Item 1.01.
Entry into a Material Definitive Agreement.
Transaction Agreement
On March 14, 2018, StarTek, Inc., a Delaware corporation (the “
Company
”), CSP Alpha Midco Pte Ltd, a Singapore private limited company (“
Aegis
”), and CSP Alpha Holdings Parent Pte Ltd, a Singapore private limited company (the “
Aegis
Stockholder
”) entered into a Transaction Agreement (the “
Transaction Agreement
”), pursuant to which the Company, Aegis and the Aegis Stockholder agreed to, among other things: (1) the sale of all of the issued and outstanding shares of the common stock of Aegis by the Aegis Stockholder to the Company; (2) the issuance of 20,600,000 shares, subject to adjustment as set forth in the Transaction Agreement, of the common stock of the Company, par value $.01 per share (the “
Common Stock
”) in consideration of such sale; (3) the amendment of the Company’s Restated Certificate of Incorporation, as amended from time to time, in order to effect such issuance and the other transactions contemplated by the Transaction Agreement; and (4) in addition to the transactions set forth above, the purchase at the closing of additional shares of Common Stock by the Aegis Stockholder, for $10,000,000 at a price of $12 per share, subject to adjustment as set forth in the Transaction Agreement, with the number of shares issued and amount of cash invested subject to potential adjustment based on the relative net debt of the parties (collectively, along with all other transactions contemplated by the Transaction Agreement, the “
Transactions
”). The closing sale price of the Company’s common stock on March 14, 2018 was $10.53 per share.
Immediately following the consummation of the Transactions, Aegis will become a wholly-owned subsidiary of the Company and the Aegis Stockholder is expected to hold approximately 55% of the Company’s outstanding Common Stock.
Each of the Company, Aegis and the Aegis Stockholder has agreed to customary representations, warranties and covenants in the Transaction Agreement including, among others, covenants relating to (1) using commercially reasonable efforts to obtain the requisite approvals of the Company’s stockholders to the StarTek Voting Proposal and the StarTek Charter Amendment described below; (2) using commercially reasonable efforts to file the definitive version of the information to be supplied by or on behalf of the Company for inclusion in the proxy statement as promptly as practicable and cause the proxy statement to be mailed to the Company’s stockholders at the earliest practicable time after the Securities and Exchange Commission (the “
SEC
”) has completed its review of the preliminary filing; (3) abiding by non-solicitation of competing acquisition proposals by the Company; (4) using commercially reasonable efforts to maintain the existing listing of the Company’s Common Stock on the New York Stock Exchange (“
NYSE
”); and (5) carrying on the Company and Aegis’ conduct of their respective businesses during the period between the date of signing the Transaction Agreement and the closing of the Transactions.
Consummation of the Transactions is subject to certain closing conditions, including, among other things, (1) approval by the stockholders of the Company of the issuance of shares of the Company’s Common Stock in the Transactions (the “
StarTek Voting Proposal
”) under NYSE rules and the amendment of the Company’s certificate of incorporation to increase the number of authorized shares of the Company’s Common Stock from 32,000,000 to 60,000,000 (the “
StarTek Charter Amendment
”); (2) the receipt of specified governmental approvals, including the termination or expiration of any waiting period applicable to the Transactions under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder; (3) the absence of any order, executive order, stay, decree, judgment or injunction (preliminary of permanent) or statute, rule or regulation that makes the consummation of the Transactions illegal, or otherwise prohibits the consummations of the Transactions; and (4) approval of the Supplemental Listing Application with the NYSE with respect to the shares of the Company’s Common Stock to be issued to the Aegis Stockholder pursuant to the Transaction Agreement.
The Transaction Agreement contains certain termination rights of the Company, on the one hand, and Aegis and the Aegis Stockholder, on the other hand, and provides that, under specified circumstances, upon the termination of the Transaction Agreement, the Company will be required to pay the Aegis Stockholder a termination fee of up to $6.8 million.
The foregoing description of the Transaction Agreement, and the transactions contemplated thereby, does not purport to be complete and is qualified in its entirety by reference to the Transaction Agreement, which is filed as Exhibit 2.1 hereto and which is incorporated herein by reference. The Transaction Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Aegis, the Aegis Stockholder or any of their respective subsidiaries and affiliates. The Transaction Agreement contains representations and warranties by Aegis and the Aegis Stockholder, on the one hand, and by the Company, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules delivered by each party in connection with the signing of the Transaction Agreement, and certain representations and warranties in the Transaction Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the Aegis Stockholder and the Company. Accordingly, the representations and
warranties in the Transaction Agreement should not be relied on by any persons as characterizations of the actual state of facts about the Company at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Transaction Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.