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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
INTERVOICE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS
FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB
CONTROL NUMBER.
SEC 1913 (11-01)
INTERVOICE, INC.
17811 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 20, 2003
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To the Shareholders of INTERVOICE, INC.:
The annual meeting of shareholders of Intervoice, Inc., a Texas
corporation (the "Company"), will be held on Wednesday, August 20, 2003, at
10:00 a.m., local time, at The Renaissance Dallas, 900 East Lookout Drive,
Richardson, Texas 75082, for the following purposes:
1. To elect the Board of Directors for the ensuing year;
2. To consider and vote upon a proposal to amend the Company's Employee
Stock Purchase Plan to increase from 1,500,000 to 2,000,000 the
aggregate number of shares of Common Stock authorized for issuance
under the plan;
3. To consider and vote upon a proposal to approve the Company's 2003
Stock Option Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed June 23, 2003 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting or any adjournment thereof. Only shareholders of record at the close of
business on the record date are entitled to notice of and to vote at the
meeting. A complete list of such shareholders will be available for examination
at the offices of the Company in Dallas, Texas, during ordinary business hours
for a period of 10 days prior to the meeting.
A record of the Company's activities during the fiscal year ended
February 28, 2003 and the financial statements for such fiscal year are
contained in the accompanying 2003 Annual Report. The 2003 Annual Report does
not form any part of the material for the solicitation of proxies.
All shareholders are cordially invited to attend the meeting.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND TO RETURN IT PROMPTLY IN THE
POSTAGE-PAID RETURN ENVELOPE PROVIDED. If a shareholder who has returned a proxy
attends the meeting in person, such shareholder may revoke the proxy and vote in
person on all matters submitted at the meeting.
By order of the Board of Directors,
David W. Brandenburg
Chairman of the Board
and Chief Executive Officer
Dallas, Texas
June 27, 2003
INTERVOICE, INC.
17811 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 20, 2003
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INTRODUCTION
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company for use at the annual meeting of shareholders of the
Company to be held at the time and place and for the purposes set forth in the
foregoing notice. The approximate date on which this proxy statement and the
accompanying proxy will first be sent to shareholders of the Company is July 18,
2003.
Shares represented by valid proxies will be voted at the meeting in
accordance with the directions given. If no direction is indicated, the shares
will be voted for the election of the Board's nominees for director, and for the
other two proposals described in the foregoing notice.
The Board of Directors is not aware of any other matter to be presented
for consideration at the meeting. If any other matter is properly presented for
action at the meeting, the proxy holders will vote the proxies in accordance
with their best judgment in such matters. The proxy holders may also, if it is
deemed to be advisable, vote such proxies to adjourn the meeting or to recess
the meeting from time to time.
Any shareholder of the Company returning a proxy has the right to
revoke the proxy at any time before it is exercised by giving written notice of
such revocation to the Company addressed to David W. Brandenburg, Chairman of
the Board and Chief Executive Officer, Intervoice, Inc., 17811 Waterview
Parkway, Dallas, Texas 75252; however, no such revocation shall be effective
until such notice of revocation has been received by the Company at or prior to
the meeting.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only holders of record of Common Stock at the close of business on June
23, 2003, the record date for the meeting, are entitled to notice of and to vote
at the meeting or any adjournment(s) thereof. The presence of a majority of the
Common Stock outstanding on the record date is necessary to constitute a quorum.
On the record date for the meeting, there were issued and outstanding
approximately 34,140,643 shares of Common Stock. At the meeting, each
shareholder of record on the record date will be entitled to one vote for each
share registered in such shareholder's name on the record date. The Articles of
Incorporation of the Company deny cumulative voting rights. The following table
sets forth certain summary information with respect to the only shareholders who
are known to the Company to be the beneficial owner of more than five percent of
the outstanding shares of Common Stock as of June 23, 2003.
NAME AND ADDRESS NUMBER OF SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
Daniel D. Hammond
17811 Waterview Parkway
Dallas, Texas 75252 2,003,426(1) 5.87%
Becker Capital Management, Inc.
1211 SW Fifth Avenue
Suite 2185
Portland, Oregon 97204 3,248,850(2) 9.52%
Mellon Financial Corporation
One Mellon Center
Pittsburgh, Pennsylvania 15258 2,133,861(3) 6.25%
Boston Safe Deposit & Trust Company
One Mellon Center
Pittsburgh, Pennsylvania 15258 1,806,070(3) 5.29%
-1-
(1) A Schedule 13G dated February 3, 2003 was filed by Daniel D. Hammond
disclosing his beneficial ownership of 2,003,426 shares of Common
Stock. The Schedule 13G indicates that all 2,003,426 shares are held
subject to sole voting and dispositive power. Mr. Hammond is the former
Chairman of the Board and Chief Executive Officer of the Company. He is
currently employed as Technical Advisor for the Company.
(2) A Schedule 13G dated February 3, 2003 was filed by Becker Capital
Management, Inc. disclosing its beneficial ownership of 3,248,850
shares of Common Stock. The Schedule 13G indicates that 2,813,950
shares are held subject to sole voting power, 3,248,850 shares are held
subject to sole dispositive power, and no shares are held subject to
shared voting or dispositive power.
(3) A Schedule 13G dated January 14, 2003 was filed by Mellon Financial
Corporation disclosing that it beneficially owns 2,133,861 shares of
Common Stock and Boston Safe Deposit and Trust Company beneficially
owns 1,806,070 shares of Common Stock. The Schedule 13G indicates that
Mellon Financial Corporation holds 1,429,091 shares subject to sole
voting power, 225,570 shares subject to shared voting power, 2,133,861
shares subject to sole dispositive power, and no shares subject to
shared dispositive power. The Schedule 13G further indicates that
Boston Safe Deposit and Trust Company holds 1,129,000 shares subject to
sole voting power, 225,570 shares subject to shared voting power,
1,806,070 shares subject to sole dispositive power, and no shares
subject to shared dispositive power.
VOTING PROCEDURES AND TABULATION
The Company will appoint one or more inspectors of election to act at
the meeting and to make a written report thereof. Prior to the meeting, the
inspectors will sign an oath to perform their duties in an impartial manner and
to the best of their abilities. The inspectors will ascertain the number of
shares outstanding and the voting power of each of such shares, determine the
shares represented at the meeting and the validity of proxies and ballots, count
all votes and ballots and perform certain other duties as required by law. The
inspectors will tabulate the number of votes cast for or withheld as to the vote
on each nominee for director and for, against or abstained from the other two
proposals described in the foregoing notice.
With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee. Votes that are withheld will be excluded entirely
from the vote and will have no effect on the voting on the election of
directors, provided a quorum is present, because directors are elected by a
plurality of the shares of Common Stock of the Company present in person or by
proxy at the meeting and entitled to vote and voted thereat.
Each of the proposals to amend the Company's Employee Stock Purchase
Plan, and to approve the Company's 2003 Stock Option Plan, must be approved by a
majority of the shares of Common Stock present or represented and voting on the
applicable proposal at the meeting. If a shareholder abstains from voting on
either proposal, it will have the same effect as a vote cast "AGAINST" such
proposal.
If the Company receives a signed proxy card with no indication of the
manner in which shares are to be voted on a particular proposal, such shares
will be voted in accordance with the recommendation of the Board of Directors
for such proposal.
Brokers who hold shares in street name only have the authority to vote
on certain items when they have not received instructions from beneficial
owners. Any "broker non-votes" will have no effect on the election of directors
or the next two proposals described in the foregoing notice.
EXECUTIVE OFFICERS
Following is certain information regarding certain executive officers
of the Company. Information regarding the only other executive officer of the
Company, David W. Brandenburg, Chairman of the Board and Chief Executive
Officer, is included under "Proposal 1. Election of Directors".
ROBERT E. RITCHEY, age 56, is President of the Company, a position he
has held since July 22, 2002. From December 2000 until his recent promotion, Mr.
Ritchey served the Company as President and General Manager Enterprise Solutions
Division. Prior to joining the Company, from May 1999 to November 2000, Mr.
Ritchey served as Vice President and General Manager of Notifier Integrated
Systems, a subsidiary of Honeywell International, a provider of network based
integration products to the electronic security and building controls industry.
Before joining Notifier Integrated Systems, from July 1994 to May 1999 he served
as Vice President General Manager for the Integrated Systems Division of
Sensormatic Electronics, a company engaged in, among other things, access
control, video products, CCTV systems, and integrated systems.
-2-
ROB-ROY J. GRAHAM, age 50, is currently Executive Vice President, Chief
Financial Officer, Secretary and Controller. He has held the positions of Chief
Financial Officer and Secretary since August 1994, the position of Controller
since August 1992, and he became an Executive Vice President on July 22, 2002.
From April 1994 to May 2001, he held the position of Chief Accounting Officer.
On June 26, 2003, the Company announced that Mr. Graham will resign from the
Company on July 25, 2003 to pursue other opportunities.
H. DON BROWN, age 47, is Executive Vice President - Human Resources. He
has held the position of Vice President of Human Resources since September 1995,
and became an Executive Vice President on July 22, 2002. 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.
MARK C. FALKENBERG, age 46, is currently serving as Chief Accounting
Officer, a position he has held since May 2001. Mark joined the Company in March
2001. Prior to joining the Company, from September 1994 to February 2000, Mr.
Falkenberg served as Vice President - Finance and Chief Financial Officer of
Harris Methodist Health Plan, a health maintenance organization and a subsidiary
of Texas Health Resources. Mr. Falkenberg will become the Company's Chief
Financial Officer on an interim basis after July 25, 2003.
DEAN C. HOWELL, age 45, is Executive Vice President and General
Counsel. He has held the position of Vice President and General Counsel since
July 2000, and became an Executive Vice President on July 22, 2002. From March
1996 to June 2000, he served as Vice President and Corporate Counsel, and from
October 1992 to February 1996, as Legal Counsel.
RON NIEMAN, age 50, is Senior Vice President Line of Business, a
position he has held since July 22, 2002. Prior to his promotion, Mr. Nieman
served as Senior Vice President-International Sales from May 2001 to July 2002.
Prior to joining the Company, Mr. Nieman served as President and Chief Executive
Officer of RemoteVideo, Inc., a company specializing in electronic security,
from August 2000 until May 2001. From December 1998 until June 2000, Mr. Nieman
served as Senior Vice President and General Manager for Sensormatic Electronic
Corporation's Video Systems Division, a manufacturer and distributor of
electronic security solutions. Mr. Nieman served as Managing Director for
Sensormatic Electronic Corporation's Commercial/Industrial Operation in
Asia-Pacific from 1996 until 1998.
GEORGE T. PLATT, age 38, is currently Senior Vice President-Business
Development and Marketing, a position he has held since July 22, 2002. Prior to
his recent promotion, Mr. Platt served as Vice President of Distribution and
Strategic Alliances for the Company's Enterprise Solutions Division, a position
he had held since March 1, 2002. From March 2000 to February 2001, Mr. Platt
served as Vice President Managing Director, Asia and Latin America. From
September 1999 to February 2000, Mr. Platt served as Vice President Managing
Director, Latin America. Prior thereto, he served as Managing Director, Asia
Pacific from October 1996 until November 1999. Mr. Platt is the son of George C.
Platt, a member of the Company's Board of Directors.
MIKE J. POLCYN, age 45, is currently Senior Vice President-Engineering,
a position he has held since July 22, 2002. Prior to his recent promotion, Mr.
Polcyn served as Vice President, Research and Development for the Company's
Enterprise Solutions Division, a position he had held since March 1, 2001. From
December 2000 to February 2001, Mr. Polcyn served as Vice President,
Engineering. From March 1998 to December 2000, Mr. Polcyn served as Vice
President, Packaged Products Line of Business. Prior thereto, he served as Vice
President, Business Development and Product Marketing from December 1995 to
March 1998.
PHILLIP C. WALDEN, age 58, is Executive Vice President - Manufacturing.
He has held the position of Vice President-Manufacturing since July 1987, and
became an Executive Vice President on July 22, 2002.
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
Q. WHAT PROPOSALS ARE SHAREHOLDERS BEING ASKED TO CONSIDER AT THE UPCOMING
ANNUAL MEETING?
A. Shareholders will elect the Board of Directors for the ensuing year and vote
upon a proposal to amend the Company's Stock Purchase Plan to increase from
1,500,000 to 2,000,000 the aggregate number of shares of Common Stock authorized
for issuance under such plan and a proposal to approve the Company's 2003 Stock
Option Plan.
-3-
Q. WHY IS THE COMPANY PROPOSING TO AMEND THE EMPLOYEE STOCK PURCHASE PLAN?
A. The purpose of the Company's Stock Purchase Plan is to provide employees of
the Company and its subsidiaries with an opportunity to acquire a proprietary
interest in the Company through the regular and systematic purchase of shares of
Common Stock through voluntary payroll deductions, and to therefore develop a
stronger incentive to work for the continued success of the Company and its
subsidiaries. As of June 23, 2003, 873,275 of the 1,500,000 shares authorized
for issuance under the Stock Purchase Plan had been issued, and options for an
additional 499,676 shares were outstanding. The Company is seeking approval to
amend the Stock Purchase Plan to increase from 1,500,000 to 2,000,000 the number
of shares of Common Stock authorized for issuance under the plan so that it may
continue to use the Stock Purchase Plan to provide an incentive to the employees
of the Company and its subsidiaries, which would align the interests of the
employees with the objectives of the shareholders.
Q. WHY IS THE COMPANY PROPOSING APPROVAL OF THE 2003 STOCK OPTION PLAN?
A. The purposes of the Company's 2003 Stock Option Plan are to attract able
persons to enter the employ of the Company, to encourage employees to remain in
the employ of the Company and to provide motivation to employees to put forth
maximum efforts toward the continued growth, profitability and success of the
Company, by providing incentives to such persons through the ownership and
performance of the Common Stock. A further purpose of the Company's 2003 Stock
Option Plan is to provide a means through which the Company may attract able
persons to become directors of the Company and to provide directors with
additional incentive and reward opportunities designed to strengthen their
concern for the welfare of the Company and its shareholders. As of June 23, 2003
only 7,700 shares were available for issuing stock options under the Company's
1998 Nonqualified Stock Option Plan and only 122,323 shares were available for
issuing stock options under the Company's 1999 Stock Option Plan. The Company is
seeking approval of the 2003 Stock Option Plan because its existing stock option
plans will not be sufficient to meet the Company's equity-based compensation
goals, and the plan is needed to provide stock-based incentive compensation to
the Company's employees and directors.
PROPOSAL 1. ELECTION OF DIRECTORS
The business and affairs of the Company are managed by and under the
direction of the Board of Directors, which exercises all corporate powers of the
Company and establishes broad corporate policies. The Articles of Incorporation
of the Company provide that the number of directors constituting the 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 the Company's directors
serving at the time of such vote. The number of director positions presently
constituting the Board is six. The six directors are to be elected at the
meeting to serve until the next annual meeting of shareholders and until their
successors have been elected and qualified. The six nominees are the current
directors of the Company: David W. Brandenburg, Joseph J. Pietropaolo, Jack P.
Reily, George C. Platt, Grant A. Dove and Gerald F. Montry. During the fiscal
year ended February 28, 2003, the Board of Directors held ten (10) meetings.
With the exception of Mr. Dove, each of the nominees to be elected at the annual
meeting attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors and the total number of meetings of any committees of
the Board of Directors on which he served during the last fiscal year. Due to a
prolonged illness, Mr. Dove was unable to attend 75% of the meetings of the
Board of Directors or the committees on which he served.
The six nominees for election to the Board of Directors who receive the
greatest number of votes cast at the meeting will be elected to the Board of
Directors. All duly submitted and unrevoked proxies in the form accompanying
this proxy statement will be voted for the nominees selected by the Board of
Directors except where authorization so to vote is withheld. If any nominee
becomes unable or unwilling to serve (which is not presently foreseen), the
persons designated as proxies will have full discretion to cast votes for
another person designated by the Board. THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ELECTION OF SUCH NOMINEES. Set forth below is certain information
with respect to the six nominees for director.
DAVID W. BRANDENBURG, age 58, is Chairman of the Board and Chief
Executive Officer of the Company. Mr. Brandenburg has held the position of Chief
Executive Officer since June 2000 and the position of Chairman of the Board
since December 2000. He held the position of President from February 2001 to
July 2002. Mr. Brandenburg is also 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.
Prior thereto, Mr. Brandenburg served as President of the Company from July 1990
to December 1994. Mr. Brandenburg has served as a director since 1997 and from
1990 to 1995, during which he served as Vice Chairman of the Company from
December 1994 to May 1995.
-4-
JOSEPH J. PIETROPAOLO, age 47, served as Vice President and co-owner of
I.A.Q. Enterprises L.L.C., a company specializing in mold remediation and
restoration services, from October 2001 until November 2002. From March 1998 to
June 2001, Mr. Pietropaolo served as an independent consultant providing
financial consulting services. 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 62, is currently the President and Chief Executive
Officer of Viewcast.com, d.b.a. Viewcast Corporation, a company engaged in video
networking and internet video streaming, a position he has held since October
1999. From January 1991 to September 1999 Mr. Platt served as 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. Mr. Platt is a member of the Board of Directors of
Viewcast.com and UniView Corp. Mr. Platt has served as a director since 1991.
Mr. Platt is the father of George T. Platt, Senior Vice President-Business
Development and Marketing.
GRANT A. DOVE, age 75, 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 Inet Technologies, Inc. and Tipping Point
Technologies, Inc. Mr. Dove has served as a director since 1997.
JACK P. REILY, age 52, is President of Reily Communications, a firm
which provides consulting services to technology clients in the communications
equipment and software market, a position he has held since 1998. From December
2000 to March 2002, he also held the position of Senior Vice President and
General Manager for Efficient Networks (affiliated with Siemens Corporation), a
leading provider of DSL modems for consumer and business applications. From 1997
to 1998 Mr. Reily was Executive Director of the Hardware Practice Group for
Broadview International, an investment banking firm with special focus on merger
and acquisition activity for telecommunications equipment manufacturers. Mr.
Reily has served as a director of the Company since August 2002.
GERALD F. MONTRY, age 64, is a principal in the firm of Mont Reuil &
Co., a firm that manages private investments, a position he has held since
September 1998. From 1986 to September 1998 Mr. Montry served as Senior Vice
President and Chief Financial Officer of DSC Communications Corporation, a
company that sold telecom equipment until it was acquired by Alcatel in 1998.
Mr. Montry had also served on the Board of Directors of DSC Communications prior
to its acquisition by Alcatel. Mr. Montry currently serves as a director of
Transwitch Corporation. Mr. Montry has served as a director of the Company since
October 2002.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The tabulation below sets forth certain information with respect to the
beneficial ownership of shares of Common Stock, as of June 24, 2003, of each
director and nominee for director of the Company, each executive officer listed
in the Summary Compensation Table included elsewhere in this proxy statement,
and all directors, nominees for director and executive officers of the Company
as a group.
Common Stock
Beneficially Owned(1)
----------------------------------
Number Percent
Name of Shares of Class
---- -------------- --------------
Directors and Nominees for Director
David W. Brandenburg .................................................... 1,692,591(2) 4.87%
Joseph J. Pietropaolo ................................................... 31,500(3) *
George C. Platt ......................................................... 50,700(3) *
Grant A. Dove ........................................................... 87,000(3) *
Jack P. Reily ........................................................... 18,000(3) *
Gerald F. Montry ........................................................ 122,000(3) *
Named Executive Officers (who are not a director or nominee named above)
Robert E. Ritchey ....................................................... 91,746(4) *
Rob-Roy J. Graham ....................................................... 448,334(4) 1.3%
H. Don Brown ............................................................ 203,568(4) *
Dean C. Howell .......................................................... 193,278(4) *
All Directors, Nominees for Director and Executive Officers
as a Group (15 persons) ...................................................... 3,538,588(5) 9.87%
-5-
* Less than 1%
(1) Unless otherwise indicated, all shares listed are directly held with
sole voting and investment power.
(2) Includes 213,846 shares held in Mr. Brandenburg's wife's IRA, and
586,000 shares not outstanding but subject to currently exercisable
stock options.
(3) Shares are not outstanding but are subject to currently exercisable
stock options, other than 7,500 shares held by Mr. Pietropaolo, 10,700
shares held by Mr. Platt, 11,000 shares held by Mr. Dove, and 122,000
shares held by Mr. Montry.
(4) Shares are not outstanding but are subject to currently exercisable
stock options, other than 10,914 shares held directly by Mr. Ritchey,
84,050 shares held directly by Mr. Graham and 318 shares held by him in
the Company's 401(k) Employee Savings Plan, 95,518 shares held by Mr.
Brown, and 60,294 shares held by Mr. Howell.
(5) Consists of shares beneficially owned by the Company's principal
executive officers and directors. The shares beneficially owned by all
directors and executive officers as a group include 1,711,416 shares
issuable upon exercise of currently exercisable options and options
which are exercisable within 60 days after June 26, 2003. The total
also includes 216,946 shares held by spouses and other family members
of directors and executive officers. The inclusion of shares in this
table as beneficially owned is not an admission of beneficial
ownership.
AUDIT COMMITTEE REPORT
We have reviewed and discussed the Company's audited financial
statements for the year ended February 28, 2003 with management and have
discussed with Ernst & Young LLP, certified public accountants, the independent
auditors and accountants for the Company, the matters required to be discussed
by SAS 61 (Codification of Statements on Auditing Standards, AU Section 380)
with respect to those statements.
We have been advised of the content of, and have received the written
disclosures and the letter from Ernst & Young LLP required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
and have discussed with Ernst & Young LLP its independence in connection with
its audit of the Company's most recent financial statements. Based on this
review and these discussions, we recommended to the Board of Directors that
these audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 2003 for filing with the SEC.
Joseph J. Pietropaolo, Gerald F. Montry and Jack P. Reily comprised the
Audit Committee. As of the date of this report, all are independent, as defined
in Rule 4200(a)(14) of the Nasdaq Stock Market.
The Board of Directors has adopted a written charter for the Audit
Committee.
The information in this Audit Committee report shall not be deemed to
be soliciting material, or be filed with the SEC or subject to Regulation 14A or
14C or to liabilities of Section 18 of the Securities Act of 1933, nor shall it
be deemed to be incorporated by reference into any filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates these paragraphs by reference.
June 24, 2003
AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Joseph J. Pietropaolo, Chairman
Gerald F. Montry
Jack P. Reily
COMPENSATION OF DIRECTORS
All directors who are not employees of the Company receive a fee of
$1,000 per month for serving as a director of the Company. The Company also
reimburses all directors for travel, lodging and related expenses incurred in
attending Board and committee meetings. Directors who are not employees of the
Company also receive a fee of $1,000 for each Board or committee meeting
attended in person, and $500 for each Board meeting attended by phone
conference. Pursuant to the Company's 1999 Stock Option Plan, at the Company's
annual meeting on August 28, 2002, Mr. Reily was automatically granted an option
to purchase 18,000 shares of Common Stock upon his initial
-6-
election to the Board, and each of Messrs. Pietropaolo, Dove and Platt was
automatically granted an option to purchase 6,000 shares of Common Stock upon
their re-election to the Board, at an exercise price based on the market price
on that date, $1.60 per share, which options can be exercised commencing on the
date of the 2003 annual meeting. On October 24, 2002 Mr. Montry, upon his
election to the Board to fill a newly created vacancy, was automatically granted
an option to purchase 18,000 shares of common stock at an exercise price of
$1.365 per share, which option can be exercised on the date of the 2004 annual
meeting. If the Company's 2003 Stock Option Plan is approved by shareholders at
the annual meeting for 2003, stock options will automatically be granted under
the 2003 Stock Option Plan to all non-employee directors re-elected to serve on
the Board at the meeting. Under the terms of the 2003 Stock Option Plan, each
non-employee director who is re-elected to the Board will automatically be
granted an option to purchase 10,000 shares of Common Stock at the fair market
value on the date of grant. If the 2003 Stock Option Plan is not approved, stock
options will automatically be granted to non-employee directors on the date of
the annual meeting under the 1999 Stock Option Plan. See Proposal 3 of this
proxy for a complete description of the 2003 Stock Option Plan and its
provisions for granting stock options to non-employee directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established committees which deal with
certain specific areas of the Board's responsibility. These committees include
the Audit Committee, Compensation Committee, Executive Committee and Nominating
Committee.
The Audit Committee, which held six (6) meetings during fiscal 2003,
has the primary responsibility to ensure the integrity of the financial
information reported by the Company. Its functions include: (a) the appointment,
compensation and oversight of independent auditors; (b) reviewing the scope of
the annual audit to be performed by the independent auditors prior to
commencement of the audit; (c) reviewing the results of those audits; (d)
reviewing the organization and scope of the Company's internal system of audit
and financial controls; (e) meeting periodically with management and the
independent public accountants to review financial, accounting and internal
control matters; and (f) meeting 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. The Company's Board of Directors has determined that two members of
the Audit Committee, Gerald F. Montry and Joseph J. Pietropaolo, are audit
committee financial experts, and both are independent in accordance with Item
7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934. Its
current members are Joseph J. Pietropaolo, Chairman, Gerald F. Montry and Jack
P. Reily.
The Compensation Committee, which held two (2) meetings during fiscal
2003, has the authority to determine and approve all the terms of the
employment, compensation and benefits payable to officers of the Company,
including those officers who are also directors. The Company'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 1999 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, Jack P. Reily and Grant A. Dove.
The Executive Committee, which did not meet during fiscal 2003, 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 David W. Brandenburg, Chairman.
The Nominating Committee, which met once during fiscal 2003, 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 the Company at the address shown on the cover of this Proxy
Statement, Attention: Nominating Committee. The current members of the
Nominating Committee are Grant A. Dove, Chairman, and George C. Platt.
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PROPOSAL 2. TO APPROVE AMENDMENT TO THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN
The Intervoice, Inc. Employee Stock Purchase Plan (the "Stock Purchase
Plan") was adopted by the Board of Directors as of October 14, 1993. The Stock
Purchase Plan has been approved by the Company's shareholders. On June 24, 2003,
the Board of Directors adopted, subject to shareholder approval, an amendment to
the Stock Purchase Plan to increase from 1,500,000 to 2,000,000 the number of
shares of Common Stock authorized for issuance thereunder. A copy of the Stock
Purchase Plan, as amended, is attached hereto as Appendix A.
As of June 24, 2003, the aggregate number of shares that had been
issued under the Stock Purchase Plan was 873,275, and options for an additional
499,676 shares were outstanding.
The purpose of the Stock Purchase Plan is to provide employees of the
Company and its subsidiaries with an opportunity to acquire a proprietary
interest in the Company through the regular and systematic purchase of shares of
Common Stock through voluntary payroll deductions, and thus to develop a
stronger incentive to work for the continued success of the Company and its
subsidiaries. In fiscal 2003, 1,356 shares of Common Stock were issued to
executive officers of the Company and 62,529 shares of Common Stock were issued
to other employees of the Company pursuant to the Stock Purchase Plan. Based on
the number of employees participating in the Stock Purchase Plan as of June 24,
2003, the Company anticipates issuing considerably more shares under the plan
during fiscal 2004. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE STOCK PURCHASE PLAN. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS SHAREHOLDERS SPECIFY
OTHERWISE.
DESCRIPTION OF THE STOCK PURCHASE PLAN AS AMENDED BY THE PROPOSED AMENDMENT
The following is a summary of the Stock Purchase Plan incorporating the
proposed amendment and is qualified in its entirety by reference to the full
text of the Stock Purchase Plan as set forth in Appendix A to this proxy
statement.
Participation in the Stock Purchase Plan is open to each eligible
employee of the Company or its participating subsidiaries. The approximate
number of persons eligible to participate in the plan as of June 23, 2003, was
718. Employees whose customary employment is for 20 hours or less per week or
five months or less in any calendar year are not eligible to participate. A
participating subsidiary is any subsidiary that is owned 50% or more by the
Company or, with respect to a lower-tier subsidiary, by a subsidiary of the
Company, and that has been designated by the Compensation Committee as a
participating affiliate in the Stock Purchase Plan. The Company's wholly-owned
subsidiaries have been designated as participating affiliates in the Stock
Purchase Plan.
Each eligible employee may elect to have payroll deductions over each
"option period" of an amount which must be at least 1% but no more than 10% of
such employee's compensation for the option period up to a maximum of $21,250
(85% of $25,000) per year. An option period consists of the 12-month period
beginning January 1 and ending the following December 31. At the end of each
option period, the Company uses the funds accumulated in each participating
employee's stock purchase account to purchase the number of whole shares of
Common Stock determined by dividing (i) the aggregate payroll deduction
authorized by the participant for the option period, by (ii) 85% of the Fair
Market Value per share on the first day of the option period. The purchase price
of a single share of Common Stock under the Stock Purchase Plan is the lower of
either (i) 85% of the Fair Market Value per share on the date of grant of the
option, which is the first day of the option period, or (ii) 85% of the Fair
Market Value per share on the date on which the option is exercised, which is
the last day of the option period. The term "Fair Market Value" is defined as
the closing price on the date in question of a share of Common Stock on the
Nasdaq National Market. No participant may purchase shares under the Stock
Purchase Plan at a rate which exceeds $25,000 in Fair Market Value of shares for
each calendar year. In addition, an otherwise eligible employee may not be
granted an option under the Stock Purchase Plan if such employee would,
immediately after grant of the option, own stock possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
any parent or subsidiary corporation of the Company. Stock certificates
representing such purchased shares are issued to the participating employees as
soon as practicable after the end of each option period; provided, however, that
the obligation of the Company to deliver such Common Stock may be postponed for
such period of time as may be necessary to register or qualify the purchase of
the shares under the Securities Act of 1933 or any applicable foreign or state
securities law. No fractional shares are issued upon exercise of an option. Any
balance remaining in a participant's stock purchase account following exercise
of an option is returned to the participant. The cash proceeds received by the
Company upon exercise of an option constitute general funds of the Company. An
option granted under the Stock Purchase Plan is not transferable by the
participant and is exercisable only by the participant. A participant may
withdraw from the Stock Purchase Plan at any time by written notice to the
Company. Upon withdrawal, the balance in the participant's stock purchase
account is returned to the participant. If a participant withdraws, he or she
may re-enroll during the enrollment period for the next option period.
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The Compensation Committee, composed of three or more members of the
Board of Directors of the Company, who are not employees of the Company, is
responsible for administration of the Stock Purchase Plan. Fees and expenses
incurred in connection with the administration of the Stock Purchase Plan are
paid by the Company.
The Board of Directors may amend or terminate the Stock Purchase Plan
at any time without shareholder approval; provided, however, that shareholder
approval is required for any amendment that would (i) increase the total number
of shares of Common Stock issuable under the Stock Purchase Plan (other than
pursuant to certain provisions of the Stock Purchase Plan relating to stock
splits, stock dividends, mergers and other changes in the Common Stock), (ii)
modify the criteria for determining the employees or class of employees eligible
to participate or (iii) materially increase benefits accruing under the Stock
Purchase Plan to participants who are subject to Section 16 of the Securities
Exchange Act of 1934. No termination or amendment of the Stock Purchase Plan
will adversely affect the rights of a participant under an option outstanding at
the time of such termination or amendment, except with the consent of such
participant.
FEDERAL INCOME TAX CONSEQUENCES
In addition to the income tax consequences described below, the
acquisition, ownership or disposition of shares acquired upon the exercise of an
option under the Stock Purchase Plan may have tax consequences under U.S.
federal estate tax laws and various state and foreign laws that may be
applicable to certain participants in the Stock Purchase Plan. Since these tax
consequences, as well as the U.S. federal income tax consequences described
below, may vary among employees depending on the particular facts and
circumstances involved, each employee should consult his or her own tax advisor
with respect to the tax consequences of the purchase of Common Stock under the
Stock Purchase Plan and the sale of such Common Stock.
This summary describes only U.S. federal income tax consequences. If an
employee is a citizen and/or resident of a country other than the United States,
the employee should consult his or her own tax advisor for information with
respect to the tax consequences of participation in the Stock Purchase Plan and
the sale of Common Stock acquired pursuant to the Stock Purchase Plan.
The Stock Purchase Plan is designed to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). Amounts deducted from the income of a participating
employee under the Stock Purchase Plan will be included in such employee's
income for the year in which those amounts would otherwise have been paid to the
employee, and will be deductible by the Company in that year. The employee will
not recognize additional taxable income either (i) on the first day of the
purchase period or (ii) at the time the Company purchases shares of Common Stock
under the Stock Purchase Plan on behalf of the employee, and no further
deduction is allowed to the Company at either time. The employee's basis in
shares purchased under the Stock Purchase Plan will equal the amount paid for
such shares. If the fair market value of shares purchased under the Stock
Purchase Plan is less on the date of disposition or death than the amount paid
for the shares, no amount will be included in the employee's gross income as
ordinary income, and the full amount of any loss (assuming the shares are sold
in an arm's length transaction) will be a long-term capital loss.
An employee who purchases shares pursuant to an option under the Stock
Purchase Plan and disposes of such shares more than two years after the option
is granted and more than one year after the option is exercised, or who dies at
any time while holding the shares, will recognize ordinary income at the time of
disposition or death in an amount equal to the lesser of (i) the excess, if any,
of the fair market value of the shares at the time of the disposition or death
over the amount paid for the shares, or (ii) 15% of the fair market value of the
shares at the time the option was granted. The Company will not be entitled to a
deduction in respect of any amount of ordinary income so recognized by the
employee. The employee's basis in the shares disposed of will be increased by
the amount of ordinary income recognized. Any further gain recognized on the
disposition will be taxed as long-term capital gain.
An employee who purchases shares pursuant to an option under the Stock
Purchase Plan and disposes of such shares less than two years after the option
is granted or less than one year after the option is exercised will recognize
ordinary income at the time of disposition in an amount equal to the excess of
the fair market value of the shares on the date of exercise of the option over
the amount paid for such shares or, if less, the gain on disposition. The
Company will be entitled to a deduction equal to the amount of ordinary income
recognized by the employee. Any additional gain recognized by the employee on
the disposition will be short-term or long-term capital gain, depending on the
employee's holding period for the shares transferred. If the employee's basis in
the shares purchased under the Stock Purchase Plan is greater than the amount
received for the shares, the excess of the basis over the amount received will
be taxed as short-term or long-term capital loss (assuming the shares are sold
in an arm's length transaction), depending on the employee's holding period for
the shares.
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The Stock Purchase Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974 and is not qualified under
Section 401(a) of the Code.
PROPOSAL 3. TO APPROVE THE COMPANY'S
2003 STOCK OPTION PLAN
On June 24, 2003 the Board of Directors adopted, subject to the
approval of the shareholders of the Company, the Intervoice, Inc. 2003 Stock
Option Plan. The Board believes that stock option plans provide an important
means of attracting, retaining and motivating key personnel and recommends that
shareholders approve the 2003 Stock Option Plan. Because directors and executive
officers of the Company are eligible to receive options under the 2003 Stock
Option Plan, each of them has a personal interest in the approval of the 2003
Stock Option Plan.
The 2003 Stock Option Plan is intended to promote and advance the
interests of the Company by providing key employees and directors of the Company
or its subsidiaries added incentive to continue in the service of the Company
and a more direct interest in the future success of its operations. The Board of
Directors believes that key employees who have an investment in the Company are
more likely to meet and exceed performance goals. As of June 24, 2003 only 7,700
shares and 122,323 shares, respectively, remain available for future grant under
the Company's 1998 Nonqualified Stock Option Plan and 1999 Stock Option Plan,
respectively. Accordingly, the Company's existing stock option and other
incentive plans will not be sufficient to meet the Company's equity-based
employee compensation and incentive goals, and the 2003 Stock Option Plan is
needed to provide stock-based incentive compensation to the Company's current
employees and to its directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE PROPOSAL TO APPROVE THE 2003 STOCK OPTION PLAN. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS SHAREHOLDERS
SPECIFY OTHERWISE.
DESCRIPTION OF THE 2003 STOCK OPTION PLAN
A copy of the 2003 Stock Option Plan is attached to this Proxy
Statement as Appendix B. The following summary of the 2003 Stock Option Plan is
qualified in its entirety by reference to the plan itself.
Purposes. The purposes of the 2003 Stock Option Plan are to attract
able persons to enter the employ of the Company, to encourage employees to
remain in the employ of the Company and to provide motivation to employees to
put forth maximum efforts toward the continued growth, profitability and success
of the Company, by providing incentives to such persons through the ownership
and performance of the Common Stock. A further purpose of the 2003 Stock Option
Plan is to provide a means through which the Company may attract able persons to
become directors of the Company and to provide directors with additional
incentive and reward opportunities designed to strengthen their concern for the
welfare of the Company and its shareholders.
Administration. The 2003 Stock Option Plan provides for administration
by the Compensation Committee or another committee of the Board (the
"Committee"), provided that each member of the Committee must be both a
"non-employee director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") and an "outside director" within the
meaning of Treasury Regulation Section 1.162-27(e)(3) interpreting Section
162(m) of the Internal Revenue Code of 1986 (the "Code"). Among the powers
granted to the Committee are the authority to interpret the 2003 Stock Option
Plan, establish rules and regulations for its operation, select eligible persons
to receive options under the 2003 Stock Option Plan and determine the form and
amount and other terms and conditions of such options. Notwithstanding the
authority delegated to the Committee to administer the 2003 Stock Option Plan,
the only stock options that can be granted to non-employee directors of the
Company are the formula-based stock option grants discussed below in the Section
entitled "Stock Options Granted to Non-Employee Directors". The exercise price
of stock options granted under the 2003 Stock Option Plan cannot be less than
the fair market value of the Common Stock on the date of grant. The 2003 Stock
Option Plan authorizes the Committee to delegate its authority under the 2003
Stock Option Plan in certain circumstances; provided, however, that only the
Committee may select and grant options to employees who are subject to Section
16 of the Exchange Act or who are "covered employees," as defined in Section
162(m) of the Code.
Eligibility for Participation. All employees of the Company and its
subsidiaries are eligible to be selected to participate in the 2003 Stock Option
Plan, and all non-employee directors of the Company will automatically
participate in the 2003 Stock Option Plan. The selection of employees is within
the discretion of the Committee. In making this selection, the Committee may
give consideration to the functions and responsibilities of the employee, his
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or her past, present and potential contributions to the growth and success of
the Company and such other factors deemed relevant by the Committee or the
Board. No employee is entitled to receive an option unless selected by the
Committee. As of June 24, 2003, the Company and its subsidiaries had a total of
721 employees.
Stock Options. The 2003 Stock Option Plan provides for the grant of
nonqualified stock options that are not intended to meet the requirements of
Section 422(b) of the Code. All options shall be subject to the terms,
conditions, restrictions and limitations of the 2003 Stock Option Plan, except
that the Committee or the Board may, in its sole judgment, subject any option to
such other terms, conditions, restrictions and limitations as it deems
appropriate, provided they are not inconsistent with the terms of the 2003 Stock
Option Plan.
Stock Options Granted to Employees. The Committee will, with regard to
each stock option granted to an employee of the Company or its subsidiaries,
determine the number of shares subject to the option, the manner and time of the
option's exercise and the exercise price per share of Common Stock subject to
the option. The term of each option shall be as specified by the Committee,
provided that, unless otherwise designated by the Committee, no option shall be
exercisable later than ten years from the effective date of the option grant,
and no option or portion of an option will become exercisable unless the
employee remains in the service of the Company through the date the option or
portion of the option is scheduled to become exercisable.
Stock Options Granted to Non-Employees Directors. Under the 2003 Stock
Option Plan, each new non-employee director will receive an option to purchase
18,000 shares of Common Stock on the date the non-employee director is first
elected to serve on the Board of Directors commencing with the 2003 annual
shareholder meeting. If the non-employee director is first elected to serve on
the Board at an annual meeting of shareholders, the option to purchase 18,000
shares will become exercisable in full on the date of the next annual meeting of
shareholders. If the non-employee director is first elected by the Board to fill
a vacancy on the Board, the stock option will become exercisable in full on the
date of the annual meeting of shareholders following the annual meeting at which
the non-employee director is first elected by the shareholders to serve on the
Board. On the date of each annual meeting of shareholders, beginning with the
meeting for fiscal year 2003, each non-employee director who is re-elected to
serve as a director will be granted an option to purchase 10,000 shares of
Common Stock. The exercise price of each stock option granted to a non-employee
director of the Company will be the fair market value (as defined in the 2003
Stock Option Plan) of the Common Stock on the effective date of the option's
grant. Each option to purchase 10,000 shares of Common Stock will become
exercisable in full by the non-employee director on the date of the annual
meeting of shareholders next following the date of grant. A non-employee
director is eligible to exercise a stock option only if he or she continues to
serve the Company as a director through the date of the annual meeting at which
the stock option is scheduled to become exercisable. In the event the number of
shares to be granted to the non-employee directors is less than the number of
shares available under the Plan at any time, then the Company will reduce
proportionately the number of shares covered by the options granted to the
non-employee directors. All options granted to non-employee directors will
remain exercisable through the tenth anniversary of the date the option was
granted.
Exercising Stock Options. Upon exercise of an option, the exercise
price may be paid by a participant in cash or, in the discretion of the
Committee, by delivery to the Company or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions to a
broker-dealer to sell or margin a sufficient portion of the shares with respect
to which the option is exercised and deliver the sale or margin loan proceeds
directly to the Company to pay for the exercise price and any required
withholding taxes.
Available Shares. The maximum number of shares of Common Stock that
shall be available for grant of options under the 2003 Stock Option Plan shall
not exceed 2,000,000, subject to adjustment in accordance with the provisions of
the 2003 Stock Option Plan. Shares of Common Stock issued pursuant to the 2003
Stock Option Plan may be shares of original issuance or treasury shares or a
combination thereof.
The Committee shall have full discretion to determine the manner in
which shares of Common Stock available for grant of options under the 2003 Stock
Option Plan are counted. In the absence of Committee action, the 2003 Stock
Option Plan sets forth certain rules applicable for this purpose. For example,
in general, unless otherwise determined by the Committee, shares of Common Stock
related to options which terminate by expiration, forfeiture or cancellation
without the issuance of shares shall again be available for grant under the 2003
Stock Option Plan.
If the Company shall effect a subdivision or a consolidation of shares
of Common Stock or the payment of a stock dividend on Common Stock without
receipt of consideration by the Company, the number of shares of Common Stock
with respect to which outstanding options granted under the 2003 Stock Option
Plan may thereafter be exercised or satisfied, and the exercise prices thereof,
shall be proportionately adjusted. In the event of changes in the outstanding
Common Stock by reason of recapitalizations, reorganizations, mergers,
consolidations, combinations, separations (including a spin-off or other
distribution of stock or property), exchanges or other relevant changes in
capitalization, outstanding options under the 2003 Stock Option Plan shall be
subject to adjustment by the
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Committee at its discretion as to the number, price and kind of shares or other
consideration subject to, and other terms of, such options to reflect such
changes in the outstanding Common Stock. Also, in the event of any such changes
in the outstanding Common Stock, the aggregate number of shares available for
grant of options under the 2003 Stock Option Plan may be equitably adjusted by
the Committee.
The maximum number of shares of Common Stock for which options may be
granted under the 2003 Stock Option Plan to any one optionee during a calendar
year is 300,000.
As of June 25, 2003, the closing sales price of the Common Stock as
reported on the Nasdaq National Market was $4.50 per share.
Corporate Change. The 2003 Stock Option Plan provides that, in the
event of a corporate change (defined in the 2003 Stock Option Plan to include
the dissolution or liquidation of the Company, certain reorganizations, mergers
or consolidations of the Company, the sale of all or substantially all the
assets of the Company or the occurrence of a change in control of the Company),
unless otherwise provided in the related option agreement, (i) each option then
outstanding under the 2003 Stock Option Plan shall become exercisable in full,
and (ii) all restrictions (other than restrictions imposed by law) imposed on
any Common Stock that may be delivered pursuant to the exercise of such options
shall be deemed satisfied.
Amendment. The Board of Directors may alter or amend the 2003 Stock
Option Plan, but may not without the approval of the shareholders of the Company
and of any regulatory authorities having jurisdiction make any alteration or
amendment which operates (a) to increase the total number of shares of Common
Stock which may be issued under the 2003 Stock Option Plan, other than as
provided in the antidillution provisions of the 2003 Stock Option Plan, (b) to
modify the criteria for determining the employees (or class of employees)
eligible to receive Options under the 2003 Stock Option Plan or (c) to
materially increase benefits accruing under the 2003 Stock Option Plan to
Participants who are subject to Section 16 of the Exchange Act. No suspension,
termination, amendment or modification of the 2003 Stock Option Plan shall
adversely affect in any material way any option previously granted under the
2003 Stock Option Plan, without the consent of the optionee (except that consent
of the optionee is not required for certain tax-related amendments or
modifications to an option which are designed to ensure that the option
qualifies as performance based compensation under Section 162(m) of the Code).
In addition, the Company will not reprice the options under the 2003 Stock
Option Plan without prior approval by the shareholders.
Effectiveness. The 2003 Stock Option Plan will become effective as of
the date of its approval by shareholders at the annual meeting. The 2003 Stock
Option Plan has no fixed expiration date.
FEDERAL INCOME TAX CONSEQUENCES. The following summary is based on an
analysis of the Code as currently in effect, existing laws, judicial decisions,
administrative rulings, regulations and proposed regulations, all of which are
subject to change. Moreover, the following is only a summary of United States
federal income tax consequences. In addition to the income tax consequences
discussed below, the acquisition, ownership or disposition of shares acquired
upon the exercise of an option under the 2003 Stock Option Plan may have tax
consequences under U.S. federal estate tax laws and various state and foreign
laws that may be applicable to certain optionees. Actual tax consequences to
employees and directors may be either more or less favorable than those
described below depending on the employees' or directors' particular
circumstances. Accordingly, each participant should consult his or her own tax
advisor with respect to the tax consequences of participation in the Plan.
This summary describes only U.S. federal income tax consequences. If an
optionee is a citizen and/or resident of a country other than the United States,
the optionee should consult his or her own tax advisor for information with
respect to the tax consequences of participation in the Stock Option Plan and
the sale of Common Stock acquired pursuant to the Stock Option Plan.
An optionee will not recognize income for federal income tax purposes
upon the grant of an option. The optionee will recognize ordinary income upon
exercise of an option in an amount equal to the excess of the fair market value
of the shares on the date of exercise over the option price of the shares. The
Company will be entitled to a deduction equal to the amount of ordinary income
recognized by the optionee due to the exercise of options at the time of such
recognition.
If the optionee is an employee, income recognized upon the exercise of
an option will be considered compensation subject to withholding at the time the
income is recognized. As a result, the Company must make the necessary
arrangements with such optionee to ensure that the amount of tax required to be
withheld is available for payment.
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The basis of shares transferred to an optionee upon exercise of an
option is the price paid for the shares plus an amount equal to any income
recognized by the optionee as a result of the exercise of the option. If the
optionee thereafter sells shares acquired upon exercise of an option, the
difference between the amount realized by the optionee and his or her basis in
the shares will constitute capital gain or loss for federal income tax purposes.
Section 162(m) of the Code limits the deduction which the Company may
take for otherwise deductible compensation payable to certain executive officers
of the Company to the extent that compensation paid to such officers for such
year exceeds $1 million, unless such compensation is performance-based, is
approved by the Company's shareholders and meets certain other criteria.
Compensation attributable to an option is deemed to satisfy the requirements for
performance-based compensation only if (i) the grant is made by a committee
composed of two or more outside directors; (ii) the plan states the maximum
number of shares with respect to which options may be granted during a specified
period to any employee; and (iii) under the terms of the option, the amount of
compensation the optionee could receive is based solely on an increase in the
value of the stock after the date of the option grant. The 2003 Stock Option
Plan has been designed such that options granted under the plan will qualify as
performance-based compensation for purposes of Section 162(m) of the Code.
The 2003 Stock Option Plan is not subject to the Employee Retirement
Income Security Act of 1974, as amended and is not qualified under Section
401(a) of the Code.
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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 the Company'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, executive officers are offered
compensation opportunities that are linked to the Company's business objectives
and performance, individual performance and contributions to the Company's
success and enhanced shareholder value. The Company's compensation programs are
designed and revised from time to time to be competitive within the software and
data industry and the telecommunications industry.
The Company's executive compensation program consists primarily of (i)
base salary, (ii) incentive cash bonus opportunities based upon individual and
corporate performance, and (iii) long-term equity based incentives. The Company
generally targets the aggregate of annual base salary, bonus opportunities and
long-term equity based incentives made available to executive officers, who
successfully perform their responsibilities, near the fiftieth percentile for
officers with similar positions in companies of comparable size in the software
and data/telecommunications industries. The Compensation Committee believes that
compensation opportunities near the fiftieth percentile for its comparison group
are appropriate provided incentive cash bonus opportunities are a significant
part of each executive officer's compensation package and such bonus
opportunities are dependant upon the Company achieving important elements of its
business and financial plans. As discussed below, the compensation opportunities
are largely dependent upon the Company's ability to achieve its earnings and/or
revenue targets.
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. To ensure compliance with
the compensation policy, the Company hired an independent consultant for fiscal
2002. In this capacity the consultant analyzed compensation paid to the five
highest paid executive officers of the Company based on a survey of compensation
information in proxy statements issued by a variety of software and
telecommunications companies. The consultant also analyzed compensation paid to
the Company's other officers based on market surveys of executive compensation,
including surveys for software and data/telecommunications companies. These
surveys included a separate study of companies within the SIC code for Telephone
and Telegraph Apparatus used in the "Performance Graph" contained in this proxy
statement.
STOCK OWNERSHIP GUIDELINES. In April 1995, the Compensation Committee
established stock ownership guidelines for key executives of the Company. These
guidelines provide that executives should hold shares in varying amounts as a
multiple of salary, currently ranging from a minimum of four times annual salary
for the Chairman of the Board and Chief Executive Officer to one times annual
salary for vice presidents who are not executive officers of the Company. The
value of each executive's share holdings for purposes of the guidelines, is
based on the greater of the current market price of the Company's Common Stock
or the aggregate amount the executive paid for the shares.
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 provide 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 2003 COMPENSATION.
BASE SALARY. The Compensation Committee annually reviews and sets base
salaries for each of the Company's executive officers at levels within the range
of those persons holding comparable positions at other companies in the
Company's comparison group. Annual salaries, including increases to salaries,
are reviewed and approved on the basis of the individual performance of the
executive, as determined through an evaluation by the officer's immediate
supervisor in consultation with the Company's executive management and by the
executive's tenure and level of responsibility, the Company's expected financial
performance, and changes in competitive pay levels. As a result of the Company's
performance during fiscal 2002, none of the executive officers received a raise
during fiscal 2003.
The Company amended and restated its employment agreement with the
Chairman of the Board and Chief Executive Officer of the Company, David W.
Brandenburg, during fiscal 2002. The amended and restated agreement provided for
a base salary of $350,000 for fiscal 2002. In accordance with the terms of Mr.
Brandenburg's agreement, the Compensation Committee reviewed Mr. Brandenburg's
base salary at the end of the fiscal year 2002 and decided
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not to change the amount of his salary for fiscal year 2003. The Compensation
Committee supports this salary level, which was less than the median base salary
for chief executive officers in the Company's comparison group. See "Agreements
with Executive Officers" for a discussion of the employment agreements with Mr.
Brandenburg and the Company's President, Robert E. Ritchey.
ANNUAL INCENTIVES. The Company has a bonus program that provides for
the payment of periodic cash bonuses to executive officers contingent upon the
achievement of certain earnings targets, revenue targets and/or other individual
and corporate performance targets. The program is intended to reward the
accomplishment of corporate objectives, reflect the Company'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 under contracts between the Company and each of its Chairman
of the Board and Chief Executive Officer and its President were based on
formulas designed to compensate such officers for any increases to revenues and
earnings per share. These officers are responsible for making and implementing
strategic decisions concerning how the Company 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 the Company'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.
Because of disappointing results from operations during fiscal 2002, a
general decline in the Company's sales activity during the first part of fiscal
2003 and diminished prospects for sales during the remainder of the fiscal year,
the Compensation Committee decided to suspend its bonus program for executive
officers during fiscal 2003. While the Compensation Committee has always placed
an emphasis on incentive compensation, the Compensation Committee determined
that it would not be appropriate to implement its normal cash bonus program
based on the reduced levels of sales and earnings the Company had experienced in
recent quarters and the sales and earnings the Company could reasonably expect
to achieve during the remainder of fiscal 2003. All of the Company's employees,
including its executive officers, were eligible to participate in a "stretch"
bonus program. This program would have provided bonus payments to all employees
if the Company had achieved earnings in excess of the earnings budgeted under
the Company's operating plan for the third and fourth quarters of fiscal 2003.
The Company failed to achieve the earnings target under the stretch bonus
program and, accordingly, none of the executive officers earned a bonus for
fiscal 2003.
Pursuant to his employment agreement, the bonus opportunity for fiscal
2003 for the Chairman of the Board and Chief Executive Officer would have
rewarded Mr. Brandenburg for increases to the Company's revenues and earnings
per share. During fiscal 2003, Mr. Brandenburg agreed to waive any bonus he was
eligible to earn for the fiscal year. The employment agreement with Mr.
Brandenburg also permitted payment of an additional discretionary bonus if the
Compensation Committee determined that such a bonus was appropriate. No such
discretionary bonus was paid to Mr. Brandenburg for fiscal 2003.
Mr. Ritchey, the Company's President, has an employment agreement
similar to Mr. Brandenburg's agreement, with similar provisions governing his
bonuses. Mr. Ritchey also agreed to waive any bonus he was eligible to earn
under his contract for fiscal 2003.
LONG-TERM EQUITY-BASED INCENTIVES. Long-term equity based incentive
awards strengthen the ability of the Company 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 the Company, and will assist them in achieving the
share ownership targeted under the stock ownership guidelines discussed above.
Long-term awards granted in fiscal 2003 consisted of nonqualified stock options
granted under the Company's 1999 Stock Option Plan. Unlike cash, the value of a
stock option will not be immediately realized and does not result in a current
expense to the Company.
The stock options are granted at the market price on the date of grant
and will only have value if the Company's stock price increases, resulting in a
commensurate benefit to the Company's shareholders. Generally, grants vest in
equal amounts over a three-year to four-year period. Executives generally must
be employed by the Company at the time of vesting in order to exercise the
options.
The Compensation Committee, in consultation with the Company's
executive management, determines from time to time the executive officers who
shall receive options under the Company's employee stock option plans, the
timing of such awards, the number of shares of Common Stock to be subject to
each award and the other terms of each award. Annual stock option awards are
made in light of a compensation review and recommendations prepared by a
compensation consultant comparing the Company's stock option awards to its
officers to awards made by companies in the Telephone and Telegraph Apparatus
industry whose description of business and revenues most closely approximated
those of the Company. These companies are included in the Company's peer group
index set
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forth in the section entitled "Stock Performance Graph". Grants to individual
executive officers by the Compensation Committee are 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 the Company. The emphasis placed on equity-based incentive
opportunities was also considered by the Compensation Committee in determining
stock option awards.
The Compensation Committee granted stock options covering 189,000
shares of Common Stock to executive officers of the Company, other than the
Chairman of the Board and Chief Executive Officer, during fiscal 2003. Options
covering 160,000 shares of Common Stock were granted to Mr. Brandenburg as
Chairman of the Board and Chief Executive Officer during fiscal 2003 under the
terms of his employment agreement.
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 2003 adequately reflect the Company's compensation goals
and policies.
June 24, 2003
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
George C. Platt , Chairman
Joseph J. Pietropaolo
Grant A. Dove
Jack P. Reily
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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 the Company in fiscal 2003
(the "Named Officers") for services rendered in all capacities to the Company
and its subsidiaries for the fiscal years ended February 28, 2003, February 28,
2002, and February 28, 2001.
LONG TERM
COMPENSATION ALL OTHER
ANNUAL COMPENSATION AWARDS COMPENSATION
----------------------- ---------------- ----------------
ALL OTHER
SECURITIES CASH
FISCAL UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS SATION(2)
-------- ---------- ---------- ---------------- ----------------
David W. Brandenburg 2003 $ 350,397 -- 160,000 $ 5,387
Chairman of the Board 2002 350,486 -- -- 5,948
and Chief Executive Officer(3) 2001 205,979 -- 500,000 4,086
Robert Ritchey 2003 $ 241,147 -- 42,500 $ 7,662
President(4) 2002 241,236 $ 24,075 50,000 8,680
2001 56,250 28,125 100,000 390
Rob-Roy J. Graham 2003 $ 255,772 -- 57,500 $ 6,741
Executive Vice President 2002 255,861 -- -- 6,467
Chief Financial Officer 2001 215,926 $ 100,000 100,000 5,867
Secretary
Controller(5)
H. Don Brown (6) 2003 $ 188,530 -- 14,250 $ 585
Executive Vice President - -- 2002 188,620 $ 37,627 -- 3,174
Human Resources 2001 170,509 65,753 50,000 5,119
Dean C. Howell 2003 $ 195,157 -- 21,750 $ 5,322
Executive Vice President and 2002 195,246 $ 38,952 -- 5,047
General Counsel(7) 2001 173,837 67,400 50,000 5,012
(1) Includes amounts deferred at the Named Officer's election pursuant to
the Company's 401(k) Employee Savings Plan.
(2) Represents Company contributions on behalf of the Named Officers under
the Company's 401(k) Employee Savings Plan and amounts includable in
compensation for Company-paid group term life insurance and disability
insurance.
(3) Mr. Brandenburg became employed by the Company during June 2000. All
other cash compensation for Mr. Brandenburg includes $2,222 for
contributions under the Company's 401(k) Employee Savings Plan and
$3,165 for Company-paid group term life insurance in fiscal year 2003;
$2,594 for contributions under the Company's 401(k) Employee Savings
Plan and $3,354 for Company-paid group term life insurance in fiscal
year 2002; and $2,312 for contributions under the Company's 401(k)
Employee Savings Plan and $1,774 for Company-paid group term life
insurance in fiscal year 2001.
(4) Mr. Ritchey became employed by the Company during December 2000. All
other cash compensation for Mr. Ritchey includes $5,502 for
contributions under the Company's 401(k) Employee Savings Plan and
$2,160 for Company-paid group term life insurance in fiscal year 2003;
$6,454 for contributions under the Company's 401(k) Employee Savings
Plan and $2,226 for Company-paid group term life insurance in fiscal
year 2002; and $390 for Company-paid group term life insurance in
fiscal year 2001.
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(5) All other cash compensation for Mr. Graham includes $5,501 for
contributions under the Company's 401(k) Employee Savings Plan and
$1,240 for Company-paid group term life insurance in fiscal year 2003;
$5,564 for contributions under the Company's 401(k) Employee Savings
Plan and $903 for Company-paid group term life insurance in fiscal year
2002; and $5,190 for contributions under the Company's 401(k) Employee
Savings Plan and $677 for Company-paid group term life insurance in
fiscal year 2001.
(6) All other compensation for Mr. Brown includes $585 for Company-paid
group term life insurance in fiscal 2003; $2,587 for contributions
under the Company's 401(k) Employee Savings Plan and $587 for Company
paid-group term life insurance in fiscal year 2002; and $4,741 for
contributions under the Company's 401(k) Employee Savings Plan and $378
for Company-paid group term life insurance in fiscal year 2001.
(7) All other cash compensation for Mr. Howell includes $4,730 for
contributions under the Company's 401(k) Employee Savings Plan and $592
for Company-paid group term life insurance in fiscal year 2003; $4,606
for contributions under the Company's 401(k) Employee Savings Plan and
$441 for Company-paid group term life insurance in fiscal year 2002;
and $4,656 for contributions under the Company's 401(k) Employee
Savings Plan and $356 for Company-paid group term life insurance in
fiscal year 2001.
OPTION GRANTS IN FISCAL YEAR 2003
The following table sets forth certain information with respect to
grants of stock options to the Named Officers during fiscal 2003 pursuant to the
Company's 1999 Stock Option Plan.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (2)
----------------------------------------------- ------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED (1) 2003 (/SH) DATE 5% 10%
-------------- -------------- ------------ ------------ ------------ ------------
David W. Brandenburg 160,000 16.1% 5.08 3/1/2012 $ 510,400 $ 1,296,000
Robert Ritchey 42,500 4.3% 1.015 7/18/2012 $ 26,988 $ 68,638
Rob-Roy J. Graham 57,500 5.8% 1.015 7/18/2012 $ 36,513 $ 92,863
H. Don Brown 14,250 1.4% 1.015 7/18/2012 $ 9,049 $ 23,014
Dean C. Howell 21,750 2.2% 1.015 7/18/2012 $ 13,811 $ 35,126
(1) All options were granted at fair market value (the average of the high
and low trading prices of the Common Stock on the Nasdaq National
Market) 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 28, 2003, based on the closing price on the
Nasdaq National Market of the Common Stock of $1.70 on such date, a
share of the Common Stock would have a value on February 28, 2013 of
approximately $2.77 at an assumed appreciation rate of 5% and
approximately $4.41 at an assumed appreciation rate of 10%.
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AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003 AND
FISCAL YEAR-END OPTION VALUES
The following table provides information concerning option exercises in
fiscal 2003 and the value of unexercised options held by each of the Named
Officers at the end of fiscal 2003.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
-------------------- -----------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
--------------- ------------------- -------------------- -----------------------
David W. Brandenburg 0 $ 0 506,000 / 160,000 $0 / $0
Robert Ritchey 0 $ 0 83,332 / 109,168 $0 / $29,113
Rob-Roy J. Graham 0 $ 0 311,466 / 90,834 $0 / $39,388
H. Don Brown 0 $ 0 86,632 / 30,918 $0 / $9,761
Dean C. Howell 0 $ 0 109,066 / 38,418 $0 / $14,899
(1) Values stated are based on the closing price ($1.70) of the Company's
Common Stock as reported on the Nasdaq National Market on February 28,
2003 and the exercise price of the options.
EQUITY COMPENSATION PLAN INFORMATION
The Company maintained six compensation plans to provide for the
issuance of Common Stock of the Company to officers and other employees of the
Company as of February 28, 2003. These plans consisted of the 1990 Employee
Stock Option Plan, 1999 Stock Option Plan, 1990 Non-Employee Option Plan,
Employee Stock Purchase Plan and the Restricted Stock Plan, which have been
approved by shareholders, and the 1998 Employee Non-Qualified Stock Option Plan
which has not been approved by the shareholders. On June 24, 2003, the
Restricted Stock Plan was terminated by the Board. The following table sets
forth information regarding outstanding options and shares of Common Stock
reserved for future issuance under the foregoing plans as of February 28, 2003:
(C)
Number of Shares of
(A) Common Stock
Number of Shares of (B) Remaining Available For
Common Stock To Be Weighted-Average Future Issuance Under
Issued Upon Exercise Of Exercise Price Of Equity Compensation
Outstanding Options, Outstanding Options Plans (Excluding Shares
Plan Category Warrants And Rights And Rights Reflected In Column (A)
----------------------------------- ---------------------------- --------------------------- ------------------------
Equity compensation plans approved 5,601,875 $7.41 1,307,157 (1)(3)
by shareholders
Equity compensation plans not
approved by shareholders (2) 407,500 $4.73 85,919 (2)
TOTAL 6,009,375 $7.23 1,393,076
(1) Includes 128,356 shares of Common Stock remaining available for future
issuance under the Employee Stock Purchase Plan as of February 28,
2003.
(2) Consists of options that are outstanding or may be issued pursuant to
the 1998 Employee Non-Qualified Stock Option Plan. The material
features of the 1998 Employee Non-Qualified Stock Option Plan are as
described in the Company's Form 10-K filed for the fiscal year ended
February 28, 2003.
-19-
(3) Includes shares of Common Stock reserved for issuance under the
Company's Restricted Stock Plan as of February 28, 2003. On June 24,
2003 the Board of Directors voted to terminate the Restricted Stock
Plan. The termination of the Restricted Stock Plan reduced by 770,570
shares the number of shares of Common Stock remaining available for
future issuance under the Company's equity compensation plans.
AGREEMENTS WITH EXECUTIVE OFFICERS
EMPLOYMENT AGREEMENT WITH DAVID W. BRANDENBURG, THE COMPANY'S CHAIRMAN
OF THE BOARD AND CHIEF EXECUTIVE OFFICER. On June 26, 2000 the Company entered
into an employment agreement with David W. Brandenburg for the period from June
26, 2000 through February 28, 2003. Effective March 1, 2002, the employment
agreement was extended one year through February 28, 2004. Under the agreement,
Mr. Brandenburg received an annual salary of $300,000 during fiscal 2001. His
salary was increased to $350,000 for fiscal 2002 and fiscal 2003. The provisions
in the employment agreement governing Mr. Brandenburg's bonus opportunities for
fiscal 2003 and fiscal 2004 were amended as of March 1, 2002. Mr. Brandenburg's
annual bonus opportunity for fiscal 2003 and fiscal 2004 is based 50% on
increases to earnings per share and 50% on increases to revenues, in each case
as compared to the immediately preceding fiscal year. For each of earnings per
share and revenues, Mr. Brandenburg's bonus opportunity ranges from 25% of his
base salary for an increase of up to 9%, to 125% of his base salary for an
increase of 40% or more. If earnings per share for fiscal 2002 or 2003 were less
than $.15, however, then the change in earnings per share for the immediately
following year will be compared to $.15. In an effort to help the Company reduce
expenses, on July 22, 2002 Mr. Brandenburg waived his right to receive any bonus
he might otherwise have earned under such bonus provisions for fiscal 2003, and
on June 17, 2003, Mr. Brandenburg waived his right to receive any bonus he is
eligible to earn under such bonus provisions for fiscal 2004.
Based on the Company's earnings and revenue performance, Mr.
Brandenburg did not earn a bonus for fiscal 2001, 2002 or 2003. See the "Summary
Compensation Table" for a discussion of the bonuses and salary paid to Mr.
Brandenburg for the three-year period ended February 28, 2003. In connection
with the execution of Mr. Brandenburg's initial employment agreement, he was
awarded stock options during fiscal 2001 covering 500,000 shares of Common Stock
under the Company's 1999 Stock Option Plan and 1990 Incentive Stock Option Plan.
In connection with the extension of his employment agreement through fiscal
2004, Mr. Brandenburg was granted a stock option on March 1, 2002 covering
160,000 shares of Common Stock under the Company's 1999 Stock Option Plan.
Except as discussed below, Mr. Brandenburg's employment agreement
requires that he not compete with the Company while he renders services under
the agreement and for a period of 18 months thereafter. The agreement further
provides that the Company can only terminate Mr. Brandenburg for cause or
because he becomes disabled (as such terms are defined in the agreement). If Mr.
Brandenburg is terminated for cause, the Company will have no liability for
further payments to him. If Mr. Brandenburg becomes completely disabled, the
Company 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 the Company (defined as a triggering
event in the agreement), Mr. Brandenburg's employment is terminated without
cause, if Mr. Brandenburg 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, the Company will 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, the Company will "gross-up" the Change in Control Amount such that
Mr. Brandenburg will 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 the Company, Mr. Brandenburg can
terminate his employment for any reason by giving 12 months' prior written
notice. Mr. Brandenburg is released from his covenant not to compete if he is
terminated by the Company without cause and without being disabled, or if he
elects to terminate his employment after a default by the Company prior to a
triggering event or after a triggering event for good reason. If Mr.
Brandenburg's employment is terminated without cause, the Company is 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
options to purchase an aggregate of 660,000 shares of Common Stock that Mr.
Brandenburg was granted in connection with his agreement and the extension to
his agreement will become completely exercisable, to the extent that the options
are not already exercisable as of such date.
EMPLOYMENT AGREEMENT WITH ROBERT E. RITCHEY. Robert E. Ritchey, the
Company's President entered into an employment agreement with the Company for
the one-and-one-half-year term commencing on September 1, 2002. Under the
agreement, Mr. Ritchey received an annual salary of $240,750 during fiscal 2003.
In an effort to help the Company reduce expenses, Mr. Ritchey agreed to waive
his right to receive any formula-based cash bonus for fiscal year 2003. Mr.
Ritchey's annual bonus opportunity for fiscal 2004 under his contract is based
33% on
-20-
increases to earnings per share, 33% on increases to bookings and 34% on
increases to revenue, in each case as compared to the immediately preceding
fiscal year. In a further effort to help the Company reduce expenses, on June
17, 2003 Mr. Ritchey waived his right to receive any bonus he might otherwise
earn under such bonus provisions for fiscal 2004. The agreement did not provide
for Mr. Ritchey to receive any stock options or restricted stock in connection
with the execution of his agreement. Other than the matters discussed in this
paragraph, Mr. Ritchey's employment agreement (including the terms governing any
termination of his employment with the Company before or after a change of
control of the Company) are substantially the same as Mr. Brandenburg's
employment agreement, which is discussed above.
AGREEMENT WITH ROB-ROY J. GRAHAM. The Company's Chief Financial
Officer, Rob-Roy J. Graham, will resign from the Company on July 25, 2003. In
connection with the resignation, Mr. Graham and the Company entered into a
separation agreement pursuant to which each party released the other party from
any and all claims and demands it might have had. Under the separation
agreement, Mr. Graham agreed, among other things, to refrain from making any
disparaging remarks about the Company or its products, not to induce the
Company's employees or customers to terminate their relationship with the
Company, not to disclose the Company's confidential and proprietary information,
and to cooperate with the Company in any pending or future litigation,
arbitration or similar proceedings involving the Company. Mr. Graham's
separation agreement further provides that he will not compete with the Company
for a period of 12 months after the date of his resignation. In accordance with
the separation agreement, the Company will pay Mr. Graham $511,544 in August of
2003. Under the agreement, the Company also accelerated the vesting of stock
options covering 85,000 shares making such options fully exercisable on June 25,
2003, and extended the exercise period for certain of his stock options
(covering approximately 277,500 shares) through July 25, 2004. The exercise
prices for most of these stock options are substantially above the closing price
for the Company's stock on June 25, 2003, only stock options covering 87,500
shares have an exercise price which is less than the market price for the
Company's stock on such date. The separation agreement includes a provision, to
comply with certain requirements under the Age Discrimination in Employment Act
and Older Workers Benefit Protection Act, that permits Mr. Graham to revoke his
acceptance of the separation agreement (and return any and all payments and
other consideration received by him under the agreement) for a period of up to
seven days after the effective date of his resignation. Mr. Graham has
represented to the Company that he has no present intention of revoking his
acceptance of the separation agreement.
-21-
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to the Company's shareholders during the
five-year period ended February 28, 2003, as well as an overall broad stock
market index, the Nasdaq Market Index, and a peer group index for the Company,
the index for SIC Code 3661 Telephone and Telegraph Apparatus. The stock
performance graph assumes $100 was invested on March 1, 1998 in the Company's
Common Stock and each such index.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET(1)
(GRAPH)
---------------------------- FISCAL YEAR ENDED ---------------------------
COMPANY / INDEX / MARKET 2/28/1998 2/28/1999 2/28/2000 2/28/2001 2/28/2002 2/28/2003
Intervoice, Inc. 100.00 241.67 802.78 188.89 112.00 37.78
Telephone, Telegraph Apparatus 100.00 106.75 298.12 110.35 44.11 23.78
Nasdaq Market Index 100.00 129.22 251.02 117.48 95.93 75.15
(1) Assumes $100 invested on March 1, 1998 and all dividends reinvested
through February 28, 2003.
-22-
CERTAIN TRANSACTIONS
For information concerning agreements between the Company and each of
David W. Brandenburg, Robert E. Ritchey and Rob-Roy J. Graham, see "Agreements
with Executive Officers".
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended February 28, 2003, Mr. Gerald F. Montry
inadvertently failed to report a stock option to purchase 18,000 shares of
Common Stock on his initial report of beneficial ownership upon his election as
a director of the Company. The stock option was reported on his Annual Statement
of Changes in Beneficial Ownership. In making this disclosure the Company has
relied solely on written representations of its current and former executive
officers and directors and copies of the reports filed by them with the
Securities and Exchange Commission.
AUDITORS
The Audit Committee appointed the firm of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending February 28,
2004. Ratification or other action by the Company's shareholders concerning the
appointment of the independent auditors of the Company for fiscal 2004 is not
required.
During the fiscal year ended February 28, 2003, Ernst & Young LLP
provided audit services to the Company consisting of examination of the
financial statements of the Company. Ernst & Young LLP has advised the Company
that no material relationship exists between Ernst & Young LLP or any of its
partners and the Company and that it is independent from the Company in all
respects. The Audit Committee of the Board of Directors has considered the
non-audit services provided to the Company by Ernst & Young LLP and believes
such are compatible with maintaining such firm's independence.
Representatives of Ernst & Young LLP are expected to attend the 2003
annual meeting. These representatives will have the opportunity to make a
statement at the meeting if they desire to do so and will also be available to
respond to appropriate questions.
AUDIT FEES
The aggregate fees billed by Ernst and Young LLP in connection with the
audit of the Company's consolidated financial statements for the fiscal year
ended February 28, 2003, and the review of quarterly financial statements
included in the Company's reports on Form 10-Q, were $388,850.
ALL OTHER FEES
The aggregate fees billed by Ernst and Young LLP for professional
services, other than services related to the audit of annual financial
statements or the review of quarterly financial statements, rendered in
connection with the Company's fiscal year ended February 28, 2003 were $148,164.
Services relating to statutory audits and accounting consultations accounted for
$109,699 of the total fees for such other professional services.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
If a shareholder intends to present a proposal for action at the
Company's 2004 annual meeting and wishes to have such proposal considered for
inclusion in the Company's proxy materials in reliance on Rule 14a-8 under the
Securities Exchange Act of 1934, the proposal must be submitted in writing and
received by the Company by February 28, 2004. Such proposals must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to shareholder proposals.
In addition, if a shareholder submits a proposal outside of Rule 14a-8
for the 2004 annual meeting, then the Company'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 the Company at 17811 Waterview Parkway, Dallas, Texas 75252.
The cost of solicitation of proxies will be borne by the Company.
Solicitation may be made by mail, personal interview, telephone and/or telegraph
by officers and regular employees of the Company, who will receive no additional
compensation for such solicitations. To aid in the solicitation of proxies, the
Company may employ the firm of Georgeson Shareholder Communications, Inc., a
proxy solicitation firm in Carlstadt, New Jersey, to solicit proxies from
brokers, banks, nominees, institutional holders and individual holders for use
at the meeting at a fee of approximately
-23-
$6,500.00 plus out-of-pocket expenses. The Company will bear the reasonable
expenses incurred by banks, brokerage firms and custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners.
For a discussion of the Company's financial condition, changes in
financial condition and results of operations, see Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
2003 Annual Report on Form 10-K, which Item is incorporated herein by reference
and made a part of this proxy statement. For a discussion of quantitative and
qualitative disclosures about market risk, see Item 7A "Quantitative and
Qualitative Disclosures About Market Risk" in the 2003 Annual Report on Form
10-K, which Item is incorporated herein by reference and made a part of this
proxy statement. For the financial statements and supplementary financial
information for the Company, see Item 8 "Financial Statements and Supplementary
Data" in the 2003 Annual Report on Form 10-K, which Item is incorporated herein
by reference and made a part of this proxy statement. For a discussion of any
changes in or disagreements with the accountants on accounting and financial
disclosure, see Item 9 "Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure" in the 2003 Annual Report on Form 10-K,
which Item is incorporated by reference and made a part of this proxy statement.
The Company will provide, by first class mail or other equally prompt means, a
copy of the information that is incorporated by reference in the proxy
statement, without charge, to each person to whom a proxy statement is delivered
upon written or oral request within one day of receipt of such request. Requests
for such information may be directed to Intervoice, Inc., Attention: Corporate
Secretary, 17811 Waterview Parkway, Dallas, Texas 75252, telephone (972)
454-8000.
INTERVOICE, INC.
DAVID W. BRANDENBURG
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
Dallas, Texas
June 27, 2003
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APPENDIX A
INTERVOICE, INC.
EMPLOYEE STOCK PURCHASE PLAN
As amended and restated effective June 24, 2003
Section 1. Purpose. It is the purpose of the Plan to promote the
interests of the Company and its shareholders by providing a method by which
eligible employees may use voluntary payroll deductions to purchase shares of
Common Stock at a discount, thereby affording them the opportunity to invest in
the Company at a preferential price, and to acquire a proprietary interest in
the Company and an increased personal interest in its continued success and
progress. The Plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Code and shall be construed
accordingly.
Section 2. Definitions. As used herein the following terms have the
following meanings:
(a) "Affiliate" means any corporation that is a subsidiary corporation
of the Company within the meaning of Section 424(f) of the Code and that has
been designated by the Committee as an Affiliate for purposes of the Plan.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Code" means the United States Internal Revenue Code of 1986, as
from time to time amended.
(d) "Committee" means the Committee described in Section 4 hereof.
(e) "Common Stock" means the Common Stock, no par value, of the
Company.
(f) "Company" means Intervoice, Inc.
(g) "Compensation" for an option period means the total compensation of
an employee for services rendered to the Company or any Affiliate. The
Compensation of an employee who does not receive salary or wages computed in
United States dollars shall be determined by converting such salary or wages
into United States dollars in accordance with the Compensation Exchange Rate.
(h) "Compensation Exchange Rate" means the New York foreign currency
exchange rate as reported in The Wall Street Journal for the first business day
immediately preceding the first business day of the applicable option period.
(i) "Eligible Employee" means any employee of the Company or an
Affiliate who is eligible to participate in the Plan pursuant to Section 5
hereof.
(j) "Fair Market Value" means the closing sale price on the date in
question (or, if there was no reported sale on such date, on the last preceding
day on which any reported sale occurred) of the Common Stock on the NASDAQ
National Market System or, if the Common Stock is not traded on the NASDAQ
National Market System, such national stock exchange or stock market on which
the Common Stock may from time to time be traded.
(k) "Option" means any option to purchase shares of Common Stock
granted by the Committee pursuant to the provisions of the Plan.
(l) "Participant" means an Eligible Employee who elects to participate
in the Plan pursuant to Section 6 hereof.
(m) "Plan" means this Intervoice, Inc. Employee Stock Purchase Plan.
Section 3. Number of Shares. The aggregate number of shares of Common
Stock issued pursuant to Options granted under the Plan shall not exceed a total
of 2,000,000 shares. The maximum number of shares of Common Stock available for
sale under the Plan is subject to adjustment as provided in Section 13. The
Common Stock to be delivered upon exercise of Options may consist of authorized
but unissued shares of Common Stock or shares of Common Stock previously issued
and reacquired by the Company.
Section 4. Administration of the Plan. The Plan shall be administered
by the Committee, which shall consist of three or more directors or executive
officers of the Company. Each member of the Committee shall be appointed by and
shall serve at the pleasure of the Board of Directors. The Board of Directors
shall have the sole continuing authority to appoint members of the Committee
both in substitution for members previously appointed and to fill vacancies
however caused. The following provisions shall apply to the administration of
the Plan by the Committee:
(a) The Committee shall designate one of its members as Chairman and shall hold
meetings at such times and places as it may determine. Each member of the
Committee shall be notified in writing of the time and place of any meeting of
the Committee at least two days prior to such meeting, provided that such notice
may be waived by a
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Committee member. A majority of the members of the Committee shall constitute a
quorum and any action taken by a majority of the members of the Committee
present at any duly called meeting at which a quorum is present (or action
unanimously approved in writing) shall constitute action by the Committee.
(b) The Committee may appoint a Secretary (who need not be a member of the
Committee) who shall keep minutes of its meetings. The Committee may make such
rules and regulations for the conduct of its business as it may determine.
(c) The Committee shall have full authority, subject to the express provisions
of the Plan to interpret the Plan, to provide, modify and rescind rules and
regulations relating to it and to make all other determinations and perform such
actions as the Committee deems necessary or advisable to administer the Plan.
(d) No member of the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
Section 5. Eligible Employees. Each employee of the Company or an
Affiliate who is employed by the Company or an Affiliate on the date his
participation in the Plan is to become effective shall be eligible to
participate in the Plan; provided, however, that: (a) An employee shall not be
granted an Option if such employee would, immediately after grant of the Option,
own stock possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company or any parent or subsidiary corporation of
the Company (within the meaning of Section 424(e) and (f) of the Code). For
purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply, and stock which the employee may
purchase under any outstanding options shall be treated as stock owned by the
employee; and
(b) No employee shall be granted an Option under the Plan which would permit
such employee's rights to purchase shares of stock under all employee stock
purchase plans of the Company and its parent and subsidiary corporations (within
the meaning of Section 424(e) and (f) of the Code) to accrue (within the meaning
of Section 423 (b) (8) of the Code) at a rate which exceeds U.S. $25,000 of fair
market value of such stock (determined at the time such option is granted) for
each calendar year during which any such option granted to such employee is
outstanding at any time.
For purposes of this Section 5, the term "employee" shall not include
an employee whose customary employment is 20 hours or less per week or is for
not more than five months in any calendar year.
Section 6. Method of Participation. Each person who will be an Eligible
Employee on any January 1 may elect to participate in the Plan by executing and
delivering, on or before the immediately preceding December 31, a payroll
deduction authorization as provided in this Section; provided, however, that an
Eligible Employee who elects not to participate on a given January 1 shall not
be eligible to participate in the Plan until the following January 1. Such
Eligible Employee shall thereby become a Participant on such January 1 and shall
remain a Participant until such Eligible Employee's participation is Terminated
as provided in Section 10 or 11 hereof.
The payroll deduction authorization executed by a Participant shall
request withholding, by means of substantially equal payroll deductions over the
period during which he or she is a Participant, of an amount which shall be no
more than 10% nor less than 1 % of such Participant's Compensation for a given
option period. A Participant may change the withholding rate of his or her
payroll deduction authorization within such limits by delivering a new payroll
deduction authorization form to the Company on or before the December 31
immediately preceding the option period with respect to which the change is to
be effective, A Participant may not change the withholding rate of his or her
payroll deduction authorization with respect to an option period at any time
after the deadline set forth in the immediately preceding sentence. All amounts
withheld in accordance with a Participant's payroll deduction authorization
shall be credited to a withholding account for such Participant. No interest
shall be payable on withholding accounts.
Section 7. Grant of Options. The Plan will be implemented in
twelve-month option periods beginning on the first day of each January and
ending on the following December 31 until the Plan is terminated. Each
Participant shall be granted an Option on the first day of each option period to
purchase the number of whole shares of Common Stock determined by dividing (x)
the aggregate payroll deduction authorized by such Participant for the option
period by (y) 85% of the Fair Market Value per share of Common Stock on the
first day of the option period. Each Option shall be exercisable as provided in
Section 9 on the last business day of an option period. In no event shall the
number of shares with respect to which an Option is granted to a Participant for
a calendar year exceed that number of shares which has an aggregate Fair Market
Value (determined on the date of grant) of U.S. $25,000, and the number of
shares actually purchased by a Participant in a calendar year may not exceed
this number. The Company shall reduce, on a substantially proportionate basis,
the number of shares of Common Stock receivable by each Participant upon
exercise of an Option in the event that the total number of shares then
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available under the Plan is less than the total number of shares with respect to
which all Participants exercise Options in such option period.
Section 8. Option Price. The purchase price per share of Common Stock
under each Option shall equal the lesser of (a) 85% of the Fair Market Value per
share of Common Stock on the date of grant of the Option or (b) 85% of the Fair
Market Value per share of Common Stock on the date on which the Option is
exercised. If the Common Stock of the Company is not admitted to trading on any
of the aforesaid dates for which closing prices of the stock are to be
determined, then reference shall be made to the Fair Market Value of the stock
on that date, as determined on such basis as shall be established or specified
for the purpose by the Committee.
Section 9. Exercise of Options. An employee who is a Participant in the
Plan on the last business day of an option period shall be deemed automatically
to have exercised the current installment of the Option granted to him or her
for that option period. Upon such exercise, the Company shall apply the entire
balance of the Participant's withholding account to the purchase of the maximum
number of whole shares of Common Stock as determined under Section 7. For
purposes of this Section 9, the balance in the withholding account of a
Participant whose salary or wages are not computed in United States dollars
shall be converted into United States dollars in accordance with the New York
foreign currency exchange rate as reported in The Wall Street Journal for the
last business day of the option period. Certificates representing shares of
Common Stock purchased for a Participant under the Plan shall be issued and
delivered to the Participant as soon as practicable after such shares are
purchased; provided, however, that the obligation of the Company to deliver
shares of Common Stock shall be postponed for such period of time as may be
necessary to register or qualify the purchased shares under the Securities Act
of 1933 and any applicable foreign or state securities law.
A Participant shall possess none of the rights or privileges of a
shareholder of the Company with respect to Common Stock purchased under the Plan
unless and until certificates representing such shares have been issued. No
fractional shares shall be issued upon exercise of any installment of an Option.
Any balance remaining in a Participant's withholding account following exercise
of an installment shall be returned to the Participant. The cash proceeds
received by the Company upon exercise of an Option shall constitute general
funds of the Company. Any unexercised portion of an Option shall expire and
become null and void as of the end of the option period in which such Option was
granted.
Section 10. Cancellation of Option and Withdrawal From the Plan. A
Participant who holds an Option under the Plan may at any time prior to exercise
thereof pursuant to Section 9 cancel the remaining unexercised portion of such
Option by written notice delivered to the Treasurer of the Company. Upon such
cancellation, the balance in the Participant's withholding account shall be
returned to such Participant and he or she shall cease to be a Participant.
Partial cancellations shall not be permitted.
A Participant may terminate his payroll deduction authorization as of
any date by written notice delivered to the Treasurer of the Company and shall
thereby cease to be a Participant as of such date. Partial termination of a
payroll deduction authorization shall not be permitted, except to the extent
expressly permitted by Section 6 of this Plan. Any Participant who voluntarily
terminates his or her payroll deduction authorization prior to the last business
day of an option period shall be deemed to have cancelled his or her Option for
such option period.
A Participant who withdraws from the Plan pursuant to this Section 10
may re-enroll as of any subsequent January 1 on which he or she is an Eligible
Employee in accordance with the procedure set forth in Section 6 of this Plan;
provided, however, that a Participant shall not be permitted to re-enroll in the
Plan until a January 1 that is at least one month after the date of his or her
withdrawal.
Section 11. Termination of Employment. Upon the termination of a
Participant's employment with the Company or an Affiliate for any reason, such
person shall cease to be a Participant, the Option held by such Participant
under the Plan shall be deemed cancelled, the balance of such Participant's
withholding account shall be returned to such Participant (or, in the event of
the Participant's death, to the executor or administrator of his or her estate)
and he or she shall have no further rights under the Plan.
All Participants shall have the same rights and privileges under the
Plan. Notwithstanding the foregoing, nothing in the Plan shall confer upon any
Participant any right to continue in the employ of the Company or an Affiliate
or in any way interfere with the right of the Company or an Affiliate to
terminate the employment of the Participant at any time, with or without cause.
Transfers of employment among the Company and its Affiliates and approved leaves
of absence not exceeding 90 days shall not be considered terminations of
employment for purposes of this Plan.
Section 12. Transferability. An Option granted under the Plan shall not
be transferable by the Participant and shall be exercisable only by the
Participant.
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Section 13. Adjustments Upon Changes in Common Stock. In the event the
Company shall effect a split of the Common Stock or declare a dividend payable
in Common Stock, or in the event the outstanding Common Stock shall be combined
into a smaller number of shares, the maximum number of shares as to which
Options may be granted under the Plan shall be increased or decreased
proportionately, and the Fair Market Value per share of Common Stock as of the
date of grant of all outstanding Options shall be adjusted, for purposes of
making the determination required by Section 8 of this Plan, in a manner deemed
appropriate by the Board of Directors.
In the event of a reclassification of Common Stock not covered by the
foregoing, or in the event of a liquidation or reorganization of the Company,
including a merger, consolidation or sale of assets, the Board of Directors
shall make such adjustments, if any, as it may deem appropriate in the number,
purchase price and kind of shares that are covered by Options theretofore
granted under the Plan or that are otherwise subject to the Plan. The provisions
of this Section shall only be applicable if, and only to the extent that, the
application thereof does not conflict with any valid governmental statute,
regulation or rule.
Section 14. Amendment and Termination of the Plan. Subject to the right
of the Board of Directors to terminate the Plan prior thereto, the Plan shall
terminate when all or substantially all of the Common Stock reserved for
purposes of the Plan has been purchased. No Options may be granted after
termination of the Plan. The Board of Directors may alter or amend the Plan but
may not without the approval of the shareholders of the Company and of any
regulatory authorities having jurisdiction make any alteration or amendment
thereof which operates (a) to increase the total number of shares of Common
Stock which may be issued under the Plan (other than as provided in Section 13),
(b) to modify the criteria for determining the employees (or class of employees)
eligible to receive Options under the Plan or (c) to materially increase
benefits accruing under the Plan to Participants who are subject to Section 16
of the Securities Exchange Act of 1934 (the "Exchange Act").
No termination or amendment of the Plan shall adversely affect the
rights of a Participant under an outstanding Option, except with the consent of
such Participant.
Section 15. Requirements of Law. The granting of Options and the
issuance of Common Stock upon the exercise of an Option shall be subject to all
applicable laws, rules and regulations and to such approval by governmental
agencies as may be required.
Section 16. Effective Date of Amended and Restated Plan. The amended
and restated Plan shall become effective, as of the date of its adoption by the
Board of Directors, if it is duly approved at the 2003 annual meeting of
shareholders of the Company. The affirmative vote of the holders of at least a
majority of the shares of Common Stock of the Company present or represented
and voting on the proposal to approve the amended Plan at the annual meeting,
shall be required to approve the amended and restated Plan. If the amended and
restated Plan is not so approved, the terms of the Plan as in effect prior to
the effective date of this amended and restated Plan shall remain in full force
and effect.
Section 17. Rule 16b-3 Compliance. Transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors adopted under the Exchange Act, some of which conditions are not set
forth herein. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
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APPENDIX B
INTERVOICE, INC.
2003 STOCK OPTION PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT. Intervoice, Inc., a Texas corporation, hereby
establishes the Intervoice, Inc. 2003 Stock Option Plan, as set forth in this
document.
1.2 PURPOSE. The purposes of the Plan are to attract able persons to
enter the employ of the Company, to encourage Employees to remain in the employ
of the Company and to provide motivation to Employees to put forth maximum
efforts toward the continued growth, profitability and success of the Company,
by providing incentives to such persons through the ownership and performance of
the Common Stock of Intervoice. A further purpose of the Plan is to provide a
means through which Intervoice may attract able persons to become directors of
Intervoice and to provide directors of Intervoice with additional incentive and
reward opportunities designed to strengthen their concern for the welfare of
Intervoice and its stockholders. Toward these objectives, Options may be granted
under the Plan to Employees and Outside Directors on the terms and subject to
the conditions set forth in the Plan.
1.3 EFFECTIVE DATE OF PLAN. This Plan shall be effective as of the date
of its approval at the 2003 annual meeting of shareholders of Intervoice by the
holders of at least a majority of the shares of Common Stock present or
represented and voting on the proposal to approve this Plan at such meeting. If
the Plan is not so approved, the Plan shall terminate and any Option granted
hereunder shall be null and void.
ARTICLE 2. DEFINITIONS
2.1 AFFILIATE. "Affiliate" means a "parent corporation" or a
"subsidiary corporation" of Intervoice, as those terms are defined in Section
424(e) and (f) of the Code.
2.2 BOARD. "Board" means the Board of Directors of Intervoice.
2.3 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.
2.4 COMMITTEE. "Committee" means the Compensation Committee of the
Board, or such other committee of the Board as may be designated by the Board to
administer the Plan; provided that the Committee shall consist of two or more
directors of Intervoice, all of whom are both a "Non-Employee Director" within
the meaning of Rule 16b-3 under the Exchange Act and an "outside director"
within the meaning of the definition of such term as contained in Treasury
Regulation Section 1.162-27(e)(3) interpreting Section 162(m) of the Code, or
any successor definitions adopted. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the Board.
2.5 COMMON STOCK. "Common Stock" means the Common Stock, no par value
per share, of Intervoice, or any stock or other securities of Intervoice
hereafter issued or issuable in substitution or exchange for the Common Stock.
2.6 COMPANY. "Company" means Intervoice and its Affiliates.
2.7 CORPORATE CHANGE. A "Corporate Change" shall be deemed to have
occurred for purposes of the Plan, upon (a) the dissolution or liquidation of
Intervoice; (b) a reorganization, merger or consolidation of Intervoice with one
or more corporations (other than a merger or consolidation effecting a
reincorporation of Intervoice in another state or any other merger or
consolidation in which the shareholders of the surviving corporation and their
proportionate interests therein immediately after the merger or consolidation
are substantially identical to the shareholders of Intervoice and their
proportionate interests therein immediately prior to the merger or
consolidation) (collectively, a "Corporate Change Merger"); (c) the sale of all
or substantially all of the assets of Intervoice; or (d) the occurrence of a
Change in Control. A "Change in Control" shall be deemed to have occurred for
purposes of the Plan if (a) individuals who were directors of Intervoice
immediately prior to a Control Transaction shall cease, within two years of such
Control Transaction, to constitute a majority of the Board (or of the Board of
Directors of any successor to Intervoice or to a company which has acquired all
or substantially all its assets) other than by reason of an increase in the size
of the membership of the applicable Board that is approved by at least a
majority of the
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individuals who were directors of Intervoice immediately prior to such Control
Transaction or (b) any entity, person or Group acquires shares of Intervoice in
a transaction or series of transactions that result in such entity, person or
Group directly or indirectly owning beneficially 50% or more of the outstanding
shares of Common Stock. As used herein, "Control Transaction" means (a) any
tender offer for or acquisition of capital stock of Intervoice pursuant to which
any person, entity or Group directly or indirectly acquires beneficial ownership
of 20% or more of the outstanding shares of Common Stock, (b) any Corporate
Change Merger of Intervoice, (c) any contested election of directors of
Intervoice or (d) any combination of the foregoing, any one of which results in
a change in voting power sufficient to elect a majority of the Board. As used
herein, "Group" means persons who act "in concert" as described in Sections
13(d)(3) and/or 14(d)(2) of the Exchange Act.
2.8 EFFECTIVE DATE. "Effective Date" means the date an Option is
determined to be effective by the Committee upon the grant of such Option to an
Employee, or the date on which an Option is automatically granted to an Outside
Director in accordance with Section 6.3.
2.9 EMPLOYEE. "Employee" means any person treated as an employee by
Intervoice or an Affiliate. "Employee" shall not include an Outside Director or
any other person treated by Intervoice or an Affiliate as an independent
contractor.
2.10 EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, including rules thereunder and successor
provisions and rules thereto.
2.11 FAIR MARKET VALUE. "Fair Market Value" means the fair market value
of the Common Stock, as determined in good faith by the Committee or, (i) if the
Common Stock is traded in the over-the-counter market, the average of the
representative closing bid and asked prices as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for the
date the Option is granted (or if there was no quoted price for such date of
grant, then for the last preceding business day on which there was a quoted
price), or (ii) if the Common Stock is traded in the NASDAQ National Market
System, the average of the highest and lowest selling prices for such stock as
quoted on the NASDAQ National Market System for the date the Option is granted
(or if there are no sales for such date of grant, then for the last preceding
business day on which there were sales), or (iii) if the Common Stock is listed
on any national stock exchange, the average of the highest and lowest selling
prices for such stock as quoted on such exchange for the date the Option is
granted (or if there are no sales for such date of grant, then for the last
preceding business day on which there were sales).
2.12 INTERVOICE. "Intervoice" means Intervoice, Inc., a Texas
corporation, and any successor thereto.
2.13 OPTION. "Option" means an option to purchase shares of Common
Stock granted to a Participant pursuant to Article 6.
2.14 OPTION AGREEMENT. "Option Agreement" means a written agreement
between Intervoice and a Participant that sets forth the terms, conditions,
restrictions and/or limitations applicable to an Option.
2.15 OUTSIDE DIRECTOR. "Outside Director" means an individual duly
elected or chosen as a director of Intervoice who is not also an Employee.
2.16 PARTICIPANT. "Participant" means any Employee or Outside Director
to whom an Option has been granted under the Plan.
2.17 PLAN. "Plan" means this Intervoice, Inc. 2003 Stock Option Plan.
2.18 RETIREMENT. "Retirement" means the termination of a Participant's
employment or service on or after his or her 65th birthday.
ARTICLE 3. PLAN ADMINISTRATION
3.1. RESPONSIBILITY OF COMMITTEE. Subject to the terms and provisions
of the Plan, including, without limitation, Section 3.6, the Plan shall be
administered by the Committee. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in accordance
with its terms; provided, however, that except as expressly provided herein the
Committee shall have no authority to administer or interpret the provisions of
the Plan relating to the grant of Options to Outside Directors.
3.2 AUTHORITY OF COMMITTEE. The Committee shall have all the authority
that may be necessary or helpful to enable it to discharge its responsibilities
with respect to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right, subject to the
provisions of Section 3.6, to: (a)
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interpret the Plan and the Option Agreements executed hereunder; (b) determine
eligibility for participation in the Plan; (c) decide all questions concerning
eligibility for, and the size of, Options granted under the Plan; (d) construe
any ambiguous provision of the Plan or any Option Agreement; (e) prescribe the
form of the Option Agreements embodying Options granted under the Plan; (f)
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Option Agreement; (g) issue administrative guidelines as an aid to
administer the Plan and make changes in such guidelines as it from time to time
deems proper; (h) make regulations for carrying out the Plan and make changes in
such regulations as it from time to time deems proper; (i) to the extent
permitted under the Plan, grant waivers of Plan terms, conditions, restrictions
and limitations; (j) accelerate the vesting of an Option granted to an Employee
when such action or actions would be in the best interests of the Company; and
(k) take any and all other actions it deems necessary or advisable for the
proper operation or administration of the Plan.
3.3 DISCRETIONARY AUTHORITY. Subject to the provisions of Section 3.6,
(i) the Committee shall have full discretionary authority in all matters related
to the discharge of its responsibilities and the exercise of its authority under
the Plan, including, without limitation, its construction of the terms of the
Plan, and its determination of eligibility for participation under the Plan, and
(ii) the decisions of the Committee and its actions with respect to the Plan
shall be final, conclusive and binding on all persons having or claiming to have
any right or interest in or under the Plan, including Participants and their
respective estates, beneficiaries and legal representatives.
3.4 ACTION BY THE COMMITTEE. The Committee may act only by a majority
of its members. Any determination of the Committee may be made, without a
meeting, by a writing or writings signed by all of the members of the Committee.
In addition, the Committee may authorize any one or more of its members to
execute and deliver documents on behalf of the Committee.
3.5 DELEGATION OF AUTHORITY. Notwithstanding anything contained in the
Plan to the contrary, the Committee may, in its discretion, delegate some or all
of its authority under the Plan to any person or persons; provided, however,
that any such delegation shall be in writing; and provided further that only the
Committee may grant Options to Employees who are subject to Section 16 of the
Exchange Act or who are "covered employees" within the meaning of Section 162(m)
of the Code.
3.6 BOARD AUTHORITY. Notwithstanding the authority hereby delegated to
the Committee to administer the Plan, the Board shall have sole and exclusive
authority, subject to the express provisions of the Plan, to determine and
interpret the terms, conditions, restrictions and/or limitations applicable to
Options automatically granted to Outside Directors pursuant to Section 6.3 of
the Plan and to make all other determinations and take any and all other actions
it deems necessary or advisable with respect to such Options. The Board shall
have no authority under the Plan to grant Options to Employees, which authority
is vested exclusively in the Committee
3.7 LIABILITY; INDEMNIFICATION. No member of the Committee or the Board
nor any person to whom authority has been delegated by the Committee, shall be
personally liable for any action, interpretation or determination made in good
faith with respect to the Plan or Options granted hereunder, and each member of
the Committee and the Board shall be fully indemnified and protected by
Intervoice with respect to any cost, expense or liability he or she may incur
with respect to any such action, interpretation or determination, to the extent
permitted by applicable law.
ARTICLE 4. ELIGIBILITY
All Employees are eligible to be selected to participate in the Plan
and all Outside Directors will automatically participate in the Plan. Options
granted to Outside Directors shall be made only in accordance with Section 6.3.
The Committee shall select, from time to time, those Employees who, in the
opinion of the Committee, can further the Plan's purposes. In making this
selection, the Committee may give consideration to the functions and
responsibilities of the Employee, his or her past, present and potential
contributions to the growth and success of the Company and such other factors
deemed relevant by the Committee. Once an Employee is so selected, the Committee
shall determine the size of Option to be granted to the Employee and shall
establish in the related Option Agreement the terms, conditions, restrictions
and/or limitations applicable to the Option, in addition to those set forth in
the Plan and the administrative rules and regulations, if any, established by
the Committee. No Employee is entitled to receive an Option unless selected by
the Committee.
ARTICLE 5. SHARES SUBJECT TO THE PLAN.
5.1 AVAILABLE SHARES. The maximum number of shares of Common Stock that
shall be available for grant of Options under the Plan shall not exceed
2,000,000, subject to adjustment as provided in Sections 5.2 and 5.3. Shares of
Common Stock issued pursuant to the Plan may be shares of original issuance or
treasury shares or a combination of the foregoing, as the Board, in its
discretion, shall from time to time determine.
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5.2 ADJUSTMENTS FOR RECAPITALIZATIONS AND REORGANIZATIONS.
(a) The shares with respect to which Options may be granted under
the Plan are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration or satisfaction of an Option theretofore
granted, Intervoice shall effect a subdivision or consolidation of shares of
Common Stock or the payment of a stock dividend on Common Stock without receipt
of consideration by Intervoice, the number of shares of Common Stock with
respect to which such Option may thereafter be exercised or satisfied, as
applicable, (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the exercise price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the exercise price per
share shall be proportionately increased.
(b) If Intervoice recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted the
Participant shall be entitled to purchase under such Option, in lieu of the
number of shares of Common Stock then covered by such Option, the number and
class of shares of stock or other securities to which the Participant would have
been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the Participant had been the holder of record of
the number of shares of Common Stock then covered by such Option.
(c) In the event of changes in the outstanding Common Stock by
reason of recapitalizations, reorganizations, mergers, consolidations,
combinations, separations (including a spin-off or other distribution of stock
or property), exchanges or other relevant changes in capitalization occurring
after the date of grant of any Option and not otherwise provided for by this
Section 5.2, any outstanding Options and any Option Agreements evidencing such
Options shall be subject to adjustment by the Committee at its discretion as to
the number, price and kind of shares of Common Stock subject to, and other terms
of, such Options to reflect such changes in the outstanding Common Stock.
(d) In the event of any changes in the outstanding Common Stock
provided for in this Section 5.2, the aggregate number of shares available for
grant of Options under the Plan may be equitably adjusted by the Committee,
whose determination shall be conclusive. Any adjustment provided for in this
Section 5.2(d) shall be subject to any required stockholder action.
(e) Notwithstanding the authority hereby delegated to the Committee
or the Board to administer the Plan or any provision of the Plan including this
Section 5.2, the Company will not reprice the Options under the Plan without
prior approval by the shareholders of Intervoice. For purposes of this
subsection 5.2(e), repricing Options shall include any of the following events:
amending an Option to reduce the exercise price; canceling an Option and
granting a new lower-priced Option; granting a new Option and canceling an old
higher-priced Option; amending an Option to allow for the payment of a cash
bonus upon Option exercise;; substituting restricted stock for underwater
Options; or the buyback of underwater Options and issuance of new Options.
5.3 ADJUSTMENTS FOR OPTIONS. The Committee shall have full discretion
to determine the manner in which shares of Common Stock available for grant of
Options under the Plan are counted. Without limiting the discretion of the
Committee under this Section 5.3, unless otherwise determined by the Committee,
for the purpose of determining the number of shares of Common Stock available
for grant of Options under the Plan; (a) the grant of an Option shall reduce the
number of shares available for grant of Options under the Plan by the number of
shares subject to such Option and (b) if any Option is canceled or forfeited, or
terminates, expires or lapses, for any reason, the shares then subject to such
Option shall again be available for grant of Options under the Plan.
ARTICLE 6. OPTIONS
6.1 GENERAL. All Options granted under this Plan shall be nonqualified
stock options that are not intended to meet the requirements of Section 422(b)
of the Code.
6.2 TERMS AND CONDITIONS OF OPTIONS. All Options granted under the Plan
shall be subject to the terms, conditions, restrictions and limitations of the
Plan. The Committee with respect to Options granted to Employees or the Board
with respect to Options automatically granted to Outside Directors may, in its
sole judgment, subject any Option or the Common Stock underlying such Option to
such other terms, conditions, restrictions and/or limitations (including, but
not limited to, the time and conditions of exercise or vesting of an Option and
restrictions on transferability of any shares of Common Stock issued or
delivered pursuant to the exercise of an Option), provided they are not
inconsistent with the terms of the Plan. Options granted under the Plan need not
be uniform.
(a) Options granted to Employees under the Plan shall be
exercisable in whole or in such installments and at such times as may be
determined by the Committee . The price at which a share of Common Stock may be
purchased upon exercise of an Option by an Employee shall be determined by the
Committee, but
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such exercise price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the Effective Date of the Option's grant. The term of
each Option granted to an Employee shall be as specified by the Committee;
provided, however, that unless otherwise designated by the Committee, no Options
shall be exercisable later than 10 years from the Effective Date of the Option's
grant.
(b) Subject to the provisions of Section 6.3, the Board shall
establish in the related Option Agreement the terms, conditions, restrictions
and/or limitations applicable to Options granted to Outside Directors, provided
they are not inconsistent with the terms of the Plan.
6.3 GRANTING OF OPTIONS.
(a) OPTIONS GRANTED TO EMPLOYEES. With regard to each Option
granted to an Employee, the Committee will determine the number of shares
subject to the Option, the manner and time of the Option's exercise, the
exercise price per share of Common Stock subject to the Option, and the duration
of the Option. An Option granted to an Employee shall become exercisable on the
date specified in the applicable Option Agreement with such Employee. An
Employee is eligible to exercise an Option only if he or she remains in the
service of the Company through the date on which the Option or portion of the
Option is scheduled to become exercisable.
(b) OPTIONS GRANTED TO OUTSIDE DIRECTORS. During the term of the
Plan, each Outside Director shall be granted Options to purchase Common Stock
under the Plan in accordance with the following terms and conditions:
(i) Automatic Grants.
(1) Outside Directors Initially Elected to Serve on the Board at an
Annual Meeting of Shareholders. On the date of the first annual
meeting of the shareholders of Intervoice at which an Outside
Director is initially elected to serve on the Board commencing with
the 2003 annual meeting of shareholders, such Outside Director
shall be granted an Option to purchase 18,000 shares of Common
Stock. Subject to subsection (b)(ii) of this Section, such Option
shall become exercisable in full on the date of the annual meeting
of the shareholders of Intervoice next following the date of grant
of such Option.
(2) Outside Directors Initially Elected by the Board of Directors
to Fill a Vacancy on the Board. On any date after the 2003 annual
meeting of the shareholders of Intervoice at which an Outside
Director is elected by the Board to fill a vacancy on the Board,
such Outside Director shall be granted an Option to purchase 18,000
shares of Common Stock. Subject to subsection (b)(ii) of this
Section, such Option shall become exercisable in full on the date
of the annual meeting of the shareholders of Intervoice next
following the annual meeting of shareholders at which the Outside
Director is first elected by the shareholders to serve on the
Board. In no event shall an Outside Director receive an automatic
grant of an Option under both this subsection and subsection
(b)(i)(1).
(3) Outside Directors Re-elected to Serve on the Board at an Annual
Meeting of Shareholders. Each Outside Director re-elected to serve
Intervoice as a director on the date of an annual meeting of the
shareholders of Intervoice commencing with the 2003 annual meeting
of shareholders, shall be granted, as of such date, an Option to
purchase 10,000 shares of Common Stock. Subject to subsection
(b)(ii) of this Section, such Option shall become exercisable in
full on the date of the annual meeting of the shareholders of
Intervoice next following the date of grant of such Option.
(ii) Eligibility. An Option will become exercisable only if the
Outside Director continues to serve Intervoice as a director through the date of
the annual meeting of shareholders at which the Option is scheduled to become
exercisable.
(iii) Price. The exercise price of each share of Common Stock that
may be purchased upon exercise of an Option granted to an Outside Director shall
be 100% of the Fair Market Value of a share of Common Stock on the Effective
Date of the Option's grant.
(iv) Duration. Options granted to Outside Directors shall expire no
later than 10 years from the Effective Date of the Option's grant, unless sooner
terminated in accordance with the terms of the related Option Agreement and the
Plan, including Section 6.5.
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(v) Effectiveness of a Grant. Options granted to Outside Directors
shall be granted automatically in accordance with the terms of this Section 6.3
without any further action by the Board. The Company shall reduce, on a
substantially proportionate basis, the number of shares of Common Stock granted
to an Outside Director under this Section 6.3 in the event that the total number
of shares then available under the Plan is less than the total number of shares
with respect to which all Outside Directors are granted Options on an Effective
Date.
6.4 EXERCISE OF OPTIONS.
(a) Subject to the terms and conditions of the Plan, Options shall
be exercised by the delivery of a written notice of exercise to Intervoice,
setting forth the number of shares of Common Stock with respect to which the
Option is to be exercised, accompanied by full payment for such shares.
(b) Upon exercise of an Option, the exercise price of the Option
shall be payable to Intervoice in full in cash.
(c) Payment of the exercise price of an Option may also be made, in
the discretion of the Committee, by delivery to Intervoice or its designated
agent of an executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of the
shares with respect to which the Option is exercised and deliver the sale or
margin loan proceeds directly to Intervoice to pay for the exercise price and
any required withholding taxes.
(d) As soon as reasonably practicable after receipt of written
notification of exercise of an Option and full payment of the exercise price and
any required withholding taxes, Intervoice shall deliver to the Participant, in
the Participant's name, a stock certificate or certificates in an appropriate
amount based upon the number of shares of Common Stock purchased under the
Option.
6.5 TERMINATION OF SERVICE. Each Option Agreement shall set forth the
extent to which the Participant shall have the right to exercise the Option
following termination of the Participant's employment or service with the
Company. Such provisions shall be determined in the sole discretion of the
Committee with respect to an Option granted to an Employee or the Board with
respect to an Option granted to an Outside Director, need not be uniform among
all Options granted under the Plan and may reflect distinctions based on the
reasons for termination of employment or service. Subject to Section 5.2 and
Article 7, in the event that a Participant's Option Agreement does not set forth
such termination provisions, the following termination provisions shall apply
with respect to such Option:
(a) RETIREMENT, DISABILITY OR DEATH. If the employment or service
of a Participant shall terminate by reason of Retirement, permanent and total
disability (within the meaning of Section 22(e)(3) of the Code) or death,
outstanding Options held by the Participant may be exercised, to the extent then
vested, no more than two years from the date of such termination of employment
or termination of service, unless the Options in any way expressly provide for
earlier termination.
(b) OTHER TERMINATION. If the employment or service of a
Participant shall terminate for any reason other than the reasons set forth in
paragraph (a) above, whether on a voluntary or involuntary basis, outstanding
Options held by the Participant may be exercised, to the extent then vested, no
more than two years from the date of such termination of employment or
termination of service, unless the Options in any way expressly provide for
earlier termination.
(c) TERMINATION FOR CAUSE. Notwithstanding paragraphs (a) and (b)
above, if the employment or service of a Participant shall be terminated by
reason of such Participant's fraud, dishonesty or performance of other acts
detrimental to the Company, all outstanding Options held by the Participant
shall immediately be forfeited to the Company and no additional exercise period
shall be allowed, regardless of the vested status of the Options.
6.6 MAXIMUM OPTION GRANTS. Notwithstanding any provision contained in
the Plan to the contrary, the maximum number of shares of Common Stock for which
Options may be granted under the Plan to any one Participant during a calendar
year is 300,000 shares.
ARTICLE 7. CORPORATE CHANGE
Notwithstanding anything contained in the Plan to the contrary, in the
event of a Corporate Change, unless otherwise provided in the related Option
Agreement, all Options then outstanding shall become exercisable in full and all
restrictions imposed on any Common Stock that may be delivered pursuant to the
exercise of such Options shall be deemed satisfied.
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ARTICLE 8. AMENDMENT AND TERMINATION
The Board may at any time suspend, terminate, amend or modify the Plan,
in whole or in part; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or
modification by the stockholders of Intervoice if Intervoice, on the advice of
counsel, determines that such stockholder approval is necessary or desirable.
Notwithstanding any provision of this Plan to the contrary, no such amendment or
modification shall be made without receipt of the prior approval of the
shareholders of Intervoice where such change would (a) increase the total number
of shares of Common Stock which may be issued under the Plan (other than as
provided in Section 5.2 of the Plan); (b) modify the criteria for determining
the employees (or class of employees) eligible to receive Options under the Plan
or (c) materially increase benefits accruing under the Plan to Participants who
are subject to Section 16 of the Securities Exchange Act of 1934. Upon
termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Options granted prior to
such termination. No suspension, termination, amendment or modification of the
Plan shall adversely affect in any material way any Option previously granted
under the Plan, without the consent of the Participant holding such Option
(except that such consent shall not be required in the case of an amendment or
modification required following a change in law or interpretation thereof to
cause the Options under the Plan to continue to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code).
ARTICLE 9. MISCELLANEOUS
9.1 OPTION AGREEMENTS. After the Committee grants an Option under the
Plan to an Employee or upon an automatic grant of an Option to an Outside
Director, Intervoice and the Participant shall enter into an Option Agreement
setting forth the terms, conditions, restrictions and/or limitations applicable
to the Option and such other matters as the Committee with respect to an Option
granted to an Employee or the Board with respect to an Option automatically
granted to an Outside Director may determine to be appropriate. The terms and
provisions of the respective Option Agreements need not be identical. In the
event of any conflict between an Option Agreement and the Plan, the terms of the
Plan shall govern.
9.2 NONASSIGNABILITY. Except as otherwise provided in a Participant's
Option Agreement, no Option granted under the Plan may be sold, transferred,
pledged, exchanged, hypothecated or otherwise disposed of, other than by will or
pursuant to the applicable laws of descent and distribution. Further, no such
Option shall be subject to execution, attachment or similar process. Any
attempted sale, transfer, pledge, exchange, hypothecation or other disposition
of an Option not specifically permitted by the Plan or the Option Agreement
shall be null and void and without effect. All Options granted to a Participant
under the Plan shall be exercisable during his or her lifetime only by such
Participant or, in the event of the Participant's legal incapacity, by his or
her guardian or legal representative.
9.3 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued pursuant to any Option granted under the Plan, and no payment or other
adjustment shall be made in respect of any such fractional share.
9.4 WITHHOLDING TAXES. The Company shall be entitled to deduct from any
payment made under the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by law to be withheld
with respect to such payment, may require the Participant to pay to the Company
such withholding taxes prior to and as a condition of the making of any payment
or the issuance or delivery of any shares of Common Stock under the Plan and
shall be entitled to deduct from any other compensation payable to the
Participant any withholding obligations with respect to Options under the Plan.
9.5 REGULATORY APPROVALS AND LISTINGS. Notwithstanding anything
contained in the Plan to the contrary, Intervoice shall have no obligation to
issue or deliver shares of Common Stock under the Plan prior to (a) the
obtaining of any approval from any governmental agency which Intervoice shall,
in its sole discretion, determine to be necessary or advisable, (b) the
admission of such shares to listing on the stock exchange or stock market on
which the Common Stock may be listed and (c) the completion of any registration
of any governmental body which Intervoice shall, in its sole discretion,
determine to be necessary or advisable.
9.6 BINDING EFFECT. The obligation of Intervoice under the Plan shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of Intervoice, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of Intervoice. The terms and conditions of the Plan
shall be binding upon each Participant and his or her heirs, legatees,
distributees and legal representatives.
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9.7 SEVERABILITY. If any provision of the Plan or any Option Agreement
is held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions of the Plan or such agreement, as the
case may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.
9.8 NO RESTRICTION OF CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent Intervoice or any Affiliate from taking any
corporate action (including any corporate action to suspend, terminate, amend or
modify the Plan) that is deemed by Intervoice or such Affiliate to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Options made or to be made under the Plan. No
Participant or other person shall have any claim against Intervoice or any
Affiliate as a result of such action.
9.9 NOTICES. All notices required or permitted to be given or made
under the Plan or any Option Agreement shall be in writing and shall be deemed
to have been duly given or made if (a) delivered personally, (b) transmitted by
first class registered or certified United States mail, postage prepaid, return
receipt requested, (c) sent by prepaid overnight courier service or (d) sent by
telecopy or facsimile transmission, answer back requested, to the person who is
to receive it at the address that such person has theretofore specified by
written notice delivered in accordance herewith. Such notices shall be effective
(a) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (b) if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return receipt
therefor or (c) if sent by telecopy or facsimile transmission, when the answer
back is received. Intervoice or a Participant may change, at any time and from
time to time, by written notice to the other, the address that it or such
Participant had theretofore specified for receiving notices. Until such address
is changed in accordance herewith, notices hereunder or under an Option
Agreement shall be delivered or sent (a) to a Participant at his or her address
as set forth in the records of the Company or (b) to Intervoice at the principal
executive offices of Intervoice clearly marked "Attention: Human Resources
Department."
9.10 GOVERNING LAW. The Plan shall be governed and construed in
accordance with the internal laws (and not the principles relating to conflicts
of laws) of the State of Texas, except as superseded by applicable federal law.
9.11 NO RIGHT, TITLE OR INTEREST IN COMPANY ASSETS. No Participant
shall have any rights as a stockholder of Intervoice as a result of
participation in the Plan until the date of issuance of a stock certificate in
his or her name. To the extent any person acquires a right to receive payments
from the Company under the Plan, such rights shall be no greater than the rights
of an unsecured creditor of the Company, and such person shall not have any
rights in or against any specific assets of the Company. All of the Options
granted under the Plan shall be unfunded.
9.12 RISK OF PARTICIPATION. Nothing contained in the Plan shall be
construed either as a guarantee by Intervoice or its Affiliates, or their
respective stockholders, directors, officers or employees, or the value of any
assets of the Plan or as an agreement by Intervoice or its Affiliates, or their
respective stockholders, directors, officers or employees, to indemnify anyone
for any losses, damages, costs or expenses resulting from participation in the
Plan.
9.13 NO GUARANTEE OF TAX CONSEQUENCES. No person connected with the
Plan in any capacity, including, but not limited to, Intervoice and the
Affiliates and their respective directors, officers, agents and employees, makes
any representation, commitment or guarantee that any tax treatment, including,
but not limited to, Federal, state and local income, estate and gift tax
treatment, will be applicable with respect to any Options or payments thereunder
made to or for the benefit of a Participant under the Plan or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan.
9.14 OTHER BENEFITS. No Option granted under the Plan shall be
considered compensation for purposes of computing benefits or contributions
under any retirement plan of Intervoice or any Affiliate, nor affect any
benefits or compensation under any other benefit or compensation plan of
Intervoice or any Affiliate now or subsequently in effect.
9.15 CONTINUED EMPLOYMENT OR SERVICE. Nothing contained in the Plan or
in any Option Agreement shall confer upon any Participant the right to continue
in the employ of the Company, or interfere in any way with the rights of the
Company to terminate his or her employment at any time, with or without cause.
Further, participation in this Plan shall not give any Outside Director any
right to continue as a director of Intervoice.
9.16 MISCELLANEOUS. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction of the Plan or
any provisions hereof. The use of the masculine gender shall also include within
its
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meaning the feminine. Wherever the context of the Plan dictates, the use of the
singular shall also include within its meaning the plural, and vice versa.
IN WITNESS WHEREOF, this Plan has been executed this ____ day of June,
2003.
INTERVOICE, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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PROXY PROXY
INTERVOICE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David W. Brandenburg, and Robert E. Ritchey,
and either of them, proxies with power of substitution in each, and hereby
authorizes them to represent and to vote, as designated below, all shares of
common stock, no par value per share ("Common Stock"), of INTERVOICE, INC. (the
"Company"), standing in the name of the undersigned at the close of business on
June 23, 2003, at the annual meeting of shareholders to be held on August 20,
2003, at Richardson, Texas, and at any adjournment thereof and especially to
vote on the items of business specified herein, as more fully described in the
notice of the meeting dated June 27, 2003, and the proxy statement accompanying
the same, the receipt of which is hereby acknowledged.
This proxy when duly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES FOR DIRECTOR NAMED HEREIN, FOR THE PROPOSAL TO AMEND THE
COMPANY'S EMPLOYEE STOCK PURCHASE PLAN, AND FOR THE PROPOSAL TO APPROVE THE
COMPANY'S 2003 STOCK OPTION PLAN.
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. Election of Directors
The undersigned hereby votes in response to the election of the Board of
Directors for the ensuing years
[ ] FOR all [ ] WITHHOLD AUTHORITY [ ] FOR all nominees, except
nominees to vote for all nominees vote withheld for those named
below:
-----------------------------
Nominee Exceptions
NOMINEES: 01 DAVID W. BRANDENBURG, 02 JOSEPH J. PIETROPAOLO,
03 GEORGE C. PLATT, 04 GRANT A. DOVE,
05 JACK P. REILY, AND 06 GERALD F. MONTRY
(Continued and to be signed on reverse side)
2. Proposal to Amend Employee Stock Purchase Plan.
The undersigned hereby votes in response to the proposal to amend the
Company's Employee Stock Purchase Plan to increase from 1,500,000 to
2,000,000 the aggregate number of shares of Common Stock authorized for
issuance under the Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to Approve the Company's 2003 Stock Option Plan.
The undersigned hereby votes in response to the proposal to approve the
Company's 2003 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the undersigned hereby authorizes the proxies to vote
upon such other business or matters as may properly come before the meeting
or any adjournment thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The undersigned hereby revokes any
proxy or proxies heretofore given to
represent or vote such Common Stock and
hereby ratifies and confirms all action
that said proxies, their substitutes,
or any of them, might lawfully take in
accordance with the terms hereof.
---------------------------------------
SIGNATURE DATE
---------------------------------------
SIGNATURE DATE
NOTE: This proxy should be signed
exactly as name appears hereon. Joint
owners should both sign. If signed as
attorney, executor, guardian, or in
some other representative capacity, or
as an officer of a corporation, please
indicate full title or capacity. Please
complete, date and return it in the
enclosed envelope, which requires no
postage if mailed in the United States.