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UNDER
THE SECURITIES ACT OF 1933
Florida | 7373 | 56-1383460 | ||
(State or other jurisdiction of incorporation) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Tampa, FL 33602
(813) 274-1000
(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)
Senior Vice President and General Counsel
Sykes Enterprises, Incorporated
400 North Ashley Drive
Tampa, FL 33602
(813) 274-1000
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service
Paul R. Lynch, Esq. Shumaker, Loop & Kendrick, LLP 101 E. Kennedy Blvd., Suite 2800 Tampa, FL 33602 | Richard B. Aldridge, Esq. Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) | o | |
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) | o |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||||||||||
Title of Each Class of | Amount to be | Offering | Aggregate | Registration | ||||||||||||||||
Securities to be Registered | Registered | Price per Share | Offering Price | Fee | ||||||||||||||||
Common Stock, $0.01 par value per share | 6,545,733 | (1) | N/A | $ | 135,094,187 | (2) | $ | 7,538.26 | (3) | |||||||||||
(1) | Represents the maximum number of shares of Sykes common stock estimated to be issuable upon the completion of the merger described herein. | |
(2) | Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f)(1) and (f)(3) and 457(c) of the Securities Act. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of ICT Group, Inc. common stock (the securities to be canceled in the merger) in accordance with Rule 457(c) under the Securities Act as follows: (i) the product of (A) $15.90, the average of the high and low prices per share of ICT common stock on the NASDAQ stock market on October 26, 2009 and (B) 16,454,834, the maximum possible number of shares of ICT common stock which may be canceled and exchanged in the merger, less (ii) the estimated amount of cash that would be paid by Sykes in exchange for such maximum possible number of shares of ICT common stock (which equals $126,537,673). | |
(3) | Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $55.80 per $1,000,000 of the proposed maximum aggregate offering price. |
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Sincerely, | ||||
John J. Brennan | ||||
Chairman, President and Chief Executive Officer | ||||
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Sykes Enterprises, Incorporated 400 North Ashley Drive Tampa, FL 33602 Attn: Investor Relations Tel: 1- | ICT Group, Inc. 100 Brandywine Boulevard Newtown, PA 18940 Attn: Secretary Tel: 1-267-685-5000 |
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100 Brandywine Boulevard
Newtown, PA 18940
Notice of Special Meeting of Shareholders
Jeffrey C. Moore | ||||
Secretary | ||||
[• ], 2009
1-_______________ (call collect)
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ANNEX A Agreement and Plan of Merger | ||||||||
ANNEX B Opinion of Greenhill & Co., LLC | ||||||||
ANNEX C Voting Agreement | ||||||||
EX-5: OPINION OF SHUMAKER, LOOP & KENDRICK, LLP | ||||||||
EX-8.1: OPINION OF SHUMAKER, LOOP & KENDRICK, LLP AS TO CERTAIN TAX MATTERS | ||||||||
EX-8.2: OPINION OF MORGAN, LEWIS & BOCKIUS LLP AS TO CERTAIN TAX MATTERS | ||||||||
EX-15: AWARENESS LETTER OF DELOITTE & TOUCHE LLP | ||||||||
EX-23.1: CONSENT OF SHUMAKER, LOOP & KENDRICK, LLP (included in Exhibits 5 and 8.1 hereto) | ||||||||
EX-23.2: CONSENT OF MORGAN, LEWIS & BOCKIUS LLP (included in Exhibit 8.2 hereto) | ||||||||
EX-23.3: CONSENT OF KPMG LLP | ||||||||
EX-23.4: CONSENT OF DELOITTE & TOUCHE LLP | ||||||||
EX-99.1: FORM OF ICT PROXY CARD | ||||||||
EX-99.2: CONSENT OF GREENHILL & CO., LLC | ||||||||
EX-5 OPINION OF SHUMAKER, LOOP & KENDRICK, LLP AS TO VALIDITY OF THE SHARES | ||||||||
EX-8.1 OPINION OF SHUMAKER, LOOP & KENDRICK, AS TO CERTAIN TAX MATTERS | ||||||||
EX-8.2 OPINION OF MORGAN, LEWIS & BOCKIUS LLP AS TO CERTAIN TAX MATTERS | ||||||||
EX-15 AWARENESS LETTER OF DELOITTE & TOUCHE LLP | ||||||||
EX-23.3 CONSENT OF KPMG LLP | ||||||||
EX-23.4 CONSENT OF DELOITTE & TOUCHE LLP | ||||||||
EX-99.1 FORM OF ICT PROXY CARD | ||||||||
EX-99.2 CONSENT OF GREENHILL & CO, LLC. |
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Q: | Why am I receiving this document? | |
A: | Sykes Enterprises, Incorporated (“Sykes”) and ICT have agreed to a merger, pursuant to which ICT will become a wholly-owned subsidiary of Sykes and will no longer be a publicly-held corporation, which is referred to in this proxy statement/prospectus as the merger. In order to complete the merger, ICT shareholders must vote to adopt the Agreement and Plan of Merger, dated as of October 5, 2009, among Sykes, SH Merger Subsidiary I, Inc., a direct wholly-owned subsidiary of Sykes, SH Merger Subsidiary II, LLC, a direct wholly-owned subsidiary of Sykes, and ICT, which is referred to in this proxy statement/prospectus as the merger agreement. Sykes and ICT are delivering this document to you as both a proxy statement of ICT and a prospectus of Sykes. It is a proxy statement because the ICT board of directors is soliciting proxies from its shareholders to vote on the adoption of the merger agreement at ICT’s special meeting of shareholders to be held on [Ÿ], 2009, and your proxy will be used at the meeting or at any adjournment or postponement of the meeting. It is a prospectus because Sykes will issue Sykes common stock to the ICT shareholders in the merger. | |
Q: | What will ICT shareholders receive in the merger? | |
A: | If the merger is completed, each of the issued and outstanding shares of ICT common stock will be converted into the right to receive consideration valued at $15.38, subject to adjustment as described below. The consideration per share of ICT common stock is payable as follows: (i) $7.69 is payable in cash without interest, and (ii) the remainder is payable by delivery of a number of shares of Sykes common stock equal to the exchange ratio described below divided by two (2). Except as described below, the exchange ratio will be the quotient determined by dividing $15.38 by the volume weighted average of the per share prices of Sykes common stock for the ten consecutive trading days ending on (and including) the third trading day immediately prior to the effective time of the merger, which is referred to in this proxy statement/prospectus as the measurement value. The exchange ratio is subject to a symmetrical collar of 7.5% above and 7.5% below $20.8979, which is the volume weighted average of the per share price of Sykes common stock for the ten consecutive trading days ending on October 2, 2009, the last trading day immediately prior to the date of the merger agreement. Within this collar, the exchange ratio will be determined pursuant to the calculation described above. If, however, the measurement value is equal to or less than $19.3306, then the exchange ratio will be 0.7956, and 0.3978 shares of Sykes common stock will be issued for each share of ICT common stock. If the measurement value is equal to or greater than $22.4652, then the exchange ratio will be 0.6846, and 0.3423 shares of Sykes common stock will be issued for each share of ICT common stock. | |
Q: | Do I need to send in my stock certificates now? | |
A: | No.A letter of transmittal will be mailed separately to ICT shareholders promptly after the effective time of the merger, and ICT shareholders should send their ICT stock certificates with the completed letter of transmittal. The method of transmitting the ICT stock certificates is at your option and risk, but if delivery is by mail, then registered mail with return receipt requested, properly insured, is suggested. | |
Q: | Are there risks I should consider in deciding whether to vote for the adoption of the merger agreement? | |
A: | Yes.The merger and the transactions contemplated by the merger agreement are subject to a number of risks and uncertainties. Before deciding whether to vote for or against the adoption of the merger agreement, you should carefully consider the risks set forth in “Risk Factors” and other information included or incorporated by reference in this proxy statement/prospectus. | |
Q: | What will happen to ICT stock options and restricted stock units in the merger? | |
A: | Each outstanding ICT stock option, whether or not then vested and exercisable, will become fully vested and exercisable immediately prior to, and then will be canceled at, the effective time of the merger, and the holder of such option will be entitled to receive an amount in cash, without interest and less any applicable taxes to be withheld, equal to (i) the excess, if any, of (1) $15.38 over (2) the exercise price per share of ICT common stock subject to such ICT stock option, multiplied by (ii) the total number of shares of ICT common stock underlying such ICT stock option, with the aggregate amount of such |
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Q: | Are there any other matters to be addressed at the meeting? | |
A: | No.No other matters may be brought before the meeting. | |
Q: | What is a proxy and how do I vote? | |
A: | A proxy is a legal designation of another person to vote your shares on your behalf. If you hold shares in your own name, you may submit a proxy for your shares by using the toll-free number or the Internet Web site if your proxy card includes instructions for using these quick, cost-effective and easy methods for submitting proxies. You also may submit a proxy in writing by simply filling out, signing and dating your proxy card and mailing it in the prepaid envelope included with these proxy materials. If you submit a proxy by telephone or the Internet Web site, please do not return your proxy card by mail. You will need to follow the instructions when you submit a proxy using any of these methods to make sure your shares will be voted at the meeting. You also may vote by submitting a ballot in person if you attend the meeting. However, ICT encourages you to submit a proxy by mail by completing your proxy card, by telephone or via the Internet Web site even if you plan to attend the meeting. If you hold shares through a broker, bank or other nominee, you may instruct your broker, bank or other nominee to vote your shares by following the instructions that the broker, bank or nominee provides to you with these materials. Most brokers offer the ability for shareholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the Internet. If you hold shares through a broker, bank or other nominee and wish to vote your shares at the meeting, you must obtain a legal proxy from your broker, bank or nominee and present it to the inspector of election with your ballot when you vote at the meeting. | |
Q: | When is this proxy statement/prospectus being mailed? | |
A: | This proxy statement/prospectus and the proxy card are first being sent to ICT shareholders on or about [• ], 2009. | |
Q: | When and where will the meeting be held? | |
A: | The meeting will be held at ICT’s corporate headquarters located at 100 Brandywine Boulevard, Newtown, PA 18940 on[• ], 2009 at[• ]a.m., Eastern Time. | |
Q: | Who is entitled to vote at the meeting? | |
A: | All holders of ICT common stock who held shares at the close of business on the “record date” ([• ], 2009) are entitled to receive notice of and to vote at the meeting, provided that such shares remain outstanding on the date of the meeting. | |
Q: | Why is my vote important? | |
A: | If you do not submit a proxy or vote in person at the meeting, it will be more difficult for ICT to obtain the necessary quorum to hold the meeting. If you hold your shares through a broker, your broker will not be able to cast a vote on the adoption of the merger agreement without instructions from you.The ICT board of directors recommends that you vote “FOR” the adoption of the merger agreement. | |
Q: | How many shares may be voted at the meeting? | |
A: | All shareholders who hold shares of ICT common stock at the close of business on the “record date” ([• ], 2009) are entitled to vote at the meeting. As of the close of business on the record date, there were[• ]shares of ICT common stock outstanding and entitled to vote at the meeting. Each share of common stock is entitled to one vote. |
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Q: | What constitutes a quorum for the meeting? | |
A: | A majority of the outstanding shares of common stock being present in person or represented by proxy constitutes a quorum for the meeting. | |
Q: | How many votes are required for the adoption of the merger agreement? | |
A: | Adoption of the merger agreement requires the affirmative vote of a majority of votes cast by the holders of the ICT common stock represented at the meeting, in person or by proxy. | |
Q: | Have any shareholders committed to vote in favor of the adoption of the merger agreement? | |
A: | Yes.John J. Brennan, who serves as a Director and our Chairman, President and Chief Executive Officer, Donald P. Brennan, who serves as a Director and Vice Chairman, and certain other affiliated shareholders, have entered into a voting agreement with Sykes under which they have agreed to vote in favor of the adoption of the merger agreement with respect to 6,329,289 shares of ICT common stock over which they hold voting control, or approximately [___]% of the outstanding shares of ICT common stock as of the close of business on the record date. | |
Q: | Can I keep my vote secret? | |
A: | Yes.You may request that your vote be kept secret until after the meeting by asking ICT to do so on your proxy card or by following the instructions when submitting your proxy by telephone or via the Internet Web site. | |
Q: | How will abstentions be counted? | |
A: | Abstentions are counted as present and entitled to vote for purposes of determining a quorum. If you abstain from voting on the adoption of the merger agreement, you will effectively not vote on that matter at the meeting. Abstentions are not considered to be votes cast under the ICT bylaws or under the laws of Pennsylvania (our jurisdiction of incorporation) and will have no effect on the outcome of the vote. | |
Q: | How will my shares be represented at the meeting? | |
A: | At the meeting, the officers named in your proxy card will vote your shares in the manner you requested if you correctly submitted your proxy. If you hold your shares directly (not in “street name” through a broker, bank or other nominee) and you sign your proxy card and return it without indicating how you would like to vote your shares, your proxy will be voted as the ICT board of directors recommends, which isFORthe adoption of the merger agreement. | |
Q: | What happens if I sell my shares after the record date but before the meeting? | |
A: | The record date of the meeting is earlier than the date of the meeting and the date that the merger is expected to be completed. If you transfer your ICT shares after the record date but before the date of the meeting, you will retain your right to vote at the meeting (provided that such shares remain outstanding on the date of the meeting), but you will not have the right to receive the merger consideration to be received by ICT’s shareholders in the merger. In order to receive the merger consideration, you must hold your shares through completion of the merger. | |
Q: | What do I do if I receive more than one proxy statement/prospectus or set of voting instructions? | |
A: | If you hold shares directly as a record holder and also in “street name,” or otherwise through a broker, bank or other nominee, you may receive more than one proxy statement/prospectus and/or set of voting instructions relating to the meeting. These should each be voted and/or returned separately in order to ensure that all of your shares are voted. | |
Q: | Am I entitled to seek dissenters’ rights if I do not vote in favor of the adoption of the merger agreement? | |
A: | No. Under Pennsylvania law, record holders of ICT common stock who do not vote in favor of the adoption of the merger agreement will not be entitled to seek dissenters’ rights in connection with the merger. A holder of ICT common stock who receives shares of Sykes common stock in the merger and who does not wish to be a Sykes shareholder may elect to sell his or her shares at any time in the public market at the value set by the market. |
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Q: | If my shares of ICT common stock are held in street name by my broker, will my broker automatically vote my shares for me? | |
A: | No.If your shares are held in an account at a broker, you must instruct the broker on how to vote your shares. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. This is called a broker non-vote. In these cases, the broker can register your shares as being present at the meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required. Because approval is based on the affirmative vote of a majority of the votes cast, and a broker non-vote is not a vote cast, broker non-votes will have no effect on the vote regarding adoption of the merger agreement. | |
Q: | Can I revoke my proxy? | |
A: | Yes.You may revoke your proxy at any time before the meeting. If you are a shareholder of record, you can revoke your proxy before it is exercised by written notice to the Office of the Secretary of ICT, by timely delivery of a valid, later-dated proxy card or a later-dated proxy submitted by telephone or via the Internet Web site, or by voting by ballot in person if you attend the meeting. Simply attending the meeting will not revoke your proxy. If you hold shares through a broker, bank or other nominee, you may submit new voting instructions by contacting your broker, bank or other nominee. | |
Q: | Who may attend the meeting? | |
A: | ICT shareholders of record (or their authorized representatives) and ICT’s invited guests may attend the meeting. Verification of stock ownership will be required at the meeting. If you own your shares in your own name or hold them through a broker, bank or other nominee (and can provide documentation showing ownership such as a letter from your broker, bank or nominee or a recent account statement) at the close of business on the record date ([• ], 2009), you will be permitted to attend the meeting. Shareholders may call the Office of the Secretary of ICT at 1-267-685-5000 to obtain directions to the meeting. | |
Q: | Will cameras and recording devices be permitted at the meeting? | |
A: | No.Shareholders are not permitted to bring cameras or recording equipment into the meeting room. | |
Q: | Will a proxy solicitor be used? | |
A: | [Yes.ICT has engaged [ ] to assist in the solicitation of proxies for the meeting and ICT estimates it will pay a fee of approximately $ . ICT has also agreed to reimburse for reasonable out-of-pocket expenses and disbursements incurred in connection with the proxy solicitation and to indemnify against certain losses, costs and expenses. In addition, our officers and employees may request the return of proxies by telephone or in person, but no additional compensation will be paid to them.] | |
Q: | Who should I call with questions? | |
A: | [ICT shareholders should call , ICT’s proxy solicitor, toll-free at 1-800- or collect at 1- with any questions about the merger, or to obtain additional copies of this proxy statement/prospectus or additional proxy cards.] |
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• | vesting of all unvested ICT stock options held by ICT’s directors and employees (including all current executive officers) and the cancellation of these stock options with holders of stock options having a per share exercise price that is less than $15.38 receiving an amount in cash (without interest and less tax withholding) equal to (i) the excess of (1) $15.38 over (2) the per share option exercise price, multiplied by (ii) the total number of shares of ICT common stock underlying all such options, but stock options having a per share exercise price that is greater than or equal to $15.38 being canceled without consideration; | ||
• | vesting of all unvested RSUs held by ICT’s directors and employees (including all current executive officers), and the cancellation of all vested RSUs in exchange for an amount in cash (without interest and less tax withholding) equal to $15.38 for each share of ICT common stock into which such RSU would otherwise be convertible; | ||
• | change-in-control severance agreements with ICT’s current executive officers; | ||
• | long term incentive plan awards for ICT’s current executive officers; and | ||
• | rights to indemnification and directors’ and officers’ liability insurance. |
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• | adoption of the merger agreement by ICT’s shareholders; | ||
• | absence of any statute, law, ordinance, rule, regulation, judgment, order, injunction (whether temporary, preliminary or permanent), decision, opinion or decree issued by a court or other governmental entity that makes the merger illegal or prohibits the consummation of the merger; | ||
• | the applicable waiting period (and any extension thereof) under the HSR Act having expired or been terminated and antitrust approvals in any other jurisdictions, if necessary, have been obtained; | ||
• | approval for the listing on the NASDAQ stock market of the Sykes common stock to be issued to the ICT shareholders in the merger, subject to official notice of issuance; | ||
• | the registration statement on Form S-4, of which this proxy statement/prospectus forms a part, having been declared effective by the SEC, and the absence of an effective stop order suspending effectiveness of the Form S-4 or proceedings pending before the SEC for that purpose; | ||
• | the representations and warranties of the other party being true and correct, subject to certain materiality thresholds, as of the date of the merger agreement and as of the closing date of the merger; | ||
• | the other party having performed or complied with, in all material respects, all of its material agreements and covenants under the merger agreement at or prior to the consummation of the merger; and | ||
• | each of ICT and Sykes having received opinions of legal counsel to the effect that the transaction will be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, which will require that, among other things, Sykes common stock constitute at least 40% of the total consideration paid or payable to ICT shareholders in exchange for their ICT common stock. See “Proposal 1: The Merger — Material U.S. Federal Income Tax Consequences of the Transaction” beginning on page 58. |
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• | the merger has not been consummated by February 28, 2010, unless all conditions have been satisfied other than the condition related to receipt of antitrust regulatory approvals, in which case the date upon which Sykes or ICT may terminate the merger agreement may be extended to a date not later than July 2, 2010 (such date, as it may be extended, being referred to as the termination date); | ||
• | a governmental entity in the United States or European Union has issued a final and non-appealable order, judgment, decision, opinion, decree or ruling or taken any other action permanently enjoining or otherwise permanently prohibiting the consummation of the transactions contemplated by the merger agreement; | ||
• | ICT’s shareholders have failed to adopt the merger agreement; or | ||
• | the other party has breached its respective representations, warranties, covenants or agreements under the merger agreement such that the applicable closing conditions would not be satisfied (and such breach is incapable of being cured prior to the termination date). |
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Implied per Share | ||||||||||||
Sykes | ICT | Value of Merger | ||||||||||
Common Stock | Common Stock | Consideration | ||||||||||
At October 5, 2009 | $ | 20.15 | $ | 10.55 | $ | 15.38 | ||||||
At[• ], 2009 | $ | [• ] | $ | [• ] | $ | [• ] |
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As of and for the | As of and for the | |||||||
Six Months Ended | Twelve Months Ended | |||||||
Comparative per share data | June 30, 2009 | December 31, 2008 | ||||||
Sykes — Historical | ||||||||
Historical per common share: | ||||||||
Earnings (loss) per share (basic) | $ | 0.72 | $ | 1.49 | ||||
Earnings (loss) per share (diluted) | 0.71 | 1.48 | ||||||
Book value per share (1) | 10.08 | 9.31 | ||||||
Unaudited Pro Forma Combined | ||||||||
Unaudited pro forma per common share: (2) | ||||||||
Earnings (loss) per share (basic) | 0.52 | 0.66 | ||||||
Earnings (loss) per share (diluted) | 0.51 | 0.66 | ||||||
Book value per share (1) | 11.18 | n/a | (4) | |||||
ICT — Historical | ||||||||
Historical per common share: | ||||||||
Earnings (loss) per share (basic) | (0.04 | ) | (1.47 | ) | ||||
Earnings (loss) per share (diluted) | (0.04 | ) | (1.47 | ) | ||||
Book value per share (1) | 7.57 | 7.50 | ||||||
Unaudited Pro Forma ICT Equivalents | ||||||||
Unaudited pro forma per equivalent ICT share (3): | ||||||||
Earnings (loss) per share (basic) | 0.38 | 0.49 | ||||||
Earnings (loss) per share (diluted) | 0.38 | 0.48 | ||||||
Book value per share | 8.23 | n/a | (4) |
(1) | The book value per share is computed by dividing total shareholders’ equity by the number of shares of common stock issued and outstanding at the end of the period. | |
(2) | The pro forma combined shares outstanding assumes the issuance of 5.9 million shares of Sykes common stock outstanding for the entire period based on a $20.8979 Sykes share price (the volume weighted average of the per share price of Sykes common stock for the ten consecutive trading days ending on October 2, 2009, the last trading day immediately prior to the date of the merger agreement). | |
(3) | The ICT equivalent pro forma combined per share amounts are calculated by multiplying the pro forma combined per share amounts by the exchange ratio of 0.7360 divided by two, or 0.3680, the number of shares of Sykes common stock that would be exchanged for each share of ICT common stock in the merger assuming a share price of $20.8979. | |
(4) | For the pro forma balance sheet presentation, it was assumed that the merger was completed on June 30, 2009 and therefore, the pro forma book values for the twelve months ended December 31, 2008 are not presented. |
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Sykes Common Stock | ICT Common Stock | |||||||||||||||
High | Low | High | Low | |||||||||||||
2009 | ||||||||||||||||
Second Quarter | $ | 19.87 | $ | 16.02 | $ | 9.65 | $ | 5.30 | ||||||||
First Quarter | 19.69 | 13.74 | 7.04 | 3.60 | ||||||||||||
2008 | ||||||||||||||||
Fourth Quarter | $ | 22.20 | $ | 12.34 | $ | 7.92 | $ | 2.82 | ||||||||
Third Quarter | 22.02 | 16.88 | 9.98 | 7.13 | ||||||||||||
Second Quarter | 22.55 | 16.26 | 11.51 | 8.20 | ||||||||||||
First Quarter | 18.27 | 15.41 | 12.26 | 8.01 | ||||||||||||
2007 | ||||||||||||||||
Fourth Quarter | $ | 20.85 | $ | 16.31 | $ | 15.16 | $ | 9.88 | ||||||||
Third Quarter | 19.46 | 14.96 | 18.77 | 13.31 | ||||||||||||
Second Quarter | 20.80 | 17.85 | 22.85 | 18.00 | ||||||||||||
First Quarter | 19.99 | 14.48 | 31.81 | 17.50 |
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Six Months Ended June 30, | Years Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||
Income statement data (1): | ||||||||||||||||||||||||||||
Revenues | $ | 412,080 | $ | 411,350 | $ | 819,190 | $ | 710,120 | $ | 574,223 | $ | 494,918 | $ | 466,713 | ||||||||||||||
Income from operations (2,3,4,5,6) | 34,551 | 32,883 | 65,708 | 51,180 | 45,158 | 26,331 | 12,597 | |||||||||||||||||||||
Net income (2,3,4,5,6) | 29,118 | 33,439 | 60,561 | 39,859 | 42,323 | 23,408 | 10,814 | |||||||||||||||||||||
Weighted Average Shares Outstanding : | ||||||||||||||||||||||||||||
Basic | 40,632 | 40,545 | 40,618 | 40,387 | 39,829 | 39,204 | 39,607 | |||||||||||||||||||||
Diluted | 40,999 | 40,860 | 40,961 | 40,699 | 40,219 | 39,536 | 39,722 | |||||||||||||||||||||
Net Income Per Share (2,3,4,5,6) : | ||||||||||||||||||||||||||||
Basic | $ | 0.72 | $ | 0.82 | $ | 1.49 | $ | 0.99 | $ | 1.06 | $ | 0.60 | $ | 0.27 | ||||||||||||||
Diluted | 0.71 | 0.82 | 1.48 | 0.98 | 1.05 | 0.59 | 0.27 | |||||||||||||||||||||
Balance Sheet Data (1,7) | ||||||||||||||||||||||||||||
Total assets | $ | 554,767 | $ | 537,611 | $ | 529,542 | $ | 505,475 | $ | 415,573 | $ | 331,185 | $ | 312,526 | ||||||||||||||
Shareholders equity | 418,434 | 387,281 | 384,030 | 365,321 | 291,473 | 226,090 | 210,035 |
(1) | The amounts for the six months ended June 30, 2009 and June 30, 2008, and 12 months ended December, 2008, 2007 and 2006 include the Argentine acquisition completed on July 3, 2006. | |
(2) | The amounts for 2009 include a $1.6 million impairment of intangible assets and goodwill related to a Canadian acquisition in 2005. | |
(3) | The amounts for 2007 include a $1.3 million provision for regulatory penalties related to privacy claims associated with the alleged inappropriate acquisition of personal bank account information in one of our European subsidiaries. | |
(4) | The amounts for 2006 include a $13.9 million net gain on the sale of facilities and $0.4 million of charges associated with the impairment of long-lived assets. | |
(5) | The amounts for 2005 include a $1.8 million net gain on the sale of facilities, a $0.3 million reversal of restructuring and other charges and $0.6 million of charges associated with the impairment of long-lived assets. | |
(6) | The amounts for 2004 include a $7.1 million net gain on the sale of facilities, a $5.4 million net gain on insurance settlement, a $0.1 million reversal of restructuring and other charges and $0.7 million of charges associated with the impairment of long-lived assets. | |
(7) | Sykes has not declared cash dividends per common share for any of the periods presented. |
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Six Months Ended June 30, | Years Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||||||||||
Revenue | $ | 194,408 | $ | 218,269 | $ | 428,177 | $ | 453,621 | $ | 447,912 | $ | 401,334 | $ | 325,529 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Cost of services | 115,563 | 137,765 | 264,975 | 287,267 | 273,618 | 244,572 | 194,365 | |||||||||||||||||||||
Selling, general and administrative | 77,795 | 83,038 | 165,281 | 164,701 | 155,435 | 141,601 | 123,559 | |||||||||||||||||||||
Restructuring charges | 1,234 | 8,700 | 7,664 | — | — | — | ||||||||||||||||||||||
Asset impairment | — | — | 2,325 | — | — | — | — | |||||||||||||||||||||
Goodwill impairment | — | — | 12,187 | — | — | — | — | |||||||||||||||||||||
Litigation costs (recoveries) | — | — | — | 1,042 | — | (3,611 | ) | 10,338 | ||||||||||||||||||||
194,592 | 220,803 | 453,468 | 460,674 | 429,053 | 382,562 | 328,262 | ||||||||||||||||||||||
Operating income (loss) | (184 | ) | (2,534 | ) | (25,291 | ) | (7,053 | ) | 18,859 | 18,772 | (2,733 | ) | ||||||||||||||||
Interest expense (income), net | 43 | (189 | ) | (128 | ) | (627 | ) | 160 | 2,464 | 1,594 | ||||||||||||||||||
Income (loss) before income taxes | (227 | ) | (2,345 | ) | (25,163 | ) | (6,426 | ) | 18,699 | 16,308 | (4,327 | ) | ||||||||||||||||
Income tax provision (benefit) | 380 | (977 | ) | (1,878 | ) | 5,383 | 1,888 | 4,133 | (1,634 | ) | ||||||||||||||||||
Net income (loss) | $ | (607 | ) | $ | (1,368 | ) | $ | (23,285 | ) | $ | (11,809 | ) | $ | 16,811 | $ | 12,175 | $ | (2,693 | ) | |||||||||
Diluted earnings (loss) per share | $ | (0.04 | ) | $ | (0.09 | ) | $ | (1.47 | ) | $ | (0.75 | ) | $ | 1.11 | $ | 0.94 | $ | (0.21 | ) | |||||||||
Shares used in computing diluted earnings (loss) per share | 16,010 | 15,865 | 15,850 | 15,773 | 15,164 | 12,964 | 12,571 | |||||||||||||||||||||
Balance sheet data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 42,310 | $ | 22,053 | $ | 31,283 | $ | 30,244 | $ | 32,367 | $ | 10,428 | $ | 11,419 | ||||||||||||||
Working capital | 70,031 | 69,161 | 61,382 | 79,591 | 79,523 | 56,881 | 48,739 | |||||||||||||||||||||
Total assets | 183,666 | 218,799 | 177,561 | 225,600 | 215,666 | 172,759 | 160,576 | |||||||||||||||||||||
Long-term debt, less current maturities | — | — | — | — | — | 35,000 | 39,000 | |||||||||||||||||||||
Shareholders equity | 121,622 | 151,338 | 119,501 | 167,189 | 161,145 | 81,012 | 68,948 |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
• | Sykes’ historical consolidated financial statements and related notes included in the Sykes 2008 10-K and the Sykes 2nd Quarter 10-Q, and | ||
• | ICT’s historical consolidated financial statements and related notes included in the ICT 2008 10-K and the ICT 2nd Quarter 10-Q. |
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Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2009
Historical | ||||||||||||||||
Pro Forma | ||||||||||||||||
Adjustments | Combined Pro | |||||||||||||||
(In thousands) | Sykes | ICT | (Note 5) | Forma | ||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 238,904 | $ | 42,310 | $ | (5,546 | )(a) | $ | 275,668 | |||||||
Receivables, net | 165,744 | 70,148 | — | 235,892 | ||||||||||||
Prepaid expenses | 9,597 | 6,243 | — | 15,840 | ||||||||||||
Other current assets | 11,723 | 3,719 | 2,442 | (b) | 17,884 | |||||||||||
Total current assets | 425,968 | 122,420 | (3,104 | ) | 545,284 | |||||||||||
Property and equipment, net | 81,223 | 51,061 | 13,500 | (c) | 145,784 | |||||||||||
Goodwill | 21,142 | — | 74,613 | (d) | 95,755 | |||||||||||
Intangibles, net | 2,564 | 489 | 67,211 | (e) | 70,264 | |||||||||||
Deferred charges and other assets | 23,870 | 9,696 | 2,284 | (b) | 35,850 | |||||||||||
$ | 554,767 | $ | 183,666 | $ | 154,504 | $ | 892,937 | |||||||||
Liabilities and shareholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 17,941 | $ | 12,658 | $ | — | $ | 30,599 | ||||||||
Accrued employee compensation and benefits | 50,058 | 16,421 | — | 66,479 | ||||||||||||
Short term financing | — | — | 100,000 | (f) | 100,000 | |||||||||||
Income taxes payable | 1,366 | 380 | — | 1,746 | ||||||||||||
Deferred revenue | 29,936 | 4,289 | — | 34,225 | ||||||||||||
Other accrued expenses and current liabilities | 15,614 | 18,641 | — | 34,255 | ||||||||||||
Total current liabilities | 114,915 | 52,389 | 100,000 | 267,304 | ||||||||||||
Term loan | — | — | 50,000 | (f) | 50,000 | |||||||||||
Deferred grants | 11,804 | — | — | 11,804 | ||||||||||||
Long-term income tax liabilities | 5,037 | 4,850 | — | 9,887 | ||||||||||||
Other long-term liabilities | 4,577 | 4,805 | 13,969 | (g) | 23,351 | |||||||||||
Total liabilities | 136,333 | 62,044 | 163,969 | 362,346 | ||||||||||||
Shareholders’ equity: | ||||||||||||||||
Total shareholders’ equity | 418,434 | 121,622 | (9,465 | )(h)(j) | 530,591 | |||||||||||
$ | 554,767 | $ | 183,666 | $ | 154,504 | $ | 892,937 | |||||||||
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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Twelve Months Ended December 31, 2008
Historical | ||||||||||||||||
Pro Forma | ||||||||||||||||
Adjustments | Combined Pro | |||||||||||||||
(In thousands, except per share amounts) | Sykes | ICT | (Note 5) | Forma | ||||||||||||
Revenues | $ | 819,190 | $ | 428,177 | $ | — | $ | 1,247,367 | ||||||||
Operating expenses: | ||||||||||||||||
Direct salaries and related costs | 524,133 | 264,975 | — | 789,108 | ||||||||||||
General and administrative | 229,027 | 165,281 | 3,614 | (i) | 397,922 | |||||||||||
Loss on disposal of property and equipment, net | 322 | — | — | 322 | ||||||||||||
Goodwill impairment | — | 12,187 | — | 12,187 | ||||||||||||
Asset impairment | — | 2,325 | — | 2,325 | ||||||||||||
Restructuring charges | — | 8,700 | — | 8,700 | ||||||||||||
Total operating expenses | 753,482 | 453,468 | 3,614 | 1,210,564 | ||||||||||||
Income (loss) from operations | 65,708 | (25,291 | ) | (3,614 | ) | 36,803 | ||||||||||
Other (income) expense | ||||||||||||||||
Interest (income) | (5,448 | ) | (535 | ) | — | (5,983 | ) | |||||||||
Interest expense | 433 | 407 | 6,129 | (f) | 6,969 | |||||||||||
Other (income) expense | (11,259 | ) | — | — | (11,259 | ) | ||||||||||
Total other (income) expense | (16,274 | ) | (128 | ) | 6,129 | (10,273 | ) | |||||||||
Income (loss) before provision for income taxes | 81,982 | (25,163 | ) | (9,743 | ) | 47,076 | ||||||||||
Provision (benefit) for income taxes | 21,421 | (1,878 | ) | (3,357 | )(g) | 16,186 | ||||||||||
Net income (loss) | $ | 60,561 | $ | (23,285 | ) | $ | (6,386 | ) | $ | 30,890 | ||||||
Share Data | ||||||||||||||||
Weighted average shares outstanding — basic (1) | 40,618 | 15,850 | 46,532 | |||||||||||||
Weighted average shares outstanding — diluted (1) | 40,961 | 15,850 | 46,875 | |||||||||||||
Earnings (loss) per share — basic | $ | 1.49 | $ | (1.47 | ) | $ | 0.66 | |||||||||
Earnings (loss) per share — diluted | $ | 1.48 | $ | (1.47 | ) | $ | 0.66 |
(1) | Pro forma weighted average shares outstanding takes into consideration the additional Sykes’ common stock issued in exchange for ICT common stock. See Note 5 (j). |
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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2009
Historical | ||||||||||||||||
Pro Forma | ||||||||||||||||
Adjustments | Combined Pro | |||||||||||||||
(In thousands, except per share amounts) | Sykes | ICT | (Note 5) | Forma | ||||||||||||
Revenues | $ | 412,080 | $ | 194,408 | $ | — | $ | 606,488 | ||||||||
Operating expenses: | ||||||||||||||||
Direct salaries and related costs | 263,980 | 115,563 | — | 379,543 | ||||||||||||
General and administrative | 111,965 | 77,795 | 3,179 | (i) | 192,939 | |||||||||||
Impairment loss on goodwill and intangibles | 1,584 | — | — | 1,584 | ||||||||||||
Restructuring charges | — | 1,234 | — | 1,234 | ||||||||||||
Total operating expenses | 377,529 | 194,592 | 3,179 | 575,300 | ||||||||||||
Income (loss) from operations | 34,551 | (184 | ) | (3,179 | ) | 31,188 | ||||||||||
Other (income) expense | ||||||||||||||||
Interest (income) | (1,456 | ) | (150 | ) | — | (1,606 | ) | |||||||||
Interest expense | 351 | 193 | 2,279 | (f) | 2,823 | |||||||||||
Impairment loss on investment in SHPS | 2,089 | — | — | 2,089 | ||||||||||||
Other (income) expense | (1,095 | ) | — | — | (1,095 | ) | ||||||||||
Total other (income) expense | (111 | ) | 43 | 2,279 | 2,211 | |||||||||||
Income (loss) before provision for income taxes | 34,662 | (227 | ) | (5,458 | ) | 28,977 | ||||||||||
Provision (benefit) for income taxes | 5,544 | 380 | (939 | )(g) | 4,985 | |||||||||||
Net income (loss) | $ | 29,118 | $ | (607 | ) | $ | (4,519 | ) | $ | 23,992 | ||||||
Share Data | ||||||||||||||||
Weighted average shares outstanding — basic (1) | 40,632 | 16,010 | 46,546 | |||||||||||||
Weighted average shares outstanding — diluted (1) | 40,999 | 16,010 | 46,913 | |||||||||||||
Earnings (loss) per share — basic | $ | 0.72 | $ | (0.04 | ) | $ | 0.52 | |||||||||
Earnings (loss) per share — diluted | $ | 0.71 | $ | (0.04 | ) | $ | 0.51 |
(1) | Pro forma weighted average shares outstanding takes into consideration the additional Sykes’ common stock issued in exchange for ICT common stock. See Note 5 (j). |
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Conversion | Estimated Fair | Form of | ||||||||||
(in thousands, except per share amounts) | Calculation | Value | Consideration | |||||||||
Number of ICT common shares outstanding as of the merger date | 16,072 | |||||||||||
Multiplied by cash consideration per common share outstanding | $ | 7.69 | $ | 123,594 | Cash | |||||||
Number of ICT common shares outstanding as of the merger date | 16,072 | |||||||||||
Assumed value of Sykes’ common shares to be issued (1) | $ | 7.69 | $ | 123,594 | Sykes common stock | |||||||
Number of ICT restricted stock units outstanding as of the merger date (2) | 932 | |||||||||||
Multiplied by cash consideration per restricted stock unit | $ | 15.38 | $ | 14,334 | Cash | |||||||
Number of ICT Group stock options outstanding as of the merger date (3) | 299 | |||||||||||
Multipled by cash consideration per stock option | $ | 4.87 | $ | 1,455 | Cash | |||||||
Estimate of consideration expected to be transferred | $ | 262,977 | ||||||||||
(1) | In accordance with ASC 805, the fair value of equity securities issued as part of the consideration transferred will be measured on the closing date of the merger at the then-current market price. To the extent that Sykes’ share price as of the closing date is greater than $22.46 or less than $19.33 (outside of the range of the collar mechanism), the consideration transferred will be different than above. Sykes’ share price used in these pro forma financial statements is $20.8979, which is the volume weighted average of the per share prices of Sykes common stock for the ten consecutive trading days ending on October 2, 2009, the last trading day immediately prior to the date of the merger agreement. If Sykes’ stock price on the closing date of the acquisition has increased or decreased by 10% from the assumed $20.8979 share price, the consideration transferred would change by $2.9 million and $(3.3) million, respectively. | |
(2) | All restricted stock units will become fully vested and then will be cancelled and the holder of such vested awards will be entitled to receive $15.38 in cash, without interest and less any applicable taxes to be withheld, in respect of each share of ICT common stock into which the RSU would otherwise be convertible. | |
(3) | All outstanding ICT stock options, whether or not then vested and exercisable, will become fully vested and exercisable immediately prior to, and then will be canceled at, the effective time of the merger, and the holder of such option will be entitled to receive an amount in cash, without interest and less any applicable taxes to be withheld, equal to (i) the excess, if any, of (1) $15.38 over (2) the exercise price per share of ICT common stock subject to such ICT stock option, multiplied by (ii) the total number of shares of ICT common stock underlying such ICT stock option, with the aggregate amount of such payment rounded up to the nearest cent. If the exercise price is equal to or greater than $15.38, then the stock option will be canceled without any payment to the stock option holder. For these pro forma financial statements a weighted average exercise price of $10.51 has been used for all options with an exercise price below $15.38. |
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(in thousands) | ||||
Assets | ||||
Current assets (i) | $ | 122,420 | ||
Property and equipment (ii) | 64,561 | |||
Identifiable intangible assets (iii) | 67,700 | |||
Goodwill (iv) | 74,613 | |||
Other assets | 9,696 | |||
Total assets | $ | 338,990 | ||
Liabilities | ||||
Current liabilities (v) | $ | (52,389 | ) | |
Long-term income tax liabilities | (4,850 | ) | ||
Other long-term liabilities (vi) | (18,774 | ) | ||
Total liabilities | (76,013 | ) | ||
Estimate of consideration to be transferred | $ | 262,977 | ||
(i) | Current assets include $42.3 million of cash, $70.2 million of accounts receivable, $6.2 million of prepaid expenses, $3.7 million of other assets. | |
(ii) | Property and equipment is predominately comprised of computer hardware, software, leasehold improvements, and furniture and fixtures. | |
(iii) | Identifiable intangibles include customer relationships, trade names, software, and non-compete agreements. The largest identifiable intangible asset recognized as part of the merger is customer relationships with an estimated fair value of $64.0 million. | |
(iv) | Goodwill represents the excess of the preliminary purchase price over the estimated value of assets acquired and liabilities assumed. | |
(v) | Current liabilities include $12.7 million of accounts payable and $16.4 million of accrued employee compensation and benefits, $4.3 million of deferred revenue, $0.4 million of income tax payable, and $18.6 million of other accrued expenses and current liabilities. | |
(vi) | Other long-term liabilities include $14.0 million of deferred tax liabilities. |
(in thousands) | ||||
(a) Cash component of the estimated consideration transferred | $ | (139,383 | ) | |
Estimated transaction costs of Sykes and ICT | (11,300 | ) | ||
Estimated deferred financing costs related to fund the acquisition | (4,863 | ) | ||
Financing proceeds used to partially fund the acquisition | 150,000 | |||
Net pro forma cash adjustment | $ | (5,546 | ) | |
(b) | Reflects the pro forma impact of estimated new deferred financing costs and the partial write-off of historical deferred financing costs. |
(in thousands) | ||||||||||||
Current | Non-Current | Total | ||||||||||
Deferred financing costs | $ | 2,442 | $ | 2,284 | $ | 4,726 |
(c) | Reflects the pro forma impact of the preliminary fair value adjustment to property and equipment of $13.5 million. The estimated useful life of the acquired property and equipment is three years. |
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(d) | Reflects the pro forma impact of $74.6 million of excess preliminary purchase price over the acquired assets and liabilities assumed. | |
(e) | Reflects the pro forma impact of the identified intangible assets of ICT which have been allocated to customer relationships, trade names, software, and non-compete agreements. |
(in thousands, other than useful life estimate) | ||||||||
Estimated Fair Market | ||||||||
Value | Estimated Useful Life | |||||||
Customer relationships | $ | 64,000 | 9 years | |||||
Trade name | 2,400 | 3 years | ||||||
Software | 800 | 5 years | ||||||
Non-compete agreements | 500 | 3 years | ||||||
Removal of ICT’s historical intangibles | (489 | ) | n/a | |||||
Total | $ | 67,211 | ||||||
(f) | As part of the acquisition of ICT, Sykes anticipates entering into new financing arrangements, which are expected to include a $75 million short-term loan due March 31, 2010, a $75 million term loan due December 31, 2012, and a three year $75 million revolving credit arrangement. See Note 1 above. It is anticipated that the short-term borrowing will have a three month maturity and, for purposes of preparing these pro forma financial statements, an interest rate of LIBOR plus 3.5%. It is anticipated that the term loan and revolver will have a three year maturity and, for purposes of preparing these pro forma financial statements, an interest rate of LIBOR plus 3.5%. For purposes of these pro forma financial statements, there has been no pro forma adjustment for borrowings on the revolver as no funds are anticipated to be drawn upon for the merger. The interest rate used for the pro forma interest expense adjustment was 3.75% which represents an estimated interest rate for both the short term loan and the term loan as of the date of this proxy statement/prospectus. | |
The actual interest rate may vary from the estimated rate reflected within these combined and condensed pro forma financial statements. A 1/8% increase or decrease in the interest rate would increase / decrease annual interest expense by $0.121 million. |
(in thousands) | ||||||||||||
Loan Amount | Current | Non-Current | ||||||||||
Short term financing | $ | 75,000 | $ | 75,000 | $ | — | ||||||
Term loan | 75,000 | 25,000 | 50,000 | |||||||||
$ | 150,000 | $ | 100,000 | $ | 50,000 | |||||||
The pro forma adjustment for interest expense includes interest expense associated with the borrowings and amortization of the estimated deferred financing costs. |
Interest expense and amortization | ||||||||
(in thousands) | ||||||||
For the 12 months ended | For the 6 months ended June | |||||||
December 31, 2008 | 30, 2009 | |||||||
Borrowing | $ | 3,633 | $ | 1,406 | ||||
Deferred Financing Costs | 2,496 | 873 | ||||||
Pro Forma Adjustment | $ | 6,129 | $ | 2,279 | ||||
Sykes has received a firm commitment from KeyBank National Association, subject to certain conditions, to provide borrowings up to an aggregate principal amount of $165 million, with a commitment to arrange for additional lenders to provide an additional $60 million. See Note 1 above. The proceeds of such borrowings are anticipated to be used to fund the cash portion of the merger consideration and certain fees and expenses incurred in connection with the merger. There is no requirement that Sykes receive funding from such lenders in order to consummate the merger. In the event that Sykes is not able to obtain such funding, it will fund the cash portion of the merger consideration using its existing cash and cash equivalents. The use of existing cash and cash equivalents would likely include the repatriation of funds to the United States, which could result in an estimated tax payment of $20 million to $55 million depending on the ability to utilize various foreign tax credits. |
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(g) | Reflects an estimate of the tax impacts of the acquisition on the balance sheet and income statement, primarily related to the additional expenses associated with incremental debt to finance the transaction and estimated fair value adjustments for fixed assets and intangibles. The estimated blended rate is based on the historical blended effective tax rate for the combined company which is 34.5% and 17.2% for the periods ending December 31, 2008 and June 30, 2009, respectively. Sykes believes that using an estimated blended tax rate is factually supportable in that it is derived from statutory rates and recognizes that Sykes and ICT are multinational corporations with operations in various countries throughout the world. The actual effective tax rate of the combined company could be significantly different (either higher or lower) than the estimated blended tax rate and depends on post-acquisition activities, including repatriation decisions, cash needs and the geographical mix of income. The preliminary estimate of the deferred tax liability at June 30, 2009 was computed using a rate of 17.2% and could be significantly different (either higher or lower) depending upon several factors, including the allocation of merger consideration by jurisdiction. |
(in thousands) | ||||
(h) Elimination of ICT’s historical equity | $ | (121,622 | ) | |
Issuance of Sykes’ common stock as partial consideration (see Note 3) | 123,594 | |||
Estimated transaction costs | (11,300 | ) | ||
Partial write-off of deferred financing fees | (137 | ) | ||
Net pro forma adjustment | $ | (9,465 | ) | |
(i) | Reflects the pro forma impact of amortization for the identifiable intangible assets recorded within adjustment (e) and the revised depreciation associated with property and equipment discussed in adjustment (c). |
Depreciation and amortization | ||||||||||||||||
(in thousands, other than useful life estime) | ||||||||||||||||
For the 12 | ||||||||||||||||
months ended | For the 6 months | |||||||||||||||
Estimated Fair | Estimated | December 31, | ended June 30, | |||||||||||||
Market Value | Useful Life | 2008 | 2009 | |||||||||||||
Intangible assets | $ | 67,700 | Various | $ | 8,238 | $ | 4,119 | |||||||||
Property and equipment | 64,561 | 3 years | 21,520 | 10,760 | ||||||||||||
Reversal of ICT’s historical depreciation and amortization | (26,144 | ) | (11,700 | ) | ||||||||||||
Pro forma adjustment | $ | 3,614 | $ | 3,179 | ||||||||||||
(j) | Reflects the issuance of Sykes’ common stock as partial consideration. |
(in thousands) | ||||
Assumed value of Sykes’ common shares to be issued (see Note 3) | $ | 123,594 | ||
Assumed Sykes’ share price (see Note 3) | $ | 20.8979 | ||
Assumed number of Sykes’ common shares to be issued | 5,914 | |||
• | those discussed and identified in public filings with the SEC made by Sykes or ICT; | ||
• | the possibility that the estimated synergies will not be realized, or will not be realized within the expected time period; |
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• | general economic conditions; | ||
• | actions taken or conditions imposed by the United States and foreign governments; | ||
• | fluctuations in foreign currency exchange rates; | ||
• | the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; | ||
• | the possibility that the integration of ICT’s business and operations with those of Sykes may be more difficult and/or take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to ICT’s or Sykes’ existing businesses; | ||
• | adverse outcomes of pending or threatened litigation or government investigations; | ||
• | anticipated dates on which Sykes and ICT will reach specific milestones in the development and implementation of their respective business strategies; | ||
• | the impact of competition in the industries and in the specific markets in which Sykes and ICT, respectively, operate; and | ||
• | the ability to retain and attract qualified management and other personnel. |
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• | retaining existing customers and attracting new customers; | ||
• | integrating the marketing and promotion activities and information technology systems of Sykes and ICT; | ||
• | conforming standards, controls, procedures and policies, business cultures and compensation structures between the companies; | ||
• | consolidating corporate and administrative infrastructures; | ||
• | consolidating sales and marketing operations; | ||
• | identifying and eliminating redundant and underperforming operations and assets; | ||
• | coordinating geographically dispersed organizations; | ||
• | managing tax costs or inefficiencies associated with integrating the operations of the combined company; and | ||
• | making any necessary modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder. |
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• | ICT may be required to pay Sykes a termination fee of $7.5 million if the merger is terminated under certain circumstances, plus reimburse Sykes for up to $4.5 million of Sykes’ actual expenses incurred in connection with the merger, as described in the merger agreement and summarized in this proxy statement/prospectus; | ||
• | Sykes and ICT will be required to pay certain costs relating to the merger, whether or not the merger is completed; | ||
• | under the merger agreement, ICT is subject to certain restrictions on the conduct of its business prior to completing the merger which may affect its ability to execute certain of its business strategies; and | ||
• | matters relating to the merger (including integration planning) may require substantial commitments of time and resources by Sykes and ICT management, which could otherwise have been devoted to other opportunities that may have been beneficial to Sykes and ICT as independent companies, as the case may be. |
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• | the relationship between the market value of ICT common stock and the consideration to be received by shareholders of ICT in the merger, including: |
• | the fact that the offer price per share of $15.38 upon which the merger consideration was based represented a premium of 46% above the closing price of ICT common stock on October 5, 2009, the day the merger agreement was executed and the last trading day before the public announcement of the merger agreement; | ||
• | the fact that the offer price per share of $15.38 upon which the merger consideration was based represented a premium of 47% and 76% above the average closing price of ICT common stock for the one and six-month periods, respectively, prior to October 5, 2009; | ||
• | the fact that the offer price per share of $15.38 upon which the merger consideration was based represented a significant premium over each of the highest closing price (a 28% premium) and lowest closing price (a 515% premium) of ICT common stock during the year preceding the announcement of the merger agreement; |
• | the belief of the ICT board of directors that ICT obtained the highest price per share that Sykes was willing to pay, taking into account the improvement in terms as a result of the extensive negotiations between the parties; | ||
• | current financial market conditions and historical market prices, volatility and trading information with respect to the common stock of ICT and the common stock of Sykes and the risk that, if ICT did not enter into the merger agreement with Sykes, the price that might be received by ICT’s shareholders selling shares of ICT stock in the open market could be less than the merger consideration; |
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• | the results of ICT’s due diligence review of Sykes’ business, finances, operations and forecasts, including Sykes’ strong balance sheet; | ||
• | the combined company’s greater financial and other resources may allow the combined company to grow and gain market share more rapidly following the merger than ICT would likely be able to achieve as an independent company; | ||
• | the combined company’s experience, resources and breadth of product offerings may allow the combined company to respond more quickly and effectively to technological change, increased competition and market demands; | ||
• | the fact that, since a portion of the merger consideration will be paid in Sykes common stock, ICT’s shareholders would have the opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Sykes common stock following the merger should they determine to retain the Sykes common stock payable in the merger; | ||
• | historical information concerning the respective businesses, prospects, financial performance and condition, operations, technology, management and competitive positions of Sykes and ICT, including public reports filed with the SEC concerning results of operations during the most recent fiscal year for each company; | ||
• | ICT management’s analysis of the financial condition, costs of doing business, results of operations and prospects of ICT and Sykes before and after giving effect to the merger; | ||
• | the fact that the merger consideration is likely to be approximately 50% cash, which provides certainty of value to holders of ICT common stock compared to a transaction in which shareholders would receive only Sykes common stock; | ||
• | the fact that the merger is intended to qualify as reorganization for U.S. federal income tax purposes if the value of the stock portion of the merger consideration is equal to at least 40% of the value of the aggregate consideration to be issued pursuant to the merger, and as a result the merger consideration that consists of Sykes common stock will only be taxable to ICT shareholders upon the disposition of the stock; | ||
• | the fact that the value of the stock portion of the merger consideration will not fluctuate to the extent that the trading price of the shares of Sykes common stock is between $19.3306 and $22.4652; | ||
• | the fact that if the measurement price of Sykes common stock used to calculate the stock portion of the merger consideration is above $22.4652, the value of the total merger consideration to be received by ICT shareholders will increase above $15.38 per share of ICT common stock; | ||
• | the ICT board of directors’ assessment as to the low likelihood that a third party would offer a higher price than Sykes; | ||
• | the terms and conditions of the merger agreement, including: |
• | the parties’ representations, warranties and covenants; | ||
• | the limited closing conditions to Sykes’ obligations under the merger agreement, including the fact that the merger agreement is not subject to approval by Sykes’ stockholders and that consummation of the merger is not subject to Sykes’ obtaining financing for the merger; | ||
• | the provisions of the merger agreement that allow ICT to engage in negotiations with, and provide information to, third parties in response to credible inquiries from third parties regarding alternative acquisition proposals; | ||
• | the provisions of the merger agreement that allow the ICT board of directors to change its recommendation that ICT shareholders vote in favor of the adoption of the merger agreement in response to certain acquisition proposals and certain intervening events, if the ICT board of directors determines in good faith that the failure to change its recommendation could reasonably be determined to be inconsistent with its fiduciary duties under applicable law; and |
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• | the ability of ICT to specifically enforce the terms of the merger agreement; |
• | the potential for other third parties to enter into strategic relationships with or to acquire ICT; | ||
• | the financial analyses presented by Greenhill; and | ||
• | the oral opinion of Greenhill rendered on October 5, 2009, which was subsequently confirmed in writing to the ICT board of directors that, as of the date of such opinion and based upon and subject to the factors, limitations and assumptions set forth in the opinion, the merger consideration to be received by the holders of ICT common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders. See the section entitled “Opinion of ICT’s Financial Advisor”. |
• | the fact that, if the measurement price of Sykes common stock used to calculate the stock portion of the merger consideration is below $19.3306, the value of the merger consideration to be received by ICT shareholders will decrease below $15.38 per share; | ||
• | that, under the terms of the merger agreement and the voting agreement: |
• | neither ICT nor certain principal shareholders can solicit other acquisition proposals; | ||
• | if the merger agreement is terminated by Sykes or ICT under certain circumstances, ICT must pay to Sykes a $7.5 million termination fee and reimburse Sykes for up to $4.5 million of expenses, all of which may deter others from proposing an alternative transaction that may be more advantageous to ICT’s shareholders; |
• | the possibility that the merger might not be consummated and the effect of public announcement of the merger on: |
• | ICT’s sales, operating results and stock price; and | ||
• | ICT’s ability to attract and retain key management, sales and marketing and other personnel; |
• | the possible negative impact of the merger and the announcement thereof on customers, employees, suppliers and the community; | ||
• | the risk that the potential benefits resulting from the merger might not be fully realized or realized within expected time periods; | ||
• | the risk that, notwithstanding the anticipated long-term benefits of the merger, the combined company’s financial results and stock price might decline; | ||
• | the possibility of substantial charges to be incurred in connection with the merger, including transaction expenses arising from the merger; | ||
• | the fact that because only 50% of the merger consideration will be in the form of Sykes common stock, ICT’s shareholders will have a smaller ongoing equity participation in the combined company (and, as a result, a smaller opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of Sykes common stock following the merger) than they have in ICT; | ||
• | the risk that the companies might not be able to obtain the necessary approvals required to complete the merger, including shareholder approvals and antitrust regulatory approvals; | ||
• | that, while the merger is expected to be completed, there can be no assurance that all conditions to the parties’ obligations to complete the merger will be satisfied, and as a result, it is possible that the merger may not be completed even if approved by ICT’s shareholders; | ||
• | the restrictions on the conduct of ICT’s business prior to the completion of the merger; |
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• | that the merger and Sykes’ and ICT’s businesses are subject to other risks, as described in the section of this proxy statement/prospectus entitled “Risk Factors” and in each company’s reports filed with the SEC; | ||
• | risks associated with fluctuations in Sykes’ stock price prior to closing of the merger; and | ||
• | various other risks. |
• | reviewed the draft of the merger agreement dated October 5, 2009 distributed to the ICT board of directors in advance of its meeting on October 5, 2009 and certain related documents; | ||
• | reviewed certain publicly available financial statements of ICT and Sykes; | ||
• | reviewed certain other publicly available business and financial information relating to ICT and Sykes that it deemed relevant; |
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• | reviewed certain information, including financial forecasts and other financial and operating data concerning ICT and Sykes, prepared by the management of ICT and Sykes, respectively; | ||
• | discussed the past and present operations and financial condition and the prospects of ICT with senior executives of ICT; | ||
• | discussed the past and present operations and financial condition and the prospects of Sykes with senior executives of Sykes; | ||
• | reviewed and discussed certain information regarding potential financial and operational benefits anticipated from the merger prepared by the management of ICT; | ||
• | reviewed the historical market prices, trading activity and equity research price targets for the ICT common stock and the Sykes common stock; | ||
• | compared the value of the merger consideration with that received in certain publicly available transactions that it deemed relevant; | ||
• | compared the value of the merger consideration with the trading valuations of certain publicly traded companies that it deemed relevant; | ||
• | compared the value of the merger consideration with the relative contribution of ICT to the pro forma combined company based on a number of metrics that it deemed relevant; | ||
• | compared the value of the merger consideration to the valuation derived by discounting projected future share prices of ICT based on financial projections prepared by ICT’s management at discount rates that it deemed appropriate; | ||
• | participated in discussions and negotiations among representatives of ICT and its legal advisors and representatives of Sykes and its legal and financial advisors; and | ||
• | performed such other analyses and considered such other factors as it deemed appropriate. |
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Date Announced | Acquiror / Target | |
06/14/09 | Stream Global Services, Inc. / eTelecare Global Solutions, Inc. | |
09/19/08 | Ayala Corporation and Providence Equity Partners / eTelecare Global Solutions, Inc. | |
08/04/08 | Aegis BPO Services Limited / PeopleSupport Incorporated | |
07/16/08 | Convergys Corporation / Intervoice, Inc. | |
07/10/08 | WNS (Holdings) Limited / Aviva Global Services | |
06/06/08 | Stratton Spain SL / Multienlace SA | |
04/07/08 | WNS (Holdings) Limited / Chang Limited | |
01/28/08 | Global BPO Services Corp. / Stream Holdings Corporation | |
12/12/07 | NCO Group, Inc. / Outsourcing Solutions Inc. | |
03/07/07 | WNS (Holdings) Limited / Marketics Technologies (India) Private Limited | |
01/12/07 | ClientLogic Corporation / SITEL Corporation | |
11/15/06 | One Equity Partners / NCO Group, Inc. | |
11/03/06 | Diamond Castle Holdings, LLC / PRC, LLC | |
10/02/06 | West Corporation / InPulse Response Group, Inc. |
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One Day Prior to | One Week Prior to | One Month Prior to | ||||||||||
Announcement | Announcement | Announcement | ||||||||||
Broad Group | 42.6 | % | 48.3 | % | 48.2 | % | ||||||
Industry Group | 28.5 | % | 41.1 | % | 35.4 | % |
• | Convergys Corporation; | ||
• | TeleTech Holdings, Inc.; | ||
• | Sykes; and | ||
• | APAC Customer Service |
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• | Enterprise value, calculated as the sum of the fully diluted market value of the respective company’s common stock, the book value of its outstanding debt, the book value of its preferred stock and the book value of any minority interest, minus total cash and cash equivalents, as a multiple of estimated EBITDA, for estimated calendar year 2010; and | ||
• | Per share equity value of its common stock as a multiple of estimated earnings per share (“EPS”), for estimated calendar year 2010. |
Analysts | Management | |||
2010 EBITDA | $32 | $40 | ||
Traded Peer Multiple Range | 4.5x - 5.5x | 4.5x - 5.5x | ||
Implied Enterprise Value Range | $144 - $176 | $182 - $222 | ||
Implied Equity Value Range | $187 - $219 | $224 - $265 | ||
Implied Per Share Price | $11.60 - $13.60 | $13.93 - $16.44 | ||
% Premium to 10/02/09 | 12.2% - 31.5% | 34.7% - 59.0% |
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• | Expanded Client Portfolio. Each of the top 14 clients of ICT, representing approximately 63% of total ICT revenues, will be new clients for Sykes. | ||
• | Accelerated Entry into New Verticals. ICT has clients in the U.S. government, utility and healthcare verticals, all of which are new to Sykes. Accordingly, the merger will provide an entry into those verticals on an accelerated basis. |
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• | Deeper Expertise within Financial and Telecom Verticals. Sykes has made significant inroads into the financial and telecom services verticals, but the merger with ICT will allow Sykes to quickly build deeper expertise in these two verticals which are increasingly significant in the customer contact management solutions and services industry. | ||
• | Extended Delivery Footprint.The merger with ICT will extend Sykes’ geographical footprint into India, Mexico and Australia, providing Sykes with additional delivery capabilities for its existing clients. | ||
• | Sustainable Revenue Growth and Margin Expansion.The addition of ICT’s clients to Sykes’ portfolio, together with ICT’s expertise in certain verticals, provides Sykes with the ability to provide a greater depth of services to existing clients, thereby creating revenue growth rates that are expected to be more consistent and sustainable than can be achieved by growth solely from a new client sales pipeline. Additionally, the increase in annual revenues permits the leverage of Sykes’ infrastructure to improve and sustain margins. | ||
• | Revenue Scale.The increase in annual revenues resulting from the merger will allow Sykes to pursue client acquisition opportunities that are larger and more complex in scope. | ||
• | Reduced Client Concentration.The addition of new clients in new verticals to Sykes existing client portfolio further reduces Sykes’ client concentration, thereby further mitigating Sykes’ risk profile. | ||
• | Merger Consideration Mix.The terms of the merger providing for fifty (50%) of ICT’s shares of common stock to be converted into shares of Sykes stock, allowing Sykes to achieve the benefits of the merger without depleting it cash reserves, thereby maintaining a strong balance sheet. | ||
• | Realization of Synergies.Potential annual synergies of approximately $20 million are expected to be realized as a result of the merger, all within approximately 12 months from the effective date of the merger. These synergies will be realized primarily through the elimination of duplicative general and administrative expenses, operational synergies and implementation of Sykes’ lower cost structure. |
• | Strain on Management, Operational, Financial and Other Resources.As a result of the merger, Sykes will be rapidly and significantly expanding its global operations, including increasing its client base and scaling up its infrastructure to support this new level of services. This expansion will increase the complexity of Sykes’ business and place significant strain on its management, personnel, operations, systems, technical performance, financial resources and internal financial control and reporting functions. Sykes may not be able to manage this growth effectively, which could damage its reputation, limit its growth and negatively affect its operating results. | ||
• | Costs and Lost Benefits if the Merger is not Consummated.If the merger is not consummated, Sykes’ management would have devoted substantial time and resources to the proposed merger at the expense of attending to and growing Sykes’ existing business and other business opportunities. |
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Weighted | No. of Shares | ||||||||||||||||
Average | Underlying | ||||||||||||||||
No. of Shares | Exercise | Vested | |||||||||||||||
Underlying | Price | Out-of-the- | |||||||||||||||
Vested | of Vested | Total Estimated | Money | ||||||||||||||
In-the-Money | In-the-Money | Resulting Option | Options to Be | ||||||||||||||
Options | Options | Consideration | Canceled | ||||||||||||||
(#) | ($) | ($) | (#) | ||||||||||||||
Non-Employee Directors: | |||||||||||||||||
Donald Brennan | 22,500 | 11.39 | 89,825 | 2,500 | |||||||||||||
Gordon Coburn | 15,000 | 12.00 | 50,700 | — | |||||||||||||
Eileen Fusco | — | — | — | — | |||||||||||||
Richard Roscitt | — | — | — | — | |||||||||||||
Bernard Somers | 18,500 | 9.07 | 116,755 | 5,000 | |||||||||||||
John Stoops | 18,500 | 9.07 | 116,755 | 3,000 | |||||||||||||
Executive Officers: | |||||||||||||||||
John Brennan | 72,200 | 9.94 | 392,446 | 27,300 | |||||||||||||
John Campbell | 34,100 | 10.20 | 176,691 | 6,200 | |||||||||||||
Pamela Goyke | — | — | — | — | |||||||||||||
Guy Gray | — | — | — | — | |||||||||||||
Janice Jones | 7,000 | 10.40 | 34,845 | 2,900 | |||||||||||||
Timothy Kowalski | 7,550 | 10.65 | 35,684 | 3,900 | |||||||||||||
Gail Lebel | 1,500 | 9.90 | 8,220 | — | |||||||||||||
Rachel Macha | — | — | — | — | |||||||||||||
John Magee | 14,400 | 9.70 | 81,752 | 5,000 | |||||||||||||
Jeffrey Moore | 20,000 | 13.68 | 34,000 | — | |||||||||||||
Vincent Paccapaniccia | 14,000 | 10.71 | 65,380 | 3,400 |
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No. of RSU Unit | Estimated | |||||||
Awards to be | Total Resulting | |||||||
Cashed Out | Consideration | |||||||
(#) | ($) | |||||||
Non-Employee Directors: | ||||||||
Donald Brennan | 3,750 | 57,675 | ||||||
Gordon Coburn | 3,750 | 57,675 | ||||||
Eileen Fusco | 10,000 | 153,800 | ||||||
Richard Roscitt | 6,250 | 96,125 | ||||||
Bernard Somers | 3,750 | 57,675 | ||||||
John Stoops | 3,750 | 57,675 | ||||||
Executive Officers: | ||||||||
John Brennan | 304,673 | 4,685,871 | ||||||
John Campbell | 8,246 | 126,823 | ||||||
Pamela Goyke | 4,313 | 66,334 | ||||||
Guy Gray | 21,911 | 336,991 | ||||||
Janice Jones | 7,250 | 111,505 | ||||||
Timothy Kowalski | 8,193 | 126,008 | ||||||
Gail Lebel | 4,730 | 72,747 | ||||||
Rachel Macha | 4,538 | 69,794 | ||||||
John Magee | 12,980 | 199,632 | ||||||
Jeffrey Moore | 6,250 | 96,125 | ||||||
Vincent Paccapaniccia | 10,826 | 166,503 | ||||||
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• | Severance benefits equal to three years of his annual base salary (as reinstated on December 1, 2009); | ||
• | Reimbursements for monthly COBRA premiums for a period of three years; | ||
• | Personal financial planning expenses up to a maximum of $25,000 per calendar year (including a tax “gross-up” payment) for a period of three years; | ||
• | Expenses for the lease, insurance and cost of repairs of a luxury car for a period of three years; and | ||
• | Premiums for certain life insurance and disability policies for a period of three years. |
• | Severance benefits as specified in each executive officer’s employment agreement, which range from eight to twenty-four months of an executive officer’s annual base salary (as adjusted on December 1, 2009); | ||
• | Continued health benefits for a duration specified in each executive officer’s employment agreement (including a tax “gross-up” payment for such continued health benefits), which durations range from eight to twenty-four months; and | ||
• | An incremental change-in-control severance benefit equal to three months of the executive officer’s base salary (as adjusted on December 1, 2009). |
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Estimated | |||||||||||||||||||||
Incremental | “Gross-up” | ||||||||||||||||||||
Cash | Health and | Aggregate | for Federal, State and | ||||||||||||||||||
Severance | Welfare | Value | Local Income and | ||||||||||||||||||
Benefit1 | Benefits2 | Perquisites | to Executive | Payroll Taxes3,6 | |||||||||||||||||
Executive Officers: | |||||||||||||||||||||
John Brennan | $ | 2,085,000 | $ | 36,217 | $ | 363,0004 | $ | 2,484,217 | $ | 50,0005 | |||||||||||
John Campbell | 657,000 | 24,145 | — | 681,145 | 16,097 | ||||||||||||||||
Pamela Goyke | 380,000 | 18,109 | — | 398,109 | 12,073 | ||||||||||||||||
Guy Gray | 566,833 | 18,109 | — | 584,942 | 12,073 | ||||||||||||||||
Janice Jones | 335,667 | 18,109 | — | 353,776 | 12,073 | ||||||||||||||||
Timothy Kowalski | 652,500 | 24,145 | — | 676,665 | 16,097 | ||||||||||||||||
Gail Lebel | 197,083 | 8,048 | — | 205,131 | 5,365 | ||||||||||||||||
Rachel Macha | 224,583 | 8,048 | — | 232,631 | 5,365 | ||||||||||||||||
John Magee | 834,750 | 24,145 | — | 858,895 | 16,097 | ||||||||||||||||
Jeffrey Moore | 321,914 | 12,072 | — | 333,986 | 8,048 | ||||||||||||||||
Vincent Paccapaniccia | 731,250 | 24,145 | — | 755,395 | 16,097 |
1 | ICT does not provide any executive officer with a gross-up or other reimbursement for tax amounts the executive might pay pursuant to Section 280G of the Code. | |
2 | Benefits listed under “Incremental Health and Welfare Benefits” are related to ICT’s group health plans and are estimated to be $1,006.04 per person, per month, multiplied by (i) 36 months for Mr. Brennan, (ii) 24 months for Messrs. Campbell, Kowalski, Magee and Paccapaniccia, (iii) 18 months for each of Ms. Goyke, Mr. Gray and Ms. Jones, (iv) 12 months for Mr. Moore, and (v) 8 months for each of Ms. Lebel and Ms. Macha. | |
3 | Assumes a 40% effective tax rate. | |
4 | Benefits include monthly payments of: $2,091 for personal financial planning services, $2,518 for a luxury automobile lease, and $5,486 for premiums for certain life insurance and disability policies for a period of three years. | |
5 | Assumes a true “gross-up” payment applicable to personal financial planning expenses. | |
6 | For executive officers other than Mr. Brennan, assumes a true “gross-up” payment applicable to the benefits listed under “Incremental Health and Welfare Benefits”. |
• | The amendment of the employment agreements for 25 senior management employees to (i) implement an adjustment of base salaries effective as of December 1, 2009, (ii) provide an incremental change-in-control severance benefit equal to three months of the senior management employee’s adjusted base salary, and (iii) provide full severance benefits under the terms of the senior management employee’s current employment agreement, if the senior management employee’s employment agreement is not renewed during the 12-month period following the effective date of the merger; | ||
• | To enter into agreements with 39 employees who currently do not have employment agreements with ICT, in order to implement (i) the adjustment of base salaries effective as of December 1, 2009 for those employees who received a 10% reduction in their base salary in 2009 as part of ICT’s overall cost reduction program, (ii) provide an incremental change-in-control severance benefit equal to three months of the employee’s base salary or adjusted base salary, as applicable (for certain sales employees with commissions, the severance benefit will take into account average monthly sales commissions), and (iii) provide the employees with severance benefits under ICT’s current plans, policies or practices, if the employee is terminated without cause during the 12-month period following the effective date of the merger; | ||
• | The amendment of the LTIP to provide that the period from January 1, 2009 through the effective date of the merger will constitute one full year of performance, if the effective date of the merger is prior to December 31, 2009. The Compensation Committee will determine whether an employee has satisfied the LTIP performance criteria based on a partial year of performance if the effective date of the merger is prior to December 31, 2009 and based on a full year of performance if the effective date of the merger is after December 31, 2009. ICT will pay the bonuses under the LTIP in cash at or prior to the closing of the merger; and | ||
• | The amendment of ICT’s Quarterly Incentive Plan (the “QIP”) to provide that the period from October 1, 2009 through the effective date of the merger will constitute a full quarter of performance, if the effective date of the merger is prior to December 31, 2009. The Compensation Committee will determine whether an employee has satisfied the QIP performance criteria based on a partial quarter of performance if the effective date of the merger is prior to December 31, 2009 and based on a full quarter of performance if the effective date of the merger is after December 31, 2009. ICT will pay the bonuses under the QIP in cash at or prior to the closing of the merger. |
Maximum Potential 2009 | Maximum Potential | |||||||||||
2009 Service- | Performance- | Cash for 2009 LTIP Awards | ||||||||||
based Award | based Award | (Service & Performance) | ||||||||||
($) | ($) | ($) | ||||||||||
Executive Officers: | ||||||||||||
John Brennan | 347,500 | 521,250 | 868,750 | |||||||||
John Campbell | 109,500 | 164,250 | 273,750 | |||||||||
Pamela Goyke | 60,000 | 90,000 | 150,000 | |||||||||
Guy Gray | 134,300 | 201,450 | 335,750 | |||||||||
Janice Jones | 53,000 | 79,500 | 132,500 | |||||||||
Timothy Kowalski | 108,800 | 163,200 | 272,000 | |||||||||
Gail Lebel | 53,800 | 80,700 | 134,500 | |||||||||
Rachel Macha | 61,300 | 91,950 | 153,250 | |||||||||
John Magee | 139,100 | 208,650 | 347,750 | |||||||||
Jeffrey Moore | 64,400 | 96,600 | 161,000 | |||||||||
Vincent Paccapaniccia | 110,600 | 165,900 | 276,500 |
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• | a bank or other financial institution; | ||
• | a tax-exempt organization; | ||
• | an S corporation or other pass-through entity; | ||
• | an insurance company; | ||
• | a mutual fund; | ||
• | a regulated investment company or real estate investment trust; | ||
• | a dealer or broker in stocks and securities, or currencies; |
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• | a trader in securities that elects mark-to-market treatment; | ||
• | a holder of ICT common stock subject to the alternative minimum tax provisions of the Internal Revenue Code; | ||
• | a holder of ICT common stock that received such ICT shares through the exercise of an employee stock option, pursuant to a tax qualified retirement plan or otherwise as compensation; | ||
• | a person that is not a U.S. holder (as defined below); | ||
• | a person that has a functional currency other than the U.S. dollar; | ||
• | a holder of ICT common stock that holds such ICT shares as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or | ||
• | a U.S. expatriate. |
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• | corporate matters, including due organization, good standing and qualification; | ||
• | capitalization; | ||
• | corporate authority to enter into and perform the obligations contemplated by the merger agreement, enforceability of the merger agreement, approval of the merger agreement by the parties’ boards of directors and shareholder voting requirements to consummate the merger and the other transactions contemplated by the merger agreement; | ||
• | required governmental filings and consents; | ||
• | the absence of conflicts with, or violations of, organizational documents, other contracts and applicable laws, in each case, as a result of the merger; | ||
• | the timely filing and accuracy of periodic reports and other filings with the SEC since January 1, 2006, as well as with respect to financial statements contained therein, internal controls and compliance with the Sarbanes-Oxley Act of 2002; |
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• | conduct of business in the ordinary course since January 1, 2009 and absence of any event, occurrence, development or state of circumstances or facts or condition that has had or would reasonably be expected to have, a material adverse effect on either party since January 1, 2009; | ||
• | absence of certain legal proceedings (pending or threatened) and orders; | ||
• | compliance with applicable laws; | ||
• | tax matters; | ||
• | intellectual property matters; | ||
• | regulatory compliance; | ||
• | broker’s fees payable in connection with the merger and the other transactions contemplated by the merger agreement; and | ||
• | the absence of any representation or warranty by either party except for those expressly set forth in the merger agreement and the acknowledgement by each party of certain investigations made of the other party and such party’s businesses. |
• | title to, or leasehold interest in, certain properties; | ||
• | matters with respect to certain material contracts; | ||
• | employee benefit plans; | ||
• | labor matters; | ||
• | environmental matters; | ||
• | matters with respect to insurance policies; and | ||
• | absence of transactions with affiliates. |
• | the activities of the Merger Subs; | ||
• | matters with respect to financing of the acquisition; and | ||
• | ownership of ICT common stock by Sykes and its subsidiaries. |
• | changes generally affecting the economy, financial or securities markets or political or regulatory conditions, to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the industries in which they operate; | ||
• | changes in the industries in which they operate, to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in such industries; |
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• | any change in law or the interpretation thereof or GAAP or the interpretation thereof, to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the industries in which they operate; | ||
• | acts of war, armed hostility or terrorism to the extent such changes do not adversely affect such party and its subsidiaries in a disproportionate manner relative to other participants in the industries in which they operate; | ||
• | the announcement of the merger agreement and the transactions contemplated thereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of such party or its subsidiaries due to the announcement and performance of the merger agreement or the identity of the parties to the merger agreement, or the performance of the merger agreement and the transactions contemplated thereby, including compliance with the covenants set forth therein; | ||
• | any failure by such party to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period (although facts and circumstances giving rise to such failure that are not otherwise excluded from the definition of material adverse effect may be taken into account in determining whether there has been a material adverse effect); | ||
• | any change in the price or trading volume of such party’s common stock on the NASDAQ stock market (although facts and circumstances giving rise to such change that are not otherwise excluded from the definition of material adverse effect may be taken into account in determining whether there has been a material adverse effect); and | ||
• | compliance with the terms of, or the taking of any action required by, the merger agreement. |
• | preserve their assets; | ||
• | keep available the services of current officers, key employees and consultants of ICT and its subsidiaries; | ||
• | preserve ICT’s business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors and lessors; and | ||
• | comply in all material respects with all applicable laws. |
• | amend or propose to amend the organizational documents of ICT or its significant subsidiaries; | ||
• | issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, or based on the value of, any shares of its capital stock of any class or any equity interest, voting debt of ICT or any of its subsidiaries (other than issuances upon the exercise of ICT stock options or the settlement of RSUs); | ||
• | other than pursuant to cash management or investment portfolio activities in the ordinary course of business, acquire (including by merger, consolidation, or acquisition of stock or assets or intellectual property or any other business combination) any ownership interest in any corporation, partnership or other business organization or any assets or any |
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interest in any assets from any other person for consideration valued in excess of $500,000 individually or $1,000,000 in the aggregate; |
• | enter into any strategic licensing, joint venture, collaboration, alliance, co-promotion or similar agreement that involves payments by ICT to a third party in excess of $200,000 individually or $500,000 in the aggregate for all such contracts; provided that no such agreement would (1) constitute a material contract of ICT, (2) limit or restrict ICT or its subsidiaries or Sykes or any of its affiliates or any successor of such entities, in each case, after the effective time of the merger, from engaging or competing in, or require any of them to work exclusively with the party to such agreement in, any material line of business or in any material geographic area (other than any limitation or restriction which ICT would have the right to terminate upon a change of control at no cost and with no such continuing material restrictions or obligations to ICT or Sykes or any of their respective subsidiaries) or (3) be reasonably expected to interfere with the parties’ ability to consummate the merger; | ||
• | (1) purchase financial instruments that at the time of purchase qualify as Level III assets (as defined in FASB Statement No. 157); (2) change in a material manner the average duration of ICT’s investment portfolio or the average credit quality of such portfolio, except for changes that would reduce investment risk in such portfolio; (3) materially change investment guidelines with respect to ICT’s investment portfolio except for changes that would reduce investment risk of ICT’s investment portfolio; (4) hypothecate, repo, encumber or otherwise pledge assets in ICT’s investment portfolio; or (5) invest new surplus cash from operations in securities other than short-term liquid securities permitted by Sykes’ investment guidelines (which are required to be implemented by ICT with respect to such new surplus cash as soon as practicable after the date of the merger agreement); | ||
• | enter into interest rate swaps, foreign exchange or commodity agreements and other similar hedging arrangements (other than for purposes of offsetting a bona fide exposure); | ||
• | merge or consolidate ICT or any of its subsidiaries with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of ICT or any of its subsidiaries, other than any such transaction between direct or indirect wholly-owned subsidiaries of ICT that would not result in material adverse tax consequences or material loss of tax benefits or loss of any material asset (including intellectual property); | ||
• | sell, pledge, dispose of, transfer, lease, license, guarantee or encumber, or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or encumbrance of any material property or assets (including intellectual property) of ICT or any of its subsidiaries to any third party, except (1) pursuant to existing contracts or commitments, (2) for the sale of goods and services in the ordinary course of business consistent with past practice, (3) transactions involving property or assets of ICT or any of its subsidiaries having a value no greater than $500,000 in the aggregate for all such transfers, (4) in connection with any waiver, release, assignment, settlement or compromise of litigation otherwise permitted under the merger agreement, or (5) in connection with cash management or investment portfolio activities in the ordinary course of business; | ||
• | split, combine, reclassify, subdivide or amend the terms of its outstanding capital stock or any other securities of ICT or enter into any agreement with respect to voting of any of its capital stock or any securities convertible into or exchangeable for such shares; | ||
• | declare, set aside, make or pay any dividend or other distribution on any shares of capital stock of ICT or its subsidiaries, except between or among wholly-owned subsidiaries of ICT; | ||
• | purchase, redeem or otherwise acquire any shares of its capital stock, any securities convertible or exchangeable or exercisable for any shares of capital stock or any other securities, except for purchases, redemptions or other acquisitions of capital stock or other securities (1) required by the terms of ICT equity compensation plans, (2) in order to pay taxes or satisfy withholding obligations in respect of such taxes in connection with the exercise of ICT stock options or vesting of RSUs or the lapse of restrictions in respect of any other equity interests in ICT, in each case pursuant to the terms of the applicable ICT equity compensation plans, or (3) required by the terms of any plans, arrangements or agreements existing on the date of the merger agreement between ICT or any of its subsidiaries and any director or employee of ICT or any of its subsidiaries; | ||
• | incur any indebtedness for borrowed money or issue any debt securities, warrants or other rights to acquire debt securities of ICT or any of its subsidiaries or assume, guarantee or endorse, as an accommodation or otherwise, the obligations of any |
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other person for borrowed money (other than under existing working capital facilities and letter of credit facilities in the ordinary course); |
• | make any loans or capital contributions to, or investments in, any person, except for (i) loans and capital contributions to, or investments in, ICT subsidiaries organized under the laws of one of the United States, (ii) with respect to each foreign subsidiary, (a) loans or capital contributions to, or investments in, foreign subsidiaries which are made in the ordinary course of business for the normal business operations of each such foreign subsidiary, consistent with past practice, and (b) additional loans or capital contributions to, or investments in, foreign subsidiaries in an amount not to exceed $250,000 in the aggregate for all foreign subsidiaries (but excluding from the limitation in this clause (b) such loans or capital contributions to, or investments in, one foreign subsidiary made by another foreign subsidiary), (iii) cash management or investment portfolio activities in the ordinary course of business and consistent with other restrictions on ICT investment portfolio activities set forth in the merger agreement, or (iv) in connection with certain transactions permitted by the merger agreement; | ||
• | make or agree to make any capital expenditures or commit to any capital projects in excess of $500,000.00 in the aggregate for all such capital expenditures and projects, other than the capital expenditures and capital projects disclosed to Sykes; | ||
• | subject to limited exceptions, terminate, cancel, renew, or request or agree to any material amendment or material modification to, material change in, or material waiver under, any material contract of ICT, or enter into or materially amend any contract that, if existing on the date of the merger agreement, would be a material contract of ICT; | ||
• | enter into an employment agreement or relationship with any person who earns an annual rate of base salary of more than or equal to $150,000.00 (other than with respect to employees hired pursuant to offers of employment outstanding on the date of the merger agreement); | ||
• | enter into, modify, amend or terminate any contract or waive, release or assign any rights or claims under any contract, which would be reasonably likely to (1) impair the ability of ICT to perform its obligations under the merger agreement in any material respect or (2) prevent or materially delay or impair the consummation of the mergers and the other transactions contemplated by the merger agreement; | ||
• | except as required pursuant to any ICT benefit plans, foreign benefit plans, collective bargaining agreements, the terms of the merger agreement or any applicable law, and subject to limited exceptions, (1) grant or provide or adopt a plan or enter into an agreement to grant or provide any retention, change in control, severance or termination payments or benefits to any current or former director, officer, employee or consultant of ICT or any of its subsidiaries, (2) subject to certain limited exceptions, increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards to any current or former director, officer, employee or consultant of ICT or any of its subsidiaries, (3) establish, adopt, amend or terminate any ICT benefit plan or amend the terms of any outstanding equity-based awards, (4) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any ICT benefit plan, (5) change any actuarial or other assumptions used to calculate funding obligations with respect to any ICT benefit plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, or (6) issue or forgive any loans to directors, officers, employees, contractors or any of their respective affiliates except for any such issuance that would not violate the Sarbanes-Oxley Act and is consistent with past practice and policy; | ||
• | pre-pay any long-term indebtedness for borrowed money or change the terms or extend the maturity of any long-term indebtedness (including providing cash cover under any letter of credit otherwise than as required to do so under such facility), other than borrowings under existing working capital facilities; | ||
• | make any material change in its method of accounting or its accounting practices, policies or principles, unless required by law, a governmental entity or GAAP, or (1) change its fiscal year, (2) make, change or revoke any material United States tax election, (3) settle or compromise any tax claim where the amount of cash to be paid to the relevant taxing authority upon such settlement or compromise of such claim exceeds $50,000 above any amount reserved for such claim in the latest ICT financial statements; | ||
• | waive, release, assign, settle or compromise any claim which upon resolution would involve the payment by ICT of an amount in excess of $1 million in the aggregate or would involve the imposition of injunctive relief against ICT that would materially limit or restrict the business of Sykes and its subsidiaries following the effective time of the merger; or |
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• | authorize or enter into an agreement to do any of the actions described in the preceding bullets. |
• | preserve their assets; | ||
• | preserve Sykes’ business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors and lessors; and | ||
• | comply in all material respects with all applicable laws. |
• | acquire (including, by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, other business organization or any division thereof; | ||
• | merge or consolidate Sykes with any person (other than a merger of a subsidiary into Sykes) or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Sykes; | ||
• | purchase, redeem or otherwise acquire any shares of its capital stock, any securities convertible or exchangeable or exercisable for any shares of capital stock or any other securities for consideration in excess of $5 million in the aggregate, except any purchase, redemption or other acquisition (1) required by the terms of Sykes benefit plans, (2) in order to pay taxes or satisfy withholding obligations in respect of such taxes in connection with the exercise of Sykes stock options, the lapse of restrictions or settlement of awards granted pursuant to the applicable Sykes benefit plans or (3) required by the terms of any plans, arrangements or agreements existing on the date of the merger agreement between Sykes or any of its subsidiaries and any director or employee of Sykes or any of its subsidiaries; | ||
• | declare, set aside, make or pay any dividend or other distribution on any shares of the capital stock of Sykes or any of its subsidiaries; | ||
• | enter into, modify, amend or terminate any contract or waive, release or assign any rights or claims under any contract, which would be reasonably likely to (1) impair the ability of Sykes to perform its obligations under the merger agreement in any material respect or (2) prevent or materially delay or impair the consummation of the mergers and the other transactions contemplated by the merger agreement; or | ||
• | authorize or enter into an agreement to do any of the actions described in the preceding bullets. |
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• | initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer from any third party relating to any acquisition proposal (as defined below) with respect to ICT; | ||
• | enter into or participate in any substantive discussion or negotiation with respect to, or provide any confidential information or data to any person relating to, an acquisition proposal; | ||
• | enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract relating to an acquisition proposal or enter into any contract or agreement in principle requiring ICT to abandon, terminate or breach its obligations under the merger agreement or fail to consummate the transactions contemplated by the merger agreement; | ||
• | take any action to make the provisions of any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other similar anti-takeover statute or regulation (including any transaction under, or a third party becoming an “interested shareholder” under, the Pennsylvania Business Corporation Law of 1988, as amended), or any restrictive provision of any applicable anti-takeover provision in ICT’s articles of incorporation or bylaws, inapplicable to any transactions contemplated by an acquisition proposal (and, to the extent permitted thereunder, ICT shall promptly take all steps necessary to terminate any waiver that may have been heretofore granted, to any person under any such provisions); or | ||
• | resolve, propose or agree to undertake any of the actions listed above. |
• | to immediately cease and cause to be terminated any solicitation, discussion or negotiation with any persons conducted prior to the execution of the merger agreement by ICT, its subsidiaries or any of their representatives with respect to any acquisition proposal and to promptly request the return or destruction of all confidential information provided by or on behalf of ICT or any of its subsidiaries to such person in connection with the consideration of any acquisition proposal to the extent that ICT is entitled to have such documents returned or destroyed; | ||
• | to notify Sykes in writing promptly (but no later than 24 hours) after it receives any acquisition proposal or inquiry of the type described above and to provide Sykes with certain information regarding such acquisition proposal or inquiry; | ||
• | to keep Sykes reasonably informed, on a reasonably current basis, of the status of any material developments with respect to, any such acquisition proposal and to provide Sykes with copies of all written inquiries and correspondence with respect to such acquisition proposal or inquiry no later than 24 hours following receipt thereof; | ||
• | not to, and to cause its subsidiaries not to, (i) enter into any contract subsequent to the date of the merger agreement that prohibits ICT from providing information concerning any acquisition proposal or inquiry to Sykes, or (ii) terminate, waive, amend or modify, or grant permission under, the standstill provisions of any agreement to which it or any of its subsidiaries is a party which prohibits the counterparty from making, effecting, entering into, making or participating in any solicitation of proxies in respect of, seeking, proposing or otherwise acting alone or in concert with others, to influence the management or the ICT board of directors with respect to, or advising, assisting, knowingly encouraging or acting as a financing source for, an acquisition proposal; and |
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• | to enforce the standstill provisions of any agreements which prohibit the counterparty from making, effecting, entering into, making or participating in any solicitation of proxies in respect of, seeking, proposing or otherwise acting alone or in concert with others, to influence the management or the ICT board of the directors with respect to, or advising, assisting, knowingly encouraging or acting as a financing source for, an acquisition proposal to, and to cause subsidiaries of ICT to, take all steps necessary to terminate any waiver of any such standstill provision that may have been previously granted unless the ICT board of directors concludes in good faith, after consultation with outside counsel, that taking such action could reasonably be determined to be inconsistent with its fiduciary duties under applicable law, and to, and to cause its subsidiaries to, otherwise enforce any such standstill provisions. |
• | a merger, consolidation, other business combination or similar transaction involving ICT or any of its subsidiaries, pursuant to which such person would own 15% or more of the consolidated assets, revenues or net income of ICT and its subsidiaries, taken as a whole; | ||
• | a sale, lease, license or other disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets of ICT (including equity interests of any of its subsidiaries) or any subsidiary of ICT representing 15% or more of the consolidated assets, revenues or net income of ICT and its subsidiaries, taken as a whole; | ||
• | the issuance or sale or other disposition (including by way of merger, consolidation, business combination, share exchange, joint venture or similar transaction) of equity interests representing 15% or more of the voting power of ICT; | ||
• | a transaction or series of transactions in which any person will acquire beneficial ownership or the right to acquire beneficial ownership of equity interests representing 15% or more of the voting power of ICT; or | ||
• | any combination of any of the transactions described in the four immediately preceding bullets. |
• | in response to an intervening event (as defined below) if the ICT board of directors concludes in good faith, after consultation with outside counsel, that the failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties under applicable law; or |
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• | in response to an acquisition proposal if the ICT board of directors concludes in good faith, after consultation with outside counsel, that the failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties under applicable law. |
• | the same base salary, short term cash incentives and severance benefits provided by ICT or its subsidiaries as of the effective time, as well as comparable health, life and disability insurance, 401(k) and deferred compensation benefits provided by ICT or its subsidiaries as of the effective time under the applicable ICT benefit plan (not taking into account for purposes of this provision only, participation in ICT’s Long Term Incentive Plan, any sales commission plans and any changes to an employee’s title only), and | ||
• | severance benefits which are no less advantageous than those offered to the ICT employees employed at the effective time of the merger under the applicable ICT benefit plan, policy or practice; |
• | the obligations in the prior two bullet points will not take into account any change in control or transaction-based retention, transition, stay or similar bonus arrangements for purposes of defining either annual incentive and bonus opportunities or employee benefits; and | ||
• | with respect to any employees based outside the United States, Sykes’ obligations will be modified to the extent necessary to comply with applicable laws of the foreign countries in which such employees are based. |
• | waive any pre-existing condition exclusions and waiting periods with respect to participation and coverage requirements otherwise applicable to former ICT employees under any such Sykes benefit plans providing medical, dental or vision benefits to the same extent such limitation would have been waived or satisfied under the analogous ICT benefit plan in which such former ICT employee participated immediately prior to the effective time of the merger; | ||
• | provide each former ICT employee with credit for any co-payments and deductibles paid prior to the effective time of the merger during the calendar year in which such effective time occurs (or if later, paid in the year in which such employee is first eligible to participate), to the same extent such credit was given under the analogous ICT benefit plan prior to the effective time of the merger, in satisfying any applicable deductible or out-of-pocket requirements under any such Sykes benefit plan in which the employee participates during the calendar year in which such effective time occurs (or if later, the year in which such employee is first eligible to participate); and |
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• | recognize all service of each former ICT employee prior to the effective time of the merger to ICT, its subsidiaries and any predecessor entities of ICT or any of its subsidiaries (as well as service to Sykes and its affiliates (including the surviving corporation) after the effective time of the merger), for all purposes (including, but not limited to, eligibility to participate, vesting credit, entitlement to benefits and benefit accrual) of any Sykes benefit plans (including those providing for vacation and paid time-off) in which any such employee participates after the effective time of the merger except that Sykes will not recognize such service to the extent it would result in any duplication of benefits for the same period of service. |
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• | adoption of the merger agreement by ICT’s shareholders; | ||
• | absence of any statute, law, ordinance, rule, regulation, judgment, order, injunction (whether temporary, preliminary or permanent), decision, opinion or decree issued by a court or other governmental entity in the United States or the European Union that makes the merger illegal or prohibits the consummation of the merger; | ||
• | the applicable waiting period (and any extension thereof) under the HSR Act will have expired or been terminated and antitrust approvals in any other jurisdictions, if necessary, have been obtained; | ||
• | approval for the listing on the NASDAQ stock market of the Sykes common stock to be issued to the ICT shareholders in the merger, subject to official notice of issuance; and | ||
• | the registration statement on Form S-4, of which this proxy statement/prospectus forms a part, having been declared effective by the SEC and the absence of an effective stop order suspending the effectiveness of the Form S-4 or proceedings pending before the SEC for that purpose. |
• | (i) the representations and warranties of ICT regarding the organization, good standing and qualification, capitalization, and corporate authority of ICT will be true and correct (other than in de minimis respects), (ii) the representations and warranties of ICT related to the absence of any event or occurrence having a material adverse effect on ICT since January 1, 2009 will be true and correct in all respects, and (iii) all other representations and warranties of ICT will be true and correct (without giving effect to any materiality or material adverse effect qualifications contained in such representations and warranties), in each case, when made and as of the date of closing of the merger (other than those representations and warranties that were made only as of a specified date, which need only be true and correct as of such specified date), except in the case of representations and warranties described in clause (iii) above, where the failure to be true and correct has not had and would not reasonably be expected to have a material adverse effect on ICT; | ||
• | ICT shall have performed or complied with, in all material respects, all of its material agreements and covenants under the merger agreement at or prior to the consummation of the merger; | ||
• | receipt of a certificate executed by ICT’s chief executive officer or chief financial officer as to the satisfaction of the conditions described in the preceding two bullets; and | ||
• | Sykes’ receipt of an opinion from McDermott Will & Emery, on the basis of representations and warranties set forth or referred to in such opinion, dated as of the closing date, to the effect that the mergers, taken together, will be treated as a “reorganization” within the meaning of Section 368(a) of the Code, which will require that, among other things, Sykes common stock constitute at least 40% of the total consideration paid or payable to ICT shareholders in exchange for their ICT common stock. See “Proposal 1: The Merger — Material U.S. Federal Income Tax Consequences of the Transaction” beginning on page 58. In the event that McDermott Will & Emery is unwilling |
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to provide such opinion, Sykes has agreed to accept such opinion from Morgan Lewis, if such firm will provide the same to Sykes. |
• | (i) the representations and warranties of Sykes and Merger Subs regarding the organization, good standing and qualification, capitalization, and corporate authority of Sykes and Merger Subs will be true and correct (other than in de minimis respects), (ii) the representations and warranties of Sykes and Merger Subs related to the absence of any event or occurrence having a material adverse effect on Sykes since January 1, 2009 will be true and correct in all respects, and (iii) all other representations and warranties of Sykes and Merger Subs will be true and correct (without giving effect to any materiality or material adverse effect qualifications contained in such representations and warranties), in each case, when made and as of the date of closing of the merger (other than those representations and warranties that were made only as of a specified date, which need only be true and correct as of such specified date), except in the case of representations and warranties described in clause (iii) above, where the failure of such representations and warranties to be true and correct has not had and would not reasonably be expected to have a material adverse effect on Sykes; | ||
• | Sykes and Merger Subs will have performed or complied with, in all material respects, all of their respective material agreements and covenants under the merger agreement at or prior to the closing date of the merger; | ||
• | receipt of a certificate executed by Sykes’ and each Merger Sub’s chief executive officer or chief financial officer as to the satisfaction of the conditions described in the preceding two bullets; and | ||
• | ICT’s receipt of an opinion from Morgan Lewis, on the basis of representations and warranties set forth or referred to in such opinion, dated as of the closing date, to the effect that the mergers, taken together, will be treated as a “reorganization” within the meaning of Section 368(a) of the Code, which will require that, among other things, Sykes common stock constitute at least 40% of the total consideration paid or payable to ICT shareholders in exchange for their ICT common stock. See “Proposal 1: The Merger — Material U.S. Federal Income Tax Consequences of the Transaction” beginning on page 58. In the event that Morgan Lewis is unwilling to provide such opinion, ICT has agreed to accept such opinion from McDermott Will & Emery, if such firm will provide the same to ICT. |
• | the merger has not been consummated by February 28, 2010, unless all conditions have been satisfied other than the condition related to receipt of antitrust regulatory approvals, in which case the date upon which Sykes or ICT may terminate the merger agreement may be extended to a date not later than July 2, 2010 (such date, as may be extended, being referred to as the termination date); | ||
• | a governmental entity in the United States or European Union has issued a final and non-appealable order, judgment, decision, opinion, decree or ruling or taken any other action permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement; or | ||
• | ICT’s shareholders have failed to vote for adoption of the merger agreement. |
• | ICT breaches its representations and warranties, covenants or agreements under the merger agreement such that the applicable closing conditions will not have been satisfied (and such breach is incapable of being cured prior to the termination date) or | ||
• | (1) the ICT board of directors effects a Change of Recommendation due to the occurrence of an intervening event; (2) the ICT board of directors effects a Change of Recommendation in response to an acquisition proposal from a third party |
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• | Sykes breaches its representations and warranties, covenants or agreements under the merger agreement such that certain applicable closing conditions will not have been satisfied (and such breach is incapable of being cured prior to the termination date); or | ||
• | at any time prior to ICT’s shareholders’ adoption of the merger agreement, if the ICT board of directors determines to accept a superior proposal, but only if ICT (1) is not in material breach of its agreement not to solicit alternative proposals and (2) the $7.5 million termination fee and Sykes’ actual expenses incurred in connection with the mergers in an amount not to exceed $4.5 million are paid concurrently with such termination. |
• | Sykes terminates the merger agreement due the occurrence of a Change of Recommendation Termination Event; or | ||
• | ICT terminates the merger agreement in order to enter into a superior proposal; or | ||
• | Sykes terminates the merger agreement and the basis for such termination is (1) a willful and material breach in existence on the date the merger agreement was signed of any representation or warranty of ICT contained in the merger agreement, or (2) a willful and material breach of covenants or agreements contained in the merger agreement to be complied with by ICT and |
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in each case such breach has resulted in the failure of certain closing conditions, and such breach is incapable of being cured prior to the termination date, or | |||
• | either Sykes or ICT terminates the merger agreement (1) due to the ICT shareholders’ failure to adopt the merger agreement, (2) prior to the time of the shareholder vote a third party acquisition proposal had been publicly announced or publicly made known to ICT’s shareholders, and (3) ICT enters into a definitive agreement or consummates a transaction with respect to such acquisition proposal within 12 months of the termination of the merger agreement. |
• | extend the time for the performance of any of the obligations or other acts of the other party; | ||
• | waive any breach of or inaccuracies in the representations and warranties of the other party; or | ||
• | waive compliance by the other party with any of the other agreements or conditions contained in the merger agreement. |
• | appear (in person or by proxy) at any meeting (whether annual or special and whether or not an adjourned or postponed meeting) of shareholders of ICT, properly called, or otherwise cause such Affiliated Shareholder’s shares of ICT common stock that are subject to the voting agreement to be counted as present for purposes of establishing a quorum, and |
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• | vote or provide a written consent with respect to such Affiliated Shareholder’s shares of ICT common stock that are subject to the voting agreement (or cause such shares to be voted, or cause a written consent to be provided with respect to all such shares): |
• | in favor of adoption of the merger agreement and approval of the merger; | ||
• | against any action, proposal, transaction or agreement that would impede, frustrate, prevent or materially delay the merger (a “Frustrating Transaction”), and | ||
• | against any acquisition proposal as described in “The Merger Agreement — Agreement Not to Solicit Other Offers” on page 71 of this proxy statement/prospectus. |
• | enter into any agreement or understanding with any person the effect of which would be inconsistent with or violative of any of the provisions contained in the voting agreement, unless such agreement or understanding is entered into in connection with ICT’s entry into an alternative acquisition agreement in compliance with the terms of the merger agreement as described in “The Merger Agreement — Agreement Not to Solicit Other Offers on page 71 of this proxy statement/prospectus; | ||
• | except as contemplated by the voting agreement and the merger agreement and subject to certain exceptions set forth in the voting agreement: |
• | sell, transfer, tender, assign, pledge, encumber, contribute to the capital of any entity, hypothecate, give or otherwise dispose of, grant a proxy or power of attorney with respect to, deposit into any voting trust or enter into a voting arrangement or agreement, or create or permit to exist any liens of any nature whatsoever with respect to, any of such Affiliated Shareholder’s shares of ICT common stock that are subject to the voting agreement (or agree or consent to, or offer to do, any of the foregoing); | ||
• | take any action that would have the effect of preventing such Affiliated Shareholder from performing such Affiliated Shareholder’s obligations under the voting agreement or impede, frustrate, prevent or materially delay the merger; |
• | directly or indirectly: |
• | solicit, initiate or knowingly encourage (including by way of furnishing nonpublic information), or take any other action knowingly to facilitate, any inquiries or the making of any proposal or offer that constitutes an acquisition proposal; | ||
• | enter into or maintain or continue discussions or negotiations in furtherance of an acquisition proposal inquiry or to obtain an acquisition proposal; | ||
• | agree to, approve, endorse or recommend any acquisition proposal or enter into any letter of intent or other contract, agreement or commitment contemplated by or otherwise relating to any acquisition proposal; or | ||
• | authorize or permit any of the officers, directors or employees of such Affiliated Shareholder or of any entity that such Affiliated Shareholder directly or indirectly controls, or any investment banker, financial advisor, attorney, accountant or other representative retained by such Affiliated Shareholder or any entity that the Affiliated Shareholder directly or indirectly controls, to take any such action; or | ||
• | make any public announcement in opposition to, or in competition with, the merger agreement or the consummation of the merger. |
• | immediately cease all existing discussions or negotiations with any parties (other than Sykes) conducted prior to the date of the voting agreement with respect to any other acquisition proposals; or |
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• | upon the terms and subject to the conditions of the voting agreement, to use such Affiliated Shareholders reasonable best efforts to take, or cause to be taken, all appropriate action that may reasonably be necessary for the purposes of carrying out the intent of the voting agreement. |
• | the completion of the merger, | ||
• | the termination of the merger agreement in accordance with its terms, or | ||
• | the amendment of the merger agreement in any material respect (other than to increase the merger consideration) unless all of the Affiliated Shareholders approve the amendment. |
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• | 100% of the net cash proceeds of all asset dispositions; | ||
• | 100% of net insurance and condemnation proceeds; and | ||
• | 100% of the net cash proceeds from debt issuances; | ||
• | 50% of the net proceeds from equity issuances. |
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• | The leverage ratio cannot exceed 2.25x at any time; | ||
• | The interest coverage ratio cannot exceed less than 3.00x at any time; | ||
• | Sykes will not be permitted to undertake capital expenditures in excess of $80 million in 2010 and $85 million thereafter. |
• | 100% of the net cash proceeds of all asset dispositions by it or its subsidiaries (subject to reinvestment limits; | ||
• | 100% of the net cash proceeds from debt issuances by it or its subsidiaries; and | ||
• | 100% of net insurance and condemnation proceeds received by it or its subsidiaries. |
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AND ICT SHAREHOLDERS
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• | change the par value of any class or series of shares; or | ||
• | effect a combination or division of the corporation’s shares and increase or decrease the number of authorized shares of the corporation and increase or decrease the par value of shares in connection with such a combination or division, provided that the rights or preferences of the holders of any outstanding class or series will not be adversely affected by the amendment, and the percentage of authorized shares remaining unissued after the share division or combination will not exceed the percentage of authorized shares that was unissued before the division or combination. Fractional shares resulting from a combination of shares approved only by the board of directors may not be redeemed for cash. |
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• | change the corporation’s name; | ||
• | in certain circumstances, reflect a reduction in authorized shares effected in connection with an acquisition by the corporation of its own shares; | ||
• | add or delete a provision authorizing that shares of the corporation not be represented by certificates; | ||
• | add, change or eliminate the par value of any class or series of shares, if the par value does not have any substantive effect on the terms of any shares of the corporation; and/or | ||
• | under certain circumstances, split the corporation’s voting shares and/or, subject to certain limitations, increase the number of authorized voting shares of the corporation in connection with a stock split or stock dividend of the corporation’s voting shares. |
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• | the corporation would not be able to pay its debts as they become due in the usual course of business; or | ||
• | the corporation’s total assets would be less than the sum of its total liabilities plus (unless otherwise provided in the articles of incorporation) the amount that would be needed to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the dividend if the corporation were to be dissolved at the time this valuation is measured. |
• | the corporation would not be able to pay its debts as they become due in the usual course of business; or | ||
• | the corporation’s total assets would be less than the sum of its total liabilities plus (unless otherwise provided in the articles of incorporation) the amount that would be needed to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the dividend if the corporation were to be dissolved at the time this valuation is measured. |
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• | such corporation’s articles of incorporation is not amended; | ||
• | the shareholders of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations, and rights, immediately after the effective date of the merger; and | ||
• | either no shares of common stock of the surviving corporation and no shares, securities or obligations convertible into such stock are to be issued or delivered under the plan of merger, or the authorized unissued shares or the treasury shares of common stock of the surviving corporation to be issued or delivered under the plan of merger do not exceed 20% of the shares of common stock of such corporation outstanding immediately prior to the effective date of the merger. |
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• | whether or not the constituent corporation is the surviving corporation: |
• | the surviving or new corporation is a Pennsylvania corporation and, except for amendments the board of directors is authorized to make without shareholder approval, its articles of incorporation are identical to the articles of incorporation of the constituent corporation; | ||
• | each share of the constituent corporation outstanding immediately prior to the effective date of the merger or consolidation will continue as or be converted into, except as may otherwise be agreed by the shareholder, an identical share of the surviving or new corporation after the effective date of the merger or consolidation; and | ||
• | the plan of merger or consolidation provides that the shareholders of the constituent corporation will hold in the aggregate shares of the surviving or new corporation to be outstanding immediately after the effectiveness of the merger or consolidation entitled to cast at least a majority of the votes entitled to be cast generally for the election of directors; |
• | immediately prior to the adoption of the plan of merger or consolidation and at all times after the adoption and prior to its effective date, another corporation that is a party to the plan owns 80% or more of the outstanding shares of each class of the constituent corporation; or | ||
• | no shares of the constituent corporation have been issued prior to the adoption of the plan of merger or consolidation by the board of directors. |
• | a merger, consolidation, share exchange or division of the corporation or a subsidiary of the corporation with an interested shareholder, or with, involving or resulting in any other corporation which is, or after such transaction would be, an affiliate or associate of the interested shareholder; | ||
• | a sale, lease, exchange, mortgage, pledge, transfer or other disposition to or with the interested shareholder, or any affiliate or associate of the interested shareholder, of assets of the corporation or a subsidiary having an aggregate market value equal to 10% or more of the market value of all the assets or outstanding shares of the corporation or representing 10% or more of the earning power or net income of the corporation; | ||
• | with certain exceptions, the issuance or transfer by the corporation or a subsidiary to the interested shareholder or an affiliate or associate of the interested shareholder of shares of the corporation or subsidiary having an aggregate market value equal to 5% or more of the market value of all the outstanding shares of the corporation; | ||
• | adoption of any plan or proposal for the liquidation or dissolution of the corporation that was proposed by or pursuant to any agreement or understanding with the interested shareholder or an affiliate or associate of the interested shareholder; | ||
• | a split, reverse split, dividend or distribution of shares, other reclassification of securities, recapitalization or other transaction proposed by or pursuant to any agreement or understanding with the interested shareholder or an affiliate or associate of the interested shareholder that has the effect of increasing the interested shareholder’s or its affiliate’s or associate’s proportionate share, whether owned directly or indirectly, of the outstanding shares of any class or series of voting shares, or securities convertible into voting shares, of the corporation or a subsidiary of the corporation; and |
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• | the receipt by the interested shareholder or any affiliate or associate of the interested shareholder of the benefit, directly or indirectly, of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by or through the corporation, other than such a benefit received proportionately as a shareholder of the corporation. |
• | the board of directors of the corporation had approved the acquisition of shares that made the person an interested shareholder of the corporation before the interested shareholder became an interested shareholder of the corporation; or | ||
• | the proposed business combination was approved by (i) the board of directors of the corporation before the person became an interested shareholder of the corporation, or (ii) all of the holders of the outstanding shares of common stock of the corporation, or (iii) the holders of shares entitled to cast a majority of the votes all shareholders would be entitled to cast in an election of directors of the corporation (not including any shares of voting stock beneficially owned by the interested shareholder or its affiliates or associates) at a meeting called for such purpose no earlier than three months after the interested shareholder became the beneficial owner, directly or indirectly, of shares entitled to cast at least 80% of the votes all shareholders would be entitled to cast in an election of directors of the corporation, if the interested shareholder at the time of the meeting is the beneficial owner, directly or indirectly, of shares entitled to cast at least 80% of the votes all shareholders would be entitled to cast in an election of directors of the corporation and certain other criteria relating to per share consideration are met. |
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Sykes SEC Filings | Period or Date Filed | |
(SEC File No. 0-28274; CIK No. 0001010612) | ||
Annual Report on Form 10-K | Filed March 10, 2009 | |
Quarterly Reports on Form 10-Q | Filed May 6, 2009 and August 5, 2009 | |
Current Reports on Form 8-K | Filed April 1, 2009, July 7, 2009, October 6, 2009 and October 9, 2009 | |
The description of Sykes common stock set forth in a registration statement filed pursuant to Section 12 of the Exchange Act and any amendment or report filed for the purpose of updating those descriptions. |
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ICT SEC Filings | Period or Date Filed | |
(SEC File No. 0-20807; CIK No. 0001013149) | ||
Annual Report on Form 10-K | Filed March 16, 2009 | |
Quarterly Reports on Form 10-Q | Filed May 8, 2009 and August 10, 2009 | |
Current Reports on Form 8-K | Filed January 6, 2009, February 23, 2009, February 25, 2009, March 26, 2009, October 6, 2009 and October 9, 2009 |
Sykes Inc. | ICT | |
Sykes Enterprises, Incorporated | ICT Group, Inc. | |
400 North Ashley Drive | 100 Brandywine Boulevard | |
Tampa, FL 33602 | Newtown, PA 18940 | |
Attention: Investor Relations | Attention: Secretary | |
Telephone: 1-_______________ | Telephone: 1-267-685-5000 |
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Among
SYKES ENTERPRISES, INCORPORATED,
SH MERGER SUBSIDIARY I, INC.,
SH MERGER SUBSIDIARY II, LLC
And
ICT GROUP, INC.
Dated as of October 5, 2009
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ARTICLE I THE MERGER | 1 | |||||
Section 1.1 | The Merger | 1 | ||||
Section 1.2 | Closing | 1 | ||||
Section 1.3 | Effective Time | 1 | ||||
Section 1.4 | Effects of the Merger | 2 | ||||
Section 1.5 | Bylaws | 2 | ||||
Section 1.6 | Articles of incorporation | 2 | ||||
Section 1.7 | Officers and Directors | 2 | ||||
Section 1.8 | Effect on Capital Stock | 2 | ||||
Section 1.9 | Company Stock Options and Other Equity-Based Awards | 3 | ||||
Section 1.10 | Certain Adjustments | 3 | ||||
Section 1.11 | Second Merger | 3 | ||||
ARTICLE II EXCHANGE OF SHARES | 4 | |||||
Section 2.1 | Exchange Agent | 4 | ||||
Section 2.2 | Exchange Procedures | 4 | ||||
Section 2.3 | [Reserved] | 5 | ||||
Section 2.4 | Distributions with Respect to Unexchanged Shares | 5 | ||||
Section 2.5 | No Further Ownership Rights | 5 | ||||
Section 2.6 | No Fractional Shares of Parent Common Stock | 5 | ||||
Section 2.7 | Termination of Exchange Fund | 5 | ||||
Section 2.8 | No Liability | 6 | ||||
Section 2.9 | Investment of the Exchange Fund | 6 | ||||
Section 2.10 | Lost Certificates | 6 | ||||
Section 2.11 | Withholding Rights | 6 | ||||
Section 2.12 | Further Assurances | 6 | ||||
Section 2.13 | Stock Transfer Books | 6 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 7 | |||||
Section 3.1 | Organization, Good Standing and Qualification | 7 | ||||
Section 3.2 | Capital Structure | 7 | ||||
Section 3.3 | Corporate Authority | 9 | ||||
Section 3.4 | Governmental Filings; No Violations, Etc. | 9 | ||||
Section 3.5 | Company Reports; Financial Statements | 10 | ||||
Section 3.6 | Absence of Certain Changes | 11 | ||||
Section 3.7 | Litigation | 11 | ||||
Section 3.8 | Compliance with Laws | 12 | ||||
Section 3.9 | Properties | 12 | ||||
Section 3.10 | Contracts | 12 | ||||
Section 3.11 | Employee Benefit Plans | 13 | ||||
Section 3.12 | Labor Matters | 15 | ||||
Section 3.13 | Tax | 15 | ||||
Section 3.14 | Intellectual Property | 15 | ||||
Section 3.15 | Environmental Matters | 16 |
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Section 3.16 | Insurance | 17 | ||||
Section 3.17 | Regulatory Compliance | 17 | ||||
Section 3.18 | Interested Party Transactions | 18 | ||||
Section 3.19 | Brokers and Finders | 18 | ||||
Section 3.20 | No Additional Representations | 18 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS | 19 | |||||
Section 4.1 | Organization, Good Standing and Qualification | 19 | ||||
Section 4.2 | Capital Structure | 19 | ||||
Section 4.3 | Corporate Authority | 21 | ||||
Section 4.4 | Governmental Filings; No Violations; Etc. | 21 | ||||
Section 4.5 | Parent Reports; Financial Statements | 21 | ||||
Section 4.6 | Litigation | 23 | ||||
Section 4.7 | Brokers and Finders | 23 | ||||
Section 4.8 | No Business Activities | 23 | ||||
Section 4.9 | Board Approval | 23 | ||||
Section 4.10 | Vote Required | 23 | ||||
Section 4.11 | Financing | 23 | ||||
Section 4.12 | Absence of Certain Changes | 23 | ||||
Section 4.13 | Compliance with Laws | 23 | ||||
Section 4.14 | Certain Agreements | 24 | ||||
Section 4.15 | Tax | 24 | ||||
Section 4.16 | Intellectual Property | 24 | ||||
Section 4.17 | Regulatory Compliance | 25 | ||||
Section 4.18 | No Additional Representations | 25 | ||||
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS | 26 | |||||
Section 5.1 | Ordinary Course | 26 | ||||
Section 5.2 | Governmental Filings | 29 | ||||
Section 5.3 | Restrictions on Parent | 30 | ||||
ARTICLE VI ADDITIONAL AGREEMENTS | 31 | |||||
Section 6.1 | Preparation of Proxy Statement; Shareholders Meeting | 31 | ||||
Section 6.2 | Access to Information/Employees | 32 | ||||
Section 6.3 | Reasonable Best Efforts | 33 | ||||
Section 6.4 | Acquisition Proposals | 34 | ||||
Section 6.5 | Fees and Expenses | 36 | ||||
Section 6.6 | Employee Benefits Matters | 37 | ||||
Section 6.7 | Directors’ and Officers’ Indemnification and Insurance | 38 | ||||
Section 6.8 | Public Announcements | 39 | ||||
Section 6.9 | Listing of Shares of Parent Common Stock | 39 | ||||
Section 6.10 | Dividends | 40 | ||||
Section 6.11 | Section 16 Matters | 40 | ||||
Section 6.12 | Company Cooperation on Certain Matters | 40 | ||||
Section 6.13 | Treatment of the Mergers as a “Reorganization” for Federal Income Tax Purposes | 40 |
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ARTICLE VII CONDITIONS PRECEDENT | 40 | |||||
Section 7.1 | Conditions to Each Party’s Obligation to Effect the Merger | 40 | ||||
Section 7.2 | Additional Conditions to Obligations of Parent and Merger | 41 | ||||
Section 7.3 | Additional Conditions to Obligations of the Company | 42 | ||||
ARTICLE VIII TERMINATION AND AMENDMENT | 43 | |||||
Section 8.1 | General | 43 | ||||
Section 8.2 | Obligations in Event of Termination | 44 | ||||
Section 8.3 | Amendment | 45 | ||||
Section 8.4 | Extension; Waiver | 45 | ||||
ARTICLE IX GENERAL PROVISIONS | 46 | |||||
Section 9.1 | Non-Survival of Representations, Warranties and Agreements | 46 | ||||
Section 9.2 | Notices | 46 | ||||
Section 9.3 | Headings | 46 | ||||
Section 9.4 | Counterparts | 46 | ||||
Section 9.5 | Entire Agreement; No Third-Party Beneficiaries | 47 | ||||
Section 9.6 | Governing Law | 47 | ||||
Section 9.7 | Severability | 47 | ||||
Section 9.8 | Assignment | 47 | ||||
Section 9.9 | Submission to Jurisdiction; Waivers | 47 | ||||
Section 9.10 | Specific Performance | 47 | ||||
Section 9.11 | Waiver of Jury Trial | 48 | ||||
Section 9.12 | Interpretation | 48 | ||||
Section 9.13 | Definitions | 48 |
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Exhibit | Title | |||
A | Bylaws of the Surviving Corporation | |||
B | Articles of Incorporation of the Surviving Corporation |
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Attention: | James T. Holder |
Attention: | Jeffrey C. Moore |
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By: | /s/ Charles E. Sykes |
Title: | President |
By: | /s/ Charles E. Sykes |
Title: | President |
By: | /s/ Charles E. Sykes |
Title: | President |
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By: | /s/ John J. Brennan |
Title: | President and Chief Executive Officer |
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Section | ||
Defined Term | Where Defined | |
“Acquisition Proposal” | 6.4(e) | |
“Actions” | 3.7(a) | |
“Agreement” | Preamble | |
“Alternative Acquisition Agreement” | 6.4(d) | |
“Articles of Merger” | 1.3 | |
“Affiliate” | 9.13 | |
“Bankruptcy and Equity Exception” | 3.3(a) | |
“Benefits Continuation Period” | 6.6(a) | |
“Board of Directors” | 9.13 | |
“Business Day” | 9.13 | |
“Capitalization Date” | 3.2(a) | |
“Cash Consideration” | 1.8(b) | |
“Certificates” | 1.8(d) | |
“Change in the Company Recommendation” | 6.1(b) | |
“CIC Severance Agreements” | 6.6(b) | |
“Closing” | 1.2 | |
“Closing Date” | 1.2 | |
“Code” | 9.13 | |
“Company” | Preamble | |
“Company Book-Entry Shares” | 1.8(d) | |
“Company Benefit Plan” | 3.11(a) | |
“Company Common Stock” | 1.8(b) | |
“Company Disclosure Letter” | Article III | |
“Company Financial Advisor” | 3.19 | |
“Company Financial Statements” | 3.5(a) | |
“Company Material Adverse Effect” | 9.13 | |
“Company Material Contract” | 3.10(b) | |
“Company Permits” | 3.17(a) | |
“Company Recommendation” | 6.1(b) | |
“Company Regulatory Agency” | 3.17(a) | |
“Company Requisite Vote” | 3.3(a) | |
“Company SEC Documents” | 3.5(a) | |
“Company Shareholder Meeting” | 6.1(b) | |
“Company Stock Options” | 1.9(a) | |
“Company Stock Plans” | 9.13 | |
“Confidentiality Agreement” | 9.13 | |
“Contracts” | 9.13 | |
“Covered Employee” | 6.6(a) | |
“DOJ” | 6.3(b) | |
“D&O Insurance” | 6.7(a) | |
“Effective Date” | 1.3 | |
“Effective Time” | 1.3 | |
“Environmental Laws” | 9.13 |
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Section | ||
Defined Term | Where Defined | |
“Environmental Permit” | 9.13 | |
“Equity Interest” | 9.13 | |
“ERISA” | 3.11(a) | |
“ERISA Affiliate” | 3.11(a) | |
“Exchange Act” | 3.4(a) | |
“Exchange Agent” | 2.1 | |
“Exchange Fund” | 2.1 | |
“Exchange Ratio” | 1.8(c) | |
“Expenses” | 9.13 | |
“Foreign Benefit Plans” | 3.11(a) | |
“Foreign Subsidiary” | 5.1(m) | |
“Form S-4” | 6.1(a) | |
“FTC” | 6.3(b) | |
“GAAP” | 9.13 | |
“Governmental Entity” | 3.4(a) | |
“Hazardous Material” | 9.13 | |
“HSR Act” | 3.4(a) | |
“Indemnified Parties” | 6.7(a) | |
“Inquiry” | 6.4(b) | |
“Insurance Policies” | 3.16 | |
“Intellectual Property” | 3.14(a) | |
“Intervening Event” | 9.13 | |
“IRS” | 3.11(b) | |
“Known”or“Knowledge” | 9.13 | |
“Law” | 9.13 | |
“Leased Real Property” | 3.9 | |
“Lien” | 9.13 | |
“Merger” | 1.1 | |
“Mergers” | 1.11(a) | |
“Merger Consideration” | 1.8(b) | |
“Merger Sub” | Preamble | |
“Merger Subs” | Preamble | |
“Merger Sub II” | Preamble | |
“Nasdaq” | 3.4(a) | |
“New Benefit Plans” | 6.6(c) | |
“Option Consideration” | 1.9(a) | |
“Options” | 1.9(a) | |
“Order” | 9.13 | |
“other party” | 9.13 | |
“Owned Real Property” | 3.9 | |
“Parent” | Preamble | |
“Parent Benefit Plans” | 4.2(b) | |
“Parent Common Stock” | 1.8(b)(ii) | |
“Parent Disclosure Letter” | Article IV |
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Section | ||
Defined Term | Where Defined | |
“Parent Financial Advisor” | 4.7 | |
“Parent Financial Statements” | 4.5(a) | |
“Parent Material Adverse Effect” | 9.13 | |
“Parent Permits” | 4.17(a) | |
“Parent Regulatory Agency” | 4.17(a) | |
“Parent SEC Documents” | 4.5(a) | |
“Parent Share Measurement Value” | 1.8(c) | |
“parties” | Preamble | |
“PBCL” | Recitals | |
“PBGC” | 3.11(b) | |
“Permitted Liens” | 9.13 | |
“Per Share Amount” | 9.13 | |
“Person” | 9.13 | |
“Proxy Statement” | 6.1(a) | |
“Qualifying Amendment” | 9.13 | |
“Regulatory Law” | 9.13 | |
“Related Person” | 9.13 | |
“Representative” | 9.13 | |
“RSU” | 1.9(b) | |
“RSU Consideration” | 1.9(b) | |
“Sarbanes-Oxley Act” | 3.5(a) | |
“SEC” | 9.13 | |
“Second Merger” | 1.11(a) | |
“Securities Act” | 3.2(d) | |
“Significant Subsidiary” | 9.13 | |
“Stock Consideration” | 1.8(b) | |
“Subsidiary” | 9.13 | |
“Superior Proposal” | 6.4(e) | |
“Surviving Corporation” | 1.1 | |
“Surviving Entity” | 1.11(a) | |
“Takeover Statute” | 3.3(c) | |
“Tax Return” | 9.13 | |
“Taxes” | 9.13 | |
“Termination Date” | 8.1(b) | |
“Termination Fee” | 8.2(b) | |
“Third Party” | 9.13 |
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1. | reviewed the draft of the Merger Agreement dated October 5, 2009 distributed to the Board of Directors in advance of its meeting on October 5, 2009 and certain related documents; | |
2. | reviewed certain publicly available financial statements of the Company and Parent; | |
3. | reviewed certain other publicly available business and financial information relating to the Company and Parent that we deemed relevant; | |
4. | reviewed certain information, including financial forecasts and other financial and operating data concerning the Company and Parent, prepared by the management of the Company and Parent, respectively; |
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5. | discussed the past and present operations and financial condition and the prospects of the Company with senior executives of the Company; | |
6. | discussed the past and present operations and financial condition and the prospects of Parent with senior executives of Parent; | |
7. | reviewed and discussed certain information regarding potential financial and operational benefits anticipated from the Merger prepared by the management of the Company; | |
8. | reviewed the historical market prices, trading activity and equity research price targets for the Company Common Stock and the Parent Common Stock; | |
9. | compared the value of the Consideration with that received in certain publicly available transactions that we deemed relevant; | |
10. | compared the value of the Consideration with the trading valuations of certain publicly traded companies that we deemed relevant; | |
11. | compared the value of the Consideration with the relative contribution of the Company to the pro forma combined company based on a number of metrics that we deemed relevant; | |
12. | compared the value of the Consideration to the valuation derived by discounting projected future share prices of the Company based on financial projections prepared by management of the Company at discount rates we deemed appropriate; | |
13. | participated in discussions and negotiations among representatives of the Company and its legal advisors and representatives of Parent and its legal and financial advisors; and | |
14. | performed such other analyses and considered such other factors as we deemed appropriate. |
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Very best regards, | ||||
GREENHILL & CO., LLC | ||||
By: | /s/ Dhiren H. Shah Dhiren H. Shah Managing Director |
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By: | /s/ Charles E. Sykes |
Title: | President and Chief Executive Officer |
By: | /s/ Charles E. Sykes |
Title: | President |
By: | /s/ John J. Brennan |
Title: | President and Chief Executive Officer |
the Amended and Restated Voting Trust Agreement
dated April 1, 2004
the Amended and Restated Voting Trust Agreement
dated April 1, 2004
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of separate trusts under The Brennan Family
1996 Trust Agreement dated February 16, 1996
f/b/o Eileen M. Brennan Oakley, Donald P. Brennan, Jr.,
Maureen C. Brennan, Patrick K. Brennan,
Jonathan R. Brennan and Erin P. Brennan,
and of separate trusts under The Brennan Family
1997 Trust Agreement dated February 14, 1997
f/b/o Eileen M. Brennan Oakley, Donald P. Brennan, Jr., Maureen C. Brennan, Patrick K. Brennan,
Jonathan R. Brennan and Erin P. Brennan
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Number of Outstanding | ||||
Shares of Common Stock | ||||
Beneficially Owned by | ||||
Name of Shareholder: | Shareholder: | |||
John J. Brennan | 651,123 | * | ||
John J. Brennan and Donald P. Brennan as Trustees under the Voting Trust created under the Amended and Restated Voting Trust Agreement dated April 1, 2004 | 4,500,000 | |||
Donald P. Brennan | — | ** | ||
Eileen Brennan Oakley as Trustee of separate trusts under The Brennan Family 1996 Trust Agreement dated February 16, 1996*** | ||||
f/b/o Eileen M. Brennan Oakley | 14,208 | |||
f/b/o Donald P. Brennan, Jr. | 14,208 | |||
f/b/o Maureen C. Brennan | 14,208 | |||
f/b/o Patrick K. Brennan | 14,208 | |||
f/b/o Jonathan R. Brennan | 14,208 | |||
f/b/o Erin P. Brennan | 14,208 | |||
Eileen Brennan Oakley as Trustee of separate trusts under The Brennan Family 1997 Trust Agreement dated February 14, 1997*** | ||||
f/b/o Eileen M. Brennan Oakley | 179,547 | |||
f/b/o Donald P. Brennan, Jr. | 179,546 | |||
f/b/o Maureen C. Brennan | 145,267 | |||
f/b/o Patrick K. Brennan | 196,186 | |||
f/b/o Jonathan R. Brennan | 196,186 | |||
f/b/o Erin P. Brennan | 196,186 |
* | Does not include (i) 4,500,000 shares of Company Common Stock, 2,250,000 of which are owned by John J. Brennan and 2,250,000 of which are owned by Donald P. Brennan, over which John J. Brennan and Donald P. Brennan share dispositive power and certain voting power as Trustees under the Voting Trust created under the Amended and Restated Voting Trust Agreement dated April 1, 2004 (the “Voting Trust Shares”), (ii) 172,698 shares of Company Common Stock over which John J. Brennan exercises voting control pursuant to certain voting agreements entered into by and among current and former employees of the Company, John J. Brennan and the Company, (iii) 99,500 shares of Company Common Stock issuable pursuant to stock options that are exercisable within sixty (60) days of the date hereof, or (iv) 45,200 shares of Company Common Stock held jointly by John J. Brennan and Jean Brennan. | |
** | Does not include (i) the Voting Trust Shares, (ii) 25,000 shares of Company Common Stock issuable pursuant to stock options that are exercisable within sixty (60) days of the date hereof, or (iii) shares of Company Common Stock which may be (X) distributed to Donald P. Brennan on or within 105 days of October 23, 2009 (the “Payment Date”) from a grantor retained annuity trust (the “GRAT”) in existence on the date of this Agreement in satisfaction of an annuity of $1,013,185.11 payable to Donald P. Brennan on the Payment Date, which annuity amount may be paid with a maximum of 492,084 shares of Company Common Stock (such shares being all of the shares of Company Common Stock currently held in the GRAT, the current trustees of which are Donald P. Brennan, ** Patricia A. Brennan and The Northern Trust Company, with Patricia A. Brennan, as trustee, having sole power, authority and discretion with respect to Company Common Stock held in the GRAT), or (Y) purchased by Donald P. Brennan from the GRAT. | |
*** | The trustees of these trusts are Eileen Brennan Oakley, Donald P. Brennan and The Northern Trust Company. The Northern Trust Company is successor to The Goldman Sachs Trust Company as a co-trustee of the trusts. Re-registration of the shares of Company Common Stock held in the trusts to substitute The Northern Trust Company as a record owner (along with Eileen Brennan Oakley and Donald P. Brennan) in place of The Goldman Sachs Trust Company is in process. Under the terms of the applicable trust agreements Eileen Brennan Oakley, as trustee, has sole power to vote and dispose of the shares and therefore is the beneficial owner thereof. |
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Exhibit | ||
No. | Description | |
2.1 | Agreement and Plan of Merger dated as of October 5, 2009 among Sykes Enterprises, Incorporated, SH Merger Subsidiary I, Inc., SH Merger Subsidiary II, LLC, and ICT Group, Inc. (included as Annex A to the proxy statement/prospectus forming a part of this Registration Statement and incorporated herein by reference) (the schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K). | |
3.1 | Articles of Incorporation of Sykes Enterprises, Incorporated (filed as Exhibit 3.1 to the Registrant’s Registration Statement on Form S-3 filed with the Commission on October 23, 1997, and incorporated herein by reference). | |
3.2 | Articles of Amendment to Articles of Incorporation of Sykes Enterprises, Incorporated (filed as Exhibit 3.2 to the Registrant’s Form 10-K filed with the Commission on March 29, 1999, and incorporated herein by reference). | |
3.3 | By-laws of Sykes Inc., as amended October 23, 2008 (Filed as Exhibit 3.3 to Registrant’s Form 10-K filed with the Commission on March 22, 2005, and incorporated herein by reference). | |
5 | Opinion of Shumaker, Loop & Kendrick, LLP as to the validity of the shares of common stock of Sykes. | |
8.1 | Opinion of Shumaker, Loop & Kendrick, LLP as to certain tax matters (including consent). | |
8.2 | Opinion of Morgan, Lewis & Bockius LLP as to certain tax matters (including consent). | |
10 | Voting Agreement, dated as of October 5, 2009, by and among Sykes Enterprises, Incorporated, ICT Group, Inc., John J. Brennan, Donald P. Brennan, and Eileen Brennan Oakley (included as Annex C to the proxy statement/prospectus forming a part of this Registration Statement and incorporated herein by reference). | |
15 | Awareness Letter of Deloitte & Touche LLP, Independent Registered Public Accounting Firm of Sykes. | |
23.1 | Consent of Shumaker, Loop & Kendrick, LLP (included in Exhibits 5 and 8.1 hereto). | |
23.2 | Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8.2 hereto). | |
23.3 | Consent of KPMG LLP, Independent Registered Public Accounting Firm of ICT. | |
23.4 | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm of Sykes. | |
99.1 | Form of ICT proxy card. | |
99.2 | Consent of Greenhill & Co., LLC. |
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SYKES ENTERPRISES, INCORPORATED (Registrant) | ||||
By: | /s/ Charles E. Sykes | |||
Charles E. Sykes | ||||
President and Chief Executive Officer (principal executive officer) | ||||
By: | /s/ W. Michael Kipphut | |||
W. Michael Kipphut, | ||||
Senior Vice President and Chief Financial Officer (principal financial and accounting officer) | ||||
Signature | Title | Date | ||
/s/ Paul L. Whiting | Chairman of the Board | October 29, 2009 | ||
Paul L. Whiting | ||||
/s/ Charles E. Sykes | President and Chief Executive Officer | October 29, 2009 | ||
Charles E. Sykes | and Director (Principal Executive Officer) | |||
/s/ Furman P. Bodenheimer, Jr. | Director | October 29, 2009 | ||
Furman P. Bodenheimer, Jr. | ||||
/s/ Mark C. Bozek | Director | October 29, 2009 | ||
Mark C. Bozek | ||||
/s/ Lt. Gen. Michael P. Delong (Ret.) | Director | October 29, 2009 | ||
Lt. Gen. Michael P. Delong (Ret.) | ||||
/s/ H. Parks Helms | Director | October 29, 2009 | ||
H. Parks Helms | ||||
/s/ Iain A. Macdonald | Director | October 29, 2009 | ||
Iain A. Macdonald | ||||
/s/ James S. MacLeod | Director | October 29, 2009 | ||
James S. MacLeod |
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Signature | Title | Date | ||
/s/ Linda F. McClintock-Greco M.D. | Director | October 29, 2009 | ||
Linda F. McClintock-Greco M.D. | ||||
/s/ William J. Meurer | Director | October 29, 2009 | ||
William J. Meurer | ||||
/s/ James K. Murray, Jr. | Director | October 29, 2009 | ||
James K. Murray, Jr. |
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