/s/  

 

The following is a summary of the information contained in this document relating to the merger of VoiceSignal and Nuance. This summary may not contain all of the information that is important to you. You should carefully read this entire consent solicitation statement/prospectus and the other documents to which we refer. In particular, you should read the annexes attached to this consent solicitation statement/prospectus, including the merger agreement, which is attached as Annex A and is incorporated by reference into this consent solicitation statement/prospectus.

 

Voice Signal Technologies, Inc.
150 Presidential Way, Suite 310
Woburn, Massachusetts 01801
(781) 970-5200
http://www.voicesignal.com

 

Voice Signal Technologies, Inc. develops and markets voice software solutions for cell phones and other mobile devices. By enabling people to use voice to access phone features and network services through their handsets, VoiceSignal’s solutions make it significantly easier to realize the potential of mobile computing on a wide range of handsets and devices. VoiceSignal’s products range from VSuite, VoiceSignal’s line of small footprint voice interface solutions for voice dialing and voice commands, to VSearch, VoiceSignal’s recently announced voice-enabled client-server platform for mobile search.

 

Nuance Communications, Inc.
1 Wayside Road
Burlington, Massachusetts 01803
(781) 565-5000
http://www.nuance.com

 

Nuance Communications, Inc. is a leading provider of speech and imaging solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with information and how they create, share and use documents. Every day, millions of users and thousands of businesses experience Nuance’s proven applications.

 

Vicksburg Acquisition Corporation
1 Wayside Road
Burlington, Massachusetts 01803
(781) 565-5000
http://www.nuance.com

 

Vicksburg Acquisition Corporation is a wholly owned subsidiary of Nuance recently formed solely for the purpose of effecting the merger. It has no business operations.

 

The merger is structured as a reverse-triangular merger pursuant to which Vicksburg Acquisition Corporation, a wholly owned subsidiary of Nuance, will merge with and into VoiceSignal, and thereafter will cease to exist as a separate corporate entity. After completion of the merger, VoiceSignal will be a wholly owned subsidiary of Nuance.

 

The terms and conditions of the merger are contained in the merger agreement, which is attached as Annex A to this consent solicitation statement/prospectus. Please carefully read the merger agreement as it is the legal document that governs the proposed merger.

 

Upon completion of the merger, VoiceSignal stockholders will be entitled to receive aggregate merger consideration consisting of approximately $210 million in cash and approximately 5,836,576 shares of Nuance common stock, which represents 3.2% of the outstanding Nuance common stock outstanding as of July 31, 2007. The cash portion of the merger consideration payable to VoiceSignal stockholders upon completion of the merger is subject to a number of adjustments, including adjustments for (i) certain expenses incurred by VoiceSignal in connection with the merger and (ii) the exercise of vested VoiceSignal stock options between the date of the merger agreement and completion of the merger. The value of the stock portion of the merger consideration payable to VoiceSignal stockholders upon completion of the merger may vary due to possible changes in market value of the Nuance common stock to be received. As a result, the exact consideration that a VoiceSignal stockholder will receive may not be known at the time the written consent is effective as it will depend on the magnitude of the adjustments, if any, described above. All VoiceSignal stockholders will also have a portion of the merger consideration that they would otherwise be entitled to receive deposited in an escrow account that will be used to compensate Nuance if Nuance is entitled to indemnification under the merger agreement.

 

Immediately prior to the consummation of the merger, all outstanding shares of preferred stock of VoiceSignal will convert into shares of VoiceSignal common stock, including all accrued and unpaid dividends, in accordance with VoiceSignal’s amended and restated certificate of incorporation. All outstanding shares of Series A, B and D preferred stock will convert into shares of common stock on a 1 for 1 basis, and all outstanding shares of Series C preferred stock will convert to shares of common stock on a 1 for 2.20127 basis. Assuming a closing date of August 24, 2007, the accrued and unpaid dividends for each share of Series C preferred stock will convert into approximately 1.275 shares of VoiceSignal common stock and the accrued and unpaid dividends for each share of the Series D stock will convert into approximately .31 to .39 shares of VoiceSignal common stock, depending on stockholders’ date of investment. No other class or series of VoiceSignal capital stock have accrued and unpaid dividends.

 

The stock consideration and cash consideration to be paid per share of VoiceSignal common stock at closing will depend upon numerous variable factors, including the amount of third-party expenses, the actual closing date, the exercise of the outstanding vested options prior to the merger and whether such exercises are on a net or cash basis. Assuming the number of outstanding shares of VoiceSignal capital stock to be 153,848,882, a closing date of August 24, 2007, third-party expenses in the amount of $10,000,000 and the exercise of all vested options on a cash basis, resulting in cash proceeds of $2,052,687 each 100 shares of VoiceSignal common stock at closing will be entitled to receive approximately $111.83 in cash, 3.79 shares of Nuance common stock and $19.50 per 100 shares will be placed in the escrow account. If funds remain in the escrow account after the expiration of the escrow period, the cash consideration received by each VoiceSignal stockholder will increase. If the closing occurs after August 24, 2007, the number of outstanding shares of VoiceSignal common stock will be increased by 17,606 for each day after August 24, 2007 that the closing occurs as the result of stock dividends that accrue on shares of VoiceSignal preferred stock. Such an increase in the number of outstanding shares of common stock will cause a reduction in the consideration per 100 shares of VoiceSignal common stock of $0.01 per day of cash consideration and 0.0004 of a share of Nuance common stock per day in the stock consideration.

 

The number of shares of Nuance common stock to which a VoiceSignal stockholder is entitled to receive will be aggregated and any fractional shares will be paid out as set forth below in “The Merger Agreement — Fractional Shares.” The terms and conditions of the Escrow Fund are described in more detail in the Section entitled “The Merger Agreement — Escrow Fund.”

 

You should be aware that the above per share amounts are estimates only and are subject to change under certain circumstances as described above and set forth more fully in the merger agreement attached as Annex A to this consent solicitation statement/prospectus. The actual consideration you receive in exchange for your VoiceSignal capital stock may be more, less or the same as these estimates.

 

The maximum number of shares of Nuance common stock to be issued by Nuance in the merger was fixed at the time the merger agreement was signed. At the time the merger agreement was signed, the parties

valued the Nuance common stock at $15.42 per share, the average of the closing price of Nuance common stock 10 days prior to the signing of the merger agreement. Nuance common stock trades on the NASDAQ Global Select Market and is subject to price fluctuation. Therefore, the value of the Nuance common stock you will receive in the merger cannot be known at this time. The value of the Nuance common stock you receive in the merger may be equal to, less than or greater than its value on the date the merger agreement was signed and/or the date the written consent is effective. Below is a comparison of the effect the fluctuations in the per share price the Nuance common stock could have on the per share value of the VoiceSignal capital stock exchanged in the merger.

 

 

 

 

The above per share values are estimates only and are subject to change under certain circumstances as set forth more fully in the merger agreement, including a change in the closing date, a change in the number of shares of VoiceSignal capital stock pursuant to exercises of outstanding vested stock options and the amount of the third party expenses. The actual value of the consideration you receive in exchange for your VoiceSignal capital stock may be more, less or the same as these estimates.

 

See the section entitled “Market Price Data” beginning on page 14 for a description of the historical value of Nuance capital stock. VoiceSignal stockholders are urged to obtain current market quotations for Nuance common stock and to review carefully the other information contained in this consent solicitation statement/prospectus or incorporated by reference into this consent solicitation statement/prospectus. See the section entitled “Where You Can Find More Information” on page 145.

 

 

 

 

 

 

 

 

We cannot complete the merger unless, among other things, (i) a majority of the outstanding shares of VoiceSignal common stock and VoiceSignal preferred stock, voting together as a single class with each share of VoiceSignal common stock entitled to cast one vote and each share of VoiceSignal preferred stock entitled to cast that number of votes equal to the number of shares of VoiceSignal common stock into which such share of VoiceSignal preferred stock is convertible and (ii) a majority of the outstanding shares of VoiceSignal Series C preferred stock and Series D preferred stock, voting together as a single class, on an as-converted-to-common-stock basis, vote to adopt the merger agreement and approve the transactions contemplated thereby. As of August 23, 2007, VoiceSignal directors, executive officers and their affiliates were entitled to vote approximately 87% of the outstanding shares of VoiceSignal capital stock, voting on an as-converted-to-common-stock basis, and approximately 91% of the VoiceSignal Series C preferred stock and Series D preferred stock voting together as a single class, on an as-converted-to-common-stock basis. VoiceSignal directors, executive officers and their affiliates holding approximately 74% of the outstanding shares of VoiceSignal capital stock on an as-converted-to-common stock basis and approximately 78% of the Series C preferred stock and Series D preferred stock, voting together on an as-converted-to-common stock basis, have

already agreed with Nuance and VoiceSignal, in a voting agreement, to vote their shares of VoiceSignal stock in favor of the adoption of the merger agreement and approval of the transactions contemplated thereby. No vote of Nuance stockholders is required to complete the merger.

 

After careful consideration of numerous factors, the VoiceSignal board of directors has determined that the proposed merger is advisable, and is fair to and in the best interests of VoiceSignal and its stockholders and unanimously recommends that VoiceSignal stockholders vote “FOR” the proposal to adopt the merger agreement and approve the transactions contemplated thereby.

 

We will complete the merger when all of the conditions to completion of the merger are satisfied or waived. The merger will become effective when the certificate of merger we file with the State of Delaware is accepted for filing or at a later time if we specify a later time in the certificate.

 

While we cannot predict the exact timing, we currently expect to complete the merger in August 2007.

 

Each of VoiceSignal’s and Nuance’s obligation to complete the merger is subject to the satisfaction or waiver of a number of conditions, including:

 

 

VoiceSignal and Nuance may mutually agree at any time to terminate the merger agreement without completing the merger.

 

In addition, either of VoiceSignal or Nuance may, without the consent of the other, terminate the merger agreement in either of the following circumstances:

 

 

In addition, Nuance may, without the consent of VoiceSignal, terminate the merger agreement in either of the following circumstances:

 

 

In addition, VoiceSignal may, without the consent of Nuance, terminate the merger agreement if:

 

 

Nuance has agreed to pay up to $1 million of transaction-related expenses incurred by VoiceSignal if the merger agreement is terminated under certain circumstances.

 

VoiceSignal has agreed that it will not solicit or encourage the initiation of any inquiries regarding any acquisition proposals or proposals by third parties. If VoiceSignal receives an inquiry or proposal, VoiceSignal must immediately suspend any discussions with the party making such inquiry or proposal and notify Nuance of such inquiry or proposal.

 

As an inducement to Nuance entering into the merger agreement, certain of VoiceSignal’s executive officers, directors and affiliates entered into a voting agreement with Nuance in which each has agreed, among other things, to vote his, her or its shares of VoiceSignal capital stock in favor of the adoption of the merger agreement and approval of the transactions contemplated thereby and against any action that would delay or prevent the merger and against any alternative transaction. These persons have the right, as of July 31, 2007, to vote a total of approximately 74% shares of VoiceSignal capital stock on an as-converted-to-common-stock basis and approximately 78% of the Series C preferred stock and Series D preferred stock, voting together on

an as-converted-to-common stock basis. In connection with the voting agreements, these persons have granted an irrevocable proxy appointing members of the Nuance board of directors, and each of them individually, as their sole and exclusive attorneys and proxies to vote their shares in accordance with the terms of the voting agreements.

 

As of August 23, 2007, VoiceSignal directors, executive officers and their affiliates were entitled to vote approximately 87% of the outstanding shares of VoiceSignal capital stock voting together as a single class, on an as-converted-to-common-stock basis, and approximately 91% of the VoiceSignal Series C preferred stock and Series D preferred stock voting together as a single class, on an as-converted-to-common-stock basis.

 

The vote required for the adoption of the merger agreement and approval of the transactions contemplated thereby is, (i) a majority of the outstanding shares of VoiceSignal common stock and VoiceSignal preferred stock, voting together as a single class with each share of VoiceSignal common stock entitled to cast one vote and each share of VoiceSignal preferred stock entitled to cast a number of votes equal to the number of shares of VoiceSignal common stock into which such share of VoiceSignal preferred stock is convertible and (ii) a majority of the outstanding shares of VoiceSignal Series C preferred stock and Series D preferred stock, voting together as a single class on an as-converted-to common stock basis.

 

You should be aware that certain VoiceSignal officers and directors have interests in the merger that may be different from, or in addition to, interests of VoiceSignal stockholders generally. These interests include, among others:

 

 

 

 

The VoiceSignal board of directors was aware of these interests in approving the merger.

 

 

Under the HSR Act, the merger may not be consummated unless certain filings have been submitted to the Federal Trade Commission, or the FTC, and the Antitrust Division of the Department of Justice, or the Antitrust Division, and certain waiting period requirements have been satisfied. VoiceSignal and Nuance have filed the appropriate notification and report forms with the FTC and with the Antitrust Division and the applicable waiting period has been terminated, thus satisfying the requirements of the HSR Act and permitting the parties to close the VoiceSignal merger.

 

The FTC and the Antitrust Division frequently evaluate transactions like the proposed merger. At any time before or after the completion of the merger, the FTC or the Antitrust Division could take any action under the antitrust laws that it deems necessary or advisable in the public interest, including seeking to enjoin the completion of the merger or seeking the divestiture of substantial assets of VoiceSignal or Nuance. In addition,

certain private parties, as well as states attorneys general and other antitrust authorities, may challenge the transaction under antitrust laws under certain circumstances.

 

In addition, the merger may be subject to various foreign antitrust laws, either before or after the merger is closed.

 

VoiceSignal and Nuance believe that the completion of the merger will not violate any antitrust laws. There can be no assurance that a challenge to the merger on antitrust grounds will not be made, or, if such a challenge is made that the result will be favorable.

 

 

The authorization of the shares of Nuance common stock to be issued in the merger for listing on the NASDAQ Global Select Market is a condition to the merger.

 

 

Subject to compliance with the procedures set forth in Section 262 of the Delaware General Corporation Law, or DGCL, VoiceSignal stockholders who do not vote in favor of adoption of the merger agreement and approval of the transactions contemplated thereby and otherwise comply with the requirements of the DGCL will be entitled to appraisal rights in connection with the merger, whereby such stockholders may receive the “fair value” of their VoiceSignal shares in cash. Failure to take any of the steps required under Section 262 of the DGCL on a timely basis may result in a loss of those appraisal rights. The provisions of Delaware law that grant appraisal rights and govern such procedures are attached as Annex B.

 

The following table presents summary historical consolidated financial data of Nuance for the five most recent fiscal years and the first nine months of the current fiscal year comparative to the same period in the prior fiscal year. The financial data is derived from Nuance’s consolidated financial statements. Since the information in this table is only a summary and does not provide all of the information contained in Nuance’s financial statements, including related notes, you should read Nuance’s Management’s Discussion and Analysis of Nuance’s Financial Condition and Results of Operations” beginning on page 77 and Nuance’s consolidated financial statements, including related notes beginning on page F-4.

 

Nuance Communications, Inc.
Selected Summary Historical Financial Data

 

 

 

The following table presents summary historical consolidated financial data of VoiceSignal for the five most recent fiscal years and the six months ended June 30, 2007 and 2006. The financial data are derived from VoiceSignal’s consolidated financial statements, some of which are not included in this consent solicitation statement/prospectus. Because the information in this table is only a summary and does not provide all of the information contained in VoiceSignal’s financial statements, including related notes, you should read VoiceSignal’s “Management’s Discussion and Analysis of VoiceSignal’s Financial Condition and Results of Operations” beginning on page 119 and VoiceSignal’s consolidated financial statements, including related notes, beginning on page F-94.

Voice Signal Technologies, Inc.
Selected Summary Historical Financial Data

 

 

 

The following table presents historical quarterly consolidated data of VoiceSignal that is derived from unaudited consolidated statements that, in the opinion of management, include all recurring adjustments necessary for a fair statement of such information (in thousands):

 

 

The following table presents summary unaudited pro forma combined financial data which reflects the proposed acquisitions of VoiceSignal and Tegic. The summary unaudited pro forma combined financial data are derived from and should be read in conjunction with the unaudited pro forma combined financial statements and related notes thereto included in this consent solicitation statement/prospectus. See “Unaudited Pro Forma Financial Information” beginning on page F-266.

 

 

 

The following table reflects (i) the historical income (loss) from continuing operations and book value per share of Nuance common stock in comparison to the pro forma income (loss) from continuing operations and book value per share after giving effect to the proposed merger with VoiceSignal; and (ii) the historical income (loss) from continuing operations and book value per share of VoiceSignal common stock in comparison with the equivalent pro forma income (loss) from continuing operations and book value per share. The pro forma combined Nuance basic and diluted earnings per share and the pro forma book value per share reflect the impact of the pending Tegic acquisition. The historical Tegic financial information can be found beginning at page F-125. Additionally, the combined pro forma statements can be found beginning on page F-266. The comparative historical and pro forma per share data should be read in conjunction with the unaudited pro forma combined financial statements and related notes thereto and the historical consolidated financial statements of Nuance and notes thereto, which can be found beginning on page F-4 of this consent solicitation statement/prospectus, and the historical consolidated financial statements of VoiceSignal, which information can be found beginning on page F-94 of this consent solicitation statement/prospectus. The pro forma combined financial data are not necessarily indicative of the operating results of future operations or the actual results that would have occurred had the merger been completed at the beginning of the period presented.

 

Nuance and VoiceSignal did not declare or pay cash dividends on their common stock during the fiscal years ended September 30, 2006 and December 31, 2006, respectively, or during the nine months and six months ended June 30, 2007, respectively. They do not intend to pay dividends on their common stock in the foreseeable future; however, VoiceSignal will convert any accrued dividends into shares of VoiceSignal capital stock prior to the closing of the merger. See “Comparative Per Share Market Price Data.”

 

 

 

 

Nuance common stock trades on the NASDAQ Global Select Market under the symbol “NUAN.” The following table sets forth, for each quarter of Nuance’s fiscal year indicated, the high and low closing sales prices per Nuance common share, in each case as reported on the Nasdaq Global Select Market.

 

 

Nuance has never declared or paid dividends on its common stock and does not have any current plans to pay any dividends in the future.

 

VoiceSignal’s capital stock is not listed for trading on any exchange or automated quotation service. As of August 21, 2007, there were 45 holders of record of VoiceSignal capital stock. VoiceSignal has never declared or paid cash dividends on its capital stock and does not plan to pay any cash dividends prior to the merger but will convert any accrued dividends into shares of VoiceSignal capital stock prior to closing.

 

The table below shows the high and low sales prices per share of Nuance common stock as reported on the NASDAQ Global Select Market on (1) May 14, 2007, the last full trading day preceding public announcement that Nuance and VoiceSignal had entered into the merger agreement, and (2) August 22, 2007, the last trading day for which closing prices were available at the time of the printing of this consent solicitation statement/prospectus.

 

The table also includes the equivalent high and low prices per share of VoiceSignal common stock on those dates. This equivalent high and low price per share reflects the fluctuating value of the Nuance common stock that VoiceSignal stockholders would receive in exchange for each share of VoiceSignal capital stock if the merger was completed on either of these dates applying the exchange ratio of 0.0379 shares of Nuance common stock and $1.3133 of cash, without interest, for each share of VoiceSignal capital stock exchanged in the merger. The values in the table below assume the number of outstanding shares of VoiceSignal capital stock of 153,848,882, a closing date of August 24, 2007, third-party expenses in the amount of $10,000,000 and the exercise of all outstanding vested options on a cash basis resulting in cash proceeds of $2,052,687. If the closing occurs after August 24, 2007, the number of outstanding shares of VoiceSignal common stock will be increased by 17,606 for each day after August 24, 2007 that the closing occurs as the result of stock dividends that accrue on shares of VoiceSignal preferred stock. Such an increase in the number of outstanding shares of common stock will cause a reduction in the consideration per 100 shares of VoiceSignal common stock of $0.01 per day of cash consideration and 0.0004 of a share of Nuance common stock per day in the stock consideration. As discussed in further detail in the section “The Merger Agreement — Merger Consideration,” the cash consideration to be paid per share of VoiceSignal common stock at closing will depend on numerous variable factors, including the amount of third-party expenses, the actual closing date, the exercise of outstanding vested option prior to the merger and whether such exercises are on a net or cash basis and the

value of the stock consideration to be paid per share of VoiceSignal common stock at closing may vary due to possible market change in the value of the Nuance common stock to be received.

 

 

 

 

The foregoing table shows only historical comparisons. These comparisons may not provide meaningful information to you in determining whether to adopt the merger agreement and approve the transactions contemplated thereby. Because the maximum number of shares of Nuance common stock to be issued in the merger is fixed, changes in the market price of Nuance common stock will affect the dollar value of Nuance common stock to be received by VoiceSignal stockholders pursuant to the merger. VoiceSignal stockholders are urged to obtain current market quotations for Nuance common stock and to review carefully the other information contained in this consent solicitation statement/prospectus or incorporated by reference into this consent solicitation statement/prospectus in considering whether to adopt the merger agreement and approve the transactions contemplated thereby. See the section entitled “Where You Can Find More Information” on page 145.

 

 

This consent solicitation statement/prospectus and the documents incorporated by reference into this consent solicitation statement/prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions, that, if they never materialize or prove incorrect, could cause the results of Nuance and its consolidated subsidiaries, on the one hand, or VoiceSignal and its consolidated subsidiaries, on the other, to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “should,” “would,” “strategy,” “plan” and similar expressions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, forward-looking statements include projections of earnings, revenues, synergies, accretion or other financial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of integration and restructuring plans and the anticipated timing of filings, approvals relating to, and the closing of, the merger; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the difficulty of maintaining expense growth while increasing revenues; the challenges of integration and restructuring associated with the merger and the challenges of achieving the anticipated synergies; the possibility that the merger may not close or that Nuance or VoiceSignal may be required to modify some aspect of the acquisition in order to obtain regulatory approval; the challenge of maintaining revenues on a combined company basis following the merger; and other risks and uncertainties described in the section entitled “Risk Factors” beginning on page 16 of this consent solicitation statement/prospectus.

 

If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, results of Nuance and VoiceSignal could differ materially from the expectations in these statements. The forward-looking statements included in this consent solicitation statement/prospectus are made only as of the date of this consent solicitation statement/prospectus, and neither Nuance nor VoiceSignal is under any obligation to update their respective forward-looking statements and neither party intends to do so.