prer14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
APAC CUSTOMER SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) |
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Title of each class of securities to which transaction applies: |
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common stock, par value $0.01 per share (the common stock) |
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(2) |
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Aggregate number of securities to which transaction applies: |
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51,321,416 outstanding shares of common stock (including 286,000 restricted shares)
5,556,917 shares of common stock issuable upon exercise of in the money
outstanding stock options |
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(3) |
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined): |
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Solely for the purpose of calculating the filing fee, the underlying value of the
transaction was calculated as the sum of (1) 51,321,416 shares of common stock,
multiplied by $8.55 per share and (2) 5,556,917 shares of common stock issuable upon
exercise of stock options with an exercise price below $8.55 multiplied by $5.38 per
option (which is the difference between $8.55 and the $3.17 weighted average
exercise price of such options). |
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(4) |
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Proposed maximum aggregate value of transaction: $468,694,320.26. |
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(5) |
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Total fee paid: $54,415.41, calculated by multiplying .00011610 by the proposed
maximum aggregate value of transaction of $468,694,320.26. |
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þ |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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(2) |
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Form, Schedule or Registration Statement No.: |
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(3) |
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Filing Party: |
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(4) |
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Date Filed: |
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Preliminary
Proxy Statement Subject to Completion
APAC CUSTOMER SERVICES,
INC.
2201 Waukegan Road, Suite 300
Bannockburn, Illinois 60015
[ ],
2011
Dear Stockholder:
You are cordially invited to attend a special meeting of the
stockholders of APAC Customer Services, Inc., or APAC, which
will be held at [ ], on [ ],
2011, at [ ] local time.
At the special meeting, you will be asked to consider and vote
upon a proposal to adopt the Agreement and Plan of Merger, dated
as of July 6, 2011, by and among APAC Customer Services,
Inc., Blackhawk Acquisition Parent, LLC, or Parent, and
Blackhawk Merger Sub, Inc., or Merger Sub, a wholly owned
subsidiary of Parent, providing for the merger of Merger Sub
with and into APAC, with APAC surviving the merger as a
wholly-owned subsidiary of Parent. Parent and Merger Sub are
affiliates of One Equity Partners. Pursuant to the terms of the
merger agreement, Merger Sub will merge with and into APAC and
each outstanding share of our common stock (including restricted
common stock), other than shares held in treasury, shares held
by Parent and its subsidiaries, shares held by APACs
subsidiaries and dissenting shares, will automatically be
converted into the right to receive $8.55 in cash. You will also
be asked to approve, by non-binding, advisory vote, certain
compensation arrangements for APACs named executive
officers in connection with the merger.
After careful consideration, our board of directors has
unanimously approved the merger agreement and has determined
that the merger is advisable and in the best interests of APAC
and its stockholders. Our board of directors unanimously
recommends that you vote FOR the proposal to adopt
the merger agreement. Our board of directors also unanimously
recommends that you vote FOR the proposal regarding
certain merger-related executive compensation arrangements.
The attached proxy statement contains detailed information
regarding the merger and the special meeting. A copy of the
merger agreement is attached as Annex A to the proxy
statement. We encourage you to read the entire proxy statement,
including the annexes, carefully and in its entirety. You may
also obtain more information about APAC from documents that we
have filed with the Securities and Exchange Commission.
Whether or not you plan to attend the special meeting, please
complete, sign, date and return, as promptly as possible, the
enclosed proxy card in the accompanying reply envelope or grant
your proxy electronically over the Internet or by telephone. If
you attend the special meeting and vote in person by ballot,
your vote will revoke any proxy that you have previously
submitted. If you hold your shares in street name,
you should instruct your broker how to vote in accordance with
the voting instruction form you will receive from your bank,
broker or other nominee.
Your vote is very important, regardless of the number of
shares that you own. We cannot consummate the merger unless the
proposal to adopt the merger agreement is approved by the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of our common stock entitled to vote thereon.
The failure of any stockholder to vote in person by ballot at
the special meeting, to submit a signed proxy card or to grant a
proxy electronically over the Internet or by telephone will have
the same effect as a vote AGAINST the proposal to
adopt the merger agreement. If you hold your shares in
street name, the failure to instruct your bank,
broker or other nominee how to vote your shares will have the
same effect as a vote AGAINST the proposal to adopt
the merger agreement.
If you have any questions or need assistance voting your shares
of our common stock, please contact Georgeson Inc., our proxy
solicitor, by calling (866)
482-5136
(toll-free) or (212)
440-9800
(banks and brokers).
Sincerely,
Kevin T. Keleghan
President and Chief Executive Officer
The merger has not been approved or disapproved by the
Securities and Exchange Commission or any state securities
commission. Neither the Securities and Exchange Commission nor
any state securities commission has passed upon the merits or
fairness of the merger or upon the adequacy of the information
contained in this document or the accompanying proxy state. Any
representation to the contrary is a criminal offense.
The proxy statement is dated [ ], 2011, and is
first being mailed, with the form of proxy, to our stockholders
on or about [ ], 2011.
Preliminary
Proxy Statement Subject to Completion
APAC CUSTOMER SERVICES
INC.
2201 Waukegan Road, Suite 300
Bannockburn, Illinois 60015
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
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Time: |
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[ ], local time, on [ ], 2011 |
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Items of Business: |
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1. To consider and vote upon a proposal to adopt the Agreement
and Plan of Merger, dated as of July 6, 2011, by and among
APAC Customer Services, Inc., or APAC, Blackhawk Acquisition
Parent, LLC, or Parent, and Blackhawk Merger Sub, Inc., a wholly
owned subsidiary of Parent, as it may be amended from time to
time. |
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2. To consider and vote upon a proposal to adjourn the special
meeting, if necessary or appropriate, to allow for the
solicitation of additional proxies in favor of the proposal to
adopt the merger agreement if there are insufficient votes to
adopt the merger agreement. |
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3. To approve, by non-binding, advisory vote, certain
compensation arrangements for APACs named executive
officers in connection with the merger. |
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Record date: |
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You may vote if you were a stockholder of record of APAC as of
the close of business on [ ], 2011. |
Even if you plan to attend the special meeting in person, we
request that you complete, sign, date and return the enclosed
proxy card in the accompanying reply envelope or grant your
proxy electronically over the Internet or by telephone prior to
the special meeting to ensure that your shares will be
represented at the special meeting if you are unable to attend.
If you fail to return your proxy card, grant your proxy
electronically over the Internet or by telephone or vote by
ballot in person at the special meeting, your shares will not be
counted for purposes of determining whether a quorum is present
at the special meeting. If you are a stockholder of record,
voting in person by ballot at the special meeting will revoke
any proxy that you previously submitted. If you hold your shares
through a bank, broker or other nominee, you must obtain from
the record holder a legal proxy issued in your name
in order to vote in person at the special meeting.
The affirmative vote of the holders of at least two-thirds of
the outstanding shares of our common stock entitled to vote
thereon is required to adopt the merger agreement. Approval of
the proposal to adjourn the special meeting, and of the
non-binding proposal regarding certain merger-related executive
compensation arrangements require the affirmative vote of a
majority of those shares of common stock present or represented
by proxy at the special meeting and entitled to vote thereon.
The failure of any stockholder of record to submit a signed
proxy card, grant a proxy electronically over the Internet or by
telephone or to vote in person by ballot at the special meeting
will have the same effect as a vote AGAINST the
proposal to adopt the merger agreement but will not have any
effect on the adjournment proposal or the non-binding proposal
regarding certain merger-related executive compensation
arrangements. If you hold your shares in street
name, the failure to instruct your bank, broker or other
nominee how to vote your shares will have the same effect as a
vote AGAINST the proposal to adopt the merger
agreement but will not have any effect on the adjournment
proposal or the non-binding proposal regarding certain
merger-related executive compensation arrangements.
Our board of directors unanimously recommends that you vote
FOR the proposal to adopt the merger agreement,
FOR the proposal to adjourn the special meeting and
FOR the non-binding proposal regarding certain
merger-related executive compensation arrangements.
In connection with the execution of the merger agreement,
certain stockholders, including Theodore G. Schwartz, chairman
and director of the Company, who, as of the date of this proxy
statement collectively own
approximately 38% of our outstanding common stock, entered into
a voting agreement agreeing to vote in favor of the adoption of
the merger agreement.
Your vote is important. Properly executed proxy cards with no
instructions indicated on the proxy card will be voted
FOR the proposal to adopt the merger agreement,
FOR the proposal to adjourn the special meeting and
FOR the non-binding proposal regarding certain
merger-related executive compensation arrangements. Whether or
not you plan to attend the special meeting, please complete,
sign, date and return the enclosed proxy card in the
accompanying reply envelope or grant your proxy electronically
over the Internet or by telephone. Your attendance at the
special meeting will not, by itself, revoke your proxy; you must
vote in person at the special meeting to revoke your proxy. If
you attend the special meeting, you may revoke your proxy and
vote in person by ballot if you wish, even if you have
previously returned your proxy card or granted your proxy
electronically over the Internet or by telephone. If you hold
your shares in street name, you should instruct your
broker how to vote in accordance with the voting instruction
form you will receive from your bank, broker or other nominee.
Your prompt cooperation is greatly appreciated.
Under Illinois law, if the merger is completed, holders of
APACs common stock who do not vote in favor of adoption of
the merger agreement will have the right to seek appraisal of
the fair value of their shares of common stock, but only if they
perfect their appraisal right by complying with the required
procedures under Illinois law, which are summarized in the
accompanying proxy statement.
By Order of the Board of Directors,
Robert B. Nachwalter
Corporate Secretary
Bannockburn, Illinois
[ ], 2011
TABLE OF
CONTENTS
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Annex A
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Annex B
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Annex C
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Annex D
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ii
SUMMARY
The following summary highlights selected information in this
proxy statement and may not contain all the information that may
be important to you. Accordingly, we encourage you to read
carefully this entire proxy statement, including the annexes.
Each item in this summary includes a page reference directing
you to a more complete description of that topic. You may obtain
the information incorporated by reference in this proxy
statement without charge by following the instructions under
Where You Can Find More Information beginning on
page 62.
Parties
to the Merger (Page 14)
APAC Customer Services, Inc., which we refer to as APAC, the
Company, we, our, or us, was founded and incorporated in 1973.
APAC is a leading provider of customer care services and
solutions to market leaders in the healthcare, communications,
business services, media & publishing,
travel & entertainment, technology and financial
services industries. We deliver highly customized customer care
services and solutions that involve communicating with customers
and managing situations that are unique to each core industry.
We provide service through multiple communication channels,
including telephone, internet, on-line chat, email, fax, mail
correspondence and automated response generated through
technology. We operate seventeen customer care centers: eight
domestic centers, two domestic client-owned facilities, five
international centers located in the Philippines, one
international center located in the Dominican Republic and one
international center located in Uruguay. Additionally, we
provide services to one of our clients through a co-location
arrangement at one of the clients domestic facilities.
Blackhawk Acquisition Parent, LLC, which we refer to as Parent,
is a Delaware limited liability company and a holding company
that owns Blackhawk Merger Sub, Inc., which we refer to as
Merger Sub. To date, Parent has not carried on any activities
other than those related to its formation, completing the
transactions contemplated by the merger agreement, arranging the
related financing and owning Merger Sub.
Merger Sub is an Illinois corporation and a wholly owned
subsidiary of Parent that was formed by Parent solely for the
purpose of facilitating the acquisition of the Company. To date,
Merger Sub has not carried on any activities other than those
related to its formation, completing the transactions
contemplated by the merger agreement and arranging the related
financing. Upon completion of the merger, Merger Sub will cease
to exist.
Each of Parent and Merger Sub are affiliates of One Equity
Partners, which we refer to as OEP. OEP is the private
investment arm of JPMorgan Chase & Co. and manages over
$10.5 billion in commitments and investments solely for the
bank. OEP enters into long-term partnerships with companies to
create sustainable value through long-term growth driven both
organically and inorganically.
Pursuant to the terms of the merger agreement, Parent has
reserved the right to assign its rights and obligations
thereunder, including its right to acquire the Company, to an
affiliate of OEP, including NCO Group, Inc. NCO Group, Inc. is a
leading global provider of business process outsourcing services
and a majority owned subsidiary of OEP. Parent will remain
jointly and severally liable for its obligations under the
merger agreement following any such assignment of Parents
rights and obligations under the merger agreement.
In this proxy statement, we refer to the Agreement and Plan of
Merger, dated July 6, 2011, by and among the Company,
Parent and Merger Sub, as it may be amended from time to time,
as the merger agreement, and the merger of Merger Sub with and
into the Company, as the merger.
The
Special Meeting (Page 15)
Time,
Place and Purpose of the Special Meeting
(Page 15)
The special meeting will be held at [ ] on
[ ], 2011 at [ ], local time.
We refer to the special meeting and any adjournments or
postponements thereof as the special meeting.
At the special meeting, holders of common stock of the Company,
par value $0.01 per share, which we refer to as the common
stock, will be asked to approve the proposal to adopt the merger
agreement, to approve the proposal to adjourn the special
meeting, if necessary or appropriate, for the purpose of
soliciting additional proxies if there are insufficient votes at
the time of the special meeting to approve the proposal to adopt
the merger agreement and to
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approve, by non-binding, advisory vote certain compensation
arrangements for the Companys named executive officers in
connection with the merger.
Record
Date and Quorum (Page 15)
You are entitled to receive notice of, and to vote at, the
special meeting if you owned shares of common stock at the close
of business on [ ], 2011, which the Company has
set as the record date for the special meeting and which we
refer to as the record date. You will have one vote for each
share of common stock that you owned on the record date. As of
the record date, there were [ ] shares of
common stock outstanding and entitled to vote at the special
meeting. A majority of the shares of common stock outstanding at
the close of business on the record date and entitled to vote,
present in person or represented by proxy, at the special
meeting constitutes a quorum for the purposes of the special
meeting.
Vote
Required (Page 16)
Approval of the proposal to adopt the merger agreement requires
the affirmative vote of the holders of outstanding common stock,
voting together as a single class, representing at least
two-thirds of all of the outstanding shares of common stock.
Abstentions and broker non-votes will have the same effect as a
vote AGAINST approval of the proposal to
adopt the merger agreement.
Approval of the proposal to adjourn the special meeting, if
necessary or appropriate, requires the affirmative vote of
holders of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote on the
matter at the special meeting. Abstentions and broker non-votes
will not have any effect on the adjournment proposal.
Approval of the non-binding proposal regarding certain
merger-related executive compensation arrangements requires the
affirmative vote of holders of a majority of the shares of
common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting.
Abstentions and broker non-votes will not have any effect on the
non-binding proposal regarding certain merger-related executive
compensation arrangements.
Pursuant to the voting agreement, dated as of July 6, 2011,
between Parent and Theodore G. Schwartz, who we refer to as
Mr. Schwartz, chairman and director of the Company,
Trust Four Hundred Thirty, Trust Seven Hundred Thirty,
Trust 3080, Trust 3081, LTHS Revocable
Trust Dated April 4, 1986 and CAPA Partners, L.P.,
which we refer to collectively as the Schwartz trusts,
Mr. Schwartz and the Schwartz trusts have agreed to vote,
subject to certain exceptions, all shares of common stock owned
by them in favor of the proposal to adopt the merger agreement.
As of the date of this proxy statement, Mr. Schwartz and
the Schwartz trusts collectively owned approximately 38% of the
outstanding common stock. The voting agreement is described in
additional detail in the section entitled The
Merger Voting Agreement beginning on
page 40. The summary of the voting agreement in this proxy
statement is qualified in its entirety by reference to the full
text of the voting agreement, which is included as
Annex B to this proxy statement.
As of the record date, the directors and executive officers of
the Company (including Mr. Schwartz and the Schwartz
trusts) beneficially owned and were entitled to vote, in the
aggregate, [ ] shares of common stock
(excluding (1) shares issuable upon the exercise or
conversion of options to purchase common stock, which we refer
to as stock options, and (2) shares issuable upon vesting
of Company restricted stock) collectively representing
[ ]% of the outstanding shares of common stock
on the record date). Each of our directors and executive
officers has informed the Company that he or she currently
intends to vote all of such holders shares of common stock
(other than shares of common stock as to which such holder does
not have discretionary authority) FOR the
proposal to adopt the merger agreement, FOR
the proposal to adjourn the special meeting and
FOR the non-binding proposal regarding
certain merger-related executive compensation arrangements.
Proxies
and Revocation (Page 18)
Any stockholder of record entitled to vote at the special
meeting may submit a proxy by telephone, over the Internet or by
returning the enclosed proxy card in the accompanying prepaid
reply envelope, or may vote in person at the special meeting. If
your shares of common stock are held in street name
through a bank, brokerage firm or
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other nominee, you should instruct your bank, brokerage firm or
other nominee on how to vote your shares of common stock using
the instructions provided by your bank, brokerage firm or other
nominee. If you fail to submit a proxy or to vote in person at
the special meeting, or do not provide your bank, brokerage firm
or other nominee with voting instructions, as applicable, your
shares of common stock will not be voted on the proposal to
adopt the merger agreement, which will have the same effect as a
vote AGAINST the proposal to adopt the merger
agreement, and your shares of common stock will not be voted on,
and will not have any effect on the proposal to adjourn the
special meeting or the non-binding proposal regarding certain
merger-related executive compensation arrangements.
If you are the stockholder of record, you may change your vote
or revoke your proxy at any time before it is voted at the
special meeting by:
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submitting a new proxy by telephone or over the Internet after
the date of the earlier submitted proxy;
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signing another proxy card with a later date and returning it to
us prior to the special meeting; or
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attending the special meeting and voting in person (your
attendance at the special meeting will not, by itself, revoke
your proxy; you must vote in person at the special meeting to
revoke your proxy).
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If you hold your shares of common stock in street
name, you should contact your bank, brokerage firm or
other nominee for instructions regarding how to change your
vote. You may also vote in person at the special meeting if you
obtain a legal proxy from your bank, brokerage firm
or other nominee.
The
Merger (Page 19)
The merger agreement provides that Merger Sub will merge with
and into the Company. The Company will be the surviving
corporation in the merger and will continue to do business
following the merger. As a result of the merger, the Company
will cease to be a publicly traded company. If the merger is
completed, you will not own any shares of the capital stock of
the surviving corporation.
The effective time of the merger will occur as soon as
practicable following the closing of the merger upon the filing
of articles of merger with the Secretary of State of the State
of Illinois (or at such later date as we and Parent may agree
and specify in the articles of merger).
Merger
Consideration (Page 19)
In the merger, each outstanding share of common stock (except
for (1) any shares of common stock held by Parent or Merger
Sub or by the Company in its treasury, (2) any shares of
common stock owned by any wholly-owned subsidiary of Parent or
the Company and (3) any shares of common stock held by
stockholders who have perfected and not withdrawn a demand for
appraisal rights pursuant to Sections 11.65 and 11.70 of
the Illinois Business Corporations Act of 1983, which we refer
to collectively as the excluded shares) will be converted into
the right to receive $8.55 in cash, without interest, which
amount we refer to as the per share merger consideration, less
any applicable withholding taxes.
Reasons
for the Merger; Recommendation of the Board
(Page 24)
After careful consideration of various factors described in the
section entitled The Merger Reasons for the
Merger; Recommendation of the Board, the board of
directors of the Company, which we refer to as the Board,
unanimously adopted the merger agreement, the merger and the
other transactions contemplated by the merger agreement and
declared that the merger agreement, the merger and the other
transactions contemplated by the merger agreement, on the terms
and subject to the conditions set forth therein, are advisable
and in the best interests of APAC and its stockholders.
The board of directors recommends that you vote
FOR the proposal to adopt the merger
agreement, FOR the proposal to adjourn the
special meeting and FOR the non-binding
proposal regarding certain merger-related executive compensation
arrangements.
3
Opinion
of Credit Suisse Securities (USA) LLC (Page 28)
On July 6, 2011, Credit Suisse Securities (USA) LLC, which
we refer to as Credit Suisse, rendered its oral opinion to the
Board (which was subsequently confirmed in writing by delivery
of Credit Suisses written opinion dated the same date) to
the effect that, as of July 6, 2011 and based upon and
subject to the various assumptions and qualifications stated in
its opinion, the merger consideration to be received by the
holders of our common stock (other than Mr. Schwartz and
the Schwartz trusts which we collectively refer to as excluded
persons) in the merger was fair, from a financial point of view,
to such stockholders.
Credit Suisses opinion was directed to our Board and only
addressed the fairness from a financial point of view of the
consideration to be received by the holders of our common stock
(other than the excluded persons) in the merger and did not
address any other aspect or implication of the merger or any
other agreement, arrangement or understanding entered into in
connection with the merger or otherwise. The summary of Credit
Suisses opinion in this proxy statement is qualified in
its entirety by reference to the full text of its written
opinion, which is included as Annex C to this proxy
statement and sets forth the procedures followed, assumptions
made, qualifications and limitations on the review undertaken
and other matters considered by Credit Suisse in preparing its
opinion. However, neither Credit Suisses written opinion
nor the summary of its opinion and the related analyses set
forth in this proxy statement are intended to be, and do not
constitute, advice or a recommendation to any stockholder as to
how such stockholder should act or vote with respect to the
merger. See The Merger Opinion of Credit
Suisse Securities (USA) LLC beginning on page 28.
Financing
of the Merger (Page 34)
We anticipate that the total funds needed to complete the
merger, including the funds needed to pay our stockholders (and
holders of our other equity-based interests) the amounts due to
them under the merger agreement and the related expenses, which,
based upon the shares of common stock (and our other
equity-based interests) outstanding as of July 6, 2011,
would be approximately $468.5 million.
This amount will be funded through a combination of equity
and/or debt financing to be provided by One Equity Partners IV,
L.P., managed by OEP, which we refer to as the OEP Fund, debt
financing that may be arranged by OEP and/or (if the merger
agreement is assigned to NCO Group, Inc.) NCO Group, Inc., and
the Companys freely available cash. The receipt of
financing by Parent is not a condition to the obligations of
either party to complete the merger under the terms of the
merger agreement. See The Merger Financing of
the Merger beginning on page 34.
In connection with the financing of the merger, the OEP Fund has
delivered a guaranty, which we refer to as the OEP Fund
guaranty. See The Merger OEP Fund
Guaranty beginning on page 34.
OEP Fund
Guaranty (Page 34)
Pursuant to and subject to the terms and conditions of the OEP
Fund guaranty, delivered by the OEP Fund in favor of the
Company, dated July 6, 2011, the OEP Fund agreed to
guarantee, up to $469 million, the payment obligations of,
and all liabilities and damages payable by, Parent and Merger
Sub, under the merger agreement, including the obligation to pay
the merger consideration if, as and when due. However, the
liability of the OEP Fund pursuant to the OEP Fund guaranty may
not exceed $469 million. For more information about the OEP
Fund guaranty, see The Merger Agreement OEP
Fund Guaranty beginning on page 34.
Interests
of Certain Persons in the Merger (Page 35)
When considering the recommendation of the Board that you vote
to approve the proposal to adopt the merger agreement, you
should be aware that our directors and executive officers may
have interests in the merger that are different from, or in
addition to, your interests as a stockholder. The Board was
aware of and considered these
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interests, among other matters, in approving the merger
agreement and the merger, and in recommending that the merger
agreement be adopted by the stockholders of the Company. These
interests include the following:
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accelerated vesting of equity awards held by our directors and
employees, including our executive officers, simultaneously with
the time at which the merger becomes effective, which we refer
to as the effective time of the merger, and the settlement of
such awards in exchange for cash; and
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the entitlement of our executive officers to receive payments
and benefits under the executive officers employment
agreements upon certain types of involuntarily termination of
employment, or if the executives voluntarily terminate their
employment for good reason following the effective
time of the merger.
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If the proposal to adopt the merger agreement is approved by our
stockholders, the shares of common stock held by our directors
and executive officers will be treated in the same manner as
outstanding shares of common stock held by all other
stockholders of the Company.
Material
U.S. Federal Income Tax Consequences of the Merger
(Page 42)
For U.S. federal income tax purposes, your receipt of cash
in exchange for your shares of common stock in the merger
generally will result in your recognizing gain or loss measured
by the difference, if any, between the cash you receive in the
merger and your tax basis in your shares of common stock. You
should consult your tax advisor for a complete analysis of the
effect of the merger on your U.S. federal, state, local
and/or
foreign taxes.
Regulatory
Approvals and Notices (Page 43)
Under the terms of the merger agreement, the merger cannot be
completed until the waiting periods applicable to the
consummation of the merger under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, which we refer to as the HSR
Act, have expired or been terminated. On July 29, 2011, we
received early termination of the HSR Act waiting period.
Litigation
Relating to the Merger (Page 43)
Following the July 6, 2011 announcement of the merger
agreement, on or about July 15, 2011, a purported class
action complaint was filed against the Company. The complaint
was filed in the Circuit Court of the Nineteenth Judicial
Circuit, Lake County, Illinois against the Company, all of its
directors and OEP, Parent and Merger Sub. The complaint alleges
that the Board breached its fiduciary duties as it relates to
the merger. The complaint also alleges that OEP, Parent and
Merger Sub aided and abetted the Board in breaching its
fiduciary duties. The Company believes that the complaint is
wholly without merit and intends to vigorously defend this
action.
The
Merger Agreement (Page 44)
Treatment
of Outstanding Equity Awards (Page 36):
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Common Stock. At the effective time of the
merger, each share of common stock issued and outstanding
(except for the excluded shares) will automatically be cancelled
and converted into the right to receive the per share merger
consideration of $8.55 in cash, without interest, less any
applicable withholding taxes.
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Director Options. At the effective time of the
merger, each outstanding and unexercised option held by a
non-employee director of the Company, which we refer to as
Director Options, to purchase shares of common stock will vest
in full and will entitle the holder to receive at closing an
amount in cash equal to the product of the total number of
shares of common stock subject to such option multiplied by the
amount, if any, by which $8.55 exceeds the exercise price per
share of such option, less any applicable withholding taxes.
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Employee Options at the Effective Time. At the
effective time of the merger,
one-half of
the unvested portion of each outstanding and unexercised option
to purchase shares of common stock other than a Director Option,
which we refer to as an Employee Option, will vest and will
entitle the holder to receive at closing an amount in cash equal
to the product of the total number of shares of common stock
subject to such
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option multiplied by the amount, if any, by which $8.55 exceeds
the exercise price per share of such option, less any applicable
withholding taxes. The Employee Options that remain unvested
immediately following the effective time of the merger shall
remain outstanding and will continue to vest in accordance with
the terms set forth in the applicable governing plan and option
agreements. After the effective time of the merger, at such time
or times as an unvested Employee Option shall vest, whether in
the ordinary course of business or upon an event triggering
acceleration under the applicable option agreement, the holder
of such Employee Option shall receive an amount in cash equal to
the product of the total number of shares of common stock
underlying the portion of the Employee Option then becoming
vested multiplied by the amount, if any, by which $8.55 exceeds
the exercise price per share of such option, less any applicable
withholding taxes.
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Restricted Stock. At the effective time of the
merger, each outstanding share of restricted stock, whether
vested or unvested, will automatically be cancelled and
converted into the right to receive an amount in cash equal to
$8.55, less any applicable withholding taxes.
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Restrictions
on Solicitations of Other Offers (Page 49)
Until the effective time of the merger or, if earlier, the
termination of the merger agreement, we are not permitted to
solicit any inquiry or the making of any acquisition proposals
or engage in any discussions or negotiations with any person
relating to an acquisition proposal. Notwithstanding these
restrictions, under certain circumstances, we may, prior to the
time our stockholders adopt the merger agreement, respond to a
written acquisition proposal or engage in discussions or
negotiations with the person making such an acquisition
proposal. At any time before the merger agreement is adopted by
our stockholders, if the Board determines that an acquisition
proposal is a superior proposal (for a description of what
constitutes a superior proposal see The Merger
Agreement Restrictions on Solicitation of Other
Offers beginning on page 49), we may terminate the
merger agreement and enter into an alternative acquisition,
merger or similar agreement, which we refer to as an acquisition
agreement, with respect to such superior proposal, so long as we
comply with certain terms of the merger agreement, including
paying a termination fee to Parent. See The Merger
Agreement Termination Fee beginning on
page 55.
Merger
Closing Conditions (Page 53)
The respective obligations of the Company, Parent and Merger Sub
to consummate the merger are subject to the satisfaction or
waiver of certain customary conditions, including:
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the adoption of the merger agreement by our stockholders;
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receipt of required antitrust approvals; and
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the accuracy of the representations and warranties of the
parties and compliance by the parties with their respective
obligations under the merger agreement.
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Termination
of the Merger Agreement (Page 54)
The merger agreement may be terminated and the merger abandoned
at any time prior to the effective time of the merger, whether
before or after the adoption of the merger agreement by our
stockholders (except as indicated below):
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by the mutual written consent of Parent and the Company;
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by the Company or Parent, if the merger has not occurred by
February 29, 2012, which we refer to as the end date,
unless the terminating partys breach of the merger
agreement is the primary cause of the failure to consummate the
merger by the end date;
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by the Company or Parent, if any governmental entity has
enjoined or otherwise prohibited the merger in a final and
nonappealable order or any other action, unless the terminating
party failed to comply with its obligations to use its
reasonable best efforts to remove such order or other action or
if the issuance of such
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final, nonappealable order was primarily due to the breach of
such party (and in the case of Parent, including Merger Sub) of
its obligations under the merger agreement;
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by the Company or Parent, if the Companys stockholders
fail to approve the adoption of the merger agreement at the
special meeting or at any adjournment or postponement thereof at
which the merger agreement has been voted upon;
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by the Company or Parent, if the other party has breached or
failed to comply in any material respect (and not cured within
30 days after the breaching party receives written notice
of the breach) with the terms of the merger agreement in such a
way as to give rise to a failure of the conditions to the merger
relating to the accuracy of such partys representations
and warranties or such partys compliance with its
covenants, unless the terminating party is similarly in breach
of its own obligations;
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by the Company, prior to the stockholders adopting the merger
agreement, if (1) the Board has authorized the Company to
enter into an alternative acquisition agreement with respect to
a superior proposal that did not result from a breach of its
obligation not to solicit acquisition proposals, (2) the
Company has given Parent notice of the superior proposal and, if
requested by Parent, the opportunity to negotiate to amend the
terms of the merger agreement, (3) in the event Parent
delivers a binding offer to alter the terms of the merger
agreement, the Board concludes that the alternative acquisition
remains a superior proposal, (4) the Company enters into an
alternative acquisition agreement with respect to such superior
proposal and (5) the Company pays the termination fee (as
described below) to Parent; or
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by Parent, if the Company withdraws, qualifies or modifies or
publicly proposes to withdraw, qualify or modify, in any manner,
the Companys recommendation to its stockholders to adopt
and approve the merger agreement.
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Termination
Fee (Page 55)
Parent would be entitled to receive a termination fee from the
Company equal to $15 million if the merger agreement is
terminated:
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(1) by the Company or Parent because the closing has not
occurred by the end date to the merger agreement or the
Companys stockholders fail to adopt the merger agreement,
or by Parent because the Company has breached the merger
agreement in such a way as to give rise to a failure of the
conditions to the merger relating to the accuracy of the
Companys representations and warranties or the
Companys compliance with its covenants, unless the Parent
is similarly in breach of its own obligations at the time of
termination or the stockholders meeting such that the Company is
not obligated to consummate the merger; (2) any person has
publicly made an acquisition proposal (which is not withdrawn);
and (3) the Company consummates any acquisition proposal
within 12 months of such termination;
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by the Company, if the Company has entered into an alternative
acquisition agreement with respect to a superior
proposal; and
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by Parent, if the Board has adversely changed its recommendation
to stockholders to adopt the merger agreement.
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Specific
Performance (Page 56)
The Company and Parent are each entitled to equitable relief to
prevent breaches of the merger agreement and to enforce
specifically the terms of the merger agreement in addition to
any other remedy to which it is entitled.
Market
Price of Common Stock (Page 58)
Our common stock is traded on the NASDAQ Global Select Market
under the ticker symbol APAC. The closing price of
our common stock on July 6, 2011, the last trading day
prior to the public announcement of the execution of the merger
agreement was $5.44 per share. On
[ ],
2011, the most recent practicable date before this proxy
statement was mailed to our stockholders, the closing price for
our common stock was $[ ]
7
per share. You are encouraged to obtain current market
quotations for our common stock in connection with voting you
shares of common stock.
Dissenters
Rights (Page 60)
Stockholders are entitled to dissenters rights under the
Illinois Business Corporation Act of 1983, as amended, which we
refer to as the IBCA, in connection with the merger, if such
stockholders meet all of the conditions set forth in
Sections 11.65 and 11.70 of the IBCA. This means that you
are entitled to have the fair value of your shares of common
stock determined by the Illinois Circuit Court and to receive
payment based on that valuation. The ultimate amount you receive
in an appraisal proceeding may be less than, equal to or more
than the amount you would have received under the merger
agreement.
To exercise your dissenters rights, you must submit a
written demand for appraisal to the Company before the vote is
taken on the merger agreement and you must not submit a proxy,
or otherwise vote, in favor of the proposal to adopt the merger
agreement. Your failure to follow exactly the procedures
specified under the IBCA will result in the loss of your
dissenters rights. See Dissenters Rights
beginning on page 60 and the text of the Illinois
dissenters rights statute reproduced in its entirety as
Annex D to this proxy statement. If you hold your
shares of common stock through a bank, brokerage firm or other
nominee and you wish to exercise dissenters rights, you
should consult with your bank, brokerage firm or other nominee
to determine the appropriate procedures for the making of a
demand for appraisal by such bank, brokerage firm or nominee. In
view of the complexity of the IBCA, stockholders who may wish to
pursue dissenters rights should consult their legal and
financial advisors promptly.
8
QUESTIONS
AND ANSWERS ABOUT THE STOCKHOLDERS MEETING AND THE
MERGER
The following questions and answers are intended to address
briefly some commonly asked questions regarding the merger, the
merger agreement and the stockholders meeting. These questions
and answers may not address all questions that may be important
to you as a stockholder of the Company. Please refer to the
Summary and the more detailed information contained
elsewhere in this proxy statement, including the annexes to this
proxy statement, which you should read carefully and in their
entirety. You may obtain the information incorporated by
reference in this proxy statement without charge by following
the instructions under Where You Can Find More
Information.
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What is the proposed transaction and what effects will it
have on the Company? |
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The proposed transaction is the acquisition of the Company by
Parent pursuant to the merger agreement. If the proposal to
adopt the merger agreement is approved by our stockholders and
the other closing conditions under the merger agreement have
been satisfied or waived, Merger Sub will merge with and into
the Company. Upon completion of the merger, Merger Sub will
cease to exist and the Company will continue as the surviving
corporation. As a result of the merger, the Company will become
a wholly owned subsidiary of Parent and will no longer be a
publicly held corporation, and you will no longer own any shares
of capital stock of the surviving corporation or have any
interest in our future earnings or growth. In addition, if the
merger is completed, our common stock will be delisted from
NASDAQ and deregistered under the Securities Exchange Act of
1934, as amended. As a result, we would no longer file periodic
reports with the Securities and Exchange Commission on account
of our common stock. |
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What will I receive if the merger is completed? |
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Upon completion of the merger, you will be entitled to receive
the per share merger consideration of $8.55 in cash, without
interest, less any applicable withholding taxes, for each share
of common stock that you own, unless you have properly exercised
your dissenters rights under the IBCA with respect to such
shares. For example, if you own 100 shares of common stock,
you will receive $855.00 in cash in exchange for your shares of
common stock, less any applicable withholding taxes. |
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When do you expect the merger to be completed? |
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We are working towards completing the merger as soon as
possible. If the proposal to adopt the merger agreement is
approved at the special meeting then, assuming timely
satisfaction of the other necessary closing conditions, we
anticipate that the merger will be completed in either the third
or fourth calendar quarter of 2011. |
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What happens if the merger is not completed? |
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If the merger agreement is not adopted by the stockholders of
the Company or if the merger is not completed for any other
reason, the stockholders of the Company will not receive any
payment for their shares of common stock. Instead, the Company
will remain an independent public company, and the common stock
will continue to be listed and traded on NASDAQ. Under specified
circumstances, the Company may be required to pay Parent a
termination fee, as described under The Merger
Agreement Termination Fee. |
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Is the merger expected to be taxable to me? |
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Yes. The exchange of shares of common stock for cash in the
merger will generally be a taxable transaction to U.S. holders
for U.S. federal income tax purposes. In general, a U.S. holder
whose shares of common stock are converted into the right to
receive cash in the merger will recognize gain or loss for U.S.
federal income tax purposes in an amount equal to the
difference, if any, between the amount of cash received with
respect to such shares (determined before the deduction of any
applicable withholding taxes) and such holders adjusted
tax basis in such shares. Backup withholding may also apply to
the cash payments made pursuant to the merger unless the U.S.
holder or other payee provides a taxpayer identification number,
certifies that such number is correct and otherwise complies
with the backup withholding rules. |
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You should read The Merger Material U.S.
Federal Income Tax Consequences of the Merger for the
definition of U.S. holder and for a more detailed
discussion of the U.S. federal income tax consequences of the
merger. You should also consult your tax advisor with respect to
the specific tax consequences to you in |
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connection with the merger in light of your own particular
circumstances, including federal estate, gift and other
non-income tax consequences, and tax consequences under state,
local or foreign tax laws. |
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How does the per share merger consideration compare to the
market price of our common stock prior to announcement of the
merger? |
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The per share merger consideration represents a premium of
approximately 57.2% over the closing price of our common stock
on July 6, 2011, the last trading day prior to the public
announcement of the merger agreement, and a premium of
approximately 50.2% over the Companys average closing
share price for the 90 calendar day period prior to
July 6, 2011. |
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Do any of the Companys directors or officers have
interests in the merger that may differ from or be in addition
to my interests as a stockholder? |
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Yes. In considering the recommendation of the Board with respect
to the proposal to adopt the merger agreement, you should be
aware that our directors and executive officers may have
interests in the merger that are different from, or in addition
to, the interests of our stockholders generally. The Board was
aware of and considered these interests, among other matters, in
approving the merger agreement and the merger, and in
recommending that the merger agreement be adopted by the
stockholders of the Company. For a description of the interests
of our directors and executive officers in the merger, see
The Merger Interests of Certain Persons in the
Merger. |
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Why am I receiving this proxy statement and proxy card? |
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You are receiving this proxy statement and proxy card because
you own shares of common stock. This proxy statement describes
matters on which we urge you to vote and is intended to assist
you in deciding how to vote your shares of common stock with
respect to such matters. |
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When and where is the special meeting? |
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The special meeting of stockholders of the Company will be held
at [ ] at [ ] on
[ ], 2011, local time. |
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Who may attend the special meeting? |
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All stockholders of record at the close of business on
[ ], 2011, which we refer to as the record
date, or their duly appointed proxies, and our invited guests
may attend the special meeting. Seating is limited and admission
is on a first-come, first-served basis. Please be prepared to
present valid photo identification for admission to the special
meeting. |
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If you hold shares of common stock in street name
(that is, in a brokerage account or through a bank or other
nominee) and you would like to attend the special meeting, you
will need to bring a valid photo identification and proof of
ownership, such as a brokerage statement as of a recent date, a
copy of your voting instruction form or a legal
proxy from your broker, bank or other nominee. If you wish to
vote in person at the special meeting, you must obtain a
legal proxy from your broker, bank or other nominee. |
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Stockholders of record will be verified against an official list
available in the registration area at the special meeting. We
reserve the right to deny admittance to anyone who cannot
adequately show proof of share ownership. |
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How many votes must be present to hold the special
meeting? |
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A majority of the outstanding shares of common stock entitled to
vote at the special meeting, represented in person or by proxy
at the special meeting, will constitute a quorum. Shares of
common stock represented in person or by proxy, including
abstentions and broker non-votes, if any, will be counted for
purposes of determining whether a quorum is present. |
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Who may vote? |
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You may vote if you owned common stock as of the close of
business on the record date. Each share of common stock is
entitled to one vote. As of the record date, there were
[ ] shares of common stock outstanding
and entitled to vote at the special meeting. |
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What am I being asked to vote on? |
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You are being asked to vote on the following: |
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The approval of a proposal to adopt the merger
agreement, which provides for the acquisition of the Company by
Parent;
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The approval of a proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies if there are insufficient votes to adopt the merger
agreement; and
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The approval by non-binding, advisory vote, of
certain compensation arrangements for our named executive
officers in connection with the merger.
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What are the voting recommendations of the Board? |
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The Board recommends that you vote your shares of common stock
FOR the proposal to adopt the merger
agreement, FOR the proposal to adjourn the
special meeting and FOR the non-binding
proposal regarding certain merger-related executive compensation
arrangements. |
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How do I vote? |
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If you are a stockholder of record (that is, if your shares of
common stock are registered in your name with BNY Mellon
Shareowner Services, our transfer agent), there are four ways to
vote: |
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By attending the special meeting and voting in
person by ballot;
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By visiting the Internet at
http://www.proxyvoting.com/APAC;
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By calling toll-free (within the U.S. or
Canada)
1-866-540-5760; or
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By completing, dating, signing and returning the
enclosed proxy card in the accompanying prepaid reply envelope.
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A control number, located on your proxy card, is designed to
verify your identity and allow you to vote your shares of
Company common stock, and to confirm that your voting
instructions have been properly recorded when voting over the
Internet or by telephone. Please be aware that, although there
is no charge for voting your shares, if you vote over the
Internet or by telephone, you may incur costs such as telephone
and Internet access charges for which you will be responsible. |
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Even if you plan to attend the special meeting in person, you
are strongly encouraged to vote your shares of common stock by
proxy. If you are a record holder or if you obtain a
legal proxy to vote shares which you beneficially
own, you may still vote your shares of common stock in person at
the special meeting even if you have previously voted by proxy.
If you are present at the special meeting and desire to vote in
person, your previous vote by proxy will not be counted. |
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What if I hold my shares of common stock in street
name? |
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A. |
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You should follow the voting directions provided by your bank,
brokerage firm or other nominee. You may complete and mail a
voting instruction form to your bank, brokerage firm or other
nominee or, in most cases, submit voting instructions by
telephone or over the Internet to your bank, brokerage firm or
other nominee. If you provide specific voting instructions by
mail, telephone or the Internet, your bank, brokerage firm or
other nominee will vote your shares of common stock as you have
directed. Please note that if you wish to vote in person at the
special meeting, you must obtain a legal proxy from
your bank, brokerage firm or other nominee. |
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Can I change my mind after I vote? |
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A. |
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Yes. If you are a stockholder of record, you may change your
vote or revoke your proxy at any time before it is voted at the
special meeting by: |
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submitting a new proxy by telephone or over the
Internet after the date of the earlier submitted proxy;
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signing another proxy card with a later date and
returning it to us prior to the special meeting; or
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attending the special meeting and voting in person
(your attendance at the special meeting will not, by itself,
revoke your proxy, you must vote in person at the special
meeting to revoke your proxy).
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If you hold your shares of common stock in street
name, you should contact your bank, brokerage firm or
other nominee for instructions regarding how to change your
vote. You may also vote in person at the special meeting if you
obtain a legal proxy from your bank, brokerage firm
or other nominee. |
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Who will count the votes? |
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A representative of BNY Mellon Shareholder Services will serve
as the independent inspector of elections and will count the
votes. |
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What does it mean if I receive more than one proxy card? |
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It means that you have multiple accounts with brokers or our
transfer agent. Please vote all of these shares. We encourage
you to register all of your shares of common stock in the same
name and address. You may do this by contacting your broker or
our transfer agent. Our transfer agent may be reached at
1-800-851-9677
or at the following address: |
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BNY Mellon Shareowner Services
P.O. Box 358015
Pittsburgh, PA 15252-8015 |
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Q. |
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Will my shares of common stock be voted if I do not provide
my proxy? |
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If you are the stockholder of record and you do not vote or
provide a proxy, your shares of common stock will not be voted. |
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If your shares of common stock are held in street
name, they may not be voted if you do not provide the
bank, brokerage firm or other nominee with voting instructions.
Currently, banks, brokerage firms or other nominees have the
authority to vote shares of common stock for which their
customers do not provide voting instructions on certain
routine matters. However, banks, brokerage firms or
other nominees are precluded from exercising their voting
discretion with respect to approving non-routine matters, such
as the proposal to adopt the merger agreement, the proposal to
approve the adjournment of the special meeting, and the
non-binding proposal regarding certain merger-related executive
compensation arrangements, and, as a result, absent specific
instructions from the beneficial owner of such shares of common
stock, banks, brokerage firms or other nominees are not
empowered to vote those shares of common stock on any of the
proposals to be voted on at the special meeting. |
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What vote is required to approve the proposal to adopt the
merger agreement? |
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The adoption of the merger agreement requires the affirmative
vote of the holders of at least two-thirds of the outstanding
shares of common stock entitled to vote thereon. If you fail to
grant a proxy or vote in person at the special meeting, abstain
from voting, or do not provide your bank, brokerage firm or
other nominee with voting instructions, this will have the same
effect as a vote AGAINST the proposal to
adopt the merger agreement. Pursuant to the voting agreement
between Parent, Mr. Schwartz and the Schwartz trusts,
Mr. Schwartz and the Schwartz trusts have agreed to vote,
subject to certain exceptions, all shares of common stock owned
by them in favor of the proposal to adopt the merger agreement.
As of the date of this proxy statement, Mr. Schwartz and
the Schwartz trusts collectively owned approximately 38% of the
outstanding common stock. For more information, see The
Merger Voting Agreement. |
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What vote is required to approve the proposal to adjourn the
special meeting? |
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Approval of the proposal to adjourn the special meeting requires
the affirmative vote of the holders of a majority of the shares
of common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting.
Abstaining from voting will have the same effect as a vote
AGAINST the proposal to adjourn the special
meeting. If you fail to submit a proxy or to vote in person at
the special meeting or do not provide your bank, brokerage firm
or other nominee with voting instructions, as applicable, your
shares of common stock will not be voted, but this will not have
any effect on the proposal to adjourn the special meeting. |
12
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What vote is required to approve the non-binding proposal
regarding certain merger-related executive compensation
arrangements? |
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A. |
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Approval of the non-binding proposal regarding certain
merger-related executive compensation arrangements requires the
affirmative vote of holders of a majority of the shares of
common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting.
Abstaining will have the same effect as a vote
AGAINST the non-binding proposal regarding
certain merger-related executive compensation arrangements. If
you fail to submit a proxy or to vote in person at the special
meeting or if your shares of common stock are held through a
bank, brokerage firm or other nominee and you do not provide
your bank, brokerage firm or other nominee with voting
instructions, as applicable, your shares of common stock will
not be voted, but this will not have any effect on the
non-binding proposal regarding certain merger-related executive
compensation arrangements. Stockholders should note that the
non-binding proposal regarding certain merger-related executive
compensation arrangements is merely an advisory vote which will
not be binding on APAC, the Board or Parent. Further, the
underlying plans and arrangements are contractual in nature and
not, by their terms, subject to stockholder approval.
Accordingly, regardless of the outcome of the non-binding,
advisory vote, if the merger is consummated, our named executive
officers will be eligible to receive the various change in
control payments and benefits in accordance with the terms and
conditions applicable to those arrangements. |
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Should I send in my stock certificates now? |
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A. |
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No. You will be sent a letter of transmittal promptly after
the completion of the merger, describing how you may surrender
your shares of common stock in exchange for the per share merger
consideration. If your shares of common stock are held in
street name by your bank, brokerage firm or other
nominee, you may receive instructions from your bank, brokerage
firm or other nominee as to what action, if any, is necessary to
effect the surrender of your shares of common stock in exchange
for the per share merger consideration. Please do NOT return
your stock certificate(s) with your proxy. |
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Am I entitled to exercise dissenters rights instead of
receiving the per share merger consideration for my shares of
common stock? |
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A. |
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Yes. As a holder of common stock, you are entitled to exercise
dissenters rights under the IBCA in connection with the
merger if you take certain actions and meet certain conditions.
See Dissenters Rights and Annex D. |
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Q. |
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Who can help answer my other questions? |
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A. |
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If you have additional questions about the merger, need
assistance in submitting your proxy or voting your shares of
common stock, or need additional copies of the proxy statement
or the enclosed proxy card, please call our proxy solicitor,
Georgeson Inc., which we refer to as Georgeson, at (866)
482-5136
(toll-free) or (212)
440-9800
(banks and brokers). |
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Generally, forward-looking statements
include expressed expectations, estimates and projections of
future events and financial performance and the assumptions on
which these expressed expectations, estimates and projections
are based. Statements that are not historical facts, including
statements about the beliefs and expectations of the Company and
its management are forward-looking statements. All
forward-looking statements are inherently uncertain as they are
based on various expectations and assumptions about future
events, and they are subject to known and unknown risks and
uncertainties and other factors that can cause actual events and
results to differ materially from historical results and those
projected. Such statements are based upon the current beliefs
and expectations of the Companys management. The Company
intends its forward-looking statements to speak only as of the
date on which they were made. The Company expressly undertakes
no obligation to update or revise any forward-looking statements
as a result of changed assumptions, new information, future
events or otherwise.
13
The following factors, among others, could cause the
Companys actual results to differ from historic results or
those expressed or implied in the forward-looking statements:
its revenue is generated from a limited number of clients and
the loss of one or more significant clients or reduction in
demand for services could have a material adverse effect on the
Company; the performance of its clients and general economic
conditions; its financial results depend on the ability to
effectively manage production capacity and workforce; the terms
of its client contracts; its ability to sustain profitability;
its availability of cash flows from operations and compliance
with debt covenants and funding requirements under the
Companys credit facility; its ability to conduct business
internationally, including managing foreign currency exchange
risks; its principal shareholder can exercise significant
control over the Company; its ability to attract and retain
qualified employees; the potential for downward pricing
pressures in its industry and other competitive factors; changes
to government regulations; the effect of rapid technology
changes; acts of God, political instability or other events
outside its control; the impact from unauthorized disclosure of
sensitive or confidential client or customer data; the inability
to complete the merger in a timely manner, if at all; the
inability to complete the merger due to the failure to obtain
stockholder approval or the failure to satisfy other conditions
to completion of the merger; the occurrence of any event, change
or other circumstance that could give rise to the termination of
the agreement; the possibility that competing offers will be
made; the effect of a change in the Companys business
relationships, operating results and business generally,
diversion of managements attention from ongoing business
concerns as a result of the pendency or consummation of the
merger; the possibility that legal proceedings may be instituted
against the Company or others relating to the merger and the
outcome of such proceedings; and other risk factors listed in
the Companys most recent SEC filings.
Other reasons that may cause actual results to differ from
historic results or those expressed or implied in the
forward-looking statements can be found in the Companys
most recent annual report on
Form 10-K
and its quarterly reports on
Form 10-Q
and current reports on
Form 8-K
as filed with the Securities and Exchange Commission. APAC
assumes no obligation to update any forward-looking information
contained in this proxy statement.
PARTIES
TO THE MERGER
The
Company
APAC Customer Services, Inc.
2201 Waukegan Road, Suite 300
Bannockburn, Illinois 60015
APAC Customer Services, Inc. was founded and incorporated in
1973. APAC is a leading provider of customer care services and
solutions to market leaders in the healthcare, communications,
business services, media & publishing,
travel & entertainment, technology and financial
services industries. We deliver highly customized customer care
services and solutions that involve communicating with customers
and managing situations that are unique to each core industry.
We provide service through multiple communication channels,
including telephone, internet, on-line chat, email, fax, mail
correspondence and automated response generated through
technology. We operate seventeen customer care centers: eight
domestic centers, two domestic client-owned facilities, five
international centers located in the Philippines, one
international center located in the Dominican Republic and one
international center located in Uruguay. Additionally, we
provide services to one of our clients through a co-location
arrangement at one of the clients domestic facilities.
Parent
Blackhawk Acquisition Parent, LLC
c/o One
Equity Partners IV, L.P.
320 Park Avenue
New York, New York 10022
(212) 270-7689
Blackhawk Acquisition Parent, LLC, is a Delaware limited
liability company and a holding company that owns Blackhawk
Merger Sub, Inc. To date, Parent has not carried on any
activities other than those related to its
14
formation, completing the transactions contemplated by the
merger agreement, arranging the related financing and owning
Merger Sub.
Merger
Sub
Blackhawk Merger Sub, Inc.
c/o One
Equity Partners IV, L.P.
320 Park Avenue
New York, New York 10022
(212) 270-7689
Blackhawk Merger Sub, Inc. is an Illinois corporation and a
wholly owned subsidiary of Parent that was formed by Parent
solely for the purpose of facilitating the acquisition of the
Company. To date, Merger Sub has not carried on any activities
other than those related to its formation, completing the
transactions contemplated by the merger agreement and arranging
the related financing. Upon completion of the merger, Merger Sub
will cease to exist.
Each of Parent and Merger Sub are affiliates of OEP. OEP is the
private investment arm of JPMorgan Chase & Co. and
manages over $10.5 billion in commitments and investments
solely for the bank. OEP enters into long-term partnerships with
companies to create sustainable value through long-term growth
driven both organically and inorganically.
Pursuant to the terms of the merger agreement, Parent has
reserved the right to assign its rights and obligations
thereunder, including its right to acquire the Company, to an
affiliate of OEP, including NCO Group, Inc. NCO Group, Inc. is a
leading global provider of business process outsourcing services
and a majority owned subsidiary of OEP. NCO Group, Inc.s
address is NCO Group, Inc., 507 Prudential Road, Horsham,
Pennsylvania 19044 and telephone number is
(215) 441-3000.
Parent will remain jointly and severally liable for its
obligations under the merger agreement following any such
assignment of Parents rights and obligations under the
merger agreement.
THE
SPECIAL MEETING
Time,
Place and Purpose of the Special Meeting
The special meeting will be held at [ ] on
[ ], 2011 at [ ], local time.
At the special meeting, holders of common stock will be asked to
approve the proposal to adopt the merger agreement, to approve
the proposal to adjourn the special meeting and to approve the
non-binding proposal regarding certain merger-related executive
compensation arrangements.
Record
Date and Quorum
We have fixed the close of business on [ ],
2011 as the record date for the special meeting, and only
holders of record of common stock on the record date are
entitled to vote at the special meeting. You are entitled to
receive notice of, and to vote at, the special meeting if you
owned shares of common stock at the close of business on the
record date. On the record date, there were
[ ] shares of common stock outstanding and
entitled to vote. Each share of common stock entitles its holder
to one vote on all matters properly coming before the special
meeting.
A majority of the shares of common stock outstanding at the
close of business on the record date and entitled to vote,
present in person or represented by proxy, at the special
meeting constitutes a quorum for the purposes of the special
meeting. Shares of common stock represented at the special
meeting but not voted, including shares of common stock for
which a stockholder directs an abstention from
voting, as well as broker non-votes, if any, will be counted for
purposes of establishing a quorum. A quorum is necessary to
transact business at the special meeting. Once a share of common
stock is represented at the special meeting, it will be counted
for the purpose of determining a quorum at the special meeting
and any adjournment of the special meeting. However, if a new
record date is set for the adjourned special meeting, then a new
quorum will have to be established. In the event that a quorum
is not present at the special meeting, it is expected that the
special meeting will be adjourned or postponed.
15
Attendance
Only stockholders of record or their duly authorized proxies
have the right to attend the special meeting. To gain
admittance, you must present a valid photo identification, such
as a drivers license or passport. If you hold shares of
common stock in street name (that is, in a brokerage
account or through a bank or other nominee) and you would like
to attend the special meeting, you will need to bring a valid
photo identification and proof of ownership, such as a brokerage
statement as of a recent date, a copy of your voting instruction
form or a legal proxy from your broker, bank or
other nominee. If you wish to vote in person at the special
meeting, you must obtain a legal proxy from your
broker, bank or other nominee. If you are the representative of
a corporate or institutional stockholder, you must present valid
photo identification along with proof that you are the
representative of such stockholder. Please note that cameras,
recording devices and other electronic devices will not be
permitted at the special meeting.
Vote
Required
Approval of the proposal to adopt the merger agreement requires
the affirmative vote of the holders of two-thirds, voting as a
single class, of the outstanding shares of common stock entitled
to vote thereon. Pursuant to a voting agreement between Parent,
Mr. Schwartz and the Schwartz trusts, Mr. Schwartz and
the Schwartz trusts have agreed to vote, subject to certain
exceptions, all shares of common stock owned by them in favor of
the proposal to adopt the merger agreement (and in favor of any
actions and proposals required, or submitted for approval in
furtherance thereof).
As of the record date, the directors and executive officers of
the Company (including Mr. Schwartz and the Schwartz
trusts) beneficially owned and were entitled to vote, in the
aggregate, [ ] shares of common stock
(excluding shares issuable upon the exercise or conversion of
stock options), collectively representing [ ]%
of the outstanding shares of common stock on the record date.
Each of our directors and executive officers has informed the
Company that he or she currently intends to vote all of such
holders shares of common stock (other than shares of
common stock as to which such holder does not have discretionary
authority) FOR the proposal to adopt the
merger agreement, FOR the proposal to adjourn
the special meeting and FOR the non-binding
proposal regarding certain merger-related executive compensation
arrangements.
For the proposal to adopt the merger agreement, you may vote
FOR, AGAINST or
ABSTAIN. Abstentions will not be counted as
votes cast in favor of the proposal to adopt the merger
agreement but will count for the purpose of determining whether
a quorum is present. If you fail to submit a proxy or to vote
in person at the special meeting, or abstain, it will have the
same effect as a vote AGAINST the proposal to adopt
the merger agreement. If you hold your shares in street
name, the failure to instruct your broker, bank or other
nominee how to vote your shares will have the same effect as a
vote AGAINST the proposal to adopt the merger
agreement.
Approval of the proposal to adjourn the special meeting to
solicit additional proxies requires the affirmative vote of the
holders of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote on the
matter at the special meeting. For the proposal to adjourn the
special meeting, if necessary or appropriate, you may vote
FOR, AGAINST or
ABSTAIN. For purposes of this proposal, if
your shares of common stock are present at the special meeting
but are not voted on this proposal, or if you have given a proxy
and abstained on this proposal, this will have the same effect
as if you voted AGAINST the proposal. If you
fail to submit a proxy or to vote in person at the special
meeting, or if there are broker non-votes, your shares of common
stock not voted will not be counted in respect of, and will not
have any effect on, the proposal to adjourn the special meeting.
Approval of the non-binding, advisory vote regarding certain
merger-related executive compensation arrangements requires the
affirmative vote of the holders of a majority of the shares of
common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting. For the
non-binding proposal regarding certain merger-related executive
compensation arrangements, you may vote FOR,
AGAINST or ABSTAIN. For
purposes of this proposal, if your shares of common stock are
present at the special meeting but are not voted on this
proposal, or if you have given a proxy and abstained on this
proposal, this will have the same effect as if you voted
AGAINST the proposal. If you fail to submit a
proxy or vote in person at the special
16
meeting, or if there are broker non-votes, your shares of common
stock not voted will not be counted in respect of, and will not
have any effect on, the non-binding proposal regarding certain
merger-related executive compensation arrangements.
If your shares of common stock are registered directly in your
name with our transfer agent, BNY Mellon Shareowner Services,
you are considered, with respect to those shares of common
stock, the stockholder of record. This proxy
statement and proxy card have been sent directly to you by the
Company.
If your shares of common stock are held through a bank,
brokerage firm or other nominee, you are considered the
beneficial owner of shares of common stock held in
street name. In that case, this proxy statement has been
forwarded to you by your bank, brokerage firm or other nominee
who is considered, with respect to those shares of common stock,
the stockholder of record. As the beneficial owner, you have the
right to direct your bank, brokerage firm or other nominee how
to vote your shares by following their instructions for voting.
If you are a stockholder of record, there are four ways to vote:
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By completing, dating, signing and returning the enclosed proxy
card in the accompanying prepaid reply envelope;
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By visiting the Internet at
http://www.proxyvoting.com/APAC;
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By calling toll-free (within the U.S. or Canada)
1-866-540-5760; or
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By attending the special meeting and voting in person by ballot.
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If you are a beneficial owner of common stock held in
street name, you will receive instructions from your
bank, brokerage firm or other nominee that you must follow in
order to have your shares of common stock voted. Those
instructions will identify which of the above choices are
available to you in order to have your shares voted.
Banks, brokerage firms or other nominees who hold shares in
street name for customers have the authority to vote on
routine proposals when they have not received
instructions from beneficial owners. However, banks, brokerage
firms or other nominees are precluded from exercising their
voting discretion with respect to approving non-routine matters,
such as the proposal to adopt the merger agreement, the proposal
to approve the adjournment of the special meeting, and the
non-binding proposal regarding certain merger-related executive
compensation arrangements, and, as a result, absent specific
instructions from the beneficial owner of such shares of common
stock, banks, brokerage firms or other nominees are not
empowered to vote those shares of common stock on any of the
proposals to be voted on at the special meeting. Broker
non-votes, if any, will be counted for purposes of determining a
quorum, but will have the same effect as a vote
AGAINST the proposal to adopt the merger
agreement.
Please note that if you are a beneficial owner of common stock
and wish to vote in person at the special meeting, you must
obtain a legal proxy from your bank, brokerage firm
or other nominee.
Please refer to the instructions on your proxy card to determine
the deadlines for voting over the Internet or by telephone. If
you choose to vote by mailing a proxy card, your proxy card must
be received by our General Counsel and Secretary by the time the
special meeting begins. Please do not send in your stock
certificates with your proxy card. When the merger is
completed, a separate letter of transmittal will be mailed to
stockholders of record that will enable you to receive the per
share merger consideration in exchange for your stock
certificates.
If you vote by proxy, regardless of the method you choose to
vote, the individuals named on the enclosed proxy card, and each
of them, with full power of substitution, will vote your shares
of common stock in the way that you indicate.
If you properly sign your proxy card but do not mark the boxes
showing how your shares of common stock should be voted on a
matter, the shares of common stock represented by your properly
signed proxy will be voted FOR the proposal
to adopt the merger agreement, FOR the
proposal to adjourn the special meeting and FOR
the non-binding, advisory proposal regarding certain
merger-related executive compensation arrangements.
17
IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF COMMON STOCK
PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE,
THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY
ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR OVER THE
INTERNET.
As of [ ], 2011, the record date, the directors
and executive officers of the Company (including
Mr. Schwartz and the Schwartz trusts) beneficially owned
and were entitled to vote, in the aggregate,
[ ] shares of common stock (excluding any
shares of common stock issuable upon exercise or conversion of
any stock options), representing approximately
[ ]% of the outstanding shares of common stock
on the record date. The directors and executive officers have
informed the Company that they currently intend to vote all of
their shares of common stock FOR the proposal
to adopt the merger agreement, FOR the
proposal to adjourn the special meeting and FOR
the non-binding proposal regarding certain merger-related
executive compensation arrangements.
Proxies
and Revocation
Any stockholder of record entitled to vote at the special
meeting may submit a proxy by telephone, over the Internet or by
returning the enclosed proxy card in the accompanying prepaid
reply envelope, or may vote in person at the special meeting. If
your shares of common stock are held in street name
by your bank, brokerage firm or other nominee, you should
instruct your bank, brokerage firm or other nominee on how to
vote your shares of common stock using the instructions provided
by your bank, brokerage firm or other nominee.
If you are a stockholder of record, you have the right to revoke
a proxy, whether delivered over the Internet, by telephone or by
mail, at any time before it is voted at the special meeting by:
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submitting a new proxy by telephone or over the Internet after
the date of the earlier voted proxy;
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signing another proxy card with a later date and returning it to
us prior to the special meeting; or
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attending the special meeting and voting in person.
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If you hold your shares of common stock in street
name, you should contact your bank, brokerage firm or
other nominee for instructions regarding how to change your
vote. You may also vote in person at the special meeting if you
obtain a legal proxy from your bank, brokerage firm
or other nominee.
Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed, including for the purpose of
soliciting additional proxies, if there are insufficient votes
at the time of the special meeting to approve the proposal to
adopt the merger agreement or if a quorum is not present at the
special meeting. Other than an announcement to be made at the
special meeting of the time, date and place of an adjourned
meeting, an adjournment generally may be made without notice. We
may also postpone the special meeting under certain
circumstances. Any adjournment or postponement of the special
meeting for the purpose of soliciting additional proxies will
allow the Companys stockholders who have already sent in
their proxies to revoke them at any time prior to their use at
the special meeting as adjourned or postponed.
Anticipated
Date of Completion of the Merger
We are working towards completing the merger as soon as
possible. Assuming timely satisfaction of the closing
conditions, including the approval by our stockholders of the
proposal to adopt the merger agreement, we anticipate that the
merger will be completed in the third or fourth calendar quarter
of 2011. If our stockholders vote to approve the proposal to
adopt the merger agreement, the merger will become effective as
promptly as practicable following the satisfaction or waiver of
the other conditions to the merger, subject to the terms of the
merger agreement.
18
Rights of
Stockholders Who Seek Appraisal
Stockholders are entitled to exercise dissenters rights
under the IBCA in connection with the merger if you take certain
actions and meet certain conditions. This means that you are
entitled to have the fair value of your shares of common stock
determined by the Illinois Circuit Court and to receive payment
based on that valuation. The ultimate amount you receive in an
appraisal proceeding may be less than, equal to or more than the
amount you would have received under the merger agreement.
Payment
of Solicitation Expenses
The expenses of preparing, printing and mailing this proxy
statement and the proxies solicited hereby will be borne jointly
by the Company and Parent. The Company may reimburse brokers,
banks and other custodians, nominees and fiduciaries
representing beneficial owners of shares of common stock for
their expenses in forwarding soliciting materials to beneficial
owners of common stock and in obtaining voting instructions from
those owners. Our directors, officers and employees may also
solicit proxies by telephone, by facsimile, by email, by mail,
on the Internet or in person. They will not be paid any
additional amounts for soliciting proxies.
The Company has engaged Georgeson to assist in the solicitation
of proxies for the special meeting. The Company estimates that
it will pay Georgeson a fee of approximately $10,000, plus fees
for direct telephone solicitations of $6.00 per completed call
(both incoming and outgoing). The Company will reimburse
Georgeson for reasonable out-of-pocket expenses and will
indemnify Georgeson and its affiliates against certain claims,
liabilities, losses, damages and expenses.
Questions
and Additional Information
If you have questions about the merger, the special meeting or
how to submit your proxy, or if you need additional copies of
this proxy statement or the enclosed proxy card, please call
Georgeson at (866)
482-5136
(toll-free)
or (212)
440-9800
(banks and brokers).
THE
MERGER (PROPOSAL 1)
This discussion of the merger is qualified in its entirety by
reference to the merger agreement, which is attached to this
proxy statement as Annex A. You should read the
entire merger agreement carefully as it is the legal document
that governs the merger.
The
Merger
The merger agreement provides that Merger Sub will merge with
and into the Company. The Company will be the surviving
corporation in the merger and will continue to do business
following the merger. As a result of the merger, the Company
will cease to be a publicly traded company. You will not own any
shares of the capital stock of the surviving corporation.
Merger
Consideration
In the merger, each outstanding share of common stock (except
for the excluded shares) will be automatically cancelled and
converted into the right to receive the per share merger
consideration of $8.55 in cash, less any applicable withholding
taxes.
Background
of the Merger
In the ordinary course of business, the Board and senior
management review and consider various strategic alternatives
available to the Company that may enhance stockholder value. In
addition, from time to time over the past several years, a
number of parties have approached Mr. Theodore Schwartz,
our chairman of the Board and founder of the Company, who
beneficially owns, directly or indirectly, shares of our common
stock representing approximately 38% of total shares
outstanding, and inquired about potential interest in a
transaction involving the sale of the Company. The Board has
also, on occasion, formed a Strategic Alternatives Committee,
which we refer
19
to as SAC or the Committee, to evaluate potential transactions
and other strategic options for the Company. However, prior to
the discussions detailed below, such approaches did not proceed
past such preliminary inquiries.
In January 2011, Mr. Kevin Keleghan, chief executive
officer of the Company, had a conversation with the chief
executive officer of Party A, another company in the customer
service industry regarding a potential merger of
semi-equals. Over the following month,
Mr. Keleghan had several additional conversations regarding
the potential merger. During this time period, Mr. Keleghan
sought the financial advice of Credit Suisse, which had provided
financial advice to the Company since 2007 on various merger and
acquisition related matters. In February 2011, Party A informed
Mr. Keleghan that it was not interested in a merger of
semi-equals, but proposed instead to acquire all of APAC at
$6.50 per share in cash. Mr. Keleghan communicated the
non-binding oral proposal to Mr. Theodore Schwartz, in his
capacity as the Chairman of the Board. Messrs. Schwartz and
Keleghan discussed the proposal and also sought input from
Credit Suisse. Following these discussions, Mr. Keleghan
informed Party A that its non-binding proposal was not likely to
be of interest to the Board. In response, Party A indicated that
it was prepared to offer to acquire APAC for $7.00 per share in
cash. Mr. Keleghan informed Mr. Schwartz and certain
other directors of the revised offer. After such directors
discussed the proposal, again with input from Credit Suisse,
Mr. Keleghan communicated to Party A that its revised
proposal was not of interest to the Board.
On March 4, 2011, after additional discussions between APAC
and Party A, the Company received a non-binding written proposal
from Party A to acquire all of APACs common stock at a
price of $7.50 per share in cash.
On March 6, 2011, the Board convened a meeting at which
representatives from Credit Suisse were present to discuss the
proposal from Party A as well as the Companys past
contacts with entities which had expressed an interest in
acquiring or combining with the Company. Mr. Keleghan and
Mr. Schwartz reported on their past contacts with
representatives from Party A, Party B, a company in the customer
service industry and Party C, a company in the customer service
industry, and representatives from Credit Suisse identified
other potentially interested strategic buyers. Mr. Schwartz
also reported on a past preliminary inquiry he had received from
a potential private equity firm or financial buyer. After
discussing the process for proceeding with these potential
buyers, the Board directed Credit Suisse to acknowledge the
proposal from Party A and to seek additional information on its
ability to finance a transaction. The Board also instructed
Credit Suisse to solicit expressions of interest from certain
other parties.
On March 9, 2011, the Company retained Kirkland &
Ellis LLP, which we refer to as Kirkland, as its outside legal
counsel.
On March 14, 2011, the Board convened a meeting at which
representatives from Credit Suisse and Kirkland were present.
Credit Suisse reported on various expressions of interest it had
received from certain private equity firms and certain potential
strategic buyers, and updated the committee on further
discussions it had had with Party A and its financial advisor.
Kirkland then reviewed with the Board various legal and
fiduciary considerations relevant to the discharge of its duties
and responsibilities. The Board then discussed the potential
process going forward. Credit Suisse proposed that it continue
to have discussions with parties who had expressed interest and
that it reach out to a targeted list of potential parties and
invite them to submit non-binding indications of interest for
the potential acquisition of the Company. A targeted list was
proposed in order to create competition among the leading
potential acquirers while preserving confidentiality. The
parties on this list were identified by Credit Suisse as those
with the greatest likelihood of interest in a possible
transaction with the Company based on, among other things, their
natural operational and business overlap with the Company,
whether they had previously expressed interest in acquiring the
Company or making acquisitions in the industry and whether they
had sufficient financial resources to acquire the Company. The
Board then directed Credit Suisse to contact the potential
buyers that were discussed.
Beginning on March 14, 2011 and continuing through
April 6, 2011, Credit Suisse contacted 10 potential buyers
for APAC, instructing them to submit indications of interest
based on publicly available information if they were interested
in potentially pursuing an acquisition of the Company. That
group included 6 potential strategic buyers and 4 potential
financial buyers. Of the 10 potential buyers contacted, 4 (3
potential strategic buyers and 1 potential financial buyer)
executed confidentiality agreements with the Company between
April 4 and May 4, 2011. Each confidentiality agreement
executed by the 4 potential buyers contained a standstill
provision that, among other
20
things, restricted the ability of each such potential buyer to
acquire or seek to acquire the assets or securities of the
Company without its consent.
Beginning on April 5, 2011, Company management made
presentations to, and held diligence discussions with, each
potential buyer who executed a confidentiality agreement as of
that date.
On April 13, 2011, the Board convened a meeting at which
Credit Suisse provided an update regarding communications with
potential buyers. Representatives of Credit Suisse reviewed the
verbal and written indications of interest that had been
provided to date. The Company had received 3 written indications
of interest and 2 verbal indications of interest, which ranged
from $7.00 per share to $8.50 per share. Based on the value
ranges and other proposed transaction terms included in each
indication of interest, the Board determined to permit 4 of the
potential buyers to proceed in the process (1 potential
financial buyer, Party D, and 3 potential strategic buyers,
including Party E).
On April 20, 2011, the Board by unanimous written consent
re-formed the Companys Strategic Alternatives Committee.
The Committee was tasked with considering potential strategic
alternatives for the Company, including possible acquisitions
and sales, and was authorized, among other items, to negotiate
the terms of possible transactions involving the Company. All
proposals recommended by the Committee were subject to final
Board approval, though the Committee could reject proposals that
it determined it could not recommend to the Board.
Messrs. John J. Park, Theodore G. Schwartz and Samuel K.
Skinner served as the Committees members. The Committee
was chaired by Mr. Park.
On April 22, 2011, the Strategic Alternatives Committee
held a meeting. Company management presented an update on the
process and diligence requests. The Committee also considered
the amended terms of its engagement with Credit Suisse and
discussed issues relating to the frequency and procedures for
future meetings.
On April 29, 2011 and May 6, 2011, the Strategic
Alternatives Committee held meetings at which Company management
and representatives of Credit Suisse were present. Updates were
provided on the process and feedback from the potential buyers,
and next steps were discussed.
On May 10, 2011, the Board held a meeting at which Company
management was present. Among other matters discussed,
Mr. Park, as chairman of the SAC, gave an update on the
process, and Mr. Keleghan provided additional information.
On May 19, 2011, the Company opened an online data room to
potential buyers in order to provide additional confidential
information about the Company to the continuing potential buyers
in the process.
On May 23, 2011, Credit Suisse was contacted by
representatives of OEP to explore the possibility of acquiring
the Company. On May 25, 2011, at the Companys
direction, Credit Suisse informed the representatives of OEP
that OEP could join the process and sent OEP the Companys
form confidentiality agreement.
On May 27, 2011, the Strategic Alternatives Committee held
a meeting at which Company management and representatives of
Credit Suisse and Kirkland were present. Management presented an
update on the process to the SAC, including OEPs
participation in the process. Credit Suisse discussed the
timeline for the process and necessary next steps. A brief
discussion followed regarding a draft merger agreement that had
been prepared by Kirkland.
On June 3, 2011, the Strategic Alternatives Committee held
a meeting at which Company management and representatives of
Credit Suisse and Kirkland were present. Management presented an
update on the process to the SAC. Credit Suisse discussed
upcoming events and the timeline for the process. Kirkland
discussed the latest versions of the draft merger agreement. The
SAC instructed Credit Suisse to contact the potential buyers to
obtain definitive proposals.
On the afternoon of June 3, 2011, Credit Suisse sent final
instruction letters to each of the potential buyers remaining in
the process, other than OEP, which had yet to execute a
confidentiality agreement. The letters directed the potential
buyers to submit a definitive proposal for the acquisition of
the Company no later than June 28, 2011, and advised that
proposals including contingencies would be disfavored. Enclosed
with each letter was a draft merger agreement prepared by
Kirkland. The letters also requested written comments on the
draft merger
21
agreement and a list of any further approvals or other items
that would need to be completed prior to entering into a
definitive merger agreement.
On the morning of June 7, 2011, the Board held a meeting at
which Company management was present. Among other matters, the
Board discussed the current status of the process and the
expected timeline for the process. Management gave an overview
on the potential buyers.
On the afternoon of June 7, 2011, OEP executed a
confidentiality agreement with the Company and was provided
access to the data room promptly thereafter. OEP was also
provided with a final instruction letter.
On June 17, 2011, the Strategic Alternatives Committee held
a meeting at which Company management and representatives of
Credit Suisse and Kirkland were present. Management presented an
update on the process to the SAC. Credit Suisse discussed
upcoming events and the timeline for the process. The SAC
discussed next steps in light of the upcoming deadline.
On June 28, 2011, in response to the final instruction
letters, three potential buyers submitted final written
proposals ranging from $6.75 to $8.00 per share, and one
potential buyer (Party C) submitted an oral proposal of
$7.50 per share. Party C asked at that point if its offer at
$7.50 would be sufficient to enable the Company to enter into a
definitive agreement with Party C. When the Company refused to
state whether or not $7.50 would be sufficient, Party C informed
the Company that it was withdrawing from the process. Also, on
June 28, 2011, OEP contacted Credit Suisse to inform them
that it was interested in making a proposal, but was currently
unable to do so due to an internal policy issue.
On June 29, 2011, OEP informed Credit Suisse that it had
resolved its internal policy issue and submitted a written
proposal of $8.00 per share.
On June 30, 2011, the Strategic Alternatives Committee met
to review the proposals. Credit Suisse gave a presentation
regarding the financial terms of the proposals and Kirkland gave
a presentation regarding the proposed transaction terms. All
potential buyers had indicated that contact with the
Companys top customers for the purpose of conducting a due
diligence review was a condition to signing a definitive merger
agreement. Two potential buyers, OEP and Party E, had made
proposals of $8.00 per share. OEP and Party E included in their
proposals a request that Mr. Schwartz and the Schwartz
trusts enter into a voting agreement in support of the merger.
Following discussion, the Strategic Alternatives Committee
directed Credit Suisse and Kirkland to continue to negotiate
with OEP and Party E in an effort to obtain improved price and
transaction terms and to set a deadline of noon CT on
July 5, 2011 for them to submit revised proposals. Credit
Suisse contacted representatives of OEP and Party E on the night
of June 30, 2011. Credit Suisse informed each of them that
only two potential buyers remained and that neither proposal was
clearly superior to the other. Credit Suisse also informed each
party of the new deadline to resubmit proposals.
On July 1, 2011, Dechert LLP, which we refer to as Dechert,
on behalf of OEP, discussed with Kirkland certain terms in the
draft merger agreement Dechert had submitted. Also on
July 1, 2011, counsel for Party E discussed certain terms
in the draft merger agreement they had submitted with Kirkland.
Later that day, on July 1, 2011, OEP submitted a revised
proposal that increased its price to $8.40 per share and stated
that it was willing to sign a merger agreement without
conducting any further customer due diligence. The proposal
stated that it would expire at 5:00 p.m. CT on
July 4, 2011. The revised proposal also included a revised
draft merger agreement, reflecting certain changes discussed
between Kirkland and Dechert.
On July 2, 2011, the Strategic Alternatives Committee held
a meeting at which representatives of Credit Suisse and Kirkland
were present. Credit Suisse presented a summary of the events
since June 28, 2011, and OEPs revised proposal was
discussed. Following discussion, the SAC directed its advisors
to contact Party E to let it know that a revised proposal had
been received from the remaining potential buyer, that the
Companys advisors were fully engaged with such potential
buyer, and that its advisors were available to answer any
questions Party E might have regarding concerns the Company had
with Party Es proposal. After the SAC meeting, Credit
Suisse contacted representatives of Party E, who informed Credit
Suisse that they would submit a revised proposal over the
weekend. The SAC also determined at this time to recommend that
the entire Board review any revised proposals that were received
and consider those proposals as an entire Board.
22
On July 3, 2011, Party E submitted a revised proposal that
increased its price to $8.25 per share and shortened its
estimated time for confirmatory due diligence from two weeks to
five business days. Shortly after receiving the revised
proposal, Credit Suisse received a call from representatives of
Party E, who indicated that they were in the process of
convening Party Es board of directors to discuss the
proposed acquisition and could potentially increase its offer
price.
On the morning of July 4, 2011, Kirkland sent revised
drafts of the merger agreement to representatives of Party E.
Later that morning, representatives of Party E contacted Credit
Suisse and stated that Party Es board had authorized Party
E to offer $8.50 per share and that the proposed price per share
was their best and final offer. At approximately
noon on July 4, 2011, Kirkland circulated a revised draft
of the merger agreement and a markup from Katten Muchin Rosenman
LLP, which we refer to as Katten, Mr. Schwartzs
counsel, of the voting agreement to Dechert, acting on behalf of
OEP. In the afternoon of July 4, 2011, Kirkland had
conversations with the outside financial and legal advisors for
Party E and with Dechert to discuss issues of concern with the
potential buyers respective markups of the merger
agreement.
On the night of July 4, 2011, the Board met to receive an
update on the process. Credit Suisse and Kirkland provided the
Board with an update on the events leading up to the submission
of the competing proposals. The discussion included the price
and a review of the draft merger agreements and other terms
contained in the letters. The Board authorized management,
Credit Suisse and Kirkland to continue discussions with both
parties to attempt to improve the price and terms of the
proposals.
At approximately 10:15 a.m. CT on July 5, 2011,
the Company received a revised draft merger agreement from
Dechert on behalf of OEP. Later that morning, representatives of
OEP, Dechert, Kirkland and Credit Suisse had a telephonic
meeting to discuss the Companys concerns with the latest
draft. On that call, OEP indicated a willingness to adopt the
Companys view on a number of issues relating to Company
representations and warranties, post-signing covenants, closing
conditions and termination rights.
At approximately 1:20 p.m. CT on July 5, 2011,
representatives of Party Es financial advisor circulated
to Credit Suisse a letter from Party Es chief executive
officer addressing certain matters of concern on the merger
agreement relating to, among other things, post-signing
covenants and termination fee issues. The letter indicated that
these issues reflected conceptual differences between the
Company and Party E and expressed confidence that a deal could
be reached if these differences were resolved. It did not
indicate whether Party E was willing to accept any of the
Companys positions, however. Party Es financial
advisor had also indicated that Party E would require certain
customer diligence prior to executing a definitive merger
agreement.
At approximately 2:00 p.m. CT on July 5, 2011,
OEP submitted a written revised offer that increased its price
to $8.50 per share, along with a revised merger agreement. The
offer noted that it would expire at 8:00 p.m. CT on
July 5, 2011.
During the afternoon of July 5, Katten engaged in
negotiations with Dechert regarding the terms of the voting
agreement with respect to Mr. Schwartz and the Schwartz
trusts. A revised voting agreement was circulated by Dechert to
Katten later that evening.
At approximately 7:50 p.m. CT on July 5, 2011,
representatives of Party E circulated a revised draft merger
agreement, which noted, among other items, that the purchase
price would be reduced to the extent that the Company was not
debt free at closing or failed to meet certain net working
capital and cash targets.
At approximately 8:00 p.m. CT on July 5, 2011,
the Board convened a meeting to review the latest proposals from
Party E and OEP. Credit Suisse provided an overview of the
status of negotiations with Party E and OEP and noted that the
proposals were indistinguishable in price, except that Party
Es proposal provided that the purchase price could be
subject to reduction based on the Companys debt, net
working capital and cash positions as of the closing. Kirkland
then provided a review of the legal differences between the two
proposals contained in the draft merger agreements that had been
negotiated and the letters submitted by each party. Following a
discussion of these differences and consideration of their
effect upon certainty of closing, the Companys ability to
consider competing new proposals, and potential issues with
obtaining a signed definitive agreement, the Board, viewing the
OEP proposal as superior to the Party E proposal, directed
Credit Suisse and Kirkland to negotiate with OEP to determine if
final terms could be reached for the Board to consider.
23
On the night of July 5, 2011, Credit Suisse contacted OEP
as directed by the Board. Following discussions between Credit
Suisse and OEP, OEP increased its proposal to $8.55 per share
and made certain concessions regarding the size of the
termination fee and closing conditions. Following these
discussions, Kirkland continued to negotiate with Dechert on the
terms of the merger agreement.
On the morning of July 6, 2011, Kirkland circulated a
revised version of the merger agreement and the disclosure
letter to OEP. The parties continued to negotiate terms
throughout the day. During the same time period, Katten
negotiated with Dechert to finalize the terms of
Mr. Schwartzs voting arrangements.
On the evening of July 6, 2011, the Board convened a
meeting to consider entering into a merger agreement with OEP.
Credit Suisse reviewed with the Board the events that had
transpired since the Boards meeting the day before. Credit
Suisse also gave the Board a financial presentation regarding
the proposal. A representative of Kirkland advised the Board of
its fiduciary duties in the context of such a transaction and
the Board discussed its fiduciary duties. Kirkland then led the
Board through a review of the latest version of the draft merger
agreement and other transaction documents, including the voting
agreement. The Board then discussed the draft agreements in
detail. The Chairman then asked Credit Suisse for its view as to
the fairness of the merger consideration. Credit Suisse then
rendered an oral opinion to the Board (which was subsequently
confirmed in writing by delivery of Credit Suisses written
opinion dated July 6, 2011) that as of that date and
based upon and subject to the various assumptions and
qualifications stated in its opinion, the merger consideration
to be received by holders of Company stock (other than the
excluded persons) in the merger was fair, from a financial point
of view, to such stockholders. After further discussion, the
Board determined that the merger agreement and the transactions
contemplated thereby were advisable and in the best interests of
the Company, adopted the merger agreement and the transactions
contemplated thereby, directed that the Company submit the
adoption of the merger agreement to a vote at a special meeting
of the shareholders to be held in accordance with the terms of
the merger agreement, and resolved to recommend the merger and
the merger agreement to the shareholders.
Following adjournment of the meeting, representatives of
Kirkland, Dechert and Katten continued to work the night of
July 6, 2011 to finalize the merger agreement, the voting
agreement and all other related documentation for execution.
These documents were promptly executed thereafter.
On the morning of July 7, 2011, the Company and OEP issued
a joint press release announcing the execution of the merger
agreement.
Reasons
for the Merger; Recommendation of the Board
In evaluating the merger agreement, the merger and the other
transactions contemplated by the merger agreement, the Board
consulted with our senior management, outside legal counsel and
independent financial advisors. In recommending that the
Companys stockholders vote their shares of common stock in
favor of adoption of the merger agreement, the Board also
considered a number of factors, including the following:
Financial
Terms; Fairness Opinion; Certainty of Value
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The historic trading ranges of the common stock and the
potential trading range of the common stock absent takeover
speculation.
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The fact that the merger consideration of $8.55 represented a
premium of approximately 56.8%, 50.6% and 47.6% over the one,
three and six month volume-weighted average prices of the common
stock, prior to market close on July 6, 2011, the trading
day prior to the execution of the merger agreement.
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The fact that the merger consideration of $8.55 represented a
premium of approximately 50.2% over the average closing price of
the common stock for the 90 calendar days prior to July 6,
2011; and a premium of approximately 50.3% over the average
closing price of the common stock for the 52-week period prior
to July 6, 2011.
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Credit Suisses presentation to the Board of certain
financial analyses and its opinion that, as of July 6, 2011
and based upon and subject to the various qualifications,
limitations and assumptions stated in its opinion, the
consideration to be offered to the holders of the Companys
common stock (other than excluded persons)
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in the merger was fair, from a financial point of view, to such
stockholders. See below under the heading
Opinion of Credit Suisse Securities (USA)
LLC and Annex C.
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The fact that the all-cash merger consideration will provide
certainty of value and liquidity to the Companys
stockholders, while eliminating long-term business and execution
risk.
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The availability of dissenters rights to Company
stockholders who comply with certain procedures under Illinois
law to have the fair value of the common stock
determined by an Illinois court.
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Financial
Condition and Prospects of the Company; Strategic
Alternatives
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The difficulty of predicting future prospects for the Company on
a standalone basis.
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The increasing challenges faced by the Company as an independent
company pursuing organic growth.
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The fact that the Companys ability to implement its growth
strategy was dependent on identification of attractive
acquisition targets and its ability to acquire them at
acceptable valuations and to integrate them successfully.
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The perceived risks of continuing as a standalone company or
pursuing other alternatives and the range of potential benefits
to the Companys stockholders of these alternatives; the
assessment that no other alternatives were reasonably likely to
create greater value for the Companys stockholders, taking
into account risk of execution as well as business, competitive,
industry and market risk, than the merger.
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Market
Check; Alternative Proposals
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The Boards view that the merger consideration was the
highest price reasonably attainable by the Companys
stockholders in a sale of the Company, considering potentially
interested third parties and strategic opportunities.
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The Boards view that the Company, with the assistance of
its advisors, negotiated the highest price per share of common
stock that OEP was willing and able to cause Parent to pay.
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The Boards view that the Company, with the assistance of
Credit Suisse, identified and contacted a sufficient number of
potential acquirors, including both strategic parties and
financial parties, to obtain the best value reasonably available
to the Companys stockholders.
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The fact that following the March 4, 2011 offer from Party
A to acquire all of APACs stock at $7.50 per share in cash
Credit Suisse contacted, and Credit Suisse or the Company were
contacted by, additional strategic and financial parties
regarding a potential transaction.
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The fact that Credit Suisse had discussions with a total of six
strategic parties and five financial parties, including those
strategic and financial parties that Credit Suisse and Company
management identified as likely potential acquirors.
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The fact that while there were preliminary discussions and
meetings with several potential third party acquirors, each of
the other parties ultimately indicated that they were not
interested in acquiring the Company at a price as high as or
higher than $8.55 per share.
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The Boards view that third parties are not likely to be
unduly deterred from making a superior proposal by the
provisions of the merger agreement.
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The fact that the Board may furnish information or enter into
discussions in connection with an acquisition proposal if it
determines in good faith, after consultation with its outside
counsel and financial advisor, that such acquisition proposal
constitutes or would be reasonably expected to result in a
superior proposal and that the failure to do so would be
inconsistent with the Boards fiduciary duties.
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The fact that the Board may terminate the merger agreement in
order to enter into a definitive agreement with respect to a
competing proposal that the Board determines, in good faith,
after consultation with its
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outside counsel and financial advisor, is a superior proposal,
if it provides Parent prior notice and an opportunity to
negotiate and pays a termination fee.
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The fact that the Board may change its recommendation to the
Companys stockholders if it determines in good faith after
consultation with its legal and financial advisors that the
failure to change its recommendation would be inconsistent with
the directors duties under applicable law.
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The fact that, as a condition to Parent and Merger Sub entering
into the merger agreement, Mr. Schwartz and the Schwartz
trusts, which collectively own approximately 38% of the
outstanding common stock have agreed to enter into a voting
agreement with Parent and Merger Sub to support the merger, but
that such voting agreement would terminate if the merger
agreement were terminated, including if the merger agreement is
terminated by the Company as permitted in connection with a
superior proposal or if the merger agreement is terminated by
Parent as permitted in connection with a Board change in
recommendation to the Company stockholders with respect to the
merger.
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Merger
Agreement Terms
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The Boards view that the merger agreement has customary
terms and was the product of extensive arms-length negotiations.
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The Boards view that the termination fee of
$15 million, or approximately 3.2% of the aggregate equity
value of the transaction, that the Company would be required to
pay to Parent in certain limited circumstances, is reasonable
and not preclusive of other offers.
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The fact that there is no third-party consent condition, no
stockholder litigation condition and no financing condition in
the merger agreement.
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The Boards belief that while the closing of the merger is
subject to certain antitrust approvals, there were not likely to
be significant antitrust or other regulatory impediments to the
closing of the merger.
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The fact that Parent and Merger Sub have agreed to use
reasonable best efforts to take, and to cause their affiliates
to take, promptly any and all steps necessary to obtain all
consents under antitrust laws, including committing to
divestments.
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The fact that a majority of the members of the Board were
independent and that no member of the Board would have an equity
interest in the Company following the merger.
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Likelihood
of Consummation
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The fact that OEP has a portfolio company in the customer care
services industry, NCO Group, Inc., and the Boards belief
that this gives OEP a strategic rationale for acquiring the
Company and, therefore, additional motivation to complete the
merger.
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Financing;
Remedies
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The fact that the OEP Fund provided a guaranty of up to
$469 million, for the full and punctual payment,
performance and discharge of all the obligations of, and all
liabilities and damages payable by, Parent and Merger Sub, under
the merger agreement, including the obligation to pay the merger
consideration if, as and when due.
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The fact that under certain circumstances, the merger agreement
permits the Company to seek specific performance remedies
against Parent and Merger Sub.
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Risks
The Board also considered a number of uncertainties and risks in
its deliberations concerning the merger and the other
transactions contemplated by the merger agreement, including the
following:
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The fact that receipt of the all-cash merger consideration would
be taxable to the Companys stockholders that are treated
as U.S. holders for U.S. federal income tax purposes.
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The fact that the Companys stockholders would forego the
opportunity to realize the potential long-term value of the
successful execution of the Companys current strategy as
an independent company.
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The fact that under the terms of the merger agreement, the
Company is unable to solicit other acquisition proposals during
the pendency of the merger.
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The fact that the termination fee could discourage other
potential acquirors from making a competing offer to acquire the
Company; although the Board believed that the termination fee
was customary in amount and would not unduly deter any other
party who might be interested in acquiring the Company.
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The restrictions on the Companys conduct of business prior
to completion of the merger, which could delay or prevent the
Company from undertaking business opportunities that may arise
or taking certain other actions with respect to its operations.
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The significant costs involved in connection with entering into
and completing the merger and the substantial time and effort of
management required to complete the merger, which may disrupt
the Companys business operations.
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The fact that, while the Company expects the merger to be
consummated if approved by the Companys stockholders,
there can be no assurance that all conditions to the
parties obligations to complete the merger will be
satisfied.
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The risk that the proposed merger might not be completed and the
effect of the resulting public announcement of termination of
the merger agreement on the trading price of the common stock.
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The fact that the market price of the common stock could be
affected by many factors, including: (1) the reason or
reasons for which the merger agreement was terminated and
whether such termination resulted from factors adversely
affecting the Company; (2) the possibility that, as a
result of the termination of the merger agreement, the
marketplace would consider the Company to be an unattractive
acquisition candidate; and (3) the possible sale of common
stock by short-term investors following an announcement that the
merger agreement was terminated.
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The fact that the Companys business, sales operations and
financial results could suffer in the event that the merger is
not consummated and that the Companys stock price would
likely be adversely affected.
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The fact that the announcement and pendency of the merger, or
failure to complete the merger, may cause substantial harm to
the Companys relationships with its employees (including
making it more difficult to attract and retain key personnel and
the possible loss of key management, technical, sales or other
personnel), vendors and customers and may divert employees
attention away from the Companys day-to-day business
operations.
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The fact that the Companys directors and executive
officers may have interests in the merger that may be different
from, or in addition to, those of the Companys
stockholders. For more information about such interests, see
below under the heading Interests of Certain
Persons in the Merger.
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The Board believed that, overall, the potential benefits of the
merger to the Companys stockholders outweighed the risks
and uncertainties of the merger.
The foregoing discussion of factors considered by the Board is
not intended to be exhaustive, but includes the material factors
considered by the Board. In light of the variety of factors
considered in connection with its evaluation of the merger, the
Board did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors
considered in reaching its determinations and recommendations.
Moreover, each
27
member of the Board applied his or her own personal business
judgment to the process and may have given different weight to
different factors.
The Board unanimously recommends that you vote
FOR the proposal to adopt the merger agreement,
FOR the proposal to adjourn the special meeting and
FOR the advisory vote regarding certain
merger-related executive compensation arrangements.
Opinion
of Credit Suisse Securities (USA) LLC
Credit Suisse acted as our financial advisor in connection with
the merger. In connection with its review of the proposed
merger, our board of directors requested that Credit Suisse
advise it with respect to the fairness to the holders of our
common stock (other than the excluded persons), from a financial
point of view, of the merger consideration to be received by
such stockholders in the merger. On July 6, 2011, our board
of directors met to review the proposed merger and the terms of
the proposed merger agreement. During this meeting, Credit
Suisse reviewed with our board of directors certain financial
analyses, as described below, and rendered its oral opinion to
our board of directors (which was subsequently confirmed in
writing by delivery of Credit Suisses written opinion
dated the same date) that, as of July 6, 2011 and based
upon and subject to the various assumptions and qualifications
stated in its opinion, the merger consideration to be received
by the holders of our common stock (other than the excluded
persons) in the merger was fair, from a financial point of view,
to such stockholders.
The full text of Credit Suisses written opinion, dated
July 6, 2011, which sets forth, among other things, the
procedures followed, assumptions made, matters considered and
limitations on the scope of the review undertaken by Credit
Suisse in connection with its opinion, is attached as
Annex C of the proxy statement and is incorporated into
this proxy statement by reference in its entirety. Holders of
our common stock are encouraged to read this opinion carefully
in its entirety. Credit Suisses opinion was provided to
our board of directors in connection with its evaluation of the
merger consideration to be received by the holders of our common
stock in the merger and Credit Suisses opinion does not
constitute advice or a recommendation to any stockholder as to
how such stockholder should vote or act on any matter relating
to the merger. Credit Suisses opinion addresses only the
fairness to the holders of our common stock (other than the
excluded persons), from a financial point of view, of the merger
consideration and does not address any other aspect or
implication of the merger or any other agreement, arrangement or
understanding entered into in connection with the merger or
otherwise. The following is a summary of the Credit Suisse
opinion and is qualified in its entirety by reference to the
full text of the opinion attached as Annex C, which you are
encouraged to read carefully in its entirety.
In arriving at its opinion, Credit Suisse, among other things:
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reviewed a draft of the merger agreement dated July 6, 2011;
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reviewed drafts of certain related agreements;
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reviewed certain publicly available business and financial
information relating to the Company;
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reviewed certain other information relating to the Company,
including certain public and management financial forecasts,
provided to or discussed with Credit Suisse by the Company;
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met with the Companys management to discuss the business
and prospects of the Company;
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considered certain financial and stock market data of the
Company, and compared that data with similar data for other
publicly held companies in businesses Credit Suisse deemed
similar to that of the Company;
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considered, to the extent publicly available, the financial
terms of certain other business combinations and other
transactions which had recently been effected; and
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considered such other information, financial studies, analyses
and investigations and financial, economic and market criteria
which Credit Suisse deemed relevant.
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In connection with its review, Credit Suisse did not
independently verify any of the foregoing information and
assumed and relied on such information being complete and
accurate in all material respects. With respect to the
28
financial forecasts for the Company prepared by the management
of the Company, the management of the Company advised Credit
Suisse, and Credit Suisse assumed, that such forecasts were
reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Companys
management as to the future financial performance of the
Company. With respect to the publicly available financial
forecasts for the Company, Credit Suisse reviewed and discussed
such forecasts with the management of the Company, and Credit
Suisse assumed, with the Companys consent, that such
forecasts represented reasonable estimates and judgments with
respect to the future financial performance of the Company.
Credit Suisse also assumed, with the Companys consent,
that, in the course of obtaining any regulatory or third party
consents, approvals or agreements in connection with the merger,
no delay, limitation, restriction or condition will be imposed
that would have an adverse effect on the Company and that the
merger would be consummated in accordance with the terms of the
merger agreement without waiver, modification or amendment of
any material term, condition or agreement thereof. Credit Suisse
also assumed, with the Companys consent, that the merger
agreement and certain related agreements when executed would
conform to the drafts reviewed by Credit Suisse in all respects
material to Credit Suisses analyses. In addition, Credit
Suisse was not requested to make, and did not make, an
independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company and was not furnished
with any such evaluations or appraisals. Credit Suisses
opinion addressed only the fairness, from a financial point of
view and as of the date of its opinion, to the holders of the
Companys common stock (other than the excluded persons) of
the merger consideration and did not address any other aspect or
implication of the merger or any other agreement, arrangement or
understanding entered into in connection with the merger or
otherwise including, without limitation, the fairness of the
amount or nature of, or any other aspect relating to, any
compensation to any officers, directors or employees of any
party to the merger, or class of such persons, relative to the
merger consideration or otherwise. The issuance of Credit
Suisses opinion was approved by its authorized internal
committee.
Credit Suisses opinion was necessarily based upon
information made available to it as of the date of the opinion
and financial, economic, market and other conditions as they
existed and could be evaluated on such date. Credit
Suisses opinion did not address the merits of the merger
as compared to alternative transactions or strategies that may
be available to the Company nor did it address the
Companys underlying decision to proceed with the merger.
Financial
Analyses
In preparing its opinion to the Companys board of
directors, Credit Suisse performed a variety of analyses,
including those described below. The summary of Credit
Suisses analyses described below is not a complete
description of the analyses underlying Credit Suisses
opinion. The preparation of a fairness opinion is a complex
process involving various quantitative and qualitative judgments
and determinations as to the most appropriate and relevant
methods of financial, comparative and other analyses and the
adaptation and application of these methods to the unique facts
and circumstances presented. As a consequence, neither a
fairness opinion nor its underlying analyses are readily
susceptible to partial analysis or summary description. Credit
Suisse arrived at its opinion based on the results of all
analyses undertaken by it and assessed as a whole and did not
draw, in isolation, conclusions from or with regard to any
individual analysis, analytic method or factor. Accordingly,
Credit Suisse believes that the totality of its analyses must be
considered as a whole and that selecting portions of its
analyses, analytic methods and factors or focusing on
information presented in tabular format, without considering all
analyses and factors or the narrative description of the
analyses, could create a misleading or incomplete view of the
processes underlying its analyses and opinion.
In performing its analyses, Credit Suisse considered financial
information regarding the Company and general business,
economic, industry and financial conditions and other matters as
they existed on, and could be evaluated as of, the date of this
written opinion, except for certain market information that
Credit Suisse considered as of July 1, 2011. No company or
transaction used in Credit Suisses analyses for
comparative purposes is identical to the Company or the proposed
merger. An evaluation of the results of Credit Suisses
analyses is not entirely mathematical. Rather, Credit
Suisses analyses involve complex considerations and
judgments concerning financial and operating characteristics and
other factors that could affect the acquisition, public trading
or other values of the companies or transactions analyzed. While
the results of each analysis were taken into account in reaching
its overall conclusion with respect to fairness, Credit Suisse
did not make separate or quantifiable judgments regarding
29
individual analyses. The estimates contained in Credit
Suisses analyses and the implied reference ranges
indicated by Credit Suisses analyses are illustrative and
are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or
less favorable than those suggested by the analyses. In
addition, any analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold,
which may depend on a variety of factors, many of which are
beyond the control of the Company and the control of Credit
Suisse. Accordingly, the estimates used in, and the results
derived from, Credit Suisses analyses are inherently
subject to substantial uncertainty.
Credit Suisse was not requested to, and it did not, recommend
the specific consideration payable in the merger, which
consideration was determined by the Company and Parent, and the
decision by the Company to enter into the merger was solely that
of the Companys board of directors. Credit Suisses
opinion and financial analyses were provided to the
Companys board of directors in connection with its
consideration of the merger and were among many factors
considered by the board of directors of the Company in
evaluating the merger. Neither Credit Suisses opinion nor
its financial analyses were determinative of the consideration
or of the views of the Companys board of directors or the
Companys management with respect to the merger.
The following is a summary of the material financial analyses
performed by Credit Suisse for the Companys board of
directors in connection with the preparation of Credit
Suisses opinion and reviewed with the Companys board
of directors at a meeting held on July 6, 2011. The
financial analyses summarized below include information
presented in tabular format. The tables alone do not constitute
a complete description of the analyses and, in order to fully
understand Credit Suisses financial analyses, the tables
must be read together with the text of each summary. Considering
the data in the tables below without considering the full
narrative description of the financial analyses, including the
methodologies underlying and the assumptions, qualifications and
limitations affecting each analysis, could create a misleading
or incomplete view of Credit Suisses financial analyses.
Selected
Companies Analysis
Credit Suisse reviewed certain financial data, multiples and
ratios for the following publicly traded companies in the global
customer care business process outsourcing industry:
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Teleperformance S.A.
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Convergys Corporation
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TeleTech Holdings, Inc.
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Sykes Enterprises, Incorporated
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StarTek, Inc.
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Although none of the selected companies are directly comparable
to the Company, the selected companies were chosen because they
are publicly traded companies that operate in a similar industry
as the Company and have lines of business and financial and
operating characteristics similar to the Company. Credit Suisse
determined, using its professional judgment, that these selected
companies were the most appropriate for purposes of this
analysis and, while there may have been other companies that
operate in similar industries to the Company or have similar
lines of business or financial or operating characteristics to
the Company, Credit Suisse did not specifically identify any
other companies for this purpose. Credit Suisse calculated the
multiples and ratios for the selected companies using closing
stock prices as of July 1, 2011 and information it obtained
from public filings, publicly available research analyst
estimates and other publicly available information. With respect
to the selected companies, Credit Suisse compared, among other
things, enterprise value as a multiple of calendar years 2011
and 2012 estimated earnings before interest, taxes, depreciation
and amortization, which we refer to as EBITDA, and stock price
as a multiple of calendar years 2011 and 2012 estimated earnings
per share, which we refer to as EPS. Credit Suisse then applied
reference ranges of selected multiples for the selected
companies to corresponding financial data of the Company, using
calendar years 2011 and 2012 estimated EBITDA and EPS derived
from the financial forecasts provided by the Companys
management as described in the section of this proxy statement
titled The Merger Certain Company
Forecasts on page 32 as well as calendar years 2011
and 2012 estimated EBITDA and EPS based on publicly available
research analyst estimates. This analysis indicated the
following
30
implied equity value per share reference range for the
Companys common stock as compared to the per share merger
consideration:
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Implied Equity Value per Share
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Per Share
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Reference Range for APAC
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Merger Consideration
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$4.90 $7.50
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$8.55
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Selected
Transactions Analysis
Credit Suisse reviewed certain transaction multiples in the
following selected publicly-announced transactions, which
involved companies with businesses in the global customer care
business process outsourcing industry:
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Acquiror(s)
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Target
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Alcorica Inc.
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PRC, LLC
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Sykes Enterprises, Incorporated
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ICT Group, Inc.
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Stream Global Services, Inc.
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eTelecare Global Solutions, Inc.
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Affiliated Computer Services, Inc.
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e-Services Group International
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Tata Consultancy Services Ltd.
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Citigroup Global Services Ltd.
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Ayala Corp./Providence Equity Partners
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eTelecare Global Solutions, Inc.
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Aegis BPO
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PeopleSupport, Inc.
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Convergys Corporation
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Intervoice, Inc.
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WNS (Holdings) Ltd.
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Aviva Global Services
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Global BPO Services Corp.
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Stream Holdings Corporation
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Oak Hill Capital Partners
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Vertex Data Science Ltd.
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Diamond Castle Holdings, LLC
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PRC, LLC
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ClientLogic Corporation
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SITEL Corporation
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One Equity Partners
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NCO Group, Inc.
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TransWorks Information Services Ltd.
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Minacs Worldwide Inc.
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Thomas H. Lee Partners/Quadrangle Group
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West Corporation
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For the selected transactions, based on publicly available
financial information with respect to the target companies and
the selected transactions, Credit Suisse compared, among other
things, enterprise value as a multiple of the target
companys EBITDA over the last 12 months preceding the
announcement of the transaction, which we refer to as LTM.
Credit Suisse then applied a reference range of selected
multiples for the selected transactions to corresponding
financial data of the Company, using estimated LTM EBITDA of the
Company as of June 30, 2011, which gave pro forma effect to
the Companys acquisition of a portion of the tele-sales
services business unit of SEI, LLC, which closed on
April 29, 2011, as described in the section of this proxy
statement titled The Merger Certain Company
Forecasts on page 32. This analysis indicated the
following implied equity value per share reference range for the
Companys common stock as compared to the per share merger
consideration:
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Implied Equity Value per Share
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Per Share
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Reference Range for APAC
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Merger Consideration
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$7.40 $9.15
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$8.55
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Discounted
Cash Flow Analysis
Credit Suisse performed discounted cash flow analyses to
calculate the estimated present values of the unlevered,
after-tax free cash flows for the Company for the six months
ending December 31, 2011 and the fiscal years ending
December 31, 2012 through December 31, 2015, based on
estimates provided to Credit Suisse by the Companys
management as described in the section of this proxy statement
titled The Merger Certain Company
Forecasts on page 32. Credit Suisse calculated
estimated terminal values of the Company in 2015 by applying a
range of assumed forward EBITDA multiples from 4.0x to 5.5x. The
range of multiples was based on estimates provided to Credit
Suisse by the Companys management of EBITDA for the fiscal
year ending December 31, 2016. The present value of the
cash flows and terminal values were then calculated using
discount rates ranging from 9.5%
31
to 12.5% based on the Companys weighted average cost of
capital. This analysis indicated the following implied equity
value per share reference range for the Companys common
stock as compared to the per share merger consideration:
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Implied Equity Value per Share
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Per Share
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Reference Range for APAC
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Merger Consideration
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$7.10 $9.55
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$8.55
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Miscellaneous
The Company engaged Credit Suisse based on Credit Suisses
qualifications, experience and reputation, and its familiarity
with the Company and its business. Credit Suisse is an
internationally recognized investment banking firm and is
regularly engaged in the valuation of businesses and securities
in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes.
Credit Suisse will receive a fee of approximately $6.4 million
for its services, $750,000 of which was payable upon delivery of
its opinion and the remaining portion of which is contingent
upon the consummation of the merger. In addition, the Company
has agreed to reimburse Credit Suisse for its reasonable
expenses, including fees and expenses of legal counsel, and to
indemnify Credit Suisse and certain related parties against
certain liabilities and other items, including liabilities under
the federal securities laws, arising out of or relating to its
engagement. Credit Suisse and its affiliates have in the past
provided and are currently providing and in the future may
provide, investment banking and other financial services to the
Company and its affiliates, for which Credit Suisse and its
affiliates have received, and would expect to receive,
compensation, including having provided general financial
advisory services to the Company during the two years preceding
the date of Credit Suisses opinion. Credit Suisse and its
affiliates also have in the past provided investment banking and
other financial services to affiliates of Parent, including
having acted as financial advisor to Prodigy Health Holdings,
LLC, a portfolio company of OEP, an affiliate of Parent, in
connection with the sale of Prodigy Health Group, Inc. in June
2011, and in connection with OEPs acquisition of Smartrac
N.V. in December 2010. Credit Suisse and its affiliates may in
the future provide financial advice and services, to the
Company, Parent and our and their respective affiliates for
which Credit Suisse and its affiliates have received, and would
expect to receive, compensation. Credit Suisse is a full service
securities firm engaged in securities trading and brokerage
activities as well as providing investment banking and other
financial services. In the ordinary course of business, Credit
Suisse and its affiliates may acquire, hold or sell, for its and
its affiliates own accounts and the accounts of customers,
equity, debt and other securities and financial instruments
(including bank loans and other obligations) of the Company,
Parent and any other company that may be involved in the merger,
as well as provide investment banking and other financial
services to such companies.
Certain
Company Forecasts
The Company does not, as a matter of course, publicly disclose
projections as to its future financial performance. However, in
connection with their due diligence review of our Company, we
provided OEP and Parent with certain non-public financial
forecasts of the Companys operating performance for fiscal
years 2011 through 2015 prepared by the Company management. In
addition to the financial forecasts which were provided to OEP
and Parent, we provided Credit Suisse with certain non-public
financial forecasts of the Companys operating performance
for fiscal years 2011 through 2015 prepared by the
Companys management, reflecting organic growth.
Collectively, we refer to these financial forecasts as the
Forecasts.
The Forecasts were not prepared with a view to public disclosure
and are included in this proxy statement only because such
information was made available, in whole or in part, to OEP and
Parent, in connection with their due diligence review of the
Company, or to Credit Suisse for use in connection with its
financial analyses summarized above under
Opinion of Credit Suisse Securities (USA)
LLC. The Forecasts were not prepared with a view to
compliance with generally accepted accounting principles as
applied in the United States, which we refer to as GAAP, the
published guidelines of the SEC regarding projections or the
guidelines established by the American Institute of Certified
Public Accountants for preparation and presentation of
prospective financial information. Furthermore,
Ernst & Young LLP, our independent auditor, has not
examined, reviewed, compiled or otherwise applied procedures to
the Forecasts and, accordingly, assumes no responsibility for,
and expresses no opinion on,
32
them. The Forecasts included in this proxy statement have been
prepared by, and are the responsibility of, our management. The
Forecasts were prepared solely for internal use of the Company
and are subjective in many respects.
In compiling the Forecasts, the Companys management took
into account historical performance, combined with estimates
regarding revenues, operating income, capital spending and
stock-based compensation. Although the Forecasts are presented
with numerical specificity, they reflect numerous assumptions
and estimates as to future events made by our management that
our management believed were reasonable at the time the
Forecasts were prepared. However, this information is not fact
and should not be relied upon as being necessarily indicative of
actual future results. In addition, numerous factors, including
industry performance, the market for our existing and new
products and services, the competitive environment, expectations
regarding future acquisitions and general business, economic,
regulatory, market and financial conditions, all of which are
difficult to predict and beyond the control of our management,
may cause the Forecasts or the underlying assumptions not to be
reflective of actual future results. In addition, the Forecasts
do not take into account any circumstances or events occurring
after the date that they were prepared and, accordingly, do not
give effect to the merger or any changes to our operations or
strategy that may be implemented after June 6, 2011 or
completion of the merger. As a result, there can be no assurance
that the Forecasts will be realized, and actual results may be
materially better or worse than those contained in the
Forecasts. The inclusion of this information should not be
regarded as an indication that the Board, the Company, OEP,
Parent, Merger Sub, Credit Suisse or any other recipient of this
information considered, or now considers, the Forecasts to be
predictive of actual future results.
The Forecasts are forward-looking statements. For information on
factors that may cause the Companys future results to
materially vary, see Cautionary Statement Concerning
Forward-Looking Information above.
The key assumptions underlying the Forecasts include:
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Revenue growth for the forecast period was assumed to run
between 8.5% and 13.9% with a compound annual growth rate of
10.7%. To determine growth rates, we examined trends and
prospects with specific customers, vertical markets, and
geographies and we assumed that
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Most accounts will grow between 0% and 5%;
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A few, recently added, new accounts would grow at 10% or greater;
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The SEI, LLC, which we refer to as SEI, business would grow at a
faster rate than our existing business, consistent with our
acquisition case;
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Accounts in a certain vertical market would decline 10% due to
trends in that industry;
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We would continue to win business with unidentified new accounts
and that they would grow between 3% and 5%; and
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We would exit or lose business, at an average rate of 5% of our
existing business, consistent with our past experience.
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We assumed that our gross profit margins would remain consistent
with the average of our 2010 actual and 2011 planned margins.
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Selling, general and administrative expenses were assumed to
increase at a slower rate than our revenue growth, thereby
leveraging our overhead costs, consistent with our recent
experience.
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Our EBITDA margins were assumed to improve gradually over time
from 16.0% to 16.4% as a result of the assumptions above and by
maintaining our gross profit margins and leveraging our overhead.
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We assumed a tax rate of 34.5% for 2011 and 36% for
2012-2015.
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We assumed that our working capital requirements would increase
as a result of growth and changes in our business mix and
capital expenditures were assumed to run between 3.4% and 4.2%
of revenue, consistent with our experience.
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33
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We assumed no that there would be no further acquisitions or
stock repurchases beyond the second quarter of 2011.
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Except to the extent required by applicable federal securities
laws, we do not intend, and expressly disclaim any
responsibility, to update or otherwise revise the Forecasts to
reflect circumstances existing after the date when the Company
prepared the Forecasts or to reflect the occurrence of future
events, even in the event that any of the assumptions underlying
the Forecasts are shown to be in error.
For purposes of the Forecasts, EBITDA means earnings before
interest, taxes, depreciation and amortization.
Management
Forecasts
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2010A
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2011E
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2012E
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2013E
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2014E
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2015E
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($ in millions)
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Total Revenue
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$
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326
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$
|
367
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$
|
418
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$
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458
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$
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500
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$
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542
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% Growth
|
|
|
11.2
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%
|
|
|
12.5
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%
|
|
|
13.9
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%
|
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|
9.7
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%
|
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|
9.1
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%
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8.5
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%
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Total EBITDA(1)
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$
|
49
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$
|
59
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$
|
67
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$
|
74
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$
|
82
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$
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89
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% Margin
|
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15.1
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%
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16.0
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%
|
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16.0
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%
|
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|
16.2
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%
|
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|
16.3
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%
|
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16.4
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%
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(1) |
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2011 pro forma for acquisition of SEI, LLC, which assumes full
annual EBITDA of $2.4 million. |
Financing
of the Merger
We anticipate that the total funds needed to complete the
merger, including the funds needed to pay our stockholders (and
holders of our other equity-based interests) the amounts due to
them under the merger agreement and the related expenses, based
upon the shares of common stock (and our other equity-based
interests) outstanding as of July 6, 2011, would be
approximately $468.5 million.
This amount will be funded through a combination of equity
and/or debt
financing to be provided by the OEP Fund, debt financing that
may be arranged by OEP
and/or (if
the merger agreement is assigned to NCO Group, Inc.) NCO Group,
Inc., and the Companys freely available cash. The receipt
of financing by Parent is not a condition to the obligations of
either party to complete the merger under the terms of the
merger agreement. The receipt of funding by Parent is not a
condition to the obligations of either party to complete the
merger under the terms of the merger agreement.
OEP Fund
Guaranty
Pursuant to and subject to the terms and conditions of the OEP
Fund guaranty, delivered by the OEP Fund in favor of the
Company, dated July 6, 2011, the OEP Fund agreed to
guarantee, up to $469 million, the full and punctual
payment, performance and discharge of all the obligations of,
and all liabilities and damages payable by, Parent and Merger
Sub, under the merger agreement, including the obligation to pay
the merger consideration if, as and when due.
Subject to certain exceptions, the OEP Fund guaranty will
terminate upon the earliest to occur of:
|
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|
|
the effective time (as defined in the merger agreement);
|
|
|
|
the termination of the merger agreement by mutual written
consent of the parties; and
|
|
|
|
sixty days after the termination of the merger agreement in
accordance with its terms (other than by mutual written consent
of the parties) except to the extent that the Company has
presented a claim for payment of any of the obligations to
Parent or the OEP Fund.
|
Closing
and Effective Time of Merger
The closing of the merger will take place on a date to be
specified by the parties to the merger agreement, but no later
than the second business day after the satisfaction or waiver of
waiver of all of the conditions to closing of the merger
(described below under The Merger Agreement
Merger Closing Conditions) (other than those conditions
which are not capable of being satisfied until the closing). On
the closing date, the parties will file articles of merger with
the Secretary of State for the State of Illinois in accordance
with the IBCA. The merger will become
34
effective upon the filing of the articles of merger, or at such
later time as is agreed by the parties and specified in the
articles of merger.
We are working towards completing the merger as soon as
possible. If the proposal to adopt the merger agreement is
approved at the special meeting then, assuming timely
satisfaction of the other necessary closing conditions, we
anticipate that the merger will be completed either in the third
or fourth calendar quarter of 2011. The effective time of the
merger will occur concurrently with the closing of the merger
agreement upon the filing of articles of merger with the
Secretary of State of the State of Illinois (or at such later
time as we and Parent may agree and specify in the articles of
merger).
Interests
of Certain Persons in the Merger
In considering the recommendation of the Board with respect to
the merger, APAC stockholders should be aware that the executive
officers and directors of the Company may have certain interests
in the merger that may be different from, or in addition to, the
interests of APAC stockholders generally. The Board was aware of
these interests and considered them, among other matters, in
approving the merger agreement and the merger and making the
recommendation that stockholders approve the proposal to adopt
the merger agreement. These interests are described below.
Indemnification
and Exculpation of Directors and Officers
Section 8.75 of the IBCA provides that an Illinois
corporation may indemnify any person who was or is a party, or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of such corporation) by reason of the fact that he or
she is or was a director, officer, employee or agent of the
corporation, or who is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such
action, suit or proceeding, if such person acted in good faith
and in a manner he or she reasonably believed to be in, or not
opposed to the best interests of such corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which
he or she reasonably believed to be in or not opposed to the
best interests of such corporation or, with respect to any
criminal action or proceeding, that the person had reasonable
cause to believe that his or her conduct was unlawful. A
corporation may indemnify any person who was or is a party, or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that
such person is or was a director, officer, employee or agent of
such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys fees)
actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, if such
person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of such
corporation, provided that no indemnification shall be made with
respect to any claim, issue, or matter as to which such person
has been adjudged to have been liable to the corporation,
unless, and only to the extent that the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court
shall deem proper. Expenses (including attorneys fees)
incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by such
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay such amount if it
shall ultimately be determined that such person is not entitled
to be indemnified by the corporation as authorized by
Section 8.75 of the IBCA. Such expenses (including
attorneys fees) incurred by former directors and officers
or other employees and agents may be so paid on such terms and
conditions, if any, as such corporation deems appropriate.
In the merger agreement, Parent and Merger Sub agreed that all
rights to exculpation and indemnification for acts or omissions
occurring at or prior to the effective time of the merger now
existing in favor of the current or
35
former directors, officers or employees of the Company or the
Companys subsidiaries as provided in their respective
employers certificates of incorporation or bylaws or other
organizational documents or in any agreement will survive the
merger and will continue in full force and effect and will not
be, for a period of six years from the effective time of the
merger, modified in any manner that would adversely affect the
rights thereunder of any individuals who at the effective time
of the merger were current or former directors, officers or
employees of the Company.
In addition, for a six-year period, Parent, the Company and its
subsidiaries and affiliates will, to the fullest extent
permitted by law, indemnify and hold harmless, and advance
expenses of, each officer, director or employee against and from
any costs or expenses, judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation to the extent such claim, action, suit, proceeding
or investigation arises out of or pertains to: any action or
omission or alleged action or omission in such persons
capacity as a director, officer or employee of the Company or
any of its subsidiaries; or the merger, the merger agreement and
any transactions contemplated thereby.
The merger agreement requires Parent to maintain the
Companys current directors and officers
insurance policies (or substitute insurance of at least the same
coverage and amounts with terms that are at least as favorable
to the indemnified parties) for six years following the
effective time. However, Parent will not be required to pay
premiums which on an annual basis exceed 300% of the annual
premiums currently paid by the Company; however, Parent must
obtain the greatest coverage available at such cost.
Treatment
of Outstanding Equity Awards
Under the terms of the merger agreement, APAC equity awards held
by our executive officers and directors that are outstanding
immediately prior to the effective time of the merger will be
subject to the following treatment.
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Director Options. At the effective time of the
merger, each of the Director Options to purchase shares of
common stock will vest in full and will entitle the holder to
receive at closing an amount in cash equal to the product of the
total number of shares of common stock subject to such option
multiplied by the amount, if any, by which $8.55 exceeds the
exercise price per share of such option, less any applicable
withholding taxes.
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|
Employee Options at the Effective Time. At the
effective time of the merger, one-half of the unvested Employee
Options will vest and will entitle the holder to receive at
closing an amount in cash equal to the product of the total
number of shares of common stock subject to such option
multiplied by the amount, if any, by which $8.55 exceeds the
exercise price per share of such option, less any applicable
withholding taxes. The Employee Options that remain unvested
immediately following the effective time of the merger shall
remain outstanding and will continue to vest in accordance with
the terms set forth in the applicable governing plan and option
agreements. After the effective time of the merger, at such time
or times as an unvested Employee Option shall vest, whether in
the ordinary course of business or upon an event triggering
acceleration under the applicable option agreement, the holder
of such Employee Option shall receive an amount in cash equal to
the product of the total number of shares of common stock
underlying the portion of the Employee Option then becoming
vested multiplied by the amount, if any, by which $8.55 exceeds
the exercise price per share of such option, less any applicable
withholding taxes.
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|
Restricted Stock. At the effective time of the
merger, each outstanding share of restricted stock share,
whether vested or unvested, will automatically be cancelled and
converted into the right to receive an amount in cash equal to
$8.55, less any applicable withholding taxes.
|
36
Summary
Tables
The following table shows, for each executive officer and each
director, as applicable, as of September 30, 2011,
(1) the number of shares subject to vested options held by
him or her, (2) the cash consideration that he or she will
receive for such vested options upon completion of the merger,
(3) the number of shares subject to unvested options that
will accelerate upon completion of the merger held by him or
her, (4) the cash consideration that he or she will receive
for such options upon completion of the merger, (5) the
number of shares subject to unvested options that will continue
to vest over time after the completion of the merger held by him
or her and (6) the cash consideration that he or she will
receive for options after the completion of the merger.
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
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|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Cash-Out
|
|
|
Shares
|
|
|
Cash-Out
|
|
|
|
|
|
|
|
|
|
Subject to
|
|
|
Payment for
|
|
|
Subject to
|
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|
Payment for
|
|
|
|
Number of
|
|
|
Cash-Out
|
|
|
Unvested
|
|
|
Unvested
|
|
|
Unvested
|
|
|
Shares of
|
|
|
|
Shares Subject
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|
|
Payment
|
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|
Options
|
|
|
Options
|
|
|
Options which
|
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Options which
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|
to Vested
|
|
|
for Vested
|
|
|
which
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|
which
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|
Continue to
|
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|
Continue to
|
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|
|
Options
|
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|
Options
|
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|
Accelerate
|
|
|
Accelerate
|
|
|
Vest over Time
|
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|
Vest over Time
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Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin T. Keleghan
|
|
|
158,301
|
|
|
|
520,855
|
|
|
|
316,604
|
|
|
|
1,041,715
|
|
|
|
300,000
|
|
|
|
996,000
|
|
Arthur D. DiBari
|
|
|
260,000
|
|
|
|
1,648,400
|
|
|
|
145,000
|
|
|
|
737,300
|
|
|
|
145,000
|
|
|
|
737,300
|
|
Andrew B. Szafran
|
|
|
276,000
|
|
|
|
2,031,420
|
|
|
|
102,000
|
|
|
|
710,340
|
|
|
|
102,000
|
|
|
|
710,340
|
|
Robert B. Nachwalter
|
|
|
62,000
|
|
|
|
448,840
|
|
|
|
49,000
|
|
|
|
344,930
|
|
|
|
49,000
|
|
|
|
344,930
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|
Mark E. McDermott
|
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|
278,040
|
|
|
|
1,918,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Michael V. Hoehne
|
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|
65,000
|
|
|
|
403,000
|
|
|
|
22,500
|
|
|
|
137,838
|
|
|
|
22,500
|
|
|
|
137,838
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|
Gregory M. Carr
|
|
|
|
|
|
|
|
|
|
|
53,000
|
|
|
|
143,100
|
|
|
|
53,000
|
|
|
|
143,100
|
|
Joseph R. Doolan
|
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|
95,000
|
|
|
|
634,150
|
|
|
|
7,500
|
|
|
|
52,950
|
|
|
|
7,500
|
|
|
|
52,950
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|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Theodore G. Schwartz
|
|
|
174,168
|
|
|
|
1,002,610
|
|
|
|
51,428
|
|
|
|
184,910
|
|
|
|
|
|
|
|
|
|
Katherine Andreasen
|
|
|
8,301
|
|
|
|
22,855
|
|
|
|
28,530
|
|
|
|
77,080
|
|
|
|
|
|
|
|
|
|
John J. Park
|
|
|
228,352
|
|
|
|
1,406,452
|
|
|
|
51,428
|
|
|
|
184,910
|
|
|
|
|
|
|
|
|
|
Samuel K. Skinner
|
|
|
56,057
|
|
|
|
300,085
|
|
|
|
51,428
|
|
|
|
184,910
|
|
|
|
|
|
|
|
|
|
John L. Workman
|
|
|
56,057
|
|
|
|
300,085
|
|
|
|
51,428
|
|
|
|
184,910
|
|
|
|
|
|
|
|
|
|
The following table shows, for each executive officer holding
shares of restricted stock as of September 30, 2011,
(1) the number of shares subject to restricted stock held
by him and (2) the cash consideration that he will receive
for such shares of restricted stock upon completion of the
merger.
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|
|
|
|
|
|
|
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Number of
|
|
|
Cash-Out Payment
|
|
|
|
Shares of
|
|
|
for Shares of
|
|
|
|
Restricted Stock
|
|
|
Restricted Stock
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
Kevin T. Keleghan
|
|
|
200,000
|
|
|
|
1,710,000
|
|
Gregory M. Carr
|
|
|
36,000
|
|
|
|
307,800
|
|
Management
Incentive Plan 2011
For fiscal year 2011, all executive officers, including the
named executive officers, are eligible to receive cash bonus
payments on either an annual or a quarterly basis based on us
achieving certain financial performance goals established by the
Companys compensation committee, which we refer to as the
Compensation Committee. Each executive officer is eligible for a
bonus ranging from 0% to 200% of his or her base salary. For all
executive officers, other than our Senior Vice President, Sales
who does not participate in the Management Incentive Plan, which
we refer to as the 2011 MIP, but instead participates in the
Business Development Sales Commission, the 2011 MIP is based 40%
on us achieving the threshold or maximum revenue amounts
established by the Compensation Committee and 60% on us
achieving the threshold or maximum PTP, which is pre-tax
profits or earnings-
37
before-taxes amounts established by the Compensation
Committee. An estimate of the bonus payments which would be
required upon a change in control is included in the tabular
disclosure in the section entitled Golden
Parachutes below.
Severance
Arrangements
Each of the Companys executive officers is party to an
Employment Security Agreement with the Company which establishes
a double trigger severance plan that provides
certain payments and benefits if the executive officers
employment is terminated in connection with a change in control.
Specifically, if an executive is terminated by the Company
without cause or by the executive for good reason
(as defined below), in either case, within one year after a
change of control, or in the case of Mr. Keleghan, not more
than six months before and in anticipation of, or within twelve
months after, a change in control, such executive would be
entitled to the severance benefits set forth in the section
entitled Golden Parachutes below.
As a condition to receiving benefits provided for in the
Employment Security Agreement, each named executive officer will
be required to execute a document releasing and waiving all
claims relating to his employment. After termination of
employment, each named executive officer is also subject to
restrictive covenants, which provide that each named executive
officer will not disclose confidential information, will not
solicit clients of the Company for a period of one year (two
years in the case of Mr. Keleghan), and will not compete
with the Company during the greater of the period of time for
which each is receiving severance benefits or one year (two
years in the case of Mr. Keleghan).
Good reason as defined in the Employment
Security Agreements and the relevant stock option and restricted
stock award agreements generally means:
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|
|
|
the executives principal place of work is moved more than
fifty miles;
|
|
|
|
the executives duties and responsibilities are materially
reduced or diminished; provided that such reduction is not,
other than, in the case of Mr. Keleghan, solely as a result
of the Companys acquisition and existence as a subsidiary
of another entity;
|
|
|
|
|
|
the executives base salary is reduced or, in the case of
Mr. Keleghan, either his base salary or his target bonus
opportunity is reduced;
|
|
|
|
|
|
the executive determines in good faith that, as a result of a
change of control, he or she is unable to carry out his or her
job responsibilities, except for Mr. Keleghan;
|
|
|
|
there is a material violation of his or her employment agreement
or Employment Security Agreement; or
|
|
|
|
the Company consummates a liquidation, dissolution or merger or
transfer of all or substantially all of the Companys
assets and such executives Employment Security Agreement
is not assumed by the surviving entity.
|
Golden
Parachutes
The following table sets forth the estimated amounts of
compensation that each named executive officer could receive
that are based on or otherwise related to the merger. These
amounts have been calculated assuming the merger is consummated
on September 30, 2011 and, where applicable, that each
named executive officer experiences a qualifying termination of
employment as of September 30, 2011. To the extent
applicable, calculations of cash severance are based on the
named executive officers current base salary and average
incentive compensation earned over the Companys
2008-2010
fiscal years. Certain of the amounts payable may vary depending
on the actual date of completion of the merger and any
qualifying termination.
Please keep in mind when reviewing this information that the
named executive officers are not entitled to receive all amounts
reported in the table below solely as a result of the merger.
Instead, certain amounts are payable only if a termination of
employment occurs within a certain period of time before or
after the merger. As a result,
38
only the amounts reported in footnote 5 to the table below as
being single trigger are payable solely as a result
of the merger.
Golden
Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
Cash
|
|
|
Equity
|
|
|
Perquisites/
|
|
|
Reimbursement
|
|
|
Total
|
|
Named Executive Officer
|
|
($)(1)
|
|
|
($)(2)
|
|
|
Benefits ($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
Kevin T. Keleghan
|
|
|
2,000,000
|
|
|
|
4,268,570
|
|
|
|
14,148
|
|
|
|
1,279,373
|
|
|
|
7,562,091
|
|
Andrew B. Szafran
|
|
|
731,250
|
|
|
|
3,452,100
|
|
|
|
14,148
|
|
|
|
|
|
|
|
4,197,498
|
|
Arthur D. DiBari
|
|
|
731,250
|
|
|
|
3,123,000
|
|
|
|
10,350
|
|
|
|
|
|
|
|
3,864,600
|
|
Mark E. McDermott
|
|
|
528,612
|
|
|
|
1,918,530
|
|
|
|
10,350
|
|
|
|
|
|
|
|
2,457,492
|
|
Robert B. Nachwalter
|
|
|
599,625
|
|
|
|
1,138,700
|
|
|
|
14,148
|
|
|
|
|
|
|
|
1,752,473
|
|
Michael P. Marrow
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Cash. Amounts reported in this column
represent the estimated value of the severance benefits payable
to the named executive officers under the Executive Security
Agreements in the event the executives employment is
terminated without cause or for good reason, in either case,
within one year after the merger (or in the case of
Mr. Keleghan, within six months prior to, or one year
following, a change of control). |
|
|
|
The amounts reported in this column with respect to
Mr. Keleghan represent a lump sum severance payment equal
to 24 months of base salary ($1,000,000) and an amount
equal to two times his target bonus under the Management
Incentive Plan ($1,000,000). |
|
|
|
The amounts reported in this column with respect to
Mr. Szafran represent a lump sum severance payment equal to
18 months of base salary ($487,500) and an amount equal to
one and one-half times his target bonus under the Management
Incentive Plan ($243,750). |
|
|
|
The amounts reported in this column with respect to
Mr. DiBari represent a lump sum severance payment equal to
18 months of base salary ($487,500) and an amount equal to
one and one-half times his target bonus under the Management
Incentive Plan ($243,750). |
|
|
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The amounts reported in this column with respect to
Mr. McDermott represent a lump sum severance payment equal
to 18 months of base salary ($377,580) and an amount equal
to one and one-half times his target bonus under the Management
Incentive Plan ($151,032). |
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The amounts reported in this column with respect to
Mr. Nachwalter represent a lump sum severance payment equal
to 18 months of base salary ($399,750) and an amount equal
to one and one-half times his target bonus under the Management
Incentive Plan ($199,875). |
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The amounts reported in this column are double
trigger in nature (i.e., eligibility to receive these
amounts requires both the occurrence of the merger and a
qualifying termination of employment). |
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(2) |
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Equity. Amounts reported in this column
represent the estimated aggregate payments to be made to the
named executive officers in respect of their unvested options
and shares of unvested restricted stock in connection with the
merger, based on a price-per share of common stock of $8.55. |
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With respect to Mr. Keleghan, $520,855 of this amount
represents payments in respect of vested options, $1,041,715 of
this amount represents payments in respect of his unvested
options to be made upon the consummation of the merger,
$1,710,000 of this amount represents payments to be made in
respect of unvested restricted stock awards upon the
consummation of the merger and $996,000 of this amount
represents payments to be made in respect of unvested options in
the event that his employment is terminated without cause or for
good reason, in either case, within six months prior to, or
within one year after, the merger. Accordingly, $3,272,570 of
the amount reported in this column with respect to
Mr. Keleghan is single-trigger in nature (i.e., eligibility
to receive the amount requires only the occurrence of the
merger) and $996,000 of the amount is double-trigger in nature. |
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With respect to Mr. Szafran, $2,031,420 of this amount
represents payments in respect of vested options, $710,340 of
this amount represents payments in respect of his unvested
options to be made upon the consummation of the merger and
$710,340 of this amount represents payments to be made in
respect of |
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unvested options in the event that his employment is terminated
without cause or for good reason, in either case, within one
year after the merger. Accordingly, $2,741,760 of the amount
reported in this column with respect to Mr. Szafran is
single-trigger in nature and $710,340 of the amount is
double-trigger in nature. |
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With respect to Mr. DiBari, $1,648,400 of this amount
represents payments in respect of vested options, $737,300 of
this amount represents payments in respect of his unvested
options to be made upon the consummation of the merger and
$737,300 of this amount represents payments to be made in
respect of unvested options in the event that his employment is
terminated without cause or for good reason, in either case,
within one year after the merger. Accordingly, $2,385,700 of the
amount reported in this column with respect to Mr. DiBari
is single-trigger in nature and $737,300 of the amount is
double-trigger in nature. |
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With respect to Mr. McDermott, $1,918,530 of this amount
represents payments in respect of vested options. Accordingly,
$1,918,530 of the amount reported in this column with respect to
Mr. McDermott is single-trigger in nature. |
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With respect to Mr. Nachwalter, $448,840 of this amount
represents payments in respect of vested options, $344,930 of
this amount represents payments in respect of his unvested
options to be made upon the consummation of the merger and
$344,930 of this amount represents payments to be made in
respect of unvested options in the event that his employment is
terminated without cause or for good reason, in either case,
within one year after the merger. Accordingly, $793,770 of the
amount reported in this column with respect to
Mr. Nachwalter is single-trigger in nature and $344,930 of
the amount is double-trigger in nature. |
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Perquisites/Benefits. Amounts reported in this
column represent the estimated amount to continue medical,
dental, life, and disability coverage for each of the named
executive officer, his spouse and beneficiary (if applicable)
for a period of 18 months as each would be entitled to
receive under the Executive Security Agreements in the event the
executives employment is terminated without cause or for
good reason, in either case, within one year after the merger
(or in the case of Mr. Keleghan, within six months prior
to, or one year following, a change of control). |
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The amounts reported in this column are
double-trigger in nature (i.e., eligibility to
receive these amounts requires both the occurrence of the merger
and a qualifying termination of employment). |
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(4) |
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Tax Reimbursement. Amounts reported in this
column represent the estimated amount the named executive
officers would be entitled to receive for reimbursement of any
excise tax imposed under Section 4999 of the Code. These
amounts are single-trigger in nature. |
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(5) |
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Total. Amounts reported in this column
represent the total estimated amounts of compensation that each
named executive officer could receive that are based on or
otherwise related to the merger. With respect to
Mr. Keleghan, $4,551,943 of this amount is single-trigger
in nature and $3,010,148 of this amount is double-trigger in
nature. With respect to Mr. Szafran, $3,473,010 of this
amount is single-trigger in nature and $724,488 of this amount
is double-trigger in nature. With respect to Mr. DiBari,
$2,384,700 of this amount is single-trigger in nature and
$1,478,900 of this amount is double-trigger in nature. With
respect to Mr. McDermott, $1,918,530 of this amount is
single-trigger in nature and $538,962 of this amount is
double-trigger in nature. With respect to Mr. Nachwalter,
$793,770 of this amount is single-trigger in nature and $958,703
of this amount is double-trigger in nature. |
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(6) |
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Mr. Marrows employment terminated on
September 12, 2010, but he is included in the table
consistent with the requirements of Instruction 1 to
Item 402(t)(2) of
Regulation S-K. |
Voting
Agreement
Concurrently with the execution of the merger agreement,
Mr. Schwartz and the Schwartz trusts entered into a voting
agreement with Parent to vote, subject to certain exceptions,
all shares of common stock owned by them in favor of the
proposal to adopt the merger agreement (and in favor of any
actions and proposals required, or submitted for approval in
furtherance thereof). As of the date of this proxy statement,
Mr. Schwartz and the Schwartz trusts collectively owned
approximately 38% of the outstanding common stock.
Pursuant to the voting agreement, each of Mr. Schwartz and
the Schwartz trusts has agreed not to:
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subject to certain exceptions, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of his or its shares of
Company common stock;
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acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any material assets of the
Company or any subsidiary or division thereof;
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make, or in any way participate in, directly or indirectly, any
solicitation of proxies to vote, or
otherwise take any action intended to advise or influence any
person with respect to the voting of, any voting securities of
the Company, other than in support of the merger and the merger
agreement;
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make any public announcement with respect to, or submit a
proposal for, or offer for (with or without conditions) any
extraordinary transaction involving the Company or its
securities or material assets;
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form, join or in any way participate in a group (as
defined in Section 13(d)(3) under the Exchange Act) in
connection with any of the foregoing matters;
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seek, in any way which may be reasonably likely to require,
involve or trigger public disclosure of such request pursuant to
applicable law, to have the foregoing restrictions amended,
modified or waived;
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otherwise take, directly or indirectly, any actions with the
purpose of avoiding or circumventing any of the foregoing
restrictions or which would reasonably be expected to have the
effect of preventing, impeding, interfering with or adversely
affecting the consummation of the transactions contemplated by
the merger agreement or its ability to perform the
shareholders obligations under this agreement; or
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exercise any rights of appraisal or rights to dissent from the
merger available under applicable law.
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In addition, each of Mr. Schwartz and the Schwartz trusts
have agreed that until the expiration or termination of the
voting agreement in accordance with its terms, such individual
or trust will vote his or its respective shares of Company
common stock:
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in favor of the adoption and approval of the merger agreement
and all of the transactions contemplated by the merger
agreement, including the merger (and in favor of any actions and
proposal required, or submitted for approval at any meeting of
the Companys shareholders, in furtherance thereof);
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against any proposal presented to the Companys
shareholders for approval at any meeting of the Companys
shareholders, or any written consent in lieu thereof, if the
action, transaction or agreement proposed would reasonably be
expected, directly or indirectly, to result in a breach by the
Company of any covenant, representation, warranty or other
obligations of the Company set forth in the merger agreement;
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against the following actions (other than the transactions
contemplated by the merger agreement):
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any competing proposal;
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any nominee for election to the Companys Board other than
(x) a person nominated by the Companys Board or any
committee thereof
and/or
(y) Theodore G. Schwartz; or
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any other action or proposal to be voted upon by the
Companys shareholders at any meeting of the Companys
shareholders, or any written consent in lieu thereof, if such
action or proposal would reasonably be expected, to prevent,
impede, interfere with, delay, postpone or adversely affect the
transactions contemplated by the merger agreement; and
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not to enter into any agreement or commitment with any person
the effect of which would violate or be inconsistent with the
provisions and agreements set forth in the foregoing bullets
above.
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Each of Mr. Schwartz and the Schwartz trusts have also
agreed to grant Parent (or its designee) an irrevocable proxy
regarding the matters addressed in the voting agreement if
Mr. Schwartz or any of the Schwartz trusts fails for any
reason to be counted as present or to vote (including by written
consent, if applicable) their respective shares in accordance
with the voting agreement.
Each of Mr. Schwartz and the Schwartz trusts is a party to
the voting agreement solely in his or its capacity as a
shareholder of the Company (and not in any capacity as an
officer or director of the Company) and nothing in the voting
agreement shall limit or affect Mr. Schwartz in acting in
his capacity as a director of the Company.
The voting agreement will terminate upon the earliest of
(1) the termination of the voting agreement by mutual
written consent, (2) the termination of the merger
agreement in accordance with its terms,
(3) February 29, 2012, (4) any reduction in or
change in the form of merger consideration and (5) the
effective time of the merger.
41
Accounting
Treatment
The merger will be accounted for as a purchase
transaction for financial accounting purposes.
Material
U.S. Federal Income Tax Consequences of the Merger
The following is a summary of certain material U.S. federal
income tax consequences of the merger that are relevant to
U.S. holders (as defined below) of the Companys
common stock whose shares will be converted to cash in the
merger and who will not own (actually or constructively) any
shares of the Companys common stock after the merger. The
following discussion does not purport to consider all aspects of
U.S. federal income taxation that might be relevant to
beneficial holders of the Companys common stock. The
discussion is based on current provisions of the Internal
Revenue Code of 1986, as amended, which we refer to as the Code,
the regulations promulgated under the Code, and rulings,
administrative pronouncements, and judicial decisions as in
effect on the date of this proxy statement, changes to which
could materially affect the tax consequences described below and
could be made on a retroactive basis. This discussion does not
address the tax consequences applicable to stockholders of the
Company who are not U.S. holders. The discussion applies
only to U.S. holders of the Companys common stock in
whose hands the shares are capital assets within the meaning of
Section 1221 of the Code and may not apply to
U.S. holders who acquired their shares pursuant to the
exercise of stock options or other compensation arrangements
with the Company or who hold their shares as part of a hedge,
straddle, conversion or other risk reduction transaction or who
are subject to special tax treatment under the Code (such as
dealers in securities or foreign currency, traders in securities
that elect to use mark-to-market accounting methods, insurance
companies, other financial institutions, regulated investment
companies, tax-exempt entities, former citizens or long-term
residents of the United States, S corporations,
partnerships and investors in S corporations and
partnerships, U.S. persons whose functional currency is not
the U.S. dollar and taxpayers subject to the alternative
minimum tax). In addition, this discussion does not consider any
aspects of U.S. federal tax law other than
U.S. federal income tax law and does not consider the
effect of any state, local or foreign tax laws.
If a partnership (or other entity taxed as a partnership for
U.S. federal income tax purposes) holds shares of the
Companys common stock, the tax treatment of a partner in
such partnership generally will depend upon the status of the
partner and the activities of the partnership. Accordingly,
partnerships that hold shares of the Companys common stock
and partners in such partnerships are urged to consult their tax
advisors regarding the specific U.S. federal income tax
consequences to them of the merger.
For purposes of this discussion, the term
U.S. holder means a beneficial owner of the
Companys common stock that is, for U.S. federal
income tax purposes, any of the following:
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an individual who is a citizen or resident of the United States;
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a corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, created in or under the
laws of the United States or of any state or the District of
Columbia;
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an estate, the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust, if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all
substantial decisions of the trust, or a trust that has a valid
election in effect under applicable U.S. Treasury
Regulations to be treated as a U.S. person for
U.S. federal income tax purposes.
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Tax
Consequences to U.S. Holders
The receipt of cash in exchange for the Companys common
stock pursuant to the merger will be a taxable transaction for
U.S. federal income tax purposes. In general, a
U.S. holder who receives cash in exchange for shares
pursuant to the merger will recognize gain or loss for
U.S. federal income tax purposes equal to the difference,
if any, between the amount of cash received and the
U.S. holders adjusted tax basis in the shares
surrendered for cash pursuant to the merger. Gain or loss will
be determined separately for each block of shares (i.e., shares
acquired at the same price per share in a single transaction)
surrendered for cash pursuant to the merger. Such gain or loss
will be capital gain or loss and will be long-term capital gain
or loss if the U.S. holders holding period for such
shares is
42
more than one year at the time of closing date of the merger.
For non-corporate taxpayers, long-term capital gains are
generally taxable at a reduced rate. Deduction of capital losses
may be subject to certain limitations.
Information
Reporting and Backup Withholding
Cash payments made pursuant to the merger will be reported to
the recipients and the Internal Revenue Service to the extent
required by the Code and applicable U.S. Treasury
Regulations. In addition, certain non-corporate
U.S. holders may be subject to backup withholding at a 28%
rate on cash payments received in connection with the merger.
Backup withholding will not apply, however, to a
U.S. holder who (1) furnishes a correct taxpayer
identification number and certifies that he, she or it is not
subject to backup withholding on the
Form W-9
or successor form or (2) is otherwise exempt from backup
withholding and when required, establishes his, her or its
exemption. Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your U.S. federal
income tax liability provided the required information is timely
furnished to the Internal Revenue Service.
The discussion set forth above is included for general
information only. Each beneficial owner of shares of the
Companys common stock should consult his, her or its own
tax advisor with respect to the specific tax consequences of the
merger to him, her or it, including the application and effect
of state, local and foreign tax laws.
Regulatory
Approvals and Notices
U.S.
Antitrust Approval
Under the terms of the merger agreement, the merger cannot be
completed until the waiting period applicable to the
consummation of the merger under the HSR Act has expired or been
terminated.
Under the HSR Act and the rules promulgated thereunder by the
FTC, the merger cannot be completed until each of the Company
and Parent files a notification and report form with the FTC and
the Antitrust Division of the DOJ under the HSR Act and the
applicable waiting period has expired or been terminated. Parent
filed a notification and report form with the FTC and the
Antitrust Division of the DOJ relating to its proposed
acquisition of the Company on July 20, 2011. We also
submitted our Pre-merger Notification and Report Form with the
FTC and the Antitrust Division of the DOJ on July 20, 2011.
On July 29, 2011, we received early termination of the HSR
Act waiting period.
At any time before or after consummation of the merger,
notwithstanding the termination of the waiting period under the
HSR Act, the Antitrust Division of the DOJ or the FTC could take
such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin
the completion of the merger, seeking divestiture of substantial
assets of the Company or Parent requiring the Company or Parent
to license, or hold separate, assets or terminate existing
relationships and contractual rights. At any time before or
after the completion of the merger, and notwithstanding the
termination of the waiting period under the HSR Act, any state
could take such action under the antitrust laws as it deems
necessary or desirable in the public interest. Such action could
include seeking to enjoin the completion of the merger or
seeking divestiture of substantial assets of the Company or
Parent. Private parties may also seek to take legal action under
the antitrust laws under certain circumstances.
Litigation
Relating to the Merger
Following the July 6, 2011 announcement of the merger
agreement, on or about July 15, 2011, a purported class
action complaint was filed against the Company. The complaint
was filed in the Circuit Court of the Nineteenth Judicial
Circuit, Lake County, Illinois against the Company, all of its
directors and OEP, Parent and Merger Sub. The complaint alleges
that the Board breached its fiduciary duties as it relates to
the merger. The complaint also alleges that OEP, Parent and
Merger Sub aided and abetted the Board in breaching its
fiduciary duties. The Company believes that the complaint is
wholly without merit and intends to vigorously defend this
action.
43
THE
MERGER AGREEMENT
This section describes the material terms of the merger
agreement. The description in this section and elsewhere in this
proxy statement is qualified in its entirety by reference to the
complete text of the merger agreement, a copy of which is
attached as Annex A and is incorporated by reference
into this proxy statement. This summary does not purport to be
complete and may not contain all of the information about the
merger agreement that is important to you. We encourage you to
read the merger agreement carefully and in its entirety. This
section is not intended to provide you with any factual
information about us. Such information can be found elsewhere in
this proxy statement and in the public filings we make with the
SEC, as described in the section entitled, Where You Can
Find More Information.
Explanatory
Note Regarding the Merger Agreement
The merger agreement is included to provide you with information
regarding its terms. Factual disclosures about the Company
contained in this proxy statement or in the Companys
public reports filed with the SEC may supplement, update or
modify the representations and warranties made by the Company
contained in the merger agreement. The representations,
warranties and covenants made in the merger agreement by the
Company, Parent and Merger Sub were qualified and subject to
important limitations agreed to by the Company, Parent and
Merger Sub in negotiating the terms of the merger agreement. In
particular, in your review of the representations and warranties
contained in the merger agreement and described in this summary,
it is important to bear in mind that the representations and
warranties were negotiated with the principal purposes of
establishing the circumstances in which a party to the merger
agreement may have the right not to consummate the merger if the
representations and warranties of the other party prove to be
untrue due to a change in circumstance or otherwise, and
allocating risk between the parties to the merger agreement,
rather than establishing matters as facts. The representations
and warranties may also be subject to a contractual standard of
materiality different from those generally applicable to reports
and documents filed with the SEC and in some cases were
qualified by the matters contained in the disclosure letter that
the Company delivered in connection with the merger agreement,
which disclosures were not reflected in the merger agreement.
Moreover, information concerning the subject matter of the
representations and warranties, which do not purport to be
accurate as of the date of this proxy statement, may have
changed since the date of the merger agreement and subsequent
developments or new information qualifying a representation or
warranty may have been included in this proxy statement.
Effects
of the Merger; Directors and Officers; Articles of
Incorporation; By-laws
The merger agreement provides that, subject to the terms and
conditions of the merger agreement, and in accordance with the
IBCA, at the effective time of the merger, Merger Sub will be
merged with and into the Company with the Company surviving the
merger and becoming a wholly owned subsidiary of Parent. At the
effective time, all of the properties, rights, privileges,
powers and franchises of the Company and Merger Sub will vest in
the Company, which will continue as the surviving corporation,
and all of the debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the
surviving corporation.
From and after the effective time, the board of directors of the
surviving corporation will consist of the directors of Merger
Sub, until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or
removal in accordance with the articles of incorporation and
by-laws of the surviving corporation. From and after the
effective time, the officers of the Company immediately prior to
the effective time will be the officers of the surviving
corporation, until their successors have been duly elected or
appointed and qualified in accordance with applicable law. At
the effective time, the articles of incorporation and bylaws of
the surviving corporation will be the articles of incorporation
and bylaws of Merger Sub (except with respect to the name of the
company), until amended in accordance with their terms or by
applicable law.
Closing
and Effective Time of the Merger
The closing of the merger will take place on a date to be
specified by the parties to the merger agreement, but no later
than the second business day after the satisfaction or waiver of
waiver of all of the conditions to closing of the merger
(described below under Merger Closing
Conditions) (other than those conditions which are not
44
capable of being satisfied until the closing). On the closing
date, the parties will file articles of merger with the
Secretary of State for the State of Illinois in accordance with
the IBCA. The merger will become effective upon the filing of
the articles of merger, or at such later time as is agreed by
the parties and specified in the articles of merger.
Merger
Consideration
Common
Stock
At the effective time, each share of common stock issued and
outstanding immediately prior to the effective time, other than
(1) any shares of common stock held by Parent or Merger Sub
or by the Company in its treasury, (2) any shares of common
stock owned by any wholly-owned subsidiary of Parent or the
Company, and (3) any shares of common stock held by
stockholders who have perfected and not withdrawn a demand for
appraisal rights pursuant to Sections 11.65 and 11.70 of
the IBCA, will be converted into the right to receive $8.55 per
share in cash, without interest and less any applicable
withholding taxes. All shares converted into the right to
receive the per share merger consideration will automatically be
canceled.
Outstanding
Equity Awards
APACs equity awards that are outstanding immediately prior
to the effective time of the merger will be subject to the
following treatment at the effective time of the merger:
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Director Options. At the effective time of the
merger, each Director Option to purchase shares of common stock
will vest in full and will entitle the holder to receive at
closing an amount in cash equal to the product of the total
number of shares of common stock subject to such option
multiplied by the amount, if any, by which $8.55 exceeds the
exercise price per share of such option, less any applicable
withholding taxes.
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Employee Options at the Effective Time. At the
effective time of the merger, one-half of the unvested Employee
Options, will vest and will entitle the holder to receive at
closing an amount in cash equal to the product of the total
number of shares of common stock subject to such option
multiplied by the amount, if any, by which $8.55 exceeds the
exercise price per share of such option, less any applicable
withholding taxes. The Employee Options that remain unvested
immediately following the effective time of the merger shall
remain outstanding and will continue to vest in accordance with
the terms set forth in the applicable governing plan and option
agreements. After the effective time of the merger, at such time
or times as an unvested Employee Option shall vest, whether in
the ordinary course of business or upon an event triggering
acceleration under the applicable option agreement, the holder
of such Employee Option shall receive an amount in cash equal to
the product of the total number of shares of common stock
underlying the portion of the Employee Option then becoming
vested multiplied by the amount, if any, by which $8.55 exceeds
the exercise price per share of such option, less any applicable
withholding taxes.
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Restricted Stock. At the effective time of the
merger, each outstanding share of restricted stock, whether
vested or unvested, will automatically be cancelled and
converted into the right to receive an amount in cash equal to
$8.55, less any applicable withholding taxes.
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Exchange
and Payment Procedures
Before the merger, Parent will designate a bank or trust company
reasonably satisfactory to the Company to make payment of the
per share merger consideration, which we refer to as the paying
agent. At or prior to the closing of the merger, Parent will
deposit with the paying agent cash sufficient to pay the
aggregate per share merger consideration to the stockholders.
Promptly (but no later than five business days) after the
effective time, the paying agent will send to each holder of
common stock a letter of transmittal and instructions advising
stockholders how to surrender stock certificates and book-entry
shares in exchange for the per share merger consideration. The
paying agent will pay the per share merger consideration to the
stockholders, without interest upon receipt of
(1) surrendered certificates or book-entry shares
representing the shares of common stock and (2) a signed
letter of transmittal and such other documents as may be
required pursuant to such instructions. The surviving
corporation may reduce the amount of any per share merger
consideration paid to the stockholders by any applicable
withholding taxes.
45
If any cash deposited with the paying agent is not claimed
within one hundred eighty days following the effective time,
such cash will be returned to the Parent, upon demand, and any
holders of common stock who have not theretofore complied with
the share certificate exchange procedures in the merger
agreement shall thereafter look only to Parent for payment of
their claims for the per share merger consideration, without any
interest thereon.
The letter of transmittal will include instructions if a
stockholder has lost a share certificate or if it has been
stolen or destroyed. If a stockholder has lost a certificate, or
if it has been stolen or destroyed, then before such stockholder
will be entitled to receive the merger consideration, such
stockholder will have to make an affidavit of the loss, theft or
destruction, and if requested by the Company, post a bond in a
reasonable amount as the Company may so direct.
The per share merger consideration in respect of all stock
options and restricted stock shall be paid directly by the
surviving corporation.
Representations
and Warranties
The merger agreement contains representations and warranties of
the Company, Parent and Merger Sub.
Some of the representations and warranties in the merger
agreement made by the Company are qualified as to
materiality or Material Adverse Effect.
For purposes of the merger agreement, Material Adverse
Effect means a material adverse effect on (1) the
business, results of operations or financial condition of the
Company and its subsidiaries taken as a whole, or (2) the
ability of the Company to timely perform its obligations under
and consummate the merger and the other transactions
contemplated by the merger agreement. For purposes of
clause (1) above, the determination of whether there has
been a Material Adverse Effect shall not take into account any
effect to the extent resulting from:
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changes (including worsening of existing events) in general
economic or political conditions or financial, credit or
securities markets in general (including changes in interest or
exchange rates) in any country or region in which the Company or
any of its subsidiaries conducts business;
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events, circumstances, changes or effects (including worsening
of existing events) generally affecting the industries in which
the Company and its subsidiaries operate;
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changes in laws applicable to the Company or any of its
subsidiaries or any of their respective properties or assets or
changes in GAAP;
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acts of war, armed hostilities, sabotage or terrorism or any
escalation or worsening of any acts of war, armed hostilities,
sabotage or terrorism;
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the announcement or existence of, or any action taken that is
expressly required to be taken by, the merger agreement
(including the demonstrable impact thereof on relationships,
contractual or otherwise, with customers, suppliers and vendors)
or any action taken by the Company at the written request of or
with the written consent of Parent;
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changes in the market price or trading volume of shares of
common stock of the Company or any failure to meet internal or
published projections, forecasts or revenue or earnings
predictions for any period ending after July 6, 2011
(however, the facts, circumstances, events, changes effects,
developments or occurrences giving rise or contributing to a
decrease in the market price or trading volume of the shares of
common stock of the Company may be taken into account whether
there has been a Material Adverse Effect; or
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any litigation arising from allegations of a breach of fiduciary
duty or other violation of applicable law relating to the merger
agreement or the transactions contemplated by the merger
agreement.
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However, the changes set forth in the first four bullets above
may be taken into account in determining whether a Material
Adverse Effect has occurred or would reasonably be expected to
occur under clause (1) of this definition if and to the
extent such changes have a disproportionate impact on the
Company and its subsidiaries relative to other participants in
the industries in which the Company
and/or its
subsidiaries operate.
46
In the merger agreement, the Company has made customary
representations and warranties to Parent and Merger Sub that are
subject, in some cases, to specified exceptions and
qualifications contained in the merger agreement. These
representations and warranties relate to, among other things:
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due organization, qualification to conduct business and
corporate standing and power with respect to the Company and its
subsidiaries;
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articles of incorporation and by-laws of the Company;
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capital structure of the Company and the Companys
ownership of its subsidiaries;
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the Companys corporate authority to enter into and perform
the merger agreement and the enforceability of the merger
agreement;
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the absence of conflicts with laws, the Companys
organizational documents and the Companys contracts;
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required consents and regulatory filings in connection with the
merger agreement;
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the Companys compliance with laws and the Companys
possession of necessary permits;
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the accuracy of the Companys SEC filings and financial
statements;
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the Companys internal controls;
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the conduct of the Companys business in the ordinary
course of business consistent with past practice, there not
having occurred a Material Adverse Effect and the absence of
certain other changes, in each case since January 3, 2011;
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the absence of certain undisclosed liabilities;
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the absence of litigation, investigations and orders;
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employee benefit plans;
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change of control payments;
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labor and employment matters;
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intellectual property matters;
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tax matters;
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existence and enforceability of material contracts;
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Credit Suisses fairness opinion to the Board;
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required vote of the stockholders;
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absence of fees to brokers in connection with the merger
agreement;
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real property matters;
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insurance matters;
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environmental matters;
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title to assets;
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customer and vendors;
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confidentiality obligations and data privacy;
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transactions with affiliates;
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compliance with Foreign Corrupt Practices Act; and
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disclaimer of other representations and warranties.
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In the merger agreement, Parent and Merger Sub have made
customary representations and warranties to the Company that are
subject, in some cases, to specified exceptions and
qualifications contained in the merger agreement. These
representations and warranties relate to, among other things:
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corporate existence, qualification to conduct business and
corporate standing and power;
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corporate authority to enter into and perform the merger
agreement and enforceability of the merger agreement;
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articles of incorporation, by-laws and organizational documents
of Parent and Merger Sub;
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the absence of conflicts with laws, organizational documents and
contracts;
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required consents and regulatory filings in connection with the
merger agreement;
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the absence of litigation, investigations and orders;
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enforceability of the guaranty provided by the OEP Fund;
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Parents ownership of Merger Sub and capital structure of
Merger Sub;
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absence of fees to brokers in connection with the merger
agreement;
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solvency of Parent and the surviving corporation following the
consummation of the merger and the transactions contemplated by
the merger agreement;
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the absence of interested shareholder status under
the IBCA of Parent, the OEP Fund and each of their respective
subsidiaries with respect to the Company; and
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acknowledgement and disclaimer of other representations and
warranties.
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None of the representations and warranties contained in the
merger agreement survive the consummation of the merger.
Conduct
of Business of the Company
The merger agreement provides that, except as may be required by
law or as may be agreed to in writing by Parent (such consent
not to be unreasonably withheld, delayed or conditioned) prior
to the effective time, the Company and its subsidiaries shall:
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conduct their business in the ordinary course consistent with
past practice; and
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use their reasonable efforts to preserve substantially intact
the Companys business organization, maintain existing
relations and goodwill with governmental entities, customers,
suppliers, and business associates and to keep available the
services of those of their current officers, employees and
consultants who are integral to the operation of their
businesses as currently conducted.
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In addition, except (1) as may be required by law,
(2) as may be agreed to in writing by Parent (such consent
not to be unreasonably withheld, delayed or conditioned),
(3) as may be expressly required, expressly contemplated or
expressly permitted by this Agreement or (4) as set forth
in the Company disclosure letter the Company shall not, subject
to certain thresholds and exceptions specified in the merger
agreement:
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amend its organizational documents;
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merge or consolidate the Company or any of its subsidiaries,
except for among wholly owned subsidiaries of the Company, or
restructure, reorganize or completely or partially liquidate the
Company or any of its subsidiaries;
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split, combine, subdivide, reclassify, purchase, redeem or
otherwise acquire, issue, sell, pledge, dispose, encumber or
grant any shares of its or its subsidiaries capital stock;
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enter into any amendment of any term of any of its outstanding
securities;
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accelerate the vesting of any options, warrants or other rights
of any kind to acquire shares of capital stock;
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declare dividends;
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increase the compensation or other benefits payable or to become
payable to directors or officers of the Company or its
subsidiaries, grant any severance or termination pay to, or
enter into any severance agreement with any director or officer
of the Company or any of its subsidiaries, enter into or amend
any employment agreement with any officer of the Company (except
to the extent necessary to replace a departing employee), or
establish, adopt, enter into, amend or terminate any collective
bargaining agreement;
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grant, confer or award options or other rights to acquire any of
the Companys or its subsidiaries capital stock,
except as required under Company benefit plans, or take any
action to cause to be exercisable any otherwise unexercisable
option, except as provided by the merger agreement;
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make acquisition transactions, except for acquisitions with a
collective purchase price not exceeding $5,000,000, in the
aggregate;
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incur indebtedness in excess of $10,000,000 in the aggregate,
except for indebtedness incurred under the Companys
existing credit facilities or for borrowed money incurred
pursuant to agreements in effect prior to the execution of the
merger agreement;
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modify, amend or terminate certain agreements;
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change accounting practices;
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sell, lease, license, transfer, exchange or swap, divest,
cancel, abandon or allow to lapse or expire, mortgage or
otherwise encumber any material portion of its properties or
assets of the Company and its wholly owned subsidiaries;
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make loans or investments in other persons or entities other
than cash management or investment portfolio activities or
employee advances, in each case in the ordinary course;
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make capital expenditures in excess of $5,000,000 in the
aggregate;
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settle litigation or claims against the Company for over
$1,000,000 in the aggregate for claims involving customers, and
for over $2,500,000 in the aggregate for all other claims;
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change tax accounting, elections and practices;
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open any material new offices or facilities or relocate or close
any material existing offices or facilities; or
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enter into a new line of business.
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Restrictions
on Solicitations of Other Offers
Until the effective time of the merger, the Company and its
subsidiaries shall not, and shall use their reasonable best
efforts to cause its and their representatives not to:
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solicit, initiate or knowingly facilitate or encourage
(including by providing information) any inquiries, proposals or
offers that constitute or may reasonably be expected to lead to,
any competing proposal;
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participate in any negotiations regarding, or furnish to any
person any nonpublic information with respect to any competing
proposal;
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engage in discussions with any persons with respect to a
competing proposal;
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approve or recommend a competing proposal;
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enter into any letter of intent, memorandum of understanding or
similar document or any agreement or commitment relating to any
competing proposal;
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enter into any agreement or agreement in principle requiring,
directly or indirectly, the Company to abandon, terminate or
fail to consummate the transactions contemplated by the merger
agreement or breach of the Companys obligations under the
merger agreement; or
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publicly propose or agree to do any of the foregoing.
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Notwithstanding the restrictions above, at any time prior to the
stockholder approval, the Company may, if it receives an
unsolicited written competing proposal which the board of
directors of the Company determines in good faith after
consultation with the Companys legal and financial
advisors constitutes or would reasonably be expected to result
in, after taking the actions described below, a superior
proposal:
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furnish nonpublic information to the third party making such
competing proposal, if, and only if, prior to so furnishing such
information, the Company receives from the third party an
executed confidentiality agreement (which confidentiality
agreement shall contain terms (including a
standstill) no less favorable to the Company than
those set forth in the confidentiality agreement with the OEP
Fund) and substantially concurrently furnishes such nonpublic
information to Parent to the extent such information was not
previously furnished to Parent; and
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engage in discussions or negotiations with the third party with
respect to the competing proposal in each case only to the
extent that the Board concludes in good faith (after receiving
the advice of its outside counsel) that failure to take such
actions would be inconsistent with the directors exercise
of their fiduciary duties under applicable law.
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For purposes of the merger agreement:
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Competing proposal shall mean any bona fide
proposal (other than a proposal or offer by Parent or any of its
subsidiaries) relating to any direct or indirect
(1) merger, reorganization, share exchange, consolidation,
business combination, recapitalization, dissolution, liquidation
or similar transaction involving the Company or any of its
subsidiaries, whose assets individually or in the aggregate,
constitute fifteen percent (15%) or more of the consolidated
assets of the Company and its subsidiaries as determined on a
book-value basis; (2) the acquisition by any person of
fifteen percent (15%) or more of the assets of the Company and
its subsidiaries, taken as a whole as determined on a book-value
basis; (3) the acquisition by any person of fifteen percent
(15%) or more of the issued and outstanding shares of the
Companys common stock or (4) any purchase,
acquisition, tender offer or exchange offer that if consummated
would result in any person beneficially owning fifteen percent
(15%) or more of the Companys common stock or any class of
equity or voting securities of its subsidiaries whose assets,
individually or in the aggregate, constitute fifteen percent
(15%) or more of the consolidated assets of the Company and its
subsidiaries as determined on a book-value basis.
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Superior proposal shall mean a written
competing proposal (with all percentages in the definition of
competing proposal increased to fifty (50%)) on terms that the
Board determines in good faith, after consultation with the
Companys financial and legal advisors, and taking into
account all the terms of the competing proposal (including the
conditionality and the timing), are more favorable from a
financial point of view to the Companys stockholders than
the transactions contemplated by this Agreement (taking into
account any revised proposal by Parent to amend the terms of
this merger agreement).
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The
Boards Recommendation; Adverse Recommendation
Changes
As described above, and subject to the provisions described
below, the Board has made the recommendation that the holders of
the shares of common stock adopt the merger agreement and
approve the merger, which we refer to as the Company
recommendation. The merger agreement provides that the Board
shall not withdraw, qualify or modify or publicly propose to
withdraw, qualify or modify, in any manner, the Company
recommendation, which we refer to as a change of recommendation.
However, the Board may effect a change of recommendation as
described below.
The Board is entitled to make a change of recommendation prior
to receipt of the stockholder approval if the Board has
concluded in good faith after consultation with the
Companys legal and financial advisors that the failure
50
of the Board to effect a change of recommendation would be
inconsistent with the directors exercise of their
fiduciary duties under applicable law.
Before making such change of recommendation, however,
(1) the Company shall have first provided three business
days prior written notice to Parent of its intention to make a
change of recommendation and the basis therefor (which notice,
if provided because of a superior proposal, shall be accompanied
by a copy of the relevant proposed transaction agreements with
the party making such superior proposal (and any other related
material documents)), (2) if requested by Parent, the
Company shall have negotiated, and caused its financial and
legal advisors to negotiate, in good faith with Parent for a
period of three business days since the delivery of such notice
to amend the terms of the merger agreement to address the
reasons for the proposed change of recommendation, and
(3) if Parent delivers a written and binding offer to alter
the terms of the merger agreement during such three business day
period, the Board shall have concluded in good faith after
consultation with the Companys legal and financial
advisors that the failure of the board of directors to effect a
change of recommendation would still be inconsistent with the
directors exercise of their fiduciary duties under
applicable law.
The merger agreement does not prohibit the Company from
(1) complying with
Rule 14d-9
or
Rule 14e-2(a)
promulgated under the Exchange Act, though such rules will not
eliminate or modify the effect any action taken pursuant to such
rules would otherwise have under the merger agreement, or
(2) making any stop-look-and-listen
communication to the Companys stockholders pursuant to
Section 14d-9(f)
under the Exchange Act.
The Company must keep Parent reasonably informed on a current
basis (within no more than 24 hours) of any material
developments in the status of any competing proposal or inquiry.
Employee
Matters
During the one-year period commencing after the effective time,
Parent has agreed to provide Company employees with compensation
and benefits that are in the aggregate no less favorable than
the compensation and benefits (other than equity-based benefits)
provided to Company employees immediately prior to the effective
time of the merger. Base compensation for Company employees
shall not be reduced during this one-year period so long as such
employee remains employed. Parent shall cause the surviving
corporation to provide to Company employees who experience a
termination of employment severance benefits that are, in the
aggregate, no less favorable than the severance benefits
provided immediately prior to the effective time of the merger.
In general, Parent has agreed to give the Companys
employees credit for their service with the Company prior to the
merger for purposes of accrual of vacation and other paid time
off and severance benefits under any employee benefit plan
provided to Company employees after closing.
For purposes of any employee benefit plan providing medical,
dental, pharmaceutical
and/or
vision benefits to employees of the Company as of the closing
date of the merger, Parent will cause all pre-existing condition
exclusions, evidence of insurability requirements and
actively-at-work requirements to be waived. In addition, Company
employees shall be immediately eligible to participate in such
new plans, to the extent coverage under such plans replaces
coverage under a comparable employee benefit offered by the
Company prior to closing and will receive credit under such new
plan (for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements for the applicable plan year)
for any eligible expenses incurred under the Company plans
during the portion of the relevant plan year prior to such
employees participation in such new plans.
Financing
Efforts
Obtaining financing is not a condition to the closing of the
merger. If any financing (or alternative financing) has not been
obtained, Parent and Merger Sub will continue to be obligated,
subject to the satisfaction or waiver of the conditions to the
closing of the merger specified described below under
Merger Closing Conditions, to consummate
the merger.
The Company has agreed to use its commercially reasonable
efforts to provide such cooperation (at Parents sole
expense) as Parent may reasonably request in connection with the
arrangement of any debt financing Parent may raise in connection
with the transactions contemplated by the merger agreement
(provided that such requested cooperation does not unreasonably
interfere with the ongoing operations of the Company and its
subsidiaries),
51
including (1) agreeing to enter into such agreements, and
to use reasonable best efforts to deliver such officers
certificates, as are customary in financings of such type and as
are, in the good faith determination of the persons executing
such officers certificates, accurate, and agreeing to
pledge, grant security interests in, and otherwise grant liens
on, the Companys assets pursuant to such agreements as may
be reasonably requested and otherwise facilitating the pledging
of collateral, provided that no obligation of the Company under
any such agreement, pledge or grant shall be effective until the
effective time, (2) subject to recipients of any such
information entering into customary arrangements for
confidentiality that are substantially similar to the provisions
in the OEP Fund confidentiality agreement or reasonably
acceptable to the Company, providing financial and other
information regarding the Company and its subsidiaries as may be
reasonably requested, making the Companys senior officers
available to assist the Parent in raising debt financing in
connection with the transactions contemplated the merger
agreement, including (A) participating in meetings,
presentations, road shows, due diligence sessions and sessions
with ratings agencies and (B) assisting with the
preparation of materials for rating agency presentations,
offering documents, private placement memoranda, bank
information memoranda, prospectuses and similar documents
necessary, proper of advisable in connection with arranging such
debt financing, and (3) otherwise reasonably cooperating in
connection with the arranging and consummation of any debt
financing that Parent may raise in connection with the
transactions contemplated by the merger agreement.
Parent shall promptly reimburse the Company for any expenses and
costs incurred assisting in the financing process and Parent has
agreed to indemnify the Company and its subsidiaries, or any of
their respective directors, officers, employees, agents and
other representatives from and against all losses, damages,
claims, costs or expenses suffered (other than (1) arising
from information provided by the Company or any of its
subsidiaries, or any of their respective directors, officers,
employees, agents and other representatives or (2) as the
result of the gross negligence or willful misconduct of the
Company or any of its subsidiaries, or any of their respective
directors, officers, employees, agents and other
representatives).
Indemnification
and Insurance
In the merger agreement, Parent and Merger Sub agreed that all
rights to exculpation and indemnification for acts or omissions
occurring at or prior to the effective time of the merger now
existing in favor of the current or former directors, officers
or employees of the Company or the Companys subsidiaries
as provided in their respective employers certificates of
incorporation or bylaws or other organizational documents or in
any agreement will survive the merger and will continue in full
force and effect and will not be, for a period of six years from
the effective time of the merger, modified in any manner that
would adversely affect the rights thereunder of any individuals
who at the effective time of the merger were current or former
directors, officers or employees of the Company.
In addition, for a six-year period, Parent, the Company and its
subsidiaries and affiliates will, to the fullest extent
permitted by law, indemnify and hold harmless, and advance
expenses of, each officer, director or employee against and from
any costs or expenses, judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation to the extent such claim, action, suit, proceeding
or investigation arises out of or pertains to: any action or
omission or alleged action or omission in such persons
capacity as a director, officer or employee of the Company or
any of its subsidiaries; or the merger, the merger agreement and
any transactions contemplated thereby.
The merger agreement requires Parent to maintain the
Companys current directors and officers
insurance policies (or substitute insurance of at least the same
coverage and amounts with terms that are at least as favorable
to the indemnified parties) for six years following the
effective time. However, Parent will not be required to pay
premiums which on an annual basis exceed 300% of the annual
premiums currently paid by the Company; however, Parent must
obtain the greatest coverage available at such cost.
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Other
Covenants
Stockholders
Meeting
The Company has agreed to duly call, give notice of and hold the
special meeting as promptly as practicable following the date of
the merger agreement. At the meeting, unless the Company has
made a change of recommendation, the Company will recommend the
adoption of the merger agreement and approval of the merger.
Stockholder
Litigation; Litigation Generally
The Company and Parent will keep each other reasonably informed
regarding, among other things, actions, suits, claims,
investigations or proceedings relating to the merger agreement.
However, in the merger agreement, the Company has agreed not to
compromise or settle any such litigation without Parents
written consent (which may not be unreasonably withheld,
conditioned or delayed) compromise, settle or agree to settle
any suit, action, claim, proceeding or investigation (including
any suit, action, claim, proceeding or investigation relating to
the merger agreement or the transactions contemplated by the
merger agreement) or pay, discharge or satisfy or agree to pay,
discharge or satisfy any claim, liability or obligation
(absolute or accrued, asserted or unasserted, contingent or
otherwise) other than the compromise, settlement, payment,
discharge or satisfaction of claims, liabilities or obligations
in the ordinary course of business consistent with past practice
which in any event does not exceed (1) with respect to
compromises, settlements, payments, discharges and satisfactions
of claims, liabilities or obligations with or involving
customers of the Company or any of its subsidiaries, $1,000,000
in the aggregate, and (2) with respect to all other
compromises, settlements, payments, discharges and satisfactions
of claims (including in regards to any suit, action, claim,
proceeding or investigation relating to this Agreement or the
transactions contemplated hereby), liabilities or obligations,
$2,500,000 in the aggregate.
Appropriate
Action; Consents; Filings
The Company, Parent and Merger Sub will use their respective
reasonable best efforts to consummate and make effective the
transactions contemplated by the merger agreement and to cause
the conditions to the merger summarized in
Merger Closing Conditions below to be
satisfied, including (1) the obtaining and maintaining of
all necessary actions or nonactions, consents and approvals from
governmental authorities, (2) the defending of any lawsuits
or other legal proceedings challenging the merger and
(3) the execution and delivery of any additional
instruments necessary to consummate the merger and other
transactions contemplated by the merger agreement.
Parent and Merger Sub agree to use their reasonable best efforts
to take (and to cause their affiliates to take) promptly any and
all steps necessary to avoid or eliminate each and every
impediment and obtain all consents under any antitrust laws,
including committing to or effecting the sale or disposition of
such assets or businesses as are required to be divested in
order to avoid any order that would otherwise have the effect of
preventing or materially delaying the consummation of the merger
and the other transactions contemplated by the merger agreement.
Parent and the Company shall cooperate with one another to
determine any notices that need to be provided to third parties,
and the Company shall use its reasonable best efforts to obtain
any third party consents not covered that are necessary, proper
or advisable to consummate the merger as reasonably determined
by Parent; provided that the Company and its subsidiaries shall
not seek any such consent of their respective customers without
the prior consent of Parent, which consent shall not be
unreasonably withheld, delayed or conditioned. Each of the
parties will furnish to the other such necessary information and
reasonable assistance as the other may request in connection
with the preparation of any governmental filings or submissions
and will cooperate in responding to any inquiry from or material
communication with a governmental authority.
Merger
Closing Conditions
The obligations of Parent and Merger Sub, on the one hand, and
the Company, on the other hand, to complete the merger are each
subject to the satisfaction or the waiver of the following
conditions:
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the affirmative vote of holders of at least two-thirds of the
outstanding shares of common stock entitled to vote thereon in
accordance with the IBCA and the rules and regulations of NASDAQ
adopting the merger agreement, which we refer to as the
stockholder approval, having been obtained;
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any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated and any required
action or non-action, consent or approval from any governmental
authority pursuant to any other antitrust law shall have been
obtained; and
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no governmental authority shall have enacted, issued,
promulgated, enforced or entered any law or order which is then
in effect and has the effect of making the merger illegal or
otherwise restraining or enjoining or prohibiting the
consummation of the merger.
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The obligations of Parent and Merger Sub to complete the merger
are also subject to the satisfaction or waiver by Parent of the
following conditions:
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the representations and warranties of the Company:
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regarding the Companys corporate authority shall be true
and correct in all material respects as of the date of the
merger agreement and as of the effective time of the merger with
the same effect as though made as of July 6, 2011;
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regarding the Companys (1) capitalization (subject to
deviations that would not result in the sum of (a) the
aggregate merger consideration and (b) the aggregate option
cash payments for unvested stock options at the effective time
of the merger being in excess of $4,000,000 more than such
amount in the absence of any deviations), and (2) absence
of a Material Adverse Effect since January 3, 2011 shall be
true and correct in all respects as of the date of the merger
agreement and as of the effective time of the merger with the
same effect as though made as of such date, and
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other than those described in the two bullets immediately above,
being true and correct (without giving effect to any materiality
or Material Adverse Effect qualifications set forth therein) as
of the date of the merger agreement and as of the closing date
of the merger as though made on such date (except to the extent
that any such representation and warranty expressly speaks as of
an earlier date, in which case as of such earlier date), except
where the failure of such representations and warranties to be
so true and correct, individually or in the aggregate, has not
had and would not reasonably be expected to have a Material
Adverse Effect;
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the Company having complied in all material respects with all
material agreements and covenants required by it in the merger
agreement; and
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Parents receipt of a certificate of an executive officer
of the Company confirming the satisfaction of the foregoing two
conditions.
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The obligations of the Company to complete the merger are also
subject to the satisfaction or waiver of the following
conditions:
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each of the representations and warranties of Parent and Merger
Sub contained in the merger agreement, without giving effect to
any materiality or Parent Material Adverse Effect
qualifications therein, shall be true and correct as though made
on and as of such date (except to the extent expressly made as
of an earlier date, in which case as of such date) except for
such failures to be true and correct as would not reasonably be
expected to have, individually or in the aggregate, a Parent
Material Adverse Effect (as such term is defined in the merger
agreement);
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Parent and Merger Sub each having complied in all material
respects with all material agreements and covenants required by
it in the merger agreement; and
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the Companys receipt of a certificate of an executive
officer of Parent confirming the satisfaction of the foregoing
two conditions.
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Termination
of the Merger Agreement
The merger agreement may be terminated and the merger abandoned
at any time prior to the effective time of the merger, whether
before or after the adoption of the merger agreement by our
stockholders:
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by the Company, prior to the stockholders adopting the merger
agreement, if (1) the Board has authorized the Company to
enter into an alternative acquisition agreement with respect to
a superior proposal that did not
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54
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result from a breach of its obligation not to solicit
acquisition proposals, (2) the Company has given Parent
notice of the superior proposal and, if requested by Parent, the
opportunity to negotiate for 3 business days to amend the terms
of the merger agreement, (3) in the event Parent delivers a
binding offer to alter the terms of the merger agreement, the
Board concludes that the alternative acquisition remains a
superior proposal, (4) the Company enters into an
alternative acquisition agreement with respect to such superior
proposal and (5) the Company pays the termination fee (as
described below) to Parent;
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by the mutual written consent of Parent and the Company;
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by the Company or Parent, if the merger has not occurred by
February 29, 2012, which we refer to as the end date,
unless the terminating partys breach of the merger
agreement is the primary cause of the failure to consummate the
merger by the end date;
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by the Company or Parent, if any governmental entity has
enjoined or otherwise prohibited the merger in a final and
nonappealable order or any other action, unless the terminating
party failed to comply with its obligations to use its
reasonable best efforts to remove such order or other action or
if the issuance of such final, nonappealable order was primarily
due to the breach of such party (and in the case of Parent,
including Merger Sub) of its obligations under the merger
agreement;
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by the Company or Parent, if the Companys stockholders
fail to approve the adoption of the merger agreement at the
stockholders meeting or at any adjournment or postponement
thereof at which the merger agreement has been voted upon;
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by the Company or Parent, if the other party has breached or
failed to comply in any material respect (and not cured within
30 days after the breaching party receives written notice
of the breach) with the terms of the merger agreement in such a
way as to give rise to a failure of the conditions to the merger
relating to the accuracy of such partys representations
and warranties or such partys compliance with its
covenants, unless the terminating party is similarly in breach
of its own obligations; or
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by Parent, if the Company withdraws, qualifies or modifies or
publicly proposes to withdraw, qualify or modify, in any manner,
the Companys recommendation to its stockholders to adopt
and approve the merger agreement.
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Termination
Fee
If the merger agreement is terminated in certain circumstances,
the Company may be required to pay a termination fee. Parent
would be entitled to receive a termination fee from the Company
equal to $15 million if the merger agreement is terminated:
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(1) by the Company or Parent because the closing has not
occurred by the end date or the Companys stockholders fail
to adopt the merger agreement, or by Parent because the Company
has breached the merger agreement in such a way as to give rise
to a failure of the conditions to the merger relating to the
accuracy of the Companys representations and warranties or
the Companys compliance with its covenants, unless the
Parent is also in breach of its own obligations such that the
Company is not obligated to consummate the merger; (2) at
the time of such termination, any person has made publicly an
acquisition proposal (which is not withdrawn at the time of
termination or the stockholders meeting); and (3) the
Company consummates any acquisition proposal within
12 months of such termination;
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by the Company, if the Company has entered into an alternative
acquisition agreement with respect to a superior
proposal; and
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by Parent, if the Board has adversely changed its recommendation
to stockholders to adopt the merger agreement.
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55
Expenses
All expenses incurred in connection with the merger agreement
and transactions contemplated by the merger agreement shall be
paid by the party incurring such expenses, except that Parent
and the Company shall each pay, whether or not the merger is
consummated, fifty percent of the expenses incurred in
connection with:
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the preparation, printing, filing and mailing of the proxy
statement and all SEC and other regulatory filing fees incurred
in connection with the proxy statement;
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the solicitation of stockholder approvals;
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engaging the services of the paying agent; and
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obtaining third party consents.
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Parent shall pay, whether or not the merger or any other
transaction is consummated, the expenses incurred in connection
with the filing of any required notices under the HSR Act or
other antitrust laws and any filing with, and obtaining of any
necessary action or non-action, consent or approval from, any
governmental authority pursuant to any antitrust law.
Assignment
Pursuant to the terms of the merger agreement, Parent has
reserved the right to assign its rights and obligations
thereunder, including its right to acquire the Company, to an
affiliate of OEP, including NCO Group, Inc., a majority owned
subsidiary of OEP. Parent will remain jointly and severally
liable for its obligations under the merger agreement following
any such assignment of Parents rights and obligations
under the merger agreement.
Specific
Performance
Parent, Merger Sub and the Company may seek specific performance
to enforce the terms of the merger agreement in the state court
of the State of Illinois located in Cook County, Illinois or
Federal court sitting in Cook County in the State of Illinois.
The Company and Parent are each entitled to equitable relief to
prevent breaches of the merger agreement and to enforce
specifically the terms of the merger agreement in addition to
any other remedy to which it is entitled.
Governing
Law
The merger agreement is governed by Illinois law.
ADJOURNMENT
OF THE SPECIAL MEETING (PROPOSAL 2)
The
Adjournment Proposal
If the number of shares of common stock present in person or
represented by proxy at the special meeting voting in favor of
the proposal to adopt the merger agreement is insufficient to
approve such proposal at the time of the special meeting, the
Board intends to adjourn the special meeting in order to enable
the Board to solicit additional proxies in respect of the
proposal to adopt the merger agreement.
We are asking you to approve a proposal to grant discretionary
authority to the presiding officer of the special meeting to
adjourn the special meeting for the purpose of soliciting
additional proxies in respect of the proposal to adopt the
merger agreement. If our stockholders approve the adjournment
proposal, we could adjourn the special meeting and any adjourned
session of the special meeting and use the additional time to
solicit additional proxies, including the solicitation of
proxies from stockholders that have previously returned properly
executed proxies voting against adoption of the merger
agreement. Among other things, approval of the adjournment
proposal could mean that, even if we had received proxies
representing a sufficient number of votes against adoption of
the merger agreement such that the proposal to adopt the merger
agreement would be defeated, we could adjourn the special
meeting without a vote on the adoption of the merger and seek to
convince the holders of those shares to change their
56
votes to votes in favor of adoption of the merger agreement.
Additionally, we may seek to adjourn the special meeting if a
quorum is not present at the special meeting.
Vote
Required and Board Recommendation
Approval of the proposal to adjourn the special meeting requires
the affirmative vote of a majority of the shares of common stock
present or represented by proxy at the special meeting and
entitled to vote on the proposal, assuming a quorum is present.
The Board believes that if the number of shares of common stock
present in person or represented by proxy at the special meeting
voting in favor of the proposal to adopt the merger agreement is
not a sufficient number of shares to adopt the merger agreement,
it is in the best interests of the Company and its stockholders
to enable the Board to continue to seek to obtain a sufficient
number of additional votes in favor of the proposal to adopt the
merger agreement.
The Board recommends that you vote FOR
adjournment of the special meeting.
MERGER-RELATED
EXECUTIVE COMPENSATION ARRANGEMENTS (PROPOSAL 3)
The
Merger-Related Executive Compensation Arrangements
Proposal
Section 14A of the Exchange Act, which was enacted as part
of the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010, requires that we provide our stockholders with the
opportunity to vote to approve, on a non-binding, advisory
basis, the golden parachute compensation
arrangements for our named executive officers, as disclosed in
the section of this proxy statement entitled The
Merger Interests of Certain Persons in the
Merger Golden Parachutes.
We are asking our stockholders to indicate their approval of the
various change in control payments which our named executive
officers will or may be eligible to receive in connection with
the merger. These payments are set forth in the table entitled
Golden Parachute Compensation on page 39 of
this proxy statement and the accompanying footnotes. The various
plans and arrangements pursuant to which these compensation
payments may be made have historically formed part of the
Companys overall compensation program for its named
executive officers, which has been disclosed to our stockholders
as part of the Compensation Discussion and Analysis and related
sections of our annual proxy statements. These historical
arrangements were adopted and approved by the Compensation
Committee of the Board, which is composed solely of
non-management directors, and are believed to be reasonable and
in line with marketplace norms.
Stockholders should note that this proposal is merely an
advisory vote which will not be binding on the Company, the
Board, Parent or the surviving corporation. Further, the
underlying plans and arrangements are contractual in nature and
not, by their terms, subject to stockholder approval.
Accordingly, regardless of the outcome of the advisory vote, if
the merger is consummated, our named executive officers will be
eligible to receive the various change in control payments in
accordance with the terms and conditions applicable to those
payments.
Vote
Required and Board Recommendation
The non-binding, advisory proposal regarding certain
merger-related executive compensation arrangements requires the
affirmative vote of the holders of a majority of the shares of
common stock present in person or represented by proxy and
entitled to vote on the matter at the special meeting.
The Board believes that it is in the best interests of the
Company and its stockholders to approve the non-binding,
advisory proposal regarding certain merger-related executive
compensation arrangements.
The Board recommends that you vote FOR the
non-binding proposal (set forth in the resolution immediately
below) regarding certain merger-related executive compensation
arrangements.
RESOLVED, that the stockholders of APAC approve, solely on
a non-binding, advisory basis, the golden parachute compensation
which may be paid to the Companys named executive officers
in connection with the
57
merger, as disclosed pursuant to Item 402(t) of
Regulation S-K
in the section entitled The Merger Interests
of Certain Persons in the Merger Golden
Parachutes in the Companys proxy statement for the
special meeting.
MARKET
PRICE OF COMMON STOCK
Our common stock is traded on The NASDAQ Global Select Market
under the ticker symbol APAC. The following table
sets forth, for the indicated calendar periods, the reported
high and low sale prices per share of our common stock as
reported by Bloomberg L.P.
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High
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Low
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Fiscal Year Ending January 1, 2012
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Third Quarter (through August 12, 2011)
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$
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8.49
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$
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5.31
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Second Quarter
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6.00
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5.32
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First Quarter
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6.21
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5.51
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Fiscal Year Ending January 2, 2011
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Fourth Quarter
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6.48
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5.27
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Third Quarter
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5.89
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4.65
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Second Quarter
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6.56
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5.55
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First Quarter
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6.20
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5.14
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Fiscal Year Ended January 3, 2010
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Fourth Quarter
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6.97
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5.09
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Third Quarter
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6.08
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4.83
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Second Quarter
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6.27
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3.47
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First Quarter
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3.56
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1.15
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Fiscal Year Ended December 28, 2008
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Fourth Quarter
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2.15
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0.97
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Third Quarter
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2.33
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1.20
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The Company did not pay any dividends during any of the periods
set forth in the table above. Under the terms of the merger
agreement, the Company cannot establish a record date for,
declare, set aside for payment or pay any dividend with respect
to any share of its common stock.
The $8.55 merger consideration represents a premium of
approximately 57.2% over the closing price of the common stock
on July 6, 2011, the last trading day prior to entering
into the merger agreement, a premium of approximately 50.2% over
the Companys average closing share price for the 90
calendar days prior to July 6, 2011, and a premium of
approximately 50.3% over the Companys average closing
share price for the 52-week period prior to July 6, 2011.
You are encouraged to obtain current market quotations for our
common stock.
58
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information about the number of
shares of our common stock beneficially owned as of
July 22, 2011, by the Companys directors and named
executive officers, as well as all directors and executive
officers as a group, and each person known to us who
beneficially owned more than 5% of the outstanding shares of our
common stock:
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Amount and
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Nature of
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Beneficial
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Percent of
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Name and Address of Beneficial Owner(1)
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Ownership
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Class(1)
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Theodore G. Schwartz
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15,043,386
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(2)(3)(4)
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28.4
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%
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Wellington Management Company, LLP
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5,316,947
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(5)
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10.0
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%
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Trust Four Hundred Thirty U/A/D 4/2/94
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2,040,000
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(2)(6)
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3.8
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%
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Trust Seven Hundred Thirty U/A/D 4/2/94
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2,040,000
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(2)(6)
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3.8
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%
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Trust 3080
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500,000
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(2)(6)
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*
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Trust 3081
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379,000
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(2)(6)
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*
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Katherine Andreasen
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8,301
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(4)
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*
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Kevin T. Keleghan
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453,301
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(4)
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*
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John J. Park
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261,798
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(4)
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*
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Samuel K. Skinner
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83,359
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(4)
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*
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John L. Workman
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111,057
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(4)
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*
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Arthur D. DiBari
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260,000
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(4)
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*
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Mark E. McDermott
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287,816
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(4)
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*
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Robert Nachwalter
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62,000
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(4)
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*
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Andrew B. Szafran
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576,000
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(4)
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1.1
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%
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All directors, nominees and executive officers as a group
(13 persons)
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17,400,518
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(4)
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32.8
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%
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Less than 1%. |
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(1) |
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The business address for all directors and executive officers is
Bannockburn Lake Office, 2201 Waukegan Road, Suite 300,
Bannockburn, Illinois 60015. Unless otherwise indicated, the
individuals listed in the table have sole voting and investment
power with respect to the shares owned by them, and such shares
are not subject to any pledge. Beneficial ownership is shown on
this table in accordance with the rules of the Securities and
Exchange Commission. Under those rules, if a person holds
options to purchase shares of common stock that are exercisable
or will be exercisable within 60 days after July 22,
2011, those shares are included in that persons reported
holdings and in calculating the percentages of shares of common
stock beneficially owned. The percentages of Common Shares
beneficially owned are based on 53,038,692 shares of common
stock, which includes 51,321,416 Common Shares outstanding as of
July 22, 2011, plus 1,717,276 shares of common stock
subject to options that will be exercisable within 60 days
of July 22, as detailed in Note 4 below. |
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(2) |
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In connection with entering into the voting agreement with
Mr. Schwartz and the Schwartz trusts, OEP may be deemed to
be the beneficial owner of the shares held by Mr. Schwartz
and the Schwartz trusts, based solely upon information provided
in the Schedule 13D filed on July 18, 2011 by
Blackhawk Acquisition Parent, LLC, One Equity Partners IV, L.P.,
OEP General Partner IV, L.P. and OEP Parent, which we refer to
collectively as the OEP Reporting Persons. The OEP Reporting
Persons have no sole voting power over the shares of common
stock, shared voting power over 19,993,429 shares of common
stock as a result of and pursuant to the Voting Agreement
between Parent, Mr. Schwartz and the Schwartz trusts and no
shared dispositive power of the shares of common stock. The
address of the OEP Reporting Persons is 320 Park Avenue, New
York, New York, 10022. |
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(3) |
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Includes 5,011,218 shares of common stock as to which
Mr. Schwartz has sole voting and investment power, and
9,858,000 shares of common stock held by a limited
partnership, as to which Mr. Schwartz disclaims beneficial
ownership except to the extent of his pecuniary interest
therein. Mr. Schwartzs address is
1 North Wacker Drive, Suite 4775, Chicago,
Illinois 60606. |
59
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(4) |
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Includes shares of common stock which may be acquired pursuant
to options exercisable as of July 22, 2011, or within
60 days thereafter, as follows: Mr. Schwartz
(174,168 shares); Ms. Andreasen (8,301 shares);
Mr. Keleghan (158,301 shares); Mr. Park
(228,352 shares); Mr. Skinner (56,057 shares);
Mr. Workman (56,057 shares); Mr. DiBari
(260,000 shares); Mr. McDermott (278,040 shares);
Mr. Nachwalter (62,000 shares); Mr. Szafran
(276,000 shares); and all directors, nominees and executive
officers (as of July 22, 2011) as a group (1,717,276). |
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(5) |
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Based solely upon information provided in the
Schedule 13G/A filed on February 10, 2011 by
Wellington Management Company, LLP. Wellington Management
Company, LLP has no sole voting power over the shares of common
stock, shared voting power over 4,995,147 shares of common
stock and dispositive power over 5,316,947 shares of common
stock. The address of Wellington Management Company, LLP is 280
Congress Street, Boston, Massachusetts 02210. |
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(6) |
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Tracy D. Schwartz and Scott Mordell serve as general trustees of
Trust Four Hundred Thirty U/A/D 4/2/94 and Trust 3080,
and Todd G. Schwartz and Scott Mordell serve as general trustees
of Trust Seven Hundred Thirty
U/A/D 4/2/94
and Trust 3081 (collectively, the Trusts). All
decisions regarding the voting and disposition of Common Shares
held by the Trusts must be made by a majority of the general
trustees and, as a result, each of the general trustees
disclaims beneficial ownership. M. Christine Schwartz, who is
married to Mr. Theodore G. Schwartz, serves as a special
trustee of the Trusts and has limited powers to designate
successors to the general trustees at the conclusion of their
terms, but has no responsibilities or powers regarding the
voting or disposition of the Common Shares owned by the Trusts
and accordingly disclaims beneficial ownership of such shares.
The address of each of the Trusts is: 1 North Wacker Drive,
Suite 4775, Chicago, Illinois 60606. |
DISSENTERS
RIGHTS
This section is intended as a brief summary of the material
provisions of the Illinois statutory procedures that a
shareholder must follow in order to seek and perfect appraisal
rights, referred to as dissenters rights in the IBCA. This
summary, however, is not a complete statement of all applicable
requirements, and it is qualified in its entirety by reference
to Sections 11.65 and 11.70 of the IBCA, the full text of
which appears in Annex D to this proxy statement.
The following summary does not constitute any legal or other
advice, nor does it constitute a recommendation that
shareholders exercise their appraisal rights under
Sections 11.65 and 11.70.
The rights of the Company shareholders who choose to dissent
from the merger are governed by the provisions of Illinois law.
An excerpt of the Illinois law (Sections 11.65 and 11.70)
governing appraisal rights is attached hereto as
Annex D.
Pursuant to Section 11.70 of Illinois law, a shareholder
may assert dissenters rights only if the shareholder
delivers to the Company prior to the vote taken with respect to
the merger at the special meeting a written demand for payment
for his or her common shares of the Company if the merger is
consummated and the shareholder does not vote in favor of the
merger.
Within 10 days after the closing of the merger, or
30 days after the shareholder delivers to the Company a
written demand for payment, whichever is later, the Company will
send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the Company as
to the estimated fair value of its common shares, the
Companys balance sheet as of the most recently completed
fiscal year ending not earlier than 16 months prior to
delivery of the statement, together with the statement of income
for that year and the latest available interim financial
statements, and either:
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a commitment to pay the estimated fair value for the common
shares of the dissenting shareholder upon transmittal to the
Company of the certificates, or other evidence of ownership,
with respect to such shares of the Company, or
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instructions to the dissenting shareholder to sell the shares
within 10 days after delivery of the Companys
statement to the shareholder. The Company may instruct the
shareholder to sell only if there is a public market for the
shares at which the shares may be readily sold. If the
shareholder does not sell within that 10 day period after
being so instructed by the Company, then the shareholder shall
be deemed for these purposes to have sold the shares at the
average of the bid and asked price quoted by a principal market
maker during that 10 day period.
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60
If the dissenting shareholder does not agree with the opinion of
the Company as to the estimated value of the shares, the
shareholder, within 30 days after the delivery of the
Companys statement of value, must notify the Company in
writing of his or her estimate of value and demand payment for
the difference between the shareholders estimate of value
plus interest due and the amount of the payment by the Company.
If, within 60 days from delivery to the Company of the
shareholder notification of estimate of value of the shares, the
Company and the dissenting shareholder have not agreed in
writing upon the value of our common shares, the Company must
either pay the difference in value demanded or file a petition
in the circuit court of Lake County, Illinois requesting the
court to determine the fair value of the shares. The Company
must make all dissenters, whether or not residents of Illinois,
whose demands remain unsettled parties to such proceeding and
all parties will be served with a copy of the petition. Failure
of the Company to commence an action will not limit or affect
the right of dissenting shareholders to otherwise commence an
action as permitted by law. In an appraisal proceeding, the
court may appoint one or more persons as appraisers to receive
evidence and recommend decision on the question of fair value.
Each dissenter made a party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds that
the fair value of the shares, plus interest, exceeds the amount
paid by the Company or the proceeds of sale by the shareholder,
whichever amount is applicable.
The court, in an appraisal proceeding, will determine all costs
of the proceeding, including the reasonable compensation and
expenses of the appraisers, if any. If the fair value of the
shares as determined by the court materially exceeds the amount
offered by the Company, or if no offer was made, then all or any
part of such expenses may be assessed against the Company. If
the amount by which any dissenter estimated the value of the
shares materially exceeds the value as determined by the court,
then all or any part of the costs may be assessed against the
dissenter. The court may also assess the fees and expenses of
counsel and experts for the parties on an equitable basis as
described in the statute.
WE STRONGLY ENCOURAGE YOU TO READ THE EXCERPTS FROM THE
ILLINOIS LAW INCLUDED HEREIN AS ANNEX D.
In view of the complexity of Sections 11.65 and 11.70 of
the IBCA, the Companys shareholders who may wish to pursue
appraisal rights should consult their legal and financial
advisors.
OTHER
MATTERS
Other
Matters for Action at the Special Meeting
As of the date of this proxy statement, the Board knows of no
matters that will be presented for consideration at the special
meeting other than as described in this proxy statement.
Stockholder
Proposals and Nominations for 2011 Annual Meeting
Once the merger is completed, there will be no public
participation in any future meetings of the Companys
stockholders. If the merger is not completed, our public
stockholders will continue to be entitled to attend and
participate in our stockholder meetings, and we would expect to
hold our 2012 annual meeting of stockholders prior to the end of
2012.
Inclusion
of Proposals in the Companys Proxy Statement and Proxy
Card under the SEC Rules
In order to be considered for inclusion in the proxy statement
distributed to stockholders prior to the annual meeting of
stockholders in 2012, a stockholder proposal pursuant to
Rule 14a-8
under the Exchange Act must have been received by us no later
than January 1, 2012 and must comply with the requirements
of SEC
Rule 14a-8.
However, if the annual meeting date is changed by more than
30 days from the anniversary of last years annual
meeting, which took place on June 7, 2011, then the
deadline for such proposals is a reasonable time before the
Company begins to print and send its proxy materials, which
would be disclosed in the Companys reports filed with the
SEC. Written requests for inclusion should be addressed to: APAC
Customer Services, Inc. Bannockburn Lake Office, 2201 Waukegan
Road, Suite 300, Bannockburn, Illinois 60015, Attention:
General Counsel and Secretary.
61
Advance
Notice Requirements for Stockholder Submission of Nominations
and Proposals
A shareholder recommendation for nomination of a person for
election to the Board or a proposal for consideration at the
2012 annual meeting of stockholders must be submitted in
accordance with the advance notice procedures and other
requirements in the Companys bylaws. These requirements
are separate from, and in addition to, the requirements
discussed above to have the stockholder proposal included in our
proxy statement and form of proxy pursuant to the SECs
rules.
Under the Companys bylaws, shareholders must follow
certain procedures to nominate a person for election as a
director at an annual or special meeting, or to introduce an
item of business at an annual meeting. Under these advance
notice procedures, stockholders must submit the proposed nominee
or item of business by delivering a notice to the Secretary of
the Company at its principal executive office. To be timely, the
Company must receive notice of a stockholders intention to
introduce a nomination or proposed item of business for the 2012
annual meeting between February 8, 2012 and March 9,
2012. However, if the date of our 2012 annual meeting is before
May 8, 2012, or after August 6, 2012, the notice must
be delivered to the corporate secretary at our principal
executive office not more than 120 days prior to the 2012
annual meeting and not less than the later of 90 days prior
to the 2012 annual meeting or 10 days following the day on
which we first publicly announce the date of the 2012 annual
meeting.
The notice must describe certain information regarding the
nominee and the shareholder giving the notice, including
information such as name, address, occupation and shares held.
Delivery
of this Proxy Statement
The SEC has adopted rules that permit companies and
intermediaries (such as brokers) to satisfy delivery
requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process,
known as householding, potentially means extra
convenience for stockholders and cost savings for companies. A
number of brokers with customers who are our stockholders
household our proxy materials unless contrary
instructions have been received from the customers. We will
promptly deliver, upon oral or written request, a separate copy
of the proxy statement to any stockholder sharing an address to
which only one copy was mailed. Requests for additional copies
should be directed to our proxy solicitor, Georgeson, at:
Georgeson Inc., 199 Water Street,
26th
Floor, New York, NY 10038, or by telephone at (866)
482-5136
(toll-free) or (212)
440-9800
(banks and brokers), or to our Investor Relations department at:
Investor Relations, APAC Customer Services, Inc. Bannockburn
Lake Office, 2201 Waukegan Road, Suite 300, Bannockburn,
Illinois 60015.
Once a stockholder has received notice from his or her broker
that the broker will be householding communications
to the stockholders address, householding will
continue until the stockholder is notified otherwise or until
the stockholder revokes his or her consent. If, at any time, a
stockholder no longer wishes to participate in
householding and would prefer to receive separate
copies of the proxy statement, the stockholder should so notify
his or her broker. Any stockholder who currently receives
multiple copies of the proxy statement at his or her address and
would like to request householding of communications
should contact his or her broker or, if shares are registered in
the stockholders name, our Investor Relations, at the
address or telephone number provided above.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. This information is also
available free of charge at www.sec.gov, an Internet site
maintained by the SEC that contains reports, proxy and
information statements, and other information regarding issuers
that is filed electronically with the SEC. Stockholders may also
read and copy any reports, statements and other information
filed by us with the SEC at the SEC public reference room at
100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
or visit the SECs website for further information on its
public reference room. In addition, investors and stockholders
may request free copies of our SEC documents by contacting our
Investor Relations department at: Investor Relations, APAC
Customer Services, Inc. Bannockburn Lake Office, 2201 Waukegan
Road, Suite 300, Bannockburn, Illinois 60015.
62
The information provided on our website is not part of this
proxy statement, and therefore is not incorporated by reference
herein.
The SEC allows us to incorporate by reference
information into this proxy statement. 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 proxy
statement, and later information filed with the SEC will update
and supersede the information in this proxy statement.
The following documents filed with the SEC are incorporated by
reference in this proxy statement:
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APACs Annual Report on
Form 10-K
for the fiscal year ended January 2, 2011;
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APACs Quarterly Report on
Form 10-Q
for the quarters ended July 3, April 3, 2011,
November 30, 2010 and August 31, 2010; and
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APACs Current Reports on
Form 8-K,
filed with the SEC on July 12, 2011, June 10, 2011,
June 6, 2011, May 20, 2011, May 17, 2011,
May 12, 2011, May 3, 3011 and February 23, 2011.
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We also incorporate by reference each document we file pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
(other than Current Reports on
Form 8-K
filed under Items 2.02 and 7.01) after the date of this
proxy statement and before the special meeting.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of any of the
documents incorporated by reference in this document, without
charge, by request directed to the Investor Relations department
at: Investor Relations, APAC Customer Services, Inc. Bannockburn
Lake Office, 2201 Waukegan Road, Suite 300, Bannockburn,
Illinois 60015, or from the SEC through the SECs website
at
http://www.sec.gov.
Documents incorporated by reference are available without
charge, excluding any exhibits to those documents (unless the
exhibit is specifically incorporated by reference into this
proxy statement).
Parent and its affiliates have supplied all information in this
proxy statement pertaining to Parent, Merger Sub, OEP and the
OEP Fund. We have supplied all information in this proxy
statement pertaining to us.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT
IS DATED [ ], 2011. YOU SHOULD NOT ASSUME THAT
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS
OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY
STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE
CONTRARY.
63
TABLE
OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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A-1
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Section 1.1
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Definitions
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A-1
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ARTICLE II THE MERGER
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A-1
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Section 2.1
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The Merger
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A-1
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Section 2.2
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Closing
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A-1
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Section 2.3
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Effective Time
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A-2
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Section 2.4
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Articles of Incorporation and Bylaws
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A-2
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Section 2.5
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Board of Directors
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A-2
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Section 2.6
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Officers
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A-2
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ARTICLE III EFFECT
OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
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A-2
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Section 3.1
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Effect on Securities
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A-2
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Section 3.2
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Exchange of Certificates
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A-3
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Section 3.3
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Stock Options and Unvested Restricted Shares
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A-4
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Section 3.4
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Lost Certificates
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A-5
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Section 3.5
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Dissenting Shares
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A-5
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Section 3.6
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Transfers; No Further Ownership Rights
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A-6
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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A-6
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Section 4.1
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Organization and Qualification; Subsidiaries
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A-6
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Section 4.2
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Articles of Incorporation and By-Laws
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A-6
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Section 4.3
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Capitalization
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A-6
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Section 4.4
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Authority Relative to Agreement
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A-7
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Section 4.5
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No Conflict; Required Filings and Consents
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A-8
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Section 4.6
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Permits and Licenses; Compliance with Laws
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A-8
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Section 4.7
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Company SEC Documents
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A-9
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Section 4.8
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Disclosure Controls and Procedures; Internal Controls over
Financial Reporting
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A-9
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Section 4.9
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Absence of Certain Changes or Events
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A-9
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Section 4.10
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No Undisclosed Liabilities
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A-10
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Section 4.11
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Absence of Litigation
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A-10
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Section 4.12
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Employee Benefit Plans
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A-10
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Section 4.13
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Labor Matters
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A-11
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Section 4.14
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Trademarks, Patents and Copyrights
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A-12
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Section 4.15
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Taxes
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A-12
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Section 4.16
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Material Contracts
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A-13
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Section 4.17
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Opinion of Financial Advisor
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A-14
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Section 4.18
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Vote Required
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A-14
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Section 4.19
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Brokers
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A-14
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Section 4.20
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Real Property
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A-14
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Section 4.21
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Insurance
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A-15
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Section 4.22
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Environmental
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A-15
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Section 4.23
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Title to Assets
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A-15
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Section 4.24
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Customers and Vendors
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A-16
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A-i
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Page
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Section 4.25
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Confidentiality Obligations; Data Privacy
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A-16
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Section 4.26
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Transactions with Affiliates
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A-16
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Section 4.27
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Foreign Corrupt Practices Act Compliance
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A-16
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Section 4.28
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No Other Representations or Warranties
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A-16
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
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A-17
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Section 5.1
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Organization and Qualification; Subsidiaries
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A-17
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Section 5.2
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Articles of Incorporation, By-Laws, and Other Organizational
Documents
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A-17
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Section 5.3
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Authority Relative to Agreement
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A-17
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Section 5.4
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No Conflict; Required Filings and Consents
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A-17
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Section 5.5
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Absence of Litigation
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A-18
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Section 5.6
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Guaranty
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A-18
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Section 5.7
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Capitalization of Acquisition Sub
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A-18
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Section 5.8
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Brokers
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A-18
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Section 5.9
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Solvency
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A-18
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Section 5.10
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Parent Ownership of Company Securities
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A-19
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Section 5.11
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Acknowledgement of Disclaimer of Other Representations and
Warranties
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A-19
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ARTICLE VI COVENANTS
AND AGREEMENTS
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A-19
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Section 6.1
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Conduct of Business by the Company Pending the Merger
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A-19
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Section 6.2
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Proxy Statement
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A-22
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Section 6.3
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Stockholders Meetings
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A-22
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Section 6.4
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Appropriate Action; Consents; Filings
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A-23
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Section 6.5
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Access to Information; Confidentiality
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A-24
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Section 6.6
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No Solicitation of Competing Proposal
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A-24
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Section 6.7
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Directors and Officers Indemnification and Insurance
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A-26
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Section 6.8
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Notification of Certain Matters; Litigation relating to Merger
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A-27
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Section 6.9
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Public Announcements
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A-28
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Section 6.10
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Employee Matters
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A-28
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Section 6.11
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Financing Cooperation
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A-29
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Section 6.12
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No Control of the Companys Business
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A-29
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Section 6.13
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Rule 16b-3
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A-30
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Section 6.14
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Anti-Takeover Laws
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A-30
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ARTICLE VII
CONDITIONS TO THE MERGER
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A-30
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Section 7.1
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Conditions to the Obligations of Each Party
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A-30
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Section 7.2
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Conditions to the Obligations of Parent
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A-30
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Section 7.3
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Conditions to the Obligations of the Company
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A-31
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
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A-31
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Section 8.1
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Termination
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A-31
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Section 8.2
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Effect of Termination
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A-32
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Section 8.3
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Termination Fees
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A-33
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Section 8.4
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Amendment
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A-33
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Section 8.5
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Waiver
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A-34
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Section 8.6
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Expenses; Transfer Taxes
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A-34
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A-ii
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Page
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ARTICLE IX GENERAL
PROVISIONS
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A-34
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Section 9.1
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Non-Survival of Representations, Warranties and Agreements
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A-34
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Section 9.2
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Notices
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A-34
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Section 9.3
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Interpretation; Certain Definitions
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A-35
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Section 9.4
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Severability
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A-36
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Section 9.5
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Assignment
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A-36
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Section 9.6
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Entire Agreement; No Third-Party Beneficiaries
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A-36
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Section 9.7
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Governing Law
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A-36
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Section 9.8
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Specific Performance
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A-36
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Section 9.9
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Consent to Jurisdiction
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A-37
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Section 9.10
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Counterparts
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A-37
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Section 9.11
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WAIVER OF JURY TRIAL
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A-37
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Appendix A
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AA-1
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A-iii
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 6, 2011
(this Agreement), is made by and among
Blackhawk Acquisition Parent, LLC, a Delaware limited liability
company (Parent), Blackhawk Merger Sub, Inc.,
an Illinois corporation and a wholly owned subsidiary of Parent
(Acquisition Sub), and APAC Customer
Services, Inc., an Illinois corporation (the
Company).
WITNESSETH
WHEREAS, in furtherance of the acquisition of the Company by
Parent, the respective boards of directors of the Company and
Acquisition Sub have unanimously approved and deemed advisable,
and the board of directors of Parent, as the sole stockholder of
Acquisition Sub, has unanimously approved this Agreement and the
merger of Acquisition Sub with and into Company (the
Merger), upon the terms and subject to
the conditions and limitations set forth herein and in
accordance with the Business Corporation Act of 1983 of the
State of Illinois (the IBCA).
WHEREAS, concurrently with the execution of this Agreement, and
as a condition and inducement to the willingness of Parent and
Acquisition Sub to enter into this Agreement, each of the
stockholders of the Company named therein has executed a Voting
Agreement, dated as of the date hereof (the Voting
Agreement), in respect of shares of Common Stock
beneficially owned by such stockholder or stockholders.
WHEREAS, concurrently with the execution of this Agreement, and
as a condition to the willingness of the Company to enter into
this Agreement, Parent and Acquisition Sub have delivered to the
Company the Guaranty (the Guaranty) of the
Guarantor, dated as of the date hereof, and pursuant to which,
subject to the terms and conditions contained therein, the
Guarantor has guaranteed all the payment obligations of Parent
or Acquisition Sub pursuant to this Agreement and all
liabilities and damages payable by Parent or Acquisition Sub
arising under or in connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants and subject to the
conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Defined
terms used in this Agreement have the meanings ascribed to them
by definition in this Agreement or in Appendix A.
ARTICLE II
THE MERGER
Section 2.1 The
Merger. Upon the terms and subject to the
conditions of this Agreement, and in accordance with the IBCA,
at the Effective Time, Acquisition Sub shall be merged with and
into the Company, whereupon the separate existence of
Acquisition Sub shall cease, and the Company shall continue
under the name APAC Customer Services, Inc. as the
surviving corporation (the Surviving
Corporation) and shall continue to be governed by the
laws of the State of Illinois.
Section 2.2 Closing. Subject
to the satisfaction or, if permissible, waiver of the conditions
set forth in Article VII hereof, the closing of the
Merger (the Closing) will take place at
9:00 a.m., Chicago time, on a date to be specified by the
parties hereto, but no later than the second Business Day after
the satisfaction or waiver of the conditions set forth in
Article VII hereof (other than those conditions that
by their terms are to be satisfied at the Closing, but subject
to the satisfaction or waiver at the Closing of such conditions)
at the offices of Kirkland & Ellis LLP, 300 North
LaSalle Drive, Chicago, Illinois 60654, unless another time,
date or place is agreed to in writing by the parties hereto
(such date being the Closing Date).
A-1
Section 2.3 Effective
Time.
(a) Concurrently with the Closing, the Company, Parent and
Acquisition Sub shall cause articles of merger (the
Articles of Merger) with respect to the
Merger to be executed and filed with the Secretary of State of
the State of Illinois (the Secretary of
State) as provided under the IBCA. The Merger shall
become effective on the date and time at which the Articles of
Merger have been duly filed with the Secretary of State or at
such other date and time as is agreed between the parties and
specified in the Articles of Merger (such date and time being
hereinafter referred to as the Effective
Time).
(b) From and after the Effective Time, the Surviving
Corporation shall possess all properties, rights, privileges,
powers and franchises of the Company and Acquisition Sub, and
all of the claims, obligations, liabilities, debts and duties of
the Company and Acquisition Sub shall become the claims,
obligations, liabilities, debts and duties of the Surviving
Corporation.
Section 2.4 Articles
of Incorporation and Bylaws. Subject to
Section 6.7 of this Agreement, the articles of
incorporation and bylaws of Acquisition Sub, as in effect
immediately prior to the Effective Time, shall be the articles
of incorporation and bylaws of the Surviving Corporation until
thereafter amended in accordance with applicable Law and the
applicable provisions of the articles of incorporation and
bylaws.
Section 2.5 Board
of Directors. Subject to applicable Law, each
of the parties hereto shall take all necessary action to ensure
that the board of directors of the Surviving Corporation
effective as of, and immediately following, the Effective Time
shall consist of the members of the board of directors of
Acquisition Sub immediately prior to the Effective Time.
Section 2.6 Officers. From
and after the Effective Time, the officers of the Company at the
Effective Time shall be the officers of the Surviving
Corporation, until their respective successors are duly elected
or appointed and qualified in accordance with applicable Law.
ARTICLE III
EFFECT OF
THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 3.1 Effect
on Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the
Company, Acquisition Sub or the holders of any securities of the
Company or Acquisition Sub:
(a) Cancellation of Company
Securities. Each share of the Companys
common shares, par value $0.01 per share (the Common
Stock), held by the Company as treasury stock or held
by Parent, Acquisition Sub, any other direct or indirect wholly
owned subsidiary of Parent, the Company or any direct or
indirect wholly owned subsidiary of the Company immediately
prior to the Effective Time shall automatically be canceled and
retired and shall cease to exist, and no consideration or
payment shall be delivered in exchange therefor or in respect
thereof.
(b) Conversion of Company
Securities. Except as otherwise provided in
this Agreement, each share of Common Stock (including Unvested
Restricted Shares) issued and outstanding immediately prior to
the Effective Time (other than shares canceled pursuant to
Section 3.1(a) hereof and Dissenting Shares) shall
be converted into the right to receive $8.55 in cash, without
interest (the Merger Consideration). Each
share of Common Stock to be converted into the right to receive
the Merger Consideration as provided in this
Section 3.1(b) shall be automatically canceled and
shall cease to exist and the holders of certificates (the
Certificates) or book-entry shares
(Book-Entry Shares) which immediately prior
to the Effective Time represented such Common Stock shall cease
to have any rights with respect to such Common Stock other than
the right to receive, upon surrender of such Certificates or
Book-Entry Shares in accordance with Section 3.2 of
this Agreement, the applicable Merger Consideration, without
interest thereon.
(c) Conversion of Acquisition Sub Capital
Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder
thereof, each common share, no par value per share, of
Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one
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(1) fully paid common share, no par value per share, of the
Surviving Corporation and constitute the only outstanding shares
of capital stock of the Surviving Corporation.
(d) Adjustments. Without limiting
the other provisions of this Agreement, if at any time during
the period between the date of this Agreement and the Effective
Time, any change in the number of outstanding shares of Common
Stock occurs as a result of a reclassification,
recapitalization, stock split (including a reverse stock split),
or combination, exchange or readjustment of shares, or any stock
dividend or stock distribution with a record date during such
period, the Merger Consideration as provided in
Section 3.1(b) shall be equitably adjusted to
reflect such change.
Section 3.2 Exchange
of Certificates.
(a) Designation of Paying Agent; Deposit of Exchange
Fund. Prior to the Effective Time, Parent
shall designate a paying agent (the Paying
Agent), the identity and the terms of appointment of
which shall be reasonably acceptable to the Company, for the
payment of the applicable Merger Consideration as provided in
Section 3.1(b) and Section 3.3(d).
Immediately prior to the filing of the Articles of Merger with
the Secretary of State, Parent shall deposit, or cause to be
deposited with the Paying Agent, cash constituting an amount
equal to the Total Common Merger Consideration (such Total
Common Merger Consideration as deposited with the Paying Agent,
the Exchange Fund). In the event the Exchange
Fund shall be insufficient to make the payments contemplated by
Section 3.1(b) and Section 3.3(d),
Parent shall promptly deposit, or cause to be deposited,
additional funds with the Paying Agent in an amount which is
equal to the deficiency in the amount required to make such
payment. The Paying Agent shall cause the Exchange Fund to be
(i) held for the benefit of the holders of Common Stock and
(ii) applied promptly to making the payments pursuant to
Section 3.1(b) and Section 3.3(d)
hereof. The Exchange Fund shall not be used for any purpose
other than to fund payments pursuant to
Section 3.1(b) and Section 3.3(d),
except as expressly provided for in this Agreement.
(b) As promptly as reasonably practicable following the
Effective Time and in any event not later than the fifth (5th)
Business Day thereafter, the Surviving Corporation shall cause
the Paying Agent to mail (or to make available for collection by
hand) (i) to each holder of record of a Certificate or
Book-Entry Share that immediately prior to the Effective Time
represented outstanding shares of Common Stock (x) a letter
of transmittal, which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates or
Book-Entry Shares, as applicable, shall pass, only upon proper
delivery of the Certificates (or affidavits of loss in lieu
thereof) or Book-Entry Shares to the Paying Agent and which
shall be in the form and have such other provisions as Parent
and the Company may reasonably specify and (y) instructions
for use in effecting the surrender of the Certificates or
Book-Entry Shares in exchange for the applicable Merger
Consideration into which the number of shares of Common Stock
previously represented by such Certificate or Book-Entry Shares
shall have been converted pursuant to this Agreement (which
instructions shall provide that, at the election of the
surrendering holder, (1) Certificates or Book-Entry Shares
may be surrendered by hand delivery or otherwise or (2) the
applicable Merger Consideration in exchange therefor may be
collected by hand by the surrendering holder or by wire transfer
to the surrendering holder).
(c) Upon surrender of a Certificate (or affidavit of loss
in lieu thereof) or Book-Entry Share for cancellation to the
Paying Agent, together with a letter of transmittal duly
completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such
Certificate or Book-Entry Share shall be entitled to receive in
exchange therefor the applicable Merger Consideration for each
share of Common Stock formerly represented by such Certificate
or Book-Entry Share, to be mailed, made available for collection
by hand or delivered by wire transfer, as elected by the
surrendering holder, within two (2) Business Days following
the later to occur of (i) the Effective Time or
(ii) the Paying Agents receipt of such Certificate
(or affidavit of loss in lieu thereof) or Book-Entry Share, and
the Certificate (or affidavit of loss in lieu thereof) or
Book-Entry Share so surrendered shall be forthwith canceled. The
Paying Agent shall accept such Certificates (or affidavits of
loss in lieu thereof) or Book-Entry Shares upon compliance with
such reasonable terms and conditions as the Paying Agent may
impose to effect an orderly exchange thereof in accordance with
normal exchange practices. No interest shall be paid or accrued
for the benefit of holders of the Certificates or Book-Entry
Shares on the applicable Merger Consideration (or the cash
pursuant to Section 3.2(d)) payable upon the
surrender of the Certificates or Book-Entry Shares.
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(d) Termination of Exchange
Fund. Any portion of the Exchange Fund
designated for distribution to the holders of the Certificates
or Book-Entry Shares that remains undistributed as of the one
hundred eighty (180) day anniversary of the Effective Time
shall be delivered to Parent, upon Parents demand, and any
such holders prior to the Merger who have not theretofore
complied with this Article III shall thereafter look
only to Parent as general creditors thereof for payment of their
claims for Merger Consideration for cash, without interest, to
which such holders may be entitled.
(e) No Liability. None of Parent,
Acquisition Sub, the Company, the Surviving Corporation or the
Paying Agent shall be liable to any person in respect of any
cash held in the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar Law. If any Certificates or Book-Entry Shares shall not
have been surrendered prior to two (2) years after the
Effective Time (or immediately prior to such earlier date on
which any cash in respect of such Certificate or Book-Entry
Share would otherwise escheat to or become the property of any
Governmental Authority), any such cash in respect of such
Certificate or Book-Entry Share shall, to the extent permitted
by applicable Law, become the property of Parent, free and clear
of all claims or interest of any person previously entitled
thereto.
(f) Investment of Exchange
Fund. The Paying Agent shall invest any cash
included in the Exchange Fund as directed by Parent or, after
the Effective Time, the Surviving Corporation; provided
that (i) no such investment shall relieve Parent or the
Paying Agent from making the payments required by this
Article III, and if the Exchange Fund diminishes for
any reason below the level required to make prompt cash payment
under Section 3.1(b) or Section 3.3(d),
Parent shall promptly provide additional funds to the Paying
Agent for the benefit of the holders of Common Stock in the
amount of such shortcoming, (ii) no such investment shall
have maturities that could prevent or delay payments to be made
pursuant to this Agreement, and (iii) such investments
shall be in short-term obligations of the United States of
America with maturities of no more than thirty (30) days or
guaranteed by the United States of America and backed by the
full faith and credit of the United States of America or in
commercial paper obligations rated
A-1 or
P-1 or
better by Moodys Investors Service, Inc. or
Standard & Poors Corporation, respectively. Any
interest or income produced by such investments will be payable
to the Surviving Corporation or Parent, as Parent directs.
(g) Withholding. Parent or the
Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to
any person such amounts as Parent or the Paying Agent is
required to deduct and withhold with respect to the making of
such payment under the Code or under any provision of state,
local or foreign tax Law, provided that, other than
United States federal backup withholding resulting from any
payees failure to provide the documentation required to
establish an exemption from such backup withholding, neither
Parent nor the Paying Agent shall withhold any amount with
respect to Taxes to the extent that Parent has not notified the
Company in writing at least three days prior to the Closing Date
of its intent to withhold such amount. To the extent that
amounts are so withheld by Parent or the Paying Agent, such
withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the person who otherwise would
have received the payment in respect of which such deduction and
withholding was made by Parent or the Paying Agent.
Section 3.3 Stock
Options and Unvested Restricted Shares.
(a) Vesting of Company
Options. The parties acknowledge and agree
that as of the Effective Time, (A) each Director Option
shall vest in full and (B) one-half of the unvested portion
of each Employee Option shall become fully vested, with the
remaining unvested portion to remain outstanding and continue to
vest in accordance with the terms set forth in the governing
option agreement and as set forth below.
(b) Treatment of Vested Company
Options. As of the Effective Time, each
holder of a Company Option that has vested and is outstanding
and unexercised immediately prior to the Effective Time shall,
in lieu of receiving Common Stock, have the right thereafter and
during the term of such Company Option (subject however to all
the terms and conditions of the applicable Company Plan and the
agreement governing such Company Option) to receive upon
exercise thereof an amount equal to the product of (A) the
Merger Consideration and (B) the number of shares of Common
Stock which might have been obtained upon exercise at the
Effective Time of the then-vested portion of such Company
Option, less the amount of the exercise price of such vested
Company Option (the Option Cash Payment).
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(c) Treatment of Unvested Company
Options. The parties acknowledge and agree
that any Company Options that are unvested as of the Effective
Time, after taking into account the provisions of
clause (a) above, shall continue to remain outstanding and
continue to vest in accordance with the terms set forth in the
applicable Company Plan and governing option agreement. In
addition, each option agreement provides certain circumstances
for the acceleration of the vesting of such unvested portion of
Company Options. At such time or times as a Company Option or
portion thereof shall vest following the Effective Time, whether
in the ordinary course or as a result of an event triggering
acceleration, the holder shall immediately be entitled to
exercise the vested portion of such Company Option by delivering
notice to the Parent or the Surviving Corporation and shall
thereafter only be entitled to receive an amount equal to the
Option Cash Payment for such Company Option portion. Parent
shall promptly make such Option Cash Payment to the holder upon
receipt of the notice of exercise, and in any event within five
(5) Business Days thereof. The Company represents that as
of the date hereof, based on the Merger Consideration, its best
estimate of the aggregate Option Cash Payments for all
outstanding unvested Company Options that will be unvested as of
the Effective Time (were the Effective Time to occur on the date
hereof), after taking into account the provisions of
clause (a) above, is $5,570,832.
(d) Treatment of Unvested Restricted
Shares. The parties acknowledge and agree
that at the Effective Time, each Unvested Restricted Share shall
become fully vested and shall be treated in the same manner as
other shares of Common Stock under Section 3.1.
(e) Tax Withholding. All amounts
payable as a result of this Section 3.3 shall be
reduced by the amount required to be withheld under applicable
federal, state or local income or other tax. To the extent that
amounts are so withheld or deducted, such withheld or deducted
amounts shall be treated for all purposes of this Agreement as
having been paid to the person in respect of whom such
withholding was made.
(f) Further Action. Prior to the
Effective Time, the Company shall take the actions necessary to
effectuate this Section 3.3, including providing
holders of Company Options with notice of their rights with
respect to any such Company Options as provided herein;
provided that the Company will provide to Parent a
reasonable opportunity to review and comment upon such notice
prior to distributing such notice to any holders of Company
Options.
(g) Funding. At the Effective
Time, Parent shall pay or cause to be paid the Total Vested
Option Consideration to the Company, which shall make the
payments set forth in Section 3.3(b) to the extent
such vested Company Options have not otherwise been exercised.
Section 3.4 Lost
Certificates. If any Certificate shall have
been lost, stolen or destroyed, then upon the making of an
affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct,
as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
Merger Consideration to which the holder thereof is entitled
pursuant to this Article III.
Section 3.5 Dissenting
Shares. Notwithstanding
Section 3.1(b) hereof, to the extent that holders
thereof are entitled to appraisal rights under
Section 11.65 of the IBCA, shares of Common Stock issued
and outstanding immediately prior to the Effective Time and held
by a holder who has properly exercised and perfected his or her
demand for appraisal rights under Section 11.70 of the IBCA
(the Dissenting Shares), shall not be
converted into the right to receive the applicable Merger
Consideration, but the holders of such Dissenting Shares shall
be treated in accordance with Section 11.70 of the IBCA
and, as applicable, would be entitled to receive only such
consideration as determined pursuant to Section 11.70 of
the IBCA; provided, however, that if any such
holder shall have failed to perfect or shall have effectively
withdrawn or otherwise lost his or her right to appraisal and
payment under the IBCA, such holders shares of Common
Stock shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the applicable Merger
Consideration, without any interest thereon, and such shares
shall not be deemed to be Dissenting Shares. Any payments
required to be made with respect to the Dissenting Shares shall
be made by Parent (and not the Company) and the Aggregate Merger
Consideration shall be reduced, on a dollar for dollar basis, as
if the holder of such Dissenting Shares had not been a
stockholder on the Closing Date. The Company shall give Parent
(i) prompt notice of any demand for appraisal received by
the Company prior to the Effective Time pursuant to the IBCA,
any withdrawal of any such demand and any other
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demand, notice or instrument delivered to the Company prior to
the Effective Time pursuant to the IBCA, and (ii) the
opportunity to participate in and direct all negotiations and
proceedings with respect to any such demand, notice or
instrument. The Company shall not make or agree to make any
payment or settlement offer, or approve (if required) any
withdrawal of such demands, prior to the Effective Time with
respect to any such demand, notice or instrument unless Parent
shall have given its prior written consent to such payment,
settlement offer or withdrawal.
Section 3.6 Transfers;
No Further Ownership Rights. From and after
the Effective Time, there shall be no registration of transfers
on the stock transfer books of the Company of shares of Common
Stock that were outstanding immediately prior to the Effective
Time. If Certificates are presented to the Surviving Corporation
for transfer following the Effective Time, they shall be
canceled against delivery of the applicable Merger
Consideration, as provided for in Section 3.1(b)
hereof, for each share of Common Stock formerly represented by
such Certificates.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Company SEC Documents filed
or (to the extent publicly available) furnished after
December 31, 2008 but before the date of this Agreement or
(ii) as disclosed in the corresponding sections or
subsections of the separate disclosure letter which has been
delivered by the Company to Parent prior to the execution of
this Agreement (the Company Disclosure
Letter), the Company hereby represents and warrants to
Parent as follows:
Section 4.1 Organization
and Qualification; Subsidiaries. Each of the
Company and its subsidiaries is a corporation or legal entity
duly organized or formed, validly existing and in good standing,
under the laws of its jurisdiction of organization or formation
and has the requisite corporate, partnership or limited
liability company power and authority and all necessary
governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted,
except where the failure to have such power, authority and
governmental approvals would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect. Each of the Company and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction in which the
character of the properties owned, leased or operated by it or
the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or
licensed and in good standing as would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
Section 4.2 Articles
of Incorporation and By-Laws. The Company has
made available to Parent a complete and correct copy of the
Amended and Restated Articles of Incorporation and the By-laws
(or equivalent organizational documents), each as amended to
date, of the Company and each of its subsidiaries. The Amended
and Restated Articles of Incorporation and the By-laws (or
equivalent organizational documents) of the Company and each of
its subsidiaries are in full force and effect. None of the
Company or any of its subsidiaries is in violation of any
provision of its Amended and Restated Articles of Incorporation
or the By-laws (or equivalent organizational documents), except
as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of
200,000,000 shares of Common Stock and 50,000,000 preferred
shares, par value $0.01 per share (the Preferred
Stock). As of July 5, 2011 (the
Capitalization Date),
(i) 53,519,267 shares of Common Stock were issued and
outstanding (including 286,000 Unvested Restricted Shares), and
(ii) 2,233,615 shares of Common Stock were held in
treasury. No shares of Preferred Stock have been issued or are
outstanding. As of the Capitalization Date, there were
6,613,367 shares of Common Stock authorized and reserved
for future issuance under the Company Plans (including, as of
the Capitalization Date, outstanding Company Options to purchase
5,599,681 shares of Common Stock). Section 4.3(a) of
the Company Disclosure Letter contains a correct and complete
list of options, unvested restricted stock and stock purchase
rights under the Company Plans, including the holder, date of
grant, term, number of underlying shares of Common Stock and,
where applicable, exercise price. Except as set forth above,
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since the Capitalization Date, no shares of capital stock of, or
other equity or voting interests in, the Company, or options,
warrants or other rights to acquire any such stock or securities
were granted, issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are, and all
shares that may be issued pursuant to the Company Plans will be,
when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable and
not subject to preemptive or similar rights. No bonds,
debentures, notes or other indebtedness having the right to vote
on any matters on which stockholders may vote in respect of the
Company or any of its subsidiaries are issued or outstanding.
(b) Section 4.3(b) of the Company Disclosure Letter
identifies each subsidiary of the Company and indicates its
jurisdiction of organization. Each of the issued and outstanding
shares of capital stock of each subsidiary of the Company is
duly authorized, validly issued, fully paid and non-assessable
and directly or indirectly owned by the Company, free and clear
of all Liens.
(c) Except as set forth above, there are no outstanding
subscriptions, options, warrants, calls, convertible securities
or other similar rights, agreements, commitments or contracts of
any kind to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is
bound obligating the Company or any of its subsidiaries to
issue, redeem, deliver or sell, or cause to be issued, redeemed,
delivered or sold, additional shares of capital stock of, or
other equity or voting interests in, or securities convertible
into, or exchangeable or exercisable for, shares of capital
stock of, or other equity or voting interests in, the Company or
any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, redeem, grant, extend or enter into any
such security, option, warrant, call, right or contract, or
obligating the Company or any of its subsidiaries to make any
payments directly or indirectly based (in whole or in part) on
the price or value of its or their capital stock. There are no
voting trust or other agreements or understandings to which the
Company or any of its subsidiaries is a party with respect to
the voting or registration, or restricting any person from
purchasing, selling, pledging or otherwise disposing of (or from
granting any option or similar right with respect to), any
shares of Common Stock except for any restrictions contained in
the applicable Company Plan. The Company has not adopted a
stockholder rights plan.
(d) As of the Capitalization Date, there is no outstanding
indebtedness for borrowed money of the Company and its
subsidiaries (not including intercompany indebtedness or, for
the avoidance of doubt, operating or capital leases), whether
under the Companys Revolving Credit and Security
Agreement, dated as of May 5, 2008, as amended, among the
Company, the lenders identified therein, and PNC Bank, National
Association, as agent for the lenders, or otherwise.
Section 4.4 Authority
Relative to Agreement.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and, subject only to receipt of the
Requisite Stockholder Approval, to consummate the Merger and the
other transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation
by the Company of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize the
execution and delivery of this Agreement or to consummate the
Merger and the other transactions contemplated hereby (other
than, with respect to the Merger, the receipt of the Requisite
Stockholder Approval, as well as the filing of the Articles of
Merger with the Secretary of State). This Agreement has been
duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent
and Acquisition Sub, this Agreement constitutes a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other
similar laws of general applicability relating to or affecting
creditors rights, and to general equitable principles).
(b) The Companys Board of Directors, at a meeting
duly called and held, has unanimously (i) adopted this
Agreement and the transactions contemplated hereby,
(ii) determined that this Agreement and the transactions
contemplated hereby are advisable and in the best interests of
the Company and Companys stockholders, (iii) directed
that the Company submit the adoption of this Agreement to a vote
at a meeting of the stockholders of the Company in accordance
with the terms of this Agreement and (iv) resolved to
recommend that the Companys stockholders approve the
Merger and this Agreement at a meeting of the stockholders. The
action of the Companys Board of Directors in approving the
Merger, this Agreement and the other transactions contemplated
hereby is
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sufficient to render the provisions of Sections 7.85 and
11.75 of the IBCA inapplicable to consummation of the Merger and
the execution, delivery and performance of this Agreement and
the Voting Agreement. To the knowledge of the Company, no other
control share acquisition, fair price,
moratorium or similar anti-takeover laws apply to
this Agreement or any of the transactions contemplated hereby,
and the Companys Board of Directors has resolved to elect,
to the extent permitted by applicable Law, not to be subject to
any control share acquisition, fair
price, moratorium or similar anti-takeover law
that might otherwise apply to the Merger.
Section 4.5 No
Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the
Company and the consummation of the Merger and the other
transactions contemplated hereby will not, (i) conflict
with or violate the Amended and Restated Articles of
Incorporation or By-laws (or equivalent organizational
documents) of (A) the Company or (B) any of its
subsidiaries, (ii) assuming the consents, approvals and
authorizations specified in Section 4.5(b) have been
received and the waiting periods referred to therein have
expired, conflict with or violate any Law applicable to the
Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or
affected, or (iii) result in any breach of, or constitute a
default (with or without notice or lapse of time, or both)
under, or give rise in others any right of termination,
amendment, modification, acceleration or cancellation of, or
result in the creation of a Lien upon any of the properties or
assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture or credit agreement, or any
other contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of
its subsidiaries or any of their respective assets is bound or
affected, other than, in the case of clauses (ii) and
(iii), any such violation, conflict, default, termination,
cancellation, modification, acceleration or Lien that would not,
individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company does not, and the consummation by the Company of the
transactions contemplated by this Agreement will not, require
any consent, approval, authorization, waiver or permit of, or
filing with or notification to, any Governmental Authority,
except for applicable requirements of (i) the Exchange Act,
(ii) the HSR Act and any other applicable U.S. or
foreign competition, antitrust, merger control or investment
Laws (together with the HSR Act, Antitrust
Laws), (iii) the filing of the Articles of Merger
with the Secretary of State of Illinois as provided under the
IBCA and (iv) the rules of NASDAQ, and except where failure
to obtain such consents, approvals, authorizations, waivers or
permits, or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect.
Section 4.6 Permits
and Licenses; Compliance with Laws. Each of
the Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates,
approvals and orders necessary for the Company or any of its
subsidiaries to own, lease and operate the properties of the
Company and its subsidiaries or to carry on its business as it
is now being conducted (the Company Permits),
and no suspension or cancellation of any of the Company Permits
is pending or, to the knowledge of the Company, threatened,
except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would not,
individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect. To the knowledge of the
Company, no investigation or review by any Governmental
Authority with respect to the Company or any of its subsidiaries
is pending or threatened, nor has any Governmental Authority
indicated an intention to conduct the same, except for those the
outcome of which would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. Each of the Company and its subsidiaries is, and since
January 1, 2008 has at all times been in compliance with,
(i) all Laws applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or
any of its subsidiaries is bound or affected, (ii) all of
the Company Permits and (iii) each note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company
or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any property or asset of the Company
or any of its subsidiaries is bound or affected, except as would
not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. Since January 1,
2009, none of the Company or any of its subsidiaries has
received any written notice from any Governmental Authority
regarding any actual or possible violation of, or failure to
comply with, in any material respect, any applicable Law.
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Section 4.7 Company
SEC Documents.
(a) Since December 31, 2008, the Company has filed
with the SEC all forms, documents, statements, certifications
and reports required to be filed or furnished prior to the date
hereof by it with the SEC (the forms, documents, statements,
certifications and reports filed or furnished since
December 31, 2008 and those filed or furnished subsequent
to the date hereof, including any amendments thereto,
collectively the Company SEC Documents). As
of their respective dates, or, if amended or superceded by a
filing prior to the date of this Agreement, as of the date of
such amendment or superceding filing, the Company SEC Documents
complied or, if not yet filed or furnished will comply in all
material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the applicable rules
and regulations promulgated thereunder, and none of the Company
SEC Documents at the time it was filed or furnished, contained
or, if not yet filed or furnished, will contain when filed or
furnished any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, or are to be made, not
misleading. No executive officer of the Company has failed to
make the certifications required by him or her under
Section 302 or 906 of the Sarbanes-Oxley Act, with respect
to any Company SEC Document, except as disclosed in
certifications filed with the Company SEC Documents. No
subsidiary of the Company is subject to the periodic reporting
requirements of the Exchange Act or is otherwise required to
file any forms, documents, statements, certifications or reports
with the SEC. The Company has made available to Parent correct
and complete copies of all correspondence between the SEC, on
the one hand, and the Company and any of its subsidiaries, on
the other hand, occurring since December 31, 2008 and prior
to the date of this Agreement and not available on the
SECs EDGAR system prior to the date of this Agreement. As
of the date of this Agreement, there are no unresolved comments
issued by the staff of the SEC with respect to any of the
Company SEC Documents filed on or prior to the date of this
Agreement.
(b) The consolidated financial statements (including all
related notes and schedules) of the Company included in or
incorporated by reference into the Company SEC Documents fairly
present, or, in the case of Company SEC Documents filed after
the date hereof, will fairly present, in all material respects
the consolidated financial position of the Company and its
consolidated subsidiaries as at the respective dates thereof and
their consolidated results of operations and consolidated cash
flows for the respective periods set forth therein (subject, in
the case of unaudited statements, to normal recurring year-end
audit adjustments that are not expected to, individually or in
the aggregate, be material in amount, to the absence of notes
and to any other adjustments described therein, including in any
notes thereto) and have been prepared in conformity with GAAP
applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto).
Section 4.8 Disclosure
Controls and Procedures; Internal Controls over Financial
Reporting. The Company has established and
maintains disclosure controls and procedures and internal
controls over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of
Rule 13a-15
under the Exchange Act) as required by
Rule 13a-15
under the Exchange Act. The Companys disclosure controls
and procedures are designed to ensure that information required
to be disclosed in the Companys periodic reports filed or
submitted under the Exchange Act is recorded, processed,
summarized and reported within the required time periods. The
Company and its subsidiaries have implemented and maintain a
system of internal controls over financial reporting that is
sufficient to provide reasonable assurances regarding the
reliability of financial reporting and the preparation of
financial statements in accordance with GAAP. The Company is in
compliance in all material respects with the applicable
provisions of the Sarbanes-Oxley Act and the applicable listing
and corporate governance rules and regulations of NASDAQ. Since
January 3, 2011 through the date hereof, the Company has
not identified (i) any significant deficiency or material
weakness in the design or operation of internal control over
financial reporting which is reasonably likely to adversely
affect the Companys ability to record, process, summarize
and report financial information or (ii) any fraud or
allegation of fraud, whether or not material, that involves
management or other employees who have a significant role in the
Companys internal control over financial reporting.
Section 4.9 Absence
of Certain Changes or Events. Since
January 3, 2011 (i) through the date of this
Agreement, except for the negotiation, execution and delivery of
this Agreement, the businesses of the Company and its
subsidiaries have been conducted in the ordinary course of
business consistent with past practice, (ii) there has not
been any event, development or state of circumstances that
would, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect and (iii) through
the date of this Agreement,
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there has not been any action that, if taken after the date
hereof without the prior approval of Parent, would constitute
(x) a breach of clause (d), (j), (k), (n) or
(o) of Section 6.1, or (y) a breach of
clause (e), (f) or (l) of Section 6.1 in
any material respect.
Section 4.10 No
Undisclosed Liabilities. Except (a) for
liabilities or obligations to the extent reflected or reserved
against in the balance sheet dated as of April 3, 2011 set
forth in the Companys quarterly report on
Form 10-Q
for the quarter ended April 3, 2011 included in the Company
SEC Documents filed prior to the date hereof, (b) for
liabilities or obligations incurred in the ordinary course of
business consistent with past practices since April 3,
2011, and (c) for liabilities incurred pursuant to this
Agreement, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, whether or not required by
GAAP to be reflected on a consolidated balance sheet (or the
notes thereto) of the Company and its subsidiaries, other than
those which would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 4.11 Absence
of Litigation. Except for matters that would
not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, (a) there is no
claim, action, proceeding, inquiry, hearing, arbitration or
investigation pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or
any of their respective properties or assets at law or in equity
which, if determined adversely to the Company, would be adverse
to the Company and its subsidiaries taken as a whole,
(b) there are no Orders before any arbitrator or
Governmental Authority, to which the Company or any of its
subsidiaries is a party or subject, (c) neither the Company
nor any of its subsidiaries has been advised in writing by any
Governmental Authority that it is considering issuing (or is
considering the appropriateness of issuing) any Order to which
the Company or any of its subsidiaries would be a party or
subject, (d) to the knowledge of the Company, there are no
investigations relating to any regulatory matters pending before
any Governmental Authority with respect to the Company or any of
its subsidiaries, (e) since December 31, 2009,
(i) there have been no subpoenas, written demands or
inquiries received by the Company, any of its subsidiaries or
any affiliate of the Company or any of its subsidiaries from any
Governmental Authority and as to which there is a reasonable
possibility of an adverse action, and (ii) no Governmental
Authority has requested that the Company or any of its
subsidiaries enter into a settlement negotiation or tolling
agreement with respect to any matter related to any such
subpoena, written demand or inquiry, and (f) to the
knowledge of the Company, no officer or director of the Company
or any of its subsidiaries is a defendant in any claim, action,
proceeding, inquiry, hearing, arbitration or investigation in
connection with his or her status as an officer or director of
the Company or any of its subsidiaries.
Section 4.12 Employee
Benefit Plans.
(a) Section 4.12(a) of the Company Disclosure Letter
contains a true and complete list of each employee benefit
plan (within the meaning of Section 3(3) of ERISA),
and all stock purchase, stock incentive, severance, employment,
change-in-control,
material fringe benefit, deferred compensation plans, programs,
policies and arrangements and all other material employee
benefit plans, programs, policies or other arrangements, whether
or not subject to ERISA, whether formal or informal, legally
binding or not, under which (i) any current or former
employee, officer, director, consultant or independent
contractor of the Company or any of its subsidiaries
(Company Employees) has any present or future
right to benefits and which are contributed to, sponsored by or
maintained by the Company or any of its subsidiaries or
(ii) under which the Company or any of its subsidiaries has
any present or future liability. All such plans, agreements,
programs, policies and arrangements shall be collectively
referred to as the Company Benefit Plans.
(b) No Company Benefit Plan is a Multiemployer Plan nor is
any Company Benefit Plan subject to Section 302 or
Title IV of ERISA or Section 412 of the Code. No
liability under Title IV or Section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring
any such liability, other than liability for premiums due the
Pension Benefit Guaranty Corporation (which premiums have been
paid when due).
(c) With respect to each Company Benefit Plan, the Company
has delivered to Parent or made available a current, accurate
and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable:
(i) any related trust agreement or other funding
instrument; (ii) the most recent IRS determination or
opinion letter; (iii) the summary plan description, plan
prospectus and other material written
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communications made by the Company or any of its subsidiaries
concerning the benefits provided under any Company Benefit Plan
not otherwise memorialized in any of the foregoing; and
(iv) for the three (3) most recent years (A) the
Form 5500 and attached schedules, (B) audited
financial statements and (C) actuarial valuation reports.
(d) Each Company Benefit Plan has been established and
administered in accordance with its terms, and in compliance
with the applicable provisions of ERISA, the Code and other
applicable Laws, except for instances of noncompliance that
would not have a Company Material Adverse Effect; no event has
occurred and no condition exists that would subject the Company
or any of its subsidiaries, either directly or by reason of
their affiliation with any ERISA Affiliate
(defined as any organization which is a member of a controlled
group of organizations within the meaning of Sections 414
of the Code), to any tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other applicable Laws, except for
events or conditions that would not have a Company Material
Adverse Effect; no non-exempt prohibited transaction
(as such term is defined in Section 406 of ERISA and
Section 4975 of the Code) and no failure to meet minimum
funding standards (within the meaning of Sections 412 or
430 of the Code or Section 302 of ERISA), whether or not
waived, has occurred with respect to any Company Benefit Plan
that would reasonably be expected to result in a Company
Material Adverse Effect; and each nonqualified deferred
compensation plan (as defined in Section 409A(d)(1)
of the Code) has been in documentary and operational compliance
with Section 409A of the Code and the guidance promulgated
thereunder by the Department of Treasury, except for instances
of noncompliance that would not have a Company Material Adverse
Effect.
(e) Each Company Benefit Plan intended to be qualified
within the meaning of Section 401(a) of the Code is so
qualified and has either received a favorable determination
letter or may rely on a favorable opinion letter issued by the
IRS; for each Company Benefit Plan with respect to which a
Form 5500 has been filed, no material change has occurred
with respect to the matters covered by the most recent
Form 5500 since the date thereof; no Company Benefit Plan
provides post-employment welfare (including health, medical or
life insurance) benefits and neither the Company nor any of its
subsidiaries have any obligation to provide any such
post-employment welfare benefits now or in the future, other
than as required by Section 4980B of the Code or other
applicable Laws.
(f) With respect to any Company Benefit Plan: (i) no
actions, suits or claims (other than routine claims for benefits
in the ordinary course) are pending or, to the knowledge of the
Company, threatened that would reasonably be expected to result
in a Company Material Adverse Effect, and (ii) no
administrative investigation, audit or other administrative
proceeding by the Department of Labor, the Department of
Treasury, the IRS or other governmental agencies are pending or
to the knowledge of the Company, threatened that would
reasonably be expected to result in a Company Material Adverse
Effect.
(g) Section 4.12(g) of the Company Disclosure Letter
sets forth a true and complete list of, to the Companys
knowledge, (i) all sale, retention or change of control
severance or bonus payments payable to any present or former
Company Employee, either before or after the Closing, as a
result of the consummation of the transactions contemplated
under this Agreement, and (ii) all payments of money or
property, or the acceleration or provision of any other rights
or benefits, to any present or former Company Employee that
would not be deductible pursuant to the terms of
Section 280G or Section 162(m) of the Code in
connection with the transactions contemplated under this
Agreement, in each case based upon the assumptions set forth
therein.
Section 4.13 Labor
Matters. There are no collective bargaining
or other labor union, works council or labor organization
agreements to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is
bound. As of the date of this Agreement, none of the employees
of the Company or any of its subsidiaries are represented by any
union, works council or labor organization with respect to their
employment by the Company or such subsidiary. To the knowledge
of the Company, as of the date hereof, there is no union
organization activity involving any of the employees of the
Company or its subsidiaries, pending or threatened. There is no
material labor strike, labor dispute, work stoppage or lockout
pending, or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries, and since
January 1, 2010, there has been no such action. There is no
unfair labor practice, charge or complaint pending or, to the
knowledge of the Company, threatened against the Company or any
of its subsidiaries, that would reasonably be expected to result
in a Company Material Adverse Effect. Neither the Company nor
any of its subsidiaries has engaged in any plant closing
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or employee layoff activities since July 1, 2008 that would
violate or give rise to an obligation to provide any notice
required pursuant to the Worker Adjustment and Retraining
Notification Act or any similar Law.
Section 4.14 Trademarks,
Patents and Copyrights.
(a) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect, the Company and its subsidiaries own. free and clear of
all Liens except Permitted Liens, or have the right to use in
the manner currently used, all patents, trademarks, trade names,
copyrights, Internet domain names, service marks, trade secrets
and other intellectual property rights (the
Intellectual Property Rights) used in
connection with the business of the Company and its subsidiaries
as currently conducted (the Company Intellectual
Property Rights). Neither the Company nor any of its
subsidiaries has received, in the thirty-six (36) months
preceding the date hereof, any written charge, complaint, claim,
demand or notice challenging the validity, enforceability,
ownership or use of any of the Company Intellectual Property
Rights. Section 4.14(a) of the Company Disclosure Letter
sets forth a complete and accurate list of all registered
Intellectual Property Rights and applications for registration
of any Intellectual Property Rights that are owned by the
Company and its subsidiaries.
(b) To the Companys knowledge, the conduct of the
business of the Company and its subsidiaries does not infringe
upon, misappropriate or otherwise violate any Intellectual
Property Rights of any other person, except for any such
infringement, misappropriation or other violation that would
not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. None of the Company or
any of its subsidiaries has received, in the thirty-six
(36) months preceding the date hereof, any written charge,
complaint, claim, demand or notice alleging any material
infringement, misappropriation or other violation that has not
been settled or otherwise fully resolved. To the Companys
knowledge, no other person has infringed, misappropriated or
otherwise violated any Company Intellectual Property Rights
during the thirty-six (36) months preceding the date
hereof, except for any such infringement, misappropriation or
other violation as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(c) The Company and its subsidiaries have taken reasonable
steps to maintain the confidentiality of or otherwise protect
and enforce their rights in all Company Intellectual Property
Rights, and to protect and preserve through the use of customary
non-disclosure agreements the confidentiality of all
confidential information that is owned or held by the Company
and its subsidiaries and used in the conduct of the business. To
the Companys knowledge, such confidential information has
not been used, disclosed to or discovered by any person except
as permitted pursuant to valid non-disclosure agreements which
have not been breached.
(d) The Companys and its subsidiaries
computers, computer software, firmware, middleware, servers,
workstations, routers, hubs, switches, data communication lines
and all other information technology equipment and services and
all associated documents (the IT Assets)
operate and perform as necessary for the Company and its
subsidiaries to conduct their businesses, and have not
materially malfunctioned or failed such that there has been a
material impact on the operations of the businesses of the
Company and its subsidiaries within the past two (2) years.
To the Companys knowledge, no person has gained
unauthorized access to the IT Assets. The Company has
implemented reasonable backup and disaster recovery technology
consistent with industry practices and Law.
Section 4.15 Taxes. Except
as would not have, individually or in the aggregate, a Company
Material Adverse Effect:
(a) For taxable periods commencing on or after
December 29, 2008, (i) the Company and each of its
subsidiaries has prepared (or caused to be prepared) and timely
filed (taking into account any extension of time within which to
file) all Tax Returns required to be filed by any of them and
all such filed Tax Returns (taking into account all amendments
thereto) are complete and accurate; (ii) the Company and
each of its subsidiaries has paid all Taxes that are shown on
such Tax Returns to be payable by it, except, in the case of
clause (i) or clause (ii) hereof, with respect to
matters contested in good faith or for which adequate reserves
have been established; (iii) as of the date of this
Agreement, there is not pending or, to the knowledge of the
Company, threatened in writing any audit, examination,
investigation or other proceeding in respect of any Tax;
(iv) there are no Liens for Taxes on any of the assets of
the Company or any of its subsidiaries other than Permitted
Liens; and (v) the Company does not have any liability for
the Taxes of another person by reason of (x) being a
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member of an affiliated, consolidated, combined or unitary group
or (y) being party to any tax sharing or similar agreement.
(b) All Taxes (determined both individually and in the
aggregate) required to be withheld, collected or deposited by or
with respect to the Company and each subsidiary have been timely
withheld, collected or deposited as the case may be, and to the
extent required, have been paid to the relevant Government
Authority.
(c) Neither the Company nor any of its subsidiaries has
requested or been granted any waiver of any federal, state,
local or foreign statute of limitations with respect to, or any
extension of a period for the assessment or collection of any
Tax, which waiver or extension is still in effect.
(d) No claim in writing is currently pending by any
Government Authority in a jurisdiction where the Company or any
of its subsidiaries does not file a Tax Return that any of them
may be subject to taxation by that jurisdiction.
(e) Neither the Company nor any of its Subsidiaries has
participated in any listed transaction within the
meaning of Section 6707A of the Code.
(f) Neither the Company nor any of its subsidiaries is a
party to, is bound by or has any obligation under any
(i) Tax sharing, Tax indemnity or Tax allocation agreement
or similar contract or arrangement or (ii) private letter
ruling, closing agreement or any similar agreement with a
Governmental Authority.
(g) Neither the Company nor any of its subsidiaries has
been either a distributing corporation or a
controlled corporation in a distribution occurring
during the last five (5) years in which the parties to such
distribution treated the distribution as one to which
section 355 of the Code is applicable.
Section 4.16 Material
Contracts.
(a) As of the date hereof, neither the Company nor any of
its subsidiaries is a party to or bound by or any of their
respective properties or assets are bound by any:
(i) material contract (as such term is
defined in item 601(b)(10) of
Regulation S-K
of the SEC);
(ii) contract relating to third-party indebtedness,
including any sale and leaseback transactions, capital leases
and other similar financing transactions, or any third-party
financial guaranty, in each case in excess of $5,000,000;
(iii) contract to which the Company or any of its
subsidiaries is a party that materially restricts the Company or
any of its subsidiaries from engaging or competing in any line
of business or in any geographic area, or which would so
restrict the Company or any of its subsidiaries following a
change in control of the Company;
(iv) partnership, joint venture or other similar agreement
or arrangement to which the Company or any of its subsidiaries
is a party and that is material to the business of the Company
or any of its subsidiaries;
(v) contract (1) providing for the disposition or
acquisition outside the ordinary course of business by the
Company or any of its subsidiaries, with obligations remaining
to be performed or liabilities continuing after the date of this
Agreement, of any business or any amount of assets that are
material to the Company and its subsidiaries, taken as a whole,
or (2) pursuant to which the Company or any of its
subsidiaries has any ownership interest in any other person or
other business enterprise other than other wholly owned
subsidiaries of the Company;
(vi) contract relating to any interest rate, derivatives,
or hedging transaction;
(vii) (x) settlement or similar contract with any
Governmental Authority or (y) any Order or consent of a
Governmental Authority to which the Company or any of its
subsidiaries is subject that is material to the Company and its
subsidiaries taken as a whole;
(viii) contract between the Company or any of its
subsidiaries and a customer or client of the Company or any of
its subsidiaries involving more than $1,000,000 per annum that
includes a most favored customer pricing clause;
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(ix) contract (other than those related to ordinary course
of business employment or incentive arrangements that are listed
on Section 4.12(a) of the Company Disclosure Letter) that
involves any director or executive officer of the Company or any
of its subsidiaries (or, to the knowledge of the Company, any of
his or her affiliates or associates) that cannot be cancelled by
the Company (or the applicable subsidiary of the Company) within
thirty (30) days prior notice without liability, penalty or
premium;
(x) contract which primarily relates to material
Intellectual Property Rights owned or licensed by the Company or
its subsidiaries to third parties; or
(xi) a contract granting any right of first refusal, right
of first offer or similar right with respect to any material
assets, rights or properties of the Company or any of its
subsidiaries to a person other than the Company or any of its
subsidiaries.
Each contract of the type described in this
Section 4.16(a) is referred to herein as a
Company Material Contract.
(b) Neither the Company nor any subsidiary of the Company
is in, and no event has occurred that with or without the lapse
of time or the giving of notice or both would constitute by the
Company or any subsidiary of the Company, a breach of or default
under the terms of any Company Material Contract where such
breach or default would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. To the knowledge of the Company, no other party to any
Company Material Contract is in, and no event has occurred that
with or without the lapse of time or the giving of notice or
both would constitute by such party a, breach of or default
under the terms of any Company Material Contract where such
breach or default would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. Except as set forth on Schedule 4.16(b) of
the Company Disclosure Letter, since January 3, 2011
through the date of this Agreement the net aggregate amount of
any penalties (net of any bonuses) arising from the
Companys or any of its subsidiaries failure to meet
the service levels set forth in the Company Material Contracts
does not exceed $2,000,000. Each Company Material Contract is a
valid and binding obligation of the Company and, to the
knowledge of the Company, each other party thereto and is in
full force and effect, except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect; provided that (i) such enforcement
may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or
hereafter in effect, relating to creditors rights
generally and (ii) equitable remedies of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
Section 4.17 Opinion
of Financial Advisor. The board of directors
of the Company has received the written opinion of Credit Suisse
Securities (USA) LLC, financial advisor to the Company, on or
prior to the date of this Agreement, to the effect that, based
upon and subject to various assumptions and qualifications set
forth therein, as of the date of such opinion, the Merger
Consideration to be received by each holder of outstanding
Common Stock in the Merger is fair, from a financial point of
view, to the holders of Common Stock, other than certain
excluded persons. A true and correct copy of such opinion has
been delivered to Parent solely for informational purposes.
Section 4.18 Vote
Required. The affirmative vote of the holders
of outstanding Common Stock, voting together as a single class,
representing at least two-thirds of all the votes entitled to be
cast thereupon by holders of Common Stock (the
Requisite Stockholder Approval) is the only
vote of holders of securities of the Company that is necessary
to approve and adopt this Agreement and the transactions
contemplated hereby.
Section 4.19 Brokers. No
broker, finder, investment banker or other firm or person other
than Credit Suisse Securities (USA) LLC is entitled to any
brokerage, finders or other fee or commission in
connection with the Merger based upon arrangements made by or on
behalf of the Company or any of its affiliates.
Section 4.20 Real
Property.
(a) None of the Company or any of its subsidiaries owns any
freehold estate in any real property which is used in the
Companys business.
(b) Section 4.20 of the Company Disclosure Letter
lists all leases, subleases or other agreements under which the
Company uses or occupies or has the right to use or occupy any
real property in excess of 50,000 square feet
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(collectively, the Company Leases). The
Company has made available to Parent a true, correct and
complete copy of each Company Lease. Each Company Lease is in
full force and effect and is valid and binding on the Company
and its subsidiaries, as applicable and, to the knowledge of the
Company, each other party thereto and enforceable in accordance
with its terms (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other
similar laws of general applicability relating to or affecting
creditors rights, and to general equitable principles) and
neither the Company nor any of its subsidiaries is in breach of
or default under, or has received written notice of any breach
of or default under, any Company Lease, and to the knowledge of
the Company, no event has occurred that with or without notice
or lapse of time or both would constitute a breach or default
thereunder by any party thereto or would permit the termination,
modification or acceleration of rent thereunder, except, in each
case, for such breaches, defaults, terminations, modifications
or accelerations that can not, individually or in aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 4.21 Insurance. Except
as has not had, individually or in the aggregate, a Company
Material Adverse Effect, all material policies of insurance
maintained by the Company or any of its subsidiaries are in full
force and effect, no notice of cancellation has been received
with respect to such policies (other than in connection with
ordinary renewals) and there is no existing default or event
which, with or without the giving of notice of lapse of time or
both, would constitute a default, by any insured thereunder.
There is no material claim by the Company or any of its
subsidiaries pending under any such insurance policies covering
the assets, business, equipment, properties, operations,
employees, officers and directors of the Company and its
subsidiaries as to which coverage has been questioned, denied or
disputed by the underwriters of such policy.
Section 4.22 Environmental. Except
as has not had, individually or in the aggregate, a Company
Material Adverse Effect:
(a) The Company and its subsidiaries are, and since
January 1, 2008 have been, in compliance with all
applicable Environmental Laws, which compliance includes the
possession and maintenance of, and compliance since
January 1, 2008 with, all Company Permits required under
applicable Environmental Laws for the operation of the business
of the Company and its subsidiaries as presently conducted.
(b) None of the Company or any of its subsidiaries has
transported, produced, processed, manufactured, generated, used,
treated, handled, stored, released or disposed of any Hazardous
Substances, except in compliance with applicable Environmental
Laws and in a manner not reasonably expected to require
investigation, cleanup, removal, containment or any other
remediation or further compliance under Environmental Law.
(c) None of the Company or any of its subsidiaries has
exposed any employee or any third party to Hazardous Substances
in violation of any Environmental Law or as would reasonably be
expected to result in liability of the Company or any of its
subsidiaries.
(d) None of the Company or any of its subsidiaries is a
party to or is the subject of any pending, or, to the knowledge
of the Company, threatened claim, action, proceeding or
investigation before any arbitrator or Governmental Authority
alleging any liability under or noncompliance with any
Environmental Law or seeking to impose any financial
responsibility for any investigation, cleanup, removal,
containment or any other remediation or compliance under any
Environmental Law. To the knowledge of the Company, there are no
facts, occurrences or circumstances that would reasonably be
expected to give rise to any such claim, action, proceeding or
investigation. None of the Company or any of its subsidiaries is
subject to any Order or agreement by or with any Governmental
Authority or third party imposing any material liability or
obligation with respect to any of the foregoing.
(e) The representations and warranties in this
Section 4.22, and as applicable to environmental
matters, Sections 4.5(b) and 4.10, are the
sole and exclusive representations and warranties of the Company
with respect to environmental matters, including matters
relating to Environmental Law or Hazardous Substances.
Section 4.23 Title
to Assets. Except with respect to matters
related to real property (which are addressed in
Section 4.20) and Intellectual Property Rights
(which are addressed in Section 4.14), each of the
Company and its subsidiaries has good, valid and marketable
title to, or a valid leasehold interest in, all of the material
properties and material assets owned or leased by them, in each
case, free and clear of Liens, other than Permitted Liens, and
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except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 4.24 Customers
and Vendors. Section 4.24 of the Company
Disclosure Letter contains a list of the top ten customers and
top five vendors of the Company and its subsidiaries on the
basis of revenues and sales to the Company and its subsidiaries
for the fiscal year ended January 2, 2011 (respectively,
the Material Customers and the
Material Vendors). Since January 3,
2011, no Material Customer or Material Vendor has canceled,
terminated or materially and adversely modified or, to the
knowledge of the Company, threatened in writing to cancel,
terminate or materially and adversely modify (including by
decreasing the rate of services obtained from or provided to the
Company and its subsidiaries), its relationship with the Company
and its subsidiaries, other than in connection with
modifications conducted in the ordinary course of business, and
except in the case of any such cancellation, termination,
adverse modification or threat in writing after the date of this
Agreement as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its subsidiaries is
currently, or has been since January 3, 2011, involved in
any dispute with a Material Customer or Material Vendor, except
as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 4.25 Confidentiality
Obligations; Data Privacy. The conduct of the
Companys and its subsidiaries businesses as
conducted, and as currently proposed by the Company and its
subsidiaries to be conducted, does not violate or conflict with
any obligation of confidentiality or use to any other person,
except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. The Company and its subsidiaries have collected, stored,
maintained, used and processed personal information from
customers in accordance with applicable data protection and
privacy Laws and is compliance with the privacy regulations set
forth in 45 C.F.R. parts 160 and 164 (Subparts A and E),
and the security regulations set for the in 45 C.F.R. Parts
160 and 164 (subparts A and C), and any amendments to the
privacy and security regulations under the Health Information
Technology for Economic and Clinical Health Act, part of the
American Recovery and Reinvestment Act of 2009, as well as any
corresponding or similar Laws, except as would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company and its subsidiaries have
written agreements with each third party service provider having
access to any such personal information or data requiring
compliance with such applicable Laws
and/or
contractual commitments, except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
Section 4.26 Transactions
with Affiliates. Section 4.26 of the
Company Disclosure Letter sets forth all arrangements,
commitments, receivables, payables and contracts (other than
those related to ordinary course of business employment or
incentive arrangements) (Affiliate Contracts)
between the Company or any of its subsidiaries, on the one hand,
and any executive officer or director of the Company or any of
its subsidiaries or their respective affiliates (other than the
Company or any of its subsidiaries), on the other hand, and each
Affiliate Contract will be terminated and receivables and
payables will be settled prior to or effective as of the Closing.
Section 4.27 Foreign
Corrupt Practices Act Compliance. Neither the
Company, any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, or agent of the
Company or any of its subsidiaries has (a) used any funds
for unlawful contributions, gifts, entertainment or other
unlawful payments relating to political activity, (b) made
any unlawful payment to any foreign or domestic government
official or employee or to any foreign or domestic political
party or campaign or violated any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended, or
(c) made any other unlawful payment. Since January 1,
2008, neither the Company nor any of its subsidiaries has
disclosed to any Governmental Authority that it violated or may
have violated any Law relating to anti-corruption, bribery or
similar matters.
Section 4.28 No
Other Representations or Warranties. Except
for the representations and warranties contained in this
Article IV, neither the Company nor any other person
on behalf of the Company makes any express or implied
representation or warranty with respect to the Company or with
respect to its business, operations or condition. Except as
otherwise set forth in this Agreement, neither the Company nor
any other person will have or be subject to any liability or
indemnification obligation to Parent, Acquisition Sub or any
other person resulting from the distribution or failure to
distribute to Parent or Acquisition Sub, or Parents or
Acquisition Subs use of, any such information, including
any information, documents, projections, forecasts or other
material made available to
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Parent or Acquisition Sub in certain data rooms or
management presentations in expectation of the transactions
contemplated by this Agreement, unless any such information is a
subject of a representation or warranty contained in this
Article IV.
ARTICLE V
REPRESENTATIONS
AND WARRANTIES OF PARENT AND ACQUISITION SUB
Except as disclosed in the separate disclosure letter which has
been delivered by Parent to the Company prior to the execution
of this Agreement (the Parent Disclosure
Letter), Parent and Acquisition Sub hereby jointly and
severally represent and warrant to the Company as of the date
hereof as follows:
Section 5.1 Organization
and Qualification; Subsidiaries. Each of
Parent and Acquisition Sub is a corporation or legal entity duly
organized or formed, validly existing and in good standing,
under the laws of its jurisdiction of organization or formation
and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to have such power,
authority and governmental approvals would not, individually or
in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. Each of Parent and Acquisition Sub is
duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it
or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified
or licensed and in good standing that would not, individually or
in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 5.2 Articles
of Incorporation, By-Laws, and Other Organizational
Documents. Parent has made available to the
Company a complete and correct copy of the certificate of
incorporation, by-laws (or equivalent organizational documents),
and other organizational documents, agreements or arrangements,
each as amended to date, of each of Parent and Acquisition Sub
(collectively, Parent Organizational
Documents). The Parent Organizational Documents are in
full force and effect. None of Parent or Acquisition Sub is in
violation of any provision of the Parent Organizational
Documents, except as would not, individually or in the
aggregate, reasonably be expected to have a Parent Material
Adverse Effect.
Section 5.3 Authority
Relative to Agreement. Each of Parent and
Acquisition Sub has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder
and to consummate the Merger and the other transactions
contemplated hereby. The execution and delivery of this
Agreement by Parent and Acquisition Sub and the consummation by
Parent and Acquisition Sub of the Merger and the other
transactions contemplated hereby have been duly and validly
authorized by all necessary action, and no other corporate
proceedings on the part of Parent or Acquisition Sub are
necessary to authorize the execution and delivery of this
Agreement or to consummate the Merger and the other transactions
contemplated hereby (other than, with respect to the Merger, the
filing of the Articles of Merger with the Secretary of State).
This Agreement has been duly and validly executed and delivered
by Parent and Acquisition Sub and, assuming the due
authorization, execution and delivery by the Company, this
Agreement constitutes a legal, valid and binding obligation of
Parent and Acquisition Sub, enforceable against Parent and
Acquisition Sub in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other
similar laws of general applicability relating to or affecting
creditors rights, and to general equitable principles).
Section 5.4 No
Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent
and Acquisition Sub does not, and the performance of this
Agreement by Parent and Acquisition Sub and the consummation of
the Merger and the other transactions contemplated hereby will
not, (i) conflict with or violate the certificate of
incorporation or by-laws (or equivalent organizational
documents) of (A) Parent or (B) Acquisition Sub,
(ii) assuming the consents, approvals and authorizations
specified in Section 5.4(b) have been received and
the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization, or
waiver has been satisfied, conflict with or violate any Law
applicable to Parent or Acquisition Sub or by which any property
or asset of Parent or Acquisition Sub is bound or affected or
(iii) result in any breach of or constitute a default (with
or
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without notice or lapse of time, or both) under, or give rise in
others any right of termination, amendment, modification,
acceleration or cancellation of, or result in the creation of a
Lien, other than any Lien required or permitted under any debt
financing that Parent may raise in connection with the
transactions contemplated by this Agreement, upon any of the
properties or assets of Parent or Acquisition Sub pursuant to,
any note, bond, mortgage, indenture or credit agreement, or any
other contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Acquisition
Sub or any of their respective assets is bound or affected,
other than, in the case of clauses (ii) and (iii), for any
such violation, conflict, default, termination, cancellation,
modification, acceleration or Lien that would not, individually
or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent
and Acquisition Sub do not, and the consummation by Parent and
Acquisition Sub of the transactions contemplated by this
Agreement will not, require any consent, approval,
authorization, waiver or permit of, or filing with or
notification to, any Governmental Authority, except for
applicable requirements of (i) the Exchange Act,
(ii) Antitrust Laws, (iii) the filing of the Articles
of Merger with the Secretary of State of Illinois as provided
under the IBCA and (iv) the rules of NASDAQ, and except
where failure to obtain such consents, approvals,
authorizations, waivers or permits, or to make such filings or
notifications, would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
Section 5.5 Absence
of Litigation. There is no claim, action,
proceeding, inquiry, hearing, arbitration or investigation
pending or, to the knowledge of Parent, threatened against
Parent or Acquisition Sub or any of their respective properties
or assets at law or in equity, and there are no Orders before
any arbitrator or Governmental Authority, to which Parent or
Acquisition Sub is a party or subject, in each case as would,
individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect.
Section 5.6 Guaranty. Concurrently
with the execution of this Agreement, Parent and Acquisition Sub
have delivered to the Company the Guaranty of the Guarantor,
dated as of the date hereof, in respect of all the payment
obligations of Parent or Acquisition Sub pursuant to this
Agreement and all liabilities and damages payable by Parent or
Acquisition Sub arising under or in connection with this
Agreement. The Guaranty is in full force and effect and is a
valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws affecting
creditors rights generally and general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought), and no event has occurred
which, with or without notice, lapse of time or both, could
constitute a default on the part of the Guarantor under such
Guaranty.
Section 5.7 Capitalization
of Acquisition Sub. As of the date of this
Agreement, the authorized share capital of Acquisition Sub
consists of 100 shares, no par value per share, all of
which are validly issued and outstanding. All of the issued and
outstanding share capital of Acquisition Sub is, and at the
Effective Time will be, owned by Parent or a direct or indirect
wholly owned subsidiary of Parent. Acquisition Sub was formed
solely for the purpose of engaging in the transactions
contemplated hereby, and it has not conducted any business prior
to the date hereof and has no, and prior to the Effective Time
will have no, assets, liabilities or obligations of any nature
other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated
by this Agreement.
Section 5.8 Brokers. No
broker, finder or investment banker or other firm or person is
entitled to any brokerage, finders or other fee or
commission in connection with the Merger based upon arrangements
made by or on behalf of Parent or the Guarantor.
Section 5.9 Solvency. None
of Parent, Acquisition Sub or Guarantor is entering into the
transactions contemplated by this Agreement with the actual
intent to hinder, delay or defraud either present or future
creditors of the Company or any of its subsidiaries. Each of
Parent and the Surviving Corporation will be, assuming
(x) satisfaction of the conditions to Parents and
Acquisition Subs obligation to consummate the Merger, or
waiver of such conditions, (y) the accuracy as of the
Effective Time of the representations and warranties of the
Company set forth in Article IV hereof (for such
purposes, such representations and warranties shall be true and
correct in all material respects without giving effect to any
knowledge, materiality or Material Adverse
Effect qualification or exception), and
(z) estimates, projections or forecasts provided by the
Company to Parent prior to the date hereof
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have been prepared in good faith on assumptions that were and
continue to be reasonable, Solvent as of the Effective Time and
immediately after consummation of the transactions contemplated
hereby. As used in this Section 5.9, the term
Solvent means, with respect to a particular
date, that on such date, (a) the sum of the assets, at a
fair valuation, of Parent and the Surviving Corporation (on a
consolidated basis) and of each of them (on a stand alone basis)
will exceed their debts, (b) each of Parent and the
Surviving Corporation (on a consolidated basis) and each of them
(on a stand alone basis) has not incurred debts beyond its
ability to pay such debts as such debts mature and (c) each
of Parent and the Surviving Corporation (on a consolidated
basis) and each of them (on a stand-alone basis) does not have
an unreasonably small amount of capital for the operation of the
businesses in which it is engaged. For purposes of this
Section 5.9, debt means any
liability on a claim, and claim means any
(i) right to payment whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured and (ii) any right to an equitable
remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
Section 5.10 Parent
Ownership of Company Securities. None of
Parent, the Guarantor or any of their respective subsidiaries
has been, at any time during the three years preceding the date
hereof, an interested shareholder of the Company, as
defined in Section 7.85
and/or
Section 11.75 of the IBCA.
Section 5.11 Acknowledgement
of Disclaimer of Other Representations and
Warranties. Parent and Acquisition Sub
acknowledge that, to their knowledge, as of the date hereof,
they and their Representatives have received access to such
books and records, facilities, equipment, contracts and other
assets of the Company which they and their Representatives, as
of the date hereof, have requested to review, and that they and
their Representatives have had full opportunity to meet with the
management of the Company and to discuss the business and assets
of the Company. Parent and Acquisition Sub each acknowledges and
agrees that, without limitation of the representations and
warranties set forth in this Agreement and except as otherwise
set forth in this Agreement or the Voting Agreement,
(a) neither the Company nor any of its subsidiaries, nor
any of their respective Representatives on behalf of the Company
or any of its subsidiaries, nor any other person on behalf of
the Company or any of its subsidiaries, makes, or has made, any
representation or warranty relating to the Company or its
business or otherwise in connection with the Merger and Parent
and Acquisition Sub are not relying on any representation or
warranty except for those set forth in this Agreement or the
Voting Agreement, (b) no person has been authorized by the
Company or any of its subsidiaries to make any representation or
warranty relating to the Company or any of its subsidiaries or
their respective businesses in connection with the Merger, and
if made, such representation or warranty must not be relied upon
by Parent or Acquisition Sub as having been authorized by such
person, (c) any estimate, projection, prediction, data,
financial information, memorandum, presentation or any other
materials or information regarding the Company provided or
addressed to Parent, Acquisition Sub or any of their
Representatives are not and shall not be deemed to be or include
representations or warranties unless any such materials or
information is a subject of a representation or warranty set
forth in Article IV of this Agreement and
(d) neither the Company nor any of its subsidiaries, nor
any of their respective Representatives, nor any other person,
will have or be subject to any liability or indemnification
obligation or other obligation of any kind or nature to Parent,
Acquisition Sub or any of their affiliates, stockholders or
Representatives resulting from the distribution of or use by
Parent, Acquisition Sub or any of their affiliates, stockholders
or Representatives of such information, unless any such
materials or information is a subject of a representation or
warranty set forth in Article IV of this Agreement.
ARTICLE VI
COVENANTS
AND AGREEMENTS
Section 6.1 Conduct
of Business by the Company Pending the
Merger. The Company covenants and agrees
that, between the date of this Agreement and the Effective Time
or the date, if any, on which this Agreement is terminated
pursuant to Section 8.1, except as may be required
by Law or as may be agreed in writing by Parent (which consent
shall not be unreasonably withheld, delayed or conditioned), the
business of the Company and its subsidiaries shall be conducted
only in, and such entities shall not take any action except in,
the ordinary course of business and in a manner consistent with
past practice; and the Company and its subsidiaries shall use
their reasonable best efforts to preserve substantially intact
the Companys business organization, maintain existing
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relations and goodwill with Governmental Authorities, customers,
suppliers and business associates and to keep available the
services of those of their current officers, employees and
consultants who are integral to the operation of their
businesses as currently conducted. Furthermore, the Company
agrees with Parent that, except (1) as may be required by
Law, (2) as may be agreed in writing by Parent (which
consent shall not be unreasonably withheld, delayed or
conditioned), (3) as may be expressly required, expressly
contemplated or expressly permitted by this Agreement or
(4) as set forth in Section 6.1 of the Company
Disclosure Letter, the Company shall not:
(a) adopt, amend or publicly propose to amend or otherwise
change, in any material respect, the Amended and Restated
Articles of Incorporation or By-laws of the Company or such
equivalent organizational documents of any of its subsidiaries;
(b) merge or consolidate the Company or any of its
subsidiaries with any other person, except for any such
transactions among wholly owned subsidiaries of the Company, or
restructure, reorganize or completely or partially liquidate the
Company or any of its subsidiaries;
(c) except for transactions among the Company and its
wholly owned subsidiaries or among the Companys wholly
owned subsidiaries, or as otherwise contemplated in
Section 6.1(f) of this Agreement, (i) split,
combine, subdivide, reclassify, purchase, redeem or otherwise
acquire, issue, sell, pledge, dispose, encumber or grant any
shares of its or its subsidiaries capital stock, or any
options, warrants, convertible securities or other rights of any
kind to acquire any shares of its or its subsidiaries
capital stock, (ii) enter into any amendment of any term of
any of its outstanding securities or (iii) accelerate the
vesting of any options, warrants or other rights of any kind to
acquire shares of capital stock to the extent that such
acceleration of vesting does not occur automatically under the
terms of any such interests or plans governing such interest in
effect as of the date hereof; provided, however
that (x) the Company may issue shares upon exercise of any
Company Option outstanding as of the date hereof, in each case
in accordance with the terms thereof or as may be granted after
the date hereof under Section 6.1(f), (y) the
Company may issue shares as required by any Company Benefit
Plans in accordance with the terms thereof as in effect on the
date hereof, and (z) the Company may acquire shares of
capital stock in connection with tax withholdings and exercise
price settlements upon the exercise of Company Options
outstanding as of the date hereof in accordance with the terms
thereof or as may be granted after the date hereof under
Section 6.1(f);
(d) declare, authorize, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property or
otherwise, with respect to the Companys or any of its
subsidiaries capital stock, other than dividends paid by
any subsidiary of the Company to the Company or any wholly owned
subsidiary of the Company or enter into any agreement with
respect to voting of its capital stock other than the Voting
Agreement;
(e) except as required pursuant to Company Benefit Plans as
in effect as of the date hereof, or as otherwise required by
Law, (i) increase the compensation or other benefits
payable or to become payable to directors or officers of the
Company or its subsidiaries, (ii) grant any severance or
termination pay to, or enter into any severance agreement with
any director or officer of the Company or any of its
subsidiaries, (iii) enter into or amend any employment
agreement with any officer of the Company (except to the extent
necessary to replace a departing employee), or
(iv) establish, adopt, enter into, amend or terminate any
collective bargaining agreement, plan, trust, fund, policy or
arrangement for the benefit of any current or former directors,
officers or employees or any of their beneficiaries;
(f) (x) grant, confer or award options or other rights
to acquire any of its or its subsidiaries capital stock,
except as required under Company Benefit Plans as in effect as
of the date hereof or agreements executed prior to, and as in
effect as of, the date hereof or pursuant to
Section 6.1(e), or (y) take any action to cause
to be exercisable any otherwise unexercisable option under any
existing stock plan, except as provided by this Agreement in
connection with the consummation of the transactions
contemplated by this Agreement pursuant to Company Benefit Plans
as in effect as of the date hereof;
(g) acquire (including by merger, consolidation, or
acquisition of stock or assets), except in respect of any
merger, consolidation, business combination among the Company
and its wholly owned subsidiaries or among the Companys
wholly owned subsidiaries, any corporation, partnership, limited
liability company,
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joint venture, other business organization or any division or
material amount of assets thereof, except with respect to
acquisitions with collective purchase prices not exceeding
$5,000,000 in the aggregate;
(h) incur any indebtedness, including any sale and
leaseback transactions, capital leases and other similar
financing transactions, or guarantee any such indebtedness for
any person (other than a wholly owned Company subsidiary) or
issue or sell any debt securities or warrants or other rights to
acquire any debt security of the Company or any of its
subsidiaries in excess of $10,000,000 in the aggregate, except
for indebtedness (i) incurred under the Companys
existing credit facilities or incurred to replace, renew,
extend, refinance or refund any existing indebtedness, or
(ii) for borrowed money incurred pursuant to agreements in
effect prior to the execution of this Agreement;
(i) (A) modify or amend, or grant any release or relinquish
any material rights under, any Company Material Contract or
(B) enter into or become bound by any agreement that if
entered into prior to the date hereof would be a Company
Material Contract (but not of a type referred to in clauses
(ii)-(xi) of Section 4.16), other than in each case
in the ordinary course of business consistent with past practice;
(j) make any material change to its methods of tax or
financial accounting in effect at January 2, 2011, except
as required by GAAP (or any interpretation thereof) or a change
in applicable Law;
(k) except for transactions among the Company and its
wholly owned subsidiaries or among the Companys wholly
owned subsidiaries, sell, lease, license, transfer, exchange or
swap, divest, cancel, abandon or allow to lapse or expire,
mortgage or otherwise encumber or subject to any Lien (other
than Permitted Liens) or otherwise dispose of any material
portion of its properties or assets, except (A) pursuant to
existing agreements set forth on Section 6.1(k) of the
Company Disclosure Letter as in effect immediately prior to the
execution of this Agreement or (B) as may be required by
applicable Law or any Governmental Authority in order to permit
or facilitate the consummation of the transactions contemplated
hereby;
(l) make any loans, advances or capital contributions to or
investments in any other person (other than the Company or
wholly owned subsidiary of the Company), other than cash
management or investment portfolio activities or advances to
employees, in each case in the ordinary course of business
consistent with past practice;
(m) except as set forth in the capital budgets disclosed in
Section 6.1(m) of the Company Disclosure Letter, make or
authorize any capital expenditure in excess of $5,000,000 in the
aggregate;
(n) compromise, settle or agree to settle any suit, action,
claim, proceeding or investigation (including any suit, action,
claim, proceeding or investigation relating to this Agreement or
the transactions contemplated hereby) or pay, discharge or
satisfy or agree to pay, discharge or satisfy any claim,
liability or obligation (absolute or accrued, asserted or
unasserted, contingent or otherwise) other than the compromise,
settlement, payment, discharge or satisfaction of claims,
liabilities or obligations in the ordinary course of business
consistent with past practice which in any event does not exceed
(x) with respect to compromises, settlements, payments,
discharges and satisfactions of claims, liabilities or
obligations with or involving customers of the Company or any of
its subsidiaries, $1,000,000 in the aggregate, and (y) with
respect to all other compromises, settlements, payments,
discharges and satisfactions of claims (including in regards to
any suit, action, claim, proceeding or investigation relating to
this Agreement or the transactions contemplated hereby),
liabilities or obligations, $2,500,000 in the aggregate;
(o) except as required by Law or, in the case of filing any
amended Tax Returns, as would not reasonably be expected to
result in a material liability of the Company or its
subsidiaries, make or change any Tax election, file any amended
Tax Returns, settle or compromise any material Tax liability of
the Company or any of its subsidiaries, agree to an extension or
waiver of the statute of limitations with respect to the
assessment or determination of Taxes of the Company or any of
its subsidiaries, enter into any closing agreement with respect
to any Tax or surrender any right to claim a Tax refund;
(p) open any material new offices or facilities or relocate
or close any material existing offices or facilities, or file
any application with any Governmental Authority to do any of the
foregoing, except for
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openings, closings and relocations in progress on the date of
this Agreement or planned on the date hereof and disclosed in
Section 6.1(p) of the Company Disclosure Letter;
(q) enter into any material line of business other than the
lines of business in which the Company and its subsidiaries are
currently engaged or distribute products or services other than
the products and services the Company and its subsidiaries are
currently distributing; or
(r) authorize or enter into any written agreement,
recommend, publicly propose or announce an intention to or
otherwise make any commitment to do any of the foregoing.
Section 6.2 Proxy
Statement.
(a) Covenants of the Company. The
Company shall prepare and cause to be filed with the SEC as
promptly as reasonably practicable after the date hereof a proxy
statement (together with any amendments thereof or supplements
thereto, the Proxy Statement) relating to the
meeting of the Companys stockholders to be held to
consider the adoption and approval of this Agreement and the
Merger. The Company will provide to Parent a reasonable
opportunity to review and comment upon the Proxy Statement prior
to filing the same with the SEC (and to review and comment on
any comments of the SEC or its staff on the Proxy Statement),
and shall reasonably consider all comments made by Parent and
its counsel, prior to the filing thereof. The Company shall
include in the Proxy Statement the text of this Agreement and,
except to the extent provided in Section 6.6(c), the
recommendation of the board of directors of the Company that the
Companys stockholders approve and adopt this Agreement.
The Company shall use all reasonable best efforts to respond, as
promptly as reasonably practicable, to any comments by the SEC
staff in respect of the Proxy Statement. None of the information
with respect to the Company or its subsidiaries to be included
in the Proxy Statement will, at the time of the mailing of the
Proxy Statement or any amendments or supplements thereto and at
the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The Company shall use its
reasonable best efforts so that the Proxy Statement will comply
as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated
thereunder.
(b) Covenants of Parent. None of
the information supplied in writing by Parent specifically for
inclusion in the Proxy Statement will, at the time of the
mailing of the Proxy Statement or any amendments or supplements
thereto and at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Cooperation. The Company,
Parent and Acquisition Sub shall cooperate and consult with each
other in preparation of the Proxy Statement. Without limiting
the generality of the foregoing, each of Parent and Acquisition
Sub will furnish to the Company the information relating to it
required by the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Proxy Statement.
The Company shall not be required to provide Parent or
Acquisition Sub the opportunity to review or comment on or
permit Parent or Acquisition Sub to participate in any
discussions with the SEC regarding the Proxy Statement or any
other filing to the extent of any disclosure regarding a Change
of Recommendation made in accordance with
Section 6.6(c).
(d) Mailing of Proxy Statement;
Amendments. As promptly as reasonably
practicable after the Proxy Statement has been cleared by the
SEC, the Company shall mail the Proxy Statement to the holders
of Common Stock as of the record date established for the
Stockholders Meeting. If at any time prior to the
Effective Time any event or circumstance relating to the Company
or Parent or any of the Companys or Parents
subsidiaries, or their respective officers or directors, should
be discovered by the Company or Parent, respectively, which,
pursuant to the Exchange Act, should be set forth in an
amendment or a supplement to the Proxy Statement, such party
shall promptly inform the others. Each of Parent, Acquisition
Sub and the Company agree to correct any information provided by
it for use in the Proxy Statement which shall have become false
or misleading. Each party shall use its reasonable best efforts
so that all documents that such party is responsible for filing
with the SEC in connection with the Merger will comply as to
form in all material respects with the applicable requirements
of the Exchange Act.
Section 6.3 Stockholders
Meetings. The Company shall, as promptly as
reasonably practicable following the date of this Agreement,
establish a record date for, duly call, give notice of, convene
and hold a meeting of its
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stockholders, for the purpose of voting upon the adoption of
this Agreement and approval of the Merger (the
Stockholders Meeting), and the Company
shall hold the Stockholders Meeting. At such
Stockholders Meeting, the Company shall recommend to its
stockholders the adoption of this Agreement and approval of the
Merger (the Company Recommendation).
Notwithstanding the foregoing, the Company shall not be
obligated to recommend to its stockholders the adoption of this
Agreement or approval of the Merger at its Stockholders
Meeting to the extent that the board of directors of the Company
makes a Change of Recommendation in accordance with
Section 6.6(c).
Section 6.4 Appropriate
Action; Consents; Filings.
(a) Subject to Section 6.6, the parties hereto
will use their respective reasonable best efforts to consummate
and make effective the transactions contemplated hereby and to
cause the conditions to the Merger set forth in
Article VII to be satisfied, including (i) the
obtaining and maintaining of all necessary actions or
nonactions, consents and approvals from Governmental Authorities
or other persons necessary in connection with the consummation
of the transactions contemplated by this Agreement and the
making of all necessary registrations and filings (including
filings with Governmental Authorities, if any) and the taking of
all reasonable steps as may be necessary to obtain an approval
from, or to avoid an action or proceeding by, any Governmental
Authority or other persons necessary in connection with the
consummation of the transactions contemplated by this Agreement,
(ii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions performed
or consummated by such party in accordance with the terms of
this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Authority vacated or reversed, and (iii) the execution and
delivery of any additional instruments necessary to consummate
the Merger and other transactions to be performed or consummated
by such party in accordance with the terms of this Agreement and
to carry out fully the purposes of this Agreement. Each of the
parties hereto shall promptly (and in no event later than ten
(10) Business Days following the date that this Agreement
is executed) make its respective filings, and thereafter make
any other submissions required or advisable under the HSR Act or
other Antitrust Law with respect to the transactions
contemplated hereby.
(b) Parent and Acquisition Sub agree to use their
reasonable best efforts to take (and to cause their affiliates
to take) promptly any and all steps necessary to avoid or
eliminate each and every impediment and obtain all consents
under any Antitrust Laws that may be required by any foreign or
U.S. federal, state or local Governmental Authority, in
each case with competent jurisdiction, so as to enable the
parties to close the transactions contemplated by this Agreement
as promptly as reasonably practicable, including committing to
or effecting, by consent decree, hold separate orders, trust, or
otherwise, the sale or disposition of such assets or businesses
as are required to be divested in order to avoid the entry of,
or to effect the dissolution of or vacate or lift, any Order,
that would otherwise have the effect of preventing or materially
delaying the consummation of the Merger and the other
transactions contemplated by this Agreement. Further, and for
the avoidance of doubt, Parent will take any and all actions
necessary in order to ensure that (x) no requirement for
any non-action by or consent or approval of the Antitrust
Division or other foreign or U.S. Governmental Authority,
(y) no decree, judgment, injunction, temporary restraining
order or any other order in any suit or proceeding, and
(z) no other matter relating to any Antitrust Laws would
preclude consummation of the Merger by the Termination Date.
(c) Promptly following the date hereof, Parent and the
Company shall cooperate with one another to determine any
notices that need to be provided to third parties, and the
Company shall use its reasonable best efforts to obtain any
third party consents not covered by paragraphs (a) and
(b) above that are necessary, proper or advisable to
consummate the Merger as reasonably determined by Parent;
provided that the Company and its subsidiaries shall not
seek any such consent of their respective customers without the
prior consent of Parent, which consent shall not be unreasonably
withheld, delayed or conditioned. Each of the parties hereto
will furnish to the other such necessary information and
reasonable assistance as the other may request in connection
with the preparation of any governmental filings or submissions
and will cooperate in responding to any inquiry from or material
communication with a Governmental Authority, including
immediately informing the other party of such inquiry or
communication, consulting in advance before making any
presentations or submissions to a Governmental Authority, and
supplying each other with copies of all material correspondence,
filings or communications between either party and any
Governmental Authority with respect to this Agreement.
Notwithstanding the
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foregoing, obtaining any third party consents pursuant to this
paragraph (c) shall not be considered a condition to the
obligations of the Parent and Acquisition Sub to consummate the
Merger pursuant to Section 7.2.
Section 6.5 Access
to Information; Confidentiality.
(a) From the date hereof to the Effective Time or the date,
if any, on which this Agreement is terminated pursuant to
Section 8.1, to the extent permitted by applicable
Law, the Company will (and will cause its subsidiaries to)
provide to Parent and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively,
Representatives) reasonable access during
normal business hours to the Companys employees,
customers, properties, books, contracts, Tax Returns and records
(including the work papers of independent accountants subject to
the consent of such independent accountants) and other
information as Parent may reasonably request regarding the
business, assets, liabilities, employees and other aspects of
the Company (but not including access to perform physical or
environmental examinations or to take samples of the soil,
ground water, air or products) and, during such period, furnish
in advance to Parent a copy of each report, schedule,
registration statement and other document to be filed by it
during such period pursuant to the requirements of federal or
state securities laws; provided, however, that the
Company shall not be required to provide such access if it would
constitute a waiver of the attorney-client privilege, work
product doctrine or other privilege held by the Company or
otherwise violate any applicable Laws. Any investigation
conducted pursuant to the access contemplated by this
Section 6.5 shall be conducted in a manner that does
not unreasonably interfere with the conduct of the business of
the Company and its subsidiaries or create a material risk of
damage or destruction to any property or assets of the Company
or any of its subsidiaries. Any access to the Companys
properties shall be subject to the Companys reasonable
security measures and insurance requirements and shall not
include the right to perform invasive testing.
(b) The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement.
Section 6.6 No
Solicitation of Competing Proposal.
(a) From and after the date of this Agreement until the
earlier of the Effective Time or the date, if any, on which this
Agreement is terminated pursuant to Section 8.1, the
Company agrees that neither it nor any subsidiary of the Company
shall, and that it shall use its reasonable best efforts to
cause its and their respective Representatives not to, directly
or indirectly: (i) solicit, initiate or knowingly
facilitate or encourage (including by way of providing
information) any inquiries, proposals or offers that constitute
or may reasonably be expected to lead to, any Competing
Proposal, (ii) participate in any negotiations regarding,
or furnish to any person any nonpublic information with respect
to, any Competing Proposal, (iii) engage in discussions
with any person with respect to any Competing Proposal,
(iv) approve or recommend any Competing Proposal,
(v) enter into any letter of intent, memorandum of
understanding or similar document or any agreement or commitment
relating to any Competing Proposal, (vi) enter into any
agreement or agreement in principle requiring, directly or
indirectly, the Company to abandon, terminate or fail to
consummate the transactions contemplated hereby or breach its
obligations hereunder, or (vii) publicly propose or agree
to do any of the foregoing. The Company shall ensure that its
Representatives are aware of the provisions of this
Section 6.6, and any violation of the restrictions
contained in this Section 6.6 by its board of
directors (including any committee thereof) or its
Representatives shall be deemed to be a breach of this
Section 6.6 by the Company.
(b) Notwithstanding the limitations set forth in
Section 6.6(a), if after the date hereof but prior
to receipt of the Requisite Stockholder Vote, the Company
receives an unsolicited written Competing Proposal which the
board of directors of the Company determines in good faith after
consultation with the Companys legal and financial
advisors constitutes or would reasonably be expected to result
in, after the taking of any of the actions referred to in either
of clause (x) or (y) below, a Superior Proposal, the
Company may take the following actions: (x) furnish
nonpublic information to the third party making such Competing
Proposal, if, and only if, prior to so furnishing such
information, the Company receives from the third party an
executed confidentiality agreement (which confidentiality
agreement shall contain terms (including a
standstill) no less favorable to the Company than
those set forth in the Confidentiality Agreement) and
substantially concurrently furnishes such nonpublic information
to Parent to the extent such information was not previously
furnished to Parent and (y) engage in discussions or
negotiations with the third party with respect to the Competing
Proposal, in each case only to the extent that the board of
directors of the Company concludes in good faith (after
receiving the advice of its outside counsel) that failure to
take such
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actions would be inconsistent with the directors exercise
of their fiduciary duties under applicable Law; provided,
however, that prior to the Company taking such actions as
described in clauses (x) and (y) above, the Company
shall have provided written notice to Parent of such
determination of the board of directors of the Company. The
Company shall keep Parent reasonably informed on a current basis
(within no more than 24 hours) of any material developments
in the status and terms of any such Competing Proposal or
inquiry (including whether such Competing Proposal or inquiry
has been withdrawn or rejected and any material change to the
terms thereof).
(c) From and after the date of this Agreement until the
earlier of the Effective Time or the date, if any, on which this
Agreement is terminated pursuant to Section 8.1 and
except as otherwise provided for in the immediately following
sentence, neither the board of directors of the Company nor any
committee thereof shall withdraw, qualify or modify or publicly
propose to withdraw, qualify or modify, in any manner, the
Company Recommendation (a Change of
Recommendation). Notwithstanding the foregoing, at any
time prior to receipt of the Requisite Stockholder Vote the
board of directors of the Company may effect a Change of
Recommendation if the board of directors of the Company has
concluded in good faith after consultation with the
Companys legal and financial advisors that the failure of
the board of directors of the Company to effect a Change of
Recommendation would be inconsistent with the directors
exercise of their fiduciary duties under applicable Law;
provided, however, that (A) the Company shall
have first provided three (3) Business Days prior written
notice to Parent of its intention to make a Change of
Recommendation and the basis therefor (which notice, if provided
because of a Superior Proposal, shall be accompanied by a copy
of the relevant proposed transaction agreements with the party
making such Superior Proposal (and any other related material
documents)), (B) if requested by Parent, the Company shall
have negotiated, and caused its financial and legal advisors to
negotiate, in good faith with Parent for a period of three
(3) Business Days since the delivery of such notice to
amend the terms of this Agreement to address the reasons for the
proposed Change of Recommendation, and (C) if Parent
delivers a written and binding offer to alter the terms of the
Agreement during such three (3) Business Day period, the
board of directors of the Company shall have concluded in good
faith after consultation with the Companys legal and
financial advisors that the failure of the board of directors to
effect a Change of Recommendation would still be inconsistent
with the directors exercise of their fiduciary duties
under applicable Law.
(d) Nothing contained in this Agreement shall prohibit the
Company or the board of directors of the Company from complying
with
Rules 14d-9
and 14e-2(a)
promulgated under the Exchange Act; provided, that such
Rules will in no way eliminate or modify the effect that any
action pursuant to such Rules would otherwise have under this
Agreement; and provided, further, that any such
disclosure (other than a stop, look and listen or
similar communication of the type contemplated by
Rule 14d-9(f)
under the Exchange Act) shall be deemed to be a Change of
Recommendation unless the board of directors of the Company
expressly and concurrently reaffirms the Company Recommendation.
(e) As used in this Agreement, Competing
Proposal shall mean any bona fide proposal (other than
a proposal or offer by Parent or any of its subsidiaries)
relating to any direct or indirect (i) merger,
reorganization, share exchange, consolidation, business
combination, recapitalization, dissolution, liquidation or
similar transaction involving the Company or any of its
subsidiaries, whose assets individually or in the aggregate,
constitute fifteen percent (15%) or more of the consolidated
assets of the Company and its subsidiaries as determined on a
book-value basis; (ii) the acquisition by any person of
fifteen percent (15%) or more of the assets of the Company and
its subsidiaries, taken as a whole as determined on a book-value
basis; (iii) the acquisition by any person of fifteen
percent (15%) or more of the issued and outstanding shares of
Common Stock or (iv) any purchase, acquisition, tender
offer or exchange offer that if consummated would result in any
person beneficially owning fifteen percent (15%) or more of the
Common Stock or any class of equity or voting securities of its
subsidiaries whose assets, individually or in the aggregate,
constitute fifteen percent (15%) or more of the consolidated
assets of the Company and its subsidiaries as determined on a
book-value basis.
(f) As used in this Agreement, Superior
Proposal shall mean a written Competing Proposal (with
all percentages in the definition of Competing Proposal
increased to fifty (50%)) on terms that the board of directors
of the Company determines in good faith, after consultation with
the Companys financial and legal advisors, and taking into
account all the terms of the Competing Proposal (including the
conditionality and the timing), are more favorable from a
financial point of view to the Companys stockholders than
the transactions contemplated by this
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Agreement (taking into account any revised proposal by Parent to
amend the terms of this Agreement pursuant to and in accordance
with Section 6.6(c) or Section 8.1(g),
as applicable).
Section 6.7 Directors
and Officers Indemnification and Insurance.
(a) Parent and Acquisition Sub agree that all rights to
exculpation and indemnification for acts or omissions occurring
at or prior to the Effective Time, whether asserted or claimed
prior to, at or after the Effective Time (including any matters
arising in connection with the transactions contemplated by this
Agreement), now existing in favor of any Indemnitee as provided
in the articles or certificates of incorporation or by- laws (or
comparable organization documents) of the Company or any of its
subsidiaries or affiliates or in any indemnification agreement
listed in Section 6.7(a) of the Company Disclosure Letter
(the Indemnity Agreements) shall survive the
Merger and shall continue in full force and effect in accordance
with their terms. For a period of six (6) years after the
Effective Time, Parent and the Surviving Corporation shall (and
Parent shall cause the Surviving Corporation to)
(i) indemnify, defend and hold harmless, and advance
expenses (subject to the person to whom expenses are advanced
providing an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification) to, Indemnitees with respect to all acts or
omissions by them in their capacities as such at any time prior
to the Effective Time, to the fullest extent permitted by Law
and as required by: (A) the Amended and Restated Articles
of Incorporation or By-laws (or equivalent organizational
documents) of the Company or any of its subsidiaries or
affiliates as in effect on the date of this Agreement and
(B) any Indemnity Agreement, and (ii) not amend,
repeal or otherwise modify any such provisions referenced in
subsections (i)(A) and (B) above in any manner that would
adversely affect the rights thereunder of any Indemnitees. The
Company has made available to Parent true and complete copies of
the Indemnity Agreements.
(b) Without limiting the provisions of
Section 6.7(a), during the period commencing as of
the Effective Time and ending on the sixth anniversary of the
Effective Time, Parent, the Surviving Corporation and its
subsidiaries and affiliates will, to the fullest extent
permitted by law: (i) indemnify and hold harmless each
Indemnitee against and from any costs or expenses (including
reasonable attorneys fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, to the extent such claim, action, suit,
proceeding or investigation arises out of or pertains to:
(A) any action or omission or alleged action or omission in
such Indemnitees capacity as a director, officer or
employee of the Company or any of its subsidiaries; or
(B) the Merger, the Merger Agreement and any transactions
contemplated hereby; and (ii) pay in advance of the final
disposition of any such claim, action, suit, proceeding or
investigation the expenses (including reasonable attorneys
fees) of any Indemnitee upon receipt of an undertaking by or on
behalf of such Indemnitee to repay such amount if it shall
ultimately be determined that such Indemnitee is not entitled to
be indemnified, in each case, if such Indemnitee is entitled to
indemnification or advancement of expenses as of the date of
this Agreement pursuant to the Companys or any of its
subsidiarys certificate of incorporation, bylaws, or other
similar governing documents or any applicable Indemnity
Agreements. Notwithstanding anything to the contrary contained
in this Section 6.7(b) or elsewhere in this
Agreement, (i) neither Parent nor the Surviving Corporation
shall (and Parent shall cause the Surviving Corporation not to)
settle or compromise or consent to the entry of any judgment or
otherwise seek termination with respect to any claim, action,
suit, proceeding or investigation for which indemnification may
be sought under this Section 6.7(b) unless such
settlement, compromise, consent or termination includes an
unconditional release of all Indemnitees from all liability
arising out of such claim, action, suit, proceeding or
investigation and (ii) the Indemnified Parties as a group
shall retain only one law firm to represent them with respect to
each matter.
(c) Prior to the Effective Time, the Company shall or, if
the Company is unable to, Parent shall cause the Surviving
Corporation as of the Effective Time to, obtain and fully pay
the premium for the non-cancellable extension of the
directors and officers liability coverage of the
Companys existing directors and officers
insurance policies and the Companys existing fiduciary
liability insurance policies (collectively, the
D&O Insurance) for the benefit of the
Indemnified Parties who are currently insured by the D&O
Insurance, in each case for a claims reporting or discovery
period of six (6) years from and after the Effective Time
with respect to any events occurring at or prior to the
Effective Time from an insurance carrier with the same or better
credit rating as the Companys current insurance carrier
with respect to D&O Insurance with terms, conditions,
retentions and limits of liability that are, in the aggregate,
no less favorable than the coverage provided under the
Companys
A-26
existing policies. If the Company or the Surviving Corporation
for any reason fail to obtain such tail insurance
policies as of the Effective Time, there shall be no breach of
this provision so long as (i) the Surviving Corporation
shall continue to maintain in effect, for a period of at least
six (6) years from and after the Effective Time, the
D&O Insurance in place as of the date hereof with the
Companys current insurance carrier or with an insurance
carrier with the same or better credit rating as the
Companys current insurance carrier with respect to
D&O Insurance with terms, conditions, retentions and limits
of liability that are no less favorable than the coverage
provided under the Companys existing policies as of the
date hereof, or (ii) Parent will provide, or cause the
Surviving Corporation to provide, for a period of not less than
six (6) years after the Effective Time, the Indemnitees who
are insured under the Companys D&O Insurance with
comparable D&O Insurance that provides coverage for events
occurring at or prior to the Effective Time from an insurance
carrier with the same or better credit rating as the
Companys current insurance carrier, that is no less
favorable than the existing policy of the Company or, if
substantially equivalent insurance coverage is unavailable, the
best available coverage. Notwithstanding anything to the
contrary in the foregoing, in each case, in no event shall
Parent and the Surviving Corporation be required to pay an
annual premium for the D&O Insurance in excess of 300% of
the annual premium currently paid by the Company for such
insurance; provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent
or the Surviving Corporation shall be obligated to obtain a
policy with the greatest coverage available, with respect to
matters occurring prior to the Effective Time, for a cost not
exceeding such amount.
(d) The Indemnitees to whom this Section 6.7
applies shall be third party beneficiaries of this
Section 6.7. The provisions of this
Section 6.7 are intended to be for the benefit of
each Indemnitee and his or her successors, heirs or
representatives. Parent shall pay all reasonable expenses,
including reasonable attorneys fees, that may be incurred
by any Indemnitee in enforcing the indemnity and other
obligations provided in this Section 6.7.
(e) The rights of each Indemnitee under this
Section 6.7 shall be in addition to any rights such
person may have under the articles of incorporation or bylaws of
the Company, the Surviving Corporation or any of its
subsidiaries, or under any applicable Law or insurance policy or
under any agreement of any Indemnitee with the Company or any of
its subsidiaries.
(f) Notwithstanding anything contained in
Section 9.1 or Section 9.6 hereof to the
contrary, this Section 6.7 shall survive the
consummation of the Merger in accordance with its terms and
shall be binding, jointly and severally, on all successors and
assigns of Parent, the Surviving Corporation and its
subsidiaries, and shall be enforceable by the Indemnitees and
their successors, heirs or representatives. In the event that
Parent or the Surviving Corporation or any of its successors or
assigns consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity
of such consolidation or merger or transfers or conveys all or
substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so
that the successors and assigns of Parent or the Surviving
Corporation, as applicable, shall succeed to the obligations set
forth in this Section 6.7.
Section 6.8 Notification
of Certain Matters; Litigation relating to
Merger. The Company shall give prompt written
notice to Parent, and Parent shall give prompt written notice to
the Company, of (i) any notice or other communication
received by such party from any Governmental Authority in
connection with the this Agreement, the Merger or the
transactions contemplated hereby, or from any person alleging
that the consent of such person is or may be required in
connection with the Merger or the transactions contemplated
hereby, (ii) any actions, suits, claims, investigations or
proceedings commenced or, to such partys knowledge,
threatened against, relating to or involving or otherwise
affecting such party or any of its subsidiaries which relate to
this Agreement, the Merger or the transactions contemplated
hereby, (iii) any request received by such party from any
Governmental Authority for any amendment or supplement to any
filing made pursuant to this Agreement or any information
required to comply with any Law applicable to the Merger,
(iv) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which it is aware and which
would be reasonably likely to cause (x) any representation
or warranty of the notifying party contained in this Agreement
to be untrue or inaccurate at the Effective Time such that the
applicable condition to closing set forth in
Article VII would, or would reasonably be expected
to, fail to be satisfied or (y) any covenant, condition or
agreement of the notifying party contained in this Agreement not
to be complied with or satisfied such that the applicable
condition to closing set forth in Article VII would,
or would reasonably be expected to, fail to be satisfied,
(v) any failure of the notifying party to comply in a
timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder
A-27
or (vi) any change, event or effect which would be
reasonably likely to, individually or in the aggregate, have a
Company Material Adverse Effect or Parent Material Adverse
Effect, as the case may be, on the notifying party;
provided, however, that the delivery of any notice
pursuant to this Section 6.8 shall not limit or
otherwise affect the remedies available hereunder to the party
receiving such notice. In the event of any actions, suits,
claims, investigations or proceedings commenced or, to such
partys knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its
subsidiaries which relate to this Agreement, the Merger or the
transactions contemplated hereby, each party shall keep the
other party reasonably informed regarding any such actions,
suits, claims, investigations or proceedings, and each party
shall give the other parties hereto the opportunity to consult
with it regarding the defense or settlement of any such actions,
suits, claims, investigations or proceedings and shall give due
consideration to the other partys advice with respect to
such actions, suits, claims, investigations or proceedings.
Section 6.9 Public
Announcements. Parent and the Company shall
consult with each other before issuing any press release or
otherwise making any public statements with respect to this
Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other
(which consent shall not be unreasonably withheld or delayed),
except as may be required by Law or by obligations pursuant to
any listing agreement with NASDAQ to which Parent or the Company
is a party. With respect to any communications to be delivered
orally, including by conference call or webcast, this
Section 6.9 shall be deemed satisfied if, to the
extent practicable, the disclosing party gives reasonable
advance notice of such disclosure to the other party, including
copies of any talking points, scripts or similar documents, and
consults with the other party and considers in good faith any
comments by such other party with respect thereto;
provided, that the prior agreement of the other party
shall be required with respect to such disclosures to the extent
that the non-disclosing party reasonably determines that any
disclosure would be materially averse to the non-disclosing
party. Notwithstanding the foregoing, the restrictions set forth
in this Section 6.9 shall not apply to any public
statement made or proposed to be made by the Company in
connection with or following a Change of Recommendation in
accordance with Section 6.6(c).
Section 6.10 Employee
Matters.
(a) During the one-year period commencing on the Effective
Date, Parent or its applicable affiliates shall provide or shall
cause the Surviving Corporation to provide Company Employees
compensation and benefits that are, in the aggregate, no less
favorable than the compensation and benefits (other than
equity-based benefits) provided to Company Employees immediately
prior to the Effective Time. Base compensation for Company
Employees during such one-year period shall not be reduced so
long as such employee remains employed after the Effective Time.
(b) Without limiting paragraph (a) of this
Section 6.10, (i) during the one-year period
commencing on the Effective Date, Parent shall provide or shall
cause the Surviving Corporation to provide to Company Employees
who experience a termination of employment severance benefits
that are, in the aggregate, no less favorable than the severance
benefits provided to Company Employees immediately prior to the
Effective Time.
(c) For purposes of eligibility and vesting under the
Company Benefit Plans or any employee benefit plan
(within the meaning of Section 3(3) of ERISA) of Parent or
its applicable affiliates, the Company, the Company subsidiaries
and their respective affiliates providing benefits to any
Company Employees after the Closing (the New
Plans), and for purposes of accrual of vacation and
other paid time off and severance benefits under New Plans, each
Company Employee shall be credited with his or her years of
service with the Company, the Company subsidiaries and their
respective affiliates before the Closing, to the same extent as
such Company Employee was entitled, before the Closing, to
credit for such service under any similar Company Benefit Plan.
In addition, and without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately
eligible to participate, without any waiting time, in any and
all New Plans to the extent coverage under such New Plan
replaces coverage under a comparable Company Benefit Plan in
which such Company Employee participated immediately before the
replacement; and (ii) for purposes of each New Plan
providing medical, dental, pharmaceutical
and/or
vision benefits to any Company Employee, Parent or its
applicable affiliates shall cause all pre-existing condition
exclusions, evidence of insurability requirements and
actively-at-work requirements of such New Plan to be waived for
such employee and his or her covered dependents, and Parent or
its applicable affiliates shall cause any eligible expenses
incurred by such employee and his or her covered dependents
under any Company Benefit Plan during the
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portion of the plan year of the New Plan ending on the date such
employees participation in the corresponding New Plan
begins to be taken into account under such New Plan for purposes
of satisfying all deductible, coinsurance and maximum
out-of-pocket
requirements applicable to such employee and his or her covered
dependents for the applicable plan year as if such amounts had
been paid in accordance with such New Plan.
(d) Parent shall cause the Surviving Corporation to honor
the terms of all employment agreements disclosed in the Company
SEC Documents or otherwise disclosed to Parent and all as listed
in Section 6.10(d) of the Company Disclosure Letter.
(e) Parent acknowledges and agrees that the occurrence of
the Effective Time shall constitute a change in
control (or similar phrase) for purposes of all Company
Benefit Plans in which the term is relevant.
(f) No provision of this Agreement shall be deemed to be
the adoption of, or an amendment to, any employee benefit plan,
as that term is defined in Section 3(3) of ERISA, or
otherwise limit the right of Parent, the Surviving Corporation
or their respective affiliates to amend, modify or terminate any
such employee benefit plan or the employment of any employee of
the Company or its subsidiaries.
Section 6.11 Financing
Cooperation. The Company shall and shall
cause its subsidiaries to, and shall use its commercially
reasonable efforts to cause the respective officers, employees
and advisors, including legal and accounting, of the Company and
its subsidiaries to at Parents sole expense, reasonably
cooperate on a timely basis in connection with the arrangement
of any debt financing that Parent may raise in connection with
the transactions contemplated by this Agreement as may be
reasonably requested by Parent (provided that such
requested cooperation does not unreasonably interfere with the
ongoing operations of the Company and its subsidiaries). Such
cooperation by the Company shall include, at the reasonable
request of Parent, (i) agreeing to enter into such
agreements, and to use reasonable best efforts to deliver such
officers certificates, as are customary in financings of
such type and as are, in the good faith determination of the
persons executing such officers certificates, accurate,
and agreeing to pledge, grant security interests in, and
otherwise grant liens on, the Companys assets pursuant to
such agreements as may be reasonably requested and otherwise
facilitating the pledging of collateral, provided that no
obligation of the Company under any such agreement, pledge or
grant shall be effective until the Effective Time,
(ii) subject to recipients of any such information entering
into customary arrangements for confidentiality that are
substantially similar to the provisions in the Confidentiality
Agreement or reasonably acceptable to the Company, providing
financial and other information regarding the Company and its
subsidiaries as may be reasonably requested, making the
Companys senior officers available to assist the Parent in
raising debt financing in connection with the transactions
contemplated by this Agreement, including (A) participating
in meetings, presentations, road shows, due diligence sessions
and sessions with ratings agencies and (B) assisting with
the preparation of materials for rating agency presentations,
offering documents, private placement memoranda, bank
information memoranda, prospectuses and similar documents
necessary, proper of advisable in connection with arranging such
debt financing, and (iii) otherwise reasonably cooperating
in connection with the arranging and consummation of any debt
financing that Parent may raise in connection with the
transactions contemplated by this Agreement. Parent shall
promptly reimburse the Company for any expenses and costs
incurred in connection with the Companys or its
subsidiaries obligations under this
Section 6.11 and shall indemnify and hold harmless
the Company and its subsidiaries and their respective directors,
officers, employees, agents and other Representatives from and
against any and all losses, damages, claims, costs or expenses
suffered or incurred by any of them in connection with the
arrangement of any debt financing that Parent may raise in
connection with the transactions contemplated by this Agreement
and any information utilized in connection therewith (other than
information provided by the Company or any of its subsidiaries,
or any of their respective directors, officers, employees,
agents and other Representatives), except to the extent such
losses, damages, claims, costs or expenses are a result of the
gross negligence or willful misconduct of the Company, its
subsidiaries or any of their respective directors, officers,
employees, agents and Representatives. Notwithstanding anything
in this Agreement to the contrary, neither the Company nor any
of its subsidiaries shall be required to pay any commitment or
other similar fee or incur any other liability or obligation in
connection with any such debt financing prior to the Effective
Time.
Section 6.12 No
Control of the Companys
Business. Without in any way limiting any
partys rights or obligations under this Agreement, the
parties understand and agree that (a) nothing contained in
this Agreement is intended to give Parent, directly or
indirectly, the right to control or direct the Companys or
its subsidiaries
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operations prior to the Effective Time and (b) prior to the
Effective Time, the Company shall exercise, consistent with and
in accordance with the terms and conditions of this Agreement,
complete control and supervision over its and its
subsidiaries operations.
Section 6.13 Rule 16b-3. Prior
to the Effective Time, the Company shall take all such actions,
if any, as may be necessary or appropriate to ensure that the
dispositions and acquisitions of equity securities of the
Company (including derivative securities) pursuant to the
transactions contemplated by this Agreement by any officer or
director of the Company who is subject to the reporting
requirements of Section 16 of the Exchange Act with respect
to the Company, are exempt under
Rule 16b-3
promulgated under the Exchange Act.
Section 6.14 Anti-Takeover
Laws. In the event that any state
anti-takeover or other similar Law (including any
fair price, business combination,
moratorium or control share acquisition
statute) is or purports to become applicable to this Agreement
or any of the transactions contemplated by this Agreement, the
Company, Parent and Acquisition Sub and their respective boards
of directors shall use their respective reasonable best efforts
to grant such approvals and take such actions as are necessary
to ensure that the transactions contemplated by this Agreement
may be consummated as promptly as reasonably practicable on the
terms and subject to the conditions set forth in this Agreement
and otherwise to eliminate the effect of such Law on this
Agreement and the transactions contemplated hereby.
ARTICLE VII
CONDITIONS
TO THE MERGER
Section 7.1 Conditions
to the Obligations of Each Party. The
obligations of the Company and Parent to consummate the Merger
are subject to the satisfaction or waiver by the Company and
Parent of the following conditions:
(a) the Requisite Stockholder Approval shall have been
obtained in accordance with the IBCA and the rules and
regulations of NASDAQ;
(b) any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated and
any required action or non-action, consent or approval from any
Governmental Authority pursuant to any other Antitrust Law shall
have been obtained; and
(c) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Order which is then
in effect and has the effect of making the Merger illegal or
otherwise restraining, enjoining or prohibiting the consummation
of the Merger.
Section 7.2 Conditions
to the Obligations of Parent. The obligations
of Parent and Acquisition Sub to consummate the Merger are
subject to the satisfaction or waiver by Parent of the following
further conditions:
(a) (i) the representations and warranties of the
Company contained in Section 4.4 (Authority Relative
to Agreement) shall be true and correct in all material respects
as of the date hereof and as of the Effective Time with the same
effect as though made as of such date, (ii) the
representations and warranties of the Company contained in
Sections 4.3 (Capitalization) (subject to deviations
that would not result in the sum of (I) the Aggregate
Merger Consideration and (II) the aggregate Option Cash
Payments for unvested Company Options at the Closing payable
pursuant to Section 3.3(c) being in excess of
$4,000,000 more than such amount in the absence of any
deviations), and clause (ii) of Section 4.9
(Absence of Certain Changes) shall be true and correct in all
respects as of the date hereof and as of the Effective Time with
the same effect as though made as of such date, and
(iii) each of the representations and warranties of the
Company contained in this Agreement (except for the
representations referenced in the foregoing clauses (i) and
(ii)), without giving effect to any materiality or Company
Material Adverse Effect qualifications therein, shall be
true and correct as of the date hereof and as of the Effective
Time with the same effect as though made as of such date (except
to the extent expressly made as of an earlier date, in which
case as of such date) except for such failures to be true and
correct as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect;
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(b) the Company shall have performed or complied in all
material respects with all material agreements and covenants
required by this Agreement to be performed or complied with by
it on or prior to the Effective Time; and
(c) the Company shall have delivered to Parent a
certificate, dated the Effective Time and signed by its chief
executive officer or another senior executive officer on behalf
of the Company, certifying that the conditions set forth in
Section 7.2(a) and Section 7.2(b) have
been satisfied.
Section 7.3 Conditions
to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject
to the satisfaction or waiver by the Company of the following
further conditions:
(a) each of the representations and warranties of Parent
and Acquisition Sub contained in this Agreement, without giving
effect to any materiality or Parent Material Adverse
Effect qualifications therein, shall be true and correct
as though made on and as of such date (except to the extent
expressly made as of an earlier date, in which case as of such
date) except for such failures to be true and correct as would
not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect;
(b) Parent and Acquisition Sub shall have performed or
complied in all material respects with all material agreements
and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective Time; and
(c) Parent shall have delivered to the Company a
certificate, dated the Effective Time and signed by its chief
executive officer or another senior executive officer on behalf
of Parent, certifying that the conditions set forth in
Section 7.3(a) and Section 7.3(b) have
been satisfied.
ARTICLE VIII
TERMINATION,
AMENDMENT AND WAIVER
Section 8.1 Termination. Notwithstanding
anything contained in this Agreement to the contrary, this
Agreement may be terminated and abandoned at any time prior to
the Effective Time, whether before or after the Requisite
Stockholder Approval, as follows:
(a) by mutual written consent of each of Parent and the
Company;
(b) by either Parent or the Company, if (i) the
Effective Time shall not have occurred on or before
February 29, 2012 (the Termination Date)
and (ii) the party seeking to terminate this Agreement
pursuant to this Section 8.1(b) shall not have
breached in any respect its obligations under this Agreement in
any manner that shall have been the primary cause of the failure
to consummate the Merger on or before such date;
(c) by either Parent or the Company, if any Governmental
Authority of competent jurisdiction shall have issued an Order
or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement, and such Order or other action shall have become
final and non-appealable; provided that the party seeking
to terminate this Agreement pursuant to this
Section 8.1(c) shall have used its reasonable best
efforts to remove such Order or other action; provided,
however, that the right to terminate this Agreement under
this Section 8.1(c) shall not be available to a
party if the issuance of such final, non-appealable Order was
primarily due to the breach in any respect of such party (and in
the case of Parent, including Acquisition Sub) of its
obligations under this Agreement;
(d) by Parent or the Company if the Requisite Stockholder
Approval shall not have been obtained at a duly held
Stockholders Meeting or at any adjournment or postponement
thereof at which this Agreement has been voted upon;
(e) by the Company, if Parent shall have breached or failed
to perform in any material respect any of its representations,
warranties, covenants or other agreements set forth in this
Agreement, which breach or failure to perform (i) would
result in a failure of a condition set forth in
Section 7.3(a) or Section 7.3(b) and
(ii) cannot be cured on or before the Termination Date or,
if curable, is not cured by Parent within thirty (30) days
of receipt by Parent of written notice of such breach or
failure; provided, that the Company is not then in breach
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of the Agreement such that any of the conditions set forth in
Section 7.2(a) or Section 7.2(b) would
not be satisfied;
(f) by Parent, if the Company shall have breached or failed
to perform in any material respect any of its representations,
warranties, covenants or other agreements set forth in this
Agreement, which breach or failure to perform (i) would
result in a failure of a condition set forth in
Section 7.2(a) or Section 7.2(b) and
(ii) cannot be cured on or before the Termination Date or,
if curable, is not cured by the Company within thirty
(30) days of receipt by the Company of written notice of
such breach or failure; provided, that Parent or
Acquisition Sub is not then in breach of the Agreement such that
any of the conditions set forth in Section 7.3(a) or
Section 7.3(b) would not be satisfied;
(g) by the Company prior to receipt of the Requisite
Stockholder Vote and subject to the provisions of
Section 6.6, in order to enter into a transaction
that is a Superior Proposal, if (i) the Companys
board of directors duly authorizes the Company to enter into a
definitive agreement with respect to a unsolicited written
Competing Proposal that did not result from a breach of any of
the provisions of Section 6.6, (ii) the board
of directors of the Company has concluded in good faith, after
consultation with the Companys legal and financial
advisors, that such Competing Proposal is a Superior Proposal
and that the failure to terminate this Agreement under this
Section 8.1(g) would be inconsistent with the
directors exercise of their fiduciary duties under
applicable Law, (iii) the Company shall have given Parent
at least three (3) Business Days prior written notice of
the boards determination that such Competing Proposal is a
Superior Proposal, the material terms of the Superior Proposal
and the Companys intention to terminate this Agreement
pursuant to this Section 8.1(g) to enter into a
definitive agreement with respect to such Superior Proposal
(which notice shall be accompanied by a copy of the proposed
transaction agreements with the party making such Superior
Proposal (and any other related material documents)),
(iv) if requested by Parent, the Company has negotiated,
and caused its financial and legal advisors to negotiate, in
good faith with Parent for a period of three (3) Business
Days since the delivery of such notice to amend the terms of
this Agreement (it being understood and agreed that such three
(3) Business Day period may be the same three
(3) Business Day period contemplated by
Section 6.6(c)), (v) if Parent delivers a
written and binding offer to alter the terms of the Agreement
during such three (3) Business Day period, the board of
directors of the Company shall have concluded in good faith
after consultation with the Companys legal and financial
advisors that such Competing Proposal remains a Superior
Proposal and that the failure to terminate this Agreement under
this Section 8.1(g) would still be inconsistent with
the directors exercise of their fiduciary duties under
applicable Law, and (vi) concurrently with or immediately
after any termination pursuant to this
Section 8.1(g), the Company enters into the
definitive agreement with respect to such Superior Proposal;
provided, however, that the Company shall not
terminate this Agreement pursuant to this
Section 8.1(g), and any purported termination
pursuant to this Section 8.1(g) shall be void and of
no force or effect, unless the Company pays to Parent the
Company Termination Fee (as defined in
Section 8.3(a)) in accordance with
Section 8.3(a) prior to or concurrently with such
termination pursuant to this Section 8.1(g); and
provided, further, that in the event of any
revision to any financial or other material term of such
Superior Proposal, the Company shall be required to deliver a
new written notice to Parent and to again comply with the
requirements of this Section 8.1(g) with respect to
such new written notice (with the applicable three
(3) Business Day period changed to a two (2) Business
Day period in such event). If, within the three
(3) Business Day period following delivery of any such
notice, Parent makes an offer that the board of directors of the
Company determines in good faith after consultation with the
Companys legal and financial advisors causes the Competing
Proposal to cease to be a Superior Proposal, then the notice of
intent to terminate pursuant to this Section 8.1(g)
shall be deemed rescinded and of no further force and
effect; or
(h) by Parent, if the board of directors of the Company or
any committee thereof shall have effected a Change of
Recommendation.
Section 8.2 Effect
of Termination.
If this Agreement is terminated pursuant to
Section 8.1, this Agreement shall become void and of
no effect without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or representative
of such party) to the other party hereto, provided that,
except as otherwise provided in this Agreement, if such
termination shall result from the intentional and knowing breach
by either party of this Agreement, such party shall
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be fully liable for any and all liabilities and damages (which
the parties acknowledge and agree shall not be limited to
reimbursement of expenses or
out-of-pocket
costs, and may include to the extent proven the benefit of the
bargain lost by a partys stockholders (taking into
consideration relevant matters, including other combination
opportunities and the time value of money), which shall be
deemed in such event to be damages of such party) incurred or
suffered by the other party as a result of such intentional and
knowing breach. The Confidentiality Agreement, the Guaranty and
the provisions of this Section 8.2,
Section 8.3, Section 8.6,
Section 9.1, Section 9.7,
Section 9.8, Section 9.9 and
Section 9.11 shall also survive any termination
hereof pursuant to Section 8.1.
Section 8.3 Termination
Fees.
(a) If
(i) (x) prior to the termination of this Agreement,
any Competing Proposal (for purposes of this subsection,
substituting 50% for the 15% thresholds set forth in the
definition of Competing Proposal) (a Qualifying
Transaction) is publicly proposed or publicly
disclosed prior to, and not publicly withdrawn at or prior to
the time of, the Stockholders Meeting or the date of
termination, as the case may be, and (y) this Agreement is
terminated by (1) Parent or the Company pursuant to
Section 8.1(b) (but only if at such time Parent
would not be prohibited from terminating this Agreement by
application of Section 8.1(b)(ii)) or
Section 8.1(d) or (2) by Parent pursuant to
Section 8.1(f) and (z) within twelve
(12) months after such termination, any definitive
agreement providing for a Qualifying Transaction shall have been
entered into and consummated (whether or not with the person, or
any affiliate thereof, who made the Competing Proposal existing
at the date of such Stockholders Meeting or termination,
as the case may be);
(ii) this Agreement is terminated by the Company pursuant
to Section 8.1(g); or
(iii) this Agreement is terminated by Parent pursuant to
Section 8.1(h), or by Parent or Company pursuant to
any other provision of Section 8.1 at any time after
Parent was entitled to terminate this Agreement pursuant to
Section 8.1(h), then in any such event the Company
shall pay to Parent a fee of $15,000,000 in cash (the
Company Termination Fee), and the Company
shall (subject to the provisions of Section 8.2)
have no further liability to Parent with respect to this
Agreement or the transactions contemplated hereby, such payment
to be made in the case of (x) termination pursuant to
Section 8.3(a)(i), in advance of or concurrently
with the first to occur of the execution or consummation of such
Qualifying Transaction, (y) termination by the Company
pursuant to Section 8.3(a)(ii) or (iii), in
advance of or concurrently with the termination of this
Agreement, provided that such termination shall be deemed
to have occurred only upon the expiration of the applicable
three (3) Business Day notice period, or
(z) termination by Parent pursuant to
Section 8.3(a)(iii), within two (2) Business
Days after such termination; it being understood that in no
event shall the Company be required to pay the fee referred to
in this Section 8.3(a) on more than one occasion.
Any such payment shall be reduced by any amount as may be
required to be deducted or withheld therefrom under applicable
Tax Law.
(b) The parties hereto agree that the agreements contained
in Section 8.3(a) are integral parts of the
transactions contemplated by this Agreement, and that such
amounts do not constitute a penalty. If the Company fails to pay
Parent the amounts due under such Section 8.3(a)
within the time periods specified therein, the Company shall pay
the costs and expenses (including reasonable legal fees and
expenses) incurred by Parent in connection with any action,
including the filing of any lawsuit, taken to collect payment of
such amounts, together with interest on the amount of any such
unpaid amounts at the prime lending rate prevailing during such
period as published in the New York City edition of The Wall
Street Journal, calculated on a daily basis from the date such
amounts were required to be paid until the date of actual
payment.
Section 8.4 Amendment. Subject
to compliance with applicable Law, this Agreement may be amended
by mutual agreement of the parties hereto by action taken by or
on behalf of their respective boards of directors at any time
prior to the Effective Time; provided, however,
that, after the adoption and approval of this Agreement and the
Merger by stockholders of the Company, there shall not be any
amendment that by Law or in accordance with the rules of NASDAQ
requires further approval by the stockholders of the Company
without such further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
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Section 8.5 Waiver. At
any time prior to the Effective Time, subject to applicable Law,
any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and
warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) subject to the
proviso of Section 8.4, waive compliance with any
agreement or condition contained herein. Any such extension or
waiver shall only be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
Notwithstanding the foregoing, no failure or delay by the
Company, Parent or Acquisition Sub in exercising any right
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further
exercise of any other right hereunder.
Section 8.6 Expenses;
Transfer Taxes.
(a) All Expenses incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be
paid by the party incurring such Expenses, except that Parent
and the Company shall each pay, whether or not the Merger or any
other transaction is consummated, fifty percent (50%) of the
Expenses incurred in connection with (i) the preparation,
printing, filing and mailing of the Proxy Statement and all SEC
and other regulatory filing fees incurred in connection with the
Proxy Statement, (ii) the solicitation of stockholder
approvals, (iii) engaging the services of the Paying Agent
and (iv) obtaining third party consents. Parent shall pay,
whether or not the Merger or any other transaction is
consummated, the Expenses incurred in connection with the filing
of any required notices under the HSR Act or other Antitrust
Laws and any filing with, and obtaining of any necessary action
or non-action, consent or approval from, any Governmental
Authority pursuant to any Antitrust Law.
(b) Notwithstanding anything to the contrary contained
herein, Parent shall pay all documentary, sales, use, real
property transfer, real property gains, registration, value
added, transfer, stamp, recording and similar Taxes, fees, and
costs together with any interest thereon, penalties, fines,
costs, fees, additions to tax or additional amounts with respect
thereto incurred in connection with this Agreement and the
transactions contemplated hereby, and shall file all Tax Returns
related thereto, regardless of who may be liable therefor under
applicable Law.
ARTICLE IX
GENERAL
PROVISIONS
Section 9.1 Non-Survival
of Representations, Warranties and
Agreements. The representations, warranties,
covenants and agreements in this Agreement and any certificate
delivered pursuant hereto by any person shall terminate at the
Effective Time or, except as provided in
Section 8.2, upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except
that this Section 9.1 shall not limit any covenant
or agreement of the parties which by its terms contemplates
performance after the Effective Time or after termination of
this Agreement, including those contained in
Section 6.7 and Section 6.10.
Section 9.2 Notices. Any
notice required to be given hereunder shall be sufficient if in
writing, and sent by facsimile transmission or
e-mail of a
.pdf attachment (provided that any notice received by facsimile
or e-mail
transmission or otherwise at the addressees location on
any Business Day after 5:00 p.m. (addressees local
time) shall be deemed to have been received at 9:00 a.m.
(addressees local time) on the next Business Day), by
reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt
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requested and first-class postage prepaid), addressed as follows
(or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.2):
if to Parent:
Blackhawk Acquisition Parent, LLC
c/o One
Equity Partners IV, L.P.
320 Park Avenue
New York, New York 10022
Phone:
(212) 270-7689
Fax:
(917) 464-7716
E-mail:
judah.a.shechter@jpmorgan.com
Attention: Judah A. Schecter
with a copy to (which shall not constitute notice):
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
Phone:
(212) 698-3500
Fax:
(212) 698-3599
E-mail:
derek.winokur@dechert.com
Attention: Derek Winokur, Esq.
if to the Company:
APAC Customer Services, Inc.
2201 Waukegan Road, Suite 300
Bannockburn, IL 60015
Phone:
(847) 236-5452
Fax:
(847) 236-5451
E-mail:
rbnachwalter@apacmail.com
Attention: General Counsel
with copy to (which shall not constitute notice):
Kirkland & Ellis LLP
300 N. LaSalle Drive
Chicago, Illinois 60654
Phone:
(312) 862-2000
Fax:
(312) 862-2200
E-Mail:
kurt.vonmoltke@kirkland.com
Attention: H. Kurt von Moltke, P.C.
Section 9.3 Interpretation;
Certain Definitions. The parties have
participated jointly in the negotiation and drafting of this
Agreement. Consequently, in the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any
provision of this Agreement. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference
shall be to an Article or Section of, or an Exhibit to, this
Agreement, unless otherwise indicated. The table of contents and
headings for this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words include,
includes or including are used in this
Agreement, they shall be deemed to be followed by the words
without limitation. The words hereof,
herein and hereunder and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the
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masculine as well as to the feminine and neuter genders of such
term. Any statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such
statute as from time to time amended, modified or supplemented,
including (in the case of statutes) by succession of comparable
successor statutes. References to a person are also to its
permitted successors and assigns. All references to
dollars or $ refer to currency of the
United States of America.
Section 9.4 Severability. If
any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law, or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the Merger be
consummated as originally contemplated to the fullest extent
possible.
Section 9.5 Assignment. Neither
this Agreement nor any rights, interests or obligations
hereunder shall be assigned by any of the parties hereto
(whether by operation of Law or otherwise) without the prior
written consent of the other parties hereto; provided,
however, that Parent may assign this Agreement to an
affiliate thereof (including, for the avoidance of doubt, NCO
Group, Inc.); provided that, upon such assignment, Parent
shall remain jointly and severally liable with its applicable
affiliate to the Company and its subsidiaries for performing all
of its obligations hereunder. Subject to the preceding sentence,
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns.
Section 9.6 Entire
Agreement; No Third-Party Beneficiaries. This
Agreement (including the exhibits and schedules hereto) and the
Confidentiality Agreement constitute the entire agreement, and
supersede all other prior agreements and understandings, both
written and oral, between the parties, or any of them, with
respect to the subject matter hereof and thereof. This
Agreement, except for the provisions of Section 6.7
hereof (which upon the Effective Time are intended to benefit
the Indemnitees) is not intended to and shall not confer upon
any person other than the parties hereto rights or remedies
hereunder; provided, however, that following the
Effective Time, each holder of Common Stock or Company Options
shall be entitled to enforce the provisions of
Article I to the extent necessary to receive the
portion of the Merger Consideration to which such holder is
entitled pursuant to Article III. The representations and
warranties in this Agreement are the product of negotiations
among the parties hereto and are for the sole benefit of the
parties hereto. Any inaccuracies in such representations and
warranties are subject to waiver by the parties hereto in
accordance with Section 8.5 without notice or
liability to any other person. The representations and
warranties in this Agreement may represent an allocation among
the parties hereto of risks associated with particular matters
regardless of the knowledge of any of the parties hereto.
Accordingly, persons other than the parties hereto may not rely
upon the representations and warranties in this Agreement as
characterizations of actual facts or circumstances as of the
date of this Agreement or as of any other date.
Section 9.7 Governing
Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Illinois,
without giving effect to any choice or conflict of laws
provision or rule (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the Laws of
any jurisdiction other than the State of Illinois.
Section 9.8 Specific
Performance.
The parties agree that irreparable damage for which monetary
damages, even if available, would not be an adequate remedy,
would occur in the event that the parties hereto do not perform
the provisions of this Agreement (including failing to take such
actions as are required of it hereunder to consummate this
Agreement) in accordance with its specified terms or otherwise
breach such provisions. The parties acknowledge and agree that
the parties shall be entitled to an injunction, specific
performance and other equitable relief to prevent breaches of
this Agreement and to enforce specifically the terms and
provisions hereof, in addition to any other remedy to which they
are entitled at law or in equity. Each of the parties agrees
that it will not oppose the granting of an injunction, specific
performance and other equitable relief on the basis that any
other party has an adequate remedy at law or that any award of
specific performance is not an appropriate remedy for any reason
at law or in equity. Any party seeking an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and
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provisions of this Agreement shall not be required to provide
any bond or other security in connection with any such order or
injunction.
Section 9.9 Consent
to Jurisdiction.
(a) Each of the Parent, Acquisition Sub and the Company
hereby irrevocably submits to the exclusive jurisdiction of the
state court of the State of Illinois located in Cook County,
Illinois or the Federal court sitting in Cook County in the
State of Illinois for the purpose of any action or proceeding
arising out of or relating to this Agreement and each of the
parties hereto hereby irrevocably agrees that all claims in
respect to such action or proceeding may be heard and determined
exclusively in such court.
(b) Each of the parties hereto (a) irrevocably
consents to the service of the summons and complaint and any
other process in any other action or proceeding relating to the
transactions contemplated by this Agreement, on behalf of itself
or its property, by personal delivery of copies of such process
to such party and nothing in this Section 9.9 shall
affect the right of any party to serve legal process in any
other manner permitted by Law, (b) consents to submit
itself to the personal jurisdiction of any court of the State of
Illinois located in Cook County, Illinois or a Federal court
sitting in Cook County in the State of Illinois in the event any
dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (c) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and
(d) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this
Agreement in any court other than a court of the State of
Illinois located in Cook County, Illinois or a Federal court
sitting in Cook County in the State of Illinois. Each of Parent,
Acquisition Sub and the Company agrees that a non-appealable
judgment in any action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by Law.
Section 9.10 Counterparts. This
Agreement may be executed and delivered (including by facsimile
transmission or by
e-mail of a
.pdf attachment) in two (2) or more counterparts, and by
the different parties hereto in separate counterparts, each of
which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one
and the same agreement.
Section 9.11 WAIVER
OF JURY TRIAL. EACH OF PARENT, ACQUISITION
SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT, EQUITY OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT OR THE
COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF, IN EACH CASE, WHETHER NOW EXISTING OR
HEREAFTER ARISING.
[REMAINDER
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IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have
caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly
authorized.
BLACKHAWK ACQUISITION PARENT, LLC
Name: Thomas Kichler
BLACKHAWK MERGER SUB, INC.
Name: Thomas Kichler
APAC CUSTOMER SERVICES, INC.
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By:
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/s/ Kevin
T. Keleghan
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Name: Kevin T. Keleghan
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Title:
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Chief Executive Officer
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Agreement and Plan of Merger Signature Page
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Appendix A
As used in the Agreement, the following terms shall have the
following meanings:
Acquisition Sub shall have the meaning
set forth in the Recitals.
Affiliate Contracts shall have the
meaning set forth in Section 4.26.
Aggregate Merger Consideration shall
mean the sum of the Total Common Merger Consideration and the
Total Vested Option Consideration.
Agreement shall have the meaning set
forth in the Recitals.
Antitrust Division shall mean the
Antitrust Division of the Department of Justice.
Antitrust Laws shall have the meaning
set forth in Section 4.5(b).
Book-Entry Shares shall have the
meaning set forth in Section 3.1(b).
Business Day shall mean any day other
than a Saturday, Sunday or a day on which all banking
institutions in New York, New York are authorized or obligated
by Law or executive order to close.
Articles of Merger shall have the
meaning set forth in Section 2.3(a).
Capitalization Date shall have the
meaning set forth in Section 4.3(a).
Certificates shall have the meaning
set forth in Section 3.1(b).
Change of Recommendation shall have
the meaning set forth in Section 6.6(c).
Closing shall have the meaning set
forth in Section 2.2.
Closing Date shall have the meaning
set forth in Section 2.2.
Code shall mean the Internal Revenue
Code of 1986, as amended.
Common Stock shall have the meaning
set forth in Section 3.1(a).
Company shall have the meaning set
forth in the Recitals.
Company Benefit Plan shall have the
meaning set forth in Section 4.12(a).
Company Disclosure Letter shall have
the meaning set forth in Article IV.
Company Employees shall have the
meaning set forth in Section 4.12(a).
Company Intellectual Property Rights
shall have the meaning set forth in
Section 4.14(a).
Company Leases shall have the meaning
set forth in Section 4.20(b).
Company Material Adverse Effect means
a material adverse effect on (x) the business, results of
operations or financial condition of the Company and its
subsidiaries taken as a whole or (y) the ability of the
Company to timely perform its obligations under and consummate
the Merger and the other transactions contemplated by this
Agreement; provided that a determination of whether there
has been a Material Adverse Effect under clause (x) above
shall not take into account any effect to the extent resulting
from: (i) changes after the date hereof (including
worsening of existing events) in general economic or political
conditions or financial, credit or securities markets in general
(including changes in interest or exchange rates) in any country
or region in which the Company or any of its subsidiaries
conducts business; (ii) any events, circumstances, changes
or effects after the date hereof (including worsening of
existing events) that generally affect the industries in which
the Company or any of the Companys subsidiaries operate;
(iii) any changes after the date hereof in Laws applicable
to the Company or any of the Companys subsidiaries or any
of their respective properties or assets or changes in GAAP;
(iv) after the date hereof, acts of war, armed hostilities,
sabotage or terrorism or any escalation or worsening of any acts
of war, armed hostilities, sabotage or terrorism; (v) the
announcement or existence of, or any action taken that is
expressly required to be taken by, this Agreement (including the
demonstrable impact thereof on relationships, contractual or
otherwise, with
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customers, suppliers and vendors) or any action taken by the
Company at the written request of or with the written consent of
Parent; (vi) any changes after the date hereof in the
market price or trading volume of shares of Common Stock or any
failure to meet internal or published projections, forecasts or
revenue or earnings predictions for any period ending after the
date hereof (provided, that the facts, circumstances,
events, changes, effects, developments or occurrences giving
rise or contributing to a decrease in the market price or
trading volume of shares of Common Stock or any failure to meet
internal or published projections, forecasts or revenue or
earnings predictions may be taken into account in determining
whether there has been a Material Adverse Effect); or
(vii) any litigation arising from allegations of a breach
of fiduciary duty or other violation of applicable Law relating
to this Agreement or the transactions contemplated by this
Agreement; provided, that the effect of such changes or
actions described in clauses (i) through and including
(iv) above shall not be excluded to the extent of the
disproportionate impact, if any, they have on the Company and
its subsidiaries relative to other participants in the
industries in which the Company
and/or its
subsidiaries operate.
Company Material Contract shall have
the meaning set forth in Section 4.16(a).