0001104659-11-039296.txt : 20110715 0001104659-11-039296.hdr.sgml : 20110715 20110715150254 ACCESSION NUMBER: 0001104659-11-039296 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20110715 DATE AS OF CHANGE: 20110715 GROUP MEMBERS: ARTHUR E. LEVINE GROUP MEMBERS: LAUREN B. LEICHTMAN FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEVINE LEICHTMAN CAPITAL PARTNERS INC CENTRAL INDEX KEY: 0001259957 IRS NUMBER: 000000000 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 335 NORTH MAPLE DRIVE STE 240 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Conmed Healthcare Management, Inc. CENTRAL INDEX KEY: 0000943324 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 421297992 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-44295 FILM NUMBER: 11970365 BUSINESS ADDRESS: STREET 1: 7250 PARKWAY DR. STREET 2: SUITE 400 CITY: HANOVER STATE: MD ZIP: 21076 BUSINESS PHONE: 5152221717 MAIL ADDRESS: STREET 1: 7250 PARKWAY DR. STREET 2: SUITE 400 CITY: HANOVER STATE: MD ZIP: 21076 FORMER COMPANY: FORMER CONFORMED NAME: PACE HEALTH MANAGEMENT SYSTEMS INC DATE OF NAME CHANGE: 19960118 SC 13D/A 1 a11-18822_1sc13da.htm SC 13D/A

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 3)*

 

CONMED HEALTHCARE MANAGEMENT, INC.

(Name of Issuer)

 

Common Stock, $0.0001 Par Value Per Share

(Title of Class of Securities)

 

20741M03

(CUSIP Number)

 

Steven E. Hartman

Levine Leichtman Capital Partners, Inc.

335 N. Maple Drive, Suite 240

Los Angeles, CA  90210

(310) 275-5335

Joshua F. Opperer, Esq.

Honigman Miller Schwartz and Cohn LLP

2290 First National Building

660 Woodward Ave

Detroit, MI  48226

(313) 465-7000

(Name, Address and Telephone Number of Persons Authorized to

Receive Notices and Communications)

 

July 11, 2011

(Date of Event Which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box o.

 

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See Rule 13d-7(b) for other parties to whom copies are to be sent.

 

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes).

 


 

 SCHEDULE 13D

 

 CUSIP No.  20741M03

 

 

 

 

1

NAME OF REPORTING PERSONS

 

                        LEVINE LEICHTMAN CAPITAL PARTNERS, INC.

 

2

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) x

 

3

SEC USE ONLY

 

4

SOURCE OF FUNDS (SEE INSTRUCTIONS)

 

            Not applicable.

5

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

     o

 

6

CITIZENSHIP OR PLACE OF ORGANIZATION

 

            CALIFORNIA

 

NUMBER OF

 

SHARES

7

SOLE VOTING POWER

 

            0

BENEFICIALLY

 

OWNED BY

8

SHARED VOTING POWER

 

            1,209,870 (1)

 

EACH

 

REPORTING

9

SOLE DISPOSITIVE POWER

 

            0

 

PERSON

 

WITH

10

SHARED DISPOSITIVE POWER

 

            1,209,870 (1)

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

            1,209,870 (1)

 

12

CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See instructions)

     o

 

13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

            9.2% (1)(2)

 

14

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

            CO

 

 

 (1)  Based upon information reported in the Schedule 13D/A filed July 15, 2011, as amended (the “Desnick Schedule 13D/A”), on behalf of James H. Desnick, M.D. (“Desnick”).  Beneficial ownership of the common stock referred to herein is being reported solely because the Reporting Person may be deemed to beneficially own such shares for the purposes of Section 13(d) or 13(g) of the Exchange Act as a result of the Financing Letter (as defined below).  Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Person that it is the beneficial owner of any of the common stock referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and any such beneficial ownership is hereby expressly disclaimed.

 

(2)  Based upon a total of 13,208,297 shares outstanding as of July 8, 2011 (including Common Stock that may be issued pursuant to warrants owned by Desnick and Heil and options owned by Pappajohn), as set forth in the Merger Agreement (as defined below) and the Desnick Schedule 13D/A.

 


 

 SCHEDULE 13D

 

 CUSIP No.  20741M03

 

 

 

 

1

NAME OF REPORTING PERSONS

 

                        ARTHUR E. LEVINE

 

2

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) x

 

3

SEC USE ONLY

 

4

SOURCE OF FUNDS (SEE INSTRUCTIONS)

 

            Not applicable.

5

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

     o

 

6

CITIZENSHIP OR PLACE OF ORGANIZATION

 

            UNITED STATES OF AMERICA

 

NUMBER OF

 

SHARES

7

SOLE VOTING POWER

 

            0

BENEFICIALLY

 

OWNED BY

8

SHARED VOTING POWER

 

            1,209,870 (1)

 

EACH

 

REPORTING

9

SOLE DISPOSITIVE POWER

 

            0

 

PERSON

 

WITH

10

SHARED DISPOSITIVE POWER

 

            1,209,870 (1)

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

            1,209,870 (1)

 

12

CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See instructions)

     o

 

13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

            9.2% (1)(2)

 

14

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

            IN

 

 

 (1)  Based upon information reported in the Desnick Schedule 13D/A.  Beneficial ownership of the common stock referred to herein is being reported solely because the Reporting Person may be deemed to beneficially own such shares for the purposes of Section 13(d) or 13(g) of the Exchange Act as a result of the Financing Letter (as defined below).  Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Person that it is the beneficial owner of any of the common stock referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and any such beneficial ownership is hereby expressly disclaimed.

 

(2)  Based upon a total of 13,208,297 shares outstanding as of July 8, 2011 (including Common Stock that may be issued pursuant to warrants owned by Desnick and Heil and options owned by Pappajohn), as set forth in the Merger Agreement (as defined below) and the Desnick Schedule 13D/A.

 


 

 SCHEDULE 13D

 

 CUSIP No.  20741M03

 

 

 

 

1

NAME OF REPORTING PERSONS

 

                        LAUREN B. LEICHTMAN

 

2

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) o

(b) x

 

3

SEC USE ONLY

 

4

SOURCE OF FUNDS (SEE INSTRUCTIONS)

 

            Not applicable.

5

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

     o

 

6

CITIZENSHIP OR PLACE OF ORGANIZATION

 

            UNITED STATES OF AMERICA

 

NUMBER OF

 

SHARES

7

SOLE VOTING POWER

 

            0

BENEFICIALLY

 

OWNED BY

8

SHARED VOTING POWER

 

            1,209,870 (1)

 

EACH

 

REPORTING

9

SOLE DISPOSITIVE POWER

 

            0

 

PERSON

 

WITH

10

SHARED DISPOSITIVE POWER

 

            1,209,870 (1)

 

11

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

            1,209,870 (1)

 

12

CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See instructions)

     o

 

13

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

            9.2% (1)(2)

 

14

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

            IN

 

 

 (1)  Based upon information reported in the Desnick Schedule 13D/A.  Beneficial ownership of the common stock referred to herein is being reported solely because the Reporting Person may be deemed to beneficially own such shares for the purposes of Section 13(d) or 13(g) of the Exchange Act as a result of the Financing Letter (as defined below).  Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Person that it is the beneficial owner of any of the common stock referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and any such beneficial ownership is hereby expressly disclaimed.

 

(2)  Based upon a total of 13,208,297 shares outstanding as of July 8, 2011 (including Common Stock that may be issued pursuant to warrants owned by Desnick and Heil and options owned by Pappajohn), as set forth in the Merger Agreement (as defined below) and the Desnick Schedule 13D/A.

 


 

SCHEDULE 13D

CUSIP No.  20741M03

 

 

This Amendment No. 3 amends and supplements the Schedule 13D of Levine Leichtman Capital Partners, Inc. (“LLCP”), Arthur E. Levine (“Mr. Levine”) and Lauren B. Leichtman (“Ms. Leichtman” and, together with LLCP and Mr. Levine, the “Reporting Persons”), filed with the Securities and Exchange Commission (the “Commission”) on May 13, 2011 (the “Statement”), as amended, relating to the shares of common stock, $.0001 par value per share (“Common Stock”), of Conmed Healthcare Management, Inc. (the “Company”).

 

In connection with the previously disclosed Financing Letter, dated May 12, 2011 (the “Financing Letter”), between James H. Desnick, M.D. (“Desnick”) and LLCP, the Reporting Persons and Desnick may be deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”).  Beneficial ownership of the Common Stock referred to herein is being reported solely because the Reporting Person may be deemed to beneficially own such shares for the purposes of Section 13(d) or 13(g) of the Exchange Act as a result of the Financing Letter.  Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Persons that they are the beneficial owners of any of the Common Stock owned by Desnick referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and any such beneficial ownership is hereby expressly disclaimed.

 

In addition, in connection with the Agreement and Plan of Merger, dated July 11, 2011 (the “Merger Agreement”), among the Company, Ayelet Investments LLC, a Delaware limited liability company (“Parent”), and Ayelet Merger Subsidiary, Inc., a Delaware corporation (“Merger Sub”), Parent entered into Voting Agreements (as defined below) with each of Desnick, Edward Heil (“Heil”) and John Pappajohn (“Pappajohn”).  Additionally, India Investment Company, a Delaware corporation (“Holdco”, and together with Parent and Desnick, the “Desnick Reporting Parties”), and Parent entered into an Investor Commitment Letter (as defined below) with Heil.  As a result of these transactions described in the preceding two sentences, the Reporting Persons may also be deemed to be beneficial owners under the Exchange Act of the shares of Common Stock beneficially owned by each of Heil and Pappajohn.  Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Persons that they are the beneficial owners of any of the Common Stock beneficially owned by Heil or Pappajohn referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and, in each case, any such beneficial ownership is hereby expressly disclaimed.

 

The Reporting Persons are filing this Schedule 13D/A solely on their own behalf.

 

ITEM 3.          Source and Amount of Funds or Other Consideration.

 

Item 3 of the Statement is amended and supplemented as follows:

 


 

On July 11, 2011, the Company entered into the Merger Agreement with Parent and Merger Sub, providing for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the “Merger”).  Aggregate consideration to be paid pursuant to the Merger Agreement will be approximately $57.2 million in cash, which will be financed as described below.  In addition to the arrangements described below, certain costs of the Merger and related transactions will be satisfied by the Company’s cash on hand.

 

Desnick Commitment Letter

 

In connection with the Merger Agreement, Desnick and Holdco entered into an Equity Commitment Letter, dated July 11, 2011 (the “Desnick Commitment Letter”), pursuant to which Desnick agreed, subject to certain conditions, to (i) purchase equity interests of Holdco for an aggregate amount equal to $21.75 million in cash, and (ii) contribute $5.51 million of equity, comprised of 1,430,778 shares of Common Stock of the Company, to Holdco, solely for the purpose of funding a portion of the aggregate Merger Consideration (as defined below).  Desnick’s equity commitment may be reduced by Holdco, but only to the extent that Parent is able to consummate the Merger Agreement with Desnick contributing less than the full amount of his commitment.  Desnick may allocate a portion of his commitment to co-investors or affiliates and may syndicate his rights and obligations to co-investors or affiliates, provided that Desnick remains liable as the primary obligor for the obligations under the Desnick Commitment Letter.  Desnick’s obligation to satisfy this commitment is subject to (a) the execution and delivery of the Merger Agreement, (b) the satisfaction or waiver by Parent at the closing of each of the conditions to Parent’s and Merger Sub’s obligations to consummate the transactions contemplated by the Merger Agreement, (c) the substantially concurrent funding of the financing transactions contemplated under the Debt Commitment Letter (as defined below), and (d) the contemporaneous consummation of the closing of the transactions contemplated by the Merger Agreement.  This summary of the Desnick Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Desnick Commitment Letter, which is attached as Exhibit 10.5 and incorporated by reference into this Item 3.

 

Holdco Commitment Letter

 

Additionally, Holdco and Parent entered into a Commitment Letter, dated July 11, 2011 (the “Holdco Commitment Letter”), pursuant to which Holdco agreed, subject to certain conditions, to (i) purchase equity interests of Parent for an aggregate amount equal to $17.75 million, (ii) make a $4.0 million unsecured, subordinate loan to Parent, and (iii) contribute to Parent $5.51 million of equity, comprised of 1,430,778 shares of Common Stock of the Company, solely for the purpose of funding a portion of the aggregate Merger Consideration.  Holdco’s commitment under the Holdco Commitment Letter may be reduced by Parent, but only to the extent that Parent is able to consummate the Merger Agreement with Holdco contributing less than the full amount of its commitment.  Holdco may allocate a portion of its commitment to co-investors or affiliates and may syndicate its rights and obligations to co-investors or affiliates, provided that Holdco remains liable as the primary obligor for the obligations under the Holdco Commitment Letter.  Holdco’s obligation to satisfy this commitment is subject to (a) the execution and delivery of the Merger Agreement, (b) the satisfaction or waiver by  Parent at the

 


 

closing of each of the conditions to Parent’s and Merger Sub’s obligations to consummate the transactions contemplated by the Merger Agreement, (c) the substantially concurrent funding of the financing transactions contemplated under the Debt Commitment Letter, and (d) the contemporaneous consummation of the closing of the transactions contemplated by the Merger Agreement.  This summary of the Holdco Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Holdco Commitment Letter, which is attached as Exhibit 10.6 and incorporated by reference into this Item 3.

 

Investor Commitment Letters

 

Holdco and Parent have also entered into Commitment Letters with Heil, George Anthony (“Anthony”) and Donald Sanders (“Sanders” and together with Heil and Anthony, the “Investors”), dated July11, 2011 (the “Investor Commitment Letters”), pursuant to which (i) Heil agreed to (a) purchase equity interests of Holdco for an aggregate amount equal to $3.25 million in cash, (b) purchase 12.5% unsecured subordinated notes of Parent for an aggregate amount equal to $1.88 million, and (c) contribute to Parent $839,800 of equity, comprised of 218,130 shares of Common Stock of the Company, (ii) Anthony agreed to purchase (a) equity interests of Holdco for an aggregate amount equal to $250,000 in cash, and (b) 12.5% unsecured subordinated notes of Parent for an aggregate amount equal to $250,000, and (iii) Sanders agreed to purchase (a) equity interests of Holdco for an aggregate amount equal to $3.5 million in cash, and (b) 12.5% unsecured subordinated notes of Parent for an aggregate amount equal to $1.88 million.  The Investor Commitment Letters were entered into for the purpose of funding a portion of the Merger Consideration.  The commitments under the Investor Commitment Letters may be reduced by Holdco, but only to the extent that Parent is able to consummate the Merger Agreement with the Investors contributing less than the full amount of their respective commitments.  The Investors obligations to satisfy their respective commitments are subject to (a) the execution and delivery of the Merger Agreement, (b) the satisfaction or waiver by Parent at the closing of each of the conditions to Parent’s and Merger Sub’s obligations to consummate the transactions contemplated by the Merger Agreement, (c) the substantially concurrent funding of the financing transactions contemplated under the Debt Commitment Letter, and (d) the contemporaneous consummation of the closing of the transactions contemplated by the Merger Agreement.  This summary of the Investor Commitment Letters does not purport to be complete and is qualified in its entirety by reference to the Investor Commitment Letters, which are attached as Exhibit 10.7, Exhibit 10.8 and Exhibit 10.9 and incorporated by reference into this Item 3.

 

Debt Commitment Letter

 

Desnick and LLCP have entered into a Debt Commitment Letter, dated July 11, 2011 (the “Debt Commitment Letter”), pursuant to which LLCP agreed to purchase (i) a Senior Secured Note in the face amount of $20 million for a purchase price of $18.5 million from Merger Sub, and (ii) a Convertible Note in the principal amount of $5.5 million from Parent, the proceeds of such notes which will be used to fund a portion of the Merger Consideration and pay related fees and expenses.  LLCP’s obligations to satisfy its commitment under the Debt Commitment Letter are subject to the execution and delivery of definitive agreements effectuating the commitment

 


 

and certain other conditions described in the Debt Commitment Letter.  This summary of the Debt Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Debt Commitment Letter, which is attached as Exhibit 10.10 and incorporated by reference into this Item 3.

 

Limited Guarantee

 

Desnick has, pursuant to a Limited Guarantee, dated as of July 11, 2011 (the “Limited Guarantee”), unconditionally and irrevocably guaranteed the payment obligations of Parent under the Merger Agreement with respect to a termination fee of approximately $2.3 million (the “Parent Termination Fee”).  The Parent Termination Fee would be payable by Parent in the event that the Company terminates the Merger Agreement upon (i) Parent’s or Merger Sub’s breach of their covenants, agreements, representations or warranties under certain circumstances described more fully therein, and (ii) Parent’s or Merger Sub’s failure to consummate the Merger following the satisfaction of all closing conditions.  The guarantee provided by Desnick under the Limited Guarantee is the Company’s sole remedy against Desnick, Parent, Merger Sub and their representatives and affiliates, except in the event of fraud or willful misconduct.  This summary of the Limited Guarantee does not purport to be complete and is qualified in its entirety by reference to the Limited Guarantee, which is attached as Exhibit 10.11 and is incorporated by reference into this Item 3.

 

Voting Agreements

 

As described in response to Item 4, the Voting Agreement Shares (as defined below) have not been purchased by any of the Reporting Persons, and thus no funds were used for such purpose.  As an inducement for Parent and Merger Subsidiary to enter into the Merger Agreement described in Item 4, Desnick, Pappajohn and Heil (collectively, the “Voting Parties”) each entered into a voting agreement with Parent, dated as of July 11, 2011 (each, a “Voting Agreement”), with respect to the Voting Agreement Shares.  Parent did not pay additional consideration to the Voting Parties in connection with the execution and delivery of the Voting Agreements.  For a description of the Voting Agreements, see Item 4 below, which description is incorporated herein by reference in response to this Item 3.

 

ITEM 4.          Purpose of Transaction.

 

Item 4 of the Statement is amended and supplemented as follows:

 

Merger Agreement

 

On July 11, 2011, the Company entered into the Merger Agreement with Parent and Merger Sub, providing for the Merger.  At the effective time of the Merger, each outstanding share of Common Stock of the Company (other than shares held by the Company, Parent and Merger Sub) will be cancelled and converted into the right to receive $3.85 per share in cash (the “Merger Consideration”).  At the effective time of the Merger, each outstanding option to acquire shares of Common Stock of the Company, whether vested or unvested, will be cancelled and

 


 

converted into the right to receive an amount in cash equal to the excess, if any, of the Merger Consideration over the exercise price per share for each share subject to the applicable option (the “Option Consideration”).  At the effective time of the Merger, each outstanding warrant to purchase shares of Common Stock of the Company (other than warrants held by Holdco and Parent), whether vested or unvested, will be cancelled and converted into the right to receive an amount in cash equal to the excess, if any, of the Merger Consideration over the exercise price per share for each share subject to the applicable warrant (the “Warrant Consideration”).  The completion of the Merger is subject to various customary conditions, including, among other things, (i) obtaining the approval of the Company’s stockholders, (ii) the accuracy of the representations and warranties made by the parties to the Merger Agreement, and (iii) the compliance by the parties to the Merger Agreement with their respective covenants and agreements under the Merger Agreement.  This summary of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached hereto as Exhibit 10.12 and is incorporated by reference into this Item 4.  On February 22, 2011, in connection with the review of a possible transaction between the Company and the Reporting Persons, Desnick entered into a confidentiality agreement with the Company that provides that for a period of two years, Desnick is subject to customary “standstill” restrictions, pursuant to which Desnick will not be permitted to acquire additional shares of the company’s capital stock or make certain proposals with respect to a merger, combination or acquisition (or take similar actions) with respect to the Company without the Company’s prior written consent.

 

If the Merger is consummated, the Company will become a wholly-owned subsidiary of Parent.  All of the equity interests of Parent will continue to be owned by Holdco following the Merger, and a majority of the shares of Holdco will be owned by Desnick and his affiliates.  The co-investors described above will also own equity interests of Holdco following the completion of the transactions contemplated by the Investor Commitment Letters.  Following the consummation of the Merger, the Company’s Common Stock will be delisted from the NYSE Amex, and the Company will cease to be registered under Section 12 of the Exchange Act.

 

Voting Agreements

 

Concurrently with the execution of, and as an inducement for Parent and Merger Sub to enter into, the Merger Agreement, on July 11, 2011, the Voting Parties entered into the Voting Agreements relating to all shares of Common Stock of the Company beneficially owned by each of the Voting Parties as of July 11, 2011 (the “Voting Agreement Shares”).  The Voting Agreement Shares constituted 30.5% of the total issued and outstanding shares of Common Stock as of July 11, 2011 (including Common Stock that the Voting Parties may acquire pursuant to the exercise of warrants or stock options that are exercisable within 60 days).  The purpose of the Voting Agreements is to facilitate the transactions contemplated by the Merger Agreement.  Pursuant to the Voting Agreements, the Voting Parties agreed, among other things, to vote the Voting Shares (i) in favor of (a) the Merger Agreement and the transactions contemplated thereby, and (b) any related matter that must be approved by the Company’s stockholders in order for the transactions contemplated by the Merger Agreement to be consummated, and (ii) against and not consent to any (a) alternative business combination transactions transaction

 


 

involving the Company, (b) reorganization, recapitalization, liquidation or winding-up of the Company or any other extraordinary transaction involving the Company, (c) corporate action, the consummation of which would materially frustrate the purposes, prevent or delay the consummation, of the transactions contemplated by the Merger Agreement or otherwise agreed to by Parent, (d) any change in the board of directors of the Company, except as contemplated by the Merger Agreement, and (e) any material change in the Company’s corporate structure, certificate of incorporation, charter or bylaws, except as contemplated by the Merger Agreement or otherwise agreed to by Parent.

 

The Voting Parties have agreed not to cause or permit, subject to certain exceptions, (i) the sale, pledge, encumbrance, assignment, grant of an option with respect to, transfer or disposal of any Voting Agreement Shares or any interest therein, (ii) the grant of any proxies or power of attorney with respect to the Voting Agreement Shares, or (iii) entrance into an agreement or commitment, whether or not in writing, providing for the sale of, pledge of, encumbrance of, assignment of, grant of an option with respect to, transfer of or disposition of any Voting Agreement Shares or any interest therein.

 

Under the Voting Agreements, the Voting Parties also granted to Parent an irrevocable proxy with respect to the Voting Agreement Shares.  The irrevocable proxy allows Parent to vote the Voting Agreement Shares in the manner set forth above.  The proxy granted to Parent will be revoked automatically upon termination of the Voting Agreement.  The Voting Agreements will terminate automatically upon the earliest to occur of (i) the effective time of the Merger, (ii) termination of the Merger Agreement in accordance with its terms, (iii) at any time upon the written agreement of Parent and a Voting Party, and (iv) upon the amendment or modification of the Merger Agreement to reduce the Merger consideration or otherwise change the terms and conditions, taken as a whole, of the Merger Agreement in a way that is materially adverse to the holders of Common Stock.  This summary of the Voting Agreements does not purport to be complete and is qualified in its entirety by reference to the form of Voting Agreement, which is attached hereto as Exhibit 10.13 and is incorporated by reference in its entirety into this Item 4.

 

The descriptions of the Desnick Commitment Letter, the Holdco Commitment Letter, the Investor Commitment Letters, the Debt Commitment Letter and the Limited Guarantee described in Item 3 of this Schedule 13D/A are incorporated by reference into this Item 4.

 

Except as set forth in this Statement and the corresponding exhibits hereto, the Reporting Persons do not have any plans or proposals which relate to or which would result in or relate to any of the acts specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D (although the Reporting Persons reserve the right to develop such plans).

 

ITEM 5.          Interest in Securities of the Issuer.

 

Item 5 of the Statement is hereby amended and supplement as follows:

 

(a)  Each of the Reporting Persons’ current beneficial ownership in the Company and the Company’s Common Stock is set forth on the cover pages to this Schedule 13D/A and is

 


 

incorporated by reference into this Item 5.  The ownership percentage appearing on such pages has been calculated based on a total of 13,208,297 shares outstanding as of July 8, 2011 (including Common Stock that may be issued pursuant to warrants owned by Desnick and Heil and options owned by Pappajohn), as set forth in the Merger Agreement.

 

Desnick beneficially owns 1,209,870 shares of Common Stock of the Company, including warrants to purchase up to 91,570 shares of Common Stock, representing approximately 9.2% of the outstanding shares of Common Stock of the Company.

 

Pursuant to the Voting Agreements, the Desnick Reporting Parties may be deemed to have beneficial ownership of an aggregate of 4,026,342 shares of Common Stock of the Company outstanding on the record date of any vote at a stockholder meeting or through written consent for certain events as set forth in the Voting Agreements (including Common Stock that the Voting Parties may acquire pursuant to the exercise of warrants or stock options, as applicable, that are exercisable within 60 days) consisting of (i) 1,209,870 shares of Common Stock of the Company that may be deemed to be beneficially owned by Desnick, including warrants to purchase up to 91,570 shares of Common Stock, (ii) 2,598,342 shares of Common Stock of the Company that may be deemed to be beneficially owned by Pappajohn, including 40,000 shares of Common Stock of the Company issuable upon exercise of stock options, and (iii) 218,130 shares of Common Stock that may be deemed to be beneficially owned by Heil.  Such shares represent approximately 30.5% of the outstanding shares of Common Stock of the Company.  The Reporting Persons disclaim beneficial ownership of such shares held by the Voting Parties.

 

Pursuant to the Investor Commitment Letter with Heil, the Desnick Reporting Parties may be deemed to have beneficial ownership of 218,130 shares of Common Stock of the Company beneficially owned by Heil.  Such shares represent approximately 1.7% of the outstanding shares of Common Stock of the Company.  The Reporting Persons disclaim beneficial ownership of such shares held by Heil.

 

Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Persons that they are the beneficial owners of any of the Common Stock owned by Desnick, Heil or Pappajohn referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and, in each case, any such beneficial ownership is hereby expressly disclaimed.

 

(b)  In connection with the Financing Letter, the Reporting Persons and Desnick may be deemed to be a “group” within the meaning of Section 13(d)(3) of the Exchange Act.  The Reporting Persons disclaim beneficial ownership of such shares held by Desnick.

 

As a result of the matters discussed in Item 4 above with respect to the Voting Agreements, the Desnick Reporting Parties may be deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act with Heil and

 


 

Pappajohn.  The Reporting Persons disclaim beneficial ownership of such shares held by each of Desnick Heil and Pappajohn.

 

As a result of the matters discussed in Item 4 above with respect to the Investor Commitment Letter, the Desnick Reporting Parties may be deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act with Heil.  The Reporting Persons disclaim beneficial ownership of such shares held by Heil.

 

The Desnick Reporting Parties may be deemed to have shared voting power over an aggregate of 4,026,342 shares as a result of the matters disclosed in Item 4 above with respect to the Voting Agreements. The Reporting Persons expressly disclaim beneficial ownership of such shares owned by each of Desnick, Heil and Pappajohn.

 

The Desnick Reporting Parties may be deemed to have shared dispositive power over an aggregate of 1,428,000 shares as a result of the matters disclosed in Item 4 above with respect to the Investor Commitment letter with Heil. The Reporting Persons expressly disclaim beneficial ownership of such shares owned by Heil.

 

The Reporting Persons are filing this Schedule 13D/A solely on their own behalf.

 

(c) Other than the Financing Letter and Debt Commitment Letter as described above, there have been no transactions in the Company’s Common Stock that were effected during the past 60 days by any of the Reporting Persons.

 

(d) Other than as described in Items 3, 4 and 5 above, to the knowledge of the Reporting Persons, no person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock described in this Schedule 13D/A.

 

(e) Not applicable.

 

ITEM 6.             Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

 

Item 6 of the Statement is hereby amended and supplemented as follows:

 

The information provided in Items 3, 4 and 5 above is incorporated by reference into this Item 6.

 

ITEM 7.             Material to Be Filed as Exhibits.

 

The following are filed herewith as exhibits to this Schedule 13D/A:

 


 

Exhibit

 

Description

 

 

 

10.5

 

Desnick Commitment Letter, dated July 11, 2011, by and between Desnick and Parent (incorporated by reference to Exhibit 7 of the Schedule 13D/A filed with the Commission on July 15, 2011, as amended, by Desnick, Parent and Holdco (the “Desnick Schedule 13D/A”))

 

 

 

10.6

 

Holdco Commitment Letter, dated July 11, 2011, by and between Parent and Holdco (incorporated by reference to Exhibit 8 of the Desnick Schedule 13D/A)

 

 

 

10.7

 

Investor Commitment Letter, dated July 11, 2011, by and between Heil, Parent and Holdco (incorporated by reference to Exhibit 9 of the Desnick Schedule 13D/A)

 

 

 

10.8

 

Investor Commitment Letter, dated July 11, 2011, by and between Anthony, Parent and Holdco (incorporated by reference to Exhibit 10 of the Desnick Schedule 13D/A)

 

 

 

10.9

 

Investor Commitment Letter, dated July 11, 2011, by and between Sanders, Parent and Holdco (incorporated by reference to Exhibit 11 of the Desnick Schedule 13D/A)

 

 

 

10.10

 

Debt Commitment Letter, dated July 11, 2011, by and between LLCP and Desnick (incorporated by reference to Exhibit 12 of the Desnick Schedule 13D/A)

 

 

 

10.11

 

Limited Guarantee, dated July 11, 2011, by and between Desnick and the Company (incorporated by reference to Exhibit 12 of the Desnick Schedule 13D/A)

 

 

 

10.12

 

Merger Agreement, dated July 11, 2011, by and between Holdco, Merger Sub and the Company (incorporated by reference to Exhibit 14 of the Desnick Schedule 13D/A)

 

 

 

10.13

 

Form of Voting Agreement, dated July 11, 2011, by and between Parent and the Voting Parties (incorporated by reference to Exhibit 15 of the Desnick Schedule 13D/A)

 


 

SIGNATURES

 

After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct.

 

July 15, 2011

 

 

 

LEVINE LEICHTMAN CAPITAL PARTNERS, INC.,

 

a California corporation

 

 

 

 

By:

/s/ Steven E. Hartman

 

 

 

 

Steven E. Hartman

 

 

 

Vice President

 

 

 

 

 

 

 

 

/s/ Arthur E. Levine

 

 

ARTHUR E. LEVINE

 

 

 

 

 

 

 

 

/s/ Lauren B. Leichtman

 

 

LAUREN B. LEICHTMAN

 

 


 

EXHIBIT INDEX

 

 

Exhibit

 

Description

 

 

 

10.5

 

Desnick Commitment Letter, dated July 11, 2011, by and between Desnick and Parent (incorporated by reference to Exhibit 7 of the Schedule 13D/A filed with the Commission on July 15, 2011, as amended, by Desnick, Parent and Holdco (the “Desnick Schedule 13D/A”))

 

 

 

10.6

 

Holdco Commitment Letter, dated July 11, 2011, by and between Parent and Holdco (incorporated by reference to Exhibit 8 of the Desnick Schedule 13D/A)

 

 

 

10.7

 

Investor Commitment Letter, dated July 11, 2011, by and between Heil, Parent and Holdco (incorporated by reference to Exhibit 9 of the Desnick Schedule 13D/A)

 

 

 

10.8

 

Investor Commitment Letter, dated July 11, 2011, by and between Anthony, Parent and Holdco (incorporated by reference to Exhibit 10 of the Desnick Schedule 13D/A)

 

 

 

10.9

 

Investor Commitment Letter, dated July 11, 2011, by and between Sanders, Parent and Holdco (incorporated by reference to Exhibit 11 of the Desnick Schedule 13D/A)

 

 

 

10.10

 

Debt Commitment Letter, dated July 11, 2011, by and between LLCP and Desnick (incorporated by reference to Exhibit 12 of the Desnick Schedule 13D/A)

 

 

 

10.11

 

Limited Guarantee, dated July 11, 2011, by and between Desnick and the Company (incorporated by reference to Exhibit 12 of the Desnick Schedule 13D/A)

 

 

 

10.12

 

Merger Agreement, dated July 11, 2011, by and between Holdco, Merger Sub and the Company (incorporated by reference to Exhibit 14 of the Desnick Schedule 13D/A)

 

 

 

10.13

 

Form of Voting Agreement, dated July 11, 2011, by and between Parent and the Voting Parties (incorporated by reference to Exhibit 15 of the Desnick Schedule 13D/A)