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its Subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or threatened against the
Company or any of its Subsidiaries, or against any person or entity whose
liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing, except as
set forth in Schedule 3.17(d) of the Company Disclosure Schedules, to the best
knowledge of the Company, there is no asbestos contained in or forming part of
any building, building component, structure or office space owned, leased,
operated or controlled by the Company or any of its Subsidiaries.
SECTION 3.18 Product Liability. Except as described in Schedule 3.18 of
the Company Disclosure Schedules, there are not presently pending, or to the
best knowledge of the Company, threatened any criminal, material civil or
administrative actions, suits, demands, claims, hearings, notices of violation,
investigations, proceedings or demand letters relating to any alleged hazard or
alleged defect in design, manufacture, development, programming, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product manufactured,
developed, programmed, distributed, licensed or sold by or on behalf of the
Company and its Subsidiaries.
SECTION 3.19 Information in Disclosure Documents. None of the information
supplied or to be supplied by the Company for the purpose of inclusion or
incorporation by reference in (i) the Offer Documents, at the time such
documents are first published, sent or given to the holders of Shares, and at
any time they are amended or supplemented, (ii) the Registration Statement to be
filed with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger, at the time the Registration Statement is filed with the
SEC or at the time it becomes effective under the Securities Act, (iii) the
Proxy Statement at the date it is first mailed to the Company's stockholders or
at the time of the Special Meeting, or (iv) any syndication or other materials
to be delivered to potential financing sources in connection with the
Transactions or otherwise in connection with the Debt Financing at the date such
materials are first delivered, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
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the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representations and warranties are made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Purchaser for inclusion or incorporation by reference in
the Proxy Statement or contained in the Parent SEC Documents (as hereinafter
defined) incorporated by reference in the Offer Documents, the Registration
Statement, the Proxy Statement or the syndication or other materials.
SECTION 3.20 Potential Conflict of Interest. Except as set forth in
Schedule 3.20 of the Company Disclosure Schedules or in the Company SEC
Documents filed prior to the date hereof, since December 31, 1998, there have
been no transactions, agreements, arrangements or understandings between the
Company or its Subsidiaries, on the one hand, and their respective affiliates,
on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act. Except as set forth in Schedule 3.20 of
Company Disclosure Schedules or in the Company SEC Documents filed prior to the
date hereof, no officer of the Company or any of its Subsidiaries owns, directly
or indirectly, any interest in (excepting not more than one percent (1%) stock
holdings for investment purposes in securities of publicly held and traded
companies) or is an officer, director, employee or consultant of any person
which is a competitor, lessor, lessee, customer or supplier of the Company or
any of its Subsidiaries; and no officer or director of the Company or any of its
Subsidiaries (i) owns, directly or indirectly, in whole or in part, any
Intellectual Property which the Company or any of its Subsidiaries is using or
the use of which is necessary for the business of the Company or its
Subsidiaries; (ii) has any claim, charge, action or cause of action against the
Company or any of its Subsidiaries, except for claims for accrued vacation pay,
accrued benefits under the Plans and similar matters and agreements existing on
the date hereof; (iii) has made, on behalf of the Company or any of its
Subsidiaries, any payment or commitment to pay any commission, fee or other
amount to, or to purchase or obtain or otherwise contract to purchase or obtain
any goods or services from, any other Person of which any officer or director of
the Company or any of its Subsidiaries, or, to the best knowledge of the
Company, a relative of any of the foregoing, is a partner or stockholder (except
stock holdings solely for investment purposes in securities of publicly held and
traded companies); or (iv) owes any money to the Company or any of its
Subsidiaries.
SECTION 3.21 Insurance. The Company and each of its Subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of the
Company and its Subsidiaries. There is no material claim pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
Subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
SECTION 3.22 Suppliers and Customers. Since December 31, 1998, no material
licensor, vendor, supplier, licensee or customer of the Company or any of its
Subsidiaries has canceled or otherwise modified its relationship with the
Company or its Subsidiaries and, to the best knowledge of the Company, (i) no
such person has any intention to do so, and (ii) the consummation of the
transactions contemplated hereby will not adversely affect any of such
relationships in any material respect, except to the extent the failure to
comply with any of the foregoing could not have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 3.23 Accounts Receivable; Inventory.
(a) Subject to any reserves set forth in the consolidated balance sheet of
the Company included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 as filed with the SEC (the "Company Balance Sheet"), the
accounts receivable shown in the Company Balance Sheet arose in the ordinary
course of business, were not, as of the date of the Company Balance Sheet,
subject to any material discount, contingency, claim of offset or recoupment or
counterclaim, and represented, as of the date of the Company Balance Sheet, bona
fide claims against debtors for sales, leases, licenses and
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other charges. All accounts receivable of the Company and its Subsidiaries
arising after the date of the Company Balance Sheet through the date of this
Agreement arose in the ordinary course of business and, as of the date of this
Agreement, are not subject to any material discount, contingency, claim of
offset or recoupment or counterclaim, except for normal reserves consistent with
past practice. The amount carried for doubtful accounts and allowances disclosed
in the Company Balance Sheet is believed by the Company as of the date of such
the Company Balance Sheet to be sufficient to provide for any losses which may
be sustained or failure to realize the accounts receivable shown in the Company
Balance Sheet.
(b) As of the date of the Company Balance Sheet, the inventories shown on
the Company Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were manufactured or acquired in the ordinary course of
business and, as of the date of this Agreement, have been replenished in all
material respects in the ordinary course of business consistent with past
practices. All such inventories are valued on the Company Balance Sheet in
accordance with GAAP, applied on a basis consistent with the Company's past
practices, and provision has been made or reserves have been established on the
Company Balance Sheet, in each case in an amount believed by the Company as of
the date of this Agreement to be adequate, for all slow-moving, obsolete or
unusable inventories.
SECTION 3.24 Title and Condition of Properties. The Company and its
Subsidiaries have good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Company Balance Sheet or
acquired after December 31, 1998, except for (A) assets which have been disposed
of to nonaffiliated third parties since December 31, 1998, in the ordinary
course of business, (B) Encumbrances reflected in the Company Balance Sheet, (C)
Encumbrances or imperfections of title which are not, individually or in the
aggregate, material in character, amount or extent and which do not materially
detract from the value or materially interfere with the present or presently
contemplated use of the assets subject thereto or affected thereby, and (D)
liens for current Taxes not yet due and payable. All of the machinery, equipment
and other tangible personal property and assets owned or used by the Company or
its Subsidiaries are operational, except for ordinary wear and tear not caused
by neglect, and are usable in the ordinary course of business.
SECTION 3.25 Illegal Payments. To the best knowledge of the Company, none
of the Company or any of its Subsidiaries or any director, officer, employee, or
agent of the Company or any of its Subsidiaries has, directly or indirectly,
paid or delivered any fee, commission, or other sum of money or item of property
however characterized to any broker, finder, agent, government official, or
other person, in the United States or any other country, in any manner related
to the business or operations of the Company or any of its Subsidiaries, which
the Company or any of its Subsidiaries or any such director, officer, employee,
or agent knows or has reason to believe to have been illegal under any
applicable law, including but not limited to the Foreign Corrupt Practices Act.
SECTION 3.26 Phoenix Acquisition. Any agreement or letter of intent
between the Company and Phoenix Wireless Group, Inc. is non-binding on the
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
Except as set forth in the schedules delivered to the Company prior to the
execution of this Agreement (the "Parent Disclosure Schedules") setting forth,
among other things, specific exceptions to Parent's and Purchaser's
representations and warranties set forth herein, Parent and the Purchaser
represent and warrant to the Company as set forth below. Each exception set
forth in the Parent Disclosure Schedules is identified by reference to, or has
been grouped under a heading referring to, a specific individual section of this
Agreement and, except as otherwise specifically stated with respect to such
exception, relates only to such section.
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SECTION 4.1 Organization; Qualification; Charter and Bylaws.
(a) Parent and each of its Subsidiaries is a corporation, partnership or
other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such governmental
approvals would not, individually or in the aggregate, have a Parent Material
Adverse Effect (as hereinafter defined). As used in this Agreement, "Parent
Material Adverse Effect" means any event, change in or effect on the business of
Parent or its Subsidiaries, taken as a whole, that is or would be expected to be
materially adverse to (i) the business, operations, properties (including
intangible properties), financial condition or results of operations or
prospects of Parent or its Subsidiaries, taken as a whole, or (ii) the ability
of Parent to consummate any of the Transactions or to perform its obligations
under this Agreement or the Stockholders' Agreement, but such definition shall
not include (A) any material adverse change due to the transactions contemplated
by this Agreement, (B) any material adverse change in the Parent's established
industry as a whole, or (C) a material adverse change in the general economic
conditions of the United States of America. Set forth in Schedule 4.1(a) of the
Parent Disclosure Schedules is a complete list of Parent's Subsidiaries,
including the respective jurisdictions in which such Subsidiaries are organized
and Parent's ownership of each.
(b) Parent and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not individually or in the
aggregate have a Parent Material Adverse Effect. Except as set forth in Schedule
4.1(b) of the Parent Disclosure Schedules, Parent does not own (i) any equity
interest in any corporation or other entity or (ii) marketable securities where
Parent's equity interest in any entity exceeds five percent (5%) of the
outstanding equity of such entity on the date hereof.
(c) Parent has made available to the Company accurate and complete copies
of (i) the Articles and/or Certificates of Incorporation and By-Laws of Parent
and each of its material Subsidiaries (certified by the respective Secretaries
of State of Parent's, and each of its material Subsidiaries' jurisdiction of
incorporation and the secretary or an assistant secretary of Parent, and each of
its Subsidiaries, respectively) as currently in effect, (ii) the stock records
of Parent and each of its Subsidiaries and (iii) (A) the minutes of all meetings
of Parent's and its material Subsidiaries' Boards of Directors, any committees
of such Boards, and Parent's, and its material Subsidiaries', shareholders (and
all consents in lieu of such meetings) each for the past five (5) years and (B)
the minutes of all meetings of the remaining Subsidiaries' Board of Directors,
and committees of such Boards, and each of such Subsidiaries' shareholders (and
all consents in lieu of such meetings) each for the past two (2) years (other
than InterVoice Limited (Private Limited Company), InterVoice da Brasil Ltd.,
InterVoice Communications International, Inc., VoicePlex Corporation, InterVoice
International, Inc. and Phone Star Corp., none of which Subsidiaries is material
to Parent). Such records, minutes, and consents accurately reflect the stock
ownership of the Company, and each of its Subsidiaries and all actions taken by
Parent at such meetings, and each of its Subsidiaries' Boards, any committees of
such Board, and Parent's, and each of its Subsidiaries' shareholders. Neither
Parent nor any of its Subsidiaries is in violation of any provision of its
respective Articles of Incorporation or By-Laws, except where such violation
would not result in a Parent Material Adverse Effect.
SECTION 4.2 Capitalization.
(a) The authorized capital stock of Parent consists of 62,000,000 shares of
Parent Common Stock and 2,000,000 shares of preferred stock, $100 par value per
share ("Parent Preferred Stock"). As of the date hereof, (i) 28,743,102 shares
of Parent Common Stock, together with associated Rights, are issued and
outstanding, (ii) no shares of Parent Preferred Stock are issued and
outstanding, (iii) 5,994,800 shares of Parent Common Stock are issued and held
in the treasury of Parent, (iv) a total of 5,819,507 shares of Parent Common
Stock are reserved for issuance pursuant to the 1990 Incentive Stock Option
Plan, the
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1990 Non-Qualified Stock Option Plan for Non-Employees, the 1984 Incentive Stock
Option Plan, the 1998 Stock Option Plan, the Restricted Stock Plan and the
Employee Stock Purchase Plan (collectively, the "Parent Stock Plans"). Schedule
4.2(a)(i) of the Parent Disclosure Schedules sets forth the maximum number of
shares of Common Stock reserved for future issuance or purchase pursuant to each
Parent Stock Plan, the number of shares of Common Stock available for issuance
or purchase pursuant to each Parent Stock Plan, the aggregate number of shares
subject to outstanding options under the Parent Stock Plan, and the respective
exercise prices thereof. All the outstanding shares of Parent's capital stock
are, and all shares which may be issued pursuant to the exercise of outstanding
options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Parent Voting Debt") of Parent
or any of its Subsidiaries issued and outstanding. Except as disclosed in this
Section 4.2 or as set forth in Schedule 4.2(a)(ii) of the Parent Disclosure
Schedules, (i) there are no shares of capital stock of Parent authorized, issued
or outstanding, (ii) there are no existing options, warrants, calls, pre-emptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of Parent or
any of its Subsidiaries, obligating Parent or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Parent Voting Debt of, or other equity interest in, Parent or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating Parent or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, and (iii) there are no
outstanding contractual obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Shares, or the capital stock of
Parent or any Subsidiary or affiliate of Parent or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.
(b) Except as set forth in Schedule 4.2(b) of the Parent Disclosure
Schedules, all of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by Parent, directly or indirectly, and all
such shares have been validly issued and are fully paid and nonassessable and
are owned by either Parent or one of its Subsidiaries free and clear of all
Encumbrances except for those directors' qualifying shares of capital stock of
such Subsidiaries not material in amount and subject to repurchase or
cancellation arrangements.
(c) There are no voting trusts or other agreements or understandings to
which Parent or any of its Subsidiaries is a party with respect to the voting of
the capital stock of Parent or any of the Subsidiaries.
(d) Other than as set forth on Schedule 4.2(d) of the Parent Disclosure
Schedules or the Parent Financial Statements (as hereinafter defined), there is
no outstanding Indebtedness of Parent or any of its Subsidiaries. Except as
identified in Schedule 4.2(d) of the Parent Disclosure Schedules, no
Indebtedness of Parent or its Subsidiaries contains any restriction upon (i) the
prepayment of such Indebtedness, (ii) the incurrence of Indebtedness (including
the Debt Financing) by Parent or its Subsidiaries, respectively, (iii) the
ability of Parent or its Subsidiaries to grant any liens on their properties or
assets or (iv) the ability of the Parent or its Subsidiaries to enter into this
Agreement or consummate the Merger.
(e) Except as set forth in Schedule 4.2(e) of the Parent Disclosure
Schedules, since January 1, 1995, Parent has not entered into any material
agreement involving the acquisition, sale or disposition of any class of capital
stock or assets of Parent or any of its Subsidiaries, by merger or otherwise;
and except as disclosed on Schedule 4.2(e) of the Parent Disclosure Schedules,
to the best knowledge of Parent, none of Parent or any of its Subsidiaries is in
breach of, or subject to a claim of default under, any such agreements listed on
such Schedule.
SECTION 4.3 Authorization; Validity of Agreement; Necessary Corporate
Action.
Each of Parent and the Purchaser has full corporate power and corporate
authority to execute and deliver this Agreement and the Stockholders' Agreement
and to consummate the Transactions. The execution, delivery and performance by
Parent of this Agreement and the Stockholders' Agreement, and the consummation
by it of the Transactions, have been duly and validly authorized by their
respective
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Boards of Directors and no other corporate action on the part of Parent is
necessary to authorize the execution and delivery by Parent and the Purchaser of
this Agreement and the Stockholders' Agreement, and the consummation by them of
the Transactions contemplated hereby. Each of this Agreement and the
Stockholders' Agreement has been duly executed and delivered by Parent and the
Purchaser and, assuming due and valid authorization, execution and delivery
hereof and thereof by the Company, is a valid and binding obligation of Parent
and the Purchaser enforceable against Parent and the Purchaser in accordance
with its terms except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought.
SECTION 4.4 Consents and Approvals; No Violations. Except as set forth in
Schedule 4.4 of the Parent Disclosure Schedules and for filings, permits,
authorizations, consents and approvals as are contemplated by this Agreement or
may be required under, and other applicable requirements of, the Exchange Act
and the HSR Act, none of the execution, delivery or performance of this
Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the Transactions or compliance by Parent or the Purchaser with any
of the provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation, the By-Laws or similar
organizational documents of Parent or any of its Subsidiaries, state securities
laws or blue sky laws, and the Texas Business Corporations Act or the NGCL, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound (collectively, the "Parent Agreements")
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, except in the case of clause (ii), (iii) or (iv) where failure to obtain
such permits, authorizations, consents or approvals or to make such filings, or
where such violations, breaches or defaults which would not, individually or in
the aggregate, have a Parent Material Adverse Effect. Schedule 4.4 of the Parent
Disclosure Schedules sets forth a list of all third party consents and approvals
required to be obtained in connection with this Agreement under the Parent
Agreements prior to the consummation of the transactions contemplated by this
Agreement.
SECTION 4.5 SEC Reports and Financial Statements. Parent has filed with
the SEC, and has heretofore made available to the Company, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1996, under the Exchange Act or the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "Parent SEC Documents"). As of their respective dates,
or if amended, as of the date of the last such amendment, the Parent SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading and (b) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, and the applicable rules and regulations of the SEC thereunder.
None of Parent's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements included in the Parent SEC
Documents (the "Parent Financial Statements") (i) have been prepared from, and
are in accordance with, the books and records of Parent and its consolidated
Subsidiaries, (ii) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (iii) have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and (iv) fairly present in all material respects the consolidated
financial position and the consolidated results of operations and
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cash flows (and changes in financial position, if any) of Parent and its
consolidated Subsidiaries as of the times and for the periods referred to
therein.
SECTION 4.6 Absence of Certain Changes. Except as set forth in Schedule
4.6 of the Parent Disclosure Schedules or in the Parent SEC Documents filed
prior to the date hereof, since February 28, 1998, Parent and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual
course. From February 28, 1998 through the date of this Agreement, there has not
occurred (i) any event, change or effect (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Parent Material Adverse Effect, (ii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the equity interests of
Parent or any of its Subsidiaries or (iii) any change in accounting principles
or methods, except insofar as may be required by a change in GAAP.
SECTION 4.7 No Undisclosed Liabilities. Except (a) as disclosed in the
Parent Financial Statements and (b) for liabilities and obligations (i) incurred
in the ordinary course of business and consistent with past practice since
February 28, 1998 (ii) created pursuant to the terms of this Agreement or (iii)
as disclosed in Schedule 4.7 of the Parent Disclosure Schedules or (iv) as
disclosed in Schedule 4.8(a) of the Parent Disclosure Schedules, neither Parent
nor any of its Subsidiaries, to the best of its knowledge, has incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that have, or would be reasonably likely to have a Parent Material
Adverse Effect and would be required to be reflected or reserved against on a
consolidated balance sheet of Parent and its Subsidiaries (including the notes
thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of Parent and its Subsidiaries as of February 28,
1998. Schedule 4.7 of the Parent Disclosure Schedules sets forth the amount of
principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of Parent and its Subsidiaries which will accelerate or become due
or result in a right of redemption or repurchase on the part of the holder of
such Indebtedness (with or without due notice or lapse of time) as a result of
this Agreement, the Merger or the other Transactions contemplated hereby or
thereby.
SECTION 4.8 Claims. Except as set forth on Schedule 4.8(a) of the Parent
Disclosure Schedules or in the Parent SEC Documents, as of the date hereof,
there is no suit, written claim, written demand, action, proceeding, including,
without limitation, any arbitration proceeding or alternative dispute resolution
proceeding, or to the best knowledge of Parent, investigation pending or, to the
best knowledge of Parent, threatened against or affecting, Parent or any of its
Subsidiaries (collectively, "Parent Claims"), that would reasonably be expected
to have a Parent Material Adverse Effect. Except as set forth on Schedule 4.8(b)
of the Parent Disclosure Schedules or in the Parent SEC Documents, there is no
Parent Claim or Parent Claims that, either individually or in the aggregate, if
adversely determined, would have a Parent Material Adverse Effect.
SECTION 4.9 Employee Benefit Plans; ERISA.
(a) Schedule 4.9(a) of the Parent Disclosure Schedules contains a true and
complete list of each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by Parent or any of its Subsidiaries, or by any trade or
business, whether or not incorporated (a "Parent ERISA Affiliate"), that
together with Parent or any of its Subsidiaries would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA, for the benefit of
any current or former employee or director of Parent, or any of its Subsidiaries
or any Parent ERISA Affiliate (the "Parent Plans"). Schedule 4.9(a) of the
Parent Disclosure Schedules identifies each of the Parent Plans that is an
"employee welfare benefit plan," or "employee pension benefit plan" as such
terms are defined in Sections 3(1) and 3(2) of ERISA (such plans being
hereinafter referred to collectively as the "Parent ERISA Plans"). Except as
required by applicable law, none of Parent, any of its Subsidiaries nor
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any Parent ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Parent Plan or modify or change any
existing Parent Plan that would affect any current or former employee or
director of Parent, any of its Subsidiaries or any Parent ERISA Affiliate.
(b) With respect to each of the Parent Plans, Parent has heretofore
delivered to the Company true and complete copies of each of the following
documents, as applicable:
(i) a copy of the Parent Plan documents (including all amendments
thereto) for each written Parent Plan or a written description of any
Parent Plan that is not otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service Form 5500
Series, if required under ERISA, with respect to each Parent ERISA Plan for
the last three (3) Parent Plan years ending prior to the date of this
Agreement for which such a report was required to be filed;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each Parent ERISA Plan for the last three (3) Plan years ending
prior to the date of this Agreement;
(iv) a copy of the most recent Parent Summary Plan Description
("Parent SPD"), together with all Summaries of Material Modification issued
with respect to such Parent SPD, if required under ERISA, with respect to
each Parent ERISA Plan, and all other material employee communications
relating to each Parent ERISA Plan;
(v) if the Parent Plan is funded through a trust or any other funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any;
(vi) all contracts relating to the Parent Plans with respect to which
Parent, any of its Subsidiaries or any Parent ERISA Affiliate may have any
liability, including insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements;
and
(vii) the most recent determination letter received from the IRS with
respect to each Parent Plan that is intended to be qualified under Section
401(a) of the Code.
(c) No liability under Title IV of ERISA has been incurred by Parent, any
of its Subsidiaries or any Parent ERISA Affiliate since the effective date of
ERISA that has not been satisfied in full, and no condition exists that presents
a material risk to Parent, or any of its Subsidiaries or any ERISA Affiliate of
incurring any liability under such Title, other than liability for premiums due
PBGC, which payments have been or will be made when due. To the extent this
representation applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it
is made not only with respect to the Parent ERISA Plans but also with respect to
any employee benefit plan, program, agreement or arrangement subject to Title IV
of ERISA to which Parent, any of its Subsidiaries or any Parent ERISA Affiliate
made, or was required to make, contributions during the past six (6) years.
(d) The PBGC has not instituted proceedings pursuant to Section 4042 of
ERISA to terminate any of the Parent ERISA Plans subject to Title IV of ERISA,
and no condition exists that presents a material risk that such proceedings will
be instituted by the PBGC.
(e) With respect to each Parent ERISA Plan that is subject to Title IV of
ERISA, the present value of accumulated benefit obligations under such Parent
ERISA Plan, as determined by the Parent ERISA Plan's actuary based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Parent ERISA Plan,
did not, as of its latest valuation date, exceed then current value of the
assets of such Plan allocable to such accumulated benefit obligations.
(f) None of Parent, any of its Subsidiaries, any Parent ERISA Affiliate,
any of the Parent ERISA Plans, any trust created thereunder, nor to Parent's and
the Purchaser's best knowledge, any trustee or administrator thereof has engaged
in a transaction or has taken or failed to take any action in connection
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with which Parent, any of its Subsidiaries or any Parent ERISA Affiliate could
be subject to any material liability for either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Sections
4975(a) or (b), 4976 or 4980B of the Code.
(g) All contributions and premiums that Parent, any of its Subsidiaries or
any Parent ERISA Affiliate is required to pay under the terms of each of the
Parent ERISA Plans and Section 412 of the Code, have, to the extent due, been
paid in full or properly recorded on the financial statements or records of
Parent or its Subsidiaries, and none of the Parent ERISA Plans or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the Parent
ERISA Plans ended prior to the date of this Agreement. No lien has been imposed
under Section 412(n) of the Code or Section 302(f) of ERISA on the assets of
Parent, any of its Subsidiaries or any Parent ERISA Affiliate, and no event or
circumstance has occurred that is reasonably likely to result in the imposition
of any such lien on any such assets on account of any Parent ERISA Plan.
(h) With respect to any Parent ERISA Plan that is a "multi-employer plan,"
as such term is defined in Section 3 (37) of ERISA, (i) neither Parent, any of
its Subsidiaries nor any Parent ERISA Affiliate has, since September 26, 1980,
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203 and 4205 of ERISA, (ii) no event
has occurred that presents a material risk of a complete or partial withdrawal,
(iii) none of Parent, any of its Subsidiaries or any Parent ERISA Affiliate has
any contingent liability under Section 4204 of ERISA, (iv) no circumstances
exist that present a material risk that any such multi-employer plan will go
into reorganization, and (v) the aggregate withdrawal liability of Parent, each
of its Subsidiaries and the Parent ERISA Affiliates, computed as if a complete
withdrawal by Parent, each of its Subsidiaries and all of its Parent ERISA
Affiliates had occurred under each such multi-employer plan on the date hereof,
would be zero.
(i) Each of the Parent Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code.
(j) Each of the Parent ERISA Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified. Parent has
applied for and received a currently effective determination letter from the IRS
stating that it is so qualified, and no event has occurred which would affect
such qualified status.
(k) Each of the Parent ERISA Plans that is intended to qualify under
Section 501(c)(9) of the Code is so qualified and meets the requirements of
Section 505(c) of the Code and the regulations thereunder.
(l) Except as set forth in Schedule 4.9(l) of the Parent Disclosure
Schedules, no amounts payable under any of the Parent Plans or any other
contract, agreement or arrangement with respect to which Parent or any of its
Subsidiaries may have any liability could fail to be deductible for federal
income tax purposes by virtue of Section 162(m) or Section 280G of the Code.
(m) Except as set forth in Schedule 4.9(m) of the Parent Disclosure
Schedules, no Parent Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of Parent, its
Subsidiaries or any Parent ERISA Affiliate after retirement or other termination
of service (other than (i) coverage mandated by applicable laws, (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of Parent, any of its Subsidiaries or an
Parent ERISA Affiliate, or (iv) benefits, the full direct cost of which is borne
by the current or former employee (or beneficiary thereof)).
(n) Except as set forth in Schedule 4.9(n) of the Parent Disclosure
Schedules and as provided in Section 2.4 hereof, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee, officer or director of Parent, any of its Subsidiaries or any
Parent ERISA Affiliate to severance pay, unemployment compensation or any other
similar termination
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payment, or (ii) accelerate the time of payment or vesting, or increase the
amount of or otherwise enhance any benefit due any such employee, officer or
director.
(o) There are no pending or, to the best knowledge of Parent, threatened or
anticipated claims by or on behalf of any Plan by any employee or beneficiary
under any such Parent Plan or otherwise involving any such Plan (other than
routine claims for benefits).
(p) Except as set forth in Schedule 3.9(p) of the Company Disclosure
Schedules, no Plan is currently under examination by, and there are no issues
related to the Plans currently pending before, the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or any court.
(q) There are no material liabilities under any foreign laws with respect
to the Plans.
SECTION 4.10 Taxes.
(a) Except as set forth in Schedule 4.10 of the Parent Disclosure
Schedules:
(i) Parent and its Subsidiaries have (A) duly filed (or there have
been filed on their behalf) with the appropriate Tax Authorities all Tax
Returns required to be filed by them on or prior to the date hereof (except
where the failure to file a Tax Return would not have a material adverse
effect on the entity failing to file such Tax Return), and such Tax Returns
are true, correct and complete in all material respects, and (B) duly paid
in full or made provision in accordance with GAAP (or there has been paid
or provision has been made on their behalf) for the payment of all Taxes
for all periods (or portions thereof) ending on or prior to the date
hereof;
(ii) there are no liens for Taxes upon any property or assets of
Parent or any Subsidiary thereof, except for liens for Taxes not yet due
and for which adequate reserves have been established in accordance with
GAAP;
(iii) within the past three (3) years, neither Parent nor any of its
Subsidiaries has made any change in tax reporting method, received a ruling
from any Tax Authority or signed an agreement with regard to Taxes;
(iv) no federal, state, local or foreign Audits are pending with
regard to any Taxes or Tax Returns of Parent or its Subsidiaries and, to
the best knowledge of Parent and its Subsidiaries, no Audit is threatened;
(v) the Tax Returns of Parent and its Subsidiaries have been examined
by the applicable Taxing Authorities (or the applicable statutes of
limitation for the assessment of Taxes for such periods have expired) for
all periods through and including February 28, 1995, and no material
adjustments were asserted as a result of such examinations which have not
been resolved and fully paid, and no issue has been raised by any Tax
Authority in any Audit of Parent or its Subsidiaries that, if raised with
respect to any other period not so audited, could be expected to result in
a proposed material deficiency for any period not so audited;
(vi) there are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against Parent or any of its
Subsidiaries, and no power of attorney granted by either Parent or any of
its Subsidiaries with respect to any Taxes is currently in force;
(vii) neither Parent nor any of its Subsidiaries is a party to any
agreement providing for the allocation, indemnification, or sharing of
Taxes;
(viii) neither Parent nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code or in payments that will not be
deductible under Section 162(m) of the Code;
(ix) neither Parent nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code or made or filed an election under
Sections 108, 441 or 1017 of the Code;
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(x) neither Parent nor any of its Subsidiaries is a party to any safe
harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by the Tax Equity and Fiscal Responsibility Act
of 1982;
(xi) neither Parent nor any of its Subsidiaries is liable for any
material Taxes to any foreign Tax Authority. Parent and its Subsidiaries do
not have and have not had a permanent establishment in any foreign country,
as defined in the applicable Tax treaty or convention between the United
States and such foreign country;
(xii) neither Parent nor any of its Subsidiaries is required to
include in income any adjustment under Section 481(a) of the Code by reason
of a change in accounting method initiated by Parent or any of its
Subsidiaries and the Internal Revenue Service has not proposed any such
adjustment or change in accounting method;
(xiii) neither Parent nor any of its Subsidiaries is a partner in any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes;
(xiv) other than as a result of the Transactions contemplated herein,
none of Parent's tax attributes are subject to the limitations of Sections
382, 383 or 384 of the Code or Treasury Regulation Section 1.1502-21(c);
and
(xv) since its formation, Parent has been a member of an affiliated
group of corporations within the meaning of Section 1504 of the Code, with
respect to which Parent is and at all times has been the common parent, and
has joined in or expects to join in the filing of a consolidated federal
income tax return for all its Tax periods ending on or prior to the
Effective Time. Neither Parent nor any of its Subsidiaries has been a
member of any other affiliated group of corporations within the meaning of
Section 1504 of the Code.
SECTION 4.11 Contracts.
For purposes of this Agreement, the Parent Agreements consist of the
following:
(a) all sales and distribution contracts of Parent or its Subsidiaries
with respect to which at least an aggregate of $500,000 in revenues and/or
orders were received or revenued thereunder since March 1, 1998, which
sales and distribution contracts are identified (to the best knowledge of
Parent) on Schedule 4.11(a) of the Parent Disclosure Schedules;
(b) all supply agreements material to the business of Parent under
which products were bought or licensed since March 1, 1998 for resale or
relicense, which supply agreements are identified (to the best knowledge of
Parent) in Schedule 4.11(b) to the Parent Disclosure Schedules;
(c) all supply agreements for the purchase of goods, software (other
than commercially available or "shrink wrap" software) or other products
for Parent's or its Subsidiaries' internal use under which orders
aggregating at least $250,000 were placed thereunder since March 1, 1998,
which internal supply agreements are identified in Schedule 4.11(c) of the
Parent Disclosure Schedules;
(d) the form of confidentiality agreement that has customarily been
used between Parent and its employees, a copy of which is included as
Schedule 4.11(d) of the Parent Disclosure Schedules;
(e) the form of agreement generally used by Parent in engaging
independent contractors, a copy of which is included as Schedule 4.11(e) of
the Parent Disclosure Schedules;
(f) the form of agreement pursuant to which Parent has generally
escrowed source code, a copy of which is included as Schedule 4.11(f) of
the Parent Disclosure Schedules; and
(g) all powers of attorney (irrespective of date of execution) of a
material nature (excluding usual and customary powers of attorney for
filing trademarks and patents, and usual and customary powers of attorney
for filing documents with governmental authorities and otherwise complying
with corporate formalities in foreign jurisdictions executed by Parent or
its Subsidiaries) in favor of one or
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more third parties, which powers of attorney are identified (to the best
knowledge of Parent) in Schedule 4.11(g) of the Parent Disclosure
Schedules.
To the best knowledge of Parent, each Parent Agreement is a valid and
binding agreement in full force and effect, except where the failure to be valid
and binding and in full force and effect would not have a Parent Material
Adverse Effect. To the best knowledge of Parent, there are no defaults, or
events which, with notice or the lapse of time, or both, would result in a
default under any of the Parent Agreements, except such defaults and events that
would not, in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.12 Real Property and Leased Property.
(a) Schedule 4.12(a) of the Parent Disclosure Schedules sets forth a
complete list of all real property owned by Parent or its Subsidiaries (the
"Parent Real Property"). Except as set forth in Schedule 4.12(a) of the Parent
Disclosure Schedules, Parent or its Subsidiaries has good and marketable title
to the Parent Real Property, free and clear of all Encumbrances. Copies of (i)
all deeds, title insurance policies and surveys of the Parent Real Property and
(ii) all documents evidencing all Encumbrances upon the Parent Real Property
have been furnished to Parent. There are no proceedings, claims, disputes or
conditions affecting any Parent Real Property that might curtail or interfere
with the use of such property, nor is an action of condemnation or eminent
domain pending or to the best knowledge of Parent and the Purchaser, threatened
for all or any portion of the Parent Real Property. Except as disclosed in
Schedule 4.12(a) of the Parent Disclosure Schedules, neither Parent nor any of
its Subsidiaries is a party to any lease, assignment or similar arrangement
under which Parent or a Subsidiary is a lessor, assignor or otherwise makes
available for use by any third party any portion of the Real Property.
(b) Within the prior twelve (12) months of the date of this Agreement,
neither Parent nor any of its Subsidiaries has received any notice of or other
writing referring to any requirements or recommendations by any insurance
company that has issued a policy covering any part of the Parent Real Property
or by any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of the
Parent Real Property. The plumbing, electrical, heating, air conditioning,
ventilating and all other structural or material mechanical systems in the
buildings upon the Parent Real Property are in working order and working
condition, so as to be adequate for the operation of the business of Parent and
its Subsidiaries as heretofore conducted, and the roof, basement and foundation
walls of all buildings on the Parent Real Property are free of leaks and other
material defects, except for any matter otherwise covered by this sentence which
does not have, individually or in the aggregate, a Parent Material Adverse
Effect.
(c) Parent and its Subsidiaries have obtained all appropriate licenses,
permits, easements and rights of way, including proofs of dedication, required
to use and operate the Parent Real Property, as well as the properties listed on
Schedule 4.12(e) of the Parent Disclosure Schedules, in the manner in which the
Parent Real Property is currently being used and operated, except for such
licenses, permits or rights of way the failure of which to have obtained does
not have, individually or in the aggregate, a Parent Material Adverse Effect.
(d) Neither Parent nor any of its Subsidiaries have received notification
that Parent or a Subsidiary is in violation of any applicable building, zoning,
anti-pollution, health or other law, ordinance or regulation in respect of the
Real Property or structures or their operations thereon and, to the best of
Parent's knowledge, no such violation exists.
(e) Set forth on Schedule 4.12(e) of the Parent Disclosure Schedules is a
list of all real property leases to which Parent or any of its Subsidiaries is a
party and that extend for a more than one (1) year after the date of this
Agreement. Parent and each of its Subsidiaries has a good and valid leasehold
interest in all properties held by them under lease listed on Schedule 4.12(f)
of the Parent Disclosure Schedules. The lessee under each such lease and its
predecessor under each such lease, if any, has been in peaceable possession (or
remedied any claims relating thereto) of the property covered thereby since the
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commencement of the original term of such lease. No waiver, indulgence or
postponement of the lessee's material obligations under any such lease has been
granted by the lessor or of the lessor's obligations thereunder by the lessee.
The lessee under each such lease is not in breach of or in default under such
lease, nor has any event occurred which (with or without the giving of notice or
the passage of time or both) would constitute a default by the lessee under such
lease or cause a Parent Material Adverse Effect, and the lessee has not received
any notice from, or given any notice to, the lessor indicating that the lessee
or the lessor is in breach of or in default under such lease that would cause a
Parent Material Adverse Effect. To the best knowledge of Parent and each of its
Subsidiaries, none of the lessors under such leases is in breach thereof or in
default thereunder.
SECTION 4.13 Intellectual Property.
(a) Schedule 4.13(a) of the Parent Disclosure Schedules is a true and
complete list of all (i) patents and patent applications, (ii) trademark
registrations and applications, (iii) service mark registrations and
applications, (iv) Parent Product Software (as hereinafter defined), (v)
copyright registrations and applications, (vi) material unregistered trademarks
and service marks, and (vii) Internet domain names used or held for use in
connection with the business of Parent or any of its Subsidiaries, together with
all material licensing, sub-licensing, distribution, consignment and similar
agreements relating to the foregoing (whether Parent or any of its Subsidiaries
is the licensee or licensor thereunder) other than distribution and licensing
agreements relating to Parent Product Software and Parent Computer Software (as
hereinafter defined) entered into in the ordinary course of business. Other than
as listed in Schedule 4.11(f) of the Parent Disclosure Schedules, and for
contracts covered by that provision, no agreement licensing the Parent
Intellectual Property (as hereinafter defined) to any licensee creates an option
for such licensee to purchase any of the Parent Intellectual Property owned by
Parent, its Subsidiaries or affiliates, or would in any other way require the
transfer of the Intellectual Property owned by Parent, its Subsidiaries or any
affiliate of Parent to such licensee. Parent or one of its Subsidiaries
currently is listed in the records of the appropriate United States, state or
foreign agency as the sole owner of record for each application and registration
listed in Schedule 4.13(a) of the Parent Disclosure Schedules.
(b) The term "Parent Computer Software" shall mean, other than
off-the-shelf applications and Parent Product Software, the following as used in
the current business of Parent or any of its Subsidiaries and which are material
to the current business of Parent: (i) any and all computer programs and
applications consisting of sets of statements and instructions to be used
directly or indirectly in computer software or firmware whether in source code
or object code form, (ii) databases and compilations, including without
limitation any and all data and collections of data, whether machine readable or
otherwise, (iii) all currently used versions of the foregoing including, without
limitation, all screen displays and designs thereof, and all component modules
of source code or object code or natural language code therefor, and whether
recorded on papers, magnetic media or other electronic or non-electronic device,
(iv) all descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, (v) all documentation, including
without limitation all technical and user manuals and training materials,
relating to the foregoing, and all content contained on all World Wide Web sites
of Parent or any of its Subsidiaries.
(c) The term "Parent Product Software" shall mean the following as
currently used in as part of the products of Parent and any of its Subsidiaries:
(i) any and all computer programs and applications consisting of sets of
statements and instructions to be used directly or indirectly in computer
software or firmware whether in source code or object code form, included in or
with any products currently or heretofore sold, licensed or leased or offered
for sale, license or lease by Parent or any of its Subsidiaries (excluding
software developed specifically and solely for a customer or distributor of
Parent or any of its Subsidiaries and which is not offered to any other
customers or distributors of Parent or any of its Subsidiaries), (ii) databases
and compilations for or of any of the foregoing, including without limitation
any and all data and collections of data, whether machine readable or otherwise,
(iii) all versions of the foregoing including, without limitation, all screen
displays and designs thereof, and all component modules of source code or object
code or natural language code therefor, and whether recorded on papers, magnetic
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media or other electronic or non-electronic device, (iv) all descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, (v) all documentation, including without limitation all
technical and user manuals and training materials, relating to the foregoing,
and all content contained on all World Wide Web sites of Parent or any of its
Subsidiaries.
(d) Except as set forth on Schedule 4.13(d)(1) of the Parent Disclosure
Schedules, Parent and its Subsidiaries, to the best knowledge of Parent, own or
have the right to use all patents, patent applications, patent rights,
copyrights, trademarks, trademark rights, trade names, trade name rights, and
service marks, and all goodwill of the business associated therewith, trade
secrets, technology and know-how, Parent Computer Software other than
off-the-shelf applications, Parent Product Software, Internet domain names,
registrations for and applications for registration of trademarks, service marks
and copyrights, and other confidential or proprietary rights and information and
all technical and user manuals and documentation made or used in connection with
any of the foregoing, used anywhere in the world in connection with the
businesses of Parent or any of its Subsidiaries as currently conducted
(collectively, the "Parent Intellectual Property"), free and clear of all
Encumbrances of any nature. Except as set forth on Schedule 4.13(d)(2) of the
Parent Disclosure Schedules, Parent and its Subsidiaries own the Parent Product
Software or have a valid right or with respect to prior to agreements had a
valid right at the time of such agreement to grant the rights and licenses in
and to the Parent Product Software currently or heretofore set forth in the
agreements between Parent or any of its Subsidiaries and their respective
customers, licensors, lessees, distributors and other resellers. Schedule
4.13(d)(3) of the Parent Disclosure Schedules sets forth a true and complete
list of all Parent Product Software which is not completely and solely owned by
Parent and/or its Subsidiaries which is material to the current business of
Parent (collectively, the "Parent Licensed Product Software"). The agreements
described on Schedule 4.13(d)(3) of the Parent Disclosure Schedules set forth
all of the rights and licenses of Parent and each of its Subsidiaries in and to
the Parent Licensed Product Software, and all restrictions and obligations
(including, without limitation, royalty and other payment obligations)
associated with such rights and licenses, and each such contract is in full
force and effect and neither Parent nor any of its Subsidiaries is in material
breach of any of its obligations under any such Agreement. Any Encumbrances set
forth on Schedule 4.13(d) of the Parent Disclosure Schedules do not materially
detract from the value of the Parent Intellectual Property subject thereto and
do not materially impair the operations of any of Parent and its Subsidiaries.
(e) All patent, trademark and copyright registrations and applications for
Parent Intellectual Property, whether registered or pending, are currently used
or planned to be used in and are material to the conduct of the businesses of
Parent and its Subsidiaries as currently conducted, are listed on Schedule
4.13(a) of the Parent Disclosure Schedules. To the best knowledge of Parent and
the Purchaser, such patents, trademarks and copyright registrations and
applications (i) are valid, subsisting, in proper form and enforceable, subject
to the rights of third parties, and have been duly maintained, including the
submission of all necessary filings and fees in accordance with the legal and
administrative requirements of the appropriate jurisdictions and (ii) have not
lapsed, expired or been abandoned, and no patent, trademark, copyright,
registration or application for any of the foregoing is the subject of any
opposition, interference, cancellation proceeding or other legal or governmental
proceeding before any governmental, registration or other authority in any
jurisdiction.
(f) To the best knowledge of Parent and the Purchaser, the conduct of the
businesses of, and/or the use of the Parent Intellectual Property by, Parent and
its Subsidiaries as currently conducted does not conflict with or infringe in
any way on any proprietary right of any third party. Other than as set forth in
Schedule 4.13(f) of the Parent Disclosure Schedules there is no claim, suit,
action, correspondence, proceeding or negotiation pending or, to the best
knowledge of Parent and the Purchaser, threatened against Parent or any of its
Subsidiaries (i) alleging any conflict or infringement with any third party's
proprietary rights, (ii) asserting Parent or any of its Subsidiaries should
consider licensing rights to a third party's patent or other proprietary rights
or (iii) challenging the ownership, use, validity or enforceability of the
Parent Intellectual Property. Each of Parent and its Subsidiaries owns or has
the valid right to use all of the material Parent Intellectual Property used by
it or held for use by it in connection with its
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business. To the best knowledge of Parent and the Purchaser, there are no
conflicts with or infringements of any Parent Intellectual Property or products
of Parent or its Subsidiaries by any third party.
(g) Except as set forth on Schedule 4.13(g)(1) of the Parent Disclosure
Schedules, the Parent Computer Software and the Parent Product Software used by
Parent or any of its Subsidiaries in the conduct of their businesses was either:
(i) developed by employees of Parent or such Subsidiary of Parent within the
scope of their employment; (ii) developed on behalf of Parent or any of its
Subsidiaries by a third party, and all ownership rights therein and in any other
associated Parent Intellectual Property have been assigned or otherwise
transferred to or vested in Parent or such Subsidiary of Parent, as the case may
be, pursuant to written agreements ("Parent Work for Hire Agreements"); (iii)
acquired from a third party pursuant to a Software Acquisition Agreement which
is in full force and effect and of which neither Parent nor any of its
Subsidiaries is in material breach, or (iv) licensed from a third party pursuant
to a written license or other contract which is in full force and effect and of
which neither Parent nor any of its Subsidiaries is in material breach. Except
as set forth on Schedule 4.13(g)(2) of the Parent Disclosure Schedules, (x) no
third party has had access to any of the source code for any of the Parent
Product Software described in clause (i) or (ii) hereof and (y) no act has been
done or omitted to be done by Parent or any of its Subsidiaries to impair or
dedicate to the public or entitle any Governmental Entity to hold abandoned any
of such Parent Computer Software or Parent Product Software.
(h) To the best knowledge of Parent and the Purchaser, no consents,
filings, and authorizations by or with governmental authorities or third parties
are necessary with respect to the consummation of the Transactions contemplated
hereby as they may affect the Intellectual Property.
(i) Neither Parent nor any of its Subsidiaries has entered into any
material consent, forbearance to sue, settlement agreement or cross-licensing
arrangement with any person relating to the Parent Intellectual Property or the
intellectual property of any third party other than as may be contained in the
agreements listed in Schedule 4.13(i) of the Parent Disclosure Schedules, or
which is not material to the current business or products of Parent.
(j) To the best knowledge of Parent, except as set forth on Schedule
4.13(j) of the Parent Disclosure Schedules, Parent and its Subsidiaries are not,
nor will any of them be as a result of the execution and delivery of this
Agreement or the performance of Parent's obligations under this Agreement, in
breach of any material license, sub-license or other agreement relating to the
Parent Intellectual Property.
(k) No former or present employees, officers or directors of Parent or any
of its Subsidiaries hold any right, title or interest directly or indirectly, in
whole or in part, in or to any Parent Intellectual Property.
(l) No trade secret or confidential know-how or other confidential
information relating to Parent or its Subsidiaries has been disclosed or
authorized to be disclosed to any third party, other than pursuant to a
non-disclosure agreement that fully protects Parent's and its Subsidiaries'
interests in and to such confidential information, except to the extent that the
failure to comply with any of the foregoing could not have, individually or in
the aggregate, a Parent Material Adverse Effect.
(m) As delivered to customers and as modified by Parent, the Parent Product
Software and the Parent Other Products (as hereinafter defined) conform to their
respective applicable specifications in all material respects, except to the
extent that the failure to comply with any of the foregoing could not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(n) To the best knowledge of Parent and the Purchaser, the conduct of the
businesses of Parent and its Subsidiaries, the use of the Parent Intellectual
Property and/or any advertising or marketing materials used by Parent and its
Subsidiaries in connection with the Parent Product Software or Parent Other
Products do not violate any provision of the Lanham Act, including without
limitation Section 43 thereof, and there are no material misstatements or
omissions in any such materials which would violate any provision of the Lanham
Act, except to the extent that the failure to comply with any of the foregoing
could not have, individually or in the aggregate, a Parent Material Adverse
Effect.
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SECTION 4.14 Year 2000 Compliance.
(a) As of the date hereof, all Date-Sensitive Data and Date-Sensitive
Systems that are material to the business of Parent owned or used by, licensed
or sold to Parent or any of its Subsidiaries other than those set forth in
Schedule 4.14(a) of the Parent Disclosure Schedules, have been or will be
evaluated for Year 2000 Compliance issues and are Year 2000 Compliant or will be
Year 2000 Compliant on or before January 1, 2000, except to the extent that the
failure to comply with any of the foregoing could not have, individually or in
the aggregate, a Parent Material Adverse Effect. Parent has requested
representations from each entity that (i) provides Date-Sensitive Data to Parent
or any of its Subsidiaries which is material to the business of Parent or (ii)
processes in any way Date-Sensitive Data or software (including the Parent
Computer Software or the Parent Product Software) for Parent or any of its
Subsidiaries. Parent has obtained or will use reasonable efforts to obtain
written representations from each entity that provides any material product or
service to Parent or any of its Subsidiaries that is dependent on Year 2000
Compliant Date-Sensitive Data or Year 2000 Compliant Date-Sensitive Systems,
that any of such entity's Date-Sensitive Data and/or Date-Sensitive Systems that
are used for, or on behalf of, Parent or any of its Subsidiaries are Year 2000
Compliant, except to the extent that the failure to comply with any of the
foregoing in this Section 4.14 could not have, individually or in the aggregate,
a Parent Material Adverse Effect.
(b) As of the date hereof, all Parent Product Software and all other
products sold, licensed or leased by Parent or any of its Subsidiaries which
are, or are used with, Date-Sensitive Systems or which process Date-Sensitive
Data ( the "Parent Other Products"), when used in accordance with their
associated specifications and other documentation, are Year 2000 Compliant
subject to the express terms and conditions of Parent's documentation attached
as Schedule 4.14(b) of the Parent Disclosure Schedules (the "Parent Year 2000
Representations"), except to the extent that the failure to comply with any of
the foregoing could not have, individually or in the aggregate, a Parent
Material Adverse Effect. To the best knowledge of Parent, (a) Parent and its
Subsidiaries have made reasonable efforts not to make written representations
concerning any Parent Product Software or other products of Parent or its
Subsidiaries, which are in addition to or inconsistent with the Parent Year 2000
Representations and (b) any such representations which are in addition to or
inconsistent with the Parent Year 2000 Representations, will not, individually
or in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.15 Labor Matters. Except as set forth on Schedule 4.15(a) of the
Parent Disclosure Schedules, (i) there is no labor strike, dispute, slowdown,
stoppage or lock-out pending, or to the knowledge of Parent, threatened against
or affecting Parent and during the past two (2) years from the date of this
Agreement there has not been any such action, (ii) Parent is not a party to or
bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of Parent, (iii) none of the
employees of Parent is represented by any labor organization and Parent does not
have any knowledge of any union organizing activities among the employees of
Parent within the past two (2) years, nor does any question concerning
representation exist concerning such employees, (iv) there are no written
personnel policies, rules or procedures applicable to employees of Parent, other
than those set forth on Schedule 4.15(a) of the Parent Disclosure Schedules,
true and correct copies of which have heretofore been delivered to the Company,
(v) to the best knowledge of Parent and the Purchaser, Parent is, and has at all
times been, in compliance, in all material respects, with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other applicable laws that would cause a Parent Material Adverse Effect,
(vi) there is no unfair labor practice charge or written complaint against
Parent pending or, to the knowledge of Parent, threatened before the National
Labor Relations Board or any similar state, local or foreign agency, (vii) there
is no grievance arising out of any collective bargaining agreement or other
grievance procedure, (viii) no charges with respect to or relating to Parent are
pending before the Equal Employment Opportunity Commission or any other agency
responsible for the prevention of unlawful employment practices, (ix) Parent has
not received notice of the intent of any federal, state, local or foreign agency
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responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to or relating to Parent and no such investigation is
in progress, and (x) there are no complaints, lawsuits or other proceedings
pending or, to the knowledge of Parent, threatened in any forum by or on behalf
of any present or former employee of Parent, any applicant for employment or
classes of the foregoing alleging breach of any express or implied contract or
employment, any laws governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship.
SECTION 4.16 Compliance with Laws. To the best of its knowledge, Parent
and each of its Subsidiaries has complied in a timely manner and in all material
respects with all laws, rules and regulations, ordinances, judgments, decrees,
orders, writs and injunctions of all United States federal, state, local and
foreign governments and agencies thereof which affect the business, properties
or assets of Parent and its Subsidiaries, and no notice, charge, claim, action
or assertion has been received by Parent or any of its Subsidiaries or has been
filed, commenced or, to Parent's knowledge, threatened against Parent or any of
its Subsidiaries alleging any violation of any of the foregoing. All licenses,
permits and approvals required under such laws, rules and regulations are in
full force and effect except where the failure to be in full force and effect
would not have a Parent Material Adverse Effect.
SECTION 4.17 Environmental Matters.
(a) Except as set forth in Schedule 4.17(a) of the Parent Disclosure
Schedules, each of Parent and its Subsidiaries is in full compliance with all
Environmental Laws, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern, except where the failure so to comply would
not cause a Parent Material Adverse Effect. Such compliance includes, but is not
limited to, the possession by Parent and each of its Subsidiaries of all permits
and other governmental authorizations required under all applicable
Environmental Laws, and compliance with the terms and conditions thereof. All
permits and other governmental authorizations currently held by Parent and each
of its Subsidiaries pursuant to the Environmental Laws are identified in
Schedule 4.17(a) of the Parent Disclosure Schedules.
(b) Except as set forth in Schedule 4.17(b) of the Parent Disclosure
Schedules, neither Parent nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority or
citizens group that alleges that Parent or any of its Subsidiaries is not in
full compliance with any Environmental Laws. Parent has provided to the Company
such information, if any, that is in the possession of or reasonably available
to Parent regarding environmental matters pertaining to or the environmental
condition of the business of Parent and its Subsidiaries, or the compliance (or
noncompliance) by Parent and its Subsidiaries with any Environmental Laws.
(c) Except as set forth in Schedule 4.17(c) of the Parent Disclosure
Schedules, there is no Environmental Claim by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, death, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by Parent or any of its Subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or threatened against Parent
or any of its Subsidiaries, or against any person or entity whose liability for
any Environmental Claim Parent has retained or assumed either contractually or
by operation of law.
(d) Without in any way limiting the generality of the foregoing, except as
set forth in Schedule 4.17(d) of the Parent Disclosure Schedules, to the best
knowledge of Parent and the Purchaser, there is no asbestos contained in or
forming part of any building, building component, structure or office space
owned, leased, operated or controlled by Parent or any of its Subsidiaries.
SECTION 4.18 Product Liability. Except as described in Schedule 4.18 of
the Parent Disclosure Schedules, there are not presently pending, or to the best
knowledge of Parent, threatened any criminal,
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material civil or administrative actions, suits, demands, claims, hearings,
notices of violation, investigations, proceedings or demand letters relating to
any alleged hazard or alleged defect in design, manufacture, development,
programming, materials or workmanship, including any failure to warn or alleged
breach of express or implied warranty or representation, relating to any product
manufactured, developed, programmed, distributed, licensed or sold by or on
behalf of Parent and its Subsidiaries.
SECTION 4.19 Information in Disclosure Documents. None of the information
supplied or to be supplied by Parent for the purpose of inclusion or
incorporation by reference in (i) the Schedule 14D-9 at the time such document
is first published, sent or given to the holders of Shares, and at any time it
is amended or supplemented, (ii) the Registration Statement to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger, at the time the Registration Statement is filed with the SEC or at the
time it becomes effective under the Securities Act or (iii) the Proxy Statement
at the date it is first mailed to the Company's stockholders or at the time of
the Special Meeting, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, no misleading. The Registration Statement will comply as to form
in all material respects with the requirements of the Securities Act and the
rules and regulations thereunder, except that no representations and warranties
are made by Parent with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or contained in the
Company SEC Documents incorporated by reference in the Registration Statement or
the Proxy Statement.
SECTION 4.20 Potential Conflict of Interest. Except as set forth in
Schedule 4.20 of the Parent Disclosure Schedules or in the Parent SEC Documents
filed prior to the date hereof, since February 28, 1998 there have been no
transactions, agreements, arrangements or understandings between Parent or its
Subsidiaries, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act. Except as set forth in Schedule 4.20 of the Parent
Disclosure Schedules or in the Parent SEC Documents filed prior to the date
hereof, no officer of Parent or any of its Subsidiaries owns, directly or
indirectly, any interest in (excepting not more than 1% stock holdings for
investment purposes in securities of publicly held and traded companies) or is
an officer, director, employee or consultant of any person which is a
competitor, lessor, lessee, customer or supplier of Parent or any of its
Subsidiaries; and no officer or director of Parent or any of its Subsidiaries
(i) owns, directly or indirectly, in whole or in part, any Parent Intellectual
Property which Parent or any of its Subsidiaries is using or the use of which is
necessary for the business of Parent or its Subsidiaries; (ii) has any claim,
charge, action or cause of action against Parent or any of its Subsidiaries,
except for claims for accrued vacation pay, accrued benefits under the Plans and
similar matters and agreements existing on the date hereof; (iii) has made, on
behalf of Parent or any of its Subsidiaries, any payment or commitment to pay
any commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any other Person of
which any officer or director of Parent or any of its Subsidiaries, or, to the
best knowledge of Parent and the Purchaser, a relative of any of the foregoing,
is a partner or stockholder (except stock holdings solely for investment
purposes in securities of publicly held and traded companies); or (iv) owes any
money to Parent or any of its Subsidiaries.
Section 4.21 Insurance. Parent and each of its Subsidiaries have policies
of insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of Parent and its
Subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Parent and its Subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds. Parent has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
SECTION 4.22 Suppliers and Customers. Since February 28, 1998, no material
licensor, vendor, supplier, licensee or customer of Parent or any of its
Subsidiaries has canceled or otherwise modified its
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relationship with Parent or its Subsidiaries and, to the best knowledge of
Parent and the Purchaser, (i) no such person has any intention to do so, and
(ii) the consummation of the transactions contemplated hereby will not adversely
affect any of such relationships in any material respect, except to the extent
that the failure to comply with any of the foregoing could not have,
individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.23 Accounts Receivable; Inventory.
(a) Subject to any reserves set forth in the consolidated balance sheet of
Parent included in Parent's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1998 as filed with the SEC (the "Parent Balance Sheet"), the
accounts receivable shown in the Parent Balance Sheet arose in the ordinary
course of business, were not, as of the date of the Parent Balance Sheet,
subject to any material discount, contingency, claim of offset or recoupment or
counterclaim, and represented, as of the date of the Parent Balance Sheet, bona
fide claims against debtors for sales, leases, licenses and other charges. All
accounts receivable of Parent and its Subsidiaries arising after the date of the
Parent Balance Sheet through the date of this Agreement arose in the ordinary
course of business and, as of the date of this Agreement, are not subject to any
material discount, contingency, claim of offset or recoupment or counterclaim,
except for normal reserves consistent with past practice. The amount carried for
doubtful accounts and allowances disclosed in the Parent Balance Sheet is
believed by Parent as of the date of such Parent Balance Sheet to be sufficient
to provide for any losses which may be sustained or failure to realize the
accounts receivable shown in the Parent Balance Sheet.
(b) As of the date of the Parent Balance Sheet, the inventories shown on
the Parent Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were manufactured or acquired in the ordinary course of
business and, as of the date of this Agreement, have been replenished in all
material respects in the ordinary course of business consistent with past
practices. All such inventories are valued on the Parent Balance Sheet in
accordance with GAAP, applied on a basis consistent with Parent's past
practices, and provision has been made or reserves have been established on the
Parent Balance Sheet, in each case in an amount believed by Parent as of the
date of this Agreement to be adequate, for all slow-moving, obsolete or unusable
inventories.
SECTION 4.24 Title and Condition of Properties. Parent and its
Subsidiaries have good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Parent Balance Sheet or
acquired after November 30, 1998, except for (A) assets which have been disposed
of to nonaffiliated third parties since November 30, 1998 in the ordinary course
of business, (B) Encumbrances reflected in the Parent Balance Sheet, (C)
Encumbrances or imperfections of title which are not, individually or in the
aggregate, material in character, amount or extent and which do not materially
detract from the value or materially interfere with the present or presently
contemplated use of the assets subject thereto or affected thereby, and (D)
liens for current Taxes not yet due and payable. All of the machinery, equipment
and other tangible personal property and assets owned or used by Parent or its
Subsidiaries are operational, except for ordinary wear and tear not caused by
neglect, and are usable in the ordinary course of business.
SECTION 4.25 Illegal Payments. To the best knowledge of Parent and the
Purchaser, none of Parent or any of its Subsidiaries or any director, officer,
employee, or agent of Parent or any of its Subsidiaries has, directly or
indirectly, paid or delivered any fee, commission, or other sum of money or item
of property however characterized to any broker, finder, agent, government
official, or other person, in the United States or any other country, in any
manner related to the business or operations of Parent or any of its
Subsidiaries, which Parent or any of its Subsidiaries or any such director,
officer, employee, or agent knows or has reason to believe to have been illegal
under any applicable law, including but not limited to the Foreign Corrupt
Practices Act.
SECTION 4.26 Financing. In order to finance the Transactions, Parent and
the Purchaser have obtained a commitment letter dated April 26, 1999 (the
"Commitment Letter") from Bank of America National Trust and Savings Association
(the "Bank"), pursuant to which the Bank has committed, subject
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to the terms and conditions thereof, to provide Purchaser financing in aggregate
amount of $150 million (the "Debt Financing"), a true and correct copy of which
has been previously provided to the Company. Subject to the terms and conditions
of the Commitment Letter (including the conditions to funding) and this
Agreement, the Debt Financing is sufficient to consummate the Transactions.
Assuming the accuracy of the Company's representations and warranties contained
in this Agreement, Parent believes (based upon the facts known to Parent as of
the date of this Agreement) that each of the conditions to the completion of the
Debt Financing contained in the Commitment Letter will be satisfied on or prior
to the initial scheduled expiration date of the Offer.
SECTION 4.27 Shares Owned by Parent, Purchaser and Affiliates. Except for
100,000 shares held by David W. Brandenburg and except for any Shares that could
be deemed to be beneficially owned (as defined in Rule 13d-3 promulgated under
the Exchange Act) by Parent or the Purchaser under the Stockholders' Agreement,
to the best knowledge of Parent and the Purchaser, none of Parent, the Purchaser
nor any of their respective Affiliates beneficially owns any Shares.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Acquisition Proposals. The Company will notify the Purchaser
within twenty-four (24) hours if any proposals are received by, any information
is requested from, or any negotiations or discussions are sought to be initiated
or continued with, the Company or its officers, directors, employees, investment
bankers, attorneys, accountants or other agents, in each case in connection with
any Acquisition Proposal (as defined below) or the making of an Acquisition
Proposal ("Acquisition Proposal Interest") indicating, in connection with such
notice, the terms and conditions of any Acquisition Proposals or offers. The
Company agrees that it, as of March 15, 1999, ceased and caused to be terminated
any activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal Interest. The Company agrees
that it shall keep Parent informed, on a current basis, of the status and terms
of any Acquisition Proposal Interest. As used in this Agreement, "Acquisition
Proposal" shall mean any tender or exchange offer involving the Company, any
proposal for a merger, consolidation or other business combination involving the
Company, any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the business or assets of, the Company
(other than immaterial or insubstantial assets or inventory in the ordinary
course of business or assets held for sale), any proposal or offer with respect
to any recapitalization or restructuring with respect to the Company or any
proposal or offer with respect to any other transaction similar to any of the
foregoing with respect to the Company other than pursuant to the Transactions to
be effected pursuant to this Agreement.
SECTION 5.2 Interim Operations of the Company. The Company covenants and
agrees that, except (i) as expressly contemplated by this Agreement, (ii) as set
forth in Schedule 5.2 of the Company Disclosure Schedules, or (iii) as agreed in
writing by Parent, after the date hereof, and prior to the time the designees of
Parent have been elected to, and shall constitute a majority of, the Company's
Board of Directors pursuant to Section 1.3 hereof (the "Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course and, to the extent consistent therewith,
each of the Company and its Subsidiaries shall use its best efforts to preserve
its business organization intact and maintain its existing relations with
customers, suppliers, employees, creditors, business partners and others having
business dealings with it, such that its good will and ongoing business shall be
unimpaired at the Effective Time of the Merger;
(b) The Company will not, directly or indirectly, (i) except upon exercise
of the options or other rights to purchase shares of Common Stock pursuant to
presently outstanding stock options under the plans described in Section 2.4
hereof, issue, sell, transfer or pledge or agree to sell, issue, transfer or
pledge any treasury stock of the Company or any capital stock of any of its
Subsidiaries beneficially owned by it, (ii) amend its Articles of Incorporation
or By-Laws or similar organizational documents; or (iii) split, combine or
reclassify the outstanding Shares or any outstanding capital stock of any of the
Subsidiaries of the Company;
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(c) neither the Company nor any of its Subsidiaries shall: (i) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (ii) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options (including any automatic grants of options under
the Company Stock Plans), warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than (A) Shares reserved for issuance on the date hereof
pursuant to the exercise of options outstanding on the date hereof under the
plans described in Section 2.4 hereof and (B) Shares issued under the ESPP if
the Offer extends beyond June 30, 1999; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any assets, other than in the ordinary
and usual course of business and consistent with past practice, or incur or
modify any indebtedness or other liability, other than in the ordinary and usual
course of business and consistent with past practice; or (iv) redeem, purchase
or otherwise acquire, directly or indirectly, any shares of any class or series
of its capital stock, or any instrument or security which consists of or
includes a right to acquire such shares (other than the cancellation of options
outstanding on the date hereof pursuant to Section 2.4 hereof);
(d) neither the Company nor any of its Subsidiaries shall make any change
in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants (other than general increases in
wages to employees who are not officers or directors or affiliates in the
ordinary course consistent with past practice), or to Persons (as hereinafter
defined) providing management services, enter into or amend any employment,
severance, consulting, termination or other agreement or plan or make any loans
to any of its officers, directors, employees, affiliates, agents or consultants
or make any change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons pursuant to any Plan or otherwise;
(e) neither the Company nor any of its Subsidiaries shall pay or make any
accrual or arrangement for payment of any pension, retirement allowance or other
employee benefit pursuant to any existing Plan, agreement or arrangement to any
officer, director, employee or affiliate or pay or agree to pay or make any
accrual or arrangement for payment to any officers, directors, employees or
affiliates of the Company of any amount relating to unused vacation days, except
payments and accruals made in the ordinary course consistent with past practice;
adopt or pay, grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other Plan,
agreement or arrangement, or any employment or consulting agreement with or for
the benefit of any director, officer, employee, agent or consultant, whether
past or present; or amend in any material respect any such existing Plan,
agreement or arrangement in a manner inconsistent with the foregoing, except
that the Company and its Subsidiaries may continue to make quarterly bonus
payments to certain key employees consistent with past business practice in an
aggregate amount not to exceed $1.8 million;
(f) the Company shall not modify, amend or terminate any of the Company
Agreements, and neither the Company nor any of its Subsidiaries shall waive,
release or assign any material rights or claims under any of the Company
Agreements, except in the ordinary course of business and consistent with past
practice;
(g) neither the Company nor any of its Subsidiaries will cause any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Parent;
(h) neither the Company nor any of its Subsidiaries will (i) incur or
assume any long-term debt, or except in the ordinary course of business and in
an amount consistent with past practice, incur or assume any short-term
indebtedness; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iii) make any loans, advances or capital contributions to, or
investments in, any other Person; or (iv) enter into any material commitment or
transaction (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets or real estate), any agreement to develop
customized software products out of the ordinary course of business;
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(i) neither the Company nor any of its Subsidiaries will change any of the
accounting methods used by it unless required by GAAP, make any Tax election or
change any Tax election already made or settle any Tax Audit, other than in the
ordinary course of business;
(j) neither the Company nor any of its Subsidiaries will pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the ordinary
course of business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company;
(k) neither the Company nor any of its Subsidiaries will adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries will take, or agree to
commit to take, any action that would or is reasonably likely to result in any
of the conditions to the Merger set forth in Article VII or any of the
conditions to the Offer set forth in Annex I not being satisfied, or would make
any representation or warranty of the Company contained herein inaccurate in any
respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger in
accordance with the terms hereof or materially delay such consummation; and
(m) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or
authorize, recommend, propose or announce an intention to do any of the
foregoing.
SECTION 5.3 No Solicitation and Fiduciary Out.
(a) Except as provided in Section 5.3(b) hereof, the Company will not, and
will ensure that its officers, directors, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal, (ii) enter into any agreement with respect to any
Acquisition Proposal, or (iii) in the event of an unsolicited Acquisition
Proposal for the Company, engage in negotiations or discussions with, or provide
any information or data to, any Person (other than Parent, any of its affiliates
or representatives) relating to any Acquisition Proposal; provided, however,
that nothing contained in this Section 5.3 or any other provision hereof shall
prohibit the Company or the Company's Board of Directors from (i) taking and
disclosing to the Company's stockholders, its position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act or (ii) making such disclosure to the Company's
stockholders as is reasonably deemed necessary, in the good faith judgment of
the Company's Board of Directors after receipt of advice from outside legal
counsel to the Company that such disclosure is required under applicable law and
that the failure to make such disclosure would cause the Company's Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to a confidentiality
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement, dated March 12, 1999 entered into between Parent
and the Company (the "Confidentiality Agreement") and may negotiate and
participate in discussions and negotiations with such Person concerning an
Acquisition Proposal if (x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company relating to any such
transaction which the Company's Board of Directors determines in good faith,
after receiving advice from a nationally recognized investment banking firm,
represents a superior transaction to the Offer and the Merger and (y) the
Company's Board of Directors determines in good faith, only after receipt of
written advice from outside legal counsel to the Company, that the failure to
provide such information or access or to engage in such discussions or
negotiations would cause the Company's Board of Directors to violate its
fiduciary duties to the Company's stockholders under applicable law (an
Acquisition Proposal which satisfies clauses (x) and
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(y) being referred to herein as a "Superior Proposal"). The Company shall
promptly, and in any event within one (1) business day following receipt of a
Superior Proposal, notify Parent of the receipt of the same and prior to
providing any such party with any material non-public information. The Company
shall promptly provide to Parent any material non-public information regarding
the Company provided to any other party which was not previously provided to
Parent.
(c) Except as set forth herein, neither the Company's Board of Directors
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent or the Purchaser, the approval or
recommendation by such Board of Directors or any such committee of the Offer,
this Agreement or the Merger, (ii) approve or recommend or propose to approve or
recommend, any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, prior to the
time of acceptance for payment of Shares in the Offer, the Company's Board of
Directors may (subject to the terms of this sentence and the following sentence)
enter into an acquisition agreement with respect to a Superior Proposal, in
which event the Company may take any of the actions set forth in clauses (i)
through (iii) of the immediately preceding sentence; provided, however, that the
Company shall not enter into an acquisition agreement with respect to a Superior
Proposal unless the Company shall have furnished Parent with written notice not
later than the first to occur of (i) 12:00 noon three (3) business days in
advance of any date that it intends to enter into such acquisition agreement or
(ii) two (2) business days prior to the expiration of the Offer; and shall have
caused its financial and legal advisors to negotiate with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the Transactions contemplated herein on such adjusted
terms.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Additional Agreements. Subject to the terms and conditions as
herein provided, the Company, Parent and the Purchaser will each comply in all
material respects with all applicable laws and with all applicable rules and
regulations of any governmental authority to achieve the satisfaction of the
Minimum Condition and all conditions set forth in Annex I attached hereto and
Article VII hereof, and to consummate and make effective the Merger and the
other Transactions contemplated hereby.
SECTION 6.2 Notification of Certain Matters. The Company shall give prompt
notice to Parent and the Purchaser, and Parent and the Purchaser shall give
prompt notice to the Company, of (i) the occurrence, or non-occurrence of any
event whose occurrence, or non-occurrence causes either (x) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time that
would have a Company Material Adverse Effect or (y) any condition set forth in
Annex I to be unsatisfied in any material respect at any time from the date
hereof to the date the Purchaser purchases Shares pursuant to the Offer and (ii)
any failure of the Company, the Purchaser or Parent, as the case may be, or any
officer, director, employee or agent thereof, to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.2 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.3 Access; Confidentiality.
(a) From the date hereof to the Effective Time, upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources (and their counsel
or representatives) and other representatives of Parent, full access, during
normal business hours during the period prior to the Appointment Date, to all
its properties, books, contracts, commitments and records and, during such
period, the Company shall (and shall cause each of its Subsidiaries to) furnish
promptly to the Parent (and such other persons) (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to
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the requirements of federal securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. Access shall include the right to conduct such studies, demonstrations
and tests of the Company's Product Software and Other Products as Parent, in its
reasonable discretion, shall deem appropriate. After the Appointment Date, the
Company shall provide Parent and such persons as Parent shall designate with all
such information, at such time as Parent shall request. Unless otherwise
required by law and until the Appointment Date, Parent and the Purchaser will
hold any such information which is non-public in confidence in accordance with,
and will otherwise abide by, the provisions of the Confidentiality Agreement. No
investigation pursuant to this Section 6.3(a) shall affect any representation or
warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel, agents
and other representatives shall cooperate with Parent and the Purchaser (and
such other persons) by providing information about the Company which is
necessary for Parent and the Purchaser and its accountants, agents, counsel and
other representatives to prepare the Disclosure Documents and to satisfy other
reasonable requests with respect to such documents. Notwithstanding the
penultimate sentence of Section 6.3(a) above, Parent and the Purchaser may
disclose, or cause their representatives to disclose, and at the request of
Parent or the Purchaser, the Company shall and shall cause its Subsidiaries to
disclose information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the Transactions contemplated
by this Agreement in the Disclosure Documents and to prospective financing
sources in connection with the Transactions contemplated hereby.
SECTION 6.4 Consents and Approvals.
(a) Each of Parent, the Purchaser and the Company will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with respect to this Agreement and the Transactions (which actions
shall include, without limitation, furnishing all information required under the
HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with this Agreement and the
Transactions. Each of the Company, Parent and the Purchaser will, and will cause
each of its respective Subsidiaries to, take all reasonable actions necessary to
obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third party required to be obtained or made by
Parent, the Purchaser, the Company or any of their respective Subsidiaries in
connection with the Transactions or the taking of any action contemplated
thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions necessary to
file on the date this Agreement is executed notifications under the HSR Act and
to respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
(c) All costs and expenses of obtaining or effecting any and all of the
consents, approvals, orders, authorizations, waivers, declarations, filings and
registrations referred to in this Section 6.4 shall be borne by the party
incurring the same, except that Parent hereby agrees to pay any applicable
filing fee (and limited strictly to such filing fee) related to notification
under the HSR Act.
SECTION 6.5 Brokers or Finders. The Company represents, as to itself and
its Subsidiaries and affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee from the Company or any
of its Subsidiaries in connection with any of the transactions contemplated by
this Agreement except for U.S. Bancorp Piper Jaffray, Inc. whose fees are set
forth in a true, correct and complete copy of the engagement letter attached as
Schedule 6.5 of the Company Disclosure Schedules. Parent represents, as to
itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee from Parent or any of its Subsidiaries in
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connection with any of the transactions contemplated by this Agreement except
for NationsBank Montgomery Securities whose fees are set forth in a true,
correct and complete copy of the engagement letter attached as Schedule 6.5 of
the Parent Disclosure Schedules. Except as set forth on Schedule 6.5 of the
Company Disclosure Schedules, the Company shall indemnify and hold harmless
Parent and the Purchaser from and against any and all losses, claims, damages,
and liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee or any other commission or similar fee, brokerage
commission, or similar payment in connection with any transaction contemplated
hereby asserted by any Person on the basis of any act or statement made or
alleged to have been made by the Company or any of its affiliates. Except as set
forth on Schedule 6.5 of the Parent Disclosure Schedules, Parent and the
Purchaser shall indemnify and hold harmless the Company from and against any and
all losses, claims, damages, and liabilities (including legal and other expenses
reasonably incurred in connection with investigating or defending any claims or
actions) with respect to any finder's fee or any other commission or similar
fee, brokerage commission, or similar payment in connection with any transaction
contemplated hereby asserted by any Person on the basis of any act or statement
made or alleged to have been made by Parent or any of its affiliates.
SECTION 6.6 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party believes, after receiving the advice of
outside counsel, may be required by law or by any listing agreement with a
national securities exchange or trading market. Information included in
Disclosure Documents shall not be deemed to constitute public disclosure for
purposes of this Section 6.6.
SECTION 6.7 Directors' and Officers' Insurance and Indemnification.
(a) For five (5) years after the Effective Time, Parent and the Surviving
Corporation (or any successor to the Surviving Corporation) shall indemnify,
defend and hold harmless the present and former officers and directors of the
Company and its Subsidiaries, and persons who become any of the foregoing prior
to the Effective Time (each an "Indemnified Party") against all losses, claims,
damages, liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of the Parent or the Surviving Corporation, which consent
shall not unreasonably be withheld)) arising out of actions or omissions
occurring at or prior to the Effective Time to the full extent permissible under
the KGCC, the terms of the Company's Articles of Incorporation or By-Laws, as in
effect at the date hereof; provided, that in the event any claim or claims are
asserted or made within such five (5) year period, all rights to indemnification
in respect of any such claim or claims shall continue until disposition of any
and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
period of not less than five (5) years after the Effective Time; provided, that
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
canceled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall Parent be required to pay aggregate
premiums for insurance under this Section 6.7(b) in excess of $250,000;
provided, further, that if the Parent or the Surviving Corporation is unable to
obtain the amount of insurance required by this Section 6.7(b) for such
aggregate premium, Parent or the Surviving Corporation shall obtain as much
insurance as can be obtained for $250,000.
SECTION 6.8 Purchaser Compliance. Parent shall cause the Purchaser to
comply with all of its obligations under or related to this Agreement.
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SECTION 6.9 Nasdaq National Market Listing and De-Listing. Parent shall
use its best efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for listing on the Nasdaq National Market subject to
official notice of issuance, prior to the Closing Date. Parent shall use its
best efforts to the extent feasible to cause the Shares to continue to be listed
on the Nasdaq National Market and registered under the Exchange Act until the
Effective Time. Parent shall use its best efforts to cause the Shares to be
de-listed from the Nasdaq National Market and de-registered under the Exchange
Act as soon as possible following the Effective Time.
SECTION 6.10 Agreement of Affiliates. The Company shall deliver to Parent,
prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "Affiliate Letter") identifying all persons who
are, or may be deemed to be, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable best efforts
to cause each such person who is identified as an "affiliate" in the Affiliate
Letter to deliver to Parent, prior to the Effective Time, a written agreement
(the "Affiliate Agreement") in substantially the form attached hereto as Exhibit
B.
SECTION 6.11 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the conditions of
this Agreement, the Purchaser and the Company agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under any
applicable laws to consummate and make effective the transactions contemplated
by this Agreement as promptly as practicable including, but not limited to (i)
the preparation and filing of all forms, registrations and notices required to
be filed to consummate the transactions contemplated by this Agreement and the
taking of such actions as are necessary to obtain any requisite approvals,
consents, orders, exemptions or waivers by any third party or Governmental
Entity, (ii) the preparation of any Offering Documents, the Registration
Statement or Disclosure Documents requested by the Purchaser, (iii) the
obtainment by Parent of the Debt Financing and (iv) the satisfaction of the
other parties' conditions to Closing. In addition, no party hereto shall take
any action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult with the other
parties hereto with respect to, provide any necessary information with respect
to and provide the other (or its counsel) copies of, all filings made by such
party with any Governmental Entity or any other information supplied by such
party to a Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement. Each party hereto shall promptly
inform the other parties of any communication from any Governmental Entity
regarding any of the transactions contemplated by this Agreement. If any party
hereto or affiliate thereof receives a request for additional information or
documentary material from any such Government Entity with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. To the extent that transfers of permits or environmental
permits are required as a result of execution of this Agreement or consummation
of the transactions contemplated hereby, the Company shall use its best efforts
to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require the Purchaser to defend against any litigation brought by any
Governmental Entity seeking to prevent the consummation of the transactions
contemplated hereby.
SECTION 6.12 No Repurchase of Parent Common Stock. Prior to the Merger,
Parent will not repurchase any shares of Parent Common Stock.
SECTION 6.13 Company Stock Plan Amendments. Prior to or contemporaneously
with the closing of the Offer, the Company will amend (i) its 401(k) plan so as
to insure that neither Parent nor its
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Subsidiaries (other than the Company) will become participating employees in
such plan and (ii) the Directors Plan to preclude any further grants of options
thereunder.
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
Parent, the Purchaser, or the Company, as the case may be, to the extent
permitted by applicable law:
(a) Stockholder Approval. The Merger and this Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, as
required by the KGCC and the NGCL;
(b) Statutes, Court Orders. No statute, rule or regulation shall have been
enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger; and there shall be no order or injunction of a court
of competent jurisdiction in effect precluding consummation of the Merger;
(c) Purchase of Shares in Offer. The Purchaser shall have made, or caused
to be made, the Offer and shall have purchased, or caused to be purchased,
9,158,155 shares pursuant to the Offer; provided, that this condition shall be
deemed to have been satisfied with respect to the obligation of Parent and the
Purchaser to effect the Merger if the Purchaser fails to accept for payment or
pay for Shares pursuant to the Offer in violation of the terms of the Offer or
of this Agreement;
(d) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose and no similar proceeding
in respect of the Proxy Statement shall have been initiated or threatened by the
SEC; and
(e) HSR Approval. The applicable waiting period under the HSR Act shall
have expired or early termination shall have been granted with respect to the
Offer.
SECTION 7.2 Conditions to Obligations by Parent and the Purchaser to
Effect the Merger. The obligations of Parent and the Purchaser to consummate the
Merger are further subject to fulfillment of the condition that all actions
contemplated by Section 2.5 hereof shall have been taken, which condition may be
waived by Parent and the Purchaser.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval of the Merger:
(a) By mutual written consent of Parent and the Company; or
(b) By Parent if the Offer shall have expired or been terminated without
any Shares being purchased thereunder by the Purchaser as a result of the
occurrence of any of the events set forth in Annex I; or
(c) By either Parent or the Company if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use their best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or
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(d) By Parent if, without any material breach by the Purchaser of its
obligations under this Agreement, the purchase of Shares pursuant to the Offer
shall not have occurred on or before three (3) months from date of this
Agreement; or
(e) By the Company if, without any material breach by the Company of its
obligations under this Agreement, the purchase of Shares pursuant to the Offer
shall not have occurred on or before three (3) months from date of this
Agreement; or
(f) By the Company (i) if there shall be a material breach of any of Parent
or the Purchaser's representations, warranties or covenants hereunder, which
breach cannot be or has not been cured within thirty (30) days of the receipt by
Parent of written notice thereof from the Company or (ii) to allow the Company
to enter into an agreement in accordance with Section 5.3(c) hereof with respect
to a Superior Proposal which the Company's Board of Directors has determined is
more favorable to the stockholders of the Company than the transactions
contemplated hereby; provided, however, if termination is pursuant to clause
(ii) of this Section 8.1(f), that it has complied with all provisions thereof,
including the notice provision therein, and that it makes simultaneous payment
of the Termination Fee (as hereinafter defined), plus any amounts then due as a
reimbursement of expenses pursuant to Section 8.2(b) hereof; or
(g) By Parent, if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached any representation, warranty or covenant or
other agreement contained in this Agreement, which breach (i) would give rise to
the failure of a condition set forth in paragraph (f) or (g) of Annex I hereto
and (ii) cannot be or has not been cured within thirty (30) days of the receipt
by the Company of written notice thereof from Parent; or
(h) By Parent, at any time prior to the purchase of the Shares pursuant to
the Offer, if (i) the Company's Board of Directors shall withdraw, modify, or
change its recommendation or approval in respect of this Agreement or the Offer
in a manner adverse to the Purchaser, (ii) the Company's Board of Directors
shall have recommended any proposal other than by Parent or the Purchaser in
respect of an Acquisition Proposal, (iii) the Company shall have exercised a
right with respect to an Acquisition Proposal referenced in Section 5.3(b)
hereof and shall, directly or through its representatives, continue discussions
with any third party concerning an Acquisition Proposal, which proposal contains
a proposal as to price (without regard to whether such proposal specifies a
particular price or range of potential prices), for more than twenty (20)
business days after the date of receipt of such Acquisition Proposal, (iv) an
Acquisition Proposal that is publicly disclosed shall have been commenced,
publicly proposed or communicated to the Company which contains a proposal as to
price (without regard to whether such proposal specifies a specific price or a
range of potential prices) and the Company shall not have rejected such proposal
within twenty (20) business days of its receipt or, if sooner, the date its
existence first becomes publicly disclosed; or
(i) By Parent, as soon as practicable after the expiration of the Offer, if
the Bank shall not have extended the Debt Financing to Purchaser in accordance
with the Commitment Letter and Parent shall have determined in good faith that
it cannot obtain debt financing within thirty-five (35) business days after
commencement of the Offer from any other source on terms at least as favorable
in the aggregate as the terms set forth in the Commitment Letter; or
(j) By the Company, at the initial scheduled expiration date of the Offer
or any extended expiration date of the Offer, if at such time (i) Parent shall
not have obtained the Debt Financing or waived the condition set forth in
subparagraph (k) of Annex I hereto and (ii) the Minimum Condition and all other
conditions set forth in Annex I (other than those set forth in paragraph (k)
thereof) have been satisfied or, to the extent such conditions may be so waived,
waived by Parent.
SECTION 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in
Section 8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void and
there shall be no liability on the part of Parent, the Purchaser or the Company,
except (i) as set forth in this
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Section 8.2 and in Sections 6.3(a), 6.5 and 9.3 hereof and (ii) nothing herein
shall relieve any party from liability for any willful and material breach of
this Agreement.
(b) If (i) Parent shall have terminated this Agreement pursuant to Section
8.1(h) hereof, (ii) Parent shall have terminated this Agreement pursuant to
Section 8.1(g) hereof and within twelve (12) months following the date of any
such termination, an acquisition pursuant to an Acquisition Proposal shall have
been consummated or (iii) the Company shall have terminated this Agreement
pursuant to Section 8.1(f)(ii), then in any such case the Company shall pay in
immediately available funds simultaneously with such termination if pursuant to
Section 8.1(f)(ii) hereof and promptly, but in no event later than two (2)
business days after the date of such termination if pursuant to Section 8.1(h)
hereof or the consummation of the acquisition contemplated by the Acquisition
Proposal following a termination pursuant to Section 8.1(g), to Parent a
Termination Fee, which fee shall be payable by wire transfer to such account as
Parent may designate in writing to the Company.
(c) Notwithstanding the provisions set forth in Section 8.2(a) and Section
8.2(b) above, if this Agreement is terminated by Parent pursuant to Section
8.1(i) hereof or by the Company pursuant to Section 8.1(j) hereof and Parent is
not entitled to terminate, withdraw or not consummate the Offer under one or
more of the conditions to the Offer set forth in Annex I to this Agreement
(other than the condition set forth in subparagraph (k) of Annex I), Parent
shall pay the Termination Fee to the Company in immediately available funds.
Payment of the Termination Fee shall be made within two (2) business days after
Parent's or the Company's termination of this Agreement pursuant to Section
8.1(i) or Section 8.1(j).
(d) Notwithstanding the provisions set forth in Sections 8.2(a) and Section
8.2(b) above, if at least a majority of the issued and outstanding Common Stock
on a fully diluted basis has been validly tendered and not withdrawn prior to
the expiration of the Offer, and this Agreement is terminated by Parent pursuant
to Section 8.1(b) or by the Company pursuant to Section 8.1(e) hereof, Parent
shall pay the Termination Fee to the Company in immediately available funds if
Parent or the Company terminates this Agreement solely as a result of the
Minimum Condition not having been satisfied, with payment of the Termination Fee
to be made within two (2) business days after Parent's or the Company's
termination of this Agreement.
(e) For purposes of this Agreement, the term "Termination Fee" shall mean
an amount equal to $4,975,000, plus an amount, not in excess of $1,000,000,
equal to the actual and reasonably documented out-of-pocket expenses incurred by
either Parent or Purchaser, on the one hand, or the Company, on the other hand,
as the case may be, in connection with the Offer, the Merger, this Agreement,
the Stockholders' Agreement and the consummation of the transactions
contemplated hereby and thereby.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Amendment and Modification. Subject to applicable law and
Section 1.3(c) hereof, this Agreement may be amended, modified and supplemented
in any and all respects, whether before or after any vote of the stockholders of
the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors or equivalent governing
bodies, at any time prior to the Effective Time with respect to any of the terms
contained herein; provided that after the approval of this Agreement by the
shareholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration.
SECTION 9.2 Non-survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
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SECTION 9.3 Expenses. Except as expressly set forth in Section 6.4(c) and
8.2(b) hereof, all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses.
SECTION 9.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by a nationally recognized overnight courier
service, such as Federal Express, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
InterVoice, Inc.
17811 Waterview Parkway
Dallas, Texas 75252
Attention: Vice President and Corporate Counsel
Telephone No.: 972-454-8694
Telecopy No.: 972-454-8120
with a copy to:
InterVoice Acquisition Subsidiary III, Inc.
17811 Waterview Parkway
Dallas, Texas 75252
Attention: Vice President and Corporate Counsel
Telephone No.: 972-454-8694
Telecopy No.: 972-454-8120
and
Sam P. Burford, Jr.
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Telephone No.: (214) 969-1700
Telecopy No.: (214) 969-1751
(b) if to the Company, to:
Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746-5006
Attention: Chief Financial Officer
Telephone No.: 407-357-1002
Telecopy No.: 407-357-1410
with a copy to:
Thomas P. Garretson
Triplett, Woolf & Garretson, LLC
2959 North Rick Road, Suite 300
Wichita, Kansas 67226
Telephone No.: 316-630-8100
Telecopy No.: 316-630-8101
SECTION 9.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the term "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement,
the term "Person" shall mean a
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natural person, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Entity or other entity or organization.
SECTION 9.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.7 Entire Agreement; No Third Party Beneficiaries. This Agreement
and the Confidentiality Agreement (including the documents and the instruments
referred to herein and therein):
(a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect
to the subject matter hereof, and
(b) except as provided in Sections 2.4 and 6.7 hereof, are not
intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
SECTION 9.8 Severability. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
asking such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
SECTION 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without giving
effect to the principles of conflicts of law thereof.
SECTION 9.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Notwithstanding the foregoing, if any party assigns its rights under
this Agreement, such party shall not be deemed to have been released from its
respective obligations set forth herein.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized as
of the date first written above.
INTERVOICE, INC.
By /s/ DANIEL D. HAMMOND
-----------------------------------
Name: Daniel D. Hammond
Title: Chairman of the Board and
Chief Executive Officer
INTERVOICE ACQUISITION SUBSIDIARY,
III, INC.
By /s/ ROB-ROY J. GRAHAM
-----------------------------------
Name: Rob-Roy J. Graham
Title: President
BRITE VOICE SYSTEMS, INC.
By /s/ STANLEY G. BRANNAN
-----------------------------------
Name: Stanley G. Brannan
Title: Chairman of the Board,
President and Chief
Executive Officer
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ANNEX I
Certain Conditions of the Offer. Notwithstanding any other provisions of
the Offer, and in addition to (and not in limitation of) the Purchaser's rights
to extend and amend the Offer at any time in its sole discretion (to the extent
as permitted by this Agreement), the Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if (i) as of the expiration date of the Offer (A) any applicable waiting period
under the HSR Act has not expired or terminated or (B) the Minimum Condition has
not been satisfied, or (ii) at any time on or after the date of this Agreement
and before the time of acceptance for payment for any such Shares, any of the
following events shall occur:
(a) there shall be threatened in writing or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material portion
of their (to the extent it relates to the Offer or Merger) or the Company's
businesses or assets, or to compel Parent or the Purchaser or their respective
Subsidiaries and affiliates to dispose of or hold separate any material portion
of the business or assets of the Company and its Subsidiaries or (to the extent
it relates to the Offer or Merger) Parent and its Subsidiaries, in each case
taken as a whole, (ii) challenging the acquisition by Parent or the Purchaser of
any Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement, or seeking to obtain from the
Company, and (to the extent it relates to the Offer or Merger) Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of the Purchaser, or render the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, or (iv) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction (other than a temporary or preliminary injunction that is removed
within ten (10) days) enacted, entered, enforced, promulgated, or deemed
applicable, pursuant to an authoritative interpretation by or on behalf of a
Governmental Entity, to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity other than the application to the Offer or the
Merger of applicable waiting periods under HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market for a period in excess of
twenty-four (24) hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a general banking moratorium or any general
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States (which shall not include the United States' participation in the NATO
peacekeeping mission in the provinces of the former Yugoslavia (including but
not limited to Serbia, Kosovo and Albania)), (iv) any material limitation by any
United States governmental authority on the extension of credit generally by
banks or other lending institutions, or (v) a change in general financial, bank
or capital market conditions which materially and adversely affects the ability
of financial institutions in the United States to extend credit or syndicate
loans or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
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(d) since December 31, 1998, there shall have occurred any change (or any
development that, insofar as reasonably can be foreseen, is reasonably likely to
result in any change) that constitutes a Company Material Adverse Effect;
(e) (i) the Company's Board of Directors or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or this Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 5.3(c) of this Agreement;
(f) any of the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct, in each case (i) as of the
date referred to in any representation or warranty which addresses matters as of
a particular date, or (ii) as to all other representations and warranties, as of
the date of this Agreement and as of the scheduled expiration of the Offer and
such inaccuracy individually or in the aggregate would have a Company Material
Adverse Effect;
(g) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under this
Agreement and such failure individually or in the aggregate would have a Company
Material Adverse Effect;
(h) the Purchaser shall have failed to receive a certificate executed by
the President or a Vice President of the Company, dated as of the scheduled
expiration of the Offer, to the effect that the conditions set forth in
paragraphs (f) and (g) of this Annex I have not occurred;
(i) all consents, permits and approvals of Governmental Entities and other
persons listed in Schedule 3.4 of the Company Disclosure Schedules and
identified with an asterisk shall not have been obtained with no material
adverse conditions attached and no material expense imposed on the Company or
any of its Subsidiaries;
(j) this Agreement shall have been terminated in accordance with its terms;
and
(k) Parent and/or the Purchaser shall not have received the Debt Financing
for the Transactions contemplated by the Commitment Letter from the Bank, and
Parent shall have determined in good faith that it cannot obtain debt financing
from any other source within thirty-five (35) business days after commencement
of the Offer on terms at least as favorable in the aggregate as the terms set
forth in the Commitment Letter.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such conditions (including any action or inaction
by Parent or the Purchaser) and may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in the sole discretion of
Parent or the Purchaser, except as otherwise provided by this Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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EXHIBIT A
FORM OF STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of April 27,
1999, is made by and among InterVoice, Inc., a Texas corporation ("Parent"),
InterVoice Acquisition Subsidiary III, Inc., a Nevada corporation and a wholly
owned subsidiary of Parent (the "Purchaser") and Stanley G. Brannan, Sue
Brannan, Alan C. Maltz (on his own behalf, as well as on behalf of his minor
children for whom Mr. Maltz acts as custodian for 80,000 shares of Common Stock
(as hereinafter defined) beneficially owned by his minor children), Scott A.
Maltz, Glenn A. Etherington, Leon A. Ferber, Ray S. Naeini, Donald R. Walsh and
John F. Kelsey, III (collectively, the "Stockholders").
WHEREAS, the Stockholders are, as of the date hereof, the record and
beneficial owners of approximately 3,090,541 shares (as may be adjusted from
time to time pursuant to Section 6 hereof, the "Shares") of common stock, no par
value (the "Common Stock") of Brite Voice Systems, Inc., a Kansas corporation
(the "Company");
WHEREAS, certain of the Stockholders also own options to purchase shares of
Common Stock (the "Stock Options") pursuant to various stock option plans
maintained by the Company;
WHEREAS, Parent, the Purchaser and the Company concurrently herewith are
entering into an Acquisition Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), which provides, among other things, for the
acquisition of the Company by Parent by means of a cash tender offer (the
"Offer") for up to 9,158,155 shares of Common Stock and for the subsequent
merger (the "Merger") of the Purchaser with and into the Company upon the terms
and subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and the Purchaser to
enter into the Merger Agreement, and in order to induce Parent and the Purchaser
to enter into the Merger Agreement, the Stockholders have agreed to enter into
this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and the Purchaser of the Merger Agreement, the foregoing preamble and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Stockholders. Each
Stockholder hereby, severally and not jointly, represents and warrants to Parent
and the Purchaser as follows:
(a) Such Stockholder is the record and beneficial owner of that number of
shares of Common Stock set forth below opposite such Stockholder's name:
<TABLE>
<CAPTION>
SHARES OF
NAME COMMON STOCK
- ---- ------------
<S> <C>
Stanley G. Brannan.......................................... 1,141,962
Sue Brannan................................................. 25,000
Alan C. Maltz............................................... 1,225,106
Alan C. Maltz, as custodian................................. 80,000
Scott A. Maltz.............................................. 472,621
Glenn A. Etherington........................................ 25,321
Leon A. Ferber.............................................. 115,000
Ray S. Naeini............................................... 0
Donald R. Walsh............................................. 3,698
John F. Kelsey, III......................................... 1,833
</TABLE>
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(b) Such Stockholder holds Stock Options covering that number of shares of
Common Stock set forth below opposite such Stockholder's name:
<TABLE>
<CAPTION>
SHARE OF
COMMON
STOCK
COVERED BY
STOCK
NAME OPTIONS
- ---- ----------
<S> <C>
Stanley G. Brannan.......................................... 4,500
Sue Brannan................................................. 0
Alan C. Maltz............................................... 4,500
Alan C. Maltz, as custodian................................. 0
Scott A. Maltz.............................................. 0
Glenn A. Etherington........................................ 139,000
Leon A. Ferber.............................................. 50,000
Ray S. Naeini............................................... 140,000
Donald R. Walsh............................................. 142,750
John F. Kelsey, III......................................... 23,500
</TABLE>
(c) Such Stockholder has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken any necessary action to authorize the execution, delivery and
performance of this Agreement.
(d) This Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
(e) Neither the execution and delivery of this Agreement nor the
consummation by such Stockholder of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which such Stockholder is a party or bound or to which those Shares or
Stock Options owned by such Stockholder are subject. Consummation by such
Stockholder of the transactions contemplated hereby will not violate, or require
any consent, approval, or notice under, any provision of any judgment, order,
decree, statute, law, rule or regulation applicable to such Stockholder or those
Shares or Stock Options owned by such Stockholder, except for any necessary
filing under Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or state takeover laws.
(f) The certificates representing those Shares owned by such Stockholder
are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
SECTION 2. Representations and Warranties of Parent and the
Purchaser. Each of Parent and the Purchaser hereby, jointly and severally,
represents and warrants to the Stockholders as follows:
(a) Each of Parent and the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the States of Texas and
Nevada, respectively, has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
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(b) This Agreement has been duly authorized, executed and delivered by each
of Parent and the Purchaser and constitutes the legal, valid and binding
obligation of each of Parent and the Purchaser, enforceable against each of them
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) the availability
of the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Parent and the Purchaser of the transactions
contemplated hereby will result in a violation of, or a default under, or
conflict with, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which Parent or the Purchaser is a
party or bound. The consummation by each of Parent and the Purchaser of the
transactions contemplated hereby will not violate, or require any consent,
approval, or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to either Parent or the Purchaser,
except for any necessary filing under the HSR Act or state takeover laws.
SECTION 3. Purchase and Sale of the Shares. Each Stockholder hereby
agrees, severally but not jointly, that he or she shall tender the Shares into
the Offer promptly, and in any event no later than the third (3RD) business day
following the commencement of the Offer, and that the Stockholders shall not
withdraw any Shares so tendered. The Purchaser hereby agrees to purchase all the
Shares so tendered at a price per Share equal to Thirteen and 40/100s Dollars
($13.40) (the "Offer Price") or any higher price that may be paid in the Offer;
provided, however, that the Purchaser's obligation to accept for payment and pay
for the Shares in the Offer is subject to all the terms and conditions of the
Offer set forth in the Merger Agreement and Annex I thereto.
SECTION 4. Transfer of the Shares. Prior to the termination of this
Agreement, except as otherwise provided herein, each Stockholder agrees,
severally but not jointly, not to: (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of the Shares
or the Stock Options; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of those Shares or
Stock Options owned by such Stockholder or any interest therein; (iii) grant any
proxy, power-of-attorney or other authorization or consent in or with respect to
those Shares owned by such Stockholder or grant any power of attorney or other
authorization or consent in or with respect to those Stock Options owned by such
Stockholder; (iv) deposit those Shares owned by such Stockholder into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or (v) take any other action that would in any way restrict, limit or
interfere with the performance of such Stockholder's obligations hereunder or
the transactions contemplated hereby.
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Stockholder hereby irrevocably grants to, and appoints, Parent and
any nominee thereof, as such Stockholder's respective proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of such
Stockholder, to vote those Shares owned by such Stockholder, or grant a consent
or approval in respect of such Shares, in connection with any meeting of the
stockholders of the Company (i) in favor of the Merger, and (ii) against any
action or agreement which would impede, interfere with or prevent the Merger,
including any other extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company and a third party or any
other proposal of a third party to acquire the Company.
(b) Each Stockholder represents, severally but not jointly, that any
proxies, if any, heretofore given in respect of those Shares owned by such
Stockholder are not irrevocable, and that such proxies are hereby revoked.
(c) Each Stockholder hereby affirms, severally but not jointly, that such
Stockholder's irrevocable proxy set forth in this Section 5 is given in
connection with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of such Stockholder under
this
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Agreement. Each Stockholder hereby further affirms, severally but not jointly,
that such Stockholder's irrevocable proxy is coupled with an interest and,
except as set forth in Section 9 hereof, is intended to be irrevocable in
accordance with the provisions of Section 17-6502 of the Kansas General
Corporation Code (the "KGCC").
SECTION 6. Certain Events. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by the Stockholders, the number of Shares and the number of shares of
Common Stock covered by the Stock Options shall be adjusted appropriately, and
this Agreement and the obligations hereunder shall attach to any additional
shares of Common Stock or other securities or rights of the Company issued to or
acquired by the Stockholders.
SECTION 7. Stock Option Cash-Out. Subject to the completion of the Merger,
each Stockholder that holds Stock Options as of the date hereof hereby agrees,
severally but not jointly, that he or she shall, in accordance with Section 2.4
of the Merger Agreement, surrender such Stock Options to the Company for
cancellation prior to the Effective Time (as defined in the Merger Agreement).
Subject to the conditions set forth in the immediately preceding sentence and
within ten (10) days after the Effective Time of the Merger, the Company will
pay the respective holders of those Stock Options that are "in the money" an
amount, in cash, equal to product of (i) the difference between the Offer Price
and the respective per share exercise prices of such Stock Options, multiplied
by (ii) the number of shares of Common Stock covered by the respective Stock
Options.
SECTION 8. Certain Other Agreements.
(a) Except as provided in this Section 8 hereof, each Stockholder will not,
and will ensure that such Stockholder's, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal (as defined in the Merger Agreement), (ii) enter into any
agreement with respect to any Acquisition Proposal, or (iii) in the event of an
unsolicited Acquisition Proposal for the Company, engage in negotiations or
discussions with, or provide any information or data to, any Person (as defined
in the Merger Agreement) (other than Parent, any of its affiliates or
representatives) relating to any Acquisition Proposal; provided, however, that
nothing contained in this Section 8 or any other provision hereof shall prohibit
Stockholders, on behalf of the Company or the Company's Board of Directors, from
(i) taking and disclosing to the Company's stockholders, its position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act or (ii) making such disclosure to
the Company's stockholders as is reasonably deemed necessary, in the good faith
judgment of the Company's Board of Directors after receipt of advice from
outside legal counsel to the Company that such disclosure is required under
applicable law and that the failure to make such disclosure would cause the
Company's Board of Directors to violate its fiduciary duties to the Company's
stockholders under applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, each Stockholder may furnish information concerning the
Company's business, properties or assets to any Person pursuant to a
confidentiality agreement with terms no less favorable to such Stockholder and
the Company than those contained in the Confidentiality Agreement, dated March
12, 1999 entered into between Parent and the Company (the "Confidentiality
Agreement") and may negotiate and participate in discussions and negotiations
with such Person concerning an Acquisition Proposal if (x) such entity or group
has on an unsolicited basis submitted a bona fide written proposal to the
Company relating to any such transaction which the Company's Board of Directors
determines in good faith, after receiving advice from a nationally recognized
investment banking firm, represents a superior transaction to the Offer and the
Merger and (y) the Company's Board of Directors determines in good faith, only
after receipt of written advice from outside legal counsel to the Company, that
the failure to provide such information or access or to engage in such
discussions or negotiations would cause the Company's Board of Directors to
violate its fiduciary duties to the Company's stockholders under applicable law
(an Acquisition Proposal
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which satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). Each Stockholder shall promptly, and in any event within one (1)
business day following receipt of a Superior Proposal, notify Parent of the
receipt of the same and prior to providing any such party with any material
non-public information. Each Stockholder shall promptly provide to Parent any
material non-public information regarding the Company provided to any other
party which was not previously provided to Parent.
(c) Except as set forth herein, no Stockholder shall (i) approve or
recommend or propose to approve or recommend, any Acquisition Proposal or (ii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares in the Offer, each Stockholder may (subject to the terms of this sentence
and the following sentence) enter into an acquisition agreement with respect to
a Superior Proposal, in which event each Stockholder may take any of the actions
set forth in clauses (i) through (ii) of the immediately preceding sentence;
provided, however, that no Stockholder shall enter into an acquisition agreement
with respect to a Superior Proposal unless the Company shall have furnished
Parent with written notice not later than the first to occur of (i) 12:00 noon
three (3) business days in advance of any date that it intends to enter into
such acquisition agreement or (ii) two (2) business days prior to the expiration
of the Offer; and shall have caused its financial and legal advisors to
negotiate with Parent to make such adjustments in the terms and conditions of
this Agreement as would enable the Stockholder to proceed with the Transactions
contemplated herein on such adjusted terms.
SECTION 9. Further Assurances. Each Stockholder shall, upon request of
Parent or the Purchaser, execute and deliver any additional documents and take
such further actions as may reasonably be deemed by Parent or the Purchaser to
be necessary or desirable to carry out the provisions hereof and to vest in
Parent the power to vote those Shares owned by such Stockholder as contemplated
by Section 5 hereof.
SECTION 10. Termination. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate immediately upon the earliest of (a) the
termination of the Merger Agreement in accordance with its terms, (b) the
Effective Time (as defined in the Merger Agreement), or (c) written notice by
Parent that Parent, in its sole discretion determines to terminate this
Agreement; provided, however, that Section 11 hereof shall survive any
termination of this Agreement.
SECTION 11. Expenses. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
SECTION 12. Public Announcements. The initial press release with respect
to the execution of this Agreement and the Merger Agreement shall be a joint
press release acceptable to Parent, the Purchaser and the Stockholders.
Thereafter, so long as this Agreement is in effect, neither the Parent,
Purchaser, nor the Stockholders, nor any of their respective affiliates shall
issue or cause the publication of any press release or other announcement with
respect to the Merger Agreement, this Agreement or the other Transactions (as
defined in the Merger Agreement) without the prior consultation of the other
party, except as such party believes, after receiving the advice of outside
counsel, may be required by law or by any listing agreement with a national
securities exchange or trading market. Stockholders hereby designate the Company
to represent them in connection with any press releases and announcements.
SECTION 13. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to such terms in the Merger
Agreement.
(b) All notices and other communications hereunder shall be in writing and
shall be deemed given upon (i) transmitter's confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a standard overnight carrier
or when delivered by hand or (iii) the expiration of five (5) business days
after
A-72
<PAGE> 160
the day when mailed in the United States by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(A) if to Stanley G. Brannan, to:
c/o Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746-5006
Facsimile: 407-357-1410
Telephone: 407-357-1002
(B) if to Sue Brannan, to:
c/o Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746-5006
Facsimile: 407-357-1410
Telephone: 407-357-1002
(C) if to Alan C. Maltz, Individually or as Custodian, to:
29 Chelsea Drive
Livingston, New Jersey 07039
Facsimile: 973-994-6665
Telephone: 973-994-2468
(D) if to Scott A. Maltz, to:
30 Blackhawk Lane
Burlingame, California 94010
Facsimile:
Telephone: 415-344-4810
(E) if to Glenn A. Etherington, to:
c/o Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746-5006
Facsimile: 407-357-1410
Telephone: 407-357-1002
(F) if to Leon A. Ferber, to:
c/o Brite Voice Systems, Inc.
40 Shawmut Road
Canton, Massachusetts 02021-1409
Facsimile: 781-828-7886
Telephone: 781-401-1525
(G) if to Ray S. Naeini, to:
c/o Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746-5006
Facsimile: 407-357-1410
Telephone: 407-357-1002
(H) if to Donald R. Walsh, to:
c/o Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746-5006
Facsimile: 407-357-1410
Telephone: 407-357-1002
A-73
<PAGE> 161
(I) if to John F. Kelsey, III, to:
c/o The Kelsey Group
600 Executive Drive
Princeton, New Jersey 08540
Facsimile: 609-921-2112
Telephone: 609-921-7200
and
(J) if to Parent or the Purchaser, to:
17811 Waterview Parkway
Dallas, Texas 75252
Facsimile: 972-454-8781
Telephone: 972-454-8694
Attention: Vice President and Corporate Counsel
with a copy to:
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Facsimile: (214) 969-1751
Telephone: (214) 969-1700
Attention: Sam P. Burford, Jr.
(c) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(e) This Agreement (including the Merger Agreement and any other documents
and instruments referred to herein) constitutes the entire agreement, and
supersedes all prior agreements and understandings, whether written and oral,
among the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Texas without giving effect to the principles of
conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by, the parties and their respective
successors and assigns, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) If any term, provision, covenant, restriction or part of the Agreement
herein is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable (either generally or with respect to certain of
the Shares) or against its regulatory policy, the remainder of the terms,
provisions, covenants, restrictions and parts of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired, invalidated or
removed.
(i) Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in
A-74
<PAGE> 162
addition to any other remedy to which they may be entitled at law or in equity,
to compel specific performance of this Agreement in any action instituted in any
state or federal court sitting in Dallas, Texas. The parties hereto consent to
personal jurisdiction in any such action brought in any state or federal court
sitting in Dallas, Texas and to service of process upon it in the manner set
forth in Section 12(b) hereof.
(j) No amendment, modification or waiver in respect of this Agreement shall
be effective against any party unless it shall be in writing and signed by such
party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-75
<PAGE> 163
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
INTERVOICE, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
INTERVOICE ACQUISITION
SUBSIDIARY III, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
STOCKHOLDERS
------------------------------------
Stanley G. Brannan
------------------------------------
Sue Brannan
------------------------------------
Alan C. Maltz (on his own behalf and
on behalf
of his minor children with respect
to those
Shares for which he acts as
custodian)
------------------------------------
Scott A. Maltz
------------------------------------
Glenn A. Etherington
------------------------------------
Leon A. Ferber
------------------------------------
Ray S. Naeini
A-76
<PAGE> 164
------------------------------------
Donald R. Walsh
------------------------------------
John F. Kelsey, III
A-77
<PAGE> 165
EXHIBIT B
FORM OF AFFILIATE AGREEMENT
, 1999
InterVoice, Inc.
17811 Waterview Parkway
Dallas, Texas 75252
Ladies and Gentlemen:
Reference is made to the provisions of the Acquisition Agreement and Plan
of Merger, dated as of April 27, 1999 (together with any amendments thereto, the
"Merger Agreement"), among Brite Voice Systems, Inc., a Kansas corporation
("Company"), InterVoice, Inc., a Texas corporation ("Parent") and InterVoice
Acquisition Subsidiary III, Inc., a Nevada corporation, and a wholly owned
subsidiary of Parent ("Purchaser"), pursuant to which, among other things,
Purchaser will be merged with and into Company, with Company continuing as the
surviving corporation (the "Merger"). This agreement constitutes the
undertakings of the undersigned contemplated by Section 6.10 of the Merger
Agreement.
I understand that I may be deemed to be an "affiliate" of Company as such
term is defined for purposes of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and that the
transferability of the shares of common stock, no par value per share, of Parent
(the "Parent Common Stock"), together with associated preferred stock purchase
rights, which I may receive upon the consummation of the Merger in exchange for
my shares of common stock, no par value per share, of Company (the "Shares") may
be restricted. Nothing herein shall be construed as an admission that I am an
affiliate.
I hereby represent, warrant and covenant to Parent that:
(a) I have the full power to execute and deliver this agreement and to
make the representations and warranties herein and to perform the
obligations hereunder;
(b) I will not sell, transfer or otherwise dispose of any of the
shares of Parent Common Stock except (i) pursuant to an effective
registration statement under the Securities Act or (ii) as permitted by,
and in accordance with, Rule 145, if applicable, or another applicable
exemption under the Securities Act; and
(c) I will not exercise appraisal rights in connection with the
Merger.
Parent agrees to cause either or both of the conditions set forth in Rule
144(c) under the Securities Act to be satisfied at all times during the period
prior to the second anniversary of the Effective Time (as defined in the Merger
Agreement).
I hereby acknowledge that except as otherwise provided in the Merger
Agreement or in the previous paragraph, Parent is under no obligation to
register the sale, transfer or other disposition of the shares of Parent Common
Stock or to take any other action necessary for the purpose of making an
exemption from registration available.
I understand that Parent will issue stop transfer instructions to its
transfer agent with respect to the shares of Parent Common Stock that I receive
upon consummation of the Merger and that a restrictive legend will be placed on
the certificates delivered to me evidencing the shares of Parent Common Stock in
substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be sold or otherwise disposed of unless registered under the
Securities Act pursuant to a Registration Statement in effect at the
time or unless the proposed sale or disposition can be made in
compliance with Rule 145 or without registration in reliance
A-78
<PAGE> 166
on another exemption from registration. Reference is made to that
certain agreement dated , 1999 between the Holder
and the Issuer, a copy of which is on file in the principal office of
the Issuer.
Parent agrees to release such stop transfer instructions and to cause this
legend to be removed from the certificates delivered to me evidencing the shares
of Parent Common Stock free of charge to the holder thereof promptly after the
restrictions on transferability of the shares of Parent Common Stock imposed by
Rule 145 are no longer applicable or Parent breaches its obligations set forth
in the first sentence of the fourth paragraph of this agreement, and after I
surrender such certificates to the transfer agent with a request for such
removal.
This agreement shall be binding on successors to Parent and on my heirs,
executors and estate.
I hereby acknowledge that the receipt of this agreement by Parent is an
inducement and a condition to Parent's obligation to consummate the Merger under
the Merger Agreement and this agreement shall be governed by the laws of the
State of Texas.
Very truly yours,
AGREED:
INTERVOICE, INC.
By:
- ------------------------------------
Name:
- ------------------------------------
Title:
- ------------------------------------
A-79
<PAGE> 167
ANNEX B
OPINION OF U.S. BANCORP PIPER JAFFRAY INC.
B-1
<PAGE> 168
EXHIBIT 6
April 26, 1999 LOGO
PERSONAL & CONFIDENTIAL
Board of Directors
Brite Voice Systems, Inc.
250 International Parkway
Heathrow, FL 32746
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock (the "Common Stock") of Brite Voice
Systems, Inc. (the "Company") of the consideration to be received by holders of
Common Stock, pursuant to an Agreement and Plan of Merger to be dated as of
April 26, 1999 (the "Agreement") among the Company, InterVoice, Inc. (the
"Parent") and InterVoice Acquisition Subsidiary III, Inc. (the "Purchaser"), a
wholly owned subsidiary of the Parent. The Agreement provides for (i) the
commencement by Purchaser of a tender offer (the "Tender Offer") to purchase
9,158,155 shares of Common Stock at a price of $13.40 per share, net to seller
in cash (the "Offer Price"), and (ii) the subsequent merger (the "Merger") of
the Purchaser into the Company in which the remaining shares of Common Stock
will be converted and exchanged for common stock of the Parent ("Parent Common
Stock") equal to the Offer Price (based on the 25 day average closing price of
the Parent Common Stock) ending at the Effective Time. The Tender Offer and the
Merger are collectively referred to as the "Transaction." The terms and
conditions of the Transaction are more fully set forth in the Agreement.
U.S. Bancorp Piper Jaffray, Inc. ("USB Piper Jaffray"), as a customary part of
its investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, underwriting and
secondary distributions of securities, private placements and valuations for
estate, corporate and other purposes. We have acted as financial advisor to the
Company in connection with the Agreement and will receive a fee for services
which is contingent upon consummation of the Transaction. We will also receive a
fee for providing this opinion. This opinion fee is not contingent upon the
consummation of the Transaction. The Company has also agreed to indemnify us
against certain liabilities in connection with our services. USB Piper Jaffray
makes a market in the Common Stock and Parent Common Stock. We acted as lead
manager for the initial public offering of Common Stock on September 6, 1989. In
the ordinary course of our business, we and our affiliates may actively trade
securities of the Company and the Parent for our own account or the account of
our customers and, accordingly, may at any time hold a long or short position in
such securities.
In arriving at our opinion, we have undertaken such review, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. We
have reviewed the draft dated April 22, 1999 of the Agreement. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and Parent, including information provided during
discussions with the management of each company. In addition, we have compared
certain financial data of the Company and Parent with various other companies
whose securities are traded in public markets, reviewed prices and premiums paid
in certain other business combinations and conducted other financial studies,
analyses and investigations as we deemed appropriate for purposes of this
opinion.
B-2
<PAGE> 169
We have relied upon and assumed the accuracy and completeness of the financial
statements and other information provided by the Company and the Parent or
otherwise made available to us and have not assumed responsibility independently
to verify such information. We have further relied upon the assurances of the
Company's and the Parent's management that the information provided has been
prepared on a reasonable basis in accordance with industry practice, and, with
respect to financial planning data, reflects the best currently available
estimates and judgment of the Company's and the Parent's management and that
they are not aware of any information or facts that would make the information
provided to us incomplete or misleading. Without limiting the generality of the
foregoing, for the purpose of this opinion, we have assumed that neither the
Company nor the Parent are party to any pending transaction, including external
financing, recapitalizations, acquisitions or merger discussions, other than the
Transaction or in the ordinary course of business. We have also assumed that the
Transaction will be taxable for federal tax purposes to the holders of Common
Stock. In arriving at our opinion, we have assumed that all the necessary
regulatory approvals and consents required for the Transaction will be obtained
in a manner that will not change the purchase price for the Company.
In arriving at our opinion, we have not performed any appraisals or valuations
of any specific assets or liabilities of the Company, and have not been
furnished with any such appraisals or valuations. We express no opinion
regarding the liquidation value of any entity. Without limiting the generality
of the foregoing, we have undertaken no independent analysis of any pending or
threatened litigation, possible unasserted claims or other contingent
liabilities, to which the Company, the Parent or any of their respective
affiliates is a party or may be subject and, at the Company's direction and with
its consent, our opinion makes no assumption concerning, and therefore does not
consider, the possible assertion of claims, outcomes or damages arising out of
any such matters.
This opinion is necessarily based upon the information available to us and facts
and circumstances as they exist and are subject to evaluation on the date
hereof; events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We are not expressing any opinion
herein as to the price at which shares of Common Stock or Parent Common Stock
have traded or may trade at any future time. We have not undertaken to reaffirm
or revise this opinion or otherwise comment upon any events occurring after the
date hereof and do not have any obligation to update, revise or reaffirm this
opinion.
This opinion is directed to the Board of Directors of the Company and is not
intended to be and does not constitute a recommendation to any stockholder of
the Company. We were not requested to opine as to, and this opinion does not
address, the basic business decision to proceed with or effect the Transaction.
Except with respect to the use of this opinion in connection with the Schedule
14D-9 relating to the Tender Offer, or the prospectus/proxy statement relating
to the Merger, this opinion shall not be published or otherwise used, nor shall
any public references to us be made, without our prior written approval.
Based upon and subject to the foregoing and based upon such other factors as we
consider relevant, it is our opinion that the consideration to be received in
the Transaction pursuant to the Agreement for the Common Stock of the Company is
fair, from a financial point of view, to the holders of Common Stock of the
Company (other than Parent and its affiliates) as of the date hereof.
Sincerely,
U.S. BANCORP PIPER JAFFRAY, INC.
B-3
<PAGE> 170
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.20-1 of the TBCA provides that a corporation may indemnify a
director who was or is a party to any action, suit or proceeding by reason of
the fact that he or she was a director of the corporation; provided that such
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and in the case of a
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful.
The InterVoice Bylaws provide that a director, officer, employee or agent
of InterVoice or a person serving at the request of InterVoice as a director,
officer, employee or other agent of another corporation, will be indemnified and
held harmless by InterVoice in a derivative suit if (1) he or she is successful
on the merits and (2) acted in good faith, and in a manner he or she reasonably
believed to be in or not opposed to the best interest of the corporation, but he
or she will not be indemnified for any claim as to which he or she was adjudged
liable for negligence or misconduct unless the court determines that under the
circumstances he or she is entitled to indemnification.
The same category of persons will be indemnified in a non-derivative suit
only if such person (1) is successful on the merits and (2) acted in good faith,
and in a manner he or she reasonably believed to be in or not opposed to the
best interest of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Acquisition Agreement and Plan of Merger by and among
InterVoice, Inc., InterVoice Acquisition Subsidiary III,
Inc. and Brite Voice Systems, Inc. dated as of April 27,
1999 (included as Annex A to this Registration
Statement).
4.1 -- Amended and Restated Rights Agreement, by and between
InterVoice, Inc. and KeyCorp Shareholder Services, Inc.
(as successor to Society National Bank) dated as of
December 12, 1994 (including the form of Rights
Certificate attached thereto as Exhibit B) incorporated
by reference to Exhibit 1 to the Company's form 8 A/A
(Amendment No. 1) dated December 14, 1994.
5.1* -- Opinion of Thompson & Knight, P.C.
10.1 -- Credit Agreement dated June 1, 1999 among InterVoice,
Inc., InterVoice Acquisition Subsidiary III, Inc. and
Bank of America National Trust and Savings Association,
Banc of America Securities LLC and certain other
financial institutions indicated as being parties to the
Credit Agreement incorporated by reference to Exhibit
99.(b)(1) of the Schedule 14D-1 (Amendment No. 4) filed
by InterVoice, Inc. and InterVoice Acquisition Subsidiary
III, Inc. on June 14, 1999.
23.1** -- Consent of Ernst & Young LLP.
23.2** -- Consent of Arthur Andersen LLP.
23.3* -- Consent of counsel (included in the opinion of Thompson &
Knight, P.C., filed previously as Exhibit 5.1.)
24.1* -- Power of Attorney (included on signature page of
Registration Statement).
99.1* -- Proxy card to be used in connection with Brite Voice
Systems, Inc. special meeting.
99.2* -- Consent of U.S. Bancorp Piper Jaffray Inc.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
II-1
<PAGE> 171
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes as follows:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) 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.
(2) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(3) That every prospectus (i) that is filed pursuant to paragraph
(h)(1) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415 (sec. 230.415 of this
chapter), will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that,
for purposes of determining any liability under the Securities Act of 1933,
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.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 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 whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE> 172
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas, on this 8th day of July, 1999.
INTERVOICE, INC.
By: /s/ DANIEL D. HAMMOND
----------------------------------
Daniel D. Hammond
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DANIEL D. HAMMOND Chairman of the Board of Directors July 8, 1999
- --------------------------------------------------- and Chief Executive Officer
Daniel D. Hammond (principal executive officer)
* Chief Financial Officer and July 8, 1999
- --------------------------------------------------- Secretary (principal financial
Rob-Roy J. Graham and accounting officer)
* Director July 8, 1999
- ---------------------------------------------------
Joseph J. Pietropaolo
* Director July 8, 1999
- ---------------------------------------------------
George C. Platt
* Director July 8, 1999
- ---------------------------------------------------
Grant A. Dove
* Director July 8, 1999
- ---------------------------------------------------
David W. Brandenburg
*By: /s/ DANIEL D. HAMMOND July 8, 1999
---------------------------------------------
Daniel D. Hammond
Attorney-in-Fact
</TABLE>
II-3
<PAGE> 173
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Acquisition Agreement and Plan of Merger by and among
InterVoice, Inc., InterVoice Acquisition Subsidiary III,
Inc. and Brite Voice Systems, Inc. dated as of April 27,
1999 (included as Annex A to this Registration
Statement).
4.1 -- Amended and Restated Rights Agreement, by and between
InterVoice, Inc. and KeyCorp Shareholder Services, Inc.
(as successor to Society National Bank) dated as of
December 12, 1994 (including the form of Rights
Certificate attached thereto as Exhibit B) incorporated
by reference to Exhibit 1 to the Company's form 8 A/A
(Amendment No. 1) dated December 14, 1994.
5.1* -- Opinion of Thompson & Knight, P.C.
10.1 -- Credit Agreement dated June 1, 1999 among InterVoice,
Inc., InterVoice Acquisition Subsidiary III, Inc. and
Bank of America National Trust and Savings Association,
Banc of America Securities LLC and certain other
financial institutions indicated as being parties to the
Credit Agreement incorporated by reference to Exhibit
99.(b)(1) of the Schedule 14D-1 (Amendment No. 4) filed
by InterVoice, Inc. and InterVoice Acquisition Subsidiary
III, Inc. on June 14, 1999.
23.1** -- Consent of Ernst & Young LLP.
23.2** -- Consent of Arthur Andersen LLP.
23.3* -- Consent of counsel (included in the opinion of Thompson &
Knight, P.C., filed previously as Exhibit 5.1.)
24.1* -- Power of Attorney (included on signature page of
Registration Statement).
99.1* -- Proxy card to be used in connection with Brite Voice
Systems, Inc. special meeting.
99.2* -- Consent of U.S. Bancorp Piper Jaffray Inc.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-4 and related
prospectus/proxy statement of InterVoice, Inc. and Brite Voice Systems, Inc.,
for the registration of shares of InterVoice common stock to be issued in
connection with the merger with Brite Voice Systems, Inc. and to the
incorporation by reference therein of our report dated April 7, 1999, except for
Note O as to which the date is April 27, 1999, with respect to the consolidated
financial statements and schedule of InterVoice, Inc., included in its Annual
Report on Form 10-K, as amended, for the year ended February 28, 1999, filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
July 12, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Registration Statement (Amendment No. 1) of
our report dated February 5, 1999, included in Brite Voice Systems, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998, and to all
references to our Firm included in this Registration Statement (Amendment No.
1).
ARTHUR ANDERSEN LLP
Orlando, Florida
July 7, 1999
