-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A5PN09iTzrUGJGeWPW6hw7wnelynJyi8nrz4R8tnrxLOg8sVnFTRkC9KbXWKYxnI SZGhg/Zt7jQgRApMxkVlzA== 0000950144-01-503092.txt : 20010604 0000950144-01-503092.hdr.sgml : 20010604 ACCESSION NUMBER: 0000950144-01-503092 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010601 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTELLIGENT SYSTEMS CORP CENTRAL INDEX KEY: 0000320340 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 581964787 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: SEC FILE NUMBER: 005-48951 FILM NUMBER: 1652310 BUSINESS ADDRESS: STREET 1: 4355 SHACKLEFORD RD CITY: NORCROSS STATE: GA ZIP: 30093 BUSINESS PHONE: 4043812900 MAIL ADDRESS: STREET 1: 4355 SHACKLEFORD ROAD CITY: NORCROSS STATE: GA ZIP: 30093 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INTELLIGENT SYSTEMS CORP CENTRAL INDEX KEY: 0000320340 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 581964787 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 4355 SHACKLEFORD RD CITY: NORCROSS STATE: GA ZIP: 30093 BUSINESS PHONE: 4043812900 MAIL ADDRESS: STREET 1: 4355 SHACKLEFORD ROAD CITY: NORCROSS STATE: GA ZIP: 30093 SC TO-I 1 g69854scto-i.txt INTELLIGENT SYSTEMS CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- SCHEDULE TO (RULE 14D-100) TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 - -------------------------------------------------------------------------------- (AMENDMENT NO. )* INTELLIGENT SYSTEMS CORPORATION - -------------------------------------------------------------------------------- (Name of Subject Company (issuer)) INTELLIGENT SYSTEMS CORPORATION - -------------------------------------------------------------------------------- (Name of Filing Persons (offeror)) COMMON STOCK, $0.01 PAR VALUE - -------------------------------------------------------------------------------- (Title of Class of Securities) 45816D100 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) J. Leland Strange Chairman of the Board, President and Chief Executive Officer Intelligent Systems Corporation 4355 Shackleford Road Norcross, Georgia 30093 (770) 381-2900 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person) CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- Transaction Valuation * Amount of Filing Fee $5,250,000 $1,050.00 - --------------------------------------------------------------------------------
*Calculated solely for the purpose of determining the amount of the filing fee, based upon the purchase of 1,000,000 shares of Common Stock, par value $0.01 per share, at the tender offer price of $5.25 per share. - -------------------------------------------------------------------------------- *Set forth in the amount on which the filing fee is calculated and state how it was determined [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: N/A Filing Party: N/A ------------ ------------- Form or Registration No.: N/A Date Filed: N/A ---------- --------------- [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [ ] third-party tender offer subject to Rule 14d-1. [X] issuer tender offer subject to Rule 13e-4. [ ] going-private transaction subject to Rule 13e-3. [ ] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] 2 This Tender Offer Statement on Schedule TO relates to the tender offer by Intelligent Systems Corporation, a Georgia corporation, to purchase 1,000,000 shares (or such lesser number of shares as are properly tendered and not properly withdrawn) of its common stock, par value $0.01 per share, at $5.25 per share, net to the seller in cash, without interest, under the terms and conditions set forth in the Offer to Purchase dated June 1, 2001, and in the related Letter of Transmittal, which together present the tender offer. This Schedule TO is intended to satisfy the reporting requirements of Rule 13e-4(c)(2) of the Securities Exchange Act of 1934, as amended. Copies of the Offer to Purchase and the related Letter of Transmittal are filed with this Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively. ITEMS 1 THROUGH 11. The information in the Offer to Purchase and the related Letter of Transmittal, copies of which are filed with this Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively, is incorporated into this Schedule TO by reference in answer to Items 1 through 11 of Schedule TO. ITEM 12. EXHIBITS (Per Item 1016 of Regulation M-A). (a)(1)(A) Offer to Purchase, dated June 1, 2001 (a)(1)(B) Letter of Transmittal (a)(1)(C) Notice of Guaranteed Delivery (a)(1)(D) Letter to brokers, dealers, commercial banks, trust companies and other nominees dated June 1, 2001 (a)(1)(E) Letter to clients for use by brokers, dealers, commercial banks, trust companies and other nominees (a)(1)(F) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(1)(G) Letter from the President of ISC to the Shareholders of ISC (a)(2)-(4) Not applicable (a)(5)(A) Press Release, dated June 1, 2001 (b) Not applicable (d) Not applicable (g) Not applicable (h) Not applicable 3 SIGNATURE After due inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. INTELLIGENT SYSTEMS CORPORATION By: /s/ J. LELAND STRANGE ----------------------------------------- J. Leland Strange, Chairman of the Board, President and Chief Executive Officer Dated: June 1, 2001 4 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- (a)(1)(A) Offer to Purchase, dated June 1, 2001 (a)(1)(B) Letter of Transmittal (a)(1)(C) Notice of Guaranteed Delivery (a)(1)(D) Letter to brokers, dealers, commercial banks, trust companies and other nominees dated June 1, 2001 (a)(1)(E) Letter to clients for use by brokers, dealers, commercial banks, trust companies and other nominees (a)(1)(F) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(1)(G) Letter from the President of ISC to the Shareholders of ISC (a)(2)-(4) Not applicable (a)(5)(A) Press Release, dated June 1, 2001 (b) Not applicable (d) Not applicable (g) Not applicable (h) Not applicable
EX-99.(A)(1)(A) 2 g69854ex99-a1a.txt OFFER TO PURCHASE, DATED JUNE 1, 2001 1 EXHIBIT (a)(1)(A) INTELLIGENT SYSTEMS CORPORATION OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK AT $5.25 PER SHARE THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 29, 2001, UNLESS THE TENDER OFFER IS EXTENDED. Intelligent Systems Corporation is offering to purchase, for a price of $5.25 per share in cash, up to 1,000,000 shares of its Common Stock, under the terms and conditions set forth in this document and the related Letter of Transmittal (which together, as they may be amended and supplemented from time to time, present the tender offer). All shares properly tendered and not properly withdrawn will be purchased for $5.25 per share, under the terms and conditions of the tender offer, including the odd lot and proration provisions. We reserve the right, in our sole discretion, to purchase more than 1,000,000 shares of our Common Stock in the tender offer, subject to applicable law. Shares not purchased because of proration provisions will not be purchased in the tender offer. Shares not purchased in the tender offer will be returned to the tendering shareholders at our expense as promptly as practicable after the expiration of the tender offer. We reserve the right to purchase all shares duly tendered by any shareholder who tenders all shares owned beneficially or of record and who, as a result of proration, would then beneficially or of record own an aggregate of fewer than 100 shares. If you own beneficially or of record less than 100 shares, and you properly tender all of them before the tender offer expires and complete the section entitled "Odd Lots" in the related Letter of Transmittal, we will purchase all of your shares without subjecting them to the proration procedure. See Section 2 - Proration. THE TENDER OFFER IS NOT CONDITIONED ON THE TENDER OF ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE TENDER OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 7 - CONDITIONS OF THE TENDER OFFER. OUR BOARD OF DIRECTORS HAS APPROVED THE TENDER OFFER. HOWEVER, NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER. OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE INFORMED US THAT THEY MAY PARTICIPATE IN THE TENDER OFFER. Our Common Stock is listed and traded on the American Stock Exchange under the trading symbol "INS." On May 31, 2001, the last trading day before the date of the public announcement of the tender offer, the last reported closing price of the shares on the American Stock Exchange was $4.40. We urge you to obtain current market quotations for the shares. See Section 8 - Price Range of Shares. --------------------- The date of this Offer to Purchase is June 1, 2001. 2 IMPORTANT If you wish to tender all or any part of your shares, you should either: (1) (a) complete and sign a Letter of Transmittal according to the instructions in the enclosed Letter of Transmittal and mail or deliver it, together with any required signature guarantee and any other required documents, to American Stock Transfer and Trust Co., the Depositary for the tender offer, and mail or deliver the certificates for your shares to the Depositary together with any other documents required by the Letter of Transmittal or (b) tender the shares according to the procedure for book-entry transfer described in Section 4 - Procedures for Tendering Shares; or (2) request a broker, dealer, commercial bank, trust company or other nominee to tender your shares for you, if your shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee. If you desire to tender your shares and (1) your certificates for the shares are not immediately available or cannot be delivered to the Depositary by the expiration of the tender offer, or (2) you cannot comply with the procedure for book-entry transfer by the expiration of the tender offer, or (3) your other required documents cannot be delivered to the Depositary by the expiration of the tender offer, you must tender your shares according to the guaranteed delivery procedure described in Section 4 - Procedures for Tendering Shares. Questions and requests for assistance may be directed to American Stock Transfer and Trust Co., the Information Agent for the tender offer, at its address and telephone numbers set forth on the back cover page of this document. Requests for additional copies of this document, the related Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent. WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES IN THE TENDER OFFER. WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE TENDER OFFER OTHER THAN THOSE CONTAINED IN THIS DOCUMENT OR IN THE RELATED LETTER OF TRANSMITTAL. YOU MUST NOT RELY ON ANY RECOMMENDATION OR ANY INFORMATION OR REPRESENTATION GIVEN OR MADE BY ANY OTHER PERSON. 3 TABLE OF CONTENTS
SECTIONS PAGE SUMMARY TERM SHEET...................................................................1 1. NUMBER OF SHARES............................................................5 2. PRORATION...................................................................5 3. PURPOSE OF THE TENDER OFFER; MATERIAL EFFECTS OF THE TENDER OFFER...........7 4. PROCEDURES FOR TENDERING SHARES.............................................9 5. WITHDRAWAL RIGHTS..........................................................13 6. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE...........................14 7. CONDITIONS OF THE TENDER OFFER.............................................15 8. PRICE RANGE OF SHARES......................................................17 9. SOURCE AND AMOUNT OF FUNDS.................................................18 10. CERTAIN INFORMATION CONCERNING US..........................................18 11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES............................20 12. EFFECTS OF THE TENDER OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT........................................22 13. LEGAL MATTERS; REGULATORY APPROVALS........................................22 14. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES..............................22 15. EXTENSION OF THE TENDER OFFER; TERMINATION; AMENDMENT......................26 16. FEES AND EXPENSES..........................................................27 17. MISCELLANEOUS..............................................................27
i 4 FORWARD-LOOKING STATEMENTS This Offer to Purchase, including the Summary Term Sheet, contains statements that are not historical facts and constitute projections, forecasts or forward-looking statements. These statements may be identified by the use of forward-looking words or phrases such as "anticipate," "believe," "expect," "intend," "may," "planned," "potential," "should," "will" and "would." Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. Our actual actions or results may differ materially from those expected or anticipated in the forward-looking statements. Specific factors that might cause such a difference, include, but are not limited to: - delays in product development; - undetected software errors; - competitive pressures; - technical difficulties; - market acceptance; - changes in financial markets; and - performance and financial condition of affiliate companies. In addition, please refer to our documents filed with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, for more information on these and other risk factors. We undertake no obligation to make any revisions to the forward-looking statements contained in this document or to update them to reflect events or circumstances occurring after the date of this document. ii 5 SUMMARY TERM SHEET We are providing this summary term sheet for your convenience. It highlights the most material information in this document, but you should realize that it does not describe all of the details of the tender offer to the same extent described in this document. We urge you to read the entire document and the related Letter of Transmittal because they contain the full details of the tender offer. We have included references to the Sections of this document where you will find a more complete discussion. WHO IS OFFERING TO PURCHASE MY SHARES? Intelligent Systems Corporation is offering to purchase your shares of Intelligent Systems Corporation Common Stock. WHAT WILL THE PURCHASE PRICE FOR THE SHARES BE? The purchase price will be $5.25 per share. We will pay this purchase price in cash, without interest, for all the shares we purchase under the tender offer. See Section 1 - Number of Shares. HOW MANY SHARES WILL YOU PURCHASE IN ALL? We will purchase up to 1,000,000 properly tendered shares in the tender offer, or if less than 1,000,000 shares are properly tendered, all properly tendered shares. In addition, we expressly reserve the right to purchase an additional 2% of our outstanding shares of Common Stock and could decide to purchase more shares subject to applicable legal requirements. See Section 1 - Number of Shares. The tender offer is not conditioned on any minimum number of shares being tendered; however, the tender offer is condition on other factors. See Section 7 - Condition of the Tender Offer. HOW WILL YOU DECIDE THE NUMBER OF SHARES PURCHASED FROM ME? We will purchase all shares properly tendered and not properly withdrawn before the expiration date in the following order of priority: first, by any odd lot holders, meaning those persons who own beneficially or of record an aggregate of fewer than 100 shares, then after the purchase of all of those shares, we will purchase all other shares on a pro rata basis with appropriate adjustments to avoid purchases of fractional shares. If more than 1,000,000 shares are tendered, unless you own less than 100 shares in total, we will not be able to purchase all the shares you tender. Therefore, you should carefully consider the number of shares you tender since the proration formula is based on the number of shares you tender, not the number of shares you own. See Section 2 - - Proration. HOW WILL YOU PAY FOR THE SHARES? We plan to fund the tender offer from the proceeds of the sale of our interest in our affiliate, PaySys International, Inc. See Section 9 - Source and Amount of Funds. 1 6 HOW LONG DO I HAVE TO TENDER MY SHARES? You may tender your shares until Friday, June 29, 2001, at 12:00 midnight, New York City time, unless we extend the tender offer. See Section 1 - Number of Shares. We may choose to extend the tender offer for any reason. See Section 15 - Extension of Tender Offer; Termination; Amendment. HOW WILL I BE NOTIFIED IF YOU EXTEND THE TENDER OFFER? We will issue a press release by 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date if we decide to extend the tender offer. See Section 15 - Extension of Tender Offer; Termination; Amendment. ARE THERE ANY CONDITIONS TO THE TENDER OFFER? Yes. The tender offer is subject to conditions such as the absence of court and governmental action prohibiting the tender offer and changes in general market conditions or our business that, in our judgment, are or may be materially adverse to us. See Section 7 - Conditions of the Tender Offer. HOW DO I TENDER MY SHARES? To tender your shares, prior to 12:00 midnight, New York City time, on Friday, June 29, 2001, unless we extend the tender offer: - you must deliver your share certificate(s) and a properly completed and duly executed Letter of Transmittal to the Depositary at the address appearing on the back cover page of this document; or - the Depositary must receive a confirmation of receipt of your shares by book-entry transfer and a properly completed and duly executed Letter of Transmittal; or - you must comply with the guaranteed delivery procedure. You may also contact the Information Agent for assistance. See Section 4 - Procedures for Tendering Shares and the instructions to the Letter of Transmittal. ONCE I HAVE TENDERED SHARES IN THE TENDER OFFER, CAN I WITHDRAW MY TENDER? You may withdraw any shares you have tendered at any time before 12:00 midnight, New York City time, on Friday, June 29, 2001, unless we extend the tender offer. If we have not accepted for payment the shares you have tendered to us, you may also withdraw your shares after 12:00 midnight, New York City time, on Friday, July 27, 2001. See Section 5 - Withdrawal Rights. 2 7 HOW DO I WITHDRAW SHARES I PREVIOUSLY TENDERED? You must deliver on a timely basis a written or facsimile notice (confirmed by telephone) of your withdrawal to the Depositary at the address appearing on the back cover page of this document. Your notice of withdrawal must specify your name, the number of shares to be withdrawn and the name of the registered holder of such shares. Some additional requirements apply if the certificates for shares to be withdrawn have been delivered to the Depositary or if your shares have been tendered under the procedure for book-entry transfer set forth in Section 4 - Procedures for Tendering Shares. See Section 5 - Withdrawal Rights. ARE YOU OR IS YOUR BOARD OF DIRECTORS RECOMMENDING THAT I PARTICIPATE IN THE TENDER OFFER? Our Board of Directors has approved the tender offer. However, neither we nor our Board of Directors makes any recommendation to you as to whether you should tender or refrain from tendering your shares. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender and the price or prices at which your shares should be tendered. See Section 11 - Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares. WHY IS THE COMPANY INITIATING THIS TENDER OFFER? We are making the tender offer for a variety of reasons which we believe are prudent and reasonable and in the interests of shareholders. However, you must evaluate for yourself the potential benefits and drawbacks of the tender offer for your particular situation. See Section 3 - Purpose of the Tender Offer; Material Effects of the Tender Offer. ARE THE OFFICERS OR DIRECTORS OF THE COMPANY PARTICIPATING IN THE TENDER OFFER? Our officers and directors are entitled to participate in the tender offer on the same basis as all other shareholders. Our executive officers have informed us that they intend to tender a minimum of fifty percent of their holdings. None of the officers has sold shares in the public market in the past several years. Depending upon the number of shares tendered by other shareholders and the proration percentage, our officers' percentage ownership may change, but it is not possible to determine the post-tender ownership percentages at the present time. See Section 11 - Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares. IF I OWN LESS THAN 100 SHARES, AND I TENDER ALL OF MY SHARES, WILL I BE SUBJECT TO PRORATION? If you own beneficially or of record less than 100 shares and you tender all of them before the tender offer expires and complete the section entitled "Odd Lots" in the Letter of Transmittal, we will purchase all of your shares without subjecting them to the proration procedure. See Section 2 - Proration. 3 8 WHEN WILL YOU PAY FOR THE SHARES I TENDER? We will pay the purchase price, net in cash, without interest, for the shares we purchase promptly after the expiration of the tender offer and our acceptance of the shares for payment. See Section 6 - Purchase of Shares and Payment of Purchase Price. WILL I HAVE TO PAY BROKERAGE COMMISSIONS IF I TENDER MY SHARES? If you are a registered shareholder and you tender your shares directly to the Depositary, you will not incur any brokerage commissions. If you hold shares through a broker or bank, we urge you to consult your broker or bank to determine whether transaction costs are applicable. See Section 3 - Purpose of the Tender Offer; Material Effects of the Tender Offer. WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IF I TENDER MY SHARES? Your receipt of cash for your tendered shares will be treated either as (1) a sale or exchange of the tendered shares, in which case you will recognize long-term or short-term capital gain or loss with respect to the tendered shares or (2) a distribution treated as a dividend, taxable as ordinary income, to the extent of your share of any of our current or accumulated earnings and profits, and with respect to any excess of the distribution over your share of any of our earnings and profits, then as a return of capital to the extent of your tax basis in your shares, and then as capital gain to the extent of any balance of the distribution. See Section 14 - United States Federal Income Tax Consequences. WILL I HAVE TO PAY STOCK TRANSFER TAX IF I TENDER MY SHARES? If you instruct the Depositary in the Letter of Transmittal to make the payment for the shares to the registered holder, you will not incur any stock transfer tax. See Section 6 - Purchase of Shares and Payment of Purchase Price. WHO CAN I TALK TO IF I HAVE QUESTIONS? The Information Agent can help answer your questions. The Information Agent is American Stock Transfer and Trust Co. Their address and telephone number are set forth on the back cover page of this document. 4 9 THE TENDER OFFER 1. NUMBER OF SHARES. Under the terms and conditions of the tender offer, we will purchase 1,000,000 shares of our Common Stock, or if less than 1,000,000 shares are properly tendered and not properly withdrawn before the scheduled expiration date of the tender offer, all shares that are properly tendered and not properly withdrawn, at a single purchase price of $5.25 per share, net to the seller in cash, without interest. The term "expiration date" means 12:00 midnight, New York City time, on Friday, June 29, 2001, unless and until we, in our sole discretion, extend the period of time during which the tender offer will remain open, in which event the term "expiration date" refers to the latest time and date at which the tender offer, as so extended by us, will expire. See Section 15 - Extension of the Tender Offer; Termination; Amendment for a description of our right to extend, delay, terminate or amend the tender offer. In accordance with the rules of the Securities and Exchange Commission, we may, and we expressly reserve the right to, purchase under the tender offer an additional amount of shares not to exceed 2% of our outstanding shares of Common Stock without amending or extending the tender offer. See Section 15 - Extension of the Tender Offer; Termination; Amendment. In the event of an over-subscription of the tender offer as described below, shares tendered will be subject to proration, except for odd lots. The proration period and withdrawal rights expire on the expiration date. If (1)(a) we increase or decrease the price to be paid for shares, (b) we increase the number of shares being sought in the tender offer and that increase in the number of shares being sought exceeds 2% of our outstanding shares of Common Stock, or (c) we decrease the number of shares being sought and (2) the tender offer is scheduled to expire at any time earlier than the tenth business day after the date that notice of any such increase or decrease is first published, sent or given in the manner specified in Section 15, the tender offer will be extended for a period of ten business days. Any period measured in business days includes the first day of the period. For the purposes of the tender offer, a "business day" means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The tender offer is not conditioned on the tender of any minimum number of shares being tendered. The tender offer is, however, subject to other conditions. See Section 7 - Conditions of the Tender Offer. 2. PRORATION. If the number of shares properly tendered and not properly withdrawn prior to the expiration date is less than or equal to 1,000,000 shares, or a greater number of shares as we may elect to purchase, subject to applicable law, we will, upon the terms and subject to the conditions of the tender offer, purchase all shares so tendered at the purchase price. Priority of Purchases. Under the terms and conditions of the tender offer, if more than 1,000,000 shares, or a greater number of shares as we may elect to purchase, subject to 5 10 applicable law, have been properly tendered and not properly withdrawn before the expiration date, we will purchase properly tendered shares on the basis set forth below: (1) We will purchase all shares properly tendered and not properly withdrawn before the expiration date by any odd lot holder (as defined below) who: (a) tenders all shares owned beneficially or of record by that shareholder (tenders of less than all the shares owned by an odd lot holder will not qualify for preference); and (b) completes the section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery; and (2) after the purchase of all of those shares, we will purchase all other shares properly tendered and not properly withdrawn before the expiration date, on a pro rata basis with appropriate adjustments to avoid purchases of fractional shares, as described below. Odd Lots. For purposes of the tender offer, the term "odd lots" shall mean all shares properly tendered prior to the expiration date and not properly withdrawn by any person, referred to as an "odd lot holder," who owns beneficially or of record an aggregate of fewer than 100 shares and so certifies in the appropriate place on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. To qualify for this preference, an odd lot holder must tender all shares owned beneficially or of record by the odd lot holder in accordance with the procedures described in Section 4 - Procedures for Tendering Shares. As set forth above, odd lots will be accepted for payment before proration, if any, of the purchase of other tendered shares. This preference is not available to partial tenders or to beneficial or record holders of an aggregate of 100 or more shares, even if these holders have separate accounts or certificates representing fewer than 100 shares. Any odd lot holder wishing to tender all of its shares of our Common Stock pursuant to the tender offer should complete the section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery. We also reserve the right, but will not be obligated, to purchase all shares duly tendered by any shareholder who tenders all shares beneficially or of record owned and who, as a result of proration, would then beneficially or of record own an aggregate of fewer than 100 shares. If we exercise this right, we will increase the number of shares that we are offering to purchase in the tender offer by the number of shares purchased through the exercise of such right, subject to applicable law. Proration. If proration of tendered shares is required, we will determine the proration factor as soon as practicable following the expiration date. Proration for each shareholder tendering shares, other than odd lot holders, shall be based on the ratio of the number of shares properly tendered and not properly withdrawn by a particular shareholder to the total number of shares properly tendered and not properly withdrawn by all shareholders, other than odd lot holders. Because of the difficulty in determining the number of shares properly tendered, including shares tendered by guaranteed delivery procedures, as described in Section 4 - Procedures for Tendering Shares, and not properly withdrawn, and because of the odd lot 6 11 procedure, we do not expect that we will be able to announce the final proration factor or commence payment for any shares purchased under the tender offer until seven to ten business days after the expiration date. The preliminary results of any proration will be announced by press release as promptly as practicable after the expiration date. You may obtain preliminary proration information from the Information Agent as well as from your broker. As described in Section 14 - United States Federal Income Tax Consequences, the number of shares that we will purchase from you under the tender offer may affect the United States federal income tax consequences to you and, therefore, may be relevant to your decision whether or not to tender shares. The Letter of Transmittal affords you the opportunity to designate the order of priority in which tendered shares are to be purchased if we have to prorate the number of shares purchased from you. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of shares and will be furnished to brokers, dealers, commercial banks and trust companies whose names, or the names of whose nominees, appear on our shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of shares. 3. PURPOSE OF THE TENDER OFFER; MATERIAL EFFECTS OF THE TENDER OFFER. Purpose of the Tender Offer. We are making the tender offer for various reasons, including our Board of Directors' desire to provide a way for shareholders to sell some of their shares in a more attractive way than is otherwise available to them, given the generally low volume of trading in our common stock. We believe that the tender offer is a prudent use of our financial resources given our business, assets and current market price, and that investing in our own shares is an attractive use of capital and an efficient means to provide value to our ongoing shareholders while at the same time providing a measure of liquidity to those who want to sell. After the completion of the tender offer, we expect to have sufficient cash and short-term investments to meet our cash needs for normal operations and anticipated capital expenditures. Therefore, in order to achieve the potential benefits described below, we have commenced the tender offer. Potential Benefits of the Tender Offer. We believe the tender offer may provide several benefits to us and our shareholders, including: - The tender offer represents the opportunity for our shareholders to sell some or all of their shares on potentially more favorable terms than would otherwise be available. Shareholders who sell all or a portion of their Common Stock have the opportunity to receive a premium of 19.0% to the $4.40 closing price per share of our Common Stock on May 31, 2001, the last trading day prior to the announcement of the tender offer. In addition, if you are the registered owner of shares of our Common Stock that you tender directly to the Depositary, the sale of those shares in the tender offer will permit you to avoid the usual transaction costs associated with open market sales. 7 12 - Shareholders who sell only a portion of their shares or who determine not to participate in the tender offer will realize a proportionate increase in their relative equity interest in our company. Accordingly, our Board of Directors believes that the tender offer is consistent with our long-term corporate goal of increasing shareholder value. Potential Risks and Disadvantages of the Tender Offer. The tender offer also presents some potential risks and disadvantages to us and our continuing shareholders, including: - The tender offer may reduce our "public float" (the number of shares owned by non-affiliate shareholders and available for trading in the securities markets). This reduction in public float may result in lower stock prices or reduced liquidity in the trading market for our Common Stock following the completion of the tender offer. - Completion of the tender offer will reduce the amount of our cash reserves which may limit our ability to make significant acquisitions or the amount of investments we can make in the immediate future. NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY ONE AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY SHARES. IN ADDITION, WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION TO YOU. YOU SHOULD CAREFULLY EVALUATE ALL INFORMATION CONCERNING THE TENDER OFFER, SHOULD CONSULT YOUR OWN INVESTMENT AND TAX ADVISORS, AND SHOULD MAKE YOUR OWN DECISIONS ABOUT WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE INFORMED US THAT THEY MAY PARTICIPATE IN THE TENDER OFFER. We may in the future purchase additional shares of Common Stock on the open market, in private transactions, through tender offers or otherwise. Any additional purchases may be on the same terms or on terms that are more or less favorable to shareholders than the terms of the tender offer. However, we and our affiliates are prohibited from purchasing any shares, other than pursuant to the tender offer, until at least ten business days after the expiration date of the tender offer, except pursuant to certain limited exceptions provided in Rule 14e-5 of the SEC. Shareholders may be able to sell non-tendered shares in the future on the American Stock Exchange or otherwise at a net price higher than the purchase price. We can give no assurance, however, as to the price at which a shareholder may be able to sell shares of Common Stock in the future. We will cancel and return to the status of authorized but unissued stock the shares purchased in the tender offer. These shares will be available for us to issue without further shareholder action (except as required by applicable law or the rules of the American Stock Exchange or any other securities exchange on which the shares are listed or traded) for purposes including, without limitation, acquisitions, raising additional capital and the satisfaction of 8 13 obligations under existing or future employee benefit or compensation programs or stock plans or compensation programs for directors. Except as disclosed in this Offer to Purchase, we currently have no plans, proposals or negotiations that relate to or would result in (a) any extraordinary transaction, such as a merger, reorganization or liquidation, involving our company or any of our subsidiaries; (b) any purchase, sale or transfer of a material amount of our or any of our subsidiaries' assets; (c) any material change in our present dividend rate or policy, or indebtedness or capitalization other than our previously announced proposal to effect a reverse stock split of our Common Stock (which proposal has been approved by Shareholders but as to which the effective date and split ratio has not yet been determined by our Board of Directors); (d) any change in our present Board of Directors or management including, but not limited to, any plans or proposals to change the number or the term of directors or to fill any existing vacancies on our Board of Directors or to change any material term of the employment contract of any executive officer; (e) any other material change in our corporate structure or business; (f) any class of our equity securities being delisted from a national securities exchange or ceasing to be authorized for quotation in an automated quotations system operated by a national securities association; (g) any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Securities Exchange Act of 1934; (h) the suspension of our obligation to file reports under Section 15(d) of the Exchange Act; (i) the acquisition by any person of additional securities of our company or the disposition of securities of our company; or (j) any change in our articles of incorporation, bylaws or other governing instruments or other actions which could impede the acquisition of control of our company. 4. PROCEDURES FOR TENDERING SHARES. Proper Tender of Shares. For shares to be tendered properly under the tender offer, (1) the certificates for those shares (or confirmation of receipt of such shares under the procedure for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal including any required signature guarantees, or an "agent's message" (as defined below), and any other documents required by the Letter of Transmittal, must be received before 12:00 midnight, New York City time, on the expiration date by the Depositary at its address set forth on the back cover page of this document or (2) the tendering shareholder must comply with the guaranteed delivery procedure set forth below. In addition, odd lot holders who tender all shares must complete the section captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery, to qualify for the preferential treatment available to odd lot holders as set forth in Section 2 - Proration. Shareholders who hold shares through brokers or banks are urged to consult the brokers or banks to determine whether transaction costs are applicable if shareholders tender shares through the brokers or banks and not directly to the Depositary. Signature Guarantees and Method of Delivery. No signature guarantee is required: (1) if the Letter of Transmittal is signed by the registered holder of the shares (which term, for purposes of this Section 4, shall include any participant in The Depository Trust Company, or DTC, whose name appears on a security position listing as the owner of the shares) tendered therewith and such holder has not completed either the box captioned "Special Delivery 9 14 Instructions" or the box captioned "Special Payment Instructions" on the Letter of Transmittal; or (2) if shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 of the Exchange Act. See Instruction 1 of the Letter of Transmittal. If a certificate for shares is registered in the name of a person other than the person executing a Letter of Transmittal, or if payment is to be made to a person other than the registered holder, then the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder appears on the certificate, with the signature guaranteed by an eligible guarantor institution. Payment for shares tendered and accepted for payment under the tender offer will be made only after timely receipt by the Depositary of certificates for such shares or a timely confirmation of the book-entry transfer of such shares into the Depositary's account at DTC as described above, a properly completed and duly executed Letter of Transmittal, or an agent's message in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. Book-Entry Delivery. The Depositary will establish an account with respect to the shares for purposes of the tender offer at DTC within two business days after the date of this document, and any financial institution that is a participant in DTC's system may make book-entry delivery of the shares by causing DTC to transfer shares into the Depositary's account in accordance with DTC's procedures for transfer. Although delivery of shares may be effected through a book-entry transfer into the Depositary's account at DTC, either (1) a properly completed and duly executed Letter of Transmittal with any required signature guarantees, or an agent's message, and any other required documents must, in any case, be transmitted to and received by the Depositary at its address set forth on the back cover page of this document before the expiration date or (2) the guaranteed delivery procedure described below must be followed. Delivery of the Letter of Transmittal and any other required documents to DTC does not constitute delivery to the Depositary. The term "agent's message" means a message transmitted by DTC to, and received by, the Depositary, which states that DTC has received an express acknowledgment from the participant in DTC tendering the shares that the participant has received and agrees to be bound by the terms of the Letter of Transmittal and that we may enforce that agreement against the participant. Federal Backup Withholding Tax. Under the United States federal backup withholding tax rules, 31% of the gross proceeds payable to a shareholder or other payee under the tender offer must be withheld and remitted to the United States Treasury, unless the shareholder or 10 15 other payee provides a taxpayer identification number (employer identification number or social security number) to the Depositary and certifies under penalties of perjury that the provided number is correct or otherwise establishes an exemption. If the Depositary is not provided with the correct taxpayer identification number or another adequate basis for exemption, the holder may be subject to certain penalties imposed by the Internal Revenue Service. Therefore, you should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal in order to provide the information and certification necessary to avoid backup withholding, unless you otherwise establish to the satisfaction of the Depositary that you are not subject to backup withholding. Specified shareholders (including, among others, all corporations and some foreign shareholders (in addition to foreign corporations)) are not subject to these backup withholding and reporting requirements rules. In order for a foreign shareholder (including a foreign corporation) to establish that it is an exempt recipient, that shareholder must submit an IRS Form W-8BEN or W-8ECI or a Substitute Form W-8, signed under penalties of perjury, attesting to that shareholder's exempt status. The applicable form can be obtained from the Information Agent. See Instructions 13 and 14 of the Letter of Transmittal. For a discussion of United States federal income tax consequences to tendering shareholders, see Section 14 - United States Federal Income Tax Consequences. Federal Income Tax Withholding on Payments to Foreign Shareholders. Even if a foreign shareholder has provided the required certification as described in the preceding paragraphs to avoid backup withholding, the Depositary will withhold United States federal income taxes at a rate of 30% of the gross payment payable to a foreign shareholder or his, her or its agent unless the Depositary determines that an exemption from, or a reduced rate of, withholding tax is available under a tax treaty or that an exemption from withholding is applicable because the gross proceeds are effectively connected with the conduct of a trade or business of the foreign shareholder within the United States. For this purpose, a foreign shareholder is any shareholder that is not a "United States holder" (as defined in Section 14). In order to obtain a reduced rate of withholding under a tax treaty, a foreign shareholder must deliver to the Depositary before the payment a properly completed and executed IRS Form W-8BEN. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid under the tender offer are effectively connected with the conduct of a trade or business within the United States, a foreign shareholder must deliver to the Depositary a properly completed and executed IRS Form W-8ECI. A foreign shareholder may be eligible to obtain a refund of all or a portion of any tax withheld if it satisfies one of the "Section 302 tests" for capital gain treatment described in Section 14 or is otherwise able to establish that no withholding or a reduced amount of withholding is due. Federal backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of federal income tax withholding. Foreign shareholders are urged to consult their tax advisors regarding the application of United States federal income tax withholding, including eligibility for a reduction of, or an exemption from, withholding tax, and the refund procedure. See Instructions 13 and 14 of the Letter of Transmittal. Guaranteed Delivery. If you desire to tender shares under the tender offer and your stock certificates are not immediately available or cannot be delivered to the Depositary before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, 11 16 or if time will not permit all required documents to reach the Depositary before the expiration date, you may nevertheless tender your shares if all of the following conditions are satisfied: - the tender is made by or through an eligible guarantor institution; - the Depositary receives by hand, mail, overnight courier, telegram or facsimile transmission, before the expiration date, a properly completed and duly executed Notice of Guaranteed Delivery in the form we have provided with this document, including (where required) a signature guarantee by an eligible guarantor institution in the form set forth in the Notice of Guaranteed Delivery; and - the certificates for all tendered shares, in proper form for transfer, or confirmation of book-entry transfer of your shares into the Depositary's account at DTC, together with a properly completed and duly executed Letter of Transmittal and any required signature guarantees, or an agent's message, or other documents required by the Letter of Transmittal, are received by the Depositary within three American Stock Exchange trading days after the expiration date of the tender offer. Return of Unpurchased Shares. If any tendered shares are not purchased under the tender offer or are properly withdrawn before the expiration date, or if less than all shares evidenced by your certificates are tendered, we will return certificates for unpurchased shares as promptly as practicable after the expiration or termination of the tender offer or the proper withdrawal of the shares, as applicable, or, in the case of shares tendered by book-entry transfer at DTC, the shares will be credited to the appropriate account maintained by the tendering shareholder at DTC, in each case without expense to the shareholder. Stock Options. We are not offering, as part of the tender offer, to purchase any outstanding options and tenders of options will not be accepted. Holders of outstanding options who wish to participate in the tender offer must exercise their options, and purchase shares of our Common Stock and then tender the shares pursuant to the tender offer, provided that the exercise of those options and the tender of shares is in accordance with the terms of the applicable option documents. In no event are any options to be delivered to the Depositary in connection with a tender of shares hereunder. An exercise of an option cannot be revoked even if shares received upon the exercise and tendered in the tender offer are not purchased in the tender offer for any reason. Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the number of shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of shares will be determined by us, in our sole discretion, and our determination will be final and binding on all parties. We reserve the absolute right to reject any or all tenders of any shares that we determine are not in proper form or the acceptance for payment of or payment for which we determine may be unlawful. We also reserve the absolute right to waive any of the conditions of the tender offer or any defect or irregularity in any tender with respect to any particular shares or any particular shareholder and our interpretation of the terms of the tender offer will be final and binding on all parties. No tender of shares will be deemed to have been properly made until all defects or irregularities have been cured by the tendering shareholder or waived by us. Neither 12 17 we nor any of the Depositary, the Information Agent, or any other person will be under any duty to give notification of any defects or irregularities in any tender or incur any liability for failure to give any such notification. Tendering Shareholder's Representation and Warranty; Our Acceptance Constitutes an Agreement. A proper tender of shares under any of the procedures described above will constitute the tendering shareholder's acceptance of the terms and conditions of the tender offer, as well as the tendering shareholder's representation and warranty to us that (1) the shareholder has a net long position in the shares or equivalent securities at least equal to the shares tendered within the meaning of Rule 14e-4 of the Exchange Act and (2) the tender of shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person, directly or indirectly, to tender shares for that person's own account unless, at the time of tender and at the end of the proration period or period during which shares are accepted by lot (including any extensions), the person so tendering (1) has a net long position equal to or greater than the amount tendered in (x) the subject securities or (y) securities immediately convertible into, or exchangeable or exercisable for, the subject securities and (2) will deliver or cause to be delivered the shares in accordance with the terms of the tender offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. Our acceptance for payment of shares tendered under the tender offer will constitute a binding agreement between the tendering shareholder and us upon the terms and conditions of the tender offer. Lost or Destroyed Certificates. Shareholders whose certificate for part or all of their shares have been lost, stolen, misplaced or destroyed may contact American Stock Transfer and Trust Co. at the address and telephone number set forth on the back cover page of this document for instructions as to obtaining a replacement certificate. That certificate will then be required to be submitted together with the Letter of Transmittal in order to receive payment for shares that are tendered and accepted for payment. A bond may be required to be posted by the shareholder to secure against the risk that the certificates may be subsequently recirculated. Shareholders are urged to contact American Stock Transfer and Trust Co. immediately in order to permit timely processing of this documentation and to determine if the posting of a bond is required. Certificates for shares, together with a properly completed and duly executed Letter of Transmittal or an agent's message, and any other documents required by the Letter of Transmittal, must be delivered to the Depositary and NOT to us. Any documents delivered to us will NOT be forwarded to the Depositary and therefore will not be deemed to be properly tendered. 5. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 5, tenders of shares under the tender offer are irrevocable. Shares tendered under the tender offer may be withdrawn at any time before the expiration date and, unless previously accepted for payment by us under the tender offer, may also be withdrawn at any time after 12:00 midnight, New York City time, on Friday, July 27, 2001. For a withdrawal to be effective, a written or facsimile transmission (confirmed by telephone) notice of withdrawal must be timely received by the Depositary at its address set forth 13 18 on the back cover page of this document. Any such notice of withdrawal must specify the name of the tendering shareholder, the number of shares to be withdrawn and the name of the registered holder of such shares. If the certificates for shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, before the release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an eligible guarantor institution, unless such shares have been tendered for the account of an eligible guarantor institution. If shares have been tendered under the procedure for book-entry transfer set forth in Section 4 - Procedures for Tendering Shares, any notice of withdrawal also must specify the name and the number of the account at DTC to be credited with the withdrawn shares and must otherwise comply with DTC's procedures. All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by us, in our sole discretion, whose determination will be final and binding. Neither we nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Withdrawals may not be rescinded and any shares properly withdrawn will thereafter be deemed not properly tendered for purposes of the tender offer unless the withdrawn shares are properly re-tendered before the expiration date by following one of the procedures described in Section 4 - Procedures for Tendering Shares. If we extend the tender offer, we are delayed in our purchase of shares or if we are unable to purchase shares under the tender offer for any reason, then, without prejudice to our rights under the tender offer, the Depositary may, subject to applicable law, retain tendered shares on our behalf, and such shares may not be withdrawn except to the extent tendering shareholders are entitled to withdrawal rights as described in this Section 5. 6. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE. Under the terms and conditions of the tender offer, as promptly as practicable following the expiration date, we will accept for payment and pay for, and thereby purchase, shares properly tendered and not properly withdrawn before the expiration date. For purposes of the tender offer, we will be deemed to have accepted for payment and therefore purchased shares that are properly tendered and not properly withdrawn, subject to the odd lot and proration provisions of the tender offer, only when, as and if we give oral or written notice to the Depositary of our acceptance of the shares for payment under the tender offer. Under the terms and conditions of the tender offer, as promptly as practicable after the expiration date, we will accept for payment and pay a purchase price of $5.25 per share for 1,000,000 shares of our Common Stock, subject to increase or decrease as provided in Section 15 - Extension of the Tender Offer; Termination; Amendment, if properly tendered and not properly withdrawn, or if less than 1,000,000 shares are properly tendered and not withdrawn, all shares that are properly tendered and not properly withdrawn. We will pay for shares purchased under the tender offer by depositing the aggregate purchase price for such shares with the Depositary, which will act as agent for tendering 14 19 shareholders for the purpose of receiving payment from us and transmitting payment to the tendering shareholders. In the event of proration, we will determine the proration factor and pay for those tendered shares accepted for payment as soon as practicable after the expiration date; however, we do not expect to be able to announce the final results of any proration and commence payment for shares purchased until approximately seven to ten business days after the expiration date. Certificates for all shares tendered and not purchased, including all shares tendered and not purchased due to proration, will be returned to the tendering shareholder or, in the case of shares tendered by book-entry transfer, will be credited to the account maintained with DTC by the participant who delivered the shares, at our expense as promptly as practicable after the expiration date or termination of the tender offer without expense to the tendering shareholders. Under no circumstances will we pay interest on the purchase price to be paid regardless of any delay in making such payment. In addition, there are other conditions to our obligation to purchase shares under the tender offer. See Section 7 - Conditions of the Tender Offer. We will pay all stock transfer taxes, if any, payable on the transfer to us of shares purchased under the tender offer. If, however, payment of the purchase price is to be made to any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the purchase price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption therefrom, is submitted. See Instruction 7 of the Letter of Transmittal. ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO FEDERAL BACKUP WITHHOLDING TAX OF 31% OF THE GROSS PROCEEDS PAID TO THE SHAREHOLDER OR OTHER PAYEE UNDER THE TENDER OFFER. SEE SECTION 4 - PROCEDURES FOR TENDERING SHARES. ALSO SEE SECTION 14 REGARDING UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR FOREIGN SHAREHOLDERS. 7. CONDITIONS OF THE TENDER OFFER. Notwithstanding any other provision of the tender offer, we will not be required to accept for payment, purchase or pay for any shares tendered, and may terminate or amend the tender offer or may postpone the acceptance for payment of, or the purchase of and the payment for shares tendered, subject to Rule 13e-4(f) of the Securities Exchange Act of 1934, if at any time on or after the date of this Offer to Purchase and before the expiration date any of the following events shall have occurred (or shall have been determined, in good faith, by us to have occurred) that, in our judgment and regardless of the circumstances giving rise to the event or events (including any action or omission to act by us), makes it inadvisable to proceed with the tender offer or with acceptance for payment: 15 20 - there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, before any court, authority, agency or tribunal that directly or indirectly (i) challenges the making of the tender offer, the acquisition of some or all of the shares under the tender offer or otherwise relates in any manner to the tender offer or (ii) in our judgment, could materially and adversely affect our, our subsidiaries' or our affiliates' (taken as a whole) business, condition (financial or other), income, operations or prospects, or otherwise materially impairs in any way the contemplated future conduct of our, our subsidiaries' or our affiliates' (taken as a whole) business or materially impairs the contemplated benefits of the tender offer to us; - there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the tender offer or us, any of our subsidiaries' or any of our affiliates, by any court or any authority, agency or tribunal that, in our judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the shares illegal or otherwise restrict or prohibit completion of the tender offer, (ii) delay or restrict our ability, or render us unable, to accept for payment or pay for some or all of the shares, (iii) materially impair the contemplated benefits of the tender offer to us or (iv) materially and adversely affect our, our subsidiaries' or our affiliates' (taken as a whole) business, condition (financial or other), income, operations or prospects, or otherwise materially impair in any way the contemplated future conduct of our, our subsidiaries' or our affiliates' (taken as a whole) business; - there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States or any of its territories, (iv) any significant decrease in the market price of the shares or any change in the general political, market, economic or financial conditions in the United States or abroad that could, in our judgment, have a material adverse effect on our business, operations or prospects or the trading in shares of our Common Stock, (v) in the case of any of the foregoing existing at the time of the commencement of the tender offer, a material acceleration or worsening thereof or (vi) any decline in either the Dow Jones Industrial Average, the NASDAQ Composite Index or the Standard and Poor's Index of 500 Industrial Companies by a material amount (including, without limitation, an amount in excess of 10%) from the close of business on the date of this Offer to Purchase; - a tender offer or exchange offer (other than this tender offer) for any or all of our shares of Common Stock, or any merger, business combination or other similar transaction with or involving us or any of our subsidiaries, shall have been proposed, announced or made by any person; 16 21 - any entity, "group" (as that term is used in Section 13(d)(3) of the Exchange Act) or person shall have acquired or proposed to acquire beneficial ownership of more than 5% of the outstanding shares (other than any such person, entity or group who has filed a Schedule 13D or Schedule 13G with the SEC with respect to our Common Stock on or before the date of this Offer to Purchase), (ii) any entity, group or person who has filed a Schedule 13D or Schedule 13G with the SEC on or before the date of this Offer to Purchase shall have acquired or proposed to acquire beneficial ownership of an additional 2% or more of the outstanding shares of our Common Stock or (iii) any person, entity or group shall have filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or made a public announcement reflecting an intent to acquire us or any of our subsidiaries or any of their respective assets or securities other than in connection with a transaction authorized by our Board of Directors; - any change or changes shall have occurred in our, our subsidiaries' or any of our affiliates' business, financial condition, assets, income, operations, prospects or stock ownership that, in our judgment, is or may be material and adverse to us, our subsidiaries' or our affiliates; or - we determine that the completion of the tender offer and the purchase of the shares will cause our shares of Common Stock to be delisted from the American Stock Exchange or to be eligible for deregistration under the Exchange Act. These conditions are for our sole benefit and may be asserted by us regardless of the circumstances (including any action or inaction by us) giving rise to any such condition, and may be waived by us, in whole or in part, at any time and from time to time in our sole discretion. Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right, and each right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination or judgment by us concerning the events described above will be final and binding on all parties. 8. PRICE RANGE OF SHARES. Our Common Stock is listed and traded on the American Stock Exchange under the trading symbol "INS." The following table sets forth, for the fiscal quarters indicated, the high and low closing prices per share on the American Stock Exchange, as applicable.
HIGH LOW ---- --- Fiscal 1999: First Quarter....................................... 2 5/8 1 9/16 Second Quarter...................................... 3 5/8 2 Third Quarter....................................... 3 5/8 2 3/8 Fourth Quarter...................................... 4 1/4 2 1/16 Fiscal 2000: First Quarter....................................... 14 1/2 3 5/8 Second Quarter...................................... 10 1/4 3 1/2 Third Quarter....................................... 6 1/4 3 3/4 Fourth Quarter...................................... 6 2 7/8 Fiscal 2001: First Quarter....................................... 4.00 3.15 Second Quarter (through May 31, 2001)............... 4.50 3.30
17 22 On May 31, 2001, the last trading day before the date of announcement of the tender offer, the last reported sale price of the shares on the American Stock Exchange was $4.40. WE URGE SHAREHOLDERS TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. 9. SOURCE AND AMOUNT OF FUNDS. Assuming that the maximum 1,000,000 shares are tendered in the offer at $5.25 per share, the aggregate purchase price will be $5,250,000. We expect that our fees and expenses for the offer will be approximately $100,000. We anticipate that we will fund the tender offer and payment of related fees and expenses from the proceeds of the sale of our interest in our affiliate, PaySys International, Inc. The tender offer is therefore not subject to our receipt of financing. 10. CERTAIN INFORMATION CONCERNING US. Summary. Intelligent Systems Corporation, a Georgia corporation, has operated either in corporate or partnership form since 1973 and its securities have been publicly traded since 1981. We operated as a master limited partnership from 1986 to 1991, when we merged into the present corporation. Since the early 1980's, we have conducted our operations principally through majority owned subsidiaries or minority owned affiliates to which we devote extensive management resources. Our main focus is to help entrepreneurs build valuable companies by providing operational and strategic management, practical business advice, early stage equity capital, a network of business contacts and, in some cases, a proven incubator program. Depending upon the needs of the partner company, we will undertake a variety of roles which often include day-to-day management of operations, board of director participation, financing, market planning, strategic contract negotiations, personnel and administrative functions, etc. Most of our partner companies are involved in the information technology industry (business to business, e-commerce, software) although we are involved in other promising industries as well (biotechnology, wireless, etc.). Our executive offices are located at 4355 Shackleford Road, Norcross, Georgia 30093 and our telephone number is (770) 381-2900. Summary Historical and Pro Forma Condensed Financial Data. The summary of our historical and pro forma financial data, set forth below, are derived from and should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K 18 23 for the year ended December 31, 2000 and in connection with the unaudited condensed financial statements included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2001, which are both incorporated herein by reference. SUMMARY HISTORICAL FINANCIAL INFORMATION
THREE MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31 MARCH 31, --------------------------------------------------------- 2001 2000 1999 1998 ------------ ------------ ------------ ------------ (IN THOUSANDS, EXCEPT SHARE DATA) Net Sales .............................. $ 1,694 $ 7,027 $ 8,479 $ 18,253 Net Income (Loss) ...................... 749(a) 8,215(b) 249(c) (1,548)(d) Net Income (Loss) Per Share Basic ...... 0.13 1.47 0.05 (.30) Total Assets ........................... 19,316 18,057 13,658 17,099 Working Capital ........................ 3,725 3,294 (48) (1,827) Long-term Debt ......................... -- -- 363 900 Shareholders' Equity ................... 15,843 14,674 10,209 9,641 Cash Dividends Paid Per Common Share ... -- 0.52 -- -- Shares Outstanding at Period End ....... 5,623,784 5,623,784 5,114,467 5,104,467
(a.) Includes net investment gains of $845,000 and $306,000 in net losses in equity of affiliates. (b.) Includes investment gains of $9.6 million and $771,000 in net losses in equity of affiliates. (c.) Includes investment gains of $2.2 million and $948,000 in net losses in equity of affiliates. (d.) Includes $944,000 charge for purchased in-process R&D, $955,000 charge to discontinue product lines, $5.2 million gain on investments and $593,000 income in equity of investments. Where You Can Find More Information. We are subject to the information requirements of the Exchange Act, and file with the SEC periodic reports, proxy statements and other information relating to our business, financial condition and other matters. We are required to disclose in such proxy statements specific information, as of particular dates, concerning our directors and executive officers, their compensation, stock options granted to them, the principal holders of our securities and any material interest of these persons in transactions with us. Pursuant to Rule 13e-4(c)(2) under the Exchange Act, we have filed an Issuer Tender Offer Statement on Schedule TO which includes additional information with respect to the tender offer. These materials and other information may be inspected at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for inspection and copying at the following regional offices of the SEC: 7 World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material can also be obtained by mail, upon payment of the SEC's customary charges, by writing to the Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. This material should also be available for inspection at the offices of the American Stock Exchange at 86 Trinity Place, New York, New York, 10006. 19 24 Incorporation by Reference. The SEC allows us to "incorporate by reference" information to this Offer to Purchase. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this Offer to Purchase, except for any information that is superseded by information that is included directly in this document. This Offer to Purchase incorporates by reference the documents listed below that we have previously filed with the SEC. The documents contain important information about us.
OUR FILINGS WITH THE SEC PERIOD - ------------------------ ------ Annual Report on Form 10-K......................................... Fiscal year ended December 31, 2000 Definitive Proxy Statement......................................... Dated April 17, 2001 Quarterly Report on Form 10-Q...................................... Quarter ended March 31, 2001 Current Report on Form 8-K......................................... Dated March 19, 2001
We incorporate by reference additional documents that we may file with the SEC between the date of this Offer to Purchase and the date the offer proration period and withdrawal rights expire. Those documents include periodic reports, such as Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy statements. You can obtain any of the documents incorporated by reference in this document through us or from the Securities and Exchange Commission's website at the address described above. Documents incorporated by reference are available from us without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this Offer to Purchase. You can obtain documents incorporated by reference in this Offer to Purchase by requesting them in writing or by telephone from Intelligent Systems Corporation, 4355 Shackleford Road, Norcross, Georgia 30093, telephone (770) 381-2900. Please be sure to include your complete name and address with your request. If you request any incorporated documents, we will mail them to you by first class mail, or another equally prompt means, within one (1) business day after receiving your request. 11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES. As of May 25, 2001, we had 5,623,784 issued and outstanding shares of Common Stock. The 1,000,000 shares of Common Stock we are offering to purchase under the tender offer represent approximately 17.8% of our outstanding shares of Common Stock as of May 25, 2001. As of May 25, 2001, our directors and executive officers as a group (8 persons) beneficially owned an aggregate of 1,702,840 shares of our Common Stock, representing approximately 30.3% of our outstanding shares, assuming the exercise of vested options by directors and officers. Our directors and executive officers are entitled to participate in the tender offer on the same basis as all other shareholders and they have informed us that they may participate in the tender offer. As of May 25, 2001, the aggregate number and percentage of our securities that were beneficially owned by our directors and executive officers were as appears in columns two and 20 25 three of the table below. Assuming we purchase 1,000,000 shares of Common Stock and that we do not purchase any shares from our directors or executive officers under the tender offer, then after the purchase of shares under the tender offer, our directors and executive officers as a group would beneficially own approximately 36.8% of our outstanding shares. The percentage beneficial ownership of each director and officer would be approximately as appears in column four of the table below if we do not purchase any shares from our directors or executive officers pursuant to the tender offer. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth certain information regarding the beneficial ownership of our Common Stock (our only class of voting securities) as of May 25, 2001 of (a) each person who we know to be the beneficial owner of more than 5% of the outstanding Common Stock, (b) each director of our company, (c) the named executive officers and (d) all executive officers and directors of our company as a group. The information shown assumes the exercise by each person (and all directors and executive officers as a group) of the stock options owned by such person that are currently exercisable or exercisable within 60 days of May 25, 2001. Unless otherwise indicated, the address of each person named below is the company address at 4355 Shackleford Road, Norcross, Georgia 30093. The table assumes that we do not purchase any shares from the persons shown in the following table. However, our directors and executive officers have advised us they may participate in the tender offer. We expect that our executive officers will tender at a minimum 50% of their respective holdings of Common Stock in the tender offer. Depending upon the number of shares tendered by other shareholders and the proration percentage, each director's and executive officer's percentage ownership may change, but it is not possible to accurately determine the post-tender ownership percentages at the present time.
PERCENTAGE OF COMMON STOCK -------------------------------------- NUMBER OF SHARES NAME AND ADDRESS BENEFICIALLY BEFORE TENDER AFTER TENDER OF BENEFICIAL OWNER OWNED OFFER OFFER - ------------------- ---------------- ------------- ------------ J. Leland Strange 1,218,203 21.7% 26.3% Donald A. McMahon 1,500 0% 0% James V. Napier 11,100 .2% .2% John B. Peatman 1,280 0% 0% Parker H. Petit 14,200 .3% .3% Francis A. Marks 175,000 3.1% 3.8% Bonnie L. Herron 149,557 2.7% 3.2% All directors and officers as a 1,702,840 30.3% 36.8% group (8 persons) Wallace R. Weitz & Company 548,000 9.7% 11.9% 1125 South 103rd Street, #600 Omaha, NE 68124
21 26 12. EFFECTS OF THE TENDER OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT. Our purchase of shares under the tender offer will reduce the number of shares that might otherwise be traded publicly and may reduce the number of our shareholders. Nonetheless, we anticipate that there will be a sufficient number of shares outstanding and publicly traded following completion of the tender offer to ensure a continued trading market for the shares. Based upon published guidelines of the American Stock Exchange, we do not believe that our purchase of shares of Common Stock under the tender offer will cause our remaining Common Stock to be delisted from the American Stock Exchange. The shares are registered under the Exchange Act, which requires, among other things, that we furnish information to our shareholders and the SEC and comply with the SEC's proxy rules in connection with meetings of our shareholders. We believe that our purchase of the shares under the tender offer will not result in the shares becoming eligible for deregistration under the Exchange Act. 13. LEGAL MATTERS; REGULATORY APPROVALS. Except as described above, we are not aware of any license or regulatory permit that appears material to our business that might be adversely affected by our acquisition of shares as contemplated by the tender offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for the acquisition or ownership of shares by us as contemplated by the tender offer. Should any approval or other action be required, we presently contemplate that we will seek that approval or other action. We are unable to predict whether we will be required to delay the acceptance for payment of or payment for shares tendered under the tender offer until the outcome of that process is known. We cannot assure you that any approval or other action, if needed, would be obtained or would be obtained without substantial cost or conditions or that the failure to obtain the approval or other action might not result in adverse consequences to our business and financial condition. Our obligation under the tender offer to accept for payment and pay for shares is subject to certain conditions. See Section 7 - Conditions of the Tender Offer. 14. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. In General. The following summary describes the material United States federal income tax consequences relating to the tender offer. This summary is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations, administrative pronouncements and judicial decisions, all as in effect as of the date of this document and all of which are subject to change, possibly with retroactive effect. This summary addresses only shares that are held as capital assets within the meaning of Section 1221 of the Code and does not address all of the tax consequences that may be relevant to shareholders in light of their particular circumstances or to certain types of shareholders subject to special treatment under the Code, including, without limitation, certain financial institutions, dealers in securities or commodities, traders in securities who elect to apply a mark-to-market method of accounting, insurance companies, tax-exempt organizations, persons who hold shares as a position in a "straddle" or as a part of a "hedging," 22 27 "conversion" or "constructive sale" transaction for United States federal income tax purposes or persons who received their shares through the exercise of employee stock options or otherwise as compensation. In addition, except as otherwise specifically noted, this discussion applies only to "United States holders" (as defined below). This summary also does not address the state, local or foreign tax consequences of participating in the tender offer. For purposes of this discussion, a "United States holder" means: - a citizen or resident of the United States; - a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or of any political subdivision of the United States; - an estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or - a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all of its substantial decisions. Holders of shares who are not United States holders should consult their tax advisors regarding the United States federal income tax consequences and any applicable foreign tax consequences of the tender offer and should also see Section 4 - Procedures for Tendering Shares for a discussion of the applicable United States withholding rules and the potential for obtaining a refund of all or a portion of any tax withheld. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE YOUR PARTICULAR TAX CONSEQUENCES OF PARTICIPATING OR NOT PARTICIPATING IN THE TENDER OFFER. Characterization of the Purchase. A United States holder will, depending on the United States holder's particular circumstances, be treated for federal income tax purposes either as having sold the United States holder's shares or as having received a distribution with respect to stock from us. Under Section 302 of the Code, a United States holder whose shares are purchased by us under the tender offer will be treated as having sold its shares, and thus will recognize capital gain or loss upon the transaction if the purchase: - results in a "complete termination" of the United States holder's equity interest in us; - results in a "substantially disproportionate" redemption with respect to the United States holder; or - is "not essentially equivalent to a dividend" with respect to the United States holder. Each of these tests, referred to as the "Section 302 tests," is explained in more detail below. 23 28 If a United States holder satisfies any of the Section 302 tests, the United States holder will be treated as if it sold its shares to us and will recognize capital gain or loss equal to the difference between the amount of cash received under the tender offer and the United States holder's adjusted tax basis in the shares surrendered in exchange therefor. This gain or loss will be long-term capital gain or loss if the United States holder's holding period for the shares that were sold exceeds one year as of the date of purchase under the tender offer. Specific limitations apply to the deductibility of capital losses by United States holders. Gain or loss must be determined separately for each block of shares (shares acquired at the same cost in a single transaction) that is purchased from a United States holder under the tender offer. A United States holder may be able to designate which blocks of shares it wishes to tender under the tender offer if less than all of its shares are tendered under the tender offer, and the order in which different blocks will be purchased in the event of proration under the tender offer. United States holders should consult their tax advisors concerning the mechanics and desirability of that designation. If a United States holder does not satisfy any of the Section 302 tests, the purchase of a United States holder's shares under the tender offer will not be treated as a sale or exchange under Section 302 of the Code with respect to the United States holder. Instead, the amount received by a United States holder with respect to the purchase of its shares under the tender offer will be treated as a distribution by us with respect to the United States holder's shares. Such distribution will be treated as a dividend distribution to the United States holder under Section 301 of the Code, taxable at ordinary income tax rates, to the extent of the United States holder's share of our current or accumulated earnings and profits (as determined under applicable provisions of the Code and Treasury Regulations), if any. To the extent the amount exceeds the United States holder's share of our current or accumulated earnings and profits, the excess first will be treated as a tax-free return of capital to the extent of the United States holder's adjusted tax basis in its shares and any remainder will be treated as capital gain (which may be long-term capital gain as described above). To the extent that a purchase of a United States holder's shares under the tender offer is treated as the receipt by the United States holder of a dividend, the United States holder's adjusted tax basis in the purchased shares will be added to any shares retained by the United States holder. Constructive Ownership of Stock and Other Issues. In applying each of the Section 302 tests, United States holders must take into account not only shares that they actually own but also shares they are treated as owning under the constructive ownership rules of Section 318 of the Code. Under the constructive ownership rules, a United States holder is treated as owning any shares that are owned (actually and in some cases constructively) by related individuals and entities as well as shares that the United States holder has the right to acquire by exercise of an option or by conversion or exchange of a security. Due to the factual nature of the Section 302 tests explained below, United States holders should consult their tax advisors to determine whether the purchase of their shares under the tender offer qualifies for sale treatment in their particular circumstances. We cannot predict whether or the extent to which the tender offer will be oversubscribed. If the tender offer is oversubscribed, proration of tenders under the tender offer will cause us to accept fewer shares than are tendered. Therefore, no assurance can be given that we will purchase a sufficient number of a United States holder's shares under the tender offer to ensure 24 29 that the United States holder receives sale treatment, rather than distribution treatment, for United States federal income tax purposes under the rules discussed below. Section 302 Tests. One of the following Section 302 tests must be satisfied in order for the purchase of shares under the tender offer to be treated as a sale or exchange (as opposed to a distribution) for federal income tax purposes: - Complete Termination Test. The purchase of a United States holder's shares under the tender offer will generally result in a "complete termination" of the United States holder's equity interest in us only if all of the shares that are actually or constructively owned by the United States holder are sold under the tender offer. United States holders should consult their tax advisors with regard to the complete termination test, the applicability of the constructive ownership rules and certain rules regarding the waiver of the constructive ownership rules applicable in certain situations. - Substantially Disproportionate Test. The purchase of a United States holder's shares under the tender offer will result in a "substantially disproportionate" redemption with respect to the United States holder if, among other things, the percentage of the then outstanding shares actually and constructively owned by the United States holder immediately after the purchase is less than 80% of the percentage of the shares actually and constructively owned by the United States holder immediately before the purchase. - Not Essentially Equivalent to a Dividend Test. The purchase of a United States holder's shares under the tender offer will be treated as "not essentially equivalent to a dividend" if the reduction in the United States holder's proportionate interest in us as a result of the purchase constitutes a "meaningful reduction" of the United States holder's interest in us given the United States holder's particular circumstances. Whether the receipt of cash by a shareholder who sells shares under the tender offer will be "not essentially equivalent to a dividend" will depend upon the shareholder's particular facts and circumstances. The IRS has indicated in a published revenue ruling that even a small reduction in the percentage interest of a shareholder whose relative stock interest in a publicly held corporation is minimal and who exercises no control over corporate affairs may constitute a "meaningful reduction." United States holders should consult their tax advisors as to the application of this test in their particular circumstances. Corporate Shareholder Dividend Treatment. In the case of a corporate United States holder, to the extent that any amounts received under the tender offer are treated as a dividend, such holder may be eligible for the dividends-received deduction. The dividends-received deduction is subject to limitations. In addition, any amount received by a corporate United States holder pursuant to the tender offer that is treated as a dividend may constitute an "extraordinary dividend" under Section 1059 of the Code. Corporate United States holders should consult their own tax advisors as to the application of Section 1059 of the Code to the tender offer, and to the tax consequences of dividend treatment in their particular circumstances. 25 30 Shareholders Whose Shares are not Purchased Under the Tender Offer. Shareholders whose shares are not purchased under the tender offer will not incur any tax liability as a result of the completion of the tender offer. Backup Withholding. See Section 4 - Procedures for Tendering Shares with respect to the application of United States federal backup withholding tax. THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO YOU OF THE TENDER OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS. 15. EXTENSION OF THE TENDER OFFER; TERMINATION; AMENDMENT. We expressly reserve the right, in our sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 7 shall have occurred or shall be deemed by us to have occurred, to extend the period of time during which the tender offer is open and thereby delay acceptance for payment of, and payment for, any shares by giving oral or written notice of such extension to the Depositary and making a public announcement of such extension. We also expressly reserve the right, in our sole discretion, to terminate the tender offer and not accept for payment or pay for any shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for shares upon the occurrence of any of the conditions specified in Section 7 hereof by giving oral or written notice of such termination or postponement to the Depositary and making a public announcement of that termination or postponement. Our reservation of the right to delay payment for shares which we have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that we must pay the consideration offered or return the shares tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law, we further reserve the right, in our sole discretion, and regardless of whether any of the events set forth in Section 7 shall have occurred or shall be deemed by us to have occurred, to amend the tender offer in any respect, including, without limitation, by decreasing or increasing the consideration offered in the tender offer to holders of shares or by decreasing or increasing the number of shares being sought in the tender offer. Amendments to the tender offer may be made at any time and from time to time effected by public announcement, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., New York City time, on the next business day after the last previously scheduled expiration date. Any public announcement made under the tender offer will be disseminated promptly to shareholders in a manner reasonably designed to inform shareholders of such change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law, we have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release through PR Newswire. If we materially change the terms of the tender offer or the information concerning the tender offer, we will extend the tender offer to the extent required by Rules 13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) under the Exchange Act. These rules and related releases and 26 31 interpretations of the SEC provide that the minimum period during which a tender offer must remain open following material changes in the terms of the tender offer or information concerning the tender offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. If (1) we increase or decrease the price to be paid for shares or increase or decrease the number of shares being sought in the tender offer and, if an increase in the number of shares being sought, that increase exceeds 2% of the outstanding shares of our Common Stock and (2) the tender offer is scheduled to expire at any time earlier than the tenth business day following the first publication of notice of an increase or decrease in the manner specified in this Section 15, the tender offer will be extended until the expiration of a ten business day period. 16. FEES AND EXPENSES. We have retained American Stock Transfer and Trust Co. to act as Information Agent and to act as Depositary in connection with the tender offer. The Information Agent may contact holders of shares by mail, telephone, telegraph and in person and may request brokers, dealers, commercial banks, trust companies and other nominee shareholders to forward materials relating to the tender offer to beneficial owners. The American Stock Transfer and Trust Co. will receive reasonable and customary compensation for its services as the Depositary and as the Information Agent, will be reimbursed by us for specified reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection with the tender offer, including certain liabilities under the federal securities laws. No fees or commissions will be payable by us to brokers, dealers, commercial banks or trust companies (other than fees to the Depositary and Information Agent as described above) for soliciting tenders of shares under the tender offer. Shareholders holding shares through brokers or banks are urged to consult the brokers or banks to determine whether transaction costs are applicable if shareholders tender shares through such brokers or banks and not directly to the Depositary. We, however, upon request, will reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding the tender offer and related materials to the beneficial owners of shares held by them as a nominee or in a fiduciary capacity. No broker, dealer, commercial bank or trust company has been authorized to act as our agent or the agent of the Information Agent or Depositary for purposes of the tender offer. We will pay or cause to be paid all stock transfer taxes, if any, on our purchase of shares except as otherwise provided in this document and Instruction 7 in the related Letter of Transmittal. 17. MISCELLANEOUS. We are not aware of any jurisdiction where the making of the tender offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the tender offer or the acceptance of shares is not in compliance with applicable law, we will make a good faith effort to comply with the applicable law. If, after such good faith effort, we cannot comply with the applicable law, the tender offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of shares in that jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the tender offer to be made by a licensed broker or 27 32 dealer, the tender offer shall be deemed to be made on behalf of us by one or more registered brokers or dealers licensed under the laws of that jurisdiction. June 1, 2001 28 33 The Letter of Transmittal and certificates for shares and any other required documents should be sent or delivered by each shareholder or such shareholder's broker, dealer, commercial bank, trust company or nominee to the Depositary at its address set forth below. The Depositary for the tender offer is: AMERICAN STOCK TRANSFER AND TRUST CO. By Hand Delivery, Overnight Delivery or by Mail: American Stock Transfer and Trust Co. 59 Maiden Lane Plaza Level New York, New York 10038 Facsimile Transmission: (718) 234-5001 (for eligible institutions only) Confirm Receipt of Facsimile by Telephone Only: (718) 921-8200 or 1-877-777-0800 (toll free) Any questions or requests for assistance may be directed to the Information Agent at its telephone number and address set forth below. Requests for additional copies of this Offer to Purchase, the related Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone number and address set forth below. You may also contact your broker, dealer, commercial bank, trust company or nominee for assistance concerning the tender offer. To confirm delivery of shares, you are directed to contact the Depositary. The Information Agent for the Offer is: AMERICAN STOCK TRANSFER AND TRUST CO. 59 Maiden Lane Plaza Level New York, New York 10038 CALL TOLL FREE 1-877-777-0800 29 EX-99.(A)(1)(B) 3 g69854ex99-a1b.txt LETTER OF TRANSMITTAL 1 EXHIBIT (a)(1)(B) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE OF INTELLIGENT SYSTEMS CORPORATION TENDERED UNDER THE OFFER TO PURCHASE DATED JUNE 1, 2001. THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 29, 2001, UNLESS THE TENDER OFFER IS EXTENDED. THE DEPOSITARY FOR THE TENDER OFFER IS: AMERICAN STOCK TRANSFER AND TRUST CO. By Hand Delivery, Overnight Delivery or by Mail: 59 Maiden Lane Plaza Level New York, New York 10038 FACSIMILE TRANSMISSION: (718) 234-5001 (FOR ELIGIBLE INSTITUTIONS ONLY) CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE ONLY: (718) 921-8200 or 1-877-777-0800 (toll-free) THE INFORMATION AGENT FOR THE TENDER OFFER IS: AMERICAN STOCK TRANSFER AND TRUST CO. ALL QUESTIONS REGARDING THE TENDER OFFER SHOULD BE DIRECTED TO THE INFORMATION AGENT AT: 1-877-777-0800 (TOLL FREE) ------------------------- This Letter of Transmittal, including the accompanying instructions, should be read carefully before you complete it. Delivery of this Letter of Transmittal to an address other than one of those shown above for the Depositary is not a valid delivery. Deliveries to ISC will NOT be forwarded to the Depositary and therefore will NOT be valid delivery to the Depositary. Deliveries to DTC will NOT be valid delivery to the Depositary. ------------------------- NOTE: EACH TENDERING SHAREHOLDER IS REQUIRED TO PROVIDE THE DEPOSITARY WITH A CORRECT TAXPAYER IDENTIFICATION NUMBER ON THE SUBSTITUTE FORM W-9 LOCATED AT THE BACK OF THIS LETTER OF TRANSMITTAL 2
- --------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4) - --------------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED (PLEASE FILL IN EXACTLY AS APPEARS ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) - ------------------------------------------------------------- ------------------------------------------------------------- STOCK CERTIFICATE NUMBER OF SHARES NUMBER OF NO(S). IF REPRESENTED BY SHARES AVAILABLE* CERTIFICATE* TENDERED** -------------------- --------------------- ------------------ -------------------- --------------------- ------------------ -------------------- --------------------- ------------------ -------------------- --------------------- ------------------ -------------------- --------------------- ------------------ - ---------------------------------------------------------------------------------------------------------------------------
**[ ] Indicate in this box the order (by certificate number) in which shares are to be purchased in event of proration (attach additional signed list if necessary): See Instruction 9. 1st ____________ 2nd _____________ 3rd ______________ 4th __________ * Need not be completed if shares are delivered by book-entry transfer. ** If you desire to tender fewer than all shares evidenced by any certificates listed above, please indicate in this column the number of shares you wish to tender. Otherwise, all shares evidenced by such certificates will be deemed to have been tendered. See Instruction 4. *** If you do not designate an order, in the event less than all shares tendered are purchased due to proration, shares will be selected for purchase by the Depositary in its discretion. See Instruction 9. - - This Letter of Transmittal is to be used only if: - certificates for shares are to be forwarded with it, or such certificates will be delivered under a Notice of Guaranteed Delivery (form enclosed) previously sent to the Depositary; or - a tender of shares is to be made by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company ("DTC"), as described in Section 4 of the Offer to Purchase. - - Shareholders who desire to tender shares and who cannot deliver the certificates for their shares or who are unable to comply with the procedures for book-entry transfer before the expiration date (as defined in Section 1 of the Offer to Purchase), and who cannot deliver all other documents required by this Letter of Transmittal to the Depositary before the expiration date, may tender their shares according to the guaranteed delivery procedures set forth in Section 4 of the Offer to Purchase. See Instruction 2. Delivery of documents to DTC does NOT constitute delivery to the Depositary. ---------------------------- [ ] Check here if any certificates representing shares tendered hereby have been lost, stolen, destroyed or mutilated. If so, follow the instructions set forth in Instruction 15. ------------------ [ ] Check here if tendered shares are being delivered by book-entry transfer to an account maintained by the Depositary with DTC and complete the following: Name of tendering institution: ------------------------------------------- DTC Account number: ------------------------------------------- Transaction code number: ------------------------------------------- 2 3 [ ] Check here if certificates for tendered shares are being delivered under a Notice of Guaranteed Delivery previously sent to the Depositary and complete the following: Name(s) of registered holder(s): ------------------------ Date of execution of Notice of Guaranteed Delivery: ------------------------ Name of institution which guaranteed delivery: ------------------------ Account number (if delivered by book-entry transfer): ------------------------ ------------------ TO AMERICAN STOCK TRANSFER AND TRUST CO.: 1. The undersigned hereby tenders to Intelligent Systems Corporation, a Georgia corporation, the above-described shares of Intelligent Systems Corporation common stock, par value $0.01 per share, at $5.25 net to the seller in cash, without interest, under the terms and conditions set forth in ISC's Offer to Purchase, dated June 1, 2001, receipt of which is hereby acknowledged, and in this Letter of Transmittal, which together present the tender offer. 2. Subject to and effective on acceptance for payment of the shares tendered hereby in accordance with the terms of the tender offer, including the terms or conditions of any extension or amendment, the undersigned hereby sells, assigns and transfers to the order of ISC all right, title and interest in and to all shares tendered hereby, and orders the registration of such shares that are tendered by book-entry transfer (and are purchased under the tender offer) to the order of ISC, and hereby irrevocably constitutes and appoints the Depositary as attorney-in-fact of the undersigned with respect to such shares, with the full knowledge that the Depositary also acts as the agent of ISC, with full power of substitution, such power of attorney being an irrevocable power coupled with an interest, to do the following: (a) deliver certificates for shares, or transfer ownership of such shares on the account books maintained by DTC, together in either such case with all accompanying evidences of transfer and authenticity, to the order of ISC, upon receipt by the Depositary, as the undersigned's agent, of the purchase price with respect to such shares; (b) present certificates for such shares for cancellation and transfer on ISC's books; and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such shares, all in accordance with the terms of the tender offer. 3. The undersigned hereby covenants, represents and warrants to ISC that: 3 4 (a) the undersigned understands that tendering of shares under any one of the procedures described in Section 4 of the Offer to Purchase and in the Instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the tender offer, including the undersigned's representation and warranty that (i) the undersigned has a net long position in shares or equivalent securities at least equal to the shares tendered within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) such tender of shares complies with Rule 14e-4 under the Exchange Act; (b) when ISC accepts the shares for purchase, ISC will acquire good, marketable and unencumbered title to them, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the undersigned will execute and deliver any additional documents the Depositary or ISC deems necessary or desirable to complete the assignment, transfer and purchase of the shares tendered hereby; and (d) the undersigned has read and agrees to all of the terms of the tender offer. 4. The undersigned acknowledges, understands and agrees as follows: (a) The names and addresses of the registered holders should be printed exactly as they appear on the certificates representing shares tendered hereby and that certificate numbers, the number of shares represented by such certificates, and the number of shares tendered, should be set forth in the appropriate boxes above. (b) All shares properly tendered and not properly withdrawn will be purchased at $5.25 per share, net to the seller in cash, without interest, under the terms and conditions of the tender offer, including the odd lot and proration provisions, and ISC will return all shares properly withdrawn and shares not purchased because of proration or otherwise, as promptly as practicable following the expiration date. (c) Under certain circumstances set forth in the Offer to Purchase, ISC may terminate or amend the tender offer or may postpone the acceptance for payment of, or the payment for, shares tendered or may accept for payment fewer than all of the shares tendered hereby. Certificate(s) for any shares not tendered or not purchased will be returned to the undersigned at the address indicated above. (d) ISC has no obligation, under the Special Payment Instructions, to transfer any certificate for shares from the name of its registered holder, or to order the registration or transfer of shares tendered by book-entry transfer, if ISC purchases none of the shares represented by such certificate or tendered by such book-entry transfer. (e) Acceptance of shares by ISC for payment will constitute a binding agreement between the undersigned and ISC under the terms and conditions of the tender offer. 4 5 (f) The check for the aggregate net purchase price for the tendered shares that are purchased by ISC will be issued to the order of the undersigned and mailed to the address indicated above unless otherwise indicated under either of the "Special Payment Instructions" or the "Special Delivery Instructions" boxes below. (g) All authority conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligations or duties of the undersigned under this Letter of Transmittal shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as provided in the Offer to Purchase, this tender is irrevocable. ------------------ ODD LOTS (See Instruction 8 to this Letter of Transmittal) To be completed ONLY if shares are being tendered by or on behalf of a person owning beneficially or of record an aggregate of fewer than 100 shares. On the date hereof, the undersigned either (check one box): [ ] owned beneficially or of record an aggregate of fewer than 100 shares, and is tendering all of such shares, or [ ] is a broker, dealer, commercial bank, trust company or other nominee which: (1) is tendering, for the beneficial owners thereof, shares with respect to which it is the record owner, and (2) believes, based upon representations made to it by such beneficial owners, that each such person was the beneficial owner of an aggregate of fewer than 100 shares and is tendering all of such shares. 5 6 SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 4, 6, 7 and 10) Fill in the following information for payee ONLY if share certificates for shares not tendered or not purchased and/or the check for the purchase price of shares are to be issued in the name of someone other than the registered holder(s), or if shares tendered and delivered by Book-Entry Transfer which are not purchased are to be returned by credit to an account maintained at a Book Entry Transfer Facility other than as designated above. Please print. Name: --------------------------------------------------------------------------- (FIRST, MIDDLE & LAST NAME) Address: ----------------------------------------------------------------------- (NUMBER AND STREET) - -------------------------------------------------------------------------------- (CITY, STATE AND ZIP) - -------------------------------------------------------------------------------- TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER [ ] Credit unpurchased Shares delivered by Book-Entry Transfer to the Book-Entry Transfer Facility account set forth below Book Entry Transfer facility: --------------------------------------------------- (NAME) - -------------------------------------------------------------------------------- (ACCOUNT NUMBER) SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 4, 6 and 10) Fill in the following information for the addressee ONLY if share certificates for shares not tendered or purchased and/or the check for the purchase price of shares purchased are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown above. Please print. Mail check and/or certificate to: Name: -------------------------------------------------------------------------- (FIRST, MIDDLE & LAST NAME) Address: ------------------------------------------------------------------------ (NUMBER AND STREET) - -------------------------------------------------------------------------------- (CITY, STATE AND ZIP) 6 7 IMPORTANT SHAREHOLDER(S) SIGN HERE (SEE INSTRUCTIONS 1 AND 6) (PLEASE COMPLETE SUBSTITUTE FORM W-9 FURNISHED HEREWITH) X ------------------------------------------------------------------------------- X ------------------------------------------------------------------------------- (SIGNATURE(S)) (Must be signed by registered holder(s) exactly as name(s) appear(s) on share certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by share certificates and documents transmitted herewith. If a signature is by an officer on behalf of a corporation or by an executor, administrator, trustee, guardian, attorney-in-fact, agent or other person acting in a fiduciary or representative capacity, please provide full title and see Instruction 6.) Dated: -------------------------------------------------------------------------- Name(s): ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): ---------------------------------------------------------- Address: ------------------------------------------------------------------------ (INCLUDE ZIP CODE) Telephone No. (include Area Code): ---------------------------------------------- Taxpayer Identification or Social Security No.: --------------------------------- GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 6) - -------------------------------------------------------------------------------- AUTHORIZED GUARANTOR SIGNATURE - -------------------------------------------------------------------------------- NAME(S) - -------------------------------------------------------------------------------- TITLE - -------------------------------------------------------------------------------- NAME OF FIRM - -------------------------------------------------------------------------------- ADDRESS - -------------------------------------------------------------------------------- TELEPHONE NO. Dated: ------------------------------- 7 8 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING PART OF THE TERMS OF THE TENDER OFFER OF INTELLIGENT SYSTEMS CORPORATION 1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either: (a) this Letter of Transmittal is signed by the registered holder of the shares exactly as the name of the registered holder appears on the certificate (which term shall include any participant in DTC whose name appears on a security position listing as the owner of shares) tendered with this Letter of Transmittal UNLESS such registered holder has completed either the "Special Payment Instructions" or "Special Delivery Instructions" above; or (b) such shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act, each such entity referred to as an "eligible guarantor institution." In all other cases, signatures must be guaranteed by an eligible guarantor institution. See Instruction 6. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. (a) This Letter of Transmittal is to be used only if certificates are delivered with it to the Depositary, or such certificates will be delivered under a Notice of Guaranteed Delivery previously sent to the Depositary, or if tenders are to be made under the procedure for tender by book-entry transfer set forth in Section 4 of the Offer to Purchase. (b) Certificates for all physically tendered shares, or confirmation of a book-entry transfer into the Depositary's account at DTC of shares tendered electronically, together in each case with a properly completed and duly executed Letter of Transmittal or an agent's message, and any other documents required by this Letter of Transmittal, should be mailed or delivered to the Depositary at the appropriate address set forth herein and must be delivered to the Depositary before the expiration date. (c) The term "agent's message" means a message from DTC to the Depositary, which states that DTC has received an express agreement from the participant in DTC tendering the shares, that such participant has received and agrees to be bound by the terms of this Letter of Transmittal, and that ISC may enforce against such participant. (d) Shareholders whose certificates are not immediately available or who cannot deliver certificates for their shares and all other required documents to the Depositary before the expiration date, or whose shares cannot be delivered before the expiration date under the procedures for book-entry transfer, may tender their shares by or through any eligible guarantor institution by properly completing and duly executing and delivering a Notice of Guaranteed Delivery or facsimile of it before the expiration date, and by otherwise complying with the 8 9 guaranteed delivery procedure set forth in Section 4 of the Offer to Purchase. Under such procedure, the certificates for all physically tendered shares or book-entry confirmation, as the case may be, as well as a properly completed and duly executed Letter of Transmittal, or an agent's message, and all other documents required by this Letter of Transmittal, must be received by the Depositary within three American Stock Exchange trading days after the expiration date, all as provided in Section 4 of the Offer to Purchase. (e) The Notice of Guaranteed Delivery may be delivered by hand or telegram or mail to the Depositary and must include, if necessary, a guarantee by an eligible guarantor institution in the form set forth in such notice. For shares to be tendered validly under the guaranteed delivery procedure, the Depositary must receive the Notice of Guaranteed Delivery before the expiration date. (f) The method of delivery of all documents, including certificates for shares, is at the option and risk of the tendering shareholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to assure delivery. (g) ISC will not accept any alternative, conditional or contingent tenders, nor will it purchase any fractional shares. All tendering shareholders, by execution of this Letter of Transmittal, or a facsimile of it, waive any right to receive any notice of the acceptance of their tender. 3. INADEQUATE SPACE. If the space provided in the section captioned "Description of Shares Tendered" is inadequate, the certificate numbers and/or the number of shares should be listed on a separate signed schedule and attached to this Letter of Transmittal. 4. PARTIAL TENDERS AND UNPURCHASED SHARES (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER.) If fewer than all of the shares evidenced by any certificate are to be tendered, fill in the number of shares that are to be tendered in the column entitled "Number of Shares Tendered." In such case, if any tendered shares are purchased, a new certificate for the remainder of the shares evidenced by the old certificates will be issued and sent to the registered holder(s) as promptly as practicable after the expiration date. Unless otherwise indicated, all shares represented by the certificates listed and delivered to the Depositary will be deemed to have been tendered. 5. PRICE AT WHICH SHARES ARE BEING TENDERED. All shares properly tendered for purchase by ISC will be purchased at $5.25 per share, net cash. 6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. (a) If this Letter of Transmittal is signed by the registered holder(s) of the shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without any change whatsoever. (b) If the shares are registered in the names of two or more joint holders, each such holder must sign this Letter of Transmittal. 9 10 (c) If any tendered shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. Make photocopies of the blank Letter of Transmittal for use in such cases. (d) When this Letter of Transmittal is signed by the registered holder(s) of the shares listed and transmitted hereby, no endorsements of certificate(s) representing such shares or separate stock powers are required unless payment is to be made, or the certificates for shares not tendered or not purchased are to be issued, to a person other than the registered holder(s). SIGNATURE(S) ON SUCH CERTIFICATE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, or if payment is to be made to a person other than the registered holder(s), the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s), and the signature(s) on such certificates or stock power(s) must be guaranteed by an eligible guarantor institution. See Instruction 1. (e) If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence to the Depositary that is satisfactory to ISC of their authority so to act. 7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no stock transfer tax stamps or funds to cover such stamps need to accompany this Letter of Transmittal. ISC will pay or cause to be paid any stock transfer taxes payable on the transfer to it of shares purchased under the tender offer. If, however: (a) payment of the purchase price is to be made to any person other than the registered holder(s); or (b) tendered certificates are registered in the name of any person(s) other than the person(s) signing this Letter of Transmittal; then the Depositary will deduct from the purchase price the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person(s) or otherwise) payable on account thereof, unless satisfactory evidence of the payment of such taxes or an exemption from them is submitted. 8. ODD LOTS. As described in Section 2 of the Offer to Purchase, if ISC is to purchase fewer than all shares tendered before the expiration date and not properly withdrawn, the shares purchased first will consist of all shares tendered by any shareholder who owned beneficially or of record an aggregate of fewer than 100 shares and who tenders all of such holder's shares. This preference will not be available unless all of such holder's shares are tendered. This preference will not be available unless the section captioned "Odd Lots" is completed. 9. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 2 of the Offer to Purchase, shareholders may designate the order in which their shares are to be 10 11 purchased in the event of proration. The order of purchase may have an effect on the federal income tax classification of any gain or loss on the shares purchased. See Sections 2 and 14 of the Offer to Purchase. 10. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificates for shares not tendered or not purchased and/or check(s) are to be issued in the name of a person other than the signer of the Letter of Transmittal, or if such certificates and/or check(s) are to be sent to someone other than the person signing the Letter of Transmittal or to the signer at a different address, the boxes captioned "Special Payment Instructions" and/or "Special Delivery Instructions" in this Letter of Transmittal should be completed as applicable and signatures must be guaranteed as described in Instructions 1 and 6. 11. IRREGULARITIES. (a) All questions as to the number of shares to be accepted and the validity, form, eligibility, including time of receipt, and acceptance for payment of any tender of shares will be determined by ISC in its sole discretion, which determinations shall be final and binding on all parties. (b) ISC reserves the absolute right to reject any or all tenders of shares that it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of ISC, be unlawful. (c) ISC also reserves the absolute right to waive any of the conditions of the tender offer and any defect or irregularity in the tender of any particular shares, and ISC's interpretation of the terms of the tender offer, including these instructions, will be final and binding on all parties. No tender of shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as ISC shall determine. None of ISC, the Depositary, the Information Agent (as defined in the Offer to Purchase) or any other person is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice. 12. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Any questions or requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone number and address set forth herein. You may also contact your broker, dealer, commercial bank, or trust company for assistance concerning the tender offer. To confirm delivery of your shares, you should contact the Depositary. 13. TAX IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. (a) Each tendering shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided herein, and to certify, under penalties of perjury, that such number is correct and that such shareholder is not subject to backup withholding of federal income tax. 11 12 (b) If a tendering shareholder has been notified by the Internal Revenue Service that such shareholder is subject to backup withholding, such shareholder must cross out item (2) of Part II of the certification box of the Substitute Form W-9, unless such shareholder has since been notified by the Internal Revenue Service that such shareholder is no longer subject to backup withholding. (c) Failure to provide the information on the Substitute Form W-9 may subject the tendering shareholder to a $50 penalty imposed by the Internal Revenue Service and to a 31% federal income tax withholding on the payment of the purchase price of all shares purchased from such shareholder. (d) If the tendering shareholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such shareholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price to such shareholder until a TIN is provided to the Depositary. (e) Each foreign shareholder must complete and submit Form W-8 in order to be exempt from the 31% federal income tax backup withholding due on payments with respect to the Shares. See Instruction 14. 14. WITHHOLDING ON FOREIGN HOLDER. The following discussion applies to any "foreign shareholder," that is a shareholder that, for United States federal income tax purposes, is a non-resident alien individual, a foreign corporation, a foreign partnership, a foreign estate or a foreign trust. A foreign shareholder who has provided the necessary certification to the Depositary will not be subject to backup withholding. However, foreign shareholders generally are subject to withholding under Internal Revenue Code Sections 1441 or 1442 at a rate of 30% of the gross payments. If a shareholder's address is outside the United States, and if the Depositary has not received a Substitute Form W-9, the Depositary will assume that the shareholder is a foreign shareholder. The general 30% withholding rate may be reduced under a tax treaty, if appropriate certification is furnished to the Depositary. A foreign shareholder may be eligible to obtain a refund of all or a portion of any tax withheld if such holder meets those tests described in Section 14 of the Offer to Purchase that would characterize the exchange as a sale (as opposed to a dividend) or is otherwise able to establish that no tax or a reduced amount of tax is due. Foreign shareholders are urged to consult their tax advisors regarding the application of United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure. 15. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. If any certificate representing shares has been lost, stolen, destroyed or mutilated, the shareholder should notify American Stock Transfer and Trust Co. of that fact by calling toll-free 1-877-777-0800 and asking for instructions on obtaining a replacement certificate(s). AST&T will require you to complete an affidavit of loss and return it to them, and you will be instructed by AST&T as to the other steps that must be taken in order to replace the certificate. A bond may be required to be posted by you to secure against the risk that the certificate may be subsequently 12 13 recirculated. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, stolen, destroyed or mutilated certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH CERTIFICATE(S) FOR SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY BEFORE THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under the federal income tax law, a shareholder whose tendered shares are accepted for payment is required by law to provide the Depositary (as payer) with such shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is an individual, the TIN is such shareholder's social security number. If the Depositary is not provided with the correct TIN, the shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service and payments that are made to such shareholder with respect to shares purchased pursuant to the tender offer may be subject to backup withholding of 31%. Certain shareholders including, among others, all corporations and certain foreign individuals are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit a Form W-8, signed under penalties of perjury, attesting to such individual's exempt status. A Form W-8 can be obtained from the Depositary. Exempt shareholders should furnish their TIN, write "Exempt" on the face of the Substitute Form W-9, and sign, date and return the Substitute Form W-9 to the Depository. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. A shareholder should consult his or her tax advisor as to such shareholder's qualification for an exemption from backup withholding and the procedure for obtaining such exemption. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a shareholder for shares purchased under the tender offer, the shareholder is required to notify the Depositary of such shareholder's correct TIN by completing the form below certifying that (a) the TIN provided on Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN) and (b) that (i) such shareholder has not been notified by the Internal Revenue Service that such shareholder is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified such shareholder that such shareholder is no longer subject to backup withholding. 13 14 WHAT NUMBER TO GIVE THE DEPOSITARY The shareholder is required to give the Depositary the social security number or employer identification number of the record holder of the shares tendered hereby. If the shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the shareholder should write "Applied For" in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% of all payments of the purchase price to such shareholder. 14 15 - ------------------------------------- ----------------------------------------- ------------------------------ SUBSTITUTE PART 1 - PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. ------------------------------ Form W-9 Social Security Number Department of the Treasury OR Payer's Request for Taxpayer Identification Number (TIN) ------------------------------ Employer Identification Number - ------------------------------------- ----------------------------------------- ------------------------------ PART 2 - Certification - Under PART 3 - penalties of perjury, I certify that: (1) The number shown on this form is my Awaiting TIN [ ] correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. - ------------------------------------- ----------------------------------------- -------------------------------- Certification Instructions - You must cross out item (2) in part 2 above if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE: DATE: , 200__ -------------------------------------- -------------- - ------------------------------------- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE TENDER OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9 15 16 - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver an application in the near future. I understand that because I have not provided a taxpayer identification number, 31% of all reportable payments made to me thereafter will be withheld until I provide a number. If I provide a properly certified taxpayer identification number within 60 days, you will refund the tax if I so request. - ------------------------------ Signature Date: - ------------------------------ ------------------------------- Print Name 16 17 The Letter of Transmittal and certificates for shares and any other required documents should be sent or delivered by each tendering shareholder or its broker, dealer, commercial bank, trust company or other nominee to the Depositary at its address set forth above. Any questions or requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone number and address set forth below. To confirm delivery of your shares, you should contact the Depositary. THE DEPOSITARY AND INFORMATION AGENT FOR THE OFFER IS: AMERICAN STOCK TRANSFER AND TRUST CO. 59 MAIDEN LANE PLAZA LEVEL NEW YORK, NEW YORK 10038 CALL TOLL-FREE: 1-877-777-0800 17 EX-99.(A)(1)(C) 4 g69854ex99-a1c.txt NOTICE OF GUARANTEED DELIVERY 1 EXHIBIT (a)(1)(C) NOTICE OF GUARANTEED DELIVERY FOR INTELLIGENT SYSTEMS CORPORATION OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK, PAR VALUE $0.01 PER SHARE, AT A PURCHASE PRICE OF $5.25 PER SHARE As set forth in Section 4 of the Offer to Purchase, dated June 1, 2001, this Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the tender offer if: - certificates representing the shares being tendered cannot be delivered prior to the expiration date; or - the procedure for book-entry transfer cannot be completed before the expiration date; or - time will not permit a properly completed and duly executed Letter of Transmittal and all other required documents to reach the Depositary referred to below before the expiration date. This form, properly completed and signed, may be delivered by hand or mailed to the Depositary so that it is received by the Depositary before the expiration date. See Section 4 - Procedures for Tendering Shares, of the Offer to Purchase. The Depositary for the tender offer is: AMERICAN STOCK TRANSFER AND TRUST CO. By Hand Delivery, Overnight Delivery or by Mail: 59 Maiden Lane Plaza Level New York, New York 10038 FACSIMILE TRANSMISSION: (718) 234-5001 (FOR ELIGIBLE INSTITUTIONS ONLY) CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE ONLY: (718) 921-8200 or 1-877-777-0800 (toll-free) Delivery of this Notice of Guaranteed Delivery to an address other than those shown above does NOT constitute a valid delivery. Deliveries to ISC will NOT be forwarded to the Depositary and therefore will NOT constitute valid delivery. Deliveries to DTC will NOT constitute valid delivery to the Depositary. This Notice of Guaranteed Delivery form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an "eligible guarantor institution" (as defined in Section 4 of the Offer to Purchase) under the instructions thereto, such signature must appear in the applicable space provided in the signature box on the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tenders __________ shares of Common Stock of Intelligent Systems Corporation for sale to Intelligent Systems Corporation at the price of $5.25 per share net to the seller in cash, without interest, under the terms and conditions set forth in the Offer to Purchase dated June 1, 2001, and the related Letter of Transmittal, which together present the tender offer, receipt of which are hereby acknowledged. ODD LOTS To be completed ONLY if shares are being tendered by or on behalf of a person owning beneficially or of record an aggregate of fewer than 100 shares of ISC Common Stock. On the date hereof, the undersigned either (check one): [ ] was the beneficial or record owner of an aggregate of fewer than 100 shares and is tendering all of those shares; or [ ] is a broker, dealer, commercial bank, trust company or other nominee that: - is tendering, for the beneficial owner(s) thereof, shares with respect to which it is the record holder; and - believes, based upon representations made to it by each such beneficial owner, that each such person was the beneficial owner of aggregate of fewer than 100 shares, and is tendering all of such. IF SHARES WILL BE DELIVERED BY BOOK-ENTRY TRANSFER, PROVIDE THE FOLLOWING INFORMATION: Name of Tendering Institution: - -------------------------------------------------------------------------------- Telephone No.: ------------------------------------------------------------------ Account No. at The Depository Trust Company: ------------------------------------------------------------------------ ------------------------------------------------------ SIGNATURE(S) Number of Shares: ------------------------------------------ Certificate Nos.: (if available) - ----------------------------------------------------------- Name(s) (Please Print): - ----------------------------------------------------------- - ----------------------------------------------------------- Address(es): ----------------------------------------------- - ----------------------------------------------------------- - ----------------------------------------------------------- (INCLUDING ZIP CODE) 3 GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, each of the foregoing constituting an "eligible guarantor institution," guarantees the delivery to the Depositary of the shares tendered hereby, in proper form for transfer, or a confirmation that the shares tendered hereby have been delivered under the procedure for book-entry transfer set forth in the Offer to Purchase into the Depositary's account at DTC, together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof or Agent's Message in the case of a book entry transfer, and any other required documents, all within three American Stock Exchange trading days after the expiration date of the tender offer. Name of Firm: ------------------------------------------------------------------- Authorized Signature: ----------------------------------------------------------- Name: --------------------------------------------------------------------------- Title: -------------------------------------------------------------------------- Address: ------------------------------------------------------------------------ Zip Code: ---------------------------------- Area Code and Telephone Number: ------------------------------------------------- Dated: _____________________________, 2001 DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(1)(D) 5 g69854ex99-a1d.txt LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS 1 EXHIBIT (a)(1)(D) INTELLIGENT SYSTEMS CORPORATION OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK, PAR VALUE $0.01 PER SHARE, AT A PURCHASE PRICE OF $5.25 PER SHARE June 1, 2001 THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 29, 2001, UNLESS THE TENDER OFFER IS EXTENDED. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: Intelligent Systems Corporation, a Georgia corporation, has appointed American Stock Transfer and Trust Co. to act as the Information Agent in connection with its offer to purchase for cash, up to 1,000,000 shares of its common stock, par value $0.01 per share, at the price of $5.25 per share, net to the seller in cash, without interest, under the terms and conditions set forth in its Offer to Purchase dated June 1, 2001, and in the related Letter of Transmittal which together present the tender offer. All shares properly tendered before the expiration date (as defined in Section 1 of the Offer to Purchase), and not properly withdrawn, will be purchased by ISC at the purchase price, net to the seller in cash, without interest, under the terms and conditions of the tender offer, including the odd lot and proration provisions thereof. See Sections 1 and 2 of the Offer to Purchase. Shares not purchased because of proration will be returned at ISC's expense to the shareholders who tendered such shares as promptly as practicable after the expiration date. ISC reserves the right, in its sole discretion, to purchase more than 1,000,000 shares under the tender offer, subject to applicable law. If, at the expiration date, more than 1,000,000 shares, or such greater number of shares as ISC may elect to purchase in accordance with applicable law, are properly tendered and not properly withdrawn, ISC will, under the terms and conditions of the tender offer, accept shares for purchase first from "odd lot holders" (as defined in Section 2 of the Offer to Purchase) who properly tender all of their shares and then on a pro rata basis from all other shareholders whose shares are properly tendered and not properly withdrawn. The tender offer is not conditioned on any minimum number of shares being tendered. The tender offer is, however, subject to other conditions. See Section 7 - Conditions of the Tender Offer, of the Offer to Purchase. For your information and for forwarding to your clients for whom you hold shares registered in your name or in the name of your nominee, we are enclosing the following documents: - Offer to Purchase, dated June 1, 2001; - Letter to clients that you may send to your clients for whose accounts you hold shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the tender offer; - Letter of Transmittal for your use and for the information of your clients (together with accompanying instructions and Substitute Form W-9); 2 - Notice of Guaranteed Delivery to be used to accept the tender offer if the share certificates and all other required documents cannot be delivered to the Depositary before the expiration date or if the procedure for book-entry transfer cannot be completed before the expiration date; - Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9; and - A return envelope addressed to the Depositary. We urge you to contact your clients as promptly as possible. The tender offer, proration period and withdrawal rights will expire at 12:00 midnight, New York City time, on Friday, June 29, 2001, unless the expiration date of the tender offer is extended. No fees or commissions will be payable to brokers, dealers, commercial banks, trust companies or any person for soliciting tenders of shares under the tender offer other than fees paid to the Information Agent, as described in the Offer to Purchase. ISC will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to the beneficial owners of shares held by you as a nominee or in a fiduciary capacity. ISC will pay or cause to be paid any stock transfer taxes applicable to its purchase of shares, except as otherwise provided in the Offer to Purchase and Letter of Transmittal. In order to take advantage of the tender offer, a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, including any required signature guarantees and any other required documents, should be sent to the Depositary with either a certificate or certificates representing the tendered shares or confirmation of their book-entry transfer, all in accordance with the instructions set forth in the Offer to Purchase and Letter of Transmittal. Holders of shares whose certificate(s) for such shares are not immediately available, holders who cannot deliver such certificate(s) and all other required documents to the Depositary or holders who cannot complete the procedures for book-entry transfer before the expiration date must tender their shares according to the procedure for guaranteed delivery set forth in Section 4 - - Procedures for Tendering Shares, of the Offer to Purchase. Nothing contained herein or in the enclosed documents shall constitute you or any other person as an agent of ISC, the Information Agent, the Depositary or any affiliate of the foregoing, or authorize you or any other person to use any document or make any statement on behalf of any of them in connection with the tender offer other than the documents enclosed herewith and the statements contained therein. Any inquiries you may have with respect to the tender offer should be addressed to American Stock Transfer and Trust Co., as Information Agent, at their address and telephone number set forth in the Offer to Purchase and Letter of Transmittal. Very truly yours, INTELLIGENT SYSTEMS CORPORATION Enclosures 2 EX-99.(A)(1)(E) 6 g69854ex99-a1e.txt LETTER TO CLIENTS FOR USE BY BROKERS, DEALERS 1 EXHIBIT (a)(1)(E) INTELLIGENT SYSTEMS CORPORATION OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK, PAR VALUE $0.01 PER SHARE, AT A PURCHASE PRICE OF $5.25 PER SHARE JUNE 1, 2001 THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY TIME, ON FRIDAY, JUNE 29, 2001, UNLESS THE TENDER OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated June 1, 2001 and the related Letter of Transmittal, which, as amended and supplemented from time to time, together present the tender offer, in connection with the offer by Intelligent Systems Corporation, a Georgia corporation, to purchase up to 1,000,000 shares of its common stock, par value $0.01 per share, at the price of $5.25 per share net to the seller in cash, without interest, under the terms and conditions set forth in the tender offer. All shares properly tendered prior to the expiration date (as defined in Section 1 of the Offer to Purchase) and not properly withdrawn will be purchased by ISC at $5.25 per share, net to the seller in cash, without interest, under the terms and conditions of the tender offer, including the odd lot and proration provisions. ISC will return as promptly as practicable after the expiration date, all shares not purchased. ISC reserves the right, in its sole discretion, to purchase more than 1,000,000 shares under the tender offer in accordance with applicable law. If, prior to the expiration date, more than 1,000,000 shares, or such greater number of shares as ISC may elect to purchase, are properly tendered and not withdrawn, ISC will, upon the terms and subject to the conditions of the tender offer, accept shares for purchase first from "odd lot holders" (as defined in Section 2 of the Offer to Purchase) who properly tender their shares and then on a pro rata basis from all other shareholders whose shares are properly tendered. WE ARE THE OWNER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, UNDER APPLICABLE LAW, WE ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY, YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT. Please instruct us as to whether you wish us to tender any or all of the shares we hold for your account on the terms and subject to the conditions of the tender offer. We call your attention to the following: - You may tender shares at the price of $5.25 per share as indicated in the attached Instruction Form, net to you in cash, without interest. - You should consult with your broker on the possibility of designating the priority in which your shares will be purchased in the event of proration. - The tender offer is not conditioned upon any minimum number of shares being tendered. The tender offer is, however, subject to certain other conditions set forth in Section 7 of the Offer to Purchase. 2 - The tender offer, proration period and withdrawal rights will expire at 12:00 midnight, New York City time, on Friday, June 29, 2001, unless ISC extends the expiration date of the tender offer. - The tender offer is for 1,000,000 shares, constituting approximately 17.8% of ISC's outstanding shares of Common Stock as of May 25, 2001. - Tendering shareholders who are registered shareholders or who tender their shares directly to the Depositary will not be obligated to pay any brokerage commissions or fees, solicitation fees, or, except as set forth in the Offer to Purchase and the Letter of Transmittal, stock transfer taxes on ISC's purchase of shares under the tender offer. - If you own beneficially or of record an aggregate of fewer than 100 shares, and you instruct us to tender on your behalf all such shares before the expiration date and check the box captioned "Odd Lots" in the attached Instruction Form, ISC, upon the terms and subject to the conditions of the tender offer, will accept all such shares for purchase before proration, if any, of the purchase of other shares properly tendered and not properly withdrawn. - The board of directors of ISC has approved the tender offer; however, neither ISC nor its board of directors makes any recommendation to shareholders as to whether to tender or refrain from tendering their shares. Shareholders must make their own decision as to whether to tender their shares and, if so, how many shares to tender. ISC's directors and executive officers have indicated that they may participate in the tender offer. IF YOU WISH TO HAVE US TENDER ANY OR ALL OF YOUR SHARES, PLEASE SO INSTRUCT US BY COMPLETING, EXECUTING, DETACHING AND RETURNING TO US THE ATTACHED INSTRUCTION FORM. If you authorize us to tender your shares, we will tender all such shares unless you specify otherwise on the attached Instruction Form. Your Instruction Form should be forwarded to us in ample time to permit us to submit a tender on your behalf before the expiration date of the tender offer. The tender offer period and withdrawal rights will expire at 12:00 midnight, New York City time, on Friday, June 29, 2001, unless ISC extends the expiration date of the tender offer. As described in the Offer to Purchase, if more than 1,000,000 shares, or such greater number of shares as ISC may elect to purchase in accordance with applicable law, are properly tendered and not properly withdrawn before the expiration date, ISC will accept shares for purchase in the following order of priority: - first, all shares properly tendered and not properly withdrawn before the expiration date by any odd lot holder who: - tenders all shares owned beneficially or of record by such odd lot holder (partial tenders will not qualify for this preference); and - completes the section captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery; and - then, all other shares properly tendered and not properly withdrawn before the expiration date on a pro rata basis, if necessary, with adjustments to avoid purchases of fractional shares, as provided in the Offer to Purchase. 2 3 INSTRUCTION FORM WITH RESPECT TO INTELLIGENT SYSTEMS CORPORATION The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated June 1, 2001 and the related Letter of Transmittal, which, as may be amended and supplemented from time to time, together constitute the tender offer in connection with the offer by Intelligent Systems Corporation, a Georgia corporation, to purchase up to 1,000,000 shares of its common stock, par value $0.01 per share, at the price of $5.25 per share net to the seller in cash, without interest, under the terms and conditions of the tender offer. The undersigned understands that all shares properly tendered and not properly withdrawn will be purchased at the purchase price, net to the seller in cash, without interest, under the terms and conditions of the tender offer, including the odd lot and proration provisions described in the Offer to Purchase. ISC will return as promptly as practicable after the expiration date all shares not purchased. The undersigned hereby instructs you to tender to ISC the number of shares indicated below or, if no number is indicated, all shares you hold for the account of the undersigned under the terms and conditions of the tender offer. Aggregate number of shares to be tendered by you for the account of the undersigned: _______________ shares (unless otherwise indicated, all of the shares will be tendered.) ODD LOTS [ ] By checking this box, the undersigned represents that the undersigned owns beneficially or of record an aggregate of fewer than 100 shares and is instructing the holder to tender all such shares. The method of delivery of this document is at the option and risk of the tendering shareholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to assure delivery. Signature(s) - ----------------------------------------------- - ----------------------------------------------- Dated , 2001 ------------------------------------ Name(s) and address(es) - ----------------------------------------------- - ----------------------------------------------- (PLEASE PRINT) - ----------------------------------------------- Area code and telephone number: ------------------------------------------------- Taxpayer Identification or Social Security Number: ------------------------------ 3 EX-99.(A)(1)(F) 7 g69854ex99-a1f.txt GUIDELINES FOR CERTIFICATION OF TAXPAYER 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 EXHIBIT (A)(1)(F) WHAT NAME AND NUMBER TO GIVE THE REQUESTER
- -------------------------------------------------------- ---------------------------------------------------------- GIVE THE NAME AND GIVE THE NAME AND EMPLOYER SOCIAL SECURITY NUMBER IDENTIFICATION NUMBER FOR THIS TYPE OF ACCOUNT: OF: FOR THIS TYPE OF ACCOUNT: OF: - -------------------------------------------------------- ---------------------------------------------------------- 1. Individual The individual 6. A valid trust, estate, or Legal entity(4) pension trust 2. Two or more The actual owner of individuals (joint the account or, if 7. Corporate The corporation account) combined funds, the first individual on 8. Association, club, The organization the account(1) religious, charitable, educational, or other 3. Custodian account of a The minor(2) tax-exempt organization minor (Uniform Gift to Minors Act) 9. Partnership The partnership 4. a. The usual revocable The grantor-trustee(1) 10. A broker or registered The broker or nominee savings trust (grantor nominee is also trustee) 11. Account with the The public entity b. So-called trust The actual owner(1) Department of Agriculture account that is not a in the name of a public legal or valid trust entity (such as a state or under state law. local government, school district, or prison) that 5. Sole Proprietorship The owner(3) received agricultural program payments - -------------------------------------------------------- ----------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show the individual's name. You may also enter your business name. (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed. INSTRUCTIONS (Section references are to the Internal Revenue Code). PURPOSE OF FORM--A person who is required to file an information return with the Internal Revenue Service (the IRS) must obtain your correct taxpayer identification number (TIN) to report income paid to you, real-estate transactions, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an individual retirement arrangement (IRA). Use Form W-9 to furnish your correct TIN to the requester (the person asking you to furnish your TIN), and, when applicable, (1) to certify that the TIN you are furnishing is correct (or that you are waiting for a number to be issued), (2) to certify that you are not subject to backup withholding, and (3) to claim exemption from backup withholding if you are an exempt payee. Furnishing your correct TIN and making the appropriate certifications will prevent certain payments from being subject to backup withholding. NOTE: If a requester gives you a form other than a W-9 to request your TIN, you must use the requester's form. HOW TO OBTAIN A TIN--If you do not have a TIN, apply for one immediately. To apply, get Form SS-5, Application for a Social Security Card (SSN) (for individuals), from your local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number (EIN) (for businesses and all other entities) from your local IRS office. NOTE: CHECKING THE BOX IN PART 3 ON THE SUBSTITUTE FORM W-9 MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE. As soon as you receive your TIN, complete another Form W-9, include your TIN, sign and date this form, and give it to the requester. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you are required to withhold and pay to the IRS 31% of such payment under certain conditions. This is called "backup withholding." Payments that could be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee compensation, and certain payments from fishing boat operators, but do not include real estate transactions. If you give the requester your correct TIN, make the appropriate certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: (1) You do not furnish your TIN to the requester, or (2) The IRS notifies the requester that you furnished an incorrect TIN, or (3) You are notified by the IRS that you are subject to backup withholding because you failed to report all your interest and dividends on your tax return (for reportable interest and dividends only), or (4) You fail to certify to the requester that you are not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or (5) You fail to certify your TIN. This applies only to reportable interest, dividend, broker, or barter exchange accounts opened after 1983, or broker accounts considered inactive in 1983. Certain payees and payments are exempt from backup withholding and information reporting. See Payees and Payments Exempt From Backup Withholding, below, and Exempt Payees and Payments under Signing the Certification, below, if you are an exempt payee. PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING - The following is a list of payees exempt from backup withholding. For interest and dividends, all listed payees are exempt except Item (9). For broker transactions, payees listed in (l) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in Items (1) through (7), except that a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding. Only payees described in Items (2) through (6) are exempt from backup withholding for barter exchange transactions, patronage dividends, and payment by certain fishing boat operators. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an Individual Retirement Plan (IRA), or a custodial account under section 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies, or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporation Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividends and patronage dividends generally not subject to back up withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and that have at least one nonresident partner. - - Payments of patronage dividends not paid in money. - - Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: The payee may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and the payee has not provided the payee's correct TIN to the payer. - - Payments of tax exempt interest (including exempt interest dividends under section 852) - - Payments described in section 6049(b)(5) to nonresident aliens. - - Payments on tax-free covenant bonds under section 1451. - - Payments made by certain foreign organizations. - - Mortgage interest paid by you. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A, and 6050N, and their regulations. 3 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 3 PENALTIES FAILURE TO FURNISH TIN--If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. SPECIFIC INSTRUCTIONS NAME--If you are an individual, you must generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change please enter your first name, the last name shown on your social security card and your new last name. If you are a sole proprietor, you must furnish your individual name and either your SSN or TIN. You may also enter your business name on the business name line. Enter your name(s) as shown on your social security card and/or as it was used to apply for your TIN on Form SS-4. SIGNING THE CERTIFICATION. (1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983--You are required to furnish your correct TIN, but you are not required to sign the certification. (2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983--You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item (2) in the certification before signing the form. (3) REAL ESTATE TRANSACTIONS--You must sign the certification. You may cross out item (2) of the certification. (4) OTHER PAYMENTS--You are required to furnish your correct TIN, but you are not required to sign the certification unless you have been notified of an incorrect TIN. Other payments include payments made in the course of the requester's trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services, payments to a nonemployee for services (including attorney and accounting fees), and payments to certain fishing boat crew members. (5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED PROPERTY, OR IRA CONTRIBUTIONS--You are required to furnish your correct TIN, but you are not required to sign the certification. (6) EXEMPT PAYEES AND PAYMENTS--If you are exempt from backup withholding, you should complete this form to avoid possible erroneous backup withholding. Enter your correct TIN in Part 1, write "EXEMPT" in the block in Part 1, and sign and date the form. If you are a nonresident alien or foreign entity not subject to backup withholding, give the requester a completed Form W-8, Certificate of Foreign Status. (7) "AWAITING TIN"--Following the instructions under How To Obtain a TIN, on page 1, check the box in Part 3 of the Substitute Form W-9 and sign and date the form. SIGNATURE--For a joint account, only the person whose TIN is shown in Part I should sign the form. PRIVACY ACT NOTICE--Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt or contributions you made to an individual retirement arrangement (IRA). The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payer. Certain penalties may also apply. EX-99.(A)(1)(G) 8 g69854ex99-a1g.txt LETTER FROM THE PRESIDENT OF ISC TO SHAREHOLDERS 1 EXHIBIT (a)(1)(G) June 1, 2001 Dear Fellow Shareholder: Intelligent Systems Corporation is offering to purchase up to 1,000,000 shares of its common stock that are properly tendered to ISC at a price of $5.25 per share, in cash. You will need to read the terms and conditions described in the Offer to Purchase that is enclosed with this letter. In the event more than 1,000,000 shares are tendered (and I would expect that may be the case), we will purchase shares on a pro rata basis with appropriate adjustments for odd lot holders and fractional shares. Given the recent liquidity event whereby we received over $20 million related to the sale of our affiliate company, PaySys International, Inc., we believe the tender offer announced today represents the right balance between reinvesting in operating companies and providing our shareholders an opportunity to sell some of their shares at a premium to the current market price. We believe the repurchase of our shares is one of the best investments available to ISC at this time and is consistent with our long-term goal of increasing shareholder value. The tender offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender some or all your shares of our common stock, instructions on how to tender are provided in the enclosed materials. I encourage you to read these materials carefully before making any decision with respect to the tender offer. Neither ISC nor the Board of Directors of ISC makes any recommendation to you whether to tender any or all of your shares. Each shareholder must make his or her own decision whether to tender shares and, if so, how many shares. In connection with this tender offer, our Board of Directors has reduced the number of shares authorized under our previously announced repurchase plan to a maximum of 400,000 additional shares. Due to the black-out period during the extended negotiations related to the PaySys sale and various other rules and regulations that limit the timing and volume of our open market purchases, we have been able to repurchase fewer than ten thousand shares in 2001 and cannot make additional purchases until after the tender offer expires. In addition, our Board of Directors has postponed a decision with respect to implementing a reverse stock split until after the tender offer expires. Please note that the tender offer is scheduled to expire at 12:00 p.m. (midnight) Eastern Time on Friday, June 29, 2001, unless extended by ISC. Questions regarding the tender offer should be directed to either the Information Agent for the tender offer, American Stock Transfer and Trust Company, at 1-877-777-0800 (toll-free) or Bonnie Herron, Chief Financial Officer of ISC, at (770) 381-2900. Sincerely, /s/ J. LELAND STRANGE J. Leland Strange President and Chief Executive Officer Enclosures EX-99.(A)(5)(A) 9 g69854ex99-a5a.txt PRESS RELEASE, DATED JUNE 1, 2001 1 EXHIBIT (a)(5)(A) FOR IMMEDIATE RELEASE For further information, call Bonnie Herron, 770/564-5504 or email to bherron@intelsys.com INTELLIGENT SYSTEMS CORPORATION ANNOUNCES COMMENCEMENT OF SELF TENDER OFFER ATLANTA, GEORGIA, JUNE 1, 2001 - Intelligent Systems Corporation (AMEX:INS; www.intelsys.com) announced today that its Board of Directors has approved the repurchase of up to 1,000,000 shares of its common stock through a self-tender offer commencing immediately. The tender offer cash price is $5.25 per common share, a 19.0% premium to the $4.40 closing price per share on May 31, 2001, the last trading day prior to the date of this release. The one million shares covered by the tender offer represent 17.8% of the 5,623,784 shares of the Company's common stock currently outstanding. If 1,000,000 shares are tendered and accepted, the total purchase price paid by the Company will be $5,250,000. If more than 1,000,000 shares are tendered, shares tendered by shareholders owning less than 100 shares will be accepted first and the remaining tendered shares will be accepted on a pro rata basis by the Company. The tender offer is not contingent upon any minimum number of shares being tendered. The tender offer commences today, June 1, 2001, and will expire at 12:00 am (midnight) Eastern Time on Friday, June 29, 2001, unless extended by the Company. The Company has appointed American Stock Transfer and Trust Company to serve as the Information Agent and Depositary for the tender offer. Tender offer documents will be mailed to shareholders commencing today. Leland Strange, President of Intelligent Systems stated "Given the recent liquidity event whereby we received over $20 million related to the sale of our affiliate company, PaySys International, Inc, we believe the tender offer announced today represents the right balance between reinvesting in operating companies and providing our shareholders an opportunity to sell some of their shares at a premium to the current market price. Management believes the repurchase of our shares is one of the best investments available to the Company at this time and is consistent with our long-term goal of increasing shareholder value." In connection with approving the tender offer, the Board of Directors reduced the number of shares authorized for repurchase under a previously announced stock repurchase program to a maximum of 400,000 additional shares. The Company has been able to repurchase less than ten thousand shares in 2001 as a result of a black-out period during the extended negotiations related to the PaySys sale and various other rules and regulations that limit the timing and volume of open market purchases by the 2 Company. The Company will resume the repurchase program after the tender offer expires. The Board of Directors also decided to postpone a decision with respect to implementing a reverse stock split until after the expiration of the tender offer. Neither ISC nor its Board of Directors is making any recommendation to shareholders as to the tender. Each shareholder must make his or her own decision whether to tender shares and, if so, how many shares. The Company has been advised that its directors or officers may participate in the tender offer. THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SHARES OF INTELLIGENT SYSTEMS CORPORATION COMMON STOCK. COMMENCEMENT OF THE PROPOSED TENDER OFFER IS SUBJECT TO, AMONG OTHER THINGS, COMPLETION OF ALL REGULATORY FILINGS. ANY SOLICITATION OF OFFERS TO BUY INTELLIGENT SYSTEMS CORPORATION COMMON STOCK WILL ONLY BE MADE PURSUANT TO AN OFFER TO PURCHASE AND RELATED MATERIALS TO BE SENT BY INTELLIGENT SYSTEMS CORPORATION TO ITS SHAREHOLDERS ON THE COMMENCEMENT OF THE PROPOSED OFFER. SHAREHOLDERS SHOULD CAREFULLY READ THOSE MATERIALS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING THE VARIOUS TERMS AND CONDITIONS OF THE OFFER. SHAREHOLDERS MAYOBTAIN COPIES OF THE OFFER TO PURCHASE, RELATED MATERIALS AND OTHER DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION THROUGH THE COMMISSION'S WEB SITE AT WWW.SEC.GOV WITHOUT CHARGE. SHAREHOLDERS MAY ALSO OBTAIN COPIES OF THE OFFER TO PURCHASE AND RELATED MATERIALS, WITHOUT CHARGE, FROM INTELLIGENT SYSTEMS CORPORATION BY ORAL OR WRITTEN REQUEST TO INTELLIGENT SYSTEMS CORPORATION ATTENTION: INVESTOR RELATIONS, 4355 SHACKLEFORD ROAD, NORCROSS, GEORGIA 30093 OR BY CALLING (770) 381-2900 OR FROM THE COMPANY'S INFORMATION AGENT, AMERICAN STOCK TRANSFER AND TRUST CO. AT 59 Maiden Lane, Plaza Level, New York, New York, 10038 TELEPHONE 1-877-777-0800 (TOLL-FREE). ABOUT INTELLIGENT SYSTEMS CORPORATION For more than twenty-five years, Intelligent Systems Corporation has identified, created, operated and grown early stage technology companies. The Company uses a combination of business know-how, flexible support, a network of contacts and resources and equity capital to create sustainable companies. Since 1990, the Company has operated the Intelligent Systems Incubator, an award-winning pioneer in privately funded incubators. Further information is available on the Company's website at www.intelsys.com, or by calling the Company's headquarters at 770/381-2900. Any forward-looking information contained herein is being provided in accordance with the provisions of the Private Securities Litigation Reform Act. Such information is subject to certain assumptions and beliefs based on current information known to the Company and is subject to factors that could result in actual results differing materially from those anticipated in any forward-looking statements contained herein. Accordingly, there can be no assurance that any 3 forward-looking statements contained herein will occur or that objectives will be achieved. #### -----END PRIVACY-ENHANCED MESSAGE-----