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Subsequent Event
12 Months Ended
Dec. 31, 2011
SUBSEQUENT EVENT [Abstract]  
Subsequent Events [Text Block]
SUBSEQUENT EVENT
In accordance with FASB ASC Topic 855, Subsequent Events, we evaluated all events or transactions that occurred after December 31, 2011 up through the date these financial statements were issued. During this period, a material recognizable subsequent event occurred. On March 6, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Nuance Communications, Inc., a Delaware corporation (“Parent”), and Townsend Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Purchaser”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Parent has agreed to cause Purchaser to commence a tender offer (the “Offer”) to acquire all of our outstanding shares of common stock, par value $0.05 per share, (the “Shares”), at a price of $29.50 per Share (the “Offer Price”), net to the holder thereof in cash, without interest.
The Merger Agreement provides that the Offer will commence as promptly as practicable (but in no event more than ten business days after the date of the Merger Agreement), and will remain open for at least 20 business days (including the day on which the Offer is commenced). Pursuant to the Merger Agreement, after the consummation of the Offer, and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Purchaser will merge with and into the Company (the “Merger”), with the Company surviving as a wholly owned subsidiary of Parent. Upon completion of the Merger, each Share outstanding immediately prior to the effective time of the Merger (excluding those Shares that are held by Parent, Purchaser and the Company or any of their respective subsidiaries, and those Shares held by stockholders who have properly and validly exercised their statutory rights of appraisal in accordance with the Delaware General Corporation Law) will be canceled and extinguished and automatically converted into the right to receive the Offer Price in cash (without interest). If Purchaser holds 90% or more of the outstanding Shares immediately prior to the Merger, it may effect the Merger as a short-form merger pursuant to the Delaware General Corporation Law. Otherwise, the Company may hold a special stockholders’ meeting to obtain stockholder approval of the Merger.
Subject to the terms and conditions of the Merger Agreement, the Company has granted Purchaser an irrevocable option (the “Top-Up Option”) to purchase at a price per share equal to the Offer Price the number of Shares (the “Top-Up Shares”) equal to the lowest number of Shares that, when added to the number of Shares owned by Parent and its subsidiaries (including Purchaser) at the time of such exercise, constitutes one Share more than 90% of the Shares then outstanding (the “Short Form Threshold”) (after giving effect to the issuance of the Top-Up Shares). The Top-Up Option is not exercisable unless, immediately after such exercise and the related issuance of the Top-Up Shares, the Short Form Threshold would be reached (assuming issuance of the Top-Up Shares), and the Top-Up Option shall in no event be exercisable for a number of Shares in excess of the Company’s total authorized and unissued Shares.

Completion of the Offer is subject to a number of conditions, including, among other things (i) that there shall have been validly tendered and not withdrawn prior to the expiration of the Offer, a number of Shares that, together with Shares then owned by Parent or any of its subsidiaries (including Purchaser), represents at least a majority of the sum of (x) all then outstanding Shares, plus (y) all Shares issuable upon the exercise of all of our then outstanding options, plus (z) all Shares issuable upon the exercise, conversion or exchange of any of our then outstanding securities (other than the then outstanding options); and (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The Merger Agreement contains representations, warranties and covenants of the parties customary for transactions of this type. The Company has also agreed not to solicit or initiate discussions with third parties regarding other proposals to acquire the Company and it has agreed to certain restrictions on its ability to respond to such proposals, subject to the fulfillment of certain fiduciary requirements of the Company’s board of directors. The Merger Agreement also contains customary termination provisions for the Company and Parent including a requirement, upon termination of the Merger Agreement in certain specified circumstances, that either Company or Parent pay the other party a termination fee in the amount of $9,936,145.
August 10, 2011, Transcend Services, Inc. (the “Company”) entered into an Amended and Restated Clinical Documentation Solution Agreement (the “Agreement”) with Multimodal Technologies, Inc. (“M*Modal”). Under the Agreement, the Company licensed a speech recognition engine, natural language processor and various editing tools (the “M*Modal Technology”) from M*Modal. The Agreement had an initial term ending on December 31, 2012, followed by four one-year renewal terms through December 31, 2016, unless the Company elected not to renew for any such one-year renewal term. The Agreement also had certain termination provisions in connection with the execution of an agreement that could result in a change in control of the Company.

As previously reported, on March 6, 2012, the Company entered into an Agreement and Plan of Merger, dated March 6, 2012, with Nuance Communications, Inc. (“Nuance”) and Townsend Merger Corporation, a wholly owned subsidiary of Nuance, which could result in a change in control of the Company under the Agreement. In response, M*Modal has terminated the Agreement effective March 12, 2012. Under the Agreement, M*Modal is obligated to provide the M*Modal Technology to the Company for an 18-month transition period. The Company has made the required advance payment of $5,400,000 to M*Modal for such transition period.

The Company intends to integrate speech recognition technology from Nuance during the transition period.

Important Information about the Tender Offer

The tender offer described herein has not yet commenced, and this Report is neither an offer to purchase nor a solicitation of an offer to sell securities. At the time the tender offer is commenced, Nuance Communications, Inc. (“Nuance”) will cause its wholly owned subsidiary, Townsend Merger Corporation to file a tender offer statement on Schedule TO with the SEC and Transcend Services, Inc. will file a solicitation/recommendation statement on Schedule 14D-9 with the SEC with respect to the tender offer. Transcend Services, Inc. stockholders are strongly advised to read the tender offer statement (including an offer to purchase, letter of transmittal and related tender offer documents) and the related solicitation/recommendation statement on Schedule 14D-9, because they will contain important information. These documents will be available at no charge on the SEC's website at www.sec.gov. A copy of the tender offer statement and the solicitation/recommendation statement will be made available free of charge to all stockholders of Transcend Services, Inc. at www.transcendservices.com or by contacting Transcend Services, Inc. at One Glenlake Parkway, Suite 1325, Atlanta, Georgia 30328, Attn: Investor Relations, (678) 808-0600.