<PAGE>
[LOGO]
BRITE VOICE SYSTEMS, INC.
7309 EAST 21ST STREET NORTH
WICHITA, KANSAS 67206-1083
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997
---------------------
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Brite
Voice Systems, Inc. will be held at the Company's corporate headquarters, 7309
East 21st Street North, Wichita, Kansas, on Tuesday, May 13, 1997, at 9:30 a.m.,
for the following purposes:
1. To elect a Board of Directors (seven members) to serve until the next
Annual Meeting of Stockholders and until their respective successors
have been elected and qualified;
2. To approve an amendment to the Company's 1994 Stock Option Plan;
3. To approve and ratify the appointment of Arthur Andersen LLP,
independent public accountants, as auditors for the current fiscal year;
and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The enclosed Proxy Statement includes information relating to these
proposals.
All stockholders of record as of the close of business on March 31, 1997,
are entitled either to attend and vote in person any shares held by them or to
attend and vote by proxy any shares held by them. A majority of the outstanding
shares of the Company is required for a quorum.
The Board of Directors and management sincerely desire your presence at the
meeting. However, so that we may be sure that your vote will be included, please
sign and return the enclosed proxy promptly. If you attend the meeting, you may
revoke your proxy and vote in person.
By Order of the Board of Directors
[SIGNATURE]
Glenn A. Etherington
SECRETARY
April 7, 1997
IMPORTANT
PLEASE SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED STAMPED ENVELOPE. THE PROXY MAY BE REVOKED BY YOU AND THE SUBMISSION
OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
<PAGE>
BRITE VOICE SYSTEMS, INC.
7309 EAST 21ST STREET NORTH
WICHITA, KANSAS 67206-1083
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997
---------------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished by the Board of Directors of Brite Voice
Systems, Inc. (the "Company") in connection with the solicitation of proxies for
use at the Annual Meeting of Stockholders to be held May 13, 1997, at the
Company's corporate headquarters, 7309 East 21st Street North, Wichita, Kansas,
and at any adjournment thereof. The shares represented by the form of proxy
enclosed herewith will be voted in accordance with the specifications noted
thereon. If no choice is specified, said shares will be voted in favor of the
proposals set forth in the attached notice. The proxy also confers discretionary
authority with respect to amendments or variations to matters identified in the
Notice of Meeting and other matters which may properly come before the meeting.
There are no rights of appraisal or similar rights of dissenters with respect to
any of the matters proposed to be considered at the meeting. The approximate
date on which this Proxy Statement and the enclosed proxy are first being sent
to stockholders is April 7, 1997.
A stockholder who has given a proxy may revoke it as to any motion on which
a vote has not already been passed by signing a proxy bearing a later date or by
a written notice delivered to the Secretary of the Company at the office of the
Company, at any time up to the meeting or any adjournment thereof, or delivered
to the Chairman of the meeting on the day of the meeting or any adjournment
thereof. A stockholder may appoint a person, other than the Board of Directors'
nominees, to represent him at the meeting. This right may be exercised by the
insertion of said person's name in the blank space provided and by striking out
the names of the Board of Directors' nominees, or by the submission of a similar
form of proxy.
The cost of solicitation of these proxies will be paid by the Company,
including reimbursements paid to brokerage firms and other custodians, nominees
and fiduciaries for reasonable costs incurred in forwarding the proxy material
to, and solicitation of proxies from, the beneficial owners of shares held of
record by such persons. The Company has not engaged any person to solicit
proxies in connection with the meeting.
VOTING AT MEETING
Only stockholders of record on the books of the Company at the close of
business on March 31, 1997, the record date established for the Annual Meeting,
will be entitled to vote at the meeting. On March 31, 1997, there were
11,830,095 shares of Common Stock outstanding and no other voting securities.
Stockholders of the Company have the right to cumulate votes in the election of
Directors (i.e., each stockholder is entitled to as many votes as equals the
number of shares of stock held by him or her on the record date, multiplied by
the number of Directors to be elected, and such votes may all be cast for a
single candidate, or may be distributed among several or all of the candidates,
as the stockholder sees fit). On all other matters, all stockholders are
entitled to one vote per share. Directors are elected by a plurality vote. All
other proposals will be determined by a vote of a majority of the shares present
in person or represented by proxy and voting on such matters.
Shares represented by proxies containing abstentions, or indicating broker
non-votes, will be considered as present at the meeting for purposes of
determining the presence of a quorum. However, abstentions and broker non-votes
will not otherwise be counted on any matters.
<PAGE>
COMMON STOCK OWNERSHIP
The following table sets forth certain information, furnished by the persons
named below, concerning beneficial ownership of the Company's Common Stock as of
February 25, 1997 (except as otherwise indicated) by (i) each person known by
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock; (ii) each Director and nominee for Director of the Company; (iii) each of
the executive officers named in the table under the heading "Compensation of
Directors and Executive Officers -- Summary Compensation Table"; and (iv) all
Directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OWNED (1) CLASS (2)
- --------------------------------------------------------------------------- ---------------- -----------
<S> <C> <C>
Stanley G. Brannan ........................................................ 1,472,562(3) 12.40%
7309 East 21st Street North
Wichita, Kansas 67206
Alan C. Maltz ............................................................. 1,305,106(4) 11.10%
50 Broad Street
14th Floor
New York, New York 10004
Perry E. Esping............................................................ 447,000 3.78%
C. MacKay Ganson, Jr....................................................... 28,362(5) *
David S. Gergacz........................................................... 105,000 *
Gerald V. Butler........................................................... 40,500 *
John F. Kelsey, III........................................................ 6,833 *
Scott A. Maltz............................................................. 472,621 4.00%
All Directors and Executive Officers as a Group (13 persons)............... 4,185,910 33.90%
</TABLE>
- ------------------------
* Less than 1% of the outstanding Common Stock
(1) Except as otherwise indicated, the listed beneficial owner has sole voting
and investment power with respect to such shares.
(2) In calculating the percentages shown, as required by the proxy solicitation
rules of the Securities and Exchange Commission, the number of shares owned
by the named individuals includes the shares they had the right to purchase
within 60 days of February 25, 1997 upon exercise of stock options. The
options held by the named individuals and the group are: Stanley G. Brannan
-- 50,000; Gerald V. Butler -- 37,500; Perry E. Esping -- 10,000; C. MacKay
Ganson, Jr. -- 7,500; David S. Gergacz -- 105,000; John F. Kelsey, III --
5,000; and the group -- 518,472.
(3) Includes 25,000 shares owned by Mr. Brannan's wife. Also includes 8,000
shares held in trust for the benefit of Mr. Brannan's children, beneficial
ownership of which is disclaimed by Mr. Brannan.
(4) Includes 80,000 shares held by Mr. Maltz as custodian for his two minor
daughters, beneficial ownership of which is disclaimed by Mr. Maltz.
(5) Includes 4,300 shares held by Tucker Anthony & R.L. Day, Inc. for the
benefit of the C. MacKay Ganson, Jr. SEP IRA. Also includes 3,081 shares
held by the CMG Trust u/d/t 12/19/68 for the benefit of Carol Ganson, as to
which Mr. Ganson is trustee.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
Pursuant to the Company's Bylaws, the Board of Directors has fixed the
number of Directors at seven and approved the slate of nominees identified
below. If any individual nominated for election as a Director is not available
at the time of the Annual Meeting to serve as a Director if so elected, proxies
cast on behalf of that nominee may be voted for the remaining nominees and for a
substitute nominee designated by the proxy holders or the current Board of
Directors. The Company expects all nominees to be available to serve if elected
as Directors. The nominees, and certain information with respect to each of
them, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ---------------------------------- --- ----------------------------------------------------- ----------------
<S> <C> <C> <C>
Stanley G. Brannan 47 Chairman of the Board October 1984
David S. Gergacz 48 President, Chief Executive Officer and Director May 1994
Perry E. Esping (1) 62 Director May 1990
C. MacKay Ganson, Jr. (1)(2) 57 Director August 1993
John F. Kelsey, III (1)(2) 50 Director May 1994
Alan C. Maltz 46 Executive Vice President and Director August 1995
Scott A. Maltz 40 Executive Vice President and Director August 1995
</TABLE>
- ------------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
STANLEY G. BRANNAN is the Company's founder and Chairman of the Board of
Directors. Prior to December 1996, Mr. Brannan also served as President and
Chief Executive Officer since the Company's inception. Prior to founding the
Company, 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 the company's Merganthaler USA Division.
DAVID S. GERGACZ joined the Company in December 1996 as President and Chief
Executive Officer. Prior to joining the Company, Mr. Gergacz served as president
and chief executive officer for Cincinnati Bell Telephone, from September 1995
to October 1996. From April 1993 to August 1995 he was president and chief
executive officer for Rogers Cantel Communications, Canada's leading provider of
wireless communications, cable television, long distance, publishing and
television and radio. From 1991 to 1993 he served as president and chief
executive officer of Boston Technology. He has also held many management
positions with companies in the telecommunications industry, including Sprint,
Bell Laboratories, AT&T and NYNEX.
PERRY E. ESPING has served as chief executive officer and chairman of BRC
Holdings, Inc. (formerly Business Records Corporation), a publicly held
corporation headquartered in Dallas, Texas, since 1988. BRC Holdings, Inc.
provides services to county governments and manufactures election products. In
1971, Mr. Esping founded First Data Resources, Inc. and served as its chairman
and chief executive officer until January 1988. After American Express acquired
First Data Resources, Mr. Esping also served as president of American Express'
Data Based Services Group USA from 1986 until 1988. Mr. Esping is a director of
Computer Management Services, Inc.
C. MACKAY GANSON, JR. is a partner of Ganson & Company Fiduciary Services,
formerly Taylor, Ganson & Perin Fiduciary Services, a small, privately-held firm
providing fiduciary and trust services for individuals. Prior to 1982, Mr.
Ganson was Vice President with Bank of Boston's venture capital affiliate. Mr.
Ganson is active in venture capital investing and serves as a director of
several privately-held companies.
3
<PAGE>
JOHN F. KELSEY, III is the founder and president of The Kelsey Group, Inc.,
a strategic planning and marketing analysis company in the interactive
publishing field. Founded in 1986, The Kelsey Group provides information and
decision-support services through publishing, consulting, conferences and
research. Its clients include numerous directory and newspaper publishers, new
media companies, technology suppliers and systems providers. Mr. Kelsey has been
involved in the electronic information services industry since 1978 when he was
responsible for strategic planning of interactive services at AT&T. Mr. Kelsey
also held several executive positions with Dow Jones & Company in the 1980s.
ALAN C. MALTZ became Executive Vice President and a Director of the Company
in August 1995, immediately following the Company's acquisition of Telecom
Services Limited (U.S.) Inc., Telecom Services Limited (West) Inc. ("TSL West"),
TSL Software Services, Inc., and TSL Management Group, Inc. (collectively the
"TSL Companies"). Mr. Maltz served as vice president and a director of TSL
(West) and as president and a director of each of the other TSL Companies since
their incorporation at various times between July 1986 and December 1992. Prior
to the founding of the TSL Companies, Mr. Maltz was vice president of
telecommunications systems at Bankers Trust Company, where he managed the
engineering, design and operation of all global telecommunications systems since
1974. Prior to his employment by Bankers Trust Company, Mr. Maltz was employed
as a project engineer by Western Union and New York Telephone Company.
SCOTT A. MALTZ was appointed Executive Vice President of Strategy and
Business Development in June 1996, having served as Vice President and a
Director of the Company since August 1995, immediately following the Company's
acquisition of the TSL Companies. Mr. Maltz was president of TSL (West) since
its formation in 1989. Prior to joining TSL, Mr. Maltz was employed by Bain &
Company, a management consulting firm where he consulted with clients in the
telecommunications, financial services and personal computer industries.
Under the terms of the Agreement and Plan of Reorganization and Merger
relating to the Company's acquisition of the TSL Companies, those persons who
were the stockholders of the TSL Companies had the right to designate two
persons to be nominated for election to the Company's Board of Directors during
the period that they collectively owned at least 20% of the issued and
outstanding shares of Common Stock, and will continue to have the right to
designate one person to be nominated for election until their collective
ownership is less than 10% of the issued and outstanding shares of Common Stock.
Alan C. Maltz and Scott A. Maltz were originally designated as nominees to the
Company's Board of Directors in August 1995 following consummation of the
merger. Alan C. Maltz and Scott A. Maltz are brothers.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held five meetings during 1996.
The Company's Audit Committee recommends selection of the Company's
independent auditors, reviews the scope and results of the audit, makes
inquiries as to the adequacy of the Company's accounting, financial and
operating controls, and reports findings and recommendations to the Board.
During 1996, this Committee met on one occasion.
The Company's Compensation Committee determines the cash compensation for
all Board-elected officers of the Company and determines the recipients and
amounts of stock option grants. During 1996, this Committee met on three
occasions.
The Company has no standing nominating committee.
During 1996, all Directors attended at least 75% of the aggregate of all
meetings of the Board of Directors and the Committees, if any, on which they
served and which were held during the period that such persons served on the
Board or such Committees.
4
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Directors of the Company who are not officers currently receive $1,000 for
each Board meeting personally attended, $250 for each conference telephone call
Board meeting attended and an annual fee of $5,500. Each Director also receives
$500 for each Committee meeting attended which is held other than in conjunction
with a regularly scheduled Board meeting. Directors are also reimbursed for
expenses incurred in attending such meetings.
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows the cash and other
compensation paid or to be paid by the Company and its subsidiaries to the two
individuals who served as the Company's chief executive officer during the year
ended December 31, 1996 and the four most highly compensated executive officers,
other than the chief executive officer, who were serving as such as of December
31, 1996 (the "Named Executive Officers"), during the years indicated and for
services rendered in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------- ------------- ALL OTHER
SALARY (1) AWARDS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) OPTIONS (#) ($)
- ----------------------------------------------------- --------- --------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Stanley G. Brannan .................................. 1996 210,000 15,218 44,000 3,351(2)
Chairman of the Board 1995 200,000 54,400 100,000 3,169(3)
1994 159,250 78,000 0 2,718(4)
David S. Gergacz .................................... 1996 36,673 14,583 504,500 18
President and Chief Executive Officer 1995 8,500 0 0 0
1994 7,000 0 10,000 0
Gerald V. Butler .................................... 1996 168,000 51,425 22,000 3,351(2)
Executive Vice President of Engineering and 1995 160,000 35,000 0 3,169(3)
Worldwide Operations 1994 15,179 0 50,000 0
Alan C. Maltz ....................................... 1996 205,000 87,125 44,000 10,462(2)
Executive Vice President 1995 79,231 33,891 0 3,808(3)
1994 0 0 0 0
Scott A. Maltz ...................................... 1996 179,375 66,625 22,000 10,551(2)
Executive Vice President of Strategy and Business 1995 69,327 25,917 0 3,818(3)
Development 1994 0 0 0 0
</TABLE>
- ------------------------
(1) Includes directors fees paid to Mr. Gergacz of $9,750 for 1996, $8,500 for
1995 and $7,000 for 1994.
(2) Includes (a) matching contributions under the Company's 401(k) plan in the
amounts of $3,135 on behalf of Messrs. Brannan, Butler and Scott Maltz and
$3,046 on behalf of Mr. Alan Maltz; (b) term life insurance premiums in the
amounts of $18 on behalf of Mr. Gergacz and $216 on behalf of each of
Messrs. Brannan, Butler, Alan Maltz, and Scott Maltz; and (c) automobile
allowances of $7,200 to each of Messrs. Alan Maltz and Scott Maltz.
(3) Includes (a) matching contributions under the Company's 401(k) plan in the
amounts of $3,049 on behalf of Messrs. Brannan and Butler, $762 on behalf of
Mr. Alan Maltz, and $772 on behalf of Mr. Scott Maltz; (b) term life
insurance premiums in the amount of $120 on behalf of Messrs. Brannan and
Butler; and (c) automobile allowances of $3,046 to each of Messrs. Alan
Maltz and Scott Maltz.
(4) Includes a matching contribution under the Company's 401(k) plan in the
amount of $2,550 and a term life insurance premium in the amount of $168.
5
<PAGE>
The following table sets forth information concerning options to purchase
Common Stock granted during 1996 to the Named Executive Officers. The potential
realizable value amounts shown below represent values that might be realized
upon exercise immediately prior to the expiration of the term of the options
using 5% and 10% appreciation rates set by the Securities and Exchange
Commission, compounded annually, and therefore are not intended to forecast
possible future appreciation, if any, of the price of the Company's Common
Stock.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS MARKET RATES OF STOCK PURCHASE
GRANTED TO PRICE PRICE APPRECIATION FOR
EMPLOYEES EXERCISE ON OPTION TERM
OPTIONS IN FISCAL PRICE DATE OF EXPIRATION -----------------------
NAME GRANTED(#) YEAR ($/SH) GRANT DATE 5% ($) 10% ($)
- ------------------------------ ----------- ----------- ----------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stanley G. Brannan............ 44,000(1) 4.50% $ 11.875 $ 11.875 01/18/06 $ 328,597 $ 832,730
David S. Gergacz.............. 500,000(2) 51.18% $ 14.875 $ 14.875 12/02/06 $4,677,403 $11,853,460
4,500(3) 0.46% $ 18.50 $ 18.50 05/14/06 $ 52,355 $ 132,679
Gerald V. Butler.............. 22,000(4) 2.25% $ 11.875 $ 11.875 01/18/06 $ 164,299 $ 416,365
Alan C. Maltz................. 44,000(1) 4.50% $ 11.875 $ 11.875 01/18/06 $ 328,597 $ 832,730
Scott A. Maltz................ 22,000(1) 2.25% $ 11.875 $ 11.875 01/18/06 $ 164,299 $ 416,365
</TABLE>
- ------------------------------
(1) Granted under the Company's 1994 Stock Option Plan and exercisable as to
one-half of the shares on January 18, 2002 and the remaining one-half of the
shares on January 18, 2003. The options vesting on January 18, 2002 were
subject to accelerated vesting upon the achievement of certain levels of
operating income in 1996; however, the Company did not achieve the minimum
operating income level required for accelerated vesting of these options.
The options vesting on January 18, 2003 are subject to earlier vesting upon
the achievement of certain levels of operating income in 1997.
(2) Granted under the Employment Agreement between the Company and Mr. Gergacz
described below under the heading "Employment Agreements; Change in Control
Arrangements". The options become exercisable as to 100,000 shares as of
December 2, 1996; 100,000 shares on December 2, 1997; 150,000 shares on
December 2, 1998; and 150,000 shares on December 2, 1999. The options
terminate on December 2, 2006 if not previously exercised. Upon termination
of Mr. Gergacz's employment by the Company, he will have the right to
exercise all then exercisable options within 90 days after the date of
termination. Upon the first to occur of (1) dissolution or liquidation of
the Company, (2) a merger or consolidation in which the Company is not the
surviving corporation, or (3) the acquisition of more than 50% of the
outstanding common stock of the Company by any person or group of related
persons acting in concert in a single transaction or series of related
transactions, all previously unexercised options will become immediately
exercisable for a period of 90 days.
(3) Granted under the Company's Non-Employee Director Stock Option Plan on April
12, 1996 and exercisable as to 1,500 shares on each of the first three
anniversaries of the grant date.
(4) Granted under the Company's 1994 Stock Option Plan and exercisable on
January 18, 2003, subject to earlier vesting upon the achievement of certain
levels of operating income in 1997.
The following table sets forth information concerning the acquisition of
shares of Common Stock under the Company's Employee Stock Purchase Plan during
1996 by the only Named Executive Officer to so acquire shares, and by all
executive officers as a group and all other employees as a group.
SHARES ACQUIRED UNDER EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE ($)
NAME OF INDIVIDUAL OR IDENTITY OF GROUP NUMBER OF SHARES PURCHASED (1)
- ----------------------------------------------------------------- --------------------------- ------------------
<S> <C> <C>
Gerald V. Butler................................................. 1,000 $ 6,554
All Executive Officers as a Group (10 persons)................... 2,412 $ 16,362
All Other Employees as a Group................................... 49,177 $ 325,421
</TABLE>
- ------------------------
(1) Shares are purchased at an exercise price equal to 85% of the lower of the
fair market value of the Common Stock on the grant date or the exercise
date. The dollar value equals the market value on the date of purchase minus
the purchase price.
6
<PAGE>
The following table sets forth, for each of the Named Executive Officers,
information concerning each exercise of options to purchase Common Stock during
the year ended December 31, 1996 and the fiscal year-end value of unexercised
options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
UNDERLYING UNEXERCISED AT FISCAL YEAR-END ($)
SHARES OPTIONS AT FISCAL YEAR-END ----------------------
ACQUIRED ON VALUE -------------------------- EXERCISABLE/
NAME EXERCISE REALIZED ($) EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- ------------ -------------------------- ----------------------
<S> <C> <C> <C> <C>
Stanley G. Brannan................. 0 0 25,000/119,000 0/132,000
David S. Gergacz................... 0 0 105,000/409,500 30,625/30,625
Gerald V. Butler................... 0 0 37,500/34,500 0/66,000
Alan C. Maltz...................... 0 0 0/44,000 0/132,000
Scott A. Maltz..................... 0 0 0/22,000 0/66,000
</TABLE>
EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL ARRANGEMENTS
David S. Gergacz is serving as President and Chief Executive Officer of the
Company under an Employment Agreement dated December 2, 1996. The agreement
provides for a minimum annual base salary of $350,000. For the thirteen month
period ending December 31, 1997, Mr. Gergacz will receive a bonus of $189,500
payable in equal installments with his base salary. During each employment year
after 1997, Mr. Gergacz will be entitled to a performance bonus of up to 50% of
his base salary upon the attainment of reasonable performance goals established
by the Board of Directors. The agreement provides that, during each year of his
employment, beginning in 2000, he will be granted options to purchase at least
20,000 shares of the Company's Common Stock at an exercise price equal to the
fair market value of the Common Stock on the grant date. The agreement also
provides for benefits generally provided to other executive officers of the
Company. Upon termination of the Agreement for "cause" (as defined in the
agreement), Mr. Gergacz will be entitled to payment of his base salary, accrued
bonus (if any), and benefits existing at the time of termination. If termination
occurs other than for cause, Mr. Gergacz will be entitled to payment of his base
salary, bonus and other benefits existing at the time of such termination for a
period of one year thereafter. Upon a Change in Control (as defined in the
Agreement), if Mr. Gergacz is either terminated or elects to resign, he will be
entitled to payment of his base salary, bonus and benefits for a period of two
years after the date of termination. In addition, upon a Change in Control, the
options to purchase shares of the Company's Common Stock granted under the
agreement would become immediately exercisable for a period of 90 days (see Note
2 to the "Option Grants in Last Fiscal Year" table appearing under the heading
"Compensation of Directors and Executive Officers"). The agreement prohibits Mr.
Gergacz from competing with the Company, directly or indirectly, in certain
respects during the term of employment and for a period of one year thereafter.
Upon consummation of the Company's acquisition of the TSL Companies in
August 1995, the Company entered into employment agreements with Alan C. Maltz
and Scott A. Maltz pursuant to which each serves as an executive officer of the
Company. The term of each agreement runs through December 31, 1997, subject,
however, to prior termination. The agreement with Alan C. Maltz provides for a
base salary of $205,000 for the year ended December 31, 1996, increased to
$215,250 for the year ending December 31, 1997. For 1996, Mr. Maltz received a
guaranteed minimum bonus of $87,125. For 1997, the agreement provides for a base
bonus of $91,481 based upon the TSL operating division's attainment of a
performance target agreed upon by Mr. Maltz and the Board of Directors. The base
bonus will be reduced on a sliding scale basis, if targeted performance is not
met, to 0% thereof if the TSL division fails to meet the financial performance
target by 25% or more, and increased, on a sliding scale basis, to a maximum of
200% of the base bonus if the TSL division exceeds the performance target by 25%
or more. Upon termination of the agreement for "cause" (as defined in
7
<PAGE>
the agreement), Mr. Maltz will be paid his base salary, accrued bonus (if any)
and benefits existing at the time of termination. Mr. Maltz may elect to
terminate the agreement in the event of a material breach by the Company
including, without limitation, a change in Mr. Maltz's duties or changes in the
conditions of his employment. Upon any such termination, generally Mr. Maltz
would be entitled to payment for the remainder of the term of the agreement in
the maximum amounts provided for thereunder. The agreement prohibits Mr. Maltz,
generally, from competing with the Company, directly or indirectly, with respect
to any line of business conducted by the Company during his employment with the
Company and for a period of three years thereafter. In addition, Mr. Maltz is
prohibited from diverting any customer of the Company or inducing any employee
to become employed by any other entity.
The agreement with Scott A. Maltz provides for a base salary of $179,375 for
the year ended December 31, 1996, increased to $188,344 for the year ending
December 31, 1997. For 1996, Mr. Maltz received a guaranteed minimum bonus of
$66,625 and for the year ending December 31, 1997, the agreement provides for a
base bonus of $69,956 based upon the TSL operating division's attainment of an
agreed upon performance target as described above. All other terms of the
agreement between the Company and Mr. Maltz are substantially the same as those
described above with respect to the Company's agreement with Alan C. Maltz.
Certain of the Company's executive officers have been granted options under
both the Company's 1984 Incentive Stock Option Plan and the Company's 1994 Stock
Option Plan. Under the 1984 Incentive Stock Option Plan, in the event of a
dissolution or liquidation of the Company, a merger or consolidation in which
the Company is not the surviving corporation, or a change of ownership involving
the transfer of in excess of 50% of the then outstanding Common Stock to a
corporation or other entity, person or group of affiliated persons (hereafter "a
Transaction"), holders of options will have the right, immediately prior to
consummation of the Transaction, to exercise all options granted thereunder
without regard to the vesting provisions contained in the applicable option
agreements. The 1994 Stock Option Plan contains a similar provision, except that
the Board of Directors may, in its sole discretion, determine that such
immediate vesting of the right to exercise outstanding options is not in the
best interests of the Company, in which event the successor corporation would be
required to agree to assume the outstanding options or substitute therefor
comparable options of such successor corporation.
CERTAIN TRANSACTIONS
Pursuant to a rental agreement between the Company and Brannan Leasing,
Inc., a corporation owned and controlled by Stanley G. Brannan, the Company paid
Brannan Leasing, Inc. $450 per hour for the use of its airplane during 1996.
Under the agreement, Brannan Leasing assumed responsibility for all expenses
associated with the airplane other than fuel. The rental agreement is terminable
by either party on 30 days notice. Rentals paid and accrued during the year
ended December 31, 1996, were $34,359. The Company believes that the terms of
the agreement are at least as favorable as those that could be obtained from an
independent third party.
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Throughout 1996, Perry E. Esping, C. MacKay Ganson, Jr. and John F. Kelsey,
III, all of whom were independent, non-employee Directors of the Company, were
members of the Compensation Committee of the Company's Board of Directors. None
of them was, during the past fiscal year, an officer or employee of the Company
or any of its subsidiaries, was formerly an officer of the Company or of any of
its subsidiaries, or had any relationship requiring disclosure herein. David S.
Gergacz served as a member of the Compensation Committee until he became
President and Chief Executive Officer of the Company in December 1996. No
executive officer of the Company served as a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
one of whose executive officers served as a director of the Company. Stanley G.
Brannan, President and Chief Executive Officer of the Company until December
1996, and currently Chairman of the Board, has participated in the Compensation
Committee's deliberations concerning executive compensation, other than
deliberations concerning his own compensation.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company (the "Committee") determines the
Company's executive compensation policies and sets specific executive salaries.
The Committee is composed of the non-employee directors of the Company, Perry E.
Esping, C. MacKay Ganson, Jr., and John F. Kelsey, III. Until his appointment as
President and Chief Executive Officer, David S. Gergacz also served as a member
of the Committee. In the future, Mr. Gergacz may participate in the Committee's
deliberations concerning executive compensation, other than deliberations
concerning his own compensation.
The Company's executive compensation program is designed to attract, retain
and motivate executive officers who are believed to have the abilities necessary
for the long-term success of the Company. This program consists of a base
salary, incentive compensation based upon the achievement of certain specified
revenue and operating profit goals, and stock options.
During 1996, Stanley G. Brannan, formerly President and Chief Executive
Officer, participated in deliberations regarding the compensation of other
executive officers, but did not participate in determining his own compensation.
Mr. Brannan made recommendations to the Committee on the incentive compensation
program to be followed by the Company, as well as specific compensation levels
for each executive officer. After evaluating these recommendations, the
Committee recommends programs and pay levels to the full Board for approval. In
making its recommendations to the Board, the Committee considers such factors as
the salaries of executive officers in similar positions with comparably sized
companies, primarily within the Company's industry; survey data obtained from
various sources; the experience and contribution levels of each executive
officer; and the Company's financial performance during the last fiscal year.
Mr. Brannan's compensation was set in accordance with the policies and practices
established for the other executive officers of the Company.
David S. Gergacz has served as President and Chief Executive Officer of the
Company since December 2, 1996 under an Employment Agreement negotiated by Mr.
Gergacz and the Board of Directors. For a description of the terms of the
Employment Agreement, see the discussion under "Compensation of Directors and
Executive Officers -- Employment Agreements; Change in Control Arrangements"
above. The Committee believes that the overall compensation established under
the agreement is comparable to, and competitive with, the compensation programs
in effect for chief executive officers of companies with which the Company
competes.
Under the Company's executive incentive compensation plan for 1996,
executive officers were entitled to receive bonuses based upon the achievement
of certain revenue and operating income targets established by the Board of
Directors at the commencement of the year. Each executive was assigned a target
bonus based upon achieving on-plan performance. Target bonuses ranged from 33%
9
<PAGE>
to 55% of base salary depending upon each executive's experience, contribution
and job responsibilities. Mr. Brannan and other staff executives were
compensated exclusively on overall Company performance. Executives in charge of
principal business units were generally compensated one-half on achievement of
revenues and contribution of their business unit, and one-half upon achievement
of corporate revenue and profit objectives. Under the formula in place during
1996, operating income was weighted three times as heavily as revenue attainment
in determining incentive compensation. During 1996, operating income was below
the minimum threshold, and no bonuses were paid based on the Company's operating
income. Bonus compensation paid to Alan C. Maltz and Scott A. Maltz represented
the minimum amounts which were guaranteed under the employment agreements
described under the heading "Employment Agreements; Change in Control
Arrangements".
The Committee also grants stock options to executive officers in order to
provide long-term incentives to the executives and to align the executives with
the goal of maximizing stockholder value over time. Stock options are generally
granted at fair market value, with vesting occurring at various dates. Grant
ranges have been established for the executives based upon the practices of
comparably-sized companies in the Company's and related industries. Individual
grants may vary within the range to reflect individual performance and
potential. During 1996, options to purchase an aggregate 293,000 shares of
common stock were granted to the Company's executive officers under the 1994
Stock Option Plan, including options covering 44,000 shares of common stock to
Mr. Brannan. One-half of such options vest on January 18, 2002 and one-half vest
on January 18, 2003. The options vesting on January 18, 2002 were subject to
earlier vesting upon the achievement of certain levels of operating income in
1996; however, the Company did not achieve the minimum operating income level
required for accelerated vesting of these options. The options vesting on
January 18, 2003 are subject to earlier vesting upon the achievement of certain
levels of operating income in 1997. The Board believes that the actions taken on
these options were consistent with the Board's intent of providing both
meaningful incentives to the Company's executives and appropriate recognition
for outstanding performance.
COMPENSATION COMMITTEE
Perry E. Esping
C. MacKay Ganson, Jr.
John F. Kelsey, III
10
<PAGE>
COMPANY PERFORMANCE
Set forth below is a line graph comparing the cumulative total return to
holders of the Company's Common Stock against the cumulative total return of the
Standard & Poor's 500 Stock Index, and the Standard & Poor's High Technology
Composite Index for the period of five fiscal years commencing December 31, 1991
and ended December 31, 1996. Total return is based on an assumed investment of
$100 on December 31, 1991 and reinvestment of dividends through December 31,
1996.
VALUE OF $100 INVESTED ON DECEMBER 31, 1991 WITH DIVIDENDS REINVESTED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BRITE VOICE STANDARD & POOR'S HIGH
SYSTEMS, INC. STANDARD & POOR'S 500 TECH COMPOSITE
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 45.83 107.62 104.13
1993 177.08 118.46 128.09
1994 297.92 120.03 149.29
1995 231.25 165.13 215.03
1996 247.92 203.05 246.36
</TABLE>
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Brite Voice Systems, Inc........................... 100.00 45.83 177.08 297.92 231.25 247.92
Standard & Poor's 500.............................. 100.00 107.62 118.46 120.03 165.13 203.05
Standard & Poor's High Tech Composite.............. 100.00 104.13 128.09 149.29 215.03 246.36
</TABLE>
11
<PAGE>
PROPOSAL NO. 2
AMENDMENT OF THE BRITE VOICE SYSTEMS
1994 STOCK OPTION PLAN
The Brite Voice Systems 1994 Stock Option Plan (the "Plan") was adopted by
the Board of Directors in March 1994 and approved by the Company's stockholders
in May 1994. The purpose of the Plan is to advance the interests of the Company
and its stockholders by helping the Company or its subsidiaries obtain and
retain the services of officers and other employees, upon whose judgment,
initiative and efforts the Company and its subsidiaries are substantially
dependent, and to provide those persons with further incentives to advance the
interests of the Company. As of March 25, 1997, approximately 750 employees of
the Company and its subsidiaries would have been eligible to participate in the
Plan.
The aggregate number of shares of Common Stock that can be issued under the
Plan, as originally adopted, was limited to 1,000,000 shares. On February 9,
1997, the Board of Directors amended the Plan in order to increase the number of
shares of Common Stock available for issuance from 1,000,000 to 2,000,000 ("the
Plan Amendment") and directed that the Plan Amendment be submitted to the
stockholders of the Company for their approval. The Plan Amendment will become
effective only if the holders of at least a majority of the issued and
outstanding shares of Common Stock present at the Annual Meeting in person or by
proxy vote for the approval of the Plan Amendment.
Shares issued under the Plan may be either authorized and unissued shares or
treasury shares. Shares covered by options which expire or are terminated
without being exercised will again be available for the granting of options. The
Plan provides that the number of shares subject to the Plan, and the number of
shares covered by, and the exercise price of, outstanding option agreements, are
subject to appropriate adjustment in the case of any stock dividends, stock
splits, mergers, consolidations or other forms of reorganization. Options
granted under the Plan may be either options which qualify as incentive stock
options ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or options which do not qualify as ISOs ("NSOs"). ISOs and
NSOs are sometimes collectively referred to herein as "Options". To the extent
the aggregate fair market value, determined as of the time an option is granted,
of the Common Stock for which any employee is granted Options, which are
exercisable for the first time by such employee during any calendar year under
the Plan and any other 'incentive stock option plan' of the Company, exceeds
$100,000, the excess options shall be treated as NSOs.
Under the terms of the Plan, Options may be granted to employees, including
officers of the Company or any subsidiary of the Company. Directors of the
Company who are also employees of the Company or one of its subsidiaries are
eligible to receive Options. Non-employee Directors of the Company are
ineligible to receive Options under the Plan. Options covering 9,500 shares of
Common Stock have been exercised and options to acquire 954,975 shares of Common
Stock are currently outstanding under the Plan. Of such amount, options covering
463,000 shares have been granted to the Company's executive officers, including
options to purchase 144,000 shares to Stanley G. Brannan, 44,000 shares to Alan
C. Maltz, 22,000 shares to Scott A. Maltz, and 72,000 shares to Gerald V.
Butler. See "Compensation of Directors and Executive Officers". Because only
35,525 shares remain available for future option grants, the Board of Directors
believes that the Plan Amendment will provide additional flexibility in granting
Options to the Company's key employees in 1997 and beyond.
Options may be granted for terms to be established by the Compensation
Committee; however, ISOs may be granted for terms not to exceed ten years from
the date of grant (five years in the case of an ISO granted to a person who owns
10% or more of the total combined voting power of all classes of stock of the
Company).
The option price with respect to ISOs must not be less than 100% of the fair
market value of the Company's Common Stock (110% thereof in the case of a person
owning 10% or more of the total combined voting power of all classes of stock of
the Company) at the time of the granting of the option. Fair market value of the
Company's Common Stock is to be determined by the Committee, but shall be
12
<PAGE>
the closing price quoted on the Nasdaq Stock Market on the date the option is
granted and, in any event, such price shall be determined in accordance with any
regulations adopted by the Internal Revenue Service pursuant to Section 422 of
the Code. The option price for NSOs must be not less than 85% of the fair market
value of the Company's Common Stock at the time of the granting of the option.
The Plan provides that the option exercise price will be payable to the
Company, in cash or by check, or by such other legal consideration as may be
approved by the Committee, in its discretion. Options granted under the Plan are
not transferable other than by Will or by the laws of descent and distribution.
ISOs may be exercised by the optionee only during the term of his or her
employment, or within 90 days after the date on which the optionee ceases to be
an eligible participant for any reason other than the death or disability of the
optionee. In the event of the death of an optionee, the optionee's executor,
administrator, or person who has inherited the right to exercise the option, may
exercise it within 12 months of the date of the optionee's death, unless the
option otherwise expires prior to the end of such 12-month period. If the
optionee's employment terminates because of the optionee's disability, the
optionee may exercise the option within 12 months of termination of employment,
unless the option otherwise expires prior to the end of such 12-month period.
The recipients of ISOs qualifying as "incentive stock options" under the
Code will not realize any taxable income upon exercise of such options, provided
no disposition of the stock acquired is made within two years from the date of
the granting of the option or within one year from the date of exercise of the
option. Assuming compliance with these and other applicable Code provisions, an
optionee will realize a capital gain or loss upon disposition of the shares. If
the optionee disposes of the shares before the expiration of the one year and
two year waiting periods, any amount realized from such a disqualifying
disposition will be taxable as ordinary income in the year of disposition, to
the extent of the difference between the option price and either the fair market
value on the date the option is exercised or the disposition price, whichever is
less. At the time of a disqualifying disposition the Company would be entitled
to an income tax deduction for the amount taxable to the optionee as ordinary
income.
The grant of an NSO will result in no taxable income to the optionee or tax
deduction to the Company at the time of grant. An optionee exercising an NSO
will, at that time, realize taxable compensation in the amount of the difference
between the option price and the then market value of the shares. Subject to the
applicable provisions of the Code, a deduction for Federal income tax purposes
will be allowable to the Company in the year of exercise in an amount equal to
the taxable compensation realized by the optionee.
Certain officers of the Company also hold options granted under the
Company's 1984 Incentive Stock Option Plan. Information concerning these options
is included in the Tables appearing under the caption "Compensation of Directors
and Executive Officers". Because the amount and timing of any Option grant under
the Plan will be entirely in the discretion of the Compensation Committee, and
because future price movements of the Company's Common Stock cannot be
predicted, the Company is unable to estimate either the dollar amount of
potential benefit or the number of Options that may be received by any employee
or group of employees under the Plan.
At the close of business on March 25, 1997, the last reported sale price of
the Company's Common Stock, as quoted on the Nasdaq Stock Market, was $10.75.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent public
accountants, to serve as auditors for the year ending December 31, 1997. Arthur
Andersen LLP has served as the Company's auditors for the past four years. It is
expected that a representative of Arthur Andersen LLP will be present at the
Annual Meeting and will have an opportunity to make a statement, if desired, and
will be available to respond to appropriate questions from stockholders.
13
<PAGE>
The Board of Directors unanimously recommends a vote FOR the appointment of
Arthur Andersen LLP as auditors for the year ending December 31, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires officers and
directors and persons who beneficially own more than 10% of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% beneficial owners are required by applicable regulations to furnish the
Company with copies of all Section 16(a) forms they file. On the basis of
reports and representations submitted by the Directors and executive officers of
the Company, all Forms 3, 4 and 5 showing ownership of, and changes of ownership
in, the Company's Common Stock during 1996, were timely filed with the
Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting, other than those specifically set forth in the Notice of
Meeting, and is not aware of any matter to be brought before the Annual Meeting
by others. If any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying Proxy to vote such Proxy in
accordance with the judgment of the Board of Directors.
STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1997 Annual Meeting of
Stockholders in May 1998. The date by which stockholder proposals must be
received by the Company for inclusion in the Proxy Statement and form of proxy
for its Annual Meeting of Stockholders to be held in 1998 is December 1, 1997.
Such stockholder proposals should be submitted to Brite Voice Systems, Inc.,
7309 East 21st Street North, Wichita, Kansas 67206, Attention: Secretary.
[SIGNATURE]
Glenn A. Etherington
SECRETARY
April 7, 1997
14
<PAGE>
APPENDIX TO PROXY STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NOT INTENDED FOR DISTRIBUTION TO STOCKHOLDERS
------------------------------------
Amendment to Brite Voice Systems, Inc. 1994 Stock Option Plan
Section 6(a) of the Brite Voice Systems, Inc. Stock Option Plan is amended to
increase the number of shares of Option Stock that may be issued pursuant to the
exercise of Options granted under the Plan from 1,000,000 to 2,000,000.
<PAGE>
PROXY
BRITE VOICE SYSTEMS, INC.
7309 EAST 21ST STREET NORTH
WICHITA, KANSAS 67206
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints David S. Gergacz and Glenn A. Etherington
( ) as Proxies, each with the power to act alone and
to appoint his substitute, and hereby authorizes them to represent and to vote,
as designated below, all shares of Common Stock of Brite Voice Systems, Inc.
held of record by the undersigned on March 31, 1997 at the annual meeting of
stockholders to be held May 13, 1997, or any adjournment thereof.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote as
as marked to the contrary below) indicated below
Stanley G. Brannan, Perry E. Esping, C. MacKay Ganson, Jr., David S. Gergacz, John F. Kelsey, III, Alan C. Maltz, Scott A.
Maltz
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line through the nominee's name.)
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE
FOR ISSUANCE THEREUNDER FROM 1,000,000 TO 2,000,000.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE AND RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP as the independent public accountants for the
Company for 1997.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
To be signed on other side.
<PAGE>
[REVERSE SIDE OF PROXY CARD]
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the nominees and FOR Proposals 2 and 3. In their discretion, the
Proxies are authorized to vote upon such other business as may properly come
before the meeting.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, give full title as such. If a corporation, sign in full
corporate name by President or other authorized officer. If a partnership, sign
in partnership name by authorized person.
Dated: _____________________, 1997
----------------------------------
Signature
----------------------------------
Signature if held jointly
Please mark, date, sign and return
the proxy card promptly using the
enclosed envelope.
