in the superior court of fulton county business case division state of ...

IN RE TRANSCEND SERVICES, INC.
SHAREHOLDER LITIGATION
IN THE SUPERIOR COURT OF FULTON COUNTY
BUSINESS CASE DIVISION
STATE OF GEORGIA
Civil Action File No. 2012CV213119
TO: ALL PERSONS OR ENTITIES WHO OWNED TRANSCEND SERVICES, INC. (“TRANSCEND” OR THE “COMPANY”)
COMMON STOCK FROM MARCH 6, 2012 THROUGH AND INCLUDING APRIL 27, 2012, AND ALL OF THEIR
SUCCESSORS IN INTEREST AND TRANSFEREES, IMMEDIATE AND REMOTE, THROUGH AND INCLUDING APRIL 27,
2012, BUT EXCLUDING DEFENDANTS AND PERSONS OR ENTITIES RELATED TO OR AFFILIATED WITH
DEFENDANTS.
THIS NOTICE WAS SENT TO YOU BY ORDER OF THE COURT. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS
ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THIS CLASS ACTION AND, IF YOU ARE A
CLASS MEMBER, CONTAINS IMPORTANT INFORMATION AS TO YOUR RIGHTS CONCERNING THE SETTLEMENT
DESCRIBED BELOW.
IF YOU HELD SHARES OF TRANSCEND STOCK FOR THE BENEFIT OF ANOTHER, PLEASE PROMPTLY TRANSMIT THIS
DOCUMENT TO THE BENEFICIAL OWNER.
This Notice is not a lawsuit against you, you are not being sued. You have received this Notice because you may be a
member of the Settlement Class described in this Notice.
I. PURPOSE OF THIS NOTICE
This Notice is given pursuant to an Order of the Superior Court of Fulton County, Georgia, Business Case Division (the “Court”)
entered in the above-captioned action (the “Consolidated Action”) on August 31, 2012 (the “Notice Order”). The purpose of this Notice is
to inform you of the pendency and proposed settlement of the Consolidated Action (the “Settlement”) by means of Stipulation of
Settlement (the “Stipulation”) entered into by the Parties, and the Court’s conditional certification of a Settlement Class for purposes of the
Settlement, and to notify you of a hearing to be held on November 5, 2012 at 10:00 a.m., before the Court (the “Settlement Hearing”) at
136 Pryor Street, S.W., Room 9J, Atlanta, Georgia 30303 for the purpose of determining: (i) whether the proposed Settlement of the
Consolidated Action on the terms and conditions provided for in the Stipulation should be finally approved by the Court; (ii) whether
judgment should be entered pursuant to the Stipulation, inter alia, dismissing the Action with prejudice; and (iii) other matters relating to
the proposed Settlement.
The Court has determined that for purposes of the Settlement only, the Action shall be conditionally maintained as a class action
pursuant to O.C.G.A § 9-11-23(b) on behalf of the Settlement Class. At the Settlement Hearing, the Court will also consider whether the
Settlement Class should be permanently certified as a settlement class pursuant to O.C.G.A § 9-11-23 and whether Plaintiffs and their
counsel have adequately represented the Class.
This Notice describes the rights that you may have pursuant to the Settlement and what steps you may, but are not required to
take, in relation to the Settlement.
If the Court approves the Settlement, the Parties (as defined below) will ask the Court at the Settlement Hearing to enter an Order
and Final Judgment dismissing the Consolidated Action with prejudice on the merits and releasing all Settled Claims.
The Court has reserved the right to adjourn the Settlement Hearing without further notice to the Class other than by announcement at the
Settlement Hearing or any adjournment thereof. The Court has further reserved the right to approve the Settlement at or after the
Settlement Hearing with such modifications as may be consented to by the Settling Parties and without further Notice to the members of
the Class.
THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE COURT. IT IS BASED ON THE
STATEMENTS OF THE PARTIES AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION
OF THE COURT AS TO THE MERITS OF ANY OF THE CLAIMS OR DEFENSES RAISED BY ANY OF THE
PARTIES.
II. HISTORY AND BACKGROUND OF THE SETTLEMENT
On March 7, 2012, Nuance Communications, Inc. (together with its subsidiary Townsend Merger Corporation, “Nuance”) and
Transcend Services, Inc. (“Transcend” or the “Company”) announced they had entered into an agreement (the “Merger Agreement”) for
Nuance to acquire Transcend through a two-step process: a cash tender offer of $29.50 per Transcend share (the “Tender Offer”)
followed by a short-form merger, the transaction having an aggregate value of approximately $300 million in cash (the “Merger”).
On March 20, 2012, Transcend filed a Solicitation/Recommendation Statement on Schedule 14D-9 (the “Recommendation
Statement”) with the Securities and Exchange Commission (the “SEC”) in connection with the proposed Tender Offer. The
Recommendation Statement included, among other things, a recommendation by the Board of Directors of Transcend (the “Board”) that
Transcend shareholders tender their shares pursuant to the Tender Offer.
The Recommendation Statement also contained a discussion of the background of the Merger Agreement and the reasons the
Board of Transcend recommended that stockholders tender their shares pursuant to the Tender Offer.

On March 23, 2012, Broadway Capital, a shareholder of the Company, filed a putative class action complaint (the “Broadway
Capital Complaint”) on behalf of all holders of Transcend’s common stock, other than Defendants and their affiliates, in the Superior Court
of Georgia for Fulton County, Georgia (the “Court”) captioned Broadway Capital v. Gerdes, et. al., Civil Action File No. 2012 CV 213119
(the “Broadway Capital Action”).
On March 26, 2012, David Krause, a shareholder of the Company, filed a putative class action complaint (the “Krause
Complaint”) on behalf of all holders of Transcend’s common stock, other than Defendants and their affiliates, in the Superior Court of
DeKalb County, Georgia captioned Krause v. Transcend Services, Inc., et. al., Civil Action File No. 2012CV4074 (the “Krause Action”).
The Krause Action was subsequently transferred to the Court on March 17, 2012 with Civil Action File No. 2012CV214372.
On March 28, 2012, Samir Salva, a shareholder of the Company, filed a putative class action complaint (the “Salva Complaint”)
on behalf of all holders of Transcend’s common stock, other than Defendants and their affiliates, in the Court captioned Samir Salva v.
Transcend Services, Inc., et al., Civil Action File No. 2012CV213285 (the “Salva Action,” together with the Broadway Capital Action and
the Krause Action, the “Actions”).
Each of the Broadway Capital Complaint, the Krause Complaint and the Salva Complaint sought relief against Transcend and
each member of its Board (collectively, the “Transcend Defendants”): Larry G. Gerdes, Joseph G. Bleser, Joseph P. Clayton, James D.
Edwards, Walter S. Huff Jr., and Charles E. Thoele, as well as Nuance Communications, Inc. and its subsidiary Townsend Merger
Corporation.
Each of the Broadway Capital Complaint, the Krause Complaint and the Salva Complaint challenged, inter alia, the Tender
Offer, the Merger, and the Merger Agreement, and alleged that the Board had breached its fiduciary duties in connection therewith and
had failed to get the highest price for Transcend’s shareholders.
Each of the Broadway Capital Complaint, the Krause Complaint and the Salva Complaint also challenged certain of the
Company’s disclosures in the Recommendation Statement (the “Challenged Disclosures”), and alleged that the Board had breached its
fiduciary duties in connection therewith.
Each of the Broadway Capital Complaint, the Krause Complaint and the Salva Complaint also alleged, inter alia, that by reason
of Defendants’ actions, Plaintiffs and members of the putative class (the “Putative Class Members”) had suffered and would suffer
irreparable harm for which they had no adequate remedy at law, and requested that the Court grant appropriate relief for such alleged
harm.
Defendants have denied and continue to deny any wrongdoing or liability with respect to all claims, events, and transactions
complained of in the Actions; deny they engaged in wrongdoing; deny they committed any violation of the law; deny that they breached
any fiduciary duties; and deny liability of any kind to Plaintiffs or the Class.
On or about March 27, 2012, Plaintiff Broadway Capital filed a motion for (i) a temporary restraining order, (ii) limited expedited
discovery pursuant to O.C.G.A. §§ 9-11-30 and 9-11-34, and (iii) a prompt post-expedited discovery hearing date on Plaintiff’s motion for
an interlocutory injunction pending trial (the “Broadway Capital TRO and Expedited Discovery Motion”) in the Broadway Capital Action,
which motion was set for a hearing on April 4, 2012 and thereafter rescheduled to April 12, 2012.
On or about March 28, 2012, Plaintiff Salva filed an emergency motion for a preliminary injunction (the “Salva PI Motion”) in the
Salva Action.
Also on or about March 28, 2012, Defendants filed a motion to dismiss or, in the alternative, to either stay proceedings or transfer
the Krause Action. Thereafter, Plaintiff in the Krause Action agreed to the transfer of his action to the Fulton County Superior Court.
On or about March 29, 2012, the Broadway Capital Action was transferred to the Business Case Division of the Court.
Also on or about March 29, 2012, Nuance filed a motion to dismiss the Broadway Capital Action.
On or about April 3, 2012, counsel for Plaintiffs Broadway Capital, Krause and Salva sent a joint letter to counsel for Defendants
setting forth a proposal upon which Plaintiffs would consider a settlement of the Actions (the “Joint Settlement Demand”) which
demanded, inter alia, that Defendants address additional disclosure issues in a supplement to be disseminated to Transcend’s
shareholders.
On or about April 9, 2012, at a teleconference held before the Court, Plaintiff Broadway Capital requested (and was granted) the
Court’s permission to substitute the Broadway Capital Interlocutory Injunction Motion for Broadway Capital’s TRO and Expedited
Discovery Motion, which substitution was concurred with by the Defendants.
On or about April 10, 2012, Plaintiff Broadway Capital filed the Broadway Capital Interlocutory Injunction Motion.
Also on or about April 10, 2012, (a) Plaintiff Krause filed a notice of joinder in the Broadway Capital Interlocutory Injunction
Motion and (b) Plaintiff Salva filed a notice of withdrawal of the Salva PI Motion and joinder in the Broadway Capital Interlocutory Injunction
Motion.
On or about April 12, 2012, (a) the Transcend Defendants filed their opposition to the Broadway Capital Interlocutory Injunction
Motion (the “Transcend Defendants’ Opposition”) and (b) Nuance filed a joinder to the Transcend Defendants’ Opposition to the
Broadway Capital Interlocutory Injunction Motion.
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On April 13, 2012, the Court denied the Broadway Capital Interlocutory Injunction Motion following oral argument and on April 16,
2012, entered an order confirming the same.
On or about April 16, 2012, Defendants extended the expiration of the Tender Offer until April 25, 2012.
Between April 13 and April 20, 2012, counsel for the Defendants and counsel for Plaintiffs engaged in good faith discussions with
regard to the possible settlement of the Actions.
After arm’s length and extensive negotiations, the Parties reached an agreement in principle concerning the proposed
settlement of the Actions, which is set forth in a memorandum of understanding (the “MOU”), dated April 23, 2012. Pursuant to the MOU,
Defendants agreed to make supplemental disclosures sought by Plaintiffs in Amendment No. 6 to the Recommendation Statement, which
Amendment was issued on April 20, 2012 (the “Supplement”).
As of the expiration of the Tender Offer at 5:00 p.m., New York City time, on Wednesday, April 25, 2012, stockholders of
Transcend holding approximately 96% of all outstanding shares validly tendered their shares to Nuance, and after the expiration of the
Tender Offer, on April 26, 2012, Nuance effected a “short form” merger under Delaware Law.
On May 13, 2012, the Court consolidated the Broadway Capital Action, the Krause Action and the Silva Action for all purposes to
In Re Transcend Services, Inc. Shareholders Litigation, Civil Action File No. 2012CV213119.
The Parties have engaged in discovery to confirm the fairness of their settlement, pursuant to which Plaintiffs’ Counsel reviewed
hundreds of pages of documents produced by Defendants and Plaintiffs took the depositions of (i) Transcend’s former Chief Financial
Officer, in Atlanta, Georgia on June 15, 2012 and (ii) a representative of the Company’s financial advisor, Lazard Freres & Co. LLC
(“Lazard”), knowledgeable about the work done by Lazard in conjunction with the Merger, in New York City, New York on July 25, 2012.
III. THE PROPOSED SETTLEMENT
In consideration for the full settlement and release of all Settled Claims (as defined in the Stipulation), the Defendants disclosed
the information annexed as Exhibit A to the Stipulation (the “Supplemental Disclosures”) in the Supplement.
Defendants have acknowledged that the decision to disclose the above Supplemental Disclosures in the Supplement directly
resulted from their desire to settle the Actions, the litigation efforts of counsel for Plaintiffs in the Actions (“Plaintiffs’ Counsel”), and the
negotiations between counsel for Plaintiffs and Defendants.
IV. RELEASE AND DISMISSAL OF CLAIMS – ORDER AND FINAL JUDGMENT
things:
At the Settlement Hearing, the Parties will jointly ask the Court to enter an Order and Final Judgment which will, among other
a. approve the Settlement pursuant to the O.C.G.A. § 9-11-23;
b. authorize and direct performance of the Settlement in accordance with its terms and conditions and reserve jurisdiction
to supervise the consummation of the Settlement;
c. permanently certify the Settlement Class for settlement purposes only pursuant to O.C.G.A. § 9-11-23;
d. provide that, upon the Effective Date of the Settlement (as defined in the Stipulation), the following claims will be
released (the “Released Claims”) with respect to all parties to the Actions and their counsel, including but not limited to
Defendants, and all of their present or past heirs, executors, estates, administrators, predecessors, successors, assigns,
parents, subsidiaries, associates, affiliates, employers, employees, agents, consultants, insurers, directors, managing directors,
officers, partners, principals, members, attorneys, accountants, financial and other advisors, investment bankers, underwriters,
lenders, and any other representatives of any of these persons or entities (the “Released Parties”): all claims, rights, causes of
action, liabilities, damages, losses, and obligations whether known or unknown, direct or derivative, belonging to Plaintiffs and
any or all members of the putative class and, to the extent their claims derive from the above, their present or past heirs,
executors, estates, administrators, predecessors, successors, assigns, parents, subsidiaries, associates, affiliates, employers,
employees, agents, consultants, insurers, directors, managing directors, officers, partners, principals, members, attorneys,
accountants, financial and other advisors, investment bankers, underwriters, lenders, and any other representatives of any of
these persons and entities (including, without limitation, any claims, whether direct, derivative, representative or in any other
capacity, arising under federal, state, local, statutory or common law or any law, rule or regulation, including the law of any
jurisdiction outside the United States) that relate in any way to any alleged misstatement or omission, any breach of duty, any
negligence or fraud (or any other alleged wrongdoing or misconduct) and also relate in any way to the Actions, the Consolidated
Action, the Merger, Merger Agreement, the Recommendation Statement, the Tender Offer Documents, the Supplemental
Disclosures, the fiduciary and other duties owed by Defendants to shareholders of Transcend in connection therewith,
Defendants’ disclosure obligations under federal, state or any other law in connection with the Merger, Merger Agreement,
Recommendation Statement, Tender Offer Documents, Supplemental Disclosures, or any other claim related in any way to any
of the foregoing (but excluding any statutory claims for appraisal and also claims to enforce this Settlement).
e. permanently bar and enjoin the institution and prosecution by Plaintiffs and any member of the Class of any other action
against any Released Party in any court asserting any Settled Claims; and
f. reserve jurisdiction over all matters relating to the administration and effectuation of the Settlement.
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V. NOTICE TO BROKERS AND OTHER NOMINEES
The Court has ordered that record holders of common stock of Transcend included in the Class send this Notice to all beneficial
owners of such stock within five (5) days after receipt of the Notice or send a list of the names and addresses of such beneficial owners to
the Notice Administrator within five (5) days of receipt of the Notice. You may obtain reimbursement of your reasonable and actual
out-of-pocket disbursements that would not have been made but for this request by submitting an itemized statement to:
In re Transcend Services, Inc. Shareholder Litigation
c/o GCG, Inc.
P.O. Box 9349
Dublin, OH 43017-4249
VI. PLAINTIFFS’ COUNSEL’S ATTORNEYS’ FEES AND EXPENSES
Defendants acknowledge that Plaintiffs’ counsel have asserted a claim for attorneys’ fees and reimbursement of expenses in this
action based upon the benefits that the Settlement has and will provide to Transcend’s former public shareholders. Rather than requiring
you or other former shareholders to pay these fees, the Parties (after negotiating the other elements of the Settlement) agreed that,
subject to Court approval of the Settlement, Defendants will cause to be paid to Plaintiffs’ Counsel the sum of $400,000 in full settlement
of this claim for attorneys’ fees and expenses. The attorneys’ fees and expense award will not be paid out of amounts that would
otherwise have been paid to you or other former holders of Transcend’s Common Stock.
VII. THE SETTLEMENT HEARING
The Settlement Hearing will be held on November 5, 2012 at 10:00 a.m., before the Superior Court of Fulton County, Georgia,
Business Case Division (the “Settlement Hearing”), 136 Pryor Street, S.W., Room 9J, Atlanta, Georgia 30303. Any Class Member may,
but is not required to, appear at the Settlement Hearing in person or by counsel and be heard in support of, or in opposition to, the fairness,
reasonableness and adequacy of the Settlement. However, no Settlement Class Member shall be heard in opposition to the Settlement
and no paper or brief submitted by any such person shall be received or considered by the Court unless no later than fourteen (14) days
before the Settlement Hearing, that person shall file with the Clerk of this Court: (a) a written notice of his, her or its intention to appear; (b)
proof that he, she or it is a Settlement Class Member; (c) a written statement of the position he, she or it will assert; (d) the reasons for his,
her or its position; and (e) all papers he, she or it intends to present to the Court in support of his, her or its position. In addition, such
person must also filed with the Clerk of this Court no later than fourteen (14) days before the Settlement Hearing a proof of service of such
notice and papers upon Counsel for the Parties at the following address:
Richard B. Brualdi, Esq.
THE BRUALDI LAW FIRM, P.C.
29 Broadway, Suite 2400
New York, New York 10006
Counsel for Plaintiffs
John G. Despriet, Esq.
WOMBLE CARLYLE SANDRIDGE & RICE LLP
271 17 th Street, NW, Suite 2400
Atlanta, Georgia 30363
Counsel for Defendants Transcend
Services, Inc., Larry G. Gerdes,
Joseph G. Bleser, Joseph P. Clayton,
James D. Edwards, Walter S. Huff Jr., and
Charles E. Thoele
4
Seven Guggenheim, Esq.
WILSON SONSINI GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, California 94304
Counsel for Defendants Nuance
Communications, Inc. and
Townsend Merger Corp.
Any person who fails to object in the manner provided above shall be deemed to have waived the right to object (including any
right of appeal) and shall be forever barred from raising such objection in this or any other action or proceeding.
VIII. EXAMINATION OF PAPERS
This notice contains only a summary of the terms of the proposed Settlement. For a more detailed statement of the matters
involved in these proceedings, you may review the files at the office of the clerk of the court during regular business hours or contact
Plaintiffs’ counsel, Mr. Brualdi, at the address listed above.
IF YOU HAVE ANY QUESTIONS, PLEASE MAKE ALL INQUIRIES TO:
THE BRUALDI LAW FIRM, P.C.
Richard B. Brualdi, Esq.
29 Broadway, Suite 2400
New York, New York 10006
Telephone: (212) 952-0602
PLEASE DO NOT CONTACT THE COURT DIRECTLY
Dated: August 31, 2012
FARUQI & FARUQI, LLP
Juan E. Monteverde, Esq.
369 Lexington Avenue, 10 th Fl.
New York, NY 10017
Telephone: (212) 983-9330
ROBBINS GELLER RUDMAN & DOWD LLP
Cullin A. O’Brien, Esq.
120 E. Palmetto Park Road, Suite 500
Boca Raton, Florida 33432
Telephone: (561) 750-3000
DISTRIBUTED BY ORDER OF THE SUPERIOR
COURT OF FULTON COUNTY, GEORGIA
BUSINESS CASE DIVISION