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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Consent Revocation Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed by the Registrant þ Filed by a Party other than the
Registrant ¨
Check the appropriate box:
EDGEWATER TECHNOLOGY, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Consent Revocation Statement if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
DATED NOVEMBER 25, 2015
EDGEWATER TECHNOLOGY, INC.
200 Harvard Mill Square, Suite 210
Wakefield, Massachusetts 01880
CONSENT REVOCATION STATEMENT BY THE BOARD OF DIRECTORS OF
EDGEWATER TECHNOLOGY, INC. IN OPPOSITION TO THE
CONSENT SOLICITATION BY LONE STAR VALUE INVESTORS, LP
This consent revocation statement filed on Schedule 14A (the
Consent Revocation Statement) is furnished by the Board of
Directors (the Board or Board of Directors) of Edgewater
Technology, Inc., a Delaware corporation (the Company, Edgewater,
we, us, or our), to the holders of outstanding shares of the
Companys common stock (the Shares), par value $0.01 per share, in
connection with the Boards opposition to the solicitation of
written stockholder consents by Lone Star Value Investors, LP, a
Delaware limited partnership, AMERI Holdings, Inc., a Delaware
corporation (Purchaser), and the other members of their group
(collectively, Lone Star).
On June 18, 2015, Purchaser sent a letter to the Company (the
Initial Offer) proposing to acquire all outstanding Shares at a
price of $8.50 per Share consisting of, in the aggregate, 50% cash
and 50% shares of Purchaser common stock (the Purchaser Common
Stock). The Board reviewed the Initial Offer and unanimously
determined that the Initial Offer significantly undervalued
Edgewater, was not in the best interest of Edgewater stockholders
and the Company decided not to pursue the proposed transaction. On
June 24, 2015, the Companys Chief Executive Officer (CEO) informed
Jeffery E. Eberwein, Chairman of Purchaser, in writing that the
Board had elected not to pursue the proposed transaction.
On October 26, 2015, Purchaser submitted an unsolicited offer to
acquire all outstanding Shares at a price of $8.50 per Share
payable entirely in Purchaser Common Stock, subject to satisfactory
completion of due diligence typical for a transaction of this type,
obtaining all necessary consents and approvals, waiver of any
significant Edgewater anti-takeover provisions, other customary
conditions for a transaction of this type and size and the
execution of a definitive agreement (the Revised Offer). In
addition, Lone Star is soliciting consents in order to facilitate
the sale of the Company to the highest bidder, whether this highest
bidder is Purchaser or another party, by asking you, among other
things, to amend the Companys amended and restated bylaws (the
Bylaws) in order to remove the Board and replace it with Lone Stars
hand-picked nominees who, according to Lone Stars consent
solicitation statement, would be fully committed to thoroughly
exploring all available strategic alternatives including a sale of
the Company to the highest bidder. Specifically, Lone Star is
asking you for your written consent as to the following proposals
(each, a Proposal and collectively, the Proposals):
(i) Repeal any provision of the Bylaws in effect at the time the
Lone Star proposal becomes effective, including any amendments
thereto, which were not included in the Bylaws that were in effect
as of September 26, 2007 and were filed with the Securities and
Exchange Commission (the SEC) on September 28, 2007;
(ii) Remove without cause five members of the Board, Paul E.
Flynn, Paul Guzzi, Nancy L. Leaming, Michael R. Loeb and Wayne
Wilson, and any person (other than those elected by the consent of
Lone Star) elected or appointed to the Board to fill any vacancy on
the Board or any newly created directorships on or after October
26, 2015 and prior to the effectiveness of the Proposals;
(iii) Amend Article II, Section 2 of the Bylaws to provide that
any vacancies on the Board resulting from the removal of directors
by the stockholders of the Company shall be filled exclusively by
the stockholders of the Company;
(iv) Amend Article II, Section 1 of the Bylaws, to fix the size
of the Board at six members; and
(v) Elect Lone Stars five nomineesLenny Alugas, Stephen R. Bova,
Robert G. Pearse, Dhruwa N. Rai and Timothy Whelanto serve as
directors of the Company (or, if any such nominee is unable or
unwilling to serve as a director of the Company, any other person
designated as a nominee by the remaining nominee or nominees).
THE EDGEWATER BOARD IS COMMITTED TO ACTING IN THE BEST INTERESTS
OF THE COMPANYS STOCKHOLDERS AND HAS:
ACCORDINGLY, THE BOARD URGES YOU NOT TO SIGN ANY WHITE CONSENT
CARD SENT TO YOU BY LONE STAR AND INSTEAD URGES YOU TO SIGN AND
RETURN THE GOLD CARD INCLUDED WITH THESE MATERIALS.
If you have previously signed and returned Lone Stars WHITE
consent card, you have the right to change your mind and revoke
your consent to the Proposals. Whether or not you have signed Lone
Stars WHITE consent card, we urge you to mark the
YES, REVOKE MY CONSENTboxes on the enclosed
GOLDconsent revocation card (the Consent Revocation Card)
and to sign, date and mail the card in the postage-paid envelope
provided. Although submitting a consent revocation will not have
any legal effect if you have not submitted a WHITE consent card, it
will help us keep track of the progress of the consent process.
Regardless of the number of Shares you own, your consent revocation
is important.
Please act today
.
If your Shares are held in street name, only your broker, bank
or other nominee can exercise your right to revoke a consent with
respect to your Shares. Please contact your broker, bank or other
nominee and instruct it to submit a
GOLDConsent Revocation Card on your behalf today.
This Consent Revocation Statement and the enclosed
GOLDConsent Revocation Card are first being mailed to the
Companys stockholders on or about November 30, 2015.
In accordance with Delaware law and the Bylaws, the Board has
set November 13, 2015 as the record date (the Record Date) for the
determination of the Companys stockholders who are entitled to
execute, withhold or revoke consents relating to the Proposals.
Only holders of record as of the close of business on the Record
Date may execute, withhold or revoke consents with respect to the
Proposals.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF CONSENT
REVOCATION MATERIALS IN OPPOSITION TO THE CONSENT SOLICITATION BY
LONE STAR
In accordance with the rules of the SEC, the Company is advising
its stockholders of the availability on the Internet of the
Companys consent revocation materials in opposition to the consent
solicitation by Lone Star. These rules allow companies to provide
access to proxy and consent materials in one of two ways. Because
the Company has elected to utilize the full set delivery option,
the Company is delivering to all stockholders paper copies of the
consent revocation materials, as well as providing access to those
materials on a publicly accessible website. Under Delaware law, the
Proposals will become effective if valid, unrevoked consents signed
by the holders of a majority of the outstanding Shares as of the
Record Date are delivered to the Company within 60 days of the
earliest-dated consent delivered to the Company. This Consent
Revocation Statement and Consent Revocation Card are available at
http://www.edgewater.com.
If you have any questions about giving your consent revocation
or otherwise require assistance, please call:
Okapi Partners LLC
1212 Avenue of the America, 24
thFloor
New York, New York 10036
Email: info@okapipartners.com
Banks and Brokerage Firms, Please Call: (212) 297-0720
Shareholders Call Toll Free: (855) 305-0856
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
Some of the statements in this Consent Revocation Statement and
elsewhere constitute forward-looking statements under Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934 (the Exchange Act), as amended.
These statements involve known and unknown risks, uncertainties and
other factors that may cause results, levels of activity, growth,
performance, tax consequences or achievements to be materially
different from any future results, levels of activity, growth,
performance, tax consequences or achievements expressed or implied
by such forward-looking statements. Such factors include, among
other things, those listed below, as well as those further set
forth under the heading Risk Factors in the Companys 2014 Annual
Report on Form 10-K as filed with the SEC on March 2, 2015.
The forward-looking statements included in this Consent
Revocation Statement and referred to elsewhere are related to
future events or the Companys strategies or future financial
performance, including statements concerning the Companys 2015
outlook, future revenue and growth, customer spending outlook,
general economic trends, IT service demand, future revenue and
revenue mix, utilization, new service offerings, significant
customers, competitive and strategic initiatives, growth plans,
potential stock repurchases, future results, tax consequences and
liquidity needs. In some cases, you can identify forward-looking
statements by terminology such as may, should, believe, anticipate,
anticipated, expectation, continued, future, forward, potential,
estimate, estimated, forecast, project, encourage, opportunity,
goal, objective, could, expect, expected, intend, plan, planned,
will, predict, or the negative of such terms or comparable
terminology. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the
Companys current plans or assessments which are believed to be
reasonable as of the date of this Consent Revocation Statement.
Factors that may cause actual results, goals, targets or objectives
to differ materially from those contemplated, projected,
forecasted, estimated, anticipated, planned or budgeted in such
forward-looking statements include, among others, the following
possibilities: (1) failure to obtain new customers or retain
significant existing customers; (2) the loss of one or more key
executives and/or employees; (3) changes in industry trends,
such as a decline in the demand for Enterprise Resource Planning
and Enterprise Performance Management solutions, custom development
and system integration services and/or declines in industry-wide
information technology spending, whether on a temporary or
permanent basis and/or delays by customers in initiating new
projects or existing project milestones; (4) inability to execute
upon growth objectives, including new services and growth in
entities acquired by the Company; (5) adverse developments and
volatility involving geopolitical or technology market conditions;
(6) unanticipated events or the occurrence of fluctuations or
variability in the matters identified under Critical Accounting
Policies in our 2014 Annual Report on Form 10-K; (7) delays in, or
the failure of, the Companys sales pipeline being converted to
billable work and recorded as revenue; (8) termination by clients
of their contracts with the Company or inability or unwillingness
of clients to pay for the Companys services, which may impact the
Companys accounting assumptions; (9) inability to recruit and
retain professionals with the high level of information technology
skills and experience needed to provide the Companys services; (10)
failure to expand outsourcing services to generate additional
revenue; (11) any changes in ownership of the Company or otherwise
that would result in a limitation of the net operating loss carry
forward under applicable tax laws; (12) future proxy contests could
be disruptive and costly, and the possibility that activist
stockholders may wage proxy contests or gain representation on or
control of the Board of Directors could cause disruption and/or
uncertainty to the Companys business, customer relationships and
employee retention; (13) the failure of the marketplace to embrace
advisory and product-based consulting services; (14) changes in the
Companys utilization levels; and/or (15) pending, threatened or
future legal proceedings in connection with the Revised Offer. In
evaluating these statements, you should specifically consider
various factors described above as well as the risks outlined under
Part IItem IA Risk Factors in the Companys 2014 Annual Report on
Form 10-K filed with the SEC on March 2, 2015. These factors may
cause the Companys actual results to differ materially from those
contemplated, projected, anticipated, planned or budgeted in any
such forward-looking statements.
Although the Company believes that the expectations in the
forward-looking statements are reasonable, the Company cannot
guarantee future results, levels of activity, performance, growth,
earnings per share or achievements. However, neither the Company
nor any other person assumes responsibility for the accuracy and
completeness of such statements. Except as otherwise required, the
Company undertakes no obligation to update any of the
forward-looking statements after the date of this Consent
Revocation Statement to conform such statements to actual
results.
DESCRIPTION OF THE LONE STAR CONSENT SOLICITATION
As set forth in the preliminary consent solicitation materials
filed with the SEC by Lone Star on November 19, 2015, as amended
(which are subject to completion by Lone Star) (Lone Stars Consent
Statement), Lone Star is asking you for your written consent as to
the following Proposals:
According to Lone Stars Consent Statement, the effectiveness of
Proposal 5 is conditioned, in part, upon the adoption of Proposal
2, and the effectiveness of Proposals 1, 2, 3 and 4 are not subject
to, or conditioned upon, the effectiveness of the other Proposals.
If none of the members of (or appointees to) the Board are removed
pursuant to Proposal 2, and there are no vacancies to fill, none of
the Lone Star nominees can be elected pursuant to Proposal 5. If
fewer than five directors are removed pursuant to Proposal 2 and
there are more nominees receiving the requisite number of consents
to fill vacancies pursuant to Proposal 5 than the number of such
resulting vacancies, then Lone Star intends to fill the vacancies
in the following order: Stephen R. Bova, Timothy Whelan, Lenny
Alugas, Dhruwa N. Rai and Robert G. Pearse.
REASONS TO REJECT LONE STARS PROPOSALS
Lone Stars Consent Statement includes the Proposals, which amend
the Bylaws. The approval of the Proposals would, among other
things, permit the removal of the current Board and replace them
with Lone Stars hand-picked nominees who would be fully committed
to thoroughly exploring all available strategic alternatives
including a sale of the Company to the highest bidder. The reasons
to reject the Proposals are set forth below.
Premiums Paid for Public Companies (2010 YTD 2015)
Total Revenue Growth
Share Price Appreciation
Edgewater-Identified Peer Group:Cartesian, Inc. (CRTN);
Ciber, Inc. (CBR); The Hackett Group, Inc. (HCKT); L-3
Communications Holdings Inc. (LLL); and Perficient Inc. (PRFT). The
Edgewater-Identified Peer Group is the group of competitor
companies identified by the Company as its self-selected peer group
for purposes of disclosure related to the Companys cumulative total
stockholder return and total return analysis contained in the
Companys annual report, dated March 2, 2015, as filed with the SEC
on Form 10-K, but excluding Sapient Corp. (which merged with and
into a wholly owned subsidiary of Publicis Groupe S.A., a French
société anonyme, on February 6, 2015 and is no longer a
public company). Consists of companies with market capitalizations
ranging from approximately $21 million to $9,768 million (as of
November 24, 2015).
Select U.S.-Based IT Services Group: L-3 Communications
Holdings Inc. (LLL); Huron Consulting Group Inc. (HURN); Navigant
Consulting Inc. (NCI); ICF International Inc. (ICFI); Resources
Connection Inc (RECN); Perficient Inc. (PRFT); The Hackett Group,
Inc. (HCKT); Ciber, Inc. (CBR); CRA International Inc. (CRAI);
Information Services Group, Inc. (III); and Cartesian, Inc. (CRTN).
The Select U.S.-Based IT Services Group is comprised of publicly
traded companies that have a majority of their business in the
U.S., have similar market capitalizations to the Company and offer
similar products and services to those offered by the Company.
Consists of companies with market capitalizations ranging from
approximately $21 million to $9,768 million (as of November 24,
2015).
Select India-Based Mid Tier IT Services Group:Persistent
Systems Ltd. (PERSISTENT); KPIT Technologies Ltd. (KPIT); Rolta
India Limited (ROLTA); Sonata Software Limited (SONATSOFTW); NIIT
Limited (NIITLTD); R Systems International Limited (RSYSTEMS);
Infinite Computer Solutions (INFINITE); Nucleus Software Exports
Ltd. (NUCLEUS); Mastech Holdings (MHH); 3i Infotech Ltd.
(3IINFOTECH); Saksoft Ltd. (SAKSOFT); Omnitech Infosolutions
Limited (BOM:532882); Goldstone Technologies Ltd. (GOLDTECH); and
Blue Star Infotech Ltd. (BLUESTINFO). The Select India-Based Mid
Tier IT Services Group consists of publicly traded companies that
have a majority of their business in India, have similar market
capitalizations to the Company and offer similar products and
services to those offered by the Company. Consists of companies
with market capitalization ranging from approximately $1 million to
$812 million (as of November 24, 2015).
The Board strongly believes that the consent solicitation being
undertaken by Lone Star is not in the best interests of the
Companys stockholders.
We urge stockholders to reject Lone Stars consent solicitation
and revoke any consent previously submitted.
Please do not delay. In order to ensure that the Board is
able to act in your best interests, please mark, sign, date and
return the enclosed GOLD consent revocation card
as promptly as possible.
BACKGROUND OF THE SOLICITATION
On May 11, 2015, Lone Star Value Investors, LP (LSVI) made its
first purchase of Edgewater stock in the two years prior to October
26, 2105, which the Company also believes to be the first-ever
purchase of Shares by any member of the Lone Star group.
On May 26, 2015, Purchaser, which was then a publicly traded
shell company known as Spatializer Audio Laboratories, Inc.,
acquired Ameri & Partners Inc (API). In connection with this
transaction, Purchaser changed its name to its present name, AMERI
Holdings, Inc. The Company believes that LSVI, one or more of its
affiliates or both hold a significant direct or indirect ownership
position in Purchaser and held that ownership position prior to
Purchasers May 26, 2015 acquisition of API.
On June 11, 2015, Timothy Oakes, Edgewaters Chief Financial
Officer (CFO), Treasurer and Secretary, had a telephone
conversation with Jeffrey Eberwein, who introduced himself as LSVIs
investment manager, during which Mr. Eberwein inquired about the
Companys business strategy and operations, offered to discuss APIs
business strategy and operations and indicated that there may be an
opportunity for a partnership or business combination between the
Company and API. Mr. Oakes agreed to check availability for a
possible meeting. Mr. Eberwein sent a follow-up email to Mr. Oakes
with additional detail regarding Purchasers May 26, 2015
acquisition of API.
On June 13, 2015, Mr. Eberwein sent an email to Mr. Oakes
proposing some times for an in-person meeting involving Mr. Oakes,
Mr. Eberwein, Giri Devanur, the CEO of API, Shirley Singleton,
Edgewaters Chairman, President and CEO, and a member of the Board.
Mr. Eberwein indicated that the meeting would be to discuss a
potential business combination involving Edgewater and API.
Subsequently, Ms. Singleton, Mr. Oakes and David Clancey,
Edgewaters Vice President, Chief Strategy Officer and Chief
Technology Officer, discussed the potential advantages and
disadvantages of Mr. Eberweins request, and determined that a
meeting to discuss a potential business combination would not be
productive given the lack of compatibility between the companies
software platforms and business strategies and in light of the
Companys previous exit from a software channel similar to APIs and
decision to continue to focus on Oracle and Microsoft channels
while expanding into cloud and big data initiatives.
On June 15, 2015, Mr. Oakes replied to Mr. Eberweins email of
June 13, 2015, stating that Edgewater did not see Purchaser as a
synergistic fit for Edgewater at that time and that the Company
would continue to focus on its organic and acquisitive growth
strategies.
On June 18, 2015, Mr. Eberwein, acting as Chairman of Purchaser,
submitted the Initial Offer to Mr. Oakes in the form of a letter
addressed to Ms. Singleton, proposing to acquire all of the
outstanding Shares at a price of $8.50 per Share consisting of, in
the aggregate, 50% cash and 50% shares of Purchaser Common Stock.
Mr. Oakes confirmed receipt of the written proposal on June 18,
2015. Purchaser Common Stock traded at the time on the OTC Pink
Market, which is the lowest tier among the three primary tiers of
the OTC Markets Group. According to the OTC Markets Group website,
the OTC Pink
®marketplace offers trading in a wide spectrum of equity
securities through any broker. This marketplace is for all types of
companies that are there by reasons of default, distress or design.
The closing price of Purchaser Common Stock on June 18, 2015 was
$2.55 per share.
On June 23, 2015, Edgewater management and representatives of
Hinckley, Allen & Snyder LLP, Edgewaters outside counsel
(Hinckley Allen), reviewed the Initial Offer with the Board via
telephonic conference. Prior to the telephonic conference, Mr.
Flynn (who had a prior commitment for the time of the telephonic
conference) communicated his views to Ms. Singleton by telephone,
indicating that he was disposed to vote in favor of rejecting the
Initial Offer. After extensive discussion, the Board (absent Mr.
Flynn) unanimously rejected the Initial Offer and instructed Ms.
Singleton to inform Purchaser accordingly.
On June 24, 2015, Ms. Singleton delivered a letter to Mr.
Eberwein stating that Ms. Singleton had presented the Initial Offer
to the Board and that the Board was unanimous in its decision not
to pursue the proposed transaction.
On August 17, 2015, Edgewater announced the entry into an Asset
Purchase Agreement among Edgewater Technology-Branchbird, Inc., a
wholly owned subsidiary of the Company, Branchbird, LLC, Andrew Oh,
Patrick Rafferty and Daniel Brock to acquire substantially all of
the assets of Branchbird, LLC in exchange for upfront cash
consideration of approximately $2.8 million, contingent earnout
consideration up to approximately $2.4 million and the assumption
of certain liabilities. The transaction was consummated on August
17, 2015.
On September 17, 2015, Edgewater publicly announced that the
Board had approved an extension of the Companys stock repurchase
program (the Repurchase Program) to September 23, 2016. The
Repurchase Program, which was originally announced in December 2007
and subsequently amended, was scheduled to expire on September 25,
2015. The Repurchase Program allowed for the repurchase of up to
$23.1 million of the Shares, a repurchase authorization amount left
unchanged by the Board in connection with this extension of the
Repurchase Program. As of September 17, 2015, Edgewater had
repurchased approximately $14.3 million of the Shares, leaving a
remaining authorization of approximately $8.8 million.
On October 26, 2015, Mr. Eberwein, acting as Chairman of
Purchaser, submitted the Revised Offer in the form of an
unsolicited letter to Ms. Singleton offering to acquire all of the
outstanding Shares at a price of $8.50 per Share payable entirely
in Purchaser Common Stock. Ms. Singleton confirmed receipt of the
written proposal on October 26, 2015. The Revised Offer was subject
to satisfactory completion of due diligence typical for a
transaction of this type, obtaining all necessary consents and
approvals, waiver of any Edgewater significant anti-takeover
provisions, other customary conditions for a transaction of this
type and size and the execution of a definitive agreement. We
believe that the Revised Offer is also conditional upon the
approval of a majority of Purchasers stockholders. On October 26,
2015, Purchaser Common Stock was an over-the-counter stock traded
on the OTC QB Venture Marketplace. The OTC QB Venture Marketplace
is the middle tier among the three primary tiers of the OTC Markets
Group. According to the OTC Markets Group website, [t]he OTCQB
®Venture Marketplace is for entrepreneurial and
development stage U.S. and international companies. The closing
price of Purchaser Common Stock on October 23, 2015, the last
trading day before the date that Lone Star publicly announced the
Revised Offer, was $5.01 per share.
Also on October 26, 2015, LSVI delivered written notice of the
Proposals and an executed written consent in support of the
Proposals to Mr. Oakes, along with a request that the Company
establish a record date with respect to the Proposals. On the same
date, Lone Star publicly disclosed an aggregate 5.3% ownership
interest in the Company by means of an SEC filing on Schedule 13D,
filed a preliminary consent solicitation statement with the SEC on
Schedule 14A for the purpose of soliciting the consent of Edgewater
stockholders in favor of the Proposals (the Preliminary Consent
Solicitation Statement) and issued a press release announcing
Purchasers delivery of the Revised Offer and Lone Stars filing of
the Preliminary Consent Solicitation Statement.
Also on October 26, 2015, the Board held a telephonic meeting to
discuss the Revised Offer and the Preliminary Consent Solicitation
Statement. Representatives from Company management and the Companys
legal advisors, Hinckley Allen and Jones Day, were present at the
meeting.
On October 28, 2015, Edgewater reported its results of
operations for its third quarter ended September 30, 2015 and held
its previously scheduled earnings call to discuss those
results.
On October 30, 2015, the Board held a telephonic meeting at
which representatives from Company management, Hinckley Allen and
Jones Day were present. Counsel reviewed the Boards fiduciary
duties and the Board discussed the hiring of a financial advisor to
advise the Board with respect to the Revised Offer and the
Preliminary Consent Solicitation Statement.
On November 2, 2015, Edgewater publicly announced the retention
of Signal Hill Capital Group LLC (Signal Hill) to serve as
financial advisor to Edgewater and assist in the Boards evaluation
of the Revised Offer and the Preliminary Consent Solicitation
Statement.
On November 4, 2015, Edgewater filed a quarterly report on Form
10-Q with the SEC regarding the Companys results for the period
ending September 30, 2015.
On November 5, 2015, the Board held a telephonic meeting to
discuss the setting of the record date for the determination of the
Companys stockholders who are entitled to execute, withhold or
revoke consents relating to the Proposals (the Record Date).
Representatives from Company management, Hinckley Allen and Jones
Day were present at the meeting. After discussion, the Board
(absent Messrs. Guzzi and Loeb) unanimously set November 13, 2015
as the Record Date.
On November 6, 2015, Lone Star filed an amended preliminary
consent solicitation statement with the SEC on Schedule 14A.
On November 9, 2015, the Board held a telephonic meeting to
discuss the Revised Offer and the Proposals. Representatives from
Company management Hinckley Allen, Jones Day and Signal Hill were
present at the meeting. After discussion, the Board unanimously
determined that the Revised Offer grossly undervalued Edgewater,
and that it and the Proposals were not in the best interests of
Edgewater stockholders.
On November 10, 2015, the Company issued a press release stating
that the Board had unanimously determined that the Revised Offer
grossly undervalued Edgewater, and that it and the Proposals were
not in the best interests of Edgewater stockholders.
Also on November 10, 2015, the Company filed a preliminary
consent revocation statement with the SEC on Schedule 14A.
On November 19, 2015, Lone Star filed a second amended
preliminary consent solicitation statement with the SEC on Schedule
14A.
Also on November 19, 2015, the Company made a presentation at
the Southwest IDEAS Investor Conference (the Conference) and filed
a Current Report on Form 8-K with the SEC attaching a copy of the
materials presented at the Conference as additional soliciting
material.
On November 20, 2015, the Company filed an amended preliminary
consent revocation statement with the SEC on Schedule 14A.
On November 23, 2015, Lone Star field a third amended
preliminary consent solicitation statement with the SEC on Schedule
14A.
On November 24, 2015, the Company filed a second amended
preliminary consent revocation statement with the SEC on Schedule
14A.
QUESTIONS AND ANSWERS ABOUT THIS CONSENT REVOCATION
STATEMENT
The Board has also unanimously determined that the Proposals are
not in the best interest of the Companys stockholders.
Accordingly, the Board urges you to reject Lone Stars consent
solicitation and revoke any consent previously submitted.
If you have validly executed and delivered a WHITE consent card
that Lone Star sent you, doing nothing further will mean that you
have consented to Lone Stars Proposals, which means you will
effectively be voting FOR the Proposals. If you have executed and
delivered a WHITE consent card that Lone Star sent you, the Board
urges you to revoke any such consent previously submitted by
executing and delivering the
GOLDConsent Revocation Card.
THE CONSENT PROCEDURE
Voting Securities and Record Date
In accordance with Delaware law and the Bylaws, the Board has
set November 13, 2015 as the Record Date for the determination of
the Companys stockholders who are entitled to execute, withhold or
revoke consents relating to the Proposals. As of the Record Date,
there were 11,801,307 Shares outstanding, each entitled to one vote
per Share.
Only record holders of Shares as of the Record Date are eligible
to execute, withhold and revoke consents in connection with the
Lone Star Consent Solicitation and this Consent Revocation
Statement. Persons beneficially owning Shares through a broker,
bank or other nominee, should contact such broker, bank or other
nominee and instruct it to execute the
GOLDConsent Revocation Card on their behalf. You may
execute, withhold or revoke consents at any time before or after
the Record Date, provided that any such consent or revocation will
be valid only if you were a holder of record of Shares on the
Record Date and the consent or revocation is otherwise valid.
Effectiveness of Consents
Under the DGCL, unless otherwise provided in a corporations
certificate of incorporation, stockholders may act without a
meeting, without prior notice and without a vote, if consents in
writing setting forth the action to be taken are signed by the
holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. The Companys certificate of incorporation
does not prohibit stockholder action by written consent. The Bylaws
provide that alteration, amendment or repeal of the Bylaws by the
stockholders of the Company requires the approval of a majority of
the total outstanding Shares entitled to vote at any annual meeting
or at any special meeting. Therefore, in order to be effective, the
Proposals require consents signed by stockholders representing a
majority of the Shares outstanding as of the Record Date.
Furthermore, under Section 228 of the DGCL and the Bylaws, all
consents will expire unless valid, unrevoked consents representing
at least a majority of the Shares outstanding as of the Record Date
are delivered to the Company within 60 days of the earliest-dated
consent delivered to the Company. On October 26, 2015, Lone Star
Value Management LLC delivered an executed consent to the
Company.
Because the proposals contained in Lone Stars Consent Statement
could become effective before the expiration of the 60-day period
set forth in Section 228 of the DGCL, WE URGE YOU TO ACT PROMPTLY
TO RETURN THE
GOLDCONSENT REVOCATION CARD.
Effect of GOLD Consent Revocation Card
A stockholder may revoke any previously signed consent by
completing, signing, dating
and
returning
to the Company a
GOLDConsent Revocation Card. A consent may also be revoked
by delivery of a written revocation of your consent to Lone Star.
Stockholders are urged, however, to deliver all consent revocations
to the Company c/o Okapi Partners LLC, 1212 Avenue of the Americas,
24
thFloor, New York, New York 10036. The Company requests
that if a revocation is instead delivered to Lone Star, a copy of
the revocation also be delivered to the Company c/o Okapi Partners
at the address set forth above, so that the Company will be aware
of all revocations.
Unless you specify otherwise, by signing and delivering the
GOLDConsent Revocation Card, you will be deemed to have
revoked consent to all of the Proposals.
Any consent revocation may itself be revoked by marking,
signing, dating and delivering a written revocation of your Consent
Revocation Card to the Company or to Lone Star or by delivering to
Lone Star a subsequently dated WHITE consent card that Lone Star
sent to you.
The Company has retained Okapi Partners to assist in
communicating with stockholders in connection with the Lone Star
consent solicitation and to assist in our efforts to obtain consent
revocations. If you have any questions regarding this Consent
Revocation Statement or about submitting your
GOLDConsent Revocation Card, or otherwise require
assistance, please call Okapi Partners toll-free at
Tel: (855) 305-0856 (Toll Free), (212) 297-0720
(Collect).
You are urged to carefully review this Consent Revocation
Statement. YOUR TIMELY RESPONSE IS IMPORTANT. You are urged NOT to
sign any WHITE consent cards. Instead, the Company urges you to
reject the solicitation efforts of Lone Star by promptly
completing, signing, dating and mailing the enclosed GOLD Consent
Revocation Card to Okapi Partners LLC, 1212 Avenue of the Americas,
24
thFloor, New York, New York 10036, Tel: (855) 305-0856
(Toll Free), (212) 297-0720 (Collect), Email:
info@okapipartners.com. Please be aware that if you sign a WHITE
consent card but do not check any of the boxes on the card, you
will be deemed to have consented to all of the Proposals in Lone
Stars Consent Statement.
Results of Consent Revocation Statement
The Company will retain an independent inspector of elections in
connection with Lone Stars consent solicitation. The Company
intends to notify stockholders of the results of Lone Stars consent
solicitation by issuing a press release, which it will also file
with the SEC as an exhibit to a Current Report on Form 8-K.
SOLICITATION OF REVOCATIONS
Cost and Method
The cost of the solicitation of consent revocations will be
borne by the Company. The Company estimates that the total
expenditures relating to the Companys solicitation of consent
revocations (other than salaries and wages of officers and
employees, but including costs of potential litigation related to
the solicitation) will be approximately $900,000, of which
approximately $
[75,000]has been spent as of the date hereof. In addition to
solicitation by mail, directors, officers and other employees of
the Company may, without additional compensation, solicit
revocations in person, or by telephone or other forms of
telecommunication.
The Company has retained Okapi Partners as its proxy solicitor
at an estimated fee of up to $75,000, plus reasonable out-of-pocket
expenses, to assist in the solicitation of revocations. The Company
will reimburse brokerage houses, banks, custodians and other
nominees and fiduciaries for out-of-pocket expenses incurred in
forwarding the Companys consent revocation materials to, and
obtaining instructions relating to such materials from, beneficial
owners of the Companys common stock. Okapi Partners has advised the
Company that approximately 25 of its employees will be involved in
the solicitation of revocations by Okapi Partners on behalf of the
Company.
Participants in the Companys Solicitation
Under applicable regulations of the SEC, each director and
certain executive officers of the Company are deemed participants
in the Companys Consent Revocation Statement. Please refer to the
section entitled SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Stock Ownership of Directors and Management for information about
our directors and executive officers who may be deemed to be
participants.
PROFESSIONAL ADVISORS
The Company has engaged Signal Hill to act as its financial
advisor in connection with, among other things, the Boards analysis
and consideration of the Revised Offer. Pursuant to this
engagement, the Company has agreed to pay Signal Hill customary
advisory fees that will be payable whether or not the Revised Offer
is consummated. The Company has also agreed to reimburse Signal
Hills reasonable expenses, including fees and disbursements of its
counsel, and to indemnify Signal Hill and related persons against
certain liabilities that may arise out of the engagement, including
certain liabilities under the federal securities laws.
Signal Hill is a leading independent investment banking firm
serving the M&A and private capital raising needs of growth
companies, primarily across the information technology landscape.
Founded in 2002, Signal Hill has advised on over 650 M&A and
financing transactions involving clients in sectors such as
software, IT services, Internet, cloud technology and digital
media. Signal Hill has more than 70 professionals in offices across
the U.S. and in India.
The Company has retained Sard Verbinnen & Co. LLC (Sard) as
its public relations advisor in connection with the Revised Offer.
The Company has agreed to pay Sard customary compensation for such
services. In addition, the Company has agreed to reimburse Sard for
its expenses and to indemnify it against certain liabilities
relating to or arising out of the engagement.
The Company has engaged Okapi Partners to assist it in
connection with the Companys communications with its stockholders
with respect to the Revised Offer. The Company has agreed to pay
Okapi Partners customary compensation described under SOLICITATION
OF REVOCATIONS Cost and Method and to indemnify it against certain
liabilities relating to or arising out of the engagement.
Except as set forth above, neither the Company nor any person
acting on its behalf has directly or indirectly employed, retained,
or compensated, or currently intends to employ, retain, or
compensate, any person to make solicitations or recommendations to
the stockholders of the Company on its behalf with respect to Lone
Stars consent solicitation.
APPRAISAL RIGHTS
Holders of Shares do not have appraisal rights under the DGCL in
connection with this solicitation of consent revocations.
CURRENT DIRECTORS OF THE COMPANY
Following are the names and ages of our current directors, the
year they became directors, their principal occupations or
employment for at least the past five years and certain of their
other directorships.
The address of each of the Directors listed above is: c/o
Edgewater Technology, Inc., 200 Harvard Mill Square, Suite 210,
Wakefield, Massachusetts 01880.
NAMED EXECUTIVE OFFICERS OF THE COMPANY
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into indemnity agreements with our directors and
with the executive officers identified in the Summary Compensation
Table (the Named Executive Officers) which provide, among other
things, that we will indemnify such executive officer or director,
under the circumstances and to the extent provided for therein, for
expenses, damages, judgments, fines and settlements he or she may
be required to pay in actions or proceedings which he or she is or
may be made a party by reason of his or her position as a director,
executive officer or other agent of our Company, and otherwise to
the full extent permitted under Delaware law and our Companys
amended and restated bylaws.
In order to identify and address concerns regarding related
party transactions and their disclosures, the Company uses Director
and Officer Questionnaires and its conduct and ethics policies. The
Company also considers the independence of its directors. The
discussion of the independence of the directors is included under
Corporate GovernanceBoard and Board Committee Matters.
Director and Officer Questionnaires are distributed to executive
officers and directors at the beginning of each fiscal year to
identify any potential related-party transactions. Within the
questionnaire, executive officers and directors are asked to
describe any transaction, arrangement or relationship or any series
of similar transactions, arrangements or relationships, occurring
since the beginning of the prior fiscal year, in which the Company
was or is to be a participant and the amount involved exceeds
$120,000, and in which any of the following had or will have a
direct or indirect interest: (i) the individual; (ii) any director
or executive officer of the Company; (iii) a nominee for director;
(iv) an immediate family member of a director or executive officer
of the Company; (v) an immediate family member of a nominee for
director; (vi) a security holder of more than 5% of the common
stock; or (vii) an immediate family member of the security holder.
Responses provided within the questionnaire are reviewed by
management of the Company to determine any necessary course of
action. No such transaction was entered into as of the date of this
Consent Revocation Statement.
It is the policy of the Company that all employees, directors
and agents maintain the highest ethical standards and comply with
all applicable legal requirements when conducting Company business.
Guidelines regarding conflicts of interest are detailed in the
Companys Code of Conduct, which was adopted by the Board. The
Companys Code of Conduct policy is available on the Companys
website at
www.edgewater.com
. All Company employees must deal with vendors, customers and
others doing business with the Company in a manner that avoids even
the appearance of conflict between personal interests and those of
the Company. Potential conflicts of interest may arise from any of
the following:
The Audit Committee is authorized to review all conflicts of
interest involving directors and executive officers.
Relationships, including business, financial, personal, and
family, may give rise to conflicts of interest or the appearance of
a conflict. Employees should carefully evaluate their relationships
as they relate to Company business to avoid conflict or the
appearance of a conflict. To avoid conflicts of interest or the
appearance of a conflict:
Any employee or director who becomes aware of a conflict is
required to bring it to the attention of a supervisor, management
or other appropriate personnel.
Directors are expected and required to uphold the same
dedication to corporate ethics as the Companys employees.
If a conflict of interest arises involving an executive officer
or director, the Board must approve a waiver to the Code of Conduct
and if a director has the conflict, that director must abstain from
the approval. Waivers are made on a case-by-case basis. The Board
has not adopted a formal written policy with respect to waiving
conflict of interests or approving related party transactions. In
making this determination, the Board considered the infrequency in
occurrence of these transactions. Any waivers to the Code of
Conduct granted to an executive officer or director shall be
disclosed by the Company on its website at
www.edgewater.com
.
CORPORATE GOVERNANCE
Board and Board Committee Matters
The Board currently consists of six directors. Wayne Wilson,
Paul E. Flynn, Paul Guzzi, Nancy L. Leaming and Michael R. Loeb are
all Independent directors under the NASDAQ listing standards. In
addition, Daniel OConnell, who served on our Board from August 2009
through the 2014 Annual Meeting of Stockholders, was also
considered Independent under the NASDAQ listing standards.
As required by the NASDAQ listing standards and our Companys
Corporate Governance Guidelines, the Board must be composed of a
majority of Independent directors. The Corporate Governance
Guidelines and committee charters are reviewed annually and updated
as necessary to reflect changes in regulatory requirements and
evolving oversight practices. Mr. Wilson serves as the Companys
lead independent director. The lead independent director is
responsible for coordinating the activities of the non-management
directors, coordinating with the Chairman to set the agenda for
Board meetings, chairing meetings of the non-management directors,
and leading the Boards review of the CEO.
The Board currently has three standing committees consisting of:
the Governance and Nominating Committee, the Compensation Committee
and the Audit Committee. No member of the Audit, Compensation or
Governance and Nominating Committee is an employee of the Company
or its subsidiaries, and all are independent as defined by the
NASDAQ listing standards. Each of the Audit, Compensation and
Governance and Nominating Committees has a written...
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