UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN
PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. ___)

 

 

Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12

IntegraMed America, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
o No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:

 

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  (3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  (4)

Proposed maximum aggregate value of transaction:

 

  (5)

Total fee paid:

 

þ Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
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August 20, 2012

To the Stockholders of IntegraMed America, Inc.:

I am pleased to inform you that, on June 10, 2012, IntegraMed America, Inc., or the Company, entered into an Agreement and Plan of Merger, or the merger agreement, with SCP-325 Holding Corp., or Buyer, and Buyer’s wholly-owned subsidiary, SCP-325 Merger Sub, Inc., or Merger Sub, providing for the merger of Merger Sub with and into the Company, or the merger, with the Company surviving the merger as a wholly-owned subsidiary of Buyer. Buyer and Merger Sub are both affiliates of Sagard Capital Partners, L.P., an investment firm. If the merger is completed, each share of the Company’s common stock, or a common share, other than as provided below, will be converted into the right to receive $14.05 in cash, without interest and less applicable withholding tax. The following common shares will not be converted into the right to receive $14.05 in cash, without interest and less applicable withholding tax, in connection with the merger: (i) common shares owned by Buyer, Merger Sub or any other direct or indirect wholly-owned subsidiary of Buyer, (ii) common shares owned by the Company as treasury stock or any direct or indirect wholly-owned subsidiary of the Company and (iii) common shares owned by stockholders who have properly exercised appraisal rights under the Delaware General Corporation Law.

You will be asked, at a special meeting of the holders of common shares, or the special meeting, to be held on September 19, 2012, at 3:00 p.m. local time, at the Company’s headquarters located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577, to consider and vote on a proposal to adopt and approve the merger agreement.

After careful consideration, the Company’s board of directors approved the merger agreement and the transactions contemplated by the merger agreement and determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable, fair to and in the best interests of the Company and the holders of common shares. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADOPTION AND APPROVAL OF THE MERGER AGREEMENT.

The accompanying proxy statement provides you with information about the merger agreement, the merger and the special meeting of the holders of common shares. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement. The Company encourages you to read the entire proxy statement and merger agreement carefully. You may also obtain more information about the Company from documents that it has filed with the Securities and Exchange Commission.

Your vote is important. Adoption and approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote thereon. The failure of any holder of common shares to vote will have the same effect as a vote “AGAINST” adopting and approving the merger agreement. Accordingly, whether or not you plan to attend the special meeting, you are requested to promptly vote your common shares by completing, signing and dating the enclosed proxy card and returning it in the envelope provided, or by voting over the telephone or over the internet as instructed in the accompanying materials. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct that entity how to vote in accordance with the voting instruction form that it furnished to you. The failure to instruct your broker, dealer, commercial bank, trust company or other nominee to vote your common shares FOR adoption and approval of the merger agreement will have the same effect as a vote “AGAINST” adopting and approving the merger agreement.

Voting by proxy will not prevent you from voting your common shares in person if you subsequently choose to attend the special meeting.

Thank you for your cooperation and continued support.

Sincerely,

Jay Higham

Chairman, President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has passed upon the merits or fairness of the merger agreement or the transactions contemplated thereby, including the merger, or upon the adequacy or accuracy of the information contained in this document or the accompanying proxy statement. Any representation to the contrary is a criminal offense.

THE ACCOMPANYING PROXY STATEMENT IS DATED AUGUST 20, 2012 AND IS FIRST BEING MAILED TO HOLDERS OF COMMON SHARES ON OR ABOUT AUGUST 20, 2012.

 
 

INTEGRAMED AMERICA, INC.

Two Manhattanville Road, 3rd Floor

Purchase, New York 10577

 

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON SEPTEMBER 19, 2012

 

 

 

To the Stockholders of IntegraMed America, Inc.:

Notice is hereby given that a special meeting, or the special meeting, of the stockholders of IntegraMed America, Inc., or the Company, will be held on September 19, 2012, at 3:00 p.m. local time, at the Company’s headquarters located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577. The special meeting is called for the following purposes:

1.                   To consider and vote on a proposal to adopt and approve the Agreement and Plan of Merger, dated as of June 10, 2012, or the merger agreement, by and among SCP-325 Holding Corp., a Delaware corporation, or Buyer, Buyer’s wholly-owned subsidiary, SCP-325 Merger Sub, Inc., a Delaware corporation, or Merger Sub, and the Company, pursuant to which Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Buyer;

2.                   To consider and vote on a proposal to approve, on a non-binding advisory basis, the merger-related executive compensation payable under existing agreements with the Company that the Company’s named executive officers will or may receive in connection with the merger contemplated by the merger agreement;

3.                   To consider and vote on a proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement or to constitute a quorum; and

4.                   To transact such other business as may properly come before the special meeting.

Only holders of record of shares of the Company’s common stock, or common shares, at the close of business on July 26, 2012 are entitled to notice of and to vote at the special meeting and at any adjournment or postponement of the special meeting. All holders of record of common shares are cordially invited to attend the special meeting in person.

Holders of common shares who do not vote in favor of adopting and approving the merger agreement will have the right to seek appraisal of the fair value of their common shares if the merger contemplated by the merger agreement is completed, but only if they submit a written demand for appraisal to the Company prior to the time the vote is taken on the adoption and approval of the merger agreement and comply with all other requirements of the Delaware General Corporation Law, or the DGCL. A copy of the applicable DGCL statutory provisions is included as Annex C to the accompanying proxy statement, and a summary of those provisions can be found under “Appraisal Rights” beginning on page 84 of the accompanying proxy statement.

The adoption and approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote thereon. The failure to vote will have the same effect as a vote “AGAINST” the adoption and approval of the merger agreement. Even if you plan to attend the special meeting in person, please complete, sign, date and return the enclosed proxy, or vote over the telephone or the internet as instructed in the accompanying materials, as promptly as possible to ensure that your common shares will be represented at the special meeting if you are unable to attend. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct that entity how to vote in accordance with the voting instruction form that it furnishes to you. Your failure to instruct your broker, dealer, commercial bank, trust company or other nominee to vote your common shares “FOR” the adoption and approval of the merger agreement will have the same effect as a vote “AGAINST” the adoption and approval of the merger agreement. If you do attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person. However, if your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you must provide a legal proxy from such nominee in order to vote your common shares in person at the special meeting.

Whether or not you plan to attend the special meeting, you are requested to promptly vote your COMMON shares by completing, signing and dating the enclosed proxy card and returning it in the envelope provided, or by voting over the telephone or over the Internet as instructed in the accompanying materials. VOTING BY PROXY WILL NOT PREVENT YOU FROM ATTENDING THE SPECIAL MEETING IF YOU SO DESIRE.

 

Claude E. White

Vice President, General Counsel and Secretary

August 20, 2012

 
 

TABLE OF CONTENTS

  PAGE
SUMMARY 1
   
The Merger 1
Parties to the Merger 1
The Special Meeting 2
Reasons for the Merger 3
Opinion of the Company’s Financial Advisor 3
Financing of the Merger 4
Limited Guaranty 5
Voting Agreement 5
Interests of Certain Persons in the Merger 5
Material U.S. Federal Income Tax Consequences of the Merger 6
Required Antitrust Approvals 7
Litigation Related to the Merger 7
Delisting and Deregistration 7
The Merger Agreement 7
Market Price of the Company’s Common Stock 12
Appraisal Rights 12
   
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER 13
   
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION 19
   
THE SPECIAL MEETING 20
   
Date, Time and Place 20
Purpose 20
Recommendation of the Board of Directors 20
Record Date; Holders of Common Shares Entitled to Vote 20
Quorum 20
Vote Required 21
Voting Procedures 22
Proxies and Revocation 23
Adjournments and Postponements 23
Anticipated Date of Completion of the Merger 23
Rights of Holders of Common Shares Who Seek Appraisal Rights 23
Solicitation of Proxies; Payment of Solicitation Expenses 24
Other Matters 24
Questions and Additional Information 24
   
THE MERGER 25
   
Overview of the Merger 25
Directors and Officers of the Surviving Corporation 25
Parties to the Merger 25
Background of the Merger 26
Recommendation of the Board of Directors; Reasons for the Merger 34
Opinion of the Company’s Financial Advisor 37
Certain Financial Forecasts 41
Financing of the Merger 43
Limited Guaranty 46
Voting Agreement 47
Closing and Effective Time of the Merger 48
Payment of Merger Consideration and Surrender of Stock Certificates 48
Interests of Certain Persons in the Merger 48
Golden Parachute Compensation 53
Intent to Vote in Favor of the Adoption and Approval of the Merger Agreement 56
Accounting Treatment 56
Material U.S. Federal Income Tax Consequences of the Merger 56
Regulatory Approvals and Notices 59

 

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Litigation Related to the Merger 59
Delisting and Deregistration 59
   
THE MERGER AGREEMENT 60
   
Certain Effects of the Merger 60
Closing and Effective Time of the Merger 60
Treatment of Common Shares, Options and Restricted Stock 61
Exchange and Payment Procedures 61
Financing Covenant; Cooperation 62
Representations and Warranties 64
Interim Operations 67
No Solicitation 69
Stockholder Meeting 71
Filings; Other Actions; Notification 71
Employee Matters 73
Indemnification; Directors’ and Officers’ Insurance and Fiduciary Liability Insurance 73
Conditions to the Merger 74
Termination 75
Termination Fees and Reimbursement of Expenses 77
Expenses 78
Amendment 79
Remedies 79
   
MARKET PRICE AND DIVIDEND INFORMATION 81
   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 82
   
Transactions by the Company’s Directors and Executive Officers 83
   
APPRAISAL RIGHTS 84
   
STOCKHOLDER PROPOSALS FOR 2013 ANNUAL MEETING 87
   
OTHER MATTERS 88
   
WHERE YOU CAN FIND MORE INFORMATION 89
   
ANNEX A—Agreement and Plan of Merger  
ANNEX B—Opinion of Jefferies & Company, Inc.  
ANNEX C—Section 262 of the Delaware General Corporation Law  
ANNEX D—Voting Agreement  

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SUMMARY

This summary highlights selected information from this proxy statement. It may not contain all of the information that is important to you. Accordingly, you are urged to read carefully the entire proxy statement, its annexes and the other documents referred to in this proxy statement. See “Where You Can Find More Information” beginning on page 89. Each item in this summary refers to the page of this proxy statement on which that subject is discussed in more detail. In this proxy statement, the terms “we,” “us,” “our” and the “Company” refer to IntegraMed America, Inc. and its subsidiaries, unless the context requires otherwise.

The Merger (see page 25)

You are being asked to vote to adopt and approve the Agreement and Plan of Merger, dated as of June 10, 2012, which we refer to as the merger agreement, by and among us, SCP-325 Holding Corp., a Delaware corporation, which we refer to as Buyer, and Buyer’s wholly-owned subsidiary, SCP-325 Merger Sub, Inc., a Delaware corporation, which we refer to as Merger Sub, pursuant to which Merger Sub would merge with an into the Company and the Company would continue as the surviving corporation and a wholly-owned subsidiary of Buyer following the merger. In this proxy statement, we refer to the merger contemplated by the merger agreement as the merger and we refer to the surviving corporation in the merger as the surviving corporation. Adoption and approval of the merger agreement requires the approval of our stockholders, as described herein. Upon completion of the merger, each share of our common stock, par value $0.01 per share, which we refer to as a common share, other than as provided below, will be automatically cancelled and converted into the right to receive $14.05 per common share in cash, which we refer to as the per common share merger consideration, without interest and less applicable withholding tax. The following common shares will not be converted into the right to receive the per common share merger consideration in connection with the merger: (i) common shares owned by Buyer, Merger Sub or any other direct or indirect wholly-owned subsidiary of Buyer, (ii) common shares owned by us as treasury stock or any of our direct or indirect wholly-owned subsidiaries and (iii) common shares owned by stockholders who have properly exercised appraisal rights under the Delaware General Corporation Law, which we refer to as the DGCL.

Parties to the Merger (see page 25)

The parties to the merger agreement are:

IntegraMed America, Inc. (see page 25)

We are a specialty healthcare services company offering products and services to patients and providers in the fertility and vein care segments of the health industry. We provide services and products through our three operating divisions, fertility centers, consumer services and vein clinics, and shared support services for providers through our corporate offices. We provide our fertility centers and vein clinics with administrative services, such as finance, accounting, human resources, risk management, legal and purchasing support, marketing and sales support, internet marketing and website support, access to integrated information systems, in some instances, non-physician practitioners and access to capital for financing clinic operations and expansion.

SCP-325 Holding Corp. (see page 26)

Buyer is a Delaware corporation and is a controlled affiliate of Sagard Capital Partners, L.P., an investment firm, which we refer to as Sagard. Buyer was formed at the direction of Sagard solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement and the related financing transactions. At the effective time of the merger, the Company will become a direct, wholly-owned subsidiary of Buyer. Buyer has de minimis assets and has not engaged in any business or operations other than activities incidental to its formation and in connection with the merger and the other transactions contemplated by the merger agreement.

SCP-325 Merger Sub, Inc. (see page 26)

Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Buyer. Merger Sub was formed at the direction of Buyer solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement and the related financing transactions. At the effective time of the merger, Merger Sub will merge with and into the Company and cease to exist, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Buyer. Merger Sub has de minimis assets and has not engaged in any business or operations other than activities incidental to its formation and in connection with the merger and the other transactions contemplated by the merger agreement.

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The Special Meeting (see page 20)

Date, Time and Place (see page 20)

The special meeting of the holders of common shares, which we refer to as the special meeting, will be held on September 19, 2012, at 3:00 p.m. local time, at our headquarters located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577.

Purpose (see page 20)

At the special meeting, you will be asked to consider and vote on the following proposals:

·to adopt and approve the merger agreement;
·to approve, on a non-binding advisory basis, the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger;
·to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement or to constitute a quorum; and
·such other proposals as may properly come before the special meeting.

Record Date (see page 20)

Only holders of record of common shares at the close of business on July 26, 2012, the record date for the special meeting, are entitled to vote at the special meeting and at any adjournment or postponement of the special meeting. On the record date for the special meeting, 11,983,556 common shares were issued and outstanding and were held by 90 holders of record. Holders of record of common shares on the record date for the special meeting are entitled to one vote per common share at the special meeting on each proposal to be voted on at the special meeting.

Quorum (see page 20)

A quorum is necessary to hold the special meeting. The presence at the special meeting, in person or by proxy, of the holders of a majority of the common shares issued and outstanding at the close of business on the record date, and entitled to vote at the special meeting, constitutes a quorum for purposes of the special meeting. Abstentions and broker non-votes will be counted as present for the purposes of determining whether a quorum is present at the special meeting. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.

Vote Required (see page 21)

The adoption and approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote thereon.

The approval, on a non-binding advisory basis, of the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger requires the approval of a majority of the votes properly cast on this proposal at the special meeting.

The approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies requires the approval of a majority of the votes properly cast on this proposal at the special meeting.

Our directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their common shares in favor of the proposal to adopt and approve the merger agreement, in favor of the proposal to approve, on a non-binding advisory basis, the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger and in favor of the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. As of July 26, 2012, the record date for the special meeting, our directors and executive officers owned, in the aggregate, 541,516 common shares, or collectively approximately 4.5% of the outstanding common shares.

In addition, pursuant to the Voting Agreement, dated as of June 10, 2012, which we refer to as the voting agreement, among Buyer, IAT Reinsurance Company Ltd., which we refer to as IAT, Wilshire Insurance Company, which we refer to as Wilshire, and Peter R. Kellogg, IAT, Wilshire and Mr. Kellogg have generally agreed, subject to certain exceptions and among

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other things, to vote all of the common shares beneficially owned by them in favor of the proposal to adopt and approve the merger agreement and the transactions contemplated thereby unless the voting agreement is terminated. As of July 26, 2012, the record date for the special meeting, IAT, Wilshire and Mr. Kellogg owned, in the aggregate, 3,221,286 common shares, or collectively approximately 26.9% of the outstanding common shares. The voting agreement is described under “The Merger—Voting Agreement” beginning on page 47.

Proxies and Revocation (see page 23)

Any holder of record of common shares entitled to vote at the special meeting may submit a proxy by telephone, over the internet or by returning the enclosed proxy card in the envelope provided or may vote in person at the special meeting. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct that entity how to vote in accordance with the voting instruction form that it furnished to you. If you fail to submit a proxy or to vote in person at the special meeting, or if you vote “ABSTAIN,” or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, it will have the same effect as a vote “AGAINST” the adoption and approval of the merger agreement.

If you are a holder of record of common shares, you can change your vote at any time before your proxy is voted at the special meeting by properly delivering a later-dated proxy through any of the methods available to you or attending the special meeting in person and voting. You may also revoke your proxy by delivering a notice of revocation to our Secretary prior to the time your proxy is voted at the special meeting. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you must contact your broker, dealer, commercial bank, trust company or other nominee to revoke your proxy.

Reasons for the Merger (see page 34)

After consideration of the various factors described under “The Merger—Recommendation of the Board of Directors; Reasons for the Merger” beginning on page 34, our board of directors unanimously determined that the merger agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of the Company and the holders of common shares, approved the merger agreement and the transactions contemplated thereby, resolved that a special meeting of the holders of common shares be called to adopt and approve the merger agreement and recommended that the holders of common shares adopt and approve the merger agreement and, on a non-binding advisory basis, approve the merger-related execution compensation that the Company’s named executive officers will or may receive in connection with the merger at that meeting.

In considering the recommendation of our board of directors with respect to the proposal to adopt and approve the merger agreement, you should be aware that certain of our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the holders of common shares generally. Our board of directors was aware of and considered these interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement, and in recommending that the merger agreement be adopted and approved by the holders of common shares. See “The Merger—Interests of Certain Persons in the Merger” beginning on page 48.

Our board of directors unanimously recommends that you vote “FOR” the adoption and approval of the merger agreement, “FOR” the approval, on a non-binding advisory basis, of the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

Opinion of the Company’s Financial Advisor (see page 37)

In connection with the merger, our board of directors received an opinion from the Company’s financial advisor, Jefferies & Company, Inc., which we refer to as Jefferies, dated June 9, 2012, as to the fairness, from a financial point of view and as of that date, of the per common share merger consideration to be received by holders of common shares (other than Sagard and its affiliates). The full text of Jefferies’ opinion describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Jefferies. This opinion is attached as Annex B to this proxy statement, which the Company encourages you to read in its entirety, and is incorporated herein by reference. Jefferies’ opinion was provided for the use and benefit of our board of directors (in its capacity as such) in its evaluation of the per common share merger consideration from a financial point of view and did not address any other aspect of the merger. The opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any alternative transactions or opportunity that might be available to the Company, nor did it address the Company’s underlying business decision to engage in the merger or the terms of the merger agreement or any voting or other agreements, documents or other arrangements referred to in the merger agreement or entered into in connection with the merger. Jefferies’ opinion does

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not constitute a recommendation as to how any holder of common shares should vote or act with respect to the merger or any related matter.

Financing of the Merger (see page 43)

Buyer anticipates that the total funds needed to complete the merger, including the funds needed to:

·pay the holders of common shares (and the holders of our other equity-based interests) the amounts due to them under the merger agreement, which, based upon the common shares (and our other equity-based interests) outstanding as of the record date, would be approximately $169.5 million;
·refinance our outstanding indebtedness, which, as of August 14, 2012, was approximately $8.2 million in principal amount; and
·pay all fees and expenses relating to the merger and the financing of the merger,

will be funded through a combination of:

·up to approximately $79.5 million of equity financing to be provided by Sagard or one or more of its affiliated entities, or other parties to whom Sagard allocates a portion of its commitment pursuant to the equity commitment letter described below;
·a $95.0 million senior secured credit facility, consisting of a $90.0 million term loan and a $5.0 million revolving loan facility; and
·our cash on hand.

Buyer has obtained the equity commitment letter and Sagard and Merger Sub have obtained the debt commitment letter described below. The funding under those commitment letters is subject to certain conditions, including conditions that do not relate directly to the merger agreement. We believe the amounts committed under the commitment letters will be sufficient to complete the transaction, but we cannot assure you of that. Those amounts might be insufficient if, among other things, one or more of the parties to the commitment letters fails to fund the committed amounts in breach of a commitment letter or if the conditions to a commitment are not met. Although obtaining the proceeds of any financing, including any financing under the commitment letters, is not a condition to the completion of the merger, the failure of Buyer and Merger Sub to obtain any portion of the committed financing (or alternate financing) will likely result in the failure of the merger to be completed. In that case, Buyer may be obligated to pay us a termination fee, as described under “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77. Buyer’s obligation to pay the termination fee is guaranteed by Sagard pursuant to the limited guaranty referred to below.

Equity Financing (see page 44)

Buyer has entered into an equity commitment letter with Sagard, dated as of June 10, 2012, which we refer to as the equity commitment letter, pursuant to which Sagard has committed to purchase, directly or indirectly through one or more affiliated entities, at or prior to the closing of the merger, equity interests of Buyer, for an amount equal to approximately $79.5 million, to fund a portion of the aggregate merger consideration to be paid by Buyer under the merger agreement and to pay the related fees and expenses pursuant to and in accordance with the merger agreement. Sagard may allocate a portion of its equity commitment to other investors. However, the allocation of any portion of Sagard’s equity commitment to other investors will only reduce Sagard’s equity commitment by the amount actually contributed to Buyer by those other investors (and not returned) at or prior to the closing date of the merger for the purpose of funding a portion of the merger consideration, any other amounts required to be paid pursuant to the merger agreement and related fees and expenses pursuant to the merger agreement.

Sagard’s obligation to fund the equity financing contemplated by the equity commitment letter is subject to:

·our execution and delivery of the merger agreement (which took place on June 10, 2012);
·the satisfaction or waiver (with Sagard’s prior written approval) of each of the conditions to the obligations of Buyer and Merger Sub to consummate the transactions contemplated by the merger agreement; and
·the contemporaneous funding of the debt financing, or any alternate debt financing that is accepted from alternate sources in accordance with the merger agreement, in accordance with the terms and conditions thereof.
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Debt Financing (see page 44)

In connection with the execution of the merger agreement, Sagard and Merger Sub received a debt commitment letter, dated as of June 10, 2012, which, along with the related fee letter, we refer to as the debt commitment letter, from GCI Capital Markets LLC, which we refer to as the commitment party. Pursuant to the debt commitment letter, the commitment party or, to the extent all or a portion of any syndication contemplated by the debt commitment letter has occurred, a syndicate of lenders, which we refer to as the lenders, have committed to provide a $95.0 million senior secured credit facility, consisting of a $90.0 million term loan and a $5.0 million revolving loan facility, to us and Merger Sub on the terms and subject to the conditions set forth in the debt commitment letter. The debt commitment letter will expire if either the closing of the debt facilities contemplated by the debt commitment letter or the funding of the loans thereunder has not occurred on or prior to November 15, 2012.

The debt facilities contemplated by the debt commitment letter are subject to a number of closing conditions, as described under “The Merger—Financing of the Merger—Debt Financing” beginning on page 44. However, the debt commitment letter is not subject to a due diligence or a “market out” condition that would allow the commitment party not to fund its commitment if the financial markets are materially adversely affected. There is a risk that the conditions to the debt financing will not be satisfied and the debt financing may not be funded when required. As of the date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event that the debt financing described in this proxy statement is not available as anticipated.

Limited Guaranty (see page 46)

Pursuant to the limited guaranty, dated as of June 10, 2012, which we refer to as the limited guaranty, by Sagard in favor of the Company, Sagard has agreed to guarantee:

·the payment by Buyer of the $8,476,812 termination fee payable to us in certain circumstances; and
·the reimbursement and indemnification obligations of Buyer in connection with the costs and expenses incurred by us in connection with the arrangement of the financing of the merger and successful suits to enforce the termination fee provisions of the merger agreement.

See “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77 and “The Merger Agreement—Expenses” beginning on page 78. However, Sagard’s obligations under the limited guaranty are subject to a cap equal to $8,476,812.

Voting Agreement (see page 47)

In connection with the execution of the merger agreement, Buyer, IAT, Wilshire and Peter R. Kellogg entered into the voting agreement, pursuant to which IAT, Wilshire and Mr. Kellogg have generally agreed, subject to certain exceptions and among other things, to vote all of the common shares beneficially owned by them in favor of the proposal to adopt and approve the merger agreement and the transactions contemplated thereby unless the voting agreement is terminated. As of July 26, 2012, the record date for the special meeting, IAT, Wilshire and Mr. Kellogg owned, in the aggregate, 3,221,286 common shares, or collectively approximately 26.9% of the outstanding common shares. A copy of the voting agreement is attached as Annex D to this proxy statement, which we encourage you to read in its entirety.

Interests of Certain Persons in the Merger (see page 48)

In considering the recommendation of our board of directors with respect to the proposal to adopt and approve the merger agreement, you should be aware that certain of our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the holders of common shares generally. Our board of directors was aware of and considered these interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement, and in recommending that the merger agreement be adopted and approved by the holders of common shares, as described under “The Merger—Recommendation of the Board of Directors; Reasons for the Merger” beginning on page 34. These interests include, among others:

·accelerated vesting of options to purchase common shares that were issued under our stock option or long-term compensation plans, and cash payments with respect to those options to purchase common shares that have an exercise price of less than $14.05;
·accelerated vesting of common shares that are subject to restrictions on transfer or forfeiture and that were granted pursuant to our stock option or long-term compensation plans, which we refer to as restricted stock, and cash
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 payments of $14.05, without interest and less applicable withholding tax, with respect to each share of restricted stock;
·a lump sum cash payment to Jay Higham, our Chairman, President and Chief Executive Officer, representing his base salary for a 24-month period, plus twice the full amount of his annual bonus based on current salary, without regard to the conditions precedent established for the bonus payment, pursuant to his employment agreement, if, within one year after the merger, Mr. Higham’s employment is terminated by Mr. Higham for “Good Reason” (as defined in the employment agreement) or by the surviving corporation without cause;
·certain payments and benefits to our executive officers who have entered into employee retention agreements with us, in the event that, within 18 months of the completion of the merger, their employment is terminated, either by the surviving corporation without cause or by themselves for “Good Reason” (as defined in the employee retention agreements), including:
oa cash lump sum payment equal to the executive officer’s annual base salary, plus the pro rata portion of the cash bonus that he or she would have earned for the fiscal year during which the termination occurred, plus the most recent annual cash bonus, if any, paid by us to him or her prior to the date that his or her employment is terminated or the date of the completion of the merger, whichever is higher;
ocontinuation of certain employee benefits for one year following the date that the executive officer’s employment is terminated (or if that continuation of benefits is not available, payment of the equivalent value thereof);
oaccelerated vesting of all incentive stock options granted to the executive officer;
oreimbursement of up to $15,000 of reasonable expenses incurred within two years of the date that the executive officer’s employment is terminated for outplacement services; and
opayment of reasonable fees and expenses incurred in successfully litigating the executive officer’s rights under his or her employee retention agreement;
·if our board of directors were to terminate our Long-Term Cash Award Plan as of the effective date of the merger, lump sum cash payments would be made to certain of our executive officers representing the entire unpaid balance of their cash award accounts maintained by us under the Long-Term Cash Award Plan;
·continued indemnification and liability insurance for our directors and officers following the completion of the merger;
·for a period of at least one year following the completion of the merger, Buyer will provide, or cause the surviving corporation and its subsidiaries to provide, our executive officers who remain employed by Buyer, the surviving corporation or any of their respective subsidiaries, with base salaries, bonus opportunities and employee pension and welfare benefits (other than equity-based or change in control compensation) that are substantially comparable in the aggregate to those provided by us and our subsidiaries to such individuals immediately prior to the completion of the merger; and
·credit for prior service with us for purposes of eligibility, vesting and other determinations under benefit plans in which our executive officers may become eligible to participate following the completion of the merger.

See “The Merger—Interests of Certain Persons in the Merger” beginning on page 48 for additional information.

Material U.S. Federal Income Tax Consequences of the Merger (see page 56)

The exchange of common shares for cash pursuant to the merger will generally be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder whose common shares are converted into the right to receive cash in the merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to his, her or its common shares (determined before the deduction of any applicable withholding taxes) and his, her or its adjusted tax basis in those common shares. Any gain recognized on the exchange of common shares for cash pursuant to the merger by non-U.S. holders will generally not be subject to U.S. federal income tax unless the non-U.S. holder has certain connections to the United States. Backup withholding may also apply to the cash payments made pursuant to the merger unless the holder or other payee provides the required information and certification and otherwise complies with the backup withholding rules. For the definitions of “U.S. holder” and “non-U.S. holder” and a more detailed discussion of the U.S. federal income tax consequences of the merger, see “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 56. You should also consult your tax advisor regarding the specific tax consequences of the merger applicable

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to you in light of your particular circumstances and for a complete analysis of the effect of the merger on your federal, state, local and foreign taxes.

Required Antitrust Approvals (see page 59)

Under the terms of the merger agreement, the merger cannot be consummated until the waiting period, and any extensions thereof, applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, has expired or been earlier terminated.

Under the HSR Act and the rules promulgated thereunder by the Federal Trade Commission, the merger cannot be consummated until each of the Company and Buyer files a notification and report form with the Federal Trade Commission and the Antitrust Division of the Department of Justice under the HSR Act and the applicable waiting period has expired or been terminated. These notification and report forms were filed on June 22, 2012 and the parties received notification of early termination of the waiting period on June 29, 2012.

Litigation Related to the Merger (see page 59)

On June 21, 2012, we, the members of our board of directors, Buyer, Merger Sub and Sagard were named as defendants in a putative class action filed in the Supreme Court of the State of New York, County of Westchester. The complaint relating to this lawsuit alleges that the members of our board of directors breached their fiduciary duties and that we, Buyer, Merger Sub and Sagard aided and abetted purported breaches of fiduciary duties by our board of directors. This lawsuit seeks injunctive and other equitable relief, including enjoining the merger, and damages, as well as recovery of the costs of the action, including reasonable attorneys’ fees.

On June 26, 2012, we, the members of our board of directors, our former director Wayne R. Moon, Buyer, Merger Sub and Sagard were named as defendants in a putative class action filed in the Court of Chancery of the State of Delaware. The complaint relating to this lawsuit alleges that the members of our board of directors and Mr. Moon breached their fiduciary duties and that Buyer, Merger Sub and Sagard aided and abetted purported breaches of fiduciary duties by our board of directors and Mr. Moon. This lawsuit seeks injunctive and other equitable relief, including enjoining the merger, and damages, as well as recovery of the costs and disbursements of the action, including reasonable attorneys’ and experts’ fees. On July 31, 2012, counsel for the plaintiff in this lawsuit requested that this lawsuit be stayed in deference to and during the pendency of the lawsuit filed in the Supreme Court of the State of New York, County of Westchester. On August 1, 2012, the Court of Chancery of the State of Delaware entered an order staying this lawsuit.

On August 14, 2012, a memorandum of understanding was entered into relating to the settlement and dismissal with prejudice of both lawsuits. The settlement is subject to, among other things, the completion of appropriate settlement documentation, confirmatory discovery, notice to the putative class and all necessary court approvals. See “The Merger—Litigation Related to the Merger” beginning on page 59 for additional information.

Delisting and Deregistration (see page 59)

Following the consummation of the merger, the common shares will be delisted from the Nasdaq Global Market and deregistered under the Securities Exchange Act of 1934, as amended, and will cease to be publicly traded. Therefore, following the consummation of the merger, we would no longer file periodic reports with the Securities and Exchange Commission on account of the common shares.

The Merger Agreement (see page 60)

Treatment of Options and Restricted Stock (see page 61)

Immediately prior to the effective time of the merger, each outstanding and unexercised option to purchase common shares that was issued under our stock option or long-term compensation plans, whether or not then vested or exercisable, will become fully vested and exercisable and, at the effective time of the merger, each such option that is not exercised will be cancelled and automatically converted into the right to receive, as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger), an amount in cash equal to the product of (i) the total number of common shares subject to that option immediately prior to the effective time of the merger and (ii) the excess, if any, of $14.05 over the exercise price of that option, without interest and less applicable withholding tax. In the event that the exercise price per common share of any option to purchase common shares that was issued under our stock option or long-term compensation plans is equal to or greater than $14.05, at the effective time of the merger, that option will be cancelled without any consideration being payable in respect thereof.

Immediately prior to the effective time of the merger, each outstanding share of restricted stock, whether or not then vested, will become free of all restrictions, fully vested and transferable and, at the effective time of the merger, will be cancelled and automatically converted into the right to receive, as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger), $14.05 in cash, without interest and less applicable withholding tax.

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No Solicitation (see page 69)

As of the date of the merger agreement, we were generally required to, and generally must use our reasonable best efforts to instruct and cause our representatives to, cease and cause to be terminated any discussions or negotiations with any person or entity that may have been ongoing with respect to an acquisition proposal.

From the date of the merger agreement until the effective time of the merger, we generally may not, and generally must use our reasonable best efforts to instruct and cause our representatives not to:

·initiate, solicit or knowingly encourage the making of any acquisition proposals;
·engage in or otherwise participate in any discussions or negotiations with any person or entity with respect to any acquisition proposals;
·provide any non-public information concerning us or any of our subsidiaries to any person or entity with the intent to initiate, solicit or knowingly encourage the making of any acquisition proposals; or
·enter into any alternative acquisition agreement.

However, at any time following the date of the merger agreement and prior to obtaining the vote of the holders of common shares required for the consummation of the merger, if we or any of our representatives receives an acquisition proposal from any person or entity that did not result from our material breach of the non-solicitation provisions of the merger agreement, we and our representatives may contact that person or entity to clarify the terms and conditions of the acquisition proposal and (i) we and our representatives may provide access to non-public information concerning us and our subsidiaries to that person or entity pursuant to a confidentiality agreement that meets certain criteria set forth in the merger agreement (so long as we promptly make that material non-public information available to Buyer and Merger Sub, to the extent that it has not previously been provided to Buyer and Merger Sub), (ii) we and our representatives may engage, enter into or participate in any discussions or negotiations with that person or entity with respect to the acquisition proposal, if and only to the extent that, prior to taking any action described above, our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) that the acquisition proposal either constitutes a superior proposal or could reasonably be expected to lead to a superior proposal and (iii) after complying with the relevant provisions of the merger agreement, our board of directors may authorize, adopt, approve, recommend or otherwise declare advisable such acquisition proposal if, and only to the extent that, prior to taking any action referenced to in this clause (iii), our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) that the acquisition proposal is a superior proposal.

Generally, our board of directors may not (i) withhold, withdraw, modify or amend, in a manner adverse to Buyer, its recommendation that the holders of common shares adopt the merger agreement, (ii) authorize, adopt, approve, recommend or otherwise declare advisable any acquisition proposal or (iii) cause or permit us to enter into an alternative acquisition agreement; provided, however, so long as we comply with certain terms of the merger agreement, described under “The Merger Agreement—No Solicitation” beginning on page 69, prior to obtaining the vote of the holders of common shares required for the consummation of the merger, our board of directors may (a) withhold, modify or amend its recommendation that the holders of common shares adopt the merger agreement or (b) authorize, adopt, approve, recommend or otherwise declare advisable any acquisition proposal made after the date of the merger agreement that our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) is a superior proposal, in each case if our board of directors determines in good faith (after consultation with our outside legal counsel) that failure to do so could be inconsistent with its fiduciary obligations under applicable law. In addition, prior to obtaining the vote of the holders of common shares required for the consummation of the merger, if our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) that an acquisition proposal is a superior proposal, we may terminate the merger agreement and enter into an alternative acquisition agreement with respect to that superior proposal, so long as we comply with certain terms of the merger agreement, described under “The Merger Agreement—No Solicitation” beginning on page 69, including paying a termination fee to Buyer. See “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77. In addition, we must notify Buyer at least 72 hours prior to terminating the merger agreement to enter into an alternative acquisition agreement with respect to a superior proposal. Buyer would then have the opportunity to deliver to us a written, binding and irrevocable offer altering the terms of the merger agreement, the equity commitment letter, the debt commitment letter and the limited guaranty as would permit our board of directors to conclude that the superior proposal no longer constitutes a superior proposal.

Please refer to “The Merger Agreement—No Solicitation” beginning on page 69 for the definitions of “acquisition proposal,” “alternative acquisition agreement” and “superior proposal.”

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Conditions to the Merger (see page 74)

The respective obligations of the Company, Buyer and Merger Sub to effect the merger are subject to the satisfaction or waiver (where permissible under applicable law) of the following conditions:

·the merger agreement must have been duly adopted by the holders of a majority of the outstanding common shares;
·any waiting period, and extensions thereof, applicable to the consummation of the merger under the HSR Act relating to the merger must have expired or been earlier terminated (notification of which was received on June 29, 2012) and all required approvals and clearances by any other applicable governmental antitrust entity applicable to the merger under applicable antitrust law must have been obtained and any applicable waiting period, or extension thereof, thereunder must have expired or been earlier terminated; and
·no governmental entity of competent jurisdiction will have enacted, issued, promulgated, enforced or entered any statute, law, common law, ordinance, code, rule, order, judgment, injunction, writ, decree, directive, regulation, guideline or interpretation having the force of the law, permit or franchise that is in effect and has the effect of making the merger illegal or otherwise prohibiting consummation of the merger.

The obligations of Buyer and Merger Sub to effect the merger are also subject to the satisfaction or waiver (where permissible under applicable law) of the following additional conditions:

·our representations and warranties regarding the absence of a Company material adverse effect since December 31, 2011 and our and our subsidiaries’ security interests in certain assets of the fertility centers and vein clinics to which we or one of our subsidiaries provides management services must be true and correct in all respects at and as of the effective time of the merger;
·our representations and warranties regarding our capitalization and the absence of encumbrances on our ownership of the capital stock of our subsidiaries must be true and correct in all respects, except for inaccuracies that are de minimis relative to those representations and warranties taken as a whole, at and as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date);
·our representations and warranties regarding the absence of any undisclosed broker’s or finder’s fee and our and our subsidiaries’ indebtedness, without giving effect to any materiality or Company material adverse effect qualifications, must be true and correct in all material respects at and as of the effective time of the merger with the same effect as though made as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date);
·our representations and warranties (other than those referenced in the preceding bullet points), without giving effect to any materiality or Company material adverse effect qualifications, must be true and correct as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date), except for failures to be true and correct that would not have, individually or in the aggregate, a Company material adverse effect;
·we must have performed in all material respects the obligations required to be performed by us under the merger agreement prior to the closing date of the merger;
·a Company material adverse effect must not have occurred since the date of the merger agreement;
·we must have delivered to Buyer a certificate, dated as of the closing date of the merger, signed on our behalf by a duly authorized officer, certifying as to the satisfaction of the conditions set forth in the preceding six bullet points; and
·if the closing of the merger has not occurred by August 15, 2012, we must have filed a Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012.

Please refer to “The Merger Agreement—Representations and Warranties” beginning on page 64 for the definition of “Company material adverse effect.”

Our obligation to effect the merger is also subject to the satisfaction or waiver of the following additional conditions:

·each of the representations and warranties of Buyer and Merger Sub set forth in the merger agreement, without giving any effect to any materiality qualifications, must be true and correct at and as of the effective time of the merger as though made as of the effective time of the merger (except to the extent expressly made as of an earlier
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 date, in which case as of that date), except for failures to be true and correct that would not, individually or in the aggregate, prevent, materially delay or materially impede the ability of Buyer or Merger Sub to consummate the merger and the other transactions contemplated by the merger agreement;
·each of Buyer and Merger Sub must have performed in all material respects all of its obligations required to be performed by it under the merger agreement on or prior to the closing date of the merger; and
·Buyer must have delivered to us a certificate, dated as of the closing date of the merger, signed on behalf of Buyer by a duly authorized officer of Buyer, certifying as to the satisfaction of the conditions set forth in the preceding two bullet points.

Termination of the Merger Agreement (see page 75)

The Company and Buyer may, by mutual written agreement, terminate the merger agreement at any time prior to the effective time of the merger. In addition, with certain exceptions, the merger agreement may be terminated at any time prior to the effective time of the merger by either the Company or Buyer, with written notice from the terminating party to the other party, if:

·the merger has not been consummated by November 15, 2012;
·the meeting of the holders of common shares to consider and vote upon the adoption of the merger agreement has been held and completed, or postponed or adjourned, and the adoption of the merger agreement by the holders of common shares was not obtained at that meeting or at any adjournment or postponement thereof; or
·a governmental entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered into any statute, law, common law, ordinance, code, rule, order, judgment, injunction, writ, decree, directive, regulation, guideline or interpretation having the force of law, permit or franchise permanently restraining, enjoining or otherwise prohibiting the consummation of the merger that has become final and non-appealable.

With certain exceptions, the merger agreement may also terminated by us, with written notice to Buyer:

·at any time prior to the time that the merger agreement is duly adopted by the holders of a majority of the outstanding common shares, if (i) our board of directors authorizes us, subject to complying with the terms set forth under “The Merger Agreement—No Solicitation” beginning on page 69, to enter into an alternative acquisition agreement with respect to a superior proposal, (ii) immediately prior to or substantially concurrently with the termination of the merger agreement, we enter into an alternative acquisition agreement with respect to that superior proposal and (iii) we, immediately prior to or substantially concurrently with the termination of the merger agreement, pay to Buyer or its designees any termination fee that is required to be paid by us pursuant to the merger agreement;
·at any time prior to the effective time of the merger, if there has been a breach of any representation, warranty, covenant or agreement made by Buyer or Merger Sub in the merger agreement, or any representation or warranty made by Buyer or Merger Sub in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following Buyer’s receipt of written notice of the breach from us (or, if earlier, three business days prior to November 15, 2012);
·at any time prior to the time that the merger agreement is duly adopted by the holders of a majority of the outstanding common shares, if our board of directors has withheld, withdrawn, modified or amended its recommendation that the holders of common shares adopt the merger agreement in response to, or as a result of, an event, development, occurrence or change in circumstances or facts occurring or arising after the date of the merger agreement (other than in connection with an acquisition proposal) and we, immediately prior to or substantially concurrently with the termination of the merger agreement, pay to Buyer or its designees any termination fee that is required to be paid by us pursuant to the merger agreement;
·at any time prior to the effective time of the merger, if all of the closing conditions have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the closing of the merger or have not been satisfied as a result of Buyer or Merger Sub’s breach of, or failure to perform any of their respective covenants or agreements contained in, the merger agreement) and we have, in good faith, indicated, in writing, to Buyer, at least one business day prior to the date that closing of the merger should have occurred under the merger agreement that we are ready, willing and able to consummate the merger and Buyer fails to close the transactions contemplated by the merger agreement, including the merger, within three business days following the date that the closing of the merger should have occurred under the merger agreement; or
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·at any time prior to the effective time of the merger, if the debt commitment letter has been terminated and a satisfactory replacement debt commitment letter has not been obtained by the 90th day after the termination of the debt commitment letter, and is not obtained prior to our termination of the merger agreement pursuant to the termination right described in this bullet point.

With certain exceptions, the merger agreement may also be terminated, at any time prior to the effective time of the merger, by Buyer, with written notice to us, if:

·our board of directors has withheld, withdrawn, modified or amended its recommendation that the holders of common shares adopt the merger agreement;
·our board of directors has authorized, adopted, approved, recommended or otherwise declared advisable any acquisition proposal made after the date of the merger agreement that our board of directors determined in good faith (after consultation with our outside legal counsel and financial advisor) is a superior proposal;
·a tender or exchange offer for common shares that constitutes an acquisition proposal (whether or not a superior proposal) has been commenced by a person or entity unaffiliated with Buyer and, within 10 business days after the public announcement of the acquisition proposal, we have not recommended that the holders of common shares reject the acquisition proposal and not tender any common shares into the tender or exchange offer; or
·there has been a breach of any representation, warranty, covenant or agreement made by us in the merger agreement, or any representation or warranty made by us in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following our receipt of written notice of the breach from Buyer (or, if earlier, three business days prior to November 15, 2012).

The termination of the merger agreement will not relieve any party to the merger agreement for liability for fraud in connection with the merger agreement.

Termination Fees and Reimbursement of Expenses (see page 77)

If the merger agreement is terminated, depending upon the circumstances under which the termination occurs:

·we may be obligated to pay Buyer a termination fee of $5,086,087;
·we may be obligated to reimburse Buyer for out-of-pocket costs and expenses incurred by or on behalf of Buyer and Merger Sub in connection with the transactions contemplated by the merger agreement, up to a maximum about equal to $2,119,203, which out-of-pocket costs and expenses will be credited against any termination fee that we must pay to Buyer; and
·Buyer may be obligated to pay us a termination fee of $8,476,812.

Sagard has guaranteed the obligation of Buyer to pay the termination fee pursuant to the limited guaranty.

Remedies (see page 79)

In the event that the merger agreement is terminated and we receive the termination fee from Buyer, or Sagard pursuant to the limited guaranty, the receipt of the termination fee will generally be our, our subsidiaries’ and the holders of common shares’ sole and exclusive remedy against Buyer, Merger Sub, Sagard, their debt financing sources, their respective affiliates and certain of their respective related parties for any loss or damage suffered or incurred by us or any other person or entity in connection with the merger agreement, the transactions contemplated by the merger agreement or any matter forming the basis for the termination of the merger agreement. Upon payment of these amounts, none of the Company, any of its affiliates or any other person or entity will be entitled to bring or maintain any other claim, action or proceeding against Buyer, Merger Sub, Sagard, their debt financing sources, their respective affiliates or certain of their respective related parties arising out of the merger agreement, the equity commitment letter, the debt commitment letter, the limited guaranty or any of the transactions contemplated by the merger agreement, or any matters forming the basis for the termination of the merger agreement.

In the event that the merger agreement is terminated and Buyer receives the termination fee from us, the receipt of the termination fee will generally be the sole and exclusive remedy of Buyer, Merger Sub and their respective affiliates against us, our subsidiaries, the holders of common shares, our and their respective affiliates and certain of our and their respective related parties for any loss or damage suffered or incurred by Buyer, Merger Sub or any other person or entity in connection with the merger agreement, the transactions contemplated by the merger agreement or any matter forming the basis for the termination of the

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merger agreement. Upon payment of these amounts, none of Buyer, Merger Sub, any of their respective affiliates or any other person or entity will be entitled to bring or maintain any other claim, action or proceeding against us, our subsidiaries, the holders of common shares, our and their respective affiliates or certain of our and their respective related parties arising out of the merger agreement, any of the transactions contemplated by the merger agreement or any matters forming the basis for the termination of the merger agreement.

Under no circumstances will we be entitled to monetary damages in excess of the amount of the termination fee payable by Buyer, except that, in addition to the termination fee payable by Buyer, we will also be entitled to reimbursement and indemnification for the costs and expenses that we incur in connection with the arrangement of the financing of the merger and successful suits to enforce the termination fee provisions of the merger agreement. Similarly, under no circumstances will Buyer be entitled to monetary damages in excess of the amount of the termination fee payable by us, except that, in addition to the termination fee payable by us, Buyer will also be entitled to reimbursement and indemnification for the costs and expenses that it incurs in connection with successful suits to enforce the termination fee provisions of the merger agreement. In addition, although both the Company and Buyer may pursue both a grant of specific performance and the payment of the termination fee by the other party, neither the Company nor Buyer will be entitled to receive both a grant of specific performance and all or any portion of the termination fee payable by the other party.

The parties to the merger agreement are entitled to an injunction or injunctions to prevent breaches of the merger agreement and to specifically enforce the terms and provisions of the merger agreement, in addition to any other remedy to which they are entitled at law or in equity. However, we are only entitled to specifically enforce the obligations of Buyer and Merger Sub to cause the equity financing contemplated by the equity commitment letter to be funded to fund the merger if certain conditions are met, including the funding of the debt financing contemplated by the debt commitment letter (or alternative financing).

Market Price of the Company’s Common Stock (see page 81)

The common shares are currently traded on the Nasdaq Global Market under the trading symbol “INMD.” On June 8, 2012, the last full trading day prior to the public announcement of the execution of the merger agreement, the reported closing sales price for the common shares on the Nasdaq Global Market was $11.34 per common share. On August 14, 2012, the latest practicable trading day before this proxy statement was printed, the reported closing sales price for the common shares on the Nasdaq Global Market was $13.99 per common share. You are encouraged to obtain current market quotations for common shares in connection with voting your common shares.

Appraisal Rights (see page 84)

Under the DGCL, holders of common shares who do not vote in favor of the adoption and approval of the merger agreement have the right to seek appraisal of the fair value of their common shares as determined by the Delaware Court of Chancery if the merger is completed, but only if they submit a written demand for an appraisal prior to the vote on the adoption and approval of the merger agreement and comply with the other DGCL procedures explained in this proxy statement. This appraisal amount could be more than, the same as or less than the amount that a holder of common shares would have been entitled to receive under the merger agreement. A copy of Section 262 of the DGCL is attached as Annex C to this proxy statement, which we encourage you to read in its entirety.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address briefly some questions you may have regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that are important to you as a holder of common shares. Please refer to the “Summary” beginning on page 1 and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully and in their entirety.

Q:Why am I receiving this proxy statement?
A:On June 10, 2012, we entered into the merger agreement with Buyer and Merger Sub providing for the merger of Merger Sub with and into us, with us continuing as the surviving corporation and a wholly-owned subsidiary of Buyer following the merger. Buyer and Merger Sub are both controlled affiliates of Sagard. You are receiving this proxy statement in connection with the solicitation of proxies by our board of directors in favor of the proposal to adopt and approve the merger agreement.
Q:What matters will be voted on at the special meeting?
A:At the special meeting, you will be asked to consider and vote on the following proposals:
·to adopt and approve the merger agreement;
·to approve, on a non-binding advisory basis, the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger;
·to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement or to constitute a quorum; and
·such other proposals as may properly come before the special meeting.
Q:Where and when is the special meeting?
A:The special meeting will be held on September 19, 2012, at 3:00 p.m. local time, at our headquarters located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577.
Q:Who is eligible to attend and vote at the special meeting?
A:Only holders of record of common shares at the close of business on July 26, 2012, the record date for the special meeting, are entitled to vote at the special meeting and at any adjournment or postponement of the special meeting. All holders of record of common shares at the close of business on July 26, 2012 are cordially invited to attend the special meeting in person. If you wish to attend the special meeting and your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you will need to bring a copy of your statement reflecting your common share ownership as of the record date. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, and you wish to vote your common shares in person at the special meeting, you must provide a legal proxy from such nominee.
Q:How many votes do the holders of common shares have?
A:Holders of common shares have one vote for each common share that they owned at the close of business on July 26, 2012, the record date for the special meeting.
Q:What constitutes a quorum for the special meeting?
A:The presence at the special meeting, in person or by proxy, of the holders of a majority of the common shares issued and outstanding at the close of business on the record date, and entitled to vote at the special meeting, constitutes a quorum for purposes of the special meeting. Abstentions and broker non-votes will be counted as present for the purposes of determining whether a quorum is present at the special meeting. The special meeting may be adjourned whether or not a quorum is present.
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Q:What vote of the holders of common shares is required to adopt and approve the merger agreement?
A:The adoption and approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote thereon. Because the affirmative vote required to adopt and approve the merger agreement is based upon the total number of outstanding common shares, if you fail to submit a proxy or to vote in person at the special meeting, or if you vote “ABSTAIN,” or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, it will have the same effect as a vote “AGAINST” the adoption and approval of the merger agreement.
Q:What vote of the holders of common shares is required to approve, on a non-binding advisory basis, the merger-related compensation that the Company’s named executive officers will or may receive in connection with the merger?
A:The approval, on a non-binding advisory basis, of the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger requires the approval of a majority of the votes properly cast on this proposal at the special meeting. If you vote “ABSTAIN” on this proposal, it will have no effect on this proposal. If you fail to submit a proxy or to vote in person at the special meeting, or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, your common shares will not be voted on this proposal and it will have no effect on this proposal.
Q:What vote of the holders of common shares is required to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies?
A:The approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies requires the approval of a majority of the votes properly cast on this proposal at the special meeting. If you vote “ABSTAIN” on this proposal, it will have no effect on this proposal. If you fail to submit a proxy or to vote in person at the special meeting, or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, your common shares will not be voted on this proposal and it will have no effect on this proposal.
Q:Why am I being asked to cast an advisory non-binding vote to approve the merger-related compensation that the Company’s named executive officers will or may receive in connection with the merger?
A:The Securities and Exchange Commission has adopted rules that require us to seek an advisory non-binding vote with respect to certain payments that could become payable to our named executive officers in connection with the merger.
Q:What is merger-related or “golden parachute” compensation?
A:Merger-related or “golden parachute” compensation is certain compensation that is tied to or based on the merger and payable to our named executive officers. See “The Merger—Golden Parachute Compensation” beginning on page 53.
Q:As a holder of common shares, what will I receive in the merger?
A:If the merger is completed, you will be entitled to receive $14.05 in cash, without interest and less applicable withholding tax, for each common share that you own immediately prior to the effective time of the merger, unless you exercise and perfect your appraisal rights under the DGCL. You will not own any shares in the surviving corporation.
Q:How does the per common share merger consideration compare to the market price of common shares prior to the announcement of the merger?
A:On June 8, 2012, the last full trading day prior to the public announcement of the execution of the merger agreement, the reported closing sales price for the common shares on the Nasdaq Global Market was $11.34 per common share. The $14.05 per common share to be paid for each common share in the merger represents a premium of approximately 23.9% to the closing sales price for the common shares on the Nasdaq Global Market on June 8, 2012.
Q:Is the merger expected to be taxable to me?
A:The exchange of common shares for cash in the merger will be a taxable transaction for U.S. federal income tax purposes. If you are a U.S. holder and your common shares are converted into the right to receive cash in the merger, you will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to your common shares (determined before deduction of any applicable
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   backup withholding) and your adjusted tax basis in your common shares. Any gain recognized on the exchange of common shares for cash pursuant to the merger by non-U.S. holders will generally not be subject to U.S. federal income tax unless the non-U.S. holder has certain connections to the United States. For the definitions of “U.S. holder” and “non-U.S. holder” and a more detailed discussion of the U.S. federal income tax consequences of the merger, see “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 56. You should also consult your tax advisor regarding the specific tax consequences of the merger to you in light of your particular circumstances and for a complete analysis of the effect of the merger on your federal, state, local and foreign taxes.
Q:Is completion of the merger subject to any conditions?
A:Yes. The Company, Buyer and Merger Sub may not effect the merger unless a number of conditions are satisfied or waived. These conditions include the adoption of the merger agreement by the holders of a majority of the outstanding common shares and expiration or early termination of the waiting period, and any extensions thereof, applicable to the consummation of the merger under the HSR Act (notification of which was received on June 29, 2012). For a more complete summary of the conditions that must be satisfied or waived prior to the completion of the merger, see “The Merger Agreement—Conditions to the Merger” beginning on page 74.
Q:When do you expect the merger to be completed?
A:The Company, Buyer and Merger Sub are working to complete the merger as soon as possible. Assuming timely satisfaction of necessary closing conditions, including the adoption of the merger agreement by the holders of a majority of the outstanding common shares, we currently anticipate that the merger will be consummated by the end of September 2012; however, we cannot predict the exact timing of the merger.
Q:What happens if the merger is not completed?
A:If the merger agreement is not adopted and approved by the holders of common shares, or if the merger is not completed for any other reason, you will not receive any payment for your common shares in connection with the merger. Instead, we will remain an independent public company and the common shares will continue to be traded on the Nasdaq Global Market. Under certain specified circumstances, we may be required to pay Buyer a termination fee or expense reimbursement, or Buyer may be required to pay us a termination fee, with respect to the termination of the merger agreement, as described under “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77.
Q:What will happen if the holders of common shares do not approve the merger-related compensation that the Company’s named executive officers will or may receive in connection with the merger?
A:Approval of the merger-related compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger is not a condition of the completion of the merger. The vote with respect to the merger-related compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger is an advisory vote and will not be binding on us. Therefore, regardless of whether the holders of common shares approve such merger-related compensation, if the merger agreement is adopted and approved by the holders of common shares and the merger is completed, that merger-related compensation will still be paid to our named executive officers to the extent payable in connection with the terms of that merger-related compensation.
Q:How does the Company’s board of directors recommend that I vote?
A:Our board of directors unanimously recommends that you vote “FOR” the adoption and approval of the merger agreement, “FOR” the approval, on a non-binding advisory basis, of the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to adjourn the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement or to constitute a quorum.
Q:How will the Company’s directors and executive officers vote on the proposal to adopt and approve the merger agreement?
A:Our directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their common shares in favor of the proposal to adopt and approve the merger agreement. As of July 26, 2012, the

 

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  record date for the special meeting, our directors and executive officers owned, in the aggregate, 541,516 common shares, or collectively approximately 4.5% of the outstanding common shares. 
Q:Do any of the Company’s directors or executive officers have interests in the merger that may differ from or be in addition to my interests as a holder of common shares?
A:Yes. In considering the recommendation of our board of directors with respect to the proposal to adopt and approve the merger agreement, you should be aware that our directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of the holders of common shares generally. Our board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted and approved by the holders of common shares. See “The Merger—Interests of Certain Persons in the Merger” beginning on page 48.
Q:How do I vote?
A:If you are a holder of record of common shares, you may vote your common shares on matters presented at the special meeting in any of the following ways:
·in person—you may attend the special meeting and cast your vote there;
·by proxy—holders of record of common shares have a choice of voting by proxy;
·over the internet—the website for internet proxy submissions is on your proxy card;
·by using a toll-free telephone number noted on your proxy card; or
·by completing, signing and dating the enclosed proxy card and returning it in the envelope provided.

If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct that entity how to vote in accordance with the voting instruction form that it furnishes to you. Please note that if your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you must provide a legal proxy from such nominee in order to vote your common shares in person at the special meeting.

A control number, located on your proxy card, is designed to verify your identity and allow you to submit a proxy for your common shares, and to confirm that your voting instructions have been properly recorded when submitting a proxy over the internet or by telephone. Please be aware that, although there is no charge for voting your common shares, if you submit a proxy over the internet, you may incur costs such as telephone and internet access charges for which you will be responsible.

Q:What is the difference between being a holder of record of common shares and a beneficial owner of common shares?
A.If your common shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered to be, with respect to those common shares, a holder of record. This proxy statement, and your proxy card, have been sent directly to you by us.

If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you are considered the beneficial owner of common shares held in street name. In that case, this proxy statement has been forwarded to you by your broker, dealer, commercial bank, trust company or other nominee, who is considered to be, with respect to those common shares, the holder of record. As the beneficial owner, you have the right to direct your broker, dealer, commercial bank, trust company or other nominee how to vote your common shares by following their instructions for voting.

Q:If my common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, will my broker, dealer, commercial bank, trust company or other nominee vote my common shares for me?
A.Your broker, dealer, commercial bank, trust company or other nominee will only be permitted to vote your common shares if you instruct your broker, dealer, commercial bank, trust company or other nominee how to vote. You should follow the procedures provided by your broker, dealer, commercial bank, trust company or other nominee regarding the voting of your common shares. If you do not instruct your broker, dealer, commercial bank, trust company or other nominee to vote your common shares, your common shares will not be voted and the effect will be the same as a vote

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AGAINST” the adoption and approval of the merger agreement and your common shares will not have an effect on the proposal to approve, on a non-binding advisory basis, the merger-related executive compensation that our named executive officers will or may receive in connection with the merger or the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

Q:How do I vote common shares that I hold through a 401(k) plan?
A:If you hold common shares in your 401(k) account, you may vote these common shares by instructing The Principal Group, which we refer to as the trustee, pursuant to the directions on the enclosed proxy card. The trustee will vote your shares in accordance with your duly executed instructions.
Q:What is a proxy?
A:A proxy is your legal designation of another person, referred to as a proxy, to vote your common shares. The written document describing the matters to be considered and voted on at the special meeting is called a proxy statement. The document used to designate a proxy to vote your common shares is called a proxy card. Our board of directors has designated Jay Higham, Timothy P. Sheehan and Claude E. White, and each of them, with full power of substitution, as proxies for the special meeting.
Q:If a holder of common shares gives a proxy, how will that holder’s common shares be voted?
A:Regardless of the method that you provide your proxy, the individuals named on the enclosed proxy card will vote your common shares in the way that you indicate. When completing the internet or telephone processes or the proxy card, you may specify whether your common shares should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your common shares should be voted on a matter, the common shares represented by your properly signed proxy card will be voted “FOR” the proposal to adopt and approve the merger agreement, “FOR” the proposal to approve, on a non-binding advisory basis, the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

Q:How do I change or revoke my proxy?
A:If you are a holder of record of common shares, you can change your vote at any time before your proxy is voted at the special meeting by properly delivering a later-dated proxy through any of the methods available to you or attending the special meeting in person and voting. You may also revoke your proxy by delivering a notice of revocation to our Secretary prior to the time your proxy is voted at the special meeting. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you must contact your broker, dealer, commercial bank, trust company or other nominee to revoke your proxy.
Q:What happens if I do not return a proxy card or otherwise vote?
A:The failure to return your proxy card or to otherwise vote will have the same effect as voting “AGAINST” the adoption and approval of the merger agreement. A vote to “ABSTAIN” will also have the same effect as voting “AGAINST” the adoption and approval of the merger agreement. The failure to return your proxy card or to otherwise vote will have no effect on (i) the proposal to approve, on a non-binding advisory basis, the merger-related compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger or (ii) the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. A vote to “ABSTAIN” will also have no effect on these proposals.
Q:What happens if I sell my common shares before the special meeting?
A:The record date for holders of common shares entitled to vote at the special meeting is earlier than both the date of the special meeting and the consummation of the merger. If you transfer your common shares after the record date, but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you transfer your common shares and each of you notifies us in writing of those special arrangements, you will retain your right to vote those common shares at the special meeting but will transfer the right to receive the per common share merger consideration to the person to whom you transfer your common shares.
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Q:Who will solicit and pay the cost of soliciting proxies?
A:We will pay for the costs of soliciting proxies; provided, that we and Buyer have agreed to each pay 50% of the costs and expenses, other than accountants’ and attorneys’ fees, incurred with respect to the printing, filing and mailing of this proxy statement, including any related preliminary materials. We may also reimburse brokers, dealers, commercial banks, trust companies, nominees and fiduciaries representing beneficial owners of common shares for their expenses in forwarding soliciting materials to beneficial owners of common shares and in obtaining voting instructions from those beneficial owners. Our directors, officers and employees may solicit proxies by telephone, by facsimile, by mail, on the internet or in person. Our directors, officers and employees will not be paid any additional amounts for soliciting proxies.
Q:What do I need to do now?
A:Please read this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement carefully to consider how the merger affects you. After you read this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, whether or not you plan to attend the special meeting, you should promptly vote your common shares by completing, signing and dating the enclosed proxy card and returning it in the envelope provided, or by voting over the telephone or over the internet. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct that entity how to vote in accordance with the voting instruction form that it furnished to you. The failure to instruct your broker, dealer, commercial bank, trust company or other nominee to vote your common shares “FOR” adoption and approval of the merger agreement will have the same effect as a vote “AGAINST” adopting and approving the merger agreement.
Q:What do I do if I receive more than one proxy or set of voting instructions?
A:If you hold common shares in more than one account, you may receive more than one proxy or set of voting instructions relating to the special meeting. For example, if you hold your common shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold common shares. These should each be voted or returned separately in accordance with the instructions provided in this proxy statement in order to ensure that all of your common shares are voted.
Q:Should I send in my stock certificates now?
A:No. A letter of transmittal will be mailed to you promptly, and in any event within three business days, after the effective time of the merger, describing how you should surrender your common shares for the per common share merger consideration. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you will receive instructions from your broker, dealer, commercial bank, trust company or other nominee as to how to effect the surrender of your common shares in exchange for the per common share merger consideration. Please do NOT return your stock certificates with your proxy.
Q:What rights do I have if I oppose the merger?
A:Holders of record of common shares as of the record date are entitled to exercise appraisal rights under Delaware law by following the procedures and satisfying the requirements specified in Section 262 of the DGCL. A copy of Section 262 of the DGCL is attached as Annex C to this proxy statement, which we encourage you to read in its entirety. See “Appraisal Rights” beginning on page 84.
Q:Who can help answer my questions?
A:If you have any questions about the merger, need assistance in submitting your proxy or voting your common shares or need additional copies of this proxy statement or the enclosed proxy card, please contact us at IntegraMed America, Inc., Two Manhattanville Road, 3rd Floor, Purchase, New York 10577, Attention: Secretary, telephone (914) 253-8000.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. For this purpose, any statements contained in this proxy statement regarding the anticipated timing of the merger, future plans or operations, financial position, prospects and objectives of management, other than statements of historical facts, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. There are a number of important factors that could cause actual events or our actual results to differ materially from those indicated by forward-looking statements, including, without limitation, the risks detailed in our filings with the Securities and Exchange Commission, including the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and factors and matters contained in this proxy statement. In addition, any forward-looking statements represent our estimates only as of the date they were made and should not be relied upon as representing our estimates as of any subsequent date. Although we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. In addition to other factors and matters contained in this proxy statement, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

·the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including a termination under circumstances that could require us to pay a termination fee;
·Buyer’s failure to obtain the necessary equity and debt financing or the failure of that financing to be sufficient to complete the merger and the other transactions contemplated by the merger agreement;
·the inability to complete the merger due to the failure to obtain the adoption and approval of the merger agreement by the holders of common shares or the failure to satisfy other conditions to completion of the merger, including the receipt of required regulatory approvals;
·the failure of the merger to close for any other reason;
·the possibility that alternative acquisition proposals will or will not be made;
·risks that the proposed merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger;
·the outcome of any legal proceedings, regulatory proceedings or enforcement matters that have been or may be instituted against us or others relating to the merger agreement;
·diversion of management’s attention from ongoing business concerns;
·the merger agreement’s contractual restrictions on the conduct of our business prior to the completion of the merger;
·the possible adverse effect on our business and the price of the common shares if the merger is not consummated in a timely manner or at all;
·the effect of the announcement of the merger on our business relationships, operating results and business generally, including our ability to retain key employees; and
·the amount of the costs, fees, expenses and charges related to the merger.
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THE SPECIAL MEETING

We are furnishing this proxy statement to the holders of common shares as part of the solicitation of proxies by our board of directors for use at the special meeting or any adjournment or postponement thereof.

Date, Time and Place

The special meeting will be held on September 19, 2012, at 3:00 p.m. local time, at our headquarters located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577. If you plan to attend the special meeting, please note that you may be asked to present valid photo identification, such as a driver’s license or passport. If you wish to attend the special meeting and your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you will need to bring a copy of your statement reflecting your common share ownership as of the record date.

Purpose

At the special meeting, you will be asked to consider and vote on the following proposals:

·to adopt and approve the merger agreement;
·to approve, on a non-binding advisory basis, the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger;
·to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement or to constitute a quorum; and
·such other proposals as may properly come before the special meeting.

A copy of the merger agreement is attached as Annex A to this proxy statement, which we encourage you to read in its entirety.

Recommendation of the Board of Directors

After careful consideration, our board of directors unanimously approved the merger agreement and the transactions contemplated by the merger agreement and determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable, fair to and in the best interests of the Company and the holders of common shares. Our board of directors unanimously recommends that you vote “FOR” the adoption and approval of the merger agreement, “FOR” the approval, on a non-binding advisory basis, of the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to adjourn the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement or to constitute a quorum.

Record Date; Holders of Common Shares Entitled to Vote

Only holders of record of common shares at the close of business on July 26, 2012, the record date for the special meeting, are entitled to vote at the special meeting and at any adjournment or postponement of the special meeting. On the record date for the special meeting, 11,983,556 common shares were issued and outstanding and were held by 90 holders of record. Holders of record of common shares on the record date for the special meeting are entitled to one vote per common share at the special meeting on each proposal to be voted on at the special meeting. For ten days prior to the special meeting, a complete list of holders of common shares entitled to vote at the special meeting will be available for examination by any holder of common shares, for any purpose relating to the special meeting, during ordinary business hours at our headquarters located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577.

Quorum

A quorum is necessary to hold the special meeting. The presence at the special meeting, in person or by proxy, of the holders of a majority of the common shares issued and outstanding at the close of business on the record date, and entitled to vote at the special meeting, constitutes a quorum for purposes of the special meeting. Abstentions and broker non-votes will be counted as present for the purposes of determining whether a quorum is present at the special meeting. A broker non-vote occurs when a broker, dealer, commercial bank, trust company or other nominee does not vote on a particular matter because it does not have the

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discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Brokers, dealers, commercial banks, trust companies and other nominees will not have discretionary voting power with respect to any of the proposals to be voted on at the special meeting. Once a common share is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment or postponement of the special meeting. However, if a new record date is set for an adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.

Vote Required

Adoption and Approval of the Merger Agreement

The adoption and approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote thereon. Because the affirmative vote required to adopt and approve the merger agreement is based upon the total number of outstanding common shares, if you fail to submit a proxy or to vote in person at the special meeting, or if you vote “ABSTAIN,” or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, it will have the same effect as a vote “AGAINST” the adoption and approval of the merger agreement.

Approval, on a Non-binding Advisory Basis, of the Merger-Related Executive Compensation that the Company’s Named Executive Officers Will or May Receive in Connection with the Merger

The approval, on a non-binding advisory basis, of the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger requires the approval of a majority of the votes properly cast on this proposal at the special meeting. If you vote “ABSTAIN” on this proposal, it will have no effect on this proposal. If you fail to submit a proxy or to vote in person at the special meeting, or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, your common shares will not be voted on this proposal and it will have no effect on this proposal. The non-binding advisory vote to approve the merger-related executive compensation that our named executive officer will or may receive in connection with the merger is a vote separate and apart from the vote to adopt and approve the merger agreement. Because the vote with respect to the merger-related compensation that our named executive officers will or may receive in connection with the merger is an advisory vote, it will not be binding on us. Therefore, regardless of whether the holders of common shares approve such merger-related compensation, if the merger agreement is adopted and approved by the holders of common shares and the merger is completed, that merger-related compensation will still be paid to our named executive officers to the extent payable in connection with the terms of that merger-related compensation.

Approval of the Adjournment of the Special Meeting, if Necessary, to Solicit Additional Proxies

The approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies requires the approval of a majority of the votes properly cast on this proposal at the special meeting. If you vote “ABSTAIN” on this proposal, it will have no effect on this proposal. If you fail to submit a proxy or to vote in person at the special meeting, or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, your common shares will not be voted on this proposal and it will have no effect on this proposal.

The Company’s Directors and Executive Officers and Certain Holders of Common Shares

Our directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their common shares in favor of the proposal to adopt and approve the merger agreement, in favor of the proposal to approve, on a non-binding advisory basis, the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger and in favor of the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. As of July 26, 2012, the record date for the special meeting, our directors and executive officers owned, in the aggregate, 541,516 common shares, or collectively approximately 4.5% of the outstanding common shares.

In addition, pursuant to the voting agreement, IAT, Wilshire and Peter R. Kellogg have generally agreed, subject to certain exceptions and among other things, to vote all of the common shares beneficially owned by them in favor of the proposal to adopt and approve the merger agreement and the transactions contemplated thereby unless the voting agreement is terminated. As of July 26, 2012, the record date for the special meeting, IAT, Wilshire and Mr. Kellogg owned, in the aggregate, 3,221,286 common shares, or collectively approximately 26.9% of the outstanding common shares. The voting agreement is described under “The Merger—Voting Agreement” beginning on page 47.

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Voting Procedures

Please ensure that your common shares can be voted at the special meeting by submitting your proxy or contacting your broker, dealer, commercial bank, trust company or other nominee.

If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should promptly instruct that entity how to vote in accordance with the voting instruction form that it furnished to you, or contact it in order to obtain directions on how to assure that your common shares are voted at the special meeting.

If you are a holder of record of common shares, you are requested to promptly vote your common shares by completing, signing and dating the enclosed proxy card and returning it in the envelope provided, or by voting over the telephone or over the internet, so that your common shares can voted at the special meeting. Instructions regarding telephone and internet voting are included on the proxy card.

A failure to vote will have the same effect as a vote AGAINST the proposal to adopt and approve the merger agreement. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be voted in favor of the proposal to adopt the merger agreement, the non-binding proposal to approve merger-related executive compensation and the proposal to adjourn the special meeting, if necessary and appropriate, to solicit additional proxies. If you properly sign your proxy card but do not mark the boxes showing how your common shares should be voted on a matter, the common shares represented by your properly signed proxy card will be voted “FOR” the proposal to adopt and approve the merger agreement, “FOR” the proposal to approve, on a non-binding advisory basis, the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

Voting in Person or by Proxy at the Special Meeting

Holders of record of common shares can ensure that their common shares are voted at the special meeting by completing, signing and dating the enclosed proxy card and returning it in the envelope provided. Submitting your proxy by this method or by voting by telephone of the internet as described below will not affect your right to attend the special meeting and to vote in person. If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you must provide a legal proxy from such nominee in order to vote your common shares in person at the special meeting.

If you vote your common shares by submitting a proxy, regardless of the method that you provide your proxy, the individuals named on the enclosed proxy card will vote your common shares in the way that you indicate. If you properly sign your proxy card but do not mark the boxes showing how your common shares should be voted on a matter, the common shares represented by your properly signed proxy card will be voted “FOR” the proposal to adopt and approve the merger agreement, “FOR” the proposal to approve, on a non-binding advisory basis, the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

Electronic Voting

Please note that there are separate arrangements for voting by telephone and internet depending on whether you are a holder of record of common shares or your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee. If you hold your common shares in an account at a broker, dealer, commercial bank, trust company or other nominee, you should check your voting instruction card forwarded to you by that broker, dealer, commercial bank, trust company or other nominee to see which options are available to you.

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO PROMPTLY VOTE YOUR COMMON SHARES BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ENVELOPE PROVIDED, OR BY VOTING OVER THE TELEPHONE OR OVER THE INTERNET. VOTING BY PROXY WILL NOT PREVENT YOU FROM ATTENDING THE SPECIAL MEETING IF YOU SO DESIRE.

Please read and follow carefully the instructions on your proxy card or voting instruction card. Please do not send in your stock certificates with your proxy card. If you are a holder of record of common shares and the merger is completed, a letter of transmittal will be mailed to you promptly, and in any event within three business days, after the effective time of the merger, describing how you should surrender your common shares for the per common share merger

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consideration. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee and the merger is completed, you will receive instructions from your broker, dealer, commercial bank, trust company or other nominee as to how to effect the surrender of your common shares in exchange for the per common share merger consideration.

Proxies and Revocation

Any holder of record of common shares entitled to vote at the special meeting may submit a proxy by telephone, over the internet or by returning the enclosed proxy card in the envelope provided or may vote in person at the special meeting. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct that entity how to vote in accordance with the voting instruction form that it furnished to you. If you fail to submit a proxy or to vote in person at the special meeting, or if you vote “ABSTAIN,” or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, it will have the same effect as a vote “AGAINST” the adoption and approval of the merger agreement.

If you are a holder of record of common shares, you can change your vote at any time before your proxy is voted at the special meeting by properly delivering a later-dated proxy through any of the methods available to you or attending the special meeting in person and voting. You may also revoke your proxy by delivering a notice of revocation to our Secretary, at IntegraMed America, Inc., Two Manhattanville Road, 3rd Floor, Purchase, New York 10577, prior to the time your proxy is voted at the special meeting. If your common shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you must contact your broker, dealer, commercial bank, trust company or other nominee to revoke your proxy.

Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned or postponed, including for the purpose of soliciting additional proxies, if there are insufficient votes at the time of the special meeting to approve the proposal to adopt and approve the merger agreement or if a quorum is not present at the special meeting. Other than an announcement to be made at the special meeting of the time, date and place of an adjourned meeting, an adjournment generally may be made without notice. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the holders of common shares who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

Anticipated Date of Completion of the Merger

The Company, Buyer and Merger Sub are working to complete the merger as soon as possible. Assuming timely satisfaction of necessary closing conditions, including the adoption of the merger agreement by the holders of a majority of the outstanding common shares, we currently anticipate that the merger will be consummated by the end of September 2012; however, we cannot predict the exact timing of the merger.

Rights of Holders of Common Shares Who Seek Appraisal Rights

Holders of common shares are entitled to statutory appraisal rights under Delaware law in connection with the merger. This means that you are entitled to have the fair value of your common shares determined by the Court of Chancery of the State of Delaware in accordance with Delaware law, and to receive payment based on that valuation instead of receiving the per common share merger consideration. The ultimate amount you would receive in an appraisal proceeding may be more than, the same as or less than the amount you would have received under the merger agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to us before the vote is taken on the merger agreement and you must not vote in favor of the adoption and approval of the merger agreement. Voting “AGAINST” the adoption and approval of the merger agreement or voting to “ABSTAIN” on that proposal is not sufficient to exercise your appraisal rights. Your failure to follow exactly the procedures specified under Delaware law will result in the loss of your appraisal rights. See “Appraisal Rights” beginning on page 84 and the text of the Delaware appraisal rights statute, Section 262 of the DGCL, which is reproduced in its entirety as Annex C to this proxy statement and which we encourage you to read carefully. If you hold your common shares through a broker, dealer, commercial bank, trust company or other nominee and you wish to exercise appraisal rights, you should consult with your broker, dealer, commercial bank, trust company or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your broker, dealer, commercial bank, trust company or other nominee. In view of the complexity of the Delaware appraisal rights statute, holders of common shares who may wish to pursue appraisal rights should consult their legal and financial advisors.

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Solicitation of Proxies; Payment of Solicitation Expenses

We will pay for the costs of soliciting proxies; provided, that we and Buyer have agreed to each pay 50% of the costs and expenses, other than accountants’ and attorneys’ fees, incurred with respect to the printing, filing and mailing of this proxy statement, including any related preliminary materials. We may also reimburse brokers, dealers, commercial banks, trust companies, nominees and fiduciaries representing beneficial owners of common shares for their expenses in forwarding soliciting materials to beneficial owners of common shares and in obtaining voting instructions from those beneficial owners. Our directors, officers and employees may solicit proxies by telephone, by facsimile, by mail, on the internet or in person. Our directors, officers and employees will not be paid any additional amounts for soliciting proxies.

Other Matters

As of the date of this proxy statement, our board of directors knows of no other matter which may be presented for consideration at the special meeting. However, if any other matter is presented properly for consideration and action at the special meeting or any adjournment or postponement of the special meeting, it is intended that the proxies will be voted with respect to that matter in accordance with the best judgment and in the discretion of the proxy holders.

Questions and Additional Information

If you have any questions about the merger, need assistance in submitting your proxy or voting your common shares or need additional copies of this proxy statement or the enclosed proxy card, please contact us at IntegraMed America, Inc., Two Manhattanville Road, 3rd Floor, Purchase, New York 10577, Attention: Secretary, telephone (914) 253-8000.

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THE MERGER

The following is a description of certain material aspects of the merger. This description may not contain all of the information that is important to you. This discussion of the merger is qualified by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

Overview of the Merger

The Company, Buyer and Merger Sub entered into the merger agreement on June 10, 2012. Under the terms of the merger agreement, Merger Sub will merge with and into the Company and the Company will continue as the surviving corporation and a wholly-owned subsidiary of Buyer following the merger. The following will also occur in connection with the merger:

·each common share (other than (i) common shares owned by Buyer, Merger Sub or any other direct or indirect wholly-owned subsidiary of Buyer, (ii) common shares owned by us as treasury stock or any of our direct or indirect wholly-owned subsidiaries and (iii) common shares owned by stockholders who have properly exercised appraisal rights under the DGCL) will be automatically cancelled and converted into the right to receive $14.05 per common share in cash, without interest and less applicable withholding tax;
·each outstanding and unexercised option to purchase common shares that was issued under our stock option or long-term compensation plans, whether or not vested or exercisable, will become fully vested and exercisable and each such option that is not exercised will be cancelled and automatically converted into the right to receive an amount in cash equal to the product of (i) the total number of common shares subject to that option immediately prior to the effective time of the merger and (ii) the excess, if any, of $14.05 over the exercise price of that option, without interest and less applicable withholding tax; and
·each outstanding share of restricted stock, whether or not then vested, will become free of all restrictions, fully vested and transferable and will be cancelled and automatically converted into the right to receive $14.05 in cash, without interest and less applicable withholding tax.

Following and as a result of the merger:

·holders of common shares will no longer have any interest in, and will no longer be stockholders of, the Company, and will not participate in any of the Company’s future earnings or growth; and
·the common shares will be delisted from the Nasdaq Global Market and deregistered under the Securities Exchange Act of 1934, as amended, and will cease to be publicly traded.

Directors and Officers of the Surviving Corporation

After the effective time of the merger, the directors of Merger Sub immediately prior to the effective time of the merger will be the initial directors of the surviving corporation, and our officers immediately prior to the effective time of the merger will be the initial officers of the surviving corporation, in each case until their respective successors have been duly elected or appointed and qualified or until their respective deaths, resignations or removals in accordance with the certificate of incorporation and bylaws of the surviving corporation.

Parties to the Merger

The parties to the merger agreement are:

IntegraMed America, Inc.

We are a specialty healthcare services company offering products and services to patients and providers in the fertility and vein care segments of the health industry. We provide services and products through our three operating divisions, fertility centers, consumer services and vein clinics, and shared support services for providers through our corporate offices. We provide our fertility centers and vein clinics with administrative services, such as finance, accounting, human resources, risk management, legal and purchasing support, marketing and sales support, internet marketing and website support, access to integrated information systems, in some instances, non-physician practitioners and access to capital for financing clinic operations and expansion.

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The principal trading market for the common shares is the Nasdaq Global Market. Our principal executive offices are located at Two Manhattanville Road, 3rd Floor, Purchase, New York 10577. Our telephone number is (914) 253-8000.

SCP-325 Holding Corp.

Buyer is a Delaware corporation and is a controlled affiliate of Sagard. Buyer was formed at the direction of Sagard solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement and the related financing transactions. At the effective time of the merger, the Company will be a direct, wholly-owned subsidiary of Buyer. Buyer has de minimis assets and has not engaged in any business or operations other than activities incidental to its formation and in connection with the merger and the other transactions contemplated by the merger agreement.

Buyer’s principal executive offices are located at 325 Greenwich Avenue, Greenwich, Connecticut 06830. Its telephone number is (203) 629-6700.

SCP-325 Merger Sub, Inc.

Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Buyer. Merger Sub was formed at the direction of Buyer solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement and the related financing transactions. At the effective time of the merger, Merger Sub will merge with and into the Company and cease to exist, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Buyer. Merger Sub has de minimis assets and has not engaged in any business or operations other than activities incidental to its formation and in connection with the merger and the other transactions contemplated by the merger agreement.

Merger Sub’s principal executive offices are located at 325 Greenwich Avenue, Greenwich, Connecticut 06830. Its telephone number is (203) 629-6700.

Background of the Merger

In the ordinary course of business, our board of directors and senior management continually review and assess strategic alternatives available to us. From time to time over the past few years, a number of parties have approached us regarding the possibility of engaging in a strategic transaction, including our possible sale. Most of these approaches have been through Jay Higham, our Chairman, President and Chief Executive Officer. Until the discussions described below, those approaches did not proceed past preliminary conversations.

On May 20, 2011, Mr. Higham received a telephone call from a representative of an investment banking firm. During this telephone call, the representative of the investment banking firm informed Mr. Higham that a private equity firm, which we refer to as Party A, was interested in having a conversation with Mr. Higham to discuss a potential strategic transaction involving the Company.

On June 2, 2011, at a regularly scheduled meeting of our board of directors, which was also attended by Claude E. White, our Vice President, General Counsel and Secretary, after discussing, among other things, the call that Mr. Higham received from the representative of the investment banking firm on May 20, 2011, our board of directors indicated that if a credible offer to purchase the Company was received from a third party, it would be considered in due course.

On June 16, 2011, Mr. Higham and Timothy P. Sheehan, our Senior Vice President and then interim Chief Financial Officer, met with a representative of Party A. During this discussion, Party A did not indicate a specific proposed value of the Company or a specific proposed transaction.

On June 21, 2011, a representative of Party A called Mr. Sheehan to ask a number of clarifying questions regarding our business.

On June 27, 2011, representatives of Party A called Mr. Higham and Mr. Sheehan to inform them that Party A desired to enter into a strategic transaction with the Company, pursuant to which Party A would purchase a majority of the Company at a price of $14.25 per common share. The representatives of Party A also informed Mr. Higham and Mr. Sheehan that the proposed strategic transaction would require the sale of at least a portion of the common shares beneficially owned by Peter R. Kellogg, the largest beneficial owner of common shares. Party A also requested negotiating exclusivity for a period of 30 days. Mr. Higham and Mr. Sheehan informed the representatives of Party A that they would communicate Party A’s proposal to our board of directors.

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On July 7, 2011, our board of directors convened a special meeting, by telephone conference call, which was also attended by Mr. Sheehan and Mr. White, to discuss, among other things, Party A’s proposal. After discussing Party A’s proposal, our board of directors instructed Mr. Higham to indicate to Party A that a price of $14.25 per common share would likely not be high enough to justify a sale of the Company. At this meeting, our board of directors also instructed Mr. Higham to have Mr. Kellogg execute a confidentiality agreement and then meet with him to determine his level of interest in pursuing a transaction involving the sale of the Company, either with Party A or another third party.

On July 11, 2011, a representative of Party A called Mr. Higham to request an update on our board of directors’ response to Party A’s proposal. Mr. Higham informed the representative of Party A that our board of directors had authorized Mr. Higham to discuss the proposal with Mr. Kellogg, but that a price of $14.25 per common share would likely not be high enough to justify a sale of the Company. The representative of Party A responded that Party A would continue to evaluate what it believed was a fair price for the Company.

On July 20, 2011, Mr. Higham and Mr. Sheehan met with representatives of a private equity firm, which we refer to as Party B. Party B had requested a meeting with Mr. Higham and Mr. Sheehan to discuss a potential strategic transaction involving the Company. Party B did not make an offer regarding a specific proposed transaction, but generally discussed a number of alternatives involving investments by Party B in the Company.

On August 3, 2011, Mr. Kellogg and the Company executed and delivered a confidentiality agreement and Mr. Kellogg met with Mr. Higham and Mr. Sheehan. During this meeting, Mr. Higham, Mr. Sheehan and Mr. Kellogg discussed the proposal from Party A, as well as our strategic options. Mr. Higham and Mr. Sheehan expressed their belief that it would be difficult to consummate a strategic transaction involving the Company without Mr. Kellogg’s support. Mr. Higham and Mr. Sheehan also informed Mr. Kellogg that, in the event that we pursued a formal sale process, either with or without Mr. Kellogg’s support, our board of directors would have a fiduciary duty to pursue the highest price reasonably available for the Company. Mr. Kellogg then told Mr. Higham and Mr. Sheehan that he would consider his options and let them know his position.

On August 8, 2011, Mr. Kellogg called Mr. Higham to inform him that, after considering his options, he would be in favor of a potential sale transaction in which he would agree to sell all of the common shares beneficially owned by him.

On August 23, 2011, our board of directors convened a special meeting, by telephone conference call, which was also attended by Mr. Sheehan, Mr. White and a representative of our outside legal counsel, Dorsey & Whitney LLP, which we refer to as Dorsey & Whitney, to discuss recent developments regarding a potential sale of the Company and the conversations between Mr. Higham, Mr. Sheehan and Mr. Kellogg. After discussion, the non-employee members of our board of directors met in an executive session, before reconvening with the full board of directors and the other participants who were present at the meeting. After all of these discussions, our board of directors authorized our management to explore the engagement of a financial advisor.

On August 29, 2011, Mr. Higham met with representatives of Jefferies. There was no pre-existing relationship between us, our management or our board of directors, on the one hand, and Jefferies, on the other hand. During this meeting, Mr. Higham and the representatives of Jefferies discussed Party A’s proposal and Mr. Higham requested that the representatives of Jefferies meet with our board of directors.

On September 26, 2011, at a regularly scheduled meeting of our board of directors, which was also attended by Mr. Sheehan, our Senior Vice President and Chief Financial Officer, Mr. White, a representative of Dorsey & Whitney and representatives of Jefferies, our board of directors discussed with Jefferies its possible engagement as the Company’s financial advisor. The representatives of Jefferies were then excused from the meeting. The representative of Dorsey & Whitney then reviewed the fiduciary duties that our directors owe under Delaware law. After further discussion, and reaching no decision with respect to our possible sale, our board of directors determined to engage Jefferies as the Company’s financial advisor, subject to negotiation of an engagement letter with terms agreeable to the Company. Our board of directors selected Jefferies to act as the Company’s financial advisor because Jefferies is an internationally recognized investment banking firm with substantial experience in merger and acquisition transactions. Our board of directors then discussed with the representative of Dorsey & Whitney whether our possible sale presented conflict of interest issues for any members of our board of directors that would require or make advisable the formation of a special committee of our board of directors for the purpose of evaluating proposals relating to our possible sale. Our board of directors concluded that no conflict of interest issues were present that would warrant the formation of a special committee of our board of directors at that time. The representatives of Jefferies were then requested to return to the meeting and, at the request of our board of directors, Jefferies discussed the process by which potential purchasers would be contacted and a market check would be conducted. Our board of directors was concerned about publicity regarding the process and the negative impact any publicity would have on our business, our employees and our affiliated physicians. After discussion, our board of directors instructed Jefferies to contact potential purchasers that were viewed as most likely to be interested in pursuing a transaction with the Company to gauge their interest in doing so. Jefferies noted for our board of directors

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that, based on the specialized nature of the Company’s business and discussions with the Company’s management, there were not many, if any, companies that managed or publicly stated an interest in managing fertility or vein care centers that would likely effect an acquisition of the Company, and that, accordingly, there were not many, if any, logical potential strategic purchasers.

On October 10, 2011, in accordance with our board’s directives, representatives of Jefferies contacted a representative of Party A. The representative of Party A indicated interest in pursuing a potential strategic transaction with the Company.

On October 14, 2011, Mr. Higham met with a group of holders of common shares, who introduced him, via telephone, to representatives of a private equity firm, which we refer to as Party C, that was interested in pursuing a potential strategic transaction with the Company. Mr. Higham informed the representatives of Party C that our board of directors would review an offer to purchase the Company. The representatives of Party C told Mr. Higham that they needed to do some additional work regarding Party C’s level of interest in the Company.

Also on October 14, 2011, Mr. Higham had a meeting with representatives of Sagard. The representatives of Sagard informed Mr. Higham that Sagard had been following the Company for approximately one year. The representatives of Sagard indicated that with respect to public companies, Sagard was comfortable making open market purchases, effecting block purchases from a company or its stockholders or consummating an entire company purchase. Mr. Higham informed the representatives of Sagard that he was not aware of any holder of a large amount of common shares that was willing to sell its common shares and that our board of directors would review any offer to purchase the Company.

In addition, on October 14, 2011, a draft confidentiality agreement was sent to Party A. That confidentiality agreement was negotiated between October 14, 2011 and October 21, 2011 and was executed and delivered on October 21, 2011, at which time Party A was provided due diligence materials.

On October 31, 2011, representatives of Party C called Mr. Higham to inform him that Party C was interested in making an offer to purchase the Company for a price of $11.50 per common share. Mr. Higham responded that our board of directors would not consider an offer at that price.

On November 8, 2011, representatives of Party C called Mr. Higham to inform him that Party C did not intend to pursue additional discussions with us regarding a potential strategic transaction.

On November 15, 2011, Mr. Higham and Mr. Sheehan, together with representatives of Jefferies, met with representatives of Party A. Mr. Higham and Mr. Sheehan made a presentation and discussed the Company’s business.

Also on November 15, 2011, in accordance with our board’s directives, Jefferies began contacting nine potential purchasers regarding their interest in the Company.

Between November 15, 2011 and December 8, 2011, we negotiated, executed and delivered confidentiality agreements with five of the nine potential purchasers contacted since November 15, 2011.

On November 18, 2011, representatives of Party A called Mr. Sheehan to discuss our operations and financial performance.

Beginning on November 21, 2011, the potential purchasers that executed and delivered confidentiality agreements with the Company, as well as their advisors, were granted access to an online data room containing confidential information regarding the Company and its subsidiaries, which we refer to as the data room. From November 21, 2011 through June 5, 2012, the Company added confidential information to the data room in response to requests from certain potential purchasers and their advisors; however, not all potential purchasers and their advisors were granted access to all of the confidential information that was contained in the data room.

On November 29, 2011, in accordance with our board’s directives, Jefferies began contacting an additional 11 potential purchasers.

Between November 29, 2011 and December 28, 2011, we negotiated, executed and delivered confidentiality agreements with 10 of the 11 additional potential purchasers contacted since November 29, 2011.

On December 5, 2011, we received an unsolicited letter of interest from Party B offering to purchase 100% of the Company for a price between $12.50 and $13.50 per common share.

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On December 12, 2011, at a regularly scheduled meeting of our board of directors, which was also attended by Mr. Sheehan, Mr. White, a representative of Dorsey & Whitney and representatives of Jefferies, our board of directors was updated on the process to date.

Between December 15, 2011 and February 20, 2012, Mr. Higham and Mr. Sheehan met with representatives of a number of companies and private equity firms that were contacted by Jefferies at the direction of our board of directors to discuss the Company’s business.

On January 9, 2012, Party A submitted a term sheet outlining a proposal involving the sale by the Company of preferred shares to Party A, the proceeds of which would be used, together with bank borrowings, to launch a tender offer, upon consummation of which Party A would own approximately one-half of the Company.

On February 10, 2012, an initial draft of the merger agreement, which was substantially prepared by Dorsey & Whitney, was added to the data room. The initial draft of the merger agreement provided for a “go shop” period after the execution and delivery of the merger agreement, during which we could initiate, solicit, facilitate and encourage acquisition proposals from third parties and engage in discussions and negotiate with those third parties.

Also on February 10, 2012, a private equity firm that had conducted due diligence and met with Mr. Higham and Mr. Sheehan verbally indicated that it valued the Company at between $12.00 and $13.00 per common share. The private equity firm dropped out of the process after being informed that their valuation was too low.

On February 14, 2012, a special meeting of our board of directors was held, by telephone conference call, to update the members of our board of directors. Mr. Higham and Mr. Sheehan discussed the various meetings and calls that they had had with representatives of potential purchasers.

On February 21, 2012, an initial draft of the limited guaranty, which was substantially prepared by Dorsey & Whitney, was added to the data room.

On February 29, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by Mr. Sheehan, Mr. White, a representative of Dorsey & Whitney and representatives of Jefferies, to review three indications of interest that had been received from Party A, Party B and another private equity firm that had conducted due diligence and met with Mr. Higham and Mr. Sheehan, which we refer to as Party D. Our board of directors was informed that:

·Party A had submitted a formal written offer to purchase preferred shares of the Company, which preferred shares would be convertible into common shares at a price of $14.50 per common share, the proceeds of which would be used, together with bank borrowings, to launch a tender offer at a price of $14.50 per common share, upon consummation of which Party A would own approximately one-half of the Company;
·Party B had submitted a formal written offer to purchase 100% of the Company at a price of $12.50 per common share; and
·Party D had verbally indicated that it valued the Company at between $10.00 and $11.00 per common share.

The members of our board of directors and the representatives of Dorsey & Whitney and Jefferies then discussed the offers from Party A, Party B and Party D. After this discussion, our board of directors determined not to proceed with Party D. Our board of directors then directed the representatives of Jefferies to contact representatives of Party A to gauge whether Party A would be willing to purchase 100% of the Company and to also contact representatives of Party B to increase Party B’s offer.

On March 4, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by Mr. Sheehan, Mr. White, a representative of Dorsey & Whitney and representatives of Jefferies. At this meeting, our board of directors was updated on the sale process to date.

On March 7, 2012, Mr. Higham had a telephone conference call with representatives of Party B to discuss certain aspects of the Company’s business and Party B’s offer to purchase 100% of the Company. Representatives of Jefferies also joined the call. During this telephone call, Party B was informed that its offer of $12.50 per common share was too low.

On March 8, 2012, representatives of Jefferies informed Mr. Higham that representatives of Party A had stated that Party A was unwilling to purchase 100% of the Company, but that it was willing to revise its offer such that the preferred shares to be purchased from the Company would be convertible into common shares at a price of $14.75 per common share, rather than $14.50 per common share, and that the proceeds of the sale of the preferred shares would be used, together with bank borrowings, to

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launch a tender offer at a price of $14.75 per common share, upon consummation of which Party A would own approximately one-half of the Company. The representatives of Jefferies also informed Mr. Higham that representatives of Party B had stated that Party B was willing to increase its offer from $12.50 to $13.00 per common share and that the representatives of both Party A and Party B had indicated that their respective revised offers constituted their respective best and final offers, subject to further confirmatory diligence.

On March 12, 2012, an unsolicited article appeared in dealReporter stating that we were exploring a sale with the Company’s financial advisor, Jefferies, and that, according to one of dealReporter’s sources, we had already collected what were termed as final round bids.

On March 14, 2012, we received an unsolicited letter from Sagard outlining a potential strategic transaction pursuant to which Sagard would purchase 100% of the Company at a price of $15.00 per common share. This letter also stated that Sagard had conducted an extensive due diligence review of the Company over 18 months based on publicly available information and that this review and analysis would enable it to move quickly. Sagard was not contacted by the Company or any of its representatives prior to the receipt of this letter. The Company was subsequently informed by Sagard that affiliates of Jefferies from time to time act in the ordinary course of business as a broker for Sagard and entities affiliated with Sagard in connection with purchases and sales of securities, for which services Sagard paid such affiliates of Jefferies approximately $11,000 in the aggregate.

Also on March 14, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by representatives of Dorsey & Whitney and Jefferies. During this meeting, our board of directors was informed about the letter that had been received from Sagard earlier that day and that another private equity firm, which we refer to as Party E, had approached Jefferies about pursuing an acquisition of the Company. After a discussion regarding these developments, as well as Party A and Party B’s revised offers, our board of directors decided that it would provide Sagard and Party E with an opportunity to submit formal offers to purchase the Company, on an expedited basis.

On March 15, 2012, Mr. Higham called Mr. Kellogg to update him on the sale process and to determine his level of interest in the Company pursuing the type of strategic transaction that was being proposed by Party A. During this telephone call, Mr. Kellogg informed Mr. Higham that if our board of directors determined that the strategic transaction proposed by Party A was the best option available to the Company and the holders of common shares, he would be supportive of that transaction.

On March 16, 2012, we executed and delivered a confidentiality agreement with an affiliate of Sagard, which confidentiality agreement was supplemented on four occasions between March 26, 2012 and May 23, 2012.

On March 17, 2012, Mr. Kellogg called Mr. Higham and informed him that, upon further reflection, he would not support the type of strategic transaction that was being proposed by Party A. Mr. Higham then communicated this information to the other members of our board of directors.

On March 19, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by Mr. Sheehan, Mr. White, a representative of Dorsey & Whitney and representatives of Jefferies. During this meeting, Jefferies reviewed with our board of directors financial terms of the offers from Sagard, Party A, Party B and Party E. The representatives of Jefferies were then excused from the meeting. Although there were no actual conflicts of interest, out of an abundance of caution and in order to avoid any potential conflicts of interest due to his position as our President and Chief Executive Officer, Mr. Higham also recused himself from the decision making process and left the meeting at this time. It was then determined that Elizabeth E. Tallett, one of our independent directors, would act as the primary point of contact for the Company with respect to discussions with the various parties. The representative of Dorsey & Whitney then again reviewed, in detail, the fiduciary duties that our directors owe under Delaware law. After a discussion, our board of directors determined that Sagard and Party E would be allowed to continue their due diligence investigation of the Company. Our board of directors also determined not to proceed with Party A’s proposal and instructed Jefferies to convey that message to representatives of Party A. Our board of directors also instructed Jefferies to inform representatives of Party B that Party B’s offer was still too low.

On March 23, 2012, Mr. Higham and Mr. Sheehan met with representatives of Sagard and its advisors and one of its potential financing sources. During this meeting, Mr. Higham, Mr. Sheehan and the representatives of Sagard and its advisors and potential financing source reviewed our business in detail and the representatives of Sagard and its advisors and potential financing source asked questions regarding our business to Mr. Higham and Mr. Sheehan.

Also on March 23, 2012, during a telephone call between Mr. Higham and representatives of Party B, Mr. Higham informed the representatives of Party B that Party B’s offered price of $13.00 per common share was still too low. As a result, the

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representatives of Party B informed Mr. Higham that Party B did not intend to pursue additional discussions with us regarding a potential strategic transaction at that time.

On March 26, 2012, we executed and delivered confidentiality agreements with Party E and an affiliate of an investment firm, which we refer to as Party F, that was interested in making a proposal to purchase the Company with Party E. Mr. Higham and Mr. Sheehan, together with representatives of Jefferies, then met with representatives of Party E and Party F and their potential financing sources. During this meeting, Mr. Higham, Mr. Sheehan and the representatives of Party E and Party F and their potential financing sources reviewed our business in detail and the representatives of Party E and Party F and their potential financing sources asked questions regarding our business to Mr. Higham and Mr. Sheehan.

On March 28, 2012, a private equity firm, which we refer to as Party G, submitted a written indication of interest to purchase 100% of the Company at a price between $13.00 and $15.00 per common share, with the participation of one of its portfolio healthcare services companies that offered similar products and services to one of the Company’s business segments, which we refer to as Party H.

Also on March 28, 2012, we executed and delivered confidentiality agreements with Party G and Party H.

On March 29, 2012, Mr. Higham and Mr. Sheehan had a telephone conference call with representatives of Party E and Party F to answer questions that Party E and Party F had regarding our business. Representatives of Jefferies also joined the conference call.

On April 2, 2012, Mr. Higham and Mr. Sheehan met with representatives of Party G and Party H to discuss the Company’s business. Representatives of Jefferies also attended the meeting.

On April 3, 2012, Sagard submitted a letter reaffirming its interest in purchasing 100% of the Company at a price of $15.00 per common share. The letter also requested negotiating exclusivity for a period of 21 days and attached Sagard’s comments to the initial draft of the merger agreement and a letter of support from a potential financing source. In its comments to the initial draft of the merger agreement, Sagard stated, among other things, that, in light of the March 12, 2012 article regarding the Company, representatives of Sagard wanted to discuss eliminating the “go shop” period that was provided for in the initial draft of the merger agreement. Sagard also emphasized that its 18 months of analysis gave it a detailed understanding of our business.

On April 4, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by a representative of Dorsey & Whitney. Due to his recusal from the decision making process, Mr. Higham did not attend this meeting. After a discussion regarding the letter from Sagard dated April 3, 2012, our board of directors determined that the process should continue as planned and that no decision regarding negotiating exclusivity would be made prior to the receipt of final indications of interest from the remaining potential purchasers. Our board of directors set a deadline of April 12, 2012 to receive final indications of interest.

On April 10, 2012, representatives of Dorsey & Whitney provided an initial draft of the voting agreement to representatives of Finn Dixon & Herling LLP, Sagard’s outside legal counsel, which we refer to as Finn Dixon.

On April 11, 2012, Mr. Higham, Mr. Sheehan and representatives of Sagard met in person to discuss our business and questions from Sagard regarding our business.

On April 12, 2012, Party G and Party H indicated that they were not interested in pursuing a transaction with us based on their due diligence.

On April 12, 2012, Sagard submitted a letter reaffirming its interest in purchasing 100% of the Company at a price of $15.00 per common share. The letter also requested negotiating exclusivity for a period of 21 days, stated that the merger agreement should be modified to remove the “go shop” period provided for in the initial draft of the merger agreement and attached a draft exclusivity agreement to be executed and delivered by the Company and Sagard, which we refer to as the exclusivity agreement. The letter also included Sagard’s comments to the initial draft of the limited guaranty, draft debt commitment letters from two potential financing sources and an initial draft of the equity commitment letter.

On April 12, 2012, a formal written offer to purchase 100% of the Company at a price of $15.50 per common share was received from Party F. Party F’s formal written offer indicated that Party F was partnering with Party E for purposes of the offer, requested negotiating exclusivity for a period of 21 days and attached a draft debt commitment letter from a potential financing source.

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On April 14, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by a representative of Dorsey & Whitney and representatives of Jefferies. At this meeting, Mr. Higham and Jefferies discussed with our board of directors the offers from Sagard and Party F. Mr. Higham and the representatives of Jefferies were then excused from the meeting. Our board of directors then discussed the two offers, including the fact that Sagard had completed a large portion of its due diligence investigation of the Company and that Sagard had made substantial progress in connection with finalizing the documentation relating to the proposed transaction and had multiple financing sources. After this discussion, our board of directors directed the representatives of Jefferies to contact representatives of Sagard to indicate to them that if Sagard was willing to raise its purchase price to $16.00 per common share, the Company would likely be willing to grant Sagard negotiating exclusivity for a period of 14 days.

On April 23, 2012, Sagard was provided with a revised draft of the exclusivity agreement.

Between April 23, 2012 and May 4, 2012, representatives of the Company and Dorsey & Whitney and representatives of Sagard and Finn Dixon negotiated the terms of the exclusivity agreement. In negotiating the terms of the exclusivity agreement, Sagard indicated that it would need an exclusivity period longer than 14 days in order to complete its diligence and that it would not proceed without a longer exclusivity period because of the substantial regulatory, legal and business due diligence required by Sagard to evaluate our multi-line business.

On April 25, 2012, representatives of Dorsey & Whitney provided a revised draft of the merger agreement to representatives of Finn Dixon. This revised draft of the merger agreement did not provide for a “go shop” period after the execution and delivery of the merger agreement, during which we could initiate, solicit, facilitate and encourage acquisition proposals from third parties and engage in discussions and negotiate with those third parties. Our board of directors agreed to remove the provisions of the merger agreement providing for a “go shop” period because we were satisfied that we had undergone a sufficient market check.

On April 30, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by a representative of Dorsey & Whitney. At this meeting, our board of directors again discussed the offers from Sagard and Party F. In particular, our board of directors emphasized the importance of deal certainty in connection with the process and the desire to only move forward with a potential purchaser that was likely to be able to consummate a transaction. Our board of directors discussed that Sagard was much further along than Party F in terms of its due diligence investigation of the Company, financing and documentation relating to the proposed transaction and that a principal of Party F had cancelled and not rescheduled a previously scheduled meeting with members of the Company’s senior management. In addition, our board of directors discussed that Party F would not be able to consummate a transaction without the approval and equity commitment of Party E, which had not been included in the offer materials, thus creating additional uncertainty. Jefferies had also previously noted that, to its knowledge, there appeared to be no history of Party E and Party F working together. Our board of directors also had a perception that Party F had a poor history in closing transactions and that Party E and Party F had a lack of experience with transactions of this type. After this discussion, Mr. Higham was excused from the meeting. After further discussion, our board of directors determined that the Company should proceed with Sagard and that the representative from Dorsey & Whitney should revise and send the draft exclusivity agreement to representatives of Finn Dixon.

On May 3, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by a representative of Dorsey & Whitney. At this meeting, Ms. Tallett updated the other members of our board of directors regarding her discussions with representatives of Sagard relating to the exclusivity agreement. After discussion, our board of directors authorized the execution and delivery of an exclusivity agreement with Sagard.

On May 4, 2012, the Company and Sagard executed and delivered the exclusivity agreement, which provided for a negotiation exclusivity period through 5:00 p.m., Eastern Time, on May 25, 2012, which negotiation exclusivity period could be extended, at the Company’s option, until 5:00 p.m., Eastern Time, June 1, 2012.

Between May 4, 2012 and June 10, 2012, Sagard and its representatives continued their due diligence investigation of the Company and representatives of the Company and Dorsey & Whitney and representatives of Sagard and Finn Dixon continued negotiating and finalized the merger agreement and the related documentation, including the limited guaranty, the equity commitment letter and the debt commitment letter. Significant issues relating to the merger agreement that were negotiated during this period included, among others:

·the fees payable by the Company and Buyer, as well as the Company’s obligation to reimburse Buyer for Buyer and Merger Sub’s out-of-pocket costs and expenses, in connection with the termination of the merger agreement under certain specified circumstances;
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·the definition of Company material adverse effect; and
·the covenant regarding the operation of the Company’s and its subsidiaries’ businesses between the execution and delivery of the merger agreement and the effective time of the merger.

On May 17, 2012, representatives of Finn Dixon provided a revised draft of the voting agreement to representatives of Dorsey & Whitney.

On May 18, 2012, representatives of Sagard informed representatives of Jefferies that Sagard was revising the price at which it was offering to purchase 100% of the Company from $15.00 per common share to $14.00 per common share. The representatives of Sagard indicated that the price reduction was justified by, among other things, substantial infrastructure improvements that we would need to undergo in the near term related to systems upgrades for electronic medical records, human resources and disaster recovery systems and hardware.

On May 20, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by a representative of Dorsey & Whitney and representatives of Jefferies, to discuss Sagard’s revision to the proposed purchase price. After discussion, our board of directors determined to continue negotiating the merger agreement and the related documentation with Sagard, but that representatives of the Company and Jefferies should continue to indicate to representatives of Sagard that Sagard would need to increase its proposed purchase price.

On May 23, 2012, representatives of Finn Dixon inquired regarding the status of the draft voting agreement.

On May 25, 2012, we extended the negotiation exclusivity period under the exclusivity agreement through 5:00 p.m., Eastern Time, on May 29, 2012.

On May 29, 2012, we extended the negotiation exclusivity period under the exclusivity agreement through 5:00 p.m., Eastern Time, on May 31, 2012.

On May 31, 2012, Sagard revised the price at which it was offering to purchase 100% of the Company from $14.00 per common share to $14.05 per common share.

On June 1, 2012, the Company and Sagard agreed to extend the negotiation exclusivity period under the exclusivity agreement through 5:00 p.m., Eastern Time, on June 5, 2012.

On June 4, 2012, representatives of Dorsey & Whitney provided Mr. Kellogg with the draft of the voting agreement that representatives of Finn Dixon provided to representatives of Dorsey & Whitney on May 17, 2012.

Between June 4, 2012 and June 10, 2012, representatives of Sagard and Finn Dixon and representatives of IAT, Wilshire and Mr. Kellogg negotiated and finalized the voting agreement.

On June 5, 2012, at a regularly scheduled meeting of our board of directors, which was also attended by Mr. Sheehan, Mr. White, a representative of Dorsey & Whitney and representatives of Jefferies, the representative of Dorsey & Whitney reviewed the current draft of the merger agreement, as well as the current drafts of the limited guaranty, the equity commitment letter and the debt commitment letter, in detail and answered extensive questions from the members of our board of directors regarding those documents. The representative of Dorsey & Whitney also again reviewed the fiduciary duties that our directors owe under Delaware law.

Also on June 5, 2012, the Company and Sagard agreed to extend the negotiation exclusivity period under the exclusivity agreement through 5:00 p.m., Eastern Time, on June 11, 2012.

On June 9, 2012, our board of directors convened a special meeting, by telephone conference call, which was also attended by Mr. White, representatives of Dorsey & Whitney and representatives of Jefferies. During the meeting, a representative of Dorsey & Whitney reviewed the changes that had been made to the draft merger agreement, limited guaranty, equity commitment letter and debt commitment letter since the board of directors had last met on June 5, 2012. Jefferies then reviewed with our board of directors Jefferies’ financial analysis of the per common share merger consideration and delivered to our board of directors an oral opinion, confirmed by delivery of a written opinion dated June 9, 2012, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations and qualifications described in its written opinion, the per common share merger consideration to be received by holders of common shares (other than Sagard and its affiliates) was fair, from a financial point of view, to those holders. The representatives of Jefferies were then excused from the meeting. A representative of Dorsey & Whitney then again reviewed the fiduciary duties that our directors owe under Delaware law. Our board of directors then resolved, by unanimous vote, that the merger agreement and the transactions contemplated thereby are

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advisable, fair to and in the best interests of the Company and the holders of common shares, approved the merger agreement and the transactions contemplated thereby, resolved that a special meeting of the holders of common shares be called to adopt and approve the merger agreement and recommended that the holders of common shares adopt and approve the merger agreement and, on a non-binding advisory basis, approve the merger-related execution compensation that the Company’s named executive officers will or may receive in connection with the merger at that meeting.

On June 10, 2012, the Company, Buyer and Merger Sub executed and delivered the merger agreement, Sagard and the Company executed and delivered the limited guaranty, Buyer, IAT, Wilshire and Mr. Kellogg executed the voting agreement, Sagard and Buyer executed the equity commitment letter and Sagard, Merger Sub and the commitment party executed the debt commitment letter.

Prior to the opening of trading on the Nasdaq Global Market on June 11, 2012, we issued a press release announcing the execution of the merger agreement.

Recommendation of the Board of Directors; Reasons for the Merger

At a meeting held on June 9, 2012, our board of directors, by a unanimous vote of all of its members, after careful consideration, determined that the merger agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of the Company and the holders of common shares, approved the merger agreement and the transactions contemplated thereby, resolved that a special meeting of the holders of common shares be called to adopt and approve the merger agreement and recommended that the holders of common shares adopt and approve the merger agreement and, on a non-binding advisory basis, approve the merger-related execution compensation that the Company’s named executive officers will or may receive in connection with the merger at that meeting.

Before making its recommendation, our board of directors consulted with our senior management and our outside legal and financial advisors. In reaching its recommendation, our board of directors reviewed a significant amount of information and considered a number of factors, including, among others, the following:

·our board of directors’ understanding of our business, financial condition and results of operations, on both a historical and a prospective basis;
·the belief that the merger is more favorable to the holders of common shares than the alternatives to the merger, which belief was formed based upon a review by our board of directors, with the assistance of our senior management and our outside advisors, of potential strategic alternatives available to us, including continuing to operate as a public company;
·the fact that we contacted, with the assistance of Jefferies, or were contacted by, 26 potential purchasers of the Company (two of which were considered strategic buyers, the remainder financial buyers), entered into confidentiality agreements with 20 of these potential purchasers and received six indications of interest from these potential purchasers;
·the belief that we could not reasonably expect to obtain more than the per common share merger consideration by conducting a wider sale process;
·the belief that $14.05 per common share was the highest price Sagard was willing to offer, taking into account the extensive negotiations between the parties and Sagard’s indication that it was its best and final offer;
·the fact that the merger consideration is to be paid in cash, which provides certainty of value to the holders of common shares and allows them to monetize their investment in us in the near future, while avoiding long-term stock market and business risk;
·the fact that the $14.05 per common share to be paid for each common share in the merger represents a premium of approximately 23.9% to the closing sales price for the common shares on the Nasdaq Global Market on June 8, 2012, the last full trading day prior to the public announcement of the execution of the merger agreement;
·the fact that, as a public company, we face continuing pressures from investors and financial analysts that may conflict with our long-term strategic plan, creating the risk of disruption and distraction that may reduce value for the holders of common shares;
·the opinion of Jefferies, dated June 9, 2012, to our board of directors as to the fairness, from a financial point of view and as of that date, of the per common share merger consideration to be received by holders of common shares (other than Sagard and its affiliates), which opinion was based on and subject to the assumptions made, procedures
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   followed, matters considered and limitations on the review undertaken by Jefferies, as more fully described under “—Opinion of the Company’s Financial Advisor” beginning on page 37; 
·the likelihood that the merger would be completed, based on, among other things:
othe fact that Buyer and Merger Sub had obtained committed debt and equity financing for the transactions contemplated by the merger agreement, the amounts of the debt and equity financing commitments, the limited number and nature of the conditions to the debt and equity financing and the obligation of Buyer to use its reasonable best efforts to obtain the debt financing;
oSagard’s interest in and knowledge of our business;
othe fact that IAT, Wilshire and Peter R. Kellogg have generally agreed to vote all of the common shares beneficially owned by them, which represent approximately 26.9% of the issued and outstanding common shares, in favor of the merger unless the voting agreement is terminated, as described under “—The Voting Agreement” beginning on page 47;
othe absence of financing or due diligence conditions to the completion of the merger;
othe limited number of conditions to the completion of the merger, including the fact that there were not expected to be any substantive issues in connection with HSR Act clearance and that there are no other significant regulatory approvals that are a condition to the completion of the merger;
othe fact that the merger agreement provides that, in the event of a failure of the merger to be consummated in certain circumstances, Buyer will pay us a $8,476,812 termination fee, as described under “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77, without us having to establish any damages, the payment of which is guaranteed by Sagard pursuant to the limited guaranty; and
oour ability, under certain circumstances, to seek specific performance of the obligations of Buyer and Merger Sub under the merger agreement;
·the fact that our independent directors do not have interests in the merger that are materially different from, or in addition to, those of the holders of common shares generally;
·the negotiations with Sagard, which, among other things, resulted in certain better contractual terms than those initially proposed by Sagard, including a significantly larger termination fee payable by Buyer to us under certain circumstances;
·the fact that, as of the date of the merger agreement, our employees and the employees of our subsidiaries were not party to any binding agreements or arrangements with Buyer or any of its affiliates regarding their post-closing employment with, or equity participation in, the surviving corporation, including with respect to any equity rollover;
·our ability, under the merger agreement, to respond to persons and entities submitting acquisition proposals to us that do not result from our material breach of the non-solicitation provisions of the merger agreement, and to engage, enter into or participate in any discussions or negotiations with that person or entity with respect to the acquisition proposal and to provide access to non-public information concerning us and our subsidiaries to that person or entity pursuant to a confidentiality agreement that meets certain criteria set forth in the merger agreement, if our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) that the acquisition proposal either constitutes a superior proposal or could reasonably be expected to lead to a superior proposal;
·our board of directors’ ability, under certain circumstances, to withhold, withdraw, modify or amend its recommendation that the holders of common shares adopt the merger agreement;
·our ability, under certain circumstances, to terminate the merger agreement in order to enter into an agreement providing for a superior proposal, subject to our compliance with certain obligations and conditions described under “The Merger Agreement—No Solicitation” beginning on page 69, including payment of a $5,086,087 termination fee; and
·the availability of appraisal rights under the DGCL to holders of common shares who comply with all of the required procedures under the DGCL, which allows holders of common shares to seek appraisal of the “fair value” of their common shares as determined by the Delaware Court of Chancery.

Our board of directors also considered potentially negative factors in its deliberations concerning the merger agreement and the merger, including, among others, the following:

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·the potential negative effect the pendency of the merger, or the failure to complete the merger, could have on our business and relationships with its employees, fertility centers, vein clinics, vendors, landlords and other third parties;
·the risk that the merger will not occur if the debt or equity financing, described under “—Financing of the Merger” beginning on page 43, is not obtained, even though the merger is not conditioned on the receipt of that financing;
·the fact that Buyer and Merger Sub are newly formed corporations with de minimis assets, and that our remedy in the event of breach of the merger agreement by Buyer or Merger Sub may be limited to receipt of the $8,476,812 termination fee, which termination fee is guaranteed by Sagard pursuant to the limited guaranty, and that, under certain circumstances, we may not be entitled to that termination fee;
·the restrictions on the conduct of our business prior to the completion of the merger, which may delay or prevent us from undertaking business opportunities that may arise or any other action we would otherwise take with respect to our operations pending completion of the merger;
·although we currently expect that the merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to effect the merger will be satisfied, and, as a result, the merger may not be consummated;
·the debt commitment letter expires on November 15, 2012, and either the Company or Buyer may, in certain circumstances, terminate the merger agreement if the merger has not been consummated by that date;
·the significant costs involved in connection with entering into the merger agreement and completing the merger, and the substantial time and effort of management required to complete the merger;
·the merger agreement does not provide for a “go shop” period during which we could initiate, solicit, facilitate and encourage acquisition proposals from third parties and engage in discussions and negotiate with those third parties;
·the per common share merger consideration is less than Sagard’s initial indication of interest of $15.00 per common share on March 14, 2012;
·another potential acquiror made a formal written offer, on April 12, 2012, to purchase 100% of the Company for $15.50 per common share;
·as of the day that our board of directors approved the merger agreement, certain securities analysts had target prices for the common shares in excess of $14.05;
·the possibility that the amounts that may be payable by us upon the termination of the merger agreement could discourage other potential acquirors from making a competing bid to acquire us, including a termination fee of $5,086,087 and up to $2,119,203 of Buyer and Merger Sub’s out-of-pocket expenses, which out-of-pocket costs and expenses would be credited against any termination fee that we must pay to Buyer;
·that the current holders of common shares would not have the opportunity to participate in any of our possible growth and profits following the merger; and
·the fact that the merger will be a taxable transaction to the holders of common shares that are U.S. holders for U.S. federal income tax purposes.

In considering the recommendation of our board of directors with respect to the proposal to adopt and approve the merger agreement, you should be aware that certain of our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the holders of common shares generally. Our board of directors was aware of and considered these interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement, and in recommending that the merger agreement be adopted and approved by the holders of common shares. See “—Interests of Certain Persons in the Merger” beginning on page 48.

The foregoing discussion of the information and factors considered by our board of directors is not intended to be exhaustive, but includes the material factors considered by our board of directors. In view of the complexity and wide variety of factors considered, our board of directors did not find it practicable to and did not attempt to quantify, rank or otherwise assign any relative or specific weights to the various factors. In addition, our board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable, but rather our board of directors conducted an overall analysis of the factors described above, including discussions with our senior management and our outside legal and financial advisors. In considering the factors described above, individual members of our board of directors may have given different weights to different factors.

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Our board of directors unanimously recommends that you vote “FOR” the adoption and approval of the merger agreement, “FOR” the approval, on a non-binding advisory basis, of the merger-related executive compensation that our named executive officers will or may receive in connection with the merger and “FOR” the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

Opinion of the Company’s Financial Advisor

On June 9, 2012, at a meeting of our board of directors held to evaluate the merger, Jefferies delivered to our board of directors an oral opinion, confirmed by delivery of a written opinion dated June 9, 2012, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations and qualifications described in its written opinion, the per common share merger consideration to be received by holders of common shares (other than Sagard and its affiliates) was fair, from a financial point of view, to those holders.

The full text of Jefferies’ opinion describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Jefferies. This opinion is attached as Annex B to this proxy statement, which the Company encourages you to read in its entirety, and is incorporated herein by reference. Jefferies’ opinion was provided for the use and benefit of our board of directors (in its capacity as such) in its evaluation of the per common share merger consideration from a financial point of view and did not address any other aspect of the merger. The opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any alternative transactions or opportunity that might be available to the Company, nor did it address the Company’s underlying business decision to engage in the merger or the terms of the merger agreement or any voting or other agreements, documents or other arrangements referred to in the merger agreement or entered into in connection with the merger. Jefferies’ opinion does not constitute a recommendation as to how any holder of common shares should vote or act with respect to the merger or any related matter. The following summary is qualified in its entirety by reference to the full text of Jefferies’ opinion.

In arriving at its opinion, Jefferies, among other things:

·reviewed an execution version provided on June 9, 2012 of the merger agreement;
·reviewed certain publicly available financial and other information about the Company;
·reviewed certain information furnished to Jefferies by the Company’s management relating to the Company’s business, operations and prospects, including financial forecasts and estimates prepared by Company management;
·held discussions with members of the Company’s senior management concerning the matters described in the two preceding bullet points;
·held discussions, at the Company’s direction, with third parties to solicit indications of interest in the possible acquisition of the Company;
·reviewed the stock trading price history and implied multiples for the common shares and compared them with those of certain publicly traded companies that Jefferies deemed relevant;
·compared the financial terms of the merger with the financial terms of certain other transactions that Jefferies deemed relevant; and
·conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate.

In its review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by the Company or that was publicly available to Jefferies (including, without limitation, the information described above), or that was otherwise reviewed by Jefferies. Jefferies relied on assurances of Company management that it was not aware of any facts or circumstances that would make any Company information inaccurate or misleading. In its review, Jefferies did not obtain any independent evaluation or appraisal of any of the Company’s assets or liabilities (contingent or otherwise), nor did Jefferies conduct a physical inspection of any of the Company’s properties or facilities, and Jefferies was not furnished with, and assumed no responsibility to obtain, any such evaluations, appraisals or physical inspections.

With respect to the financial forecasts provided to and examined by Jefferies, Jefferies noted that projecting future results of any company is inherently subject to uncertainty. Jefferies was informed, however, and assumed, that the financial forecasts

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were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of Company management as to the Company’s future financial performance. Jefferies expressed no opinion as to any of the financial forecasts or the assumptions on which they were made.

Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date of Jefferies’ opinion. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which Jefferies becomes aware after the date of the opinion. Jefferies made no independent investigation of any legal, accounting or tax matters affecting the Company and assumed the correctness in all respects material to its analysis of all legal, accounting and tax advice given to the Company or the Company’s board of directors, including, without limitation, advice as to the legal, accounting and tax consequences of the terms of, and transactions contemplated by, the merger agreement to the Company and the holders of common shares. In addition, in preparing its opinion, Jefferies did not take into account any tax consequences of the merger to any holder of common shares. Jefferies assumed that the final merger agreement would be substantially similar to the execution version reviewed. Jefferies also assumed that, in the course of obtaining the necessary regulatory or third-party approvals, consents and releases for the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on the Company or the merger.

Jefferies was not asked to address, and its opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company, other than holders of common shares as expressly set forth in its opinion. Jefferies expressed no opinion as to the price at which common shares would trade at any time. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of the Company’s officers, directors or employees, or any class of those persons, in connection with the merger relative to the per common share merger consideration or otherwise. The issuance of Jefferies’ opinion was authorized by the Fairness Committee of Jefferies & Company, Inc. Except as described in this summary, the Company imposed no other instructions or limitations on Jefferies with respect to the investigations made or the procedures followed by Jefferies in rendering its opinion.

In connection with rendering its opinion to the Company’s board of directors, Jefferies performed a variety of financial and comparative analyses which are summarized below. The following summary is not a complete description of all analyses performed and factors considered by Jefferies in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the selected companies and selected transactions analyses summarized below, no company or transaction used as a comparison was identical to the Company or the merger. These analyses necessarily involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading or acquisition values of the companies concerned.

Jefferies believes that its analyses and the summary below must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Jefferies’ analyses and opinion. Jefferies did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.

The estimates of the Company’s future performance in or underlying Jefferies’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, Jefferies considered industry performance, general business and economic conditions and other matters, many of which were beyond the Company’s control. Estimates of the financial value of companies do not purport to be appraisals or necessarily reflect the prices at which companies or securities actually may be sold or acquired.

The per common share merger consideration was determined through negotiation between the Company and Sagard, and the Company’s decision to enter into the merger was solely that of the Company’s board of directors. Jefferies’ opinion and financial analyses were only one of many factors considered by the Company’s board of directors in its evaluation of the merger and should not be viewed as determinative of the views of the Company’s board of directors or management with respect to the merger or the consideration payable in the merger.

The following is a brief summary of the material financial analyses performed by Jefferies and reviewed with the Company’s board of directors on June 9, 2012. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data

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below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses.

Selected Companies Analysis

Jefferies reviewed selected financial and stock market data of the Company and the following 10 selected publicly traded healthcare service companies:

·Almost Family, Inc.
·Amedisys, Inc.
·AmSurg Corp.
·Chemed Corporation
·Gentiva Health Services Inc.
·Hanger Orthopedic Group, Inc.
·LHC Group, Inc.
·Lincare Holdings Inc.
·RadNet, Inc.
·US Physical Therapy Inc.

Jefferies reviewed total enterprise values of the selected companies, calculated as equity values based on closing stock prices on June 8, 2012 plus total debt, preferred stock and minority interest, less cash and cash equivalents, as a multiple of estimated calendar years 2012 and 2013 earnings before interest, taxes, depreciation and amortization as adjusted for non-recurring items, referred to as adjusted EBITDA. The overall low to high calendar years 2012 and 2013 estimated adjusted EBITDA multiples observed for the selected companies were 4.5x to 7.7x (with a median multiple of 5.5x) and 4.3x to 7.2x (with a median multiple of 5.3x), respectively. It was noted that the Company’s EBITDA margins for calendar years 2012 and 2013 generally were lower than those of the selected companies. Jefferies then applied selected ranges of calendar years 2012 and 2013 estimated adjusted EBITDA multiples of 4.0x to 6.0x and 3.5x to 5.5x, respectively, derived from the selected companies to corresponding data of the Company. Financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data of the Company were based on internal estimates of Company management. This analysis indicated the following approximate implied per common share equity value reference ranges for the Company, as compared to the per common share merger consideration:

Implied Per Common Share Equity Value Reference

Ranges for the Company Based on:

Per Common Share Merger Consideration

2012E Adjusted EBITDA

2013E Adjusted EBITDA

$10.85 - $14.26 $11.55 - $15.85 $14.05

 

Selected Transactions Analysis

Jefferies reviewed publicly available financial information for the following 14 selected transactions announced between January 1, 2007 and June 8, 2012 involving healthcare service companies with transaction values of between $100 million and $1.6 billion:

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Announcement Date

Acquiror

Target

November 4, 2011 JLL Partners, Inc. American Dental Partners, Inc.
July 29, 2011 Saga Group Ltd. Allied Healthcare International Inc.
April 7, 2011 AmSurg Corp. National Surgical Care, Inc.
March 3, 2011 Valitas Health Services, Inc. America Service Group Inc.
January 21, 2011 Surgery Center Holdings, Inc. NovaMed, Inc.
September 27, 2010 Virtual Radiologic Corporation NightHawk Radiology Holdings, Inc.
August 16, 2010 Leonard Green & Partners, L.P. Prospect Medical Holdings, Inc.
August 14, 2010 Onex Corporation Res-Care, Inc.
May 24, 2010 Gentiva Health Services Inc. Odyssey Healthcare, Inc.
April 5, 2010 GDC Holdings, Inc. National Dentex Corporation
January 24, 2010 Bioscrip, Inc. Critical Homecare Solutions Holdings, Inc.
June 19, 2008 The Blackstone Group L.P. Apria Healthcare Group Inc.
February 19, 2008 Amedisys, Inc. TLC Health Care Services, Inc.
April 24, 2007 Crestview Partners, L.P. Symbion, Inc.

 

Jefferies reviewed enterprise values of the selected transactions, calculated as the purchase prices paid for the target companies’ equity plus total debt, preferred stock and minority interest, less cash and cash equivalents, as a multiple of latest 12 months adjusted EBITDA. The overall low to high latest 12 months adjusted EBITDA multiples observed for the selected transactions were 5.2x to 9.3x (with a median multiple of 7.6x). Jefferies then applied a selected range of latest 12 months adjusted EBITDA multiples of 5.5x to 7.5x derived from the selected transactions to the Company’s latest 12 months (as of March 31, 2012) adjusted EBITDA. Financial data of the selected transactions were based on publicly available information. Financial data of the Company were based on the Company’s public filings and internal estimates of Company management. This analysis indicated the following approximate implied per common share equity value reference range for the Company, as compared to the per common share merger consideration:

Implied Per Common Share Equity Value
Reference Range for the Company

Per Common Share Merger Consideration

$12.52 - $15.61 $14.05

 

Discounted Cash Flow Analysis

Jefferies performed a discounted cash flow analysis of the Company by calculating the implied present value of the free cash flows that the Company was forecasted to generate during the fiscal years ending December 31, 2012 through December 31, 2016 based on internal estimates of Company management, from which free cash flows were calculated as the Company’s adjusted EBITDA (with stock-based compensation treated as a non-cash expense) less depreciation and amortization, less taxes at an assumed rate of 40.5%, plus depreciation and amortization, less capital expenditures and less increases or plus decreases in working capital. The implied terminal value of the Company was derived by applying to the Company’s calendar year 2016 unlevered free cash flows (adjusted to reflect normalized levels of depreciation and amortization, taxes, capital expenditures and changes in net working capital) a selected range of perpetuity growth rates of 1.0% to 3.0%. Present values of cash flows and terminal values were calculated using a discount rate range of 13.5% to 14.5% derived from a weighted average cost of capital calculation. This analysis indicated the following approximate implied per common share equity value reference range for the Company, as compared to the per common share merger consideration:

Implied Per Common Share Equity Value
Reference Range for the Company

Per Common Share Merger Consideration

$14.38 - $17.17 $14.05
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Other Information

Jefferies also noted certain additional factors that were not considered part of Jefferies’ financial analysis with respect to its opinion but were referenced for informational purposes, including premiums paid in selected North American transactions involving healthcare service companies announced between January 1, 2008 and June 8, 2012 with transaction values of between $50 million and $1.0 billion which, when applying a selected range of premiums of 24% to 56% derived from the closing stock prices of the target companies one trading day, one week and one month prior to public announcement of the relevant transaction to the closing price of the common shares on March 12, 2012 (the last trading day prior to news reports that the Company was exploring a sale and had hired a financial advisor), indicated an implied per common share equity value reference range for the Company of approximately $13.84 to $17.51.

Miscellaneous

Under the terms of Jefferies’ engagement, the Company agreed to pay Jefferies for its financial advisory services in connection with the merger an aggregate fee of $2.0 million, of which a portion was payable upon delivery of Jefferies’ opinion and $1.0 million is payable contingent upon completion of the merger. In addition, the Company agreed to reimburse Jefferies for its expenses, including fees and expenses of counsel, and to indemnify Jefferies and related parties against liabilities, including liabilities under federal securities laws, arising out of or in connection with the services rendered and to be rendered by Jefferies under its engagement.

Jefferies maintains a market in the securities of the Company and, in the ordinary course of business, Jefferies and its affiliates may trade or hold securities of the Company and/or affiliates of Sagard for Jefferies’ own account and for the accounts of Jefferies’ customers and, accordingly, may at any time hold long or short positions in those securities. In addition, Jefferies may in the future seek to provide financial advisory and financing services to the Company, Sagard or entities that are affiliated with the Company or Sagard, for which Jefferies would expect to receive compensation.

Jefferies was selected to act as the Company’s financial advisor in connection with the merger because Jefferies is an internationally recognized investment banking firm with substantial experience in merger and acquisition transactions. Jefferies is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.

Certain Financial Forecasts

We do not, as a matter of course, publicly disclose financial forecasts as to future financial performance, earnings or other results, and are especially cautious of making financial forecasts because of the unpredictability of the underlying assumptions and estimates. However, in connection with the evaluation of a possible transaction, we provided projections to our board of directors and our advisors, as well as to prospective bidders and their financing sources in connection with their due diligence review of us, which contained certain non-public financial forecasts that were prepared by Company management.

A summary of the financial forecasts included in the projections has been included below. This summary is not being included in this proxy statement to influence your decision whether to vote “FOR” or “AGAINST” the proposal to adopt and approve the merger agreement, but is being included because these financial forecasts were made available to and were considered by our board of directors and our advisors, as well as to prospective bidders and their financing sources. The inclusion of this information should not be regarded as an indication that our board of directors or our advisors, or any other person, considered, or now considers, the financial forecasts to be material or to be necessarily predictive of actual future results, and you should not be on them as such. Our management’s financial forecasts, upon which the summary financial forecasts included below were based, are inherently subjective in many respects. There can be no assurance that these financial forecasts will be realized or that actual results will not be significantly more positive or negative than forecasted.

In addition, the financial forecasts were not prepared with a view toward public disclosure or toward complying with generally accepted accounting principles, which we refer to as GAAP, the published guidelines of the Securities and Exchange Commission regarding projections or the use of non-GAAP financial measures or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither our independent registered public accounting firm, nor any other independent accountants, have audited, compiled, examined or performed any procedures with respect to the financial forecasts contained in this proxy statement, nor have they expressed any opinion or any other form of assurance on this information or its achievability.

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These financial forecasts were based on numerous variables and assumptions that are inherently uncertain and are in significant respects beyond our control. We believe the assumptions that our management used as a basis for the financial forecasts were reasonable; however, important factors that may affect actual results and cause these financial forecasts not to be achieved include, but are not limited to, risks and uncertainties relating to our business (including our ability to achieve strategic goals, objectives and targets over the applicable periods), industry performance, general business and economic conditions, the regulatory environment and other factors described in or referenced under “Cautionary Statement Concerning Forward-Looking Information” beginning on page 19. In addition, the financial forecasts also reflect assumptions that are subject to change and do not reflect revised prospects for our business, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the financial forecasts were prepared. Accordingly, there can be no assurance that these financial forecasts will be realized or that our future financial results will not materially vary from these financial forecasts.

No one has made or makes any representation to any holder of common shares regarding the information included in the financial forecasts. We have made no representation to Sagard, Buyer or Merger Sub in the merger agreement or otherwise concerning these financial forecasts.

You are cautioned not to rely on the forecasted financial information. We have not updated and do not intend to update or otherwise revise the financial forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions on which the financial forecasts were based are shown to be in error.

The following is a summary of the financial forecasts prepared by our management and provided to our board of directors and our advisors, as well as to prospective bidders and their financing sources:

($ in thousands)                        
    2011E   2012E   2013E   2014E   2015E   2016E
Revenues   $ 270,319   $  302,770   $  338,024   $ 379,848   $  427,118   $479,729
Cost of services and sales   249,947   276,424   307,215   342,516   381,894   426,156
Gross profit   20,372   26,346   30,809   37,332   45,224   53,573
Total operating expenses   11,514   13,173   13,864   14,933   16,281   17,749
Earnings before interest and taxes   8,857   13,173   16,945   22,399   28,943   35,824
EBITDA   15,728   18,906   23,657   29,892   37,394   45,473
Adjusted EBITDA(1)   17,478   20,941   26,330   33,064   41,643   51,041
Capital expenditures and acquisitions of intangible assets   8,500   11,831   19,320   13,490   15,645   16,583
Working capital(2)   43,688   47,108   53,376   57,625   62,131   67,203
 
(1)Adjusted EBITDA includes add-back of stock-based compensation.
 (2)Working capital represents a negative number.

These financial forecasts were updated in May 2012 for actual 2011 and first quarter 2012 results, which updated forecasts were provided to our board of directors and our advisors and utilized by the Company’s financial advisor for purposes of its financial analyses. The following is a summary of the updated financial forecasts.

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($ in thousands)                    
    2012E   2013E   2014E   2015E   2016E
Revenues   $  302,770   $  338,024   $ 379,848   $  427,118   $479,729
Cost of services and sales   276,424   307,215   342,516   381,894   426,156
Gross profit   26,346   30,809   37,332   45,224   53,573
Total operating expenses   13,173   13,864   14,933   16,281   17,749
Earnings before interest and taxes   13,173   16,945   22,399   28,943   35,824
EBITDA   18,726   23,507   29,765   37,285   45,377
Adjusted EBITDA(1)   20,760   26,180   32,937   41,533   50,946
Free cash flow(2)   1,862   5,238   13,407   17,028   22,755
Capital expenditures and acquisitions of intangible assets   11,800   19,286   13,453   15,605   16,540
Working capital(3)   44,370   50,660   54,939   59,482   64,595
 
(1)Adjusted EBITDA includes add-back of stock-based compensation.
 (2)Terminal year free cash flows of $24.6 million also were calculated reflecting Company management’s estimates for the steady-state operations of the Company without giving effect to certain one-time capital expenditures expected by management to be incurred in calendar year 2016.
 (3)Working capital represents a negative number.

In preparing the financial forecasts our management made the following material assumptions:

·revenue and contribution from our fertility centers will grow due to organic growth at existing fertility centers, tuck-in acquisitions and new fertility center contracts;
·revenue and contribution from our Attain IVF programs will grow due to increased enrollments;
·revenue and contribution from our vein clinics will grow due to organic growth at existing vein clinics and de novo vein clinics; and
·corporate selling, general and administrative expenses and division specific overhead expenses will grow at a slower rate than revenue.

Financing of the Merger

Buyer anticipates that the total funds needed to complete the merger, including the funds needed to:

·pay the holders of common shares (and the holders of our other equity-based interests) the amounts due to them under the merger agreement, which, based upon the common shares (and our other equity-based interests) outstanding as of the record date, would be approximately $169.5 million;
·refinance our outstanding indebtedness, which, as of August 14, 2012, was approximately $8.2 million in principal amount; and
·pay all fees and expenses relating to the merger and the financing of the merger,

will be funded through a combination of:

·up to approximately $79.5 million of equity financing to be provided by Sagard or one or more of its affiliated entities, or other parties to whom Sagard allocates a portion of its commitment pursuant to the equity commitment letter;
·a $95.0 million senior secured credit facility, consisting of a $90.0 million term loan and a $5.0 million revolving loan facility; and
·our cash on hand.

Buyer has obtained the equity commitment letter and Sagard and Merger Sub have obtained the debt commitment letter. The funding under those commitment letters is subject to certain conditions, including conditions that do not relate directly to the merger agreement. We believe the amounts committed under the commitment letters will be sufficient to complete the transaction, but we cannot assure you of that. Those amounts might be insufficient if, among other things, one or more of the parties to the commitment letters fails to fund the committed amounts in breach of a commitment letter or if the conditions to a commitment are not met. Although obtaining the proceeds of any financing, including any financing under the commitment letters, is not a condition to the completion of the merger, the failure of Buyer and Merger Sub to obtain any portion of the committed financing

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(or alternate financing) will likely result in the failure of the merger to be completed. In that case, Buyer may be obligated to pay us the termination fee, as described under “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77. Buyer’s obligation to pay the termination fee is guaranteed by Sagard pursuant to the limited guaranty.

Equity Financing

Buyer has entered into an equity commitment letter with Sagard, dated as of June 10, 2012, pursuant to which Sagard has committed to purchase, directly or indirectly through one or more affiliated entities, at or prior to the closing of the merger, equity interests of Buyer, for an amount equal to approximately $79.5 million, to fund a portion of the aggregate merger consideration to be paid by Buyer under the merger agreement and to pay the related fees and expenses pursuant to and in accordance with the merger agreement.

Sagard may allocate a portion of its equity commitment to other investors. However, the allocation of any portion of Sagard’s equity commitment to other investors will only reduce Sagard’s equity commitment by the amount actually contributed to Buyer by those other investors (and not returned) at or prior to the closing date of the merger for the purpose of funding a portion of the merger consideration, any other amounts required to be paid pursuant to the merger agreement and related fees and expenses pursuant to the merger agreement.

Sagard’s obligation to fund the equity financing contemplated by the equity commitment letter is subject to:

·our execution and delivery of the merger agreement (which took place on June 10, 2012);
·the satisfaction or waiver (with Sagard’s prior written approval) of each of the conditions to the obligations of Buyer and Merger Sub to consummate the transactions contemplated by the merger agreement; and
·the contemporaneous funding of the debt financing, or any alternate debt financing that is accepted from alternate sources in accordance with the merger agreement, in accordance with the terms and conditions thereof.

We are a third-party beneficiary of the equity commitment letter to the extent that we seek specific performance of the obligations of Buyer and Merger Sub to cause Sagard to fund its equity commitment in certain circumstances in accordance with the terms of the merger agreement and the equity commitment letter.

The obligation of Sagard to fund its equity commitment will terminate upon the earliest to occur of:

·the valid termination of the merger agreement in accordance with its terms;
·the Company or any of its affiliates accepting payment from Sagard under the limited guaranty or the occurrence of any event which, by the terms of the limited guaranty, is an event that terminates Sagard’s obligations or liabilities under the limited guaranty;
·the Company or any of its affiliates, securityholders or agents directly or indirectly asserting a claim against Sagard, or any other party expressly described in the limited guaranty, in connection with the equity commitment letter, the merger agreement, the limited guaranty or any transaction contemplated thereby or otherwise relating thereto, other than a claim against Sagard under the limited guaranty pursuant to its terms, a claim against Sagard under the equity commitment letter pursuant to its terms or a claim against Buyer or Merger Sub under the merger agreement pursuant to its terms; and
·the effective time of the merger, following payment by Sagard of its equity commitment.

Debt Financing

In connection with the execution of the merger agreement, Sagard and Merger Sub obtained the debt commitment letter. Pursuant to the debt commitment letter, GCI Capital Markets LLC and the lenders have committed to provide a $95.0 million senior secured credit facility, consisting of a $90.0 million term loan and a $5.0 million revolving loan facility, to us and Merger Sub on the terms and subject to the conditions set forth in the debt commitment letter. The debt commitment letter will expire if either the closing of the debt facilities contemplated by the debt commitment letter or the funding of the loans thereunder has not occurred on or prior to November 15, 2012.

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The debt facilities contemplated by the debt commitment letter are subject to a number of closing conditions, including the following:

·the initial capitalization of the borrower under the debt facilities contemplated by the debt commitment letter consisting of (i) the loans under the debt facilities contemplated by the debt commitment letter, (ii) cash equity capital representing a minimum of 40% of the total debt and equity capitalization of the borrower from a group of investors arranged by Sagard, and providing Sagard (or its controlled investment affiliates) with direct or indirect ownership of no less than 60% of the capital stock of Buyer on a fully-diluted basis and control of the board of directors of Buyer, and (iii) a minimum of $5.0 million of cash or cash equivalents (or a lesser amount agreed between the commitment party and the borrower), other than certain cash and cash equivalents that are excluded for purposes of this calculation in accordance with the debt commitment letter;
·the consummation of the merger in accordance with applicable law, the merger agreement and the other documentation relating to the merger (without giving effect to any modifications, amendments or waivers thereto that would be materially adverse to the interests of the commitment party and the lenders without the consent of the commitment party) prior to, or substantially concurrently with, the initial funding of the loans under the debt facilities contemplated by the debt commitment letter, and delivery to the commitment party of reasonably satisfactory evidence that the merger has been consummated;
·funded consolidated total debt of the borrower under the debt facilities contemplated by the debt commitment letter, on the closing date of the merger, after giving effect to the merger and the other transactions contemplated by the merger agreement, may not exceed 3.75 times trailing 12 months adjusted EBITDA, as calculated in the manner set forth in the debt commitment letter;
·the revolving loan facility, exclusive of letters of credit issued on the closing date of the merger, must be unfunded on the closing date of the merger;
·the borrower under the debt facilities contemplated by the debt commitment letter having a minimum trailing 12 months adjusted EBITDA, as calculated in the manner set forth in the debt commitment letter, of $23,750,000;
·receipt of the consolidated audited financial statements for the fiscal year ended December 31, 2011 of the borrower under the debt facilities contemplated by the debt commitment letter and receipt of the unaudited financial statements for the most recent end of a quarter for which financial statements are available of the borrower, which end of a quarter will be no earlier than June 30, 2012 if the closing date of the merger occurs on or after August 15, 2012;
·the absence of any order or injunction prohibiting the funding of the loans under the debt facilities contemplated by the debt commitment letter;
·the accuracy of certain representations made by us, our subsidiaries and their respective businesses in the merger agreement, which are referred to in the debt commitment letter as the “Merger Agreement Representations,” and certain representations made by the borrower under the debt facilities contemplated by the debt commitment letter, Buyer and their subsidiaries in the definitive documentation relating to the debt facilities contemplated by the debt commitment letter, which are referred to in the debt commitment letter as the “Specified Representations,” in all material respects, without duplication of any materiality qualifiers contained therein;
·delivery and execution of certain customary loan documents (including a credit agreement), security documents, opinions, insurance deliveries, certificates (including as to solvency), searches, surveys, government and third party consents (to the extent required under the terms of the documentation relating to the merger), subordination agreements (to the extent that any debt is required to be subordinated to the loans under the debt facilities contemplated by the debt commitment letter), control agreements (other than for a certain account specified in the debt commitment letter, so long as the borrower under the debt facilities contemplated by the debt commitment letter complies with certain agreements relating to that account), landlord and bailee waivers (it being understood that the borrower will only be required to use commercially reasonable efforts to obtain landlord and bailee waivers) and certain other customary closing deliveries, in each case containing the terms set forth in the debt commitment letter or, if not set forth in the debt commitment letter, mutually reasonably acceptable to the commitment party and the borrower;
·all actions necessary to establish that the commitment party will have a perfected first priority security interest in the property of Buyer, the borrower under the debt facilities contemplated by the debt commitment letter and their direct and indirect domestic subsidiaries must have been taken;
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·the borrower under the debt facilities contemplated by the debt commitment letter and its domestic subsidiaries must have first priority perfected liens on substantially all of the assets of certain physician practices that are managed by the borrower or one of its domestic subsidiaries, which physician practices are contemplated to include, at a minimum, all vein clinics managed by the borrower or one of its domestic subsidiaries;
·the borrower under the debt facilities contemplated by the debt commitment letter and its domestic subsidiaries must, with respect to vein clinics managed by the borrower or one of its domestic subsidiaries, maintain stock option agreements or other stock restriction agreements with the owners of the vein clinics providing the borrower or the applicable subsidiary with the ability to transfer ownership of the applicable vein clinic to a third party of its choosing, in each case in form and substance reasonably satisfactory to the commitment party;
·the borrower under the debt facilities contemplated by the debt commitment letter and each of its domestic subsidiaries must have granted to the commitment party a lien on all security interests and its rights under all stock option agreements and stock restriction agreements described in the preceding two bullet points;
·the commitment party must have received all documentation and other information regarding Buyer, the borrower under the debt facilities contemplated by the debt commitment letter and their direct and indirect subsidiaries required by the Office of Foreign Assets Control, the PATRIOT Act and other applicable anti-money laundering and “know your customer” rules and regulations, as well as, to the extent requested by the commitment party and if applicable, the Small Business Administration;
·the information provided to the commitment party by or on behalf of Sagard, the borrower under the debt facilities contemplated by the debt commitment letter or any of their respective affiliates must be accurate and complete in all material respects, taken as a whole, it being understood that any projections as to future events will not be viewed as facts, that the actual results during the period or periods covered by those projections may differ from the projected results and that those differences may be material, it being further understood that those projections must have been prepared in good faith upon assumptions that were believed to be reasonable at the time prepared and furnished;
·all fees and expenses required under the debt commitment letter, to be paid on the closing date of the merger, must have been paid; and
·the commitment party must be satisfied that since December 31, 2011 there has been no Company material adverse effect (as defined in the merger agreement and described under “The Merger Agreement—Representations and Warranties” beginning on page 64, without giving affect to any amendment or other modification to that term after the date of the debt commitment letter, unless agreed to in writing by the commitment party).

The debt commitment letter is not subject to a due diligence or a “market out” condition that would allow the commitment party not to fund its commitment if the financial markets are materially adversely affected. There is a risk that the conditions to the debt financing will not be satisfied and the debt financing may not be funded when required. As of the date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event that the debt financing described in this proxy statement is not available as anticipated.

Subject to the terms and conditions of the merger agreement, Buyer will use its reasonable best efforts to take (or cause to be taken) all actions or do, or cause to be done, all things necessary proper or advisable to obtain the debt financing on the terms and conditions described in the debt commitment letter. Buyer will not, without our prior written consent, permit any amendment or modification to be made to, or any waiver of any provisions or remedy under, the debt commitment letter, if such amendment, modification or waiver would (i) reduce the aggregate amount of the debt financing, including by changing the amount of fees to be paid or original issue discount of the debt financing, unless the equity financing is increased by a corresponding amount, or (ii) impose new or additional conditions, or otherwise amend, modify or expand any conditions, to the receipt of the debt financing in a manner that would reasonably be expected to (a) prevent, delay or impair the closing of the merger, (b) make the funding of the debt financing (or satisfaction of the conditions to obtaining the debt financing) less likely to occur or (c) adversely impact the ability of Sagard, Buyer or Merger Sub to enforce its rights against the other parties to the debt commitment letter or the definitive agreements contemplated by the debt commitment letter, the ability of Buyer or Merger Sub to consummate the transactions contemplated by the merger agreement or the likelihood of consummation of the transactions contemplated by the merger agreement.

Limited Guaranty

Pursuant to the limited guaranty, Sagard has agreed to guarantee:

·the payment by Buyer of the $8,476,812 termination fee payable to us in certain circumstances; and
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·the reimbursement and indemnification obligations of Buyer in connection with the costs and expenses incurred by us in connection with the arrangement of the financing of the merger and successful suits to enforce the termination fee provisions of the merger agreement.

See “The Merger Agreement—Termination Fees and Reimbursement of Expenses” beginning on page 77 and “The Merger Agreement—Expenses” beginning on page 78. However, Sagard’s obligations under the limited guaranty are subject to a cap equal to $8,476,812.

The limited guaranty will terminate upon the earlier of:

·receipt by us of payment in full of the obligations guaranteed under the limited guaranty and any other amounts that may be payable under the limited guaranty;
·the effective time of the merger; and
·the three month anniversary of the termination of the merger agreement in accordance with its terms, unless, prior to that three month anniversary, we have commenced a proceeding to enforce our rights under the merger agreement, the equity commitment letter, our confidentiality agreement with an affiliate of Sagard or the limited guaranty, and that proceeding has not reached a final, non-appealable resolution as of that three month anniversary, in which case the limited guaranty will terminate upon either (i) the final, non-appealable resolution of that proceeding and payment in full of the obligations guaranteed under the limited guaranty and any other amounts payable under the limited guaranty or (ii) a written agreement signed by each of the parties to the limited guaranty terminating the limited guaranty.

Voting Agreement

In connection with the execution of the merger agreement, on June 10, 2012, Buyer, IAT, Wilshire and Peter R. Kellogg entered into the voting agreement, pursuant to which IAT, Wilshire and Mr. Kellogg agreed, subject to certain exceptions and among other things, to:

·vote all of the common shares beneficially owned by each of them in favor of the merger and against any other acquisition proposals relating to the Company or any action, proposal, transaction or agreement that would either (i) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the merger agreement or of IAT, Wilshire or Mr. Kellogg contained in the voting agreement or (ii) would impede, interfere with, delay, discourage, adversely affect or inhibit the transactions contemplated by the merger agreement, including the merger;
·grant an irrevocable proxy to Buyer with respect to the common shares beneficially owned by them;
·not transfer, directly or indirectly, any common shares beneficially owned by them; and
·not solicit or encourage submission of an acquisition proposal relating to the Company or participate in any discussions or negotiations concerning any other acquisition proposals relating to the Company.

As of July 26, 2012, the record date for the special meeting, IAT, Wilshire and Mr. Kellogg owned, in the aggregate, 3,221,286 common shares, or collectively approximately 26.9% of the outstanding common shares. Any additional common shares that IAT, Wilshire or Mr. Kellogg purchases, acquires the right to vote or otherwise acquires beneficial ownership of prior to the termination of the voting agreement will automatically become subject to the voting agreement. The voting agreement will automatically terminate upon the earliest to occur of:

·the mutual consent of Buyer, IAT, Wilshire and Mr. Kellogg;
·the effective time of the merger;
·the termination of the merger agreement in accordance with its terms;
·our board of directors expressly withdrawing its recommendation that the holders of common shares adopt the merger agreement; and
·upon written notice by IAT, Wilshire and Mr. Kellogg to Buyer upon a third party having made a bona fide written proposal which is a superior proposal to acquire all of the common shares for cash at a per share price of at least $16.50 per common share.

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A copy of the voting agreement is attached as Annex D to this proxy statement, which we encourage you to read in its entirety.

Closing and Effective Time of the Merger

The closing of the merger will take place on the third business day following the satisfaction or waiver in accordance with the merger agreement of all of the conditions to the closing of the merger, as described under “The Merger Agreement—Conditions to the Merger” beginning on page 74 (other than the conditions that by their nature are to be satisfied at the closing of the merger, but subject to the fulfillment or waiver of those conditions), or at such other date as we and Buyer may agree in writing.

Assuming timely satisfaction of necessary closing conditions, including the adoption of the merger agreement by the holders of a majority of the outstanding common shares, we currently anticipate that the merger will be consummated by the end of September 2012; however, we cannot predict the exact timing of the merger. The effective time of the merger will occur at the time when a certificate of merger has been duly filed with the office of the Secretary of State of the State of Delaware (or at such later time as may be agreed by us and Buyer in writing and specified in the certificate of merger).

Payment of Merger Consideration and Surrender of Stock Certificates

Promptly after the effective time of the merger, but not later than three business days after the effective time of the merger, a letter of transmittal will be mailed to each holder of record of common shares (other than common shares that are also shares of restricted stock or that are owned by stockholders that have perfected and not withdrawn a demand for, or lost their right to, appraisal pursuant to Section 262 of the DGCL) describing how that holder should surrender its common shares for the per common share merger consideration.

You should not return your stock certificates with the enclosed proxy card and you should not forward your stock certificates to the paying agent, as described under “The Merger Agreement—Exchange and Payment Procedures” beginning on page 61, without a letter of transmittal.

If you are the holder of record of common shares, you will not be entitled to receive the per common share merger consideration until you deliver a duly completed and executed letter of transmittal to the paying agent. If your common shares are certificated, you must also surrender your stock certificate or certificates to the paying agent and, if your common shares are not certificated, the paying agent must also receive an “agent’s message” or such other evidence of transfer of your common shares as the paying agent may reasonably request. If ownership of your common shares is not in our transfer records, the per common share merger consideration will only be delivered if the applicable letter of transmittal is accompanied by all documents reasonably required by us and the paying agent to evidence and effect the underlying transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable. If you are a beneficial owner of common shares that are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you will receive the per common share merger consideration in accordance with the procedures of your broker, dealer, commercial bank, trust company or other nominee.

If you have lost a stock certificate, or if it has been stolen or destroyed, then, before you will be entitled to receive the per common share merger consideration, you will have to make an affidavit of the loss, theft or destruction and, if required by Buyer, post a bond in such reasonable amount as Buyer may direct, as indemnity against any claim that may be made against the surviving corporation with respect to that stock certificate. These procedures will be described in the letter of transmittal that you will receive, which you should read carefully and in its entirety.

Interests of Certain Persons in the Merger

In considering the recommendation of our board of directors with respect to the proposal to adopt and approve the merger agreement, you should be aware that certain of our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the holders of common shares generally. Our board of directors was aware of and considered these interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement, and in recommending that the merger agreement be adopted and approved by the holders of common shares.

Options

Immediately prior to the effective time of the merger, each outstanding and unexercised option to purchase common shares that was issued under our stock option or long-term compensation plans, whether or not then vested or exercisable, will become fully vested and exercisable and, at the effective time of the

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merger, each such option that is not exercised will be cancelled and automatically converted into the right to receive, as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger), an amount in cash equal to the product of (i) the total number of common shares subject to that option immediately prior to the effective time of the merger and (ii) the excess, if any, of $14.05 over the exercise price of that option, without interest and less applicable withholding tax.

No person who has served as our director since the beginning of our last completed fiscal year, except for Jay Higham, who is also our President and Chief Executive Officer, currently holds options to purchase common shares that were issued under our stock option or long-term compensation plans. The following table sets forth, as of August 14, 2012, for each person who has served as our executive officer since the beginning of our last completed fiscal year and who currently holds options to purchase common shares that were issued under our stock option or long-term compensation plans: (i) the aggregate number of common shares subject to vested options to purchase common shares that were issued under our stock option or long-term compensation plans and the value of those options, on a pre-tax basis, at the per common share merger consideration; (ii) the aggregate number of unvested options to purchase common shares that were issued under our stock option or long-term compensation plans that will vest in connection with the merger, assuming the executive officer remains employed by us through the effective time of the merger, and the value of those options, on a pre-tax basis, at the per common share merger consideration; and (iii) the aggregate number of common shares subject to vested and unvested options to purchase common shares that were issued under our stock option or long-term compensation plans, assuming the executive officer remains employed by us through the effective time of the merger, and the value of those options, on a pre-tax basis, at the per common share merger consideration:

 

Vested Option

Unvested Option

Aggregate Options

Name

Shares

Value ($)(1)

Shares

Value ($)(1)

Shares

Value ($)(1)

Daniel P. Doman 23,675 142,569 14,439 86,531 38,114 229,100
Jay Higham 57,923 331,522 31,877 191,594 89,800 523,116
Timothy P. Sheehan 10,314 61,368 10,314 61,368
Scott Soifer 19,986 114,472 14,439 86,531 34,425 201,003
 
(1)Calculated for each option to purchase common shares by multiplying (i) the total number of common shares subject to that option and (ii) the excess, if any, of $14.05 over the exercise price of that option. All options to purchase common shares that are included in the table are incentive stock options, other than 12,516 vested options to purchase common shares and 5,828 unvested options to purchase common shares held by Mr. Higham. In addition, all options to purchase common shares that are included in the table were granted under our 2000 Long-Term Compensation Plan or our 2007 Long-Term Compensation Plan.

Restricted Stock

Immediately prior to the effective time of the merger, each outstanding share of restricted stock, whether or not then vested, will become free of all restrictions, fully vested and transferable and, at the effective time of the merger, will be cancelled and automatically converted into the right to receive, as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger), $14.05 in cash, without interest and less applicable withholding tax.

No person who has served as our director since the beginning of our last completed fiscal year, except for Mr. Higham, currently holds shares of restricted stock. The following table sets forth, as of August 14, 2012, for each person who has served as our executive officer since the beginning of our last completed fiscal year and who currently holds shares of restricted stock: (i) the number of shares of restricted stock that will vest in connection with the merger; and (ii) the pre-tax value of those shares of restricted stock at the per common share merger consideration:

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Name

Number of Shares of Restricted Stock

Value ($)(1)

Daniel P. Doman 19,023 267,269
Jeffrey Futterman 3,998 56,172
Jay Higham 59,646 838,020
John J. Kearns 4,461 62,671
Joyce Murty 381 5,348
Andrew Mintz(2) 16,781 235,771
Timothy P. Sheehan 20,589 289,278
Scott Soifer 23,777 334,067
Claude E. White 4,461 62,671
 
(1)Calculated by multiplying the $14.05 per common share merger consideration by the number of shares of restricted stock.
(2)Mr. Mintz resigned effective December 31, 2011. We have sued Mr. Mintz for the return of shares of restricted stock that were forfeited due to his resignation.

Employment Agreement

We previously entered into an employment agreement with Mr. Higham to serve as our President and Chief Executive Officer. The employment agreement provides that if, within one year after our “Change of Control” (as defined in the employment agreement), Mr. Higham’s employment is terminated by Mr. Higham for “Good Reason” (as defined in the employment agreement) or by us without cause, we will pay Mr. Higham a lump sum amount equal to his base salary for a 24-month period, plus twice the full amount of his annual bonus based on current salary, without regard to the conditions precedent established for the bonus payment. Under the employment agreement, Mr. Higham would also be entitled to accrued but unpaid bonus and stock incentive compensation, if any, for the fiscal year preceding the termination. Pursuant to an amendment to Mr. Higham’s employment agreement, effective as of June 10, 2012, in the event that we determine that any payments or distributions by us, or any person or entity affiliated with us, to or for Mr. Higham’s benefit, whether paid or payable or distributed or distributable pursuant to the terms of the employment agreement, any option agreement, any restricted stock award agreement or otherwise, would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, or Mr. Higham would incur any interest or penalties with respect to that excise tax, then those payments would be reduced by the amount, if any, necessary to prevent any part of those payments from being treated as a “parachute payment” within the meaning of Section 280G(b)(2) of the Code. In addition, in order to receive any of the payments described above, Mr. Higham must not have breached certain provisions of the employment agreement, including the confidentiality, non-competition and non-solicitation provisions thereof.

The merger will constitute a “Change of Control” under the employment agreement. If the merger had been consummated on August 14, 2012 and Mr. Higham’s employment had been terminated immediately following the consummation of the merger for “Good Reason” or by the surviving corporation without cause, Mr. Higham would have been entitled to receive a lump sum cash payment equal to $1,722,000, $861,000 of which represents his annualized base salary for 24 months and $861,000 of which represents twice the full amount of his annual bonus without regard to the established conditions precedent for the annual bonus. If this lump sum cash payment were to be made, Mr. Higham would not be liable for excise taxes under Section 4999 of the Code and, therefore, would receive the entire amount of the payment.

Employee Retention Agreements

We previously entered into employee retention agreements with each of our current executive officers, other than Mr. Higham and John J. Kearns, our Controller. Each employee retention agreement provides that if, within 18 months after we experience a “Change in Control” (as defined in the employee retention agreement), the employment of the executive officer who is party to that employee retention agreement is terminated, either by us without cause or by the executive officer for “Good Reason” (as defined in the employee retention agreement), the executive officer will be entitled to:

·a cash lump sum payment equal to his or her annual base salary;
·a cash lump sum payment equal to the greater of (i) the pro rata portion of the cash bonus that he or she would have earned for the fiscal year during which the termination occurred and (ii) an amount equal to (a) the most recent annual cash bonus, if any, paid by us to him or her prior to the date that his or her employment is terminated or the date of the “Change in Control,” whichever is higher, multiplied by (b) the number of days in the fiscal year in which the termination occurred through the date of the termination divided by 365;
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·a cash lump sum payment equal to the most recent annual cash bonus, if any, paid by us to him or her prior to the date that his or her employment is terminated or the date of the “Change in Control,” whichever is higher;
·medical insurance, dental insurance, life insurance and long-term disability insurance benefits continuation for one year following the date that his or her employment is terminated (or, if the benefits continuation described in this bullet point is not available, payment of the equivalent value thereof); and
·accelerated vesting of all incentive stock options granted to him or her.

In addition to the above, pursuant to the employee retention agreements, we are required to (i) pay, or reimburse, each executive officer that is a party to an employee retention agreement up to $15,000 of reasonable expenses incurred within two years of the date that his or her employment is terminated for outplacement services and (ii) pay each executive officer that is a party to an employee retention agreement for all reasonable fees and expenses incurred by him or her in litigating his or her rights under the employee retention agreement, to the extent he or she is successful in that litigation.

The merger will constitute a “Change in Control” under the employee retention agreements. The following table sets forth, for each executive officer that is a party to an employee retention agreement, the value of the payments and other benefits that would be provided to him or her under the employee retention agreement, assuming that the consummation of the merger occurred on August 14, 2012 and that the employment of each executive officer that is a party to an employee retention agreement was terminated immediately following the consummation of the merger, either by the surviving corporation without cause or by the executive officer for “Good Reason”:

Name

Cash Payment Equal to Annual Base Salary
($)

Cash Payment Equal to Pro Rata Cash Bonus
($)

Cash Payment Equal to Most Recent Annual Cash Bonus
($)

Value of Benefits Continuation ($)(1)

Estimated Value of Incentive Stock Option Acceleration ($)(2)

Total Value of Payments and Benefits Under Employee Retention Agreement
($)(3)

Daniel P. Doman 275,000 104,271 34,814 14,337 86,531 514,953
Jeffrey Futterman 200,000 35,000 20,000 12,484 267,484
Joyce Murty 167,400 9,765 8,166 1,059 186,390
Timothy P. Sheehan 240,000 70,000 3,700 9,996 61,638 385,334
Scott Soifer 267,800 78,108 6,695 9,072 86,531 448,206
Gool Thakarar 200,000 35,000 1,137 236,137
Claude E. White 183,195 32,059 13,045 9,782 238,081
 
(1)Value based on continued benefits of all medical insurance, dental insurance, life insurance and long-term disability insurance policies in which the executive officer was entitled to participate immediately prior to his or her termination.
(2)See “—Options” beginning on page 48 for details regarding the accelerated incentive stock options.
(3)Assumes that the executive officer does not, within two years of the date that his or her employment is terminated, incur any expenses for outplacement services. Also assumes that there is no litigation relating to the executive officer’s rights under the employee retention agreement.

Long-Term Incentive Cash Award Plan

Under our Long-Term Cash Award Plan, in the event of a “Company Sale” (as defined in the Long-Term Cash Award Plan), our board of directors may elect to terminate the Long-Term Cash Award Plan and pay the entire unpaid balance of each cash award account (whether or not then vested) then maintained by us in a lump sum to the holder of that account as of the effective date of the “Company Sale.”

The merger will constitute a “Company Sale” under the Long-Term Cash Award Plan. If the consummation of the merger had occurred on August 14, 2012, and our board of directors had terminated the Long-Term Cash Award Plan and made a lump sum payment of the entire unpaid balance of each cash award account then maintained by us to the holder of that account on that date, the following executive officers would have received the following payments:

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Name

 

Payment of Unpaid Balance
of Cash Award Account
($)

Daniel P. Doman   11,850
Jeffrey Futterman   4,740
Jay Higham   23,700
John J. Kearns   4,740
Timothy P. Sheehan   11,850
Scott Soifer   11,850
Claude E. White   4,740
     

Under the merger agreement, we may not terminate the Long-Term Cash Award Plan, or make payments under the Long-Term Cash Award Plan in relation to the transactions contemplated by the merger agreement, without Buyer’s prior written approval, which prior written approval may not be unreasonably withheld, delayed or conditioned.

Indemnification; Directors’ and Officers’ Insurance and Fiduciary Liability Insurance

Buyer has agreed to cause the surviving corporation in the merger to indemnify and hold harmless our present and former directors and officers and the present and former directors and officers of our subsidiaries against certain costs, liabilities and expenses arising out of or pertaining to their service as a director or officer (or in certain capacities for another entity at our request). We are generally required to use our commercially reasonable efforts prior to the effective time of the merger to purchase a six year prepaid “tail policy” with terms, conditions, retentions and limits of liability that are at least as favorable to the beneficiaries thereof as provided in our directors’ and officers’ insurance policies and fiduciary liability insurance policies, as in effect on the date of the merger agreement, with respect to matters existing or occurring at or prior to the effective time of the merger. If we fail to obtain a six year prepaid “tail policy” prior to the effective time of the merger, the surviving corporation will, and Buyer will cause the surviving corporation to, generally maintain in effect for at least six years from the effective time of the merger, at no expense to the beneficiaries thereof, our directors’ and officers’ insurance policies and fiduciary liability insurance policies, with terms, conditions, retentions and limits of liability that are at least as favorable to the beneficiaries thereof as provided in our directors’ and officers’ insurance policies and fiduciary liability insurance policies as of the date of the merger agreement, with respect to matters existing or occurring at or prior to the effective time of the merger. Our present and former directors and officers will have the right to enforce the provisions of the merger agreement relating to their indemnification and are express third-party beneficiaries of the merger agreement for this purpose. A more complete description of the indemnification and insurance rights provided to our present and former directors and officers is set forth under “The Merger Agreement—Indemnification; Directors’ and Officers’ Insurance and Fiduciary Liability Insurance” beginning on page 73.

Agreements with the Surviving Corporation

As of the date of this proxy statement, no members of our management have entered into any agreement, arrangement or understanding with Buyer or any of its affiliates regarding employment with, or the right to convert into or reinvest or participate in the equity of, the surviving corporation, Buyer or any of its subsidiaries, and no members of our management currently expect to enter into any of these type of agreements, arrangements or understandings prior to the completion of the merger. Moreover, as of the date of this proxy statement, no discussions have occurred between members of our management and representatives of Buyer or its affiliates with respect to any of these type of agreements, arrangements and understandings.

However, the merger agreement provides that:

·for at least one year following the effective time of the merger, Buyer will provide, or cause the surviving corporation and any of its subsidiaries to provide, all individuals who are employees of ours or any of our subsidiaries as of the effective time of the merger, who remain in the employment of Buyer, the surviving corporation or any of their respective subsidiaries, with base salaries, bonus opportunities and employee pension and welfare benefits (other than equity-based or change in control compensation) that are substantially comparable in the aggregate to those provided by us and our subsidiaries to such individuals immediately prior to the effective time of the merger;
·Buyer will cause the surviving corporation and its subsidiaries to comply with the terms, including terms that provide for amendment or termination, of all contracts, agreements, arrangements, policies, plans and written commitments of ours or any of our subsidiaries that are in effect immediately prior to the effective time of the merger that are applicable to any current or former directors or employees of ours or any of our subsidiaries;
·Buyer will provide all individuals who are employees of ours or any of our subsidiaries as of the effective time of the merger, who remain in the employment of Buyer, the surviving corporation or any of their respective subsidiaries,
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  with full credit for their prior service with us or our subsidiary for purposes of eligibility and vesting and, in the case of vacation and severance pay only, benefit accrual under any employee benefit plan, program or arrangement established or maintained by Buyer, the surviving corporation or any of their respective subsidiaries under which those individuals may be eligible to participate from or after the effective time of the merger, except when this credit would result in a duplication of benefits or was not recognized immediately prior to the effective time of the merger for purposes of any comparable plan, program or arrangement of ours or any of our subsidiaries; 
·Buyer will cause to be waived pre-existing condition limits and at-work condition limits, to the extent those limits are waived under a comparable plan, program or arrangement of ours or any of our subsidiaries;
·Buyer will cause to be recognized deductible, co-insurance and out-of-pocket expenses paid by employees of ours or any of our subsidiaries during the calendar year in which the merger occurs, to the same extent those payments are recognized under a comparable plan, program or arrangement of ours or any of our subsidiaries; and
·Buyer will waive any waiting period or evidence of insurability requirement that would otherwise affect employees of ours or any of our subsidiaries who remain in the employment of Buyer, the surviving corporation or any of their respective subsidiaries, and their eligible dependents, from or after the effective time of the merger during the calendar year in which the merger occurs.

These provisions of the merger agreement are not enforceable by employees or others as third-party beneficiaries.

Golden Parachute Compensation

Golden Parachute Compensation Table

The following table sets forth the information required by Item 402(t) of Regulation S-K promulgated by the Securities and Exchange Commission regarding the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger, assuming:

·the price per common share was $14.05, the per share price payable under the merger agreement;
·the consummation of the merger occurred on August 14, 2012, which is the latest practicable date prior to the filing of this proxy statement; and
·each of the named executive officers was terminated by the surviving corporation without cause immediately following the consummation of the merger.

Golden Parachute Compensation

Name

Cash
($)(1)

Equity
($)(2)

Perquisites/ Benefits
($)(3)

Total
($)

Jay Higham(4) 1,745,700 1,361,136 3,106,836
Timothy P. Sheehan(5) 325,550 350,646 24,996 701,192
Daniel P. Doman(6) 425,935 496,369 29,337 951,641
Andrew Mintz(7) 235,771 235,771
Scott Soifer(8) 364,453 535,070 24,072 923,595
Claude E. White(9) 233,039 62,671 24,782 320,492
 
(1)Cash payments pursuant to employee retention agreements that are included in this column are payable only upon a “double trigger” (that is, if the named executive officer’s employment is terminated by the named executive officer for “Good Reason” (as defined in the employee retention agreement) or by the surviving corporation without cause, in either case, within 18 months after the merger). However, in the case of Mr. Higham, he would be entitled to a reduced cash payment and benefits upon such termination, irrespective of the consummation of the merger. The cash payments of the unpaid balances of named executive officers’ cash award accounts under our Long-Term Cash Award Plan that are included in this column are payable only if our board of directors terminates our Long-Term Cash Award Plan and makes a lump sum payment of the entire unpaid balance of each cash award account to the holder of that account on the date that the merger is consummated. We are prohibited under the merger agreement from making such payments in relation to the merger.
(2)As described under “The Merger Agreement—Treatment of Common Shares, Options and Restricted Stock—Options” beginning on page 61, immediately prior to the effective time of the merger, each outstanding and unexercised option to purchase common shares that was issued under our stock option
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  or long-term compensation plans, whether or not then vested or exercisable, will become fully vested and exercisable and, at the effective time of the merger, each such option that is not exercised will be cancelled and automatically converted into the right to receive an amount in cash equal to the product of (i) the total number of common shares subject to that option immediately prior to the effective time of the merger and (ii) the excess, if any, of $14.05 over the exercise price of that option, without interest and less applicable withholding tax. In addition, as described under “The Merger Agreement—Treatment of Common Shares, Options and Restricted Stock—Restricted Stock” beginning on page 61, immediately prior to the effective time of the merger, each outstanding share of restricted stock, whether or not then vested, will become free of all restrictions, fully vested and transferable and, at the effective time of the merger, will be cancelled and automatically converted into the right to receive $14.05 in cash, without interest and less applicable withholding tax. Payments for outstanding and unexercised options to purchase common shares and outstanding shares of restricted stock that are included in this column are “single trigger” (that is, payment for those outstanding and unexercised options to purchase common shares and outstanding shares of restricted stock will be made as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger)). 
(3)The values of perquisites and benefits that are included in this column will be provided only upon a “double trigger” (that is, if the named executive officer’s employment is terminated by the named executive officer for “Good Reason” (as defined in the applicable employee retention agreement) or by the surviving corporation without cause, in either case, within 18 months after the merger). The values included in this column include the value of medical insurance, dental insurance, life insurance and long-term disability insurance benefits continuation for one year for each named executive officer that is a party to an employee retention agreement, which value is equal to $9,996, $14,337, $9,072 and $9,782 for Messrs. Sheehan, Doman, Soifer and White, respectively. The value of this benefits continuation is estimated based upon costs currently paid by us for similar benefits and the current benefit plans in which the named executives and their dependents participate. In addition, pursuant to the employee retention agreements, we are required to (i) pay, or reimburse, each named executive officer that is a party to an employee retention agreement up to $15,000 of reasonable expenses incurred within two years of the date that his employment is terminated for outplacement services and (ii) pay each named executive officer that is a party to an employee retention agreement for all reasonable fees and expenses incurred by him in litigating his rights under the employee retention agreement, to the extent he is successful in that litigation. For purposes of this table, we have assumed that each of the named executive officers that is a party to an employee retention agreement would incur $15,000 of expenses for outplacement services within two years of the date that the termination occurred and would not incur any fees or expenses in connection with successful litigation relating to the employee retention agreements.
(4)For Mr. Higham, the cash column consists of (i) a lump-sum cash payment equal to $1,722,000 pursuant to Mr. Higham’s employment agreement, $861,000 of which represents his annualized base salary for 24 months and $861,000 of which represents twice the full amount of his annual bonus without regard to the established conditions precedent for the annual bonus, and (ii) a lump-sum cash payment equal to $23,700, which represents the unpaid balance of Mr. Higham’s cash award account under our Long-Term Cash Award Plan. The cash payment pursuant to Mr. Higham’s employment agreement is payable only upon a “double trigger” (that is, if Mr. Higham’s employment is terminated by Mr. Higham for “Good Reason” (as defined in Mr. Higham’s employment agreement) or by the surviving corporation without cause, in either case, within one year after the merger). For Mr. Higham, the equity column consists of (a) $523,116, which represents the value that Mr. Higham will receive for his outstanding and unexercised options to purchase common shares, and (b) $838,020, which represents the value that Mr. Higham will receive for his outstanding shares of restricted stock.
(5)For Mr. Sheehan, the cash column consists of (i) a lump-sum cash payment equal to $325,550 pursuant to Mr. Sheehan’s employee retention agreement, $240,000 of which represents his annual base salary, $70,000 of which represents the pro rata portion of the cash bonus that he would have earned for the fiscal year during which the termination occurred and $3,700 of which represents the most recent annual cash bonus paid by us to him prior to the date that the termination occurred, and (ii) a lump-sum cash payment equal to $11,850, which represents the unpaid balance of Mr. Sheehan’s cash award account under our Long-Term Cash Award Plan. For Mr. Sheehan, the equity column consists of (a) $61,368, which represents the value that Mr. Sheehan will receive for his outstanding and unexercised options to purchase common shares, and (b) $289,278, which represents the value that Mr. Sheehan will receive for his outstanding shares of restricted stock.
(6)For Mr. Doman, the cash column consists of (i) a lump-sum cash payment equal to $425,935 pursuant to Mr. Doman’s employee retention agreement, $275,000 of which represents his annual base salary, $104,271 of which represents the pro rata portion of the cash bonus that he would have earned for the fiscal year during which the termination occurred and $34,814 of which represents the most recent annual cash bonus paid by us to him prior to the date that the termination occurred, and (ii) a lump-sum cash payment equal to $11,850, which represents the unpaid balance of Mr. Doman’s cash award account under our Long-Term Cash Award Plan. For Mr. Doman, the equity column consists of (a) $229,100, which represents the value that Mr. Doman will receive for his outstanding and unexercised options to purchase common
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  shares, and (b) $267,269, which represents the value that Mr. Doman will receive for his outstanding shares of restricted stock.  
(7)For Mr. Mintz, the equity column represents the value that Mr. Mintz may receive for his outstanding shares of restricted stock. Mr. Mintz resigned effective December 31, 2011. We have sued Mr. Mintz for the return of shares of restricted stock that were forfeited due to his resignation.
(8)For Mr. Soifer, the cash column consists of (i) a lump-sum cash payment equal to $364,453 pursuant to Mr. Soifer’s employee retention agreement, $267,800 of which represents his annual base salary, $78,108 of which represents the pro rata portion of the cash bonus that he would have earned for the fiscal year during which the termination occurred and $6,695 of which represents the most recent annual cash bonus paid by us to him prior to the date that the termination occurred, and (ii) a lump-sum cash payment equal to $11,850, which represents the unpaid balance of Mr. Soifer’s cash award account under our Long-Term Cash Award Plan. For Mr. Soifer, the equity column consists of (a) $201,003, which represents the value that Mr. Soifer will receive for his outstanding and unexercised options to purchase common shares, and (b) $334,067, which represents the value that Mr. Soifer will receive for his outstanding shares of restricted stock.
(9)For Mr. White, the cash column consists of (i) a lump-sum cash payment equal to $233,039 pursuant to Mr. White’s employee retention agreement, $183,195 of which represents his annual base salary, $32,059 of which represents the pro rata portion of the cash bonus that he would have earned for the fiscal year during which the termination occurred and $13,045 of which represents the most recent annual cash bonus paid by us to him prior to the date that the termination occurred, and (ii) a lump-sum cash payment equal to $4,740, which represents the unpaid balance of Mr. White’s cash award account under our Long-Term Cash Award Plan. For Mr. White, the equity column represents the value that Mr. White will receive for his outstanding shares of restricted stock.

Any changes in the assumptions or estimates above would affect the amounts shown in the table. In addition, a portion of the equity awards represented in the equity column may vest in the ordinary course prior to the actual date that the merger is consummated, the pro rata bonuses for 2012 included in the cash column for each of the named executive officers, other than Messrs. Higham and Mintz, are expected to be higher based on the actual date that the merger is consummated and the unpaid balances of named executive officers’ cash award accounts under our Long-Term Cash Award Plan included in the cash column for each of the named executive officers, other than Mr. Mintz, may be higher based on the actual date that the merger is consummated.

Narrative to Golden Parachute Compensation Table

The merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger is described under “—Interests of Certain Persons in the Merger” beginning on page 48.

Non-binding Advisory Vote

Section 14A of the Securities Exchange Act of 1934, as amended, and Rule 14a-21(c) under that Act require that we seek approval, on a non-binding advisory basis, from the holders of common shares, of the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger. Accordingly, we are asking the holders of common shares to vote on the adoption of the following resolution at the special meeting:

RESOLVED, that the compensation that may be paid or become payable to the Company’s named executive officers in connection with the merger, as disclosed in the table entitled “Golden Parachute Compensation” on page 53 of the Company’s proxy statement dated August 20, 2012, including the associated narrative discussion in the section entitled “The Merger—Interests of Certain Persons in the Merger” beginning on page 48 of the Company’s proxy statement dated August 20, 2012, and the agreements or understandings pursuant to which such compensation may be paid or become payable, are hereby APPROVED.

The approval, on a non-binding advisory basis, of the merger-related executive compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger requires the approval of a majority of the votes properly cast on this proposal at the special meeting. If you vote “ABSTAIN” on this proposal, it will have no effect on this proposal. If you fail to submit a proxy or to vote in person at the special meeting, or if you do not provide your broker, dealer, commercial bank, trust company or other nominee with voting instructions, your common shares will not be voted on this proposal and it will have no effect on this proposal.

Holders of common shares should note that approval of the merger-related compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger is not a condition of the

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completion of the merger. Rather, the vote with respect to the merger-related compensation payable under existing agreements with us that our named executive officers will or may receive in connection with the merger is an advisory vote and will not be binding on us. Therefore, regardless of whether the holders of common shares approve such merger-related compensation, if the merger agreement is adopted and approved by the holders of common shares and the merger is completed, that merger-related compensation will still be paid to our named executive officers to the extent payable in connection with the terms of that merger-related compensation.

Our board of directors unanimously recommends that you vote “FOR” the approval, on a non-binding advisory basis, of the merger-related executive compensation that our named executive officers will or may receive in connection with the merger.

Intent to Vote in Favor of the Adoption and Approval of the Merger Agreement

Our directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their common shares in favor of the proposal to adopt and approve the merger agreement. As of July 26, 2012, the record date for the special meeting, our directors and executive officers owned, in the aggregate, 541,516 common shares, or collectively approximately 4.5% of the outstanding common shares.

In addition, pursuant to the voting agreement, IAT, Wilshire and Peter R. Kellogg have generally agreed, subject to certain exceptions and among other things, to vote all of the common shares beneficially owned by them in favor of the proposal to adopt and approve the merger agreement and the transactions contemplated thereby unless the voting agreement is terminated. As of July 26, 2012, the record date for the special meeting, IAT, Wilshire and Mr. Kellogg owned, in the aggregate, 3,221,286 common shares, or collectively approximately 26.9% of the outstanding common shares. The voting agreement is described under “—Voting Agreement” beginning on page 47.

Accounting Treatment

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion summarizes the material U.S. federal income tax consequences of the merger to holders of common shares. This discussion is based upon the provisions of the Code, final, temporary and proposed U.S. Treasury Regulations promulgated thereunder and judicial decisions and administrative rulings, all as in effect as of the date of this proxy statement and all of which are subject to change or varying interpretation, possibly with retroactive effect. Any of those changes or differing interpretations could alter the tax consequences set forth herein. We have not obtained, and will not obtain, a ruling from the U.S. Internal Revenue Service, which we refer to as the IRS, with respect to any U.S. federal tax consequences of the merger. The IRS may disagree with the discussion herein, and its determination may be upheld by a court.

This discussion assumes that holders of common shares hold their common shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not purport to address all aspects of U.S. federal income taxation that may be relevant to a holder of common shares in light of that holder’s particular circumstances, nor does it discuss any special considerations applicable to holders of common shares subject to special rules under the U.S. federal income tax laws. For example, this summary does not address the tax treatment of special classes of holders of common shares, such as financial institutions or broker-dealers, mutual funds, partnerships or other pass-through entities and their partners or members, tax-exempt organizations, insurance companies, dealers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, controlled foreign corporations, passive foreign investment companies, U.S. expatriates, holders who acquired their common shares through the exercise of options or otherwise as compensation, holders who hold their common shares as part of a hedge, straddle, constructive sale or conversion transaction or holders whose functional currency is not the U.S. dollar.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds common shares, the tax treatment of a partner as a beneficial owner of those common shares generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding common shares, you should consult your own tax advisor regarding the U.S. federal income tax consequences of the merger to you. This discussion does not address any aspect of foreign, state, local, alternative minimum, estate, gift or other tax law that may be applicable to a holder of common shares.

We intend this discussion to provide only a general summary of the material U.S. federal income tax consequences of the merger to holders of common shares. This discussion is not a complete analysis or description of all potential U.S. federal income

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tax consequences of the merger that may result to a particular holder of common shares. The U.S. federal income tax laws are complex and subject to varying interpretation.

All holders of common shares should consult their own tax advisors to determine the particular tax consequences to them (including the application and effect of any state, local or foreign income and other tax laws) of the receipt of cash in exchange for common shares pursuant to the merger.

NOTICE PURSUANT TO IRS CIRCULAR 230: NOTHING CONTAINED IN THIS SUMMARY CONCERNING ANY U.S. FEDERAL TAX ISSUE IS INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY A HOLDER OF COMMON SHARES, FOR THE PURPOSE OF AVOIDING U.S. FEDERAL TAX PENALTIES UNDER THE CODE. THIS SUMMARY WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THIS PROXY STATEMENT. EACH HOLDER OF COMMON SHARES SHOULD SEEK U.S. FEDERAL TAX ADVICE, BASED ON THAT HOLDER’S PARTICULAR CIRCUMSTANCES, FROM AN INDEPENDENT TAX ADVISOR.

For purposes of this discussion, the term U.S. holder means a beneficial owner of common shares that is, for U.S. federal income tax purposes:

·an individual citizen or resident of the United States;
·a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
·an estate the income of which is subject to U.S. federal income tax regardless of its source; or
·a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.

A non-U.S. holder is a beneficial owner (other than a partnership or any entity or arrangement treated as a partnership for U.S. federal income tax purposes) of common shares that is not a U.S. holder.

Tax Consequences of the Merger for U.S. Holders

The conversion of common shares into cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, a U.S. holder generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received pursuant to the merger (determined before the deduction of any applicable withholding taxes) and that U.S. holder’s adjusted tax basis in the common shares converted into cash pursuant to the merger. A U.S. holder’s adjusted tax basis will generally equal the price the U.S. holder paid for his, her or its common shares. The gain or loss recognized for U.S. federal income tax purposes generally will be capital gain or loss, and will be long-term capital gain or loss if the holder’s holding period for his, her or its common shares exceeds one year as of the date of the merger. Long-term capital gains for certain non-corporate U.S. holders, including individuals, are generally eligible for a reduced rate of federal income taxation. There are currently no preferential tax rates for long-term capital gains of a U.S. holder that is a corporation. The deductibility of capital losses is subject to limitations under the Code. If a U.S. holder acquired different blocks of common shares at different times or different prices, that U.S. holder must determine its tax basis, holding period and gain or loss separately with respect to each block of common shares.

A U.S. holder may, under certain circumstances, be subject to information reporting and backup withholding at the applicable rate (currently, 28%) with respect to the cash received pursuant to the merger, unless the holder properly establishes an exemption or provides its correct tax identification number and otherwise complies with the applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a payee’s U.S. federal income tax liability, if any, provided that the U.S. holder furnishes the required information to the IRS in a timely manner. All U.S. holders surrendering common shares pursuant to the merger should complete and sign, under penalty of perjury, the IRS Form W-9 included as part of the letter of transmittal and return it to the paying agent to provide the information, including the holder’s taxpayer identification number, and certifications necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to us and the paying agent). Corporations are not subject to backup withholding. U.S. holders should consult their own tax advisor regarding the information reporting and backup withholding rules in their particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding.

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Tax Consequences of the Merger for Non-U.S. Holders

Any gain recognized on the receipt of cash pursuant to the merger by a non-U.S. holder generally will not be subject to U.S. federal income tax, unless:

·the gain is effectively connected with a U.S. trade or business of the non-U.S. holder (and, if required by an applicable income tax treaty, is also attributable to a permanent establishment or, in the case of an individual, a fixed base in the United States maintained by the non-U.S. holder);
·the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the merger and certain other conditions are met; or
·we are or have been a “United States real property holding corporation,” as defined in the Code, at any time within the five-year period preceding the merger or the non-U.S. holder’s holding period, whichever period is shorter, and the non-U.S. holder owned (directly, indirectly or constructively) more than 5% of the common shares during that period.

If gain is described in the first bullet point above, unless an applicable treaty provides otherwise, the non-U.S. holder generally will be subject to U.S. federal income tax on the net gain in the same manner as a U.S. holder, provided that the non-U.S. holder completes an IRS Form W-8ECI. Non-U.S. holders that are taxed as corporations for purposes of U.S. federal income tax may also be subject to a branch profits tax at a rate of 30% (or a lower rate as specified by an applicable income tax treaty) on the portion of its effectively connected earnings and profits for the taxable year. Individual non-U.S. holders described in the second bullet point above will generally be subject to U.S. federal income tax at a flat rate of 30% (or a lower rate as specified by an applicable income tax treaty) on the gain derived, which may be offset by U.S.-source capital losses, even though the non-U.S. holders are not considered to be residents of the United States.

Generally a corporation is a U.S. real property holding corporation if the fair market value of its U.S. real property interests, as defined in the Code and applicable U.S. Treasury Regulations, equals or exceeds 50% of the aggregate fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We do not believe that we are or have been a U.S. real property holding corporation for U.S. federal income tax purposes.

A non-U.S. holder will be subject to information reporting and, in certain circumstances, backup withholding tax (currently at a rate of 28%) with respect to the cash received by the holder pursuant to the merger, unless the non-U.S. holder certifies under penalties of perjury that it is not a United States person, as defined under the Code (and the payor does not have actual knowledge or reason to know that the holder is a United States person as defined under the Code), or the holder otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against a non-U.S. holder’s U.S. federal income tax liability, if any, provided that the required information is furnished to the IRS in a timely manner. In order to avoid backup withholding, a non-U.S. holder should complete and sign an appropriate Form W-8 which may be obtained from the paying agent or at www.irs.gov.

Non-U.S. holders should consult their own tax advisors regarding the tax consequences of the merger and the potential applicability of any income tax treaty in their particular circumstances, as well as their qualification for exemption from backup withholding and the procedure for obtaining exemption.

Appraisal Rights

Holders of common shares are entitled to appraisal rights in connection with the merger. If a holder of common shares receives cash pursuant to the exercise of appraisal rights, that holder will generally recognize gain or loss, measured by the difference between the cash received and that holder’s tax basis in his, her or its common shares. Interest, if any, awarded in an appraisal proceeding by a court would be included in the holder’s income as ordinary income for U.S. federal income tax purposes. Holders of common shares who exercise appraisal rights are urged to consult their own tax advisors as to the U.S. federal income tax consequences of their exercise of appraisal rights.

THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX CONSEQUENCES RELEVANT TO HOLDERS OF COMMON SHARES. THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF COMMON SHARES. YOU SHOULD CONSULT YOUR TAX ADVISOR CONCERNING THE FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES OF THE MERGER TO YOU.

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Regulatory Approvals and Notices

Under the terms of the merger agreement, the merger cannot be consummated until the waiting period, and any extensions thereof, applicable to the consummation of the merger under the HSR Act has expired or been earlier terminated.

Under the HSR Act and the rules promulgated thereunder by the Federal Trade Commission, the merger cannot be consummated until each of the Company and Buyer files a notification and report form with the Federal Trade Commission and the Antitrust Division of the Department of Justice under the HSR Act and the applicable waiting period has expired or been terminated. These notification and report forms were filed on June 22, 2012 and the Company and Buyer received notification of early termination of the waiting period on June 29, 2012.

At any time before or after the consummation of the merger, and irrespective of the expiration or termination of the waiting period under the HSR Act, the Antitrust Division of the Department of Justice, the Federal Trade Commission or any state could take such action under the antitrust laws as it considers necessary or desirable in the public interest, including seeking to enjoin the consummation of the merger, seeking divestiture of substantial assets of the Company or Buyer or requiring the Company or Buyer to terminate existing relationships or contractual rights. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

There can be no assurance that a challenge to the merger on antitrust grounds will not be made and, if a challenge is made, there can be no assurance as to its result.

Litigation Related to the Merger

On June 21, 2012, we, the members of our board of directors, Buyer, Merger Sub and Sagard were named as defendants in a putative class action, captioned Shane Ruth v. Jay Higham et al., filed in the Supreme Court of the State of New York, County of Westchester, which we refer to as the Ruth Action. The plaintiff in the Ruth Action alleges that he is a holder of common shares and purports to bring the Ruth Action as a class action on behalf of himself and a class of holders of common shares. The complaint relating to the Ruth Action alleges that the members of our board of directors breached their fiduciary duties by, among other things, failing to take steps to maximize our value to the public holders of common shares, taking steps to avoid competitive bidding, failing to properly value us and ignoring and not protecting against conflicts of interest resulting from our directors’ own interrelationships or connection with the merger, and that we, Buyer, Merger Sub and Sagard aided and abetted the members of our board of directors’ purported breaches of fiduciary duties. The Ruth Action seeks injunctive and other equitable relief, including enjoining the merger, and damages, as well as recovery of the costs of the Ruth Action, including reasonable attorneys’ fees.

On June 26, 2012, we, the members of our board of directors, our former director Wayne R. Moon, Buyer, Merger Sub and Sagard were named as defendants in a putative class action, captioned Charles Francis v. IntegraMed America, Inc. et al., filed in the Court of Chancery of the State of Delaware, which we refer to as the Francis Action. The plaintiff in the Francis Action alleges that he is a holder of common shares and purports to bring the Francis Action as a class action on behalf of himself and a class of holders of common shares. The complaint relating to the Francis Action alleges that the members of our board of directors and Mr. Moon breached their fiduciary duties by, among other things, failing to take steps to maximize our value to the public holders of common shares, and that Buyer, Merger Sub and Sagard aided and abetted the members of our board of directors’ and Mr. Moon’s purported breaches of fiduciary duties. The Francis Action seeks injunctive and other equitable relief, including enjoining the merger, and damages, as well as recovery of the costs and disbursements of the Francis Action, including reasonable attorneys’ and experts’ fees.

On July 16, 2012, counsel for the plaintiff in the Francis Action informed us that it would be coordinating with counsel for the plaintiff in the Ruth Action to jointly prosecute the Ruth Action. On July 31, 2012, counsel for the plaintiff in the Francis Action informed the Court of Chancery of the State of Delaware that it would be coordinating with counsel for the plaintiff in the Ruth Action to jointly prosecute the Ruth Action in the Supreme Court of the State of New York, County of Westchester. Accordingly, counsel for the plaintiff in the Francis Action requested that the Francis Action be stayed in deference to and during the pendency of the Ruth Action. On August 1, 2012, the Court of Chancery of the State of Delaware entered an order staying the Francis Action.

On August 14, 2012, a memorandum of understanding was entered into relating to the settlement and dismissal with prejudice of both the Francis Action and the Ruth Action. The settlement is subject to, among other things, the completion of appropriate settlement documentation, confirmatory discovery, notice to the putative class and all necessary court approvals. As contemplated by the memorandum of understanding, we have included certain additional disclosures in this proxy statement. Although we believe that the Francis Action and the Ruth Action are without merit, we have entered into the memorandum of understanding to avoid the burden, expense, inconvenience and distraction of continued litigation and to fully and finally resolve both of those actions. The settlement and dismissal with prejudice of both the Francis Action and the Ruth Action, if completed and approved by the necessary courts, will resolve all of the claims that were or could have been brought in those actions, including all claims relating to the merger (other than claims for appraisal under Section 262 of the DGCL). The memorandum of understanding provides that the parties to the Francis Action and the Ruth Action will negotiate in good faith regarding an appropriate amount of attorneys’ fees and expenses to be paid to counsel for the plaintiffs in those actions, provided that the merger is consummated. Any agreed upon amount of attorneys’ fees and expenses will be subject to court approval. Any failure of the applicable court to approve a request for attorneys’ fees and expenses, in whole or in part, will have no impact on the effectiveness of the settlement.

Delisting and Deregistration

Following the consummation of the merger, the common shares will be delisted from the Nasdaq Global Market and deregistered under the Securities Exchange Act of 1934, as amended, and will cease to be publicly traded. Therefore, following the consummation of the merger, we would no longer file periodic reports with the Securities and Exchange Commission on account of the common shares.

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THE MERGER AGREEMENT

The following is a summary of the material terms of the merger agreement. The descriptions of the merger agreement in this section and elsewhere in this proxy statement are qualified in their entirety by reference to the full text of the merger agreement, a copy of which is attached as Annex A to this proxy statement, and which is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read the merger agreement carefully and in its entirety because it is the legal document that governs the merger. This section is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings that we make with the Securities and Exchange Commission, as described under “Where You Can Find More Information” beginning on page 89.

The merger agreement and this summary of its terms have been included to provide you with information regarding the terms of the merger agreement. Our representations, warranties, covenants and agreements contained in the merger agreement have been made solely for the benefit of Buyer and Merger Sub. In addition, these representations, warranties, covenants and agreements (i) have been made only for purposes of the merger agreement, (ii) have been qualified by (a) matters disclosed in certain of our Securities and Exchange Commission filings and (b) confidential disclosures made to Buyer and Merger Sub in the disclosure letter delivered in connection with the merger agreement, (iii) are subject to materiality qualifications contained in the merger agreement which may differ from what may be viewed as material by investors, (iv) were made only as of the date of the merger agreement or such other date as is specified in the merger agreement and (v) have been included in the merger agreement for the purpose of allocating risk between the parties rather than establishing matters as fact. Accordingly, the merger agreement is attached as Annex A to this proxy statement only to provide you with information regarding the terms of the merger agreement, and not to provide you with any other factual information regarding us or our business. You should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of us or any of our subsidiaries or affiliates. In addition, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in our public disclosures.

Certain Effects of the Merger

The merger agreement provides that, at the effective time of the merger, Merger Sub will be merged with and into us and, as a result of the merger, the separate corporate existence of Merger Sub will cease and we will continue as the surviving corporation and a wholly-owned subsidiary of Buyer.

After the effective time of the merger, the directors of Merger Sub immediately prior to the effective time of the merger will be the initial directors of the surviving corporation, and our officers immediately prior to the effective time of the merger will be the initial officers of the surviving corporation, in each case until their respective successors have been duly elected or appointed and qualified or until their respective deaths, resignations or removals in accordance with the certificate of incorporation and bylaws of the surviving corporation.

At the effective time of the merger, our certificate of incorporation will be amended to read in its entirety as set forth in Exhibit B to the merger agreement and, as so amended, will be the certificate of incorporation of the surviving corporation, until duly amended in accordance with its terms and applicable law. At the effective time of the merger, our bylaws will be amended to read in their entirety as the bylaws of Merger Sub as in effect immediately prior to the effective time of the merger and, as so amended, will be the bylaws of the surviving corporation until amended in accordance with their terms and applicable law.

Following the consummation of the merger, the common shares will be delisted from the Nasdaq Global Market and deregistered under the Securities Exchange Act of 1934, as amended, and will cease to be publicly traded.

Closing and Effective Time of the Merger

The closing of the merger will take place on the third business day following the satisfaction or waiver in accordance with the merger agreement of all of the conditions to the closing of the merger, as described under “—Conditions to the Merger” beginning on page 74 (other than the conditions that by their nature are to be satisfied at the closing of the merger, but subject to the fulfillment or waiver of those conditions), or at such other date as we and Buyer may agree in writing.

Assuming timely satisfaction of necessary closing conditions, including the adoption of the merger agreement by the holders of a majority of the outstanding common shares, we currently anticipate that the merger will be consummated by the end of September 2012; however, we cannot predict the exact timing of the merger. The effective time of the merger will occur at the time when a

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certificate of merger has been duly filed with the office of the Secretary of State of the State of Delaware (or at such later time as may be agreed by us and Buyer in writing and specified in the certificate of merger).

Treatment of Common Shares, Options and Restricted Stock

Common Shares

At the effective time of the merger, each common share that is issued and outstanding immediately prior to the effective time of the merger, other than issued and outstanding common shares (i) that are owned by Buyer, Merger Sub or any other direct or indirect wholly-owned subsidiary of Buyer, (ii) that are owned by us as treasury stock or any of our direct or indirect wholly-owned subsidiaries, (iii) that are also shares of restricted stock or (iv) that are owned by stockholders that have perfected and not withdrawn a demand for, or lost their right to, appraisal pursuant to Section 262 of the DGCL with respect to those common shares, will be automatically converted into the right to receive $14.05 per common share in cash, without interest and less applicable withholding tax. Each common share held by us, Buyer, Merger Sub or any other direct or indirect wholly-owned subsidiary of Buyer or ours will be cancelled without payment of any consideration therefor and will cease to exist. Common shares held by stockholders who have properly exercised their appraisal rights for these common shares in accordance with Section 262 of the DGCL will be entitled to payment of the appraised value of these common shares in accordance with Section 262 of the DGCL. If any holder of common shares effectively withdraws its demand for, or fails to perfect or otherwise loses his, her, or its right to, appraisal under Section 262 of the DGCL with respect to any common shares, then the right of that holder of common shares to receive the payment of the appraised value of those common shares will cease and those common shares will be deemed to have been automatically converted into, as of the effective time of the merger, and will represent only, the right to receive $14.05 per common share, without interest and less applicable withholding taxes. See “Appraisal Rights” beginning on page 84.

Options

Immediately prior to the effective time of the merger, each outstanding and unexercised option to purchase common shares that was issued under our stock option or long-term compensation plans, whether or not then vested or exercisable, will become fully vested and exercisable and, at the effective time of the merger, each such option that is not exercised will be cancelled and automatically converted into the right to receive, as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger), an amount in cash equal to the product of (i) the total number of common shares subject to that option immediately prior to the effective time of the merger and (ii) the excess, if any, of $14.05 over the exercise price of that option, without interest and less applicable withholding tax. In the event that the exercise price per common share of any option to purchase common shares that was issued under our stock option or long-term compensation plans is equal to or greater than $14.05, at the effective time of the merger, that option will be cancelled without any consideration being payable in respect thereof.

Restricted Stock

Immediately prior to the effective time of the merger, each outstanding share of restricted stock, whether or not then vested, will become free of all restrictions, fully vested and transferable and, at the effective time of the merger, will be cancelled and automatically converted into the right to receive, as soon as reasonably practicable after the effective time of the merger (but in any event no later than three business days after the effective time of the merger), $14.05 in cash, without interest and less applicable withholding tax.

Exchange and Payment Procedures

Under the merger agreement, the paying agent will be American Stock Transfer & Trust Company or another bank or trust company mutually acceptable to us and Buyer. Immediately prior to, or at, the effective time of the merger, Buyer will deposit, or will cause to be deposited, with the paying agent a cash amount in immediately available funds sufficient to make payment of the aggregate consideration to be paid pursuant to the merger agreement to the holders of common shares (other than common shares that are also shares of restricted stock or that are owned by stockholders that have perfected and not withdrawn a demand for, or lost their right to, appraisal pursuant to Section 262 of the DGCL). Promptly after the effective time of the merger, but not later than three business days after the effective time of the merger, Buyer will cause the paying agent to mail to each holder of record of common shares (other than common shares that are also shares of restricted stock or that are owned by stockholders that have perfected and not withdrawn a demand for, or lost their right to, appraisal pursuant to Section 262 of the DGCL) a letter of transmittal and instructions for use in effecting the surrender of the certificates formerly representing common shares (or affidavits of loss in lieu thereof).

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You should not return your stock certificates with the enclosed proxy card and you should not forward your stock certificates to the paying agent without a letter of transmittal.

If you are the holder of record of common shares, you will not be entitled to receive the per common share merger consideration until you deliver a duly completed and executed letter of transmittal to the paying agent. If your common shares are certificated, you must also surrender your stock certificate or certificates to the paying agent and, if your common shares are not certificated, the paying agent must also receive an “agent’s message” or such other evidence of transfer of your common shares as the paying agent may reasonably request. If ownership of your common shares is not in our transfer records, the per common share merger consideration will only be delivered if the applicable letter of transmittal is accompanied by all documents reasonably required by us and the paying agent to evidence and effect the underlying transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable. If you are a beneficial owner of common shares that are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you will receive the per common share merger consideration in accordance with the procedures of your broker, dealer, commercial bank, trust company or other nominee.

No interest will be paid or accrued on the cash payable upon the surrender of any stock certificate or any common share that is not certificated. Buyer, the surviving corporation and the paying agent will be entitled to deduct and withhold any applicable taxes from the merger consideration. To the extent that any amount is so withheld, that withheld amount will be treated as having been paid to the person or entity in respect of whom it is withheld.

From and after the effective time of the merger, our stock transfer books will be closed and thereafter there will be no further registration of transfers of common shares that were outstanding immediately prior to the effective time of the merger. If, after the effective time of the merger, a stock certificate is presented to the surviving corporation, Buyer or the paying agent for transfer, it will be cancelled and exchanged for the per common share merger consideration.

After the date that is one year after the effective time of the merger, Buyer may require the paying agent to deliver to it any remaining undistributed funds that have not been disbursed to holders of common shares. After that date, holders of common shares immediately prior to the effective time of the merger will be entitled to look only to the surviving corporation for payment of the merger consideration. The surviving corporation, Buyer and the paying agent will not be liable to any holder of common shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

If you have lost a stock certificate, or if it has been stolen or destroyed, then, before you will be entitled to receive the per common share merger consideration, you will have to make an affidavit of the loss, theft or destruction and, if required by Buyer, post a bond in such reasonable amount as Buyer may direct, as indemnity against any claim that may be made against the surviving corporation with respect to that stock certificate. These procedures will be described in the letter of transmittal that you will receive, which you should read carefully and in its entirety.

Financing Covenant; Cooperation

Buyer and Merger Sub will each use its reasonable best efforts to take (or cause to be taken) all actions, and do, or cause to be done, all things necessary, proper or advisable to obtain the equity financing on the terms and conditions described in the equity commitment letter, including:

·maintaining in effect the equity commitment letter;
·using reasonable best efforts to ensure the accuracy of all representations and warranties of Buyer or Merger Sub in the equity commitment letter;
·complying with all covenants and agreements of Buyer or Merger Sub in the equity commitment letter;
·satisfying, on a timely basis, all conditions applicable to Buyer or Merger Sub in the equity commitment letter that are within their control;
·consummating the equity financing in accordance with the equity commitment letter, subject to the terms and conditions of the equity commitment letter, at or prior to the closing of the merger, and, in any event, prior to November 15, 2012; and
·enforcing the obligations of Sagard and its investment affiliates, and the rights of Buyer and Merger Sub, under the equity commitment letter.

Each of Buyer and Merger Sub will not, without our prior written consent, amend, alter or waive, or agree to amend, alter or waive, any term of the equity commitment letter, if such amendment, alteration or waiver would (i) reduce the aggregate amount of the equity financing unless the amount of the debt financing is increased by a corresponding amount or (ii) impose new

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or additional conditions, or otherwise amend, modify or expand any conditions, to the receipt of the equity financing in a manner that would reasonably be expected to (a) prevent, delay or impair the closing of the merger, (b) make the funding of the equity financing (or satisfaction of the conditions to obtaining the equity financing) less likely to occur or (c) adversely impact the ability of Buyer and the Merger Sub to enforce its rights against other parties to the equity commitment letter or adversely impact their ability to consummate the transactions contemplated by the merger agreement or the likelihood of consummation of the transactions contemplated by the merger agreement.

Neither Buyer nor Merger Sub is required to seek or obtain other equity financing and Sagard is not required to provide equity financing in an amount that exceeds the amount set forth in the equity commitment letter.

Further, subject to the terms and conditions of the merger agreement, Buyer will use its reasonable best efforts to take (or cause to be taken) all actions or do, or cause to be done, all things necessary proper or advisable to obtain the debt financing on the terms and conditions described in the debt commitment letter. Buyer will not, without our prior written consent, permit any amendment or modification to be made to, or any waiver of any provisions or remedy under, the debt commitment letter, if such amendment, modification or waiver would (i) reduce the aggregate amount of the debt financing, including by changing the amount of fees to be paid or original issue discount of the debt financing, unless the equity financing is increased by a corresponding amount, or (ii) impose new or additional conditions, or otherwise amend, modify or expand any conditions, to the receipt of the debt financing in a manner that would reasonably be expected to (a) prevent, delay or impair the closing of the merger, (b) make the funding of the debt financing (or satisfaction of the conditions to obtaining the debt financing) less likely to occur or (c) adversely impact the ability of Sagard, Buyer or Merger Sub to enforce its rights against the other parties to the debt commitment letter or the definitive agreements contemplated by the debt commitment letter, the ability of Buyer or Merger Sub to consummate the transactions contemplated by the merger agreement or the likelihood of consummation of the transactions contemplated by the merger agreement. Buyer and Merger Sub may amend or modify the debt commitment letter to add lenders, lead arrangers, bookrunners, syndication agents or similar entities that have not executed the debt commitment letter (if the addition of those additional parties, individually or in the aggregate, would not prevent, delay or impair the availability of the debt financing or the consummation of the transactions contemplated by the merger agreement) and enter into additional financing commitment letters with respect to the debt financing of the transactions contemplated by the merger agreement, so long as those commitment letters either do not contain any new or additional conditions other than those set forth in the debt commitment letter or that would not adversely affect the ability of Buyer or Merger Sub to consummate the transactions contemplated by the merger agreement or the likelihood of consummation of the transactions contemplated by the merger agreement.

Each of Buyer and Merger Sub will use its reasonable best efforts:

·to maintain in effect the debt commitment letter until the transactions contemplated by the merger agreement are consummated;
·to ensure the accuracy of all representations and warranties of Sagard and Buyer in the debt commitment letter;
·to comply with all covenants of Buyer in the debt commitment letter;
·to satisfy, on a timely basis, all conditions applicable to Sagard and Buyer set forth in the debt commitment letter (including by consummating the equity financing pursuant to the terms of the equity commitment letter) that are within its control;
·to enter into definitive agreements with respect to the debt financing on the terms and conditions contemplated by the debt commitment letter; and
·to consummate the debt financing at or prior to the closing of the merger (and, in any event, prior to November 15, 2012).

If all conditions precedent in the debt commitment letter, other than the availability of funding of the equity financing contemplated under the equity commitment letter, have been satisfied, or upon funding will be satisfied, each of Buyer and Merger Sub is required to use its reasonable best efforts to cause the lender parties to the debt commitment letter to fund on the closing date of the merger the debt financing required to consummate the transactions contemplated by the merger agreement and otherwise enforce its rights under the debt commitment letter, including through litigation pursued in good faith. Buyer has agreed to keep us informed, on a reasonably current basis, in reasonable detail, with respect to the debt financing and to provide us with prompt notice if Buyer becomes aware of any material adverse change with respect to the availability of the debt financing.

Obtaining financing is not a condition to the closing of the merger, such that, if any financing (or any alternative financing) has not been obtained, Buyer and Merger Sub will continue to be obligated, subject to the satisfaction or waiver of the conditions to the closing of the merger specified in the merger agreement, to consummate the merger. However, we may

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specifically enforce Buyer’s and Merger Sub’s obligations to consummate the merger only if, among other things, the debt has been funded in accordance with the terms of the merger agreement or will be funded in accordance with the terms of the debt commitment letter at the closing of the merger if the equity financing is funded at the closing of the merger. See “—Remedies” beginning on page 79 for a further discussion of our remedies if Buyer and Merger Sub fail to consummate the merger under certain circumstances.

If all or any portion of the debt financing becomes unavailable on the terms and conditions contemplated in the debt commitment letter, or the debt commitment letter is terminated or modified in a manner materially adverse to Buyer or Merger Sub for any reason, each of Buyer and Merger Sub will use its reasonable best efforts (i) to arrange to promptly obtain debt financing from alternative sources in an amount that is sufficient, when added to the portion of the equity financing and debt financing that is available and together with any cash or cash equivalents held by us as of the effective time of the merger, to pay in cash all amounts required to be paid by Buyer, Merger Sub and the surviving corporation in connection with the transactions contemplated by the merger agreement and (ii) to promptly obtain a new debt financing commitment letter and a new definitive agreement that provides for debt financing on terms not materially less favorable, in the aggregate, to Buyer and Merger Sub, taken as a whole, and in an amount that is sufficient, when added to the portion of the equity financing and debt financing that is available and together with any cash or cash equivalents held by us as of the effective time of the merger, to pay in cash all amounts required to be paid by Buyer, Merger Sub and the surviving corporation in connection with the transactions contemplated by the merger agreement.

We have agreed to use our reasonable best efforts to provide Buyer and Merger Sub with the cooperation that is customary in connection with the financing of the merger and is reasonably requested by Buyer, but (i) no liability or obligation, including any liability or obligation to pay any commitment or other similar fee, of ours or any of our subsidiaries under any certificate, document or instrument will be effective until the effective time of the merger and neither us nor any of our subsidiaries will be required to take any action under any certificate, document or instrument that is not contingent upon the closing of the merger, including the entry into any agreement that is effective before the effective time of the merger, or that would be effective prior to the effective time of the merger, (ii) we are not required to provide cooperation to the extent it would interfere unreasonably with our business or operations or the business or operations of any of our subsidiaries and (iii) neither us nor any of our subsidiaries will be required to issue any offering or information document. Buyer has agreed to, promptly upon our request, reimburse us for all reasonable out-of-pocket costs, including reasonable attorneys’ fees, that we have incurred in connection with the cooperation contemplated by the merger agreement.

Representations and Warranties

The representations and warranties of ours contained in the merger agreement have been made solely for the benefit of Buyer and Merger Sub. In addition, these representations and warranties (i) have been made only for purposes of the merger agreement, (ii) have been qualified by (a) matters disclosed in certain of our Securities and Exchange Commission filings and (b) confidential disclosures made to Buyer and Merger Sub in the disclosure letter delivered in connection with the merger agreement, (iii) are subject to materiality qualifications contained in the merger agreement which may differ from what may be viewed as material by investors, (iv) were made only as of the date of the merger agreement or such other date as is specified in the merger agreement and (v) have been included in the merger agreement for the purpose of allocating risk between the parties rather than establishing matters as fact. The representations and warranties made by us to Buyer and Merger Sub in the merger agreement include representations and warranties relating to, among other things:

·our, our subsidiaries’ and, to our knowledge, our fertility centers’ due organization, existence, good standing and qualification to do business;
·our capitalization;
·the absence of encumbrances on our ownership of the capital stock of our subsidiaries;
·our corporate power and authority to execute, deliver and perform, and to consummate the transactions contemplated by, the merger agreement, and the enforceability of the merger agreement against us;
·the approval and declaration of advisability of the merger agreement and the transactions contemplated by the merger agreement by our board of directors, the recommendation of adoption of the merger agreement by our board of directors to the holders of common shares, and the receipt of an opinion of the Company’s financial advisor;
·required governmental notices, reports, filings, consents, registrations, approvals and authorizations;
·the absence of violations or breaches of our and any of our subsidiaries’ governing documents, applicable laws or certain agreements as a result of our entering into and performing our obligations under the merger agreement;
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·our Securities and Exchange Commission filings since January 1, 2011 and the financial statements included in these filings;
·our disclosure controls and procedures and internal controls over financial reporting;
·the conduct of our, our subsidiaries’ and our fertility centers’ businesses in accordance with the ordinary course, consistent with past practice, since December 31, 2011;
·the absence of a Company material adverse effect (as described below) since December 31, 2011;
·the absence of legal proceedings, investigations or governmental orders against us, our subsidiaries and our fertility centers;
·the absence of certain undisclosed liabilities;
·employee benefits matters;
·compliance with laws and the receipt of required permits, licenses, certifications, accreditations, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a governmental entity and compliance with the terms thereof;
·the inapplicability of any anti-takeover law to the merger;
·environmental matters;
·tax matters;
·certain employment and labor matters;
·intellectual property;
·insurance policies and our captive insurance company;
·real property;
·material contracts and the absence of any default under any material contract;
·this proxy statement;
·the absence of certain related party transactions;
·the absence of any undisclosed broker’s or finder’s fee;
·certain regulatory matters;
·our and our subsidiaries’ indebtedness; and
·our and our subsidiaries’ security interests in certain assets of the fertility centers and vein clinics to which we or one of our subsidiaries provides management services.

Certain of our representations and warranties include representations and warranties (in certain cases, to our knowledge) with respect to fertility centers and vein clinics to which we or one of our subsidiaries provides management services. Many of our representations and warranties are qualified by, among other things, exceptions relating to materiality or a Company material adverse effect. For the purposes of the merger agreement, a Company material adverse effect means a change, event or occurrence that has, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on our and our subsidiaries’ financial condition, business, operations, assets or results of operations, taken as a whole. However, none of the following, and no changes, events or occurrences, individually or in the aggregate, to the extent arising out of, resulting from or attributable to any of the following, will constitute or be taken into account in determining whether a Company material adverse effect has occurred or may, would or could occur:

·changes generally affecting the economy, credit, securities, currency or other financial markets or political conditions in the United States or elsewhere in the world, including changes in interest or exchange rates or any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market;
·changes that are the result of acts of war (whether or not declared), armed hostilities, sabotage or terrorism, or any escalation or worsening of any of those acts of war (whether or not declared), armed hostilities, sabotage or terrorism;
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·epidemics, pandemics, earthquakes, tsunamis, hurricanes, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions or other force majeure events;
·changes that are the result of factors generally affecting the industries in which we and our subsidiaries operate or in which our and our subsidiaries’ products or services are used or distributed;
·any loss of, or adverse change in, our or our subsidiaries’ relationship with any of their respective customers, employees, physician practices to which they provide management services (including physicians employed by those physician practices), financing sources, distributors or suppliers caused by the pendency or the announcement of the transactions contemplated by the merger agreement;
·other than for purposes of certain representations and warranties, changes or effects from the entry into, announcement or performance of the merger agreement or the consummation of the transactions contemplated by the merger agreement, including any litigation arising from allegations of any breach of fiduciary duty or violation of law relating to the merger agreement or the transactions contemplated by the merger agreement, or our compliance with the terms of the merger agreement;
·changes or prospective changes in any law or U.S. GAAP or interpretation or enforcement thereof after the date of the merger agreement;
·our failure to meet any internal or public projections or forecasts or estimates of revenues, earnings or other financial performance or results of operations for any period (but the exception in this clause will not prevent or otherwise affect a determination that any change, event or occurrence underlying that failure has resulted in, or contributed to, a Company material adverse effect);
·any actions taken or failure to take action, in each case, to which Buyer has approved, consented to or requested in writing, or the failure to take any action that is prohibited by the merger agreement;
·any change resulting or arising from the identity of, or any facts or circumstances relating to, Buyer, Merger Sub or their respective affiliates;
·any decline in the price or trading volume of the common shares on the Nasdaq Global Market (but the exception in this clause will not prevent or otherwise affect a determination that any change, event or occurrence underlying that decline has resulted in, or contributed to, a Company material adverse effect); or
·certain actions taken in order to obtain the expiration of the waiting period under the HSR Act or the consents from governmental antitrust entities that are necessary in order to consummate the transactions contemplated by the merger agreement.

Any change, event or occurrence referred to in the first, second, third, fourth and seventh bullet points above may be taken into account in determining whether there has been a Company material adverse effect solely if and to the extent that change, event or occurrence has a materially disproportionate effect on us and our subsidiaries, taken as a whole, as compared to other companies operating in the industries in which we and our subsidiaries operate.

The representations and warranties of Buyer and Merger Sub contained in the merger agreement have been made solely for our benefit. In addition, these representations and warranties (i) have been made only for purposes of the merger agreement, (ii) are subject to certain qualifications and exceptions that are contained in the merger agreement, (iii) were made only as of the date of the merger agreement or such other date as is specified in the merger agreement and (iv) have been included in the merger agreement for the purpose of allocating risk between the parties rather than establishing matters as fact. The representations and warranties made by Buyer and Merger Sub to us in the merger agreement include representations and warranties relating to, among other things:

·their due organization, existence, good standing and qualification to do business;
·their corporate power and authority to execute, deliver and perform, and to consummate the transactions contemplated by, the merger agreement, and the enforceability of the merger agreement against them;
·required governmental notices, reports, filings, consents, registrations, approvals and authorizations;
·the absence of violations or breaches of their governing documents, applicable laws or certain agreements as a result of their entering into and performing their obligations under the merger agreement;
·the absence of legal proceedings, investigations or governmental orders against Buyer and Merger Sub;
·the validity and enforceability of the equity commitment letter and the debt commitment letter;
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·the absence of any breach or default under the equity commitment letter or the debt commitment letter;
·the absence of conditions precedent or other contingencies relating to the funding of the equity financing and the debt financing, other than as set forth in the equity commitment letter and the debt commitment letter;
·sufficiency of funds;
·the operations of Buyer and Merger Sub;
·the absence of any broker’s or finder’s fee;
·the solvency of Buyer and the surviving corporation as of the effective time of the merger and immediately following the consummation of the merger;
·the enforceability of the limited guaranty against Sagard and the absence of any default on the part of Sagard under the limited guaranty;
·the inapplicability of the “interested stockholder” provisions of Section 203 of the DGCL to Buyer or Merger Sub;
·the ownership of common shares by Buyer, Merger Sub and their respective affiliates and associates;
·the absence of certain agreements, arrangements and understandings, including certain employee agreements, arrangements and understandings;
·information supplied for inclusion in this proxy statement;

None of the representations and warranties made by us, Buyer or Merger Sub that are contained in the merger agreement or any instrument delivered pursuant to the merger agreement will survive the effective time of the merger.

Interim Operations

Under the merger agreement, we have agreed that, subject to certain exceptions that are set forth in the merger agreement and the disclosure letter delivered in connection with the merger agreement, between the date of the merger agreement and the effective time of the merger, unless Buyer otherwise approves in writing (which approval may not be unreasonably withheld, delayed or conditioned), we will, and will cause our subsidiaries (including vein clinics to which we or one of our subsidiaries provides services) to, conduct their respective businesses in the ordinary course and use their respective commercially reasonable efforts to preserve their respective business organizations intact and maintain existing relations and goodwill with governmental entities, customers, suppliers, employees and business associates. Under the merger agreement, we have also agreed that, subject to certain exceptions that are set forth in the merger agreement and the disclosure letter delivered in connection with the merger agreement, between the date of the merger agreement and the effective time of the merger, unless Buyer otherwise approves in writing (which approval may not be unreasonably withheld, delayed or conditioned, except in the cases of the first, second, third, fourth, fifth, sixth, eighth, tenth, eleventh and thirteenth bullet points below, clauses (i) and (ii) of the twelfth bullet point below and the eighteenth bullet point below (solely to the extent relating to one of the preceding bullet points or clauses), as to each of which Buyer will have the right to approve in its sole discretion), the Company will not and will not permit any of the Company’s subsidiaries to:

·amend or otherwise change its governing documents;
·merge or consolidate with any other corporation, partnership, limited liability company, joint venture, association or other business organization or restructure, reorganize or completely or partially liquidate;
·issue, sell, pledge, dispose of, grant, confer, award, transfer or encumber any shares of our or our subsidiaries’ capital, or securities convertible or exchangeable into or exercisable for any shares of our or our subsidiaries’ capital stock, or any options, warrants or other rights of any kind to acquire any shares of our or our subsidiaries’ capital stock or securities convertible or exchangeable into or exercisable for any shares of our or our subsidiaries’ capital stock;
·declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock;
·reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
·incur any indebtedness for borrowed money or guarantee any indebtedness for borrowed money of another individual, corporation, partnership, limited liability company, joint venture, estate, trust, association, organization,
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  governmental entity or other entity, or issue or sell any debt securities or warrants or other rights to acquire any debt security of ours or any of our subsidiaries; 
·make any material changes in accounting methods, principles or practices;
·(i) increase the compensation or other benefits payable or to become payable to directors or executive officers of ours or any of our subsidiaries, (ii) grant or materially increase any retention, severance or termination pay to, or enter into or materially amend any retention agreement, severance agreement or termination agreement with any director or executive officer of ours or any of our subsidiaries, (iii) enter into or materially amend any employment agreement with any executive officer of ours or any of our subsidiaries or (iv) establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries;
·(i) enter into any new, or amend, terminate or renew any existing, bonus or change in control or severance agreement with or for the benefit of any officers, directors or employees of ours or our subsidiaries, (ii) establish, adopt, enter into, amend, renew or terminate any benefit plan of ours or any of our subsidiaries, (iii) make any deposits or contributions of cash or other property to, or take any other action to fund or in any other way secure the payment of compensation or benefits under, any benefit plan of ours or any of our subsidiaries or agreements subject to any benefit plan of ours or any of our subsidiaries or any other plan, agreement, contract or arrangement of ours or (v) hire or terminate, other than for cause, any employee;
·grant, confer or award options, convertible securities, restricted stock units or other rights to acquire any or our or our subsidiaries’ capital stock or take any action to cause to be exercisable any otherwise unexercisable options to purchase common shares that were issued under our stock option or long-term compensation plans;
·acquire, including by merger, consolidation, business combination, acquisition of stock or assets or otherwise, any corporation, partnership, limited liability company, joint venture, association or other business organization or any division thereof, or all or substantially all of the assets of any corporation, partnership, limited liability company, joint venture, association or other business organization, in connection with acquisitions or investments;
·(i) modify or amend in any material respect any material contract with a term longer than one year which cannot be terminated without material penalty to us or our applicable subsidiary upon notice of 60 calendar days or less, (ii) waive, release or assign any material rights or claims under any material contract or (iii) enter into any material contract;
·sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any lien, or otherwise dispose of, any material portion of our or our subsidiaries’ properties or assets;
·file any amendment to any tax return or make any election relating to taxes, change any election relating to taxes already made, adopt or change any accounting method relating to taxes, enter into any closing agreement relating to taxes, settle any claim or assessment relating to taxes or consent to any claim or assessment relating to taxes or any waiver of the statute of limitations for any of those claims or assessments if any of the foregoing would reasonably be expected to materially increase our and our subsidiaries’ tax liability or materially reduce a tax attribute of ours and our subsidiaries;
·settle, compromise, discharge or agree to settle any litigation, investigation, arbitration or proceeding other than those that do not involve the payment by us or our subsidiaries of monetary damages in excess of $500,000 in the aggregate, after taking into account any applicable reserves and insurance coverage, and which do not involve any material injunctive or other material non-monetary relief or impose restrictions on the business or operations of us or our subsidiaries;
·make any capital expenditures, other than capital expenditures made in accordance with our annual budget and capital expenditure plan and capital expenditures made in the ordinary course of business consistent with past practice in an aggregate amount that does not exceed $1.0 million;
·solely to the extent that we or one of our subsidiaries has the right, but not the obligation, whether by contract or otherwise, to consent to any of the foregoing actions of a fertility center or vein clinic to which it provides managements services, grant that consent; or
·authorize or enter into any written agreement or otherwise make any commitment to do any of the foregoing actions.

Under the merger agreement, Buyer and Merger Sub have agreed that, except as otherwise expressly contemplated or expressly required by the merger agreement, between the date of the merger agreement and the effective time of the merger, unless we otherwise approve in writing, Buyer and Merger Sub will not enter into any agreement, arrangement or understanding that

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would reasonably be expected to materially prevent, delay or impair the consummation of the transactions contemplated by the merger agreement, or propose, announce an intention, enter into any agreement, arrangement or understanding or otherwise make a commitment to take any such action.

No Solicitation

As of the date of the merger agreement, we generally must, and generally must use our reasonable best efforts to instruct and cause our representatives to, cease and cause to be terminated any discussions or negotiations with any person or entity that may be ongoing with respect to an acquisition proposal.

From the date of the merger agreement until the effective time of the merger, except as set forth below, we may not, and we will use our reasonable best efforts to instruct and cause our representatives not to:

·initiate, solicit or knowingly encourage the making of any acquisition proposal;
·engage in or otherwise participate in any discussions or negotiations with any person or entity with respect to any acquisition proposals;
·provide any non-public information concerning us or any of our subsidiaries to any person or entity with the intent to initiate, solicit or knowingly encourage the making of any acquisition proposals; or
·enter into any alternative acquisition agreement.

However, at any time following the date of the merger agreement and prior to obtaining the vote of the holders of common shares required for the consummation of the merger, if we or any of our representatives receives an acquisition proposal from any person or entity that did not result from a material breach of our obligations that are described in this section, we and our representatives may contact that person or entity to clarify the terms and conditions of the acquisition proposal and (i) we and our representatives may provide access to non-public information concerning us and our subsidiaries to that person or entity pursuant to a confidentiality agreement that meets certain criteria set forth in the merger agreement (so long as we promptly make that material non-public information available to Buyer and Merger Sub, to the extent that it has not previously been provided to Buyer and Merger Sub), (ii) we and our representatives may engage, enter into or participate in any discussions or negotiations with that person or entity with respect to the acquisition proposal, if and only to the extent that, prior to taking any action described above, our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) that the acquisition proposal either constitutes a superior proposal or could reasonably be expected to lead to a superior proposal and (iii) after complying with the relevant provisions of the merger agreement, our board of directors may authorize, adopt, recommend or otherwise declare advisable such acquisition proposal if, and only to the extent that, prior to taking any action referenced to in this clause (iii) our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) that the acquisition proposal is a superior proposal.

Generally, our board of directors may not:

·withhold, withdraw, modify or amend, in a manner adverse to Buyer, its recommendation that the holders of common shares adopt the merger agreement;
·authorize, adopt, approve, recommend or otherwise declare advisable any acquisition proposal; or
·cause or permit us to enter into an alternative acquisition agreement.

However, notwithstanding the above, but subject to the following two paragraphs, prior to obtaining the vote of the holders of common shares required for the consummation of the merger, our board of directors may (i) withhold, modify or amend its recommendation that the holders of common shares adopt the merger agreement or (ii) authorize, adopt, approve, recommend or otherwise declare advisable any acquisition proposal made after the date of the merger agreement that our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) is a superior proposal, in each case, if our board of directors determines in good faith (after consultation with our outside legal counsel) that failure to do so could be inconsistent with its fiduciary obligations under applicable law, and may also terminate the merger agreement to enter into an alternative acquisition agreement with respect to a superior proposal. In this proxy statement, we refer to any action in clause (i) or (ii) above as a change of recommendation.

We may not effect a change of recommendation, in connection with a superior proposal or otherwise, prior to taking the following actions:

·we must notify Buyer in writing, at least 72 hours in advance, that we intend to effect a change of recommendation;
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·upon Buyer’s request, we will discuss with Buyer the facts and circumstances giving rise to the change of recommendation to facilitate Buyer’s evaluation of whether to improve the terms and conditions of the merger agreement, the equity commitment letter, the debt commitment letter or the limited guaranty as would permit our board of directors not to effect a change of recommendation;
·if Buyer delivers to us a written, binding and irrevocable offer capable of being accepted by us to alter the terms of the merger agreement, the equity commitment letter, the debt commitment letter or the limited guaranty during the seventy-two hour notice period, our board of directors must have determined in good faith, after considering the terms of Buyer’s offer and (i) if the change of recommendation is in connection with a superior proposal, after consultation with our outside legal counsel and financial advisor, that the superior proposal would continue to constitute a superior proposal or (ii) after consultation with our outside legal counsel, that failure to effect a change of recommendation could be inconsistent with our fiduciary obligations under applicable law; and
·with respect to an intended change of recommendation in connection with a superior proposal, in the event of any material change to the material terms of the superior proposal, we will, in each case, provide Buyer with an additional notice and, unless we provide the additional notice to Buyer within 48 hours of providing Buyer with the original notice, the notice period will start again, except that the notice period will be 24 hours.

In addition, we may not enter into an alternative agreement with respect to a superior proposal prior to taking the following actions:

·we must notify Buyer in writing, at least 72 hours in advance, that we intend to enter into the alternative acquisition agreement, and that written notice must include a copy of the superior proposal and any related financing commitments, to facilitate Buyer’s evaluation of whether to improve the terms and conditions of the merger agreement, the equity commitment letter, the debt commitment letter or the limited guaranty in a manner that would cause the superior proposal to no longer constitute a superior proposal;
·if Buyer delivers to us a written, binding and irrevocable offer capable of being accepted by us to alter the terms of the merger agreement, the equity commitment letter, the debt commitment letter or the limited guaranty during the seventy-two hour notice period, our board of directors must have determined in good faith (after consultation with our outside legal counsel and financial advisor), after considering the terms of Buyer’s offer, that the superior proposal would continue to constitute a superior proposal; and
·in the event of any material change to the material terms of the superior proposal, we will, in each case, provide Buyer with an additional notice and, unless we provide the additional notice to Buyer within 48 hours of providing Buyer with the original notice, the notice period will start again, except that the notice period will be 24 hours.

Neither we nor our board of directors is prohibited from taking and disclosing to the holders of common shares a position with respect to a tender offer or exchange offer by a third party pursuant to applicable law or making any other disclosure with respect to an acquisition proposal required by applicable law.

We will notify Buyer promptly if (i) an acquisition proposal is received by us or any of our representatives, which notice will include the material terms and conditions of the acquisition proposal (including, if applicable, providing Buyer with a copy of the acquisition proposal and any proposed agreements relating thereto), (ii) any non-public information is requested from us or any of our representatives by any person or entity that has made an acquisition proposal, (iii) we or our representatives engage, enter into or participate in any discussions or negotiations with any person or entity that has made an acquisition proposal, other than to clarify the terms and conditions of the acquisition proposal (and will keep Buyer reasonably informed on a reasonably current basis of any material discussions or negotiations with that person or entity), or (iv) an amendment to a previously disclosed acquisition proposal is received by us or any of our representatives, which notice will include the material terms and conditions of the amendment (including, if applicable, providing Buyer with a copy of the amendment and any revised agreements relating thereto).

An acquisition proposal means any bona fide offer or proposal (other than an offer or proposal by Buyer or Merger Sub) to engage in an acquisition transaction.

An acquisition transaction means any transaction or series of transactions (other than the transactions contemplated by the merger agreement) involving:

·the purchase or other acquisition from us, directly or indirectly, of more than 20% of the common shares outstanding as of the consummation of the purchase or other acquisition, or any tender offer or exchange offer that, if
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  consummated in accordance with its terms, would result in the beneficial ownership of more than 20% of the common shares outstanding as of the consummation of the tender or exchange offer; 
·a merger, consolidation, business combination or other similar transaction involving us, pursuant to which our stockholders immediately preceding the merger, consolidation, business combination or transaction own less than 80% of the voting equity interests in the surviving or resulting entity of the merger, consolidation, business combination or transaction; or
·a sale, transfer, acquisition or disposition, directly or indirectly, of more than 20% of our and our subsidiaries’ consolidated assets, taken as a whole, measured by the fair market value thereof.

An alternative acquisition agreement means any letter of intent, acquisition agreement, merger agreement or other similar definitive agreement, other than confidentiality agreements meeting certain criteria set forth in the merger agreement, relating to an acquisition transaction.

A superior proposal means a bona fide written acquisition proposal for an acquisition transaction involving:

·the purchase or other acquisition from us, directly or indirectly, of more than 50% of the common shares outstanding as of the consummation of the purchase or other acquisition, or any tender offer or exchange offer that, if consummated in accordance with its terms, would result in the beneficial ownership of more than 50% of the common shares outstanding as of the consummation of the tender or exchange offer;
·a merger, consolidation, business combination or other similar transaction involving us, pursuant to which our stockholders immediately preceding the merger, consolidation, business combination or transaction own less than 50% of the voting equity interests in the surviving or resulting entity of the merger, consolidation, business combination or transaction; or
·a sale, transfer, acquisition or disposition, directly or indirectly, of more than 50% of our and our subsidiaries’ consolidated assets, taken as a whole, measured by the fair market value thereof,

that our board of directors determines in good faith (after consultation with our outside legal counsel and financial advisor) (i) is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the acquisition proposal (including the financing thereof and any conditions thereto) and the identity of the person or entity making the acquisition proposal and (ii) if consummated, would result in a transaction more favorable to our stockholders (in their capacity as stockholders) from a financial point of view than the transactions contemplated by the merger agreement, taking into account all of the terms and conditions of the acquisition proposal and the merger agreement, including any written proposal by Buyer and Merger Sub to amend the terms of the merger agreement and any break-up fees, expense reimbursement or similar provisions.

Stockholder Meeting

Unless the merger agreement has been terminated in accordance with its terms, we are required to, as promptly as reasonably practicable, take all reasonable action necessary to convene and hold a meeting of the holders of common shares to consider and vote upon the adoption of the merger agreement. However, we may postpone or adjourn the meeting of the holders of common shares (i) with the consent of Buyer in its sole discretion, (ii) for the absence of a quorum, (iii) to the extent necessary to ensure that any supplement or amendment to this proxy statement required under applicable law is provided to the holders of common shares within a reasonable period of time in advance of the meeting of the holders of common shares, (iv) to allow reasonable additional time to solicit additional proxies, (v) to the extent required by law, (vi) if we have provided a written notice to Buyer that we intend to make a change of recommendation in connection with a superior proposal and the notice period set forth above has not yet expired or (vii) if we have provided a written notice to Buyer that we intend to enter into an alternative acquisition agreement with respect to a superior proposal and the notice period set forth above has not yet expired. Subject to a change of recommendation pursuant to the provisions described under “—No Solicitation” beginning on page 69, our board of directors is required to recommend the adoption of the merger agreement by the holders of common shares, to include that recommendation in this proxy statement and to take all reasonable lawful action to solicit the adoption of the merger agreement by the holders of common shares.

Filings; Other Actions; Notification

The Company and Buyer will cooperate with each other and use, and will cause their respective affiliates to use, their reasonable best efforts to take or cause to be taken all actions, and do and cause to be done all things, reasonably necessary, proper or advisable to consummate the merger and the other transactions contemplated by the merger agreement as soon as reasonably practicable, including effecting the regulatory filings, described under “The Merger—Regulatory Approvals and Notices

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beginning on page 59, and obtaining, as promptly as reasonably practicable, all actions, non-actions, waivers, consents, registrations, approvals, permits and authorizations that may be required, necessary or advisable to be obtained from any third party or any governmental entity in order to consummate the merger or any of the other transactions contemplated by the merger agreement.

The Company and Buyer have agreed, subject to certain exceptions and applicable law:

·to furnish the other, upon request, with all information concerning itself, its affiliates, directors officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of Buyer, the Company or their respective affiliates in connection with the merger and the transactions contemplated by the merger agreement;
·keep the other apprised of the status of matters relating to the completion of the transactions contemplated by the merger agreement; and
·not to permit any of their affiliates, officers or other representatives to participate in any meeting with any governmental entity in respect of any filing, investigation or other inquiry with respect to the merger or any of the other transactions contemplated by the merger agreement unless it consults with the other party in advance and, to the extent permitted by that governmental entity, gives the other party the opportunity to attend and participate.

In addition, subject to the terms and conditions of the merger agreement:

·we and Buyer have agreed to promptly provide to each and every governmental entity with jurisdiction over the enforcement of applicable antitrust laws all non-privileged information and documents that they request or that are necessary, proper or advisable to permit the consummation of the transactions contemplated by the merger agreement;
·Buyer has agreed to use its reasonable best efforts to avoid the entry or enactment of any permanent, preliminary or temporary injunction or other order, decree, decision, determination, judgment, investigation or law that would delay, restrain, prevent, enjoin or otherwise prohibit the consummation of the transactions contemplated by the merger agreement, including unconditionally committing to:
oselling, divesting or otherwise conveying particular assets, categories, portions or parts of assets of businesses of Buyer, Sagard, its affiliate Sagard Capital Partners Management Corp., any fund or investment entity to which Sagard Capital Partners Management Corp. provides management services or any entity controlled by Buyer, Sagard, Sagard Capital Partners Management Corp. or any fund or investment entity to which Sagard Capital Partners Management Corp. provides management services;
oagreeing to sell, divest or otherwise convey any particular asset, category, portion or part of an asset or business of ours or any of our subsidiaries contemporaneously with or subsequent to the effective time of the merger;
opermitting us to sell, divest or otherwise convey any of the particular assets, categories, portions or parts of assets or businesses of ours or any of our subsidiaries prior to the effective time of the merger; and
olicensing, holding separate or entering into similar arrangements with respect to its respective assets or our assets or conduct of business arrangements or terminating any and all existing relationships and contractual rights and obligations,

in each case, as a condition to obtaining any and all expirations of waiting periods under the HSR Act or consents from any governmental entity with jurisdiction over the enforcement of applicable antitrust laws necessary to consummate the transactions contemplated by the merger agreement; and

·each of the Company and Buyer have agreed, that if any injunction, decision, order, judgment, determination, decree or law is entered, issued or enacted, or becomes reasonably foreseeable to be entered, issued or enacted, in any proceeding, review or inquiry of any kind that would make the consummation of the merger in accordance with the merger agreement unlawful or that would delay, restrain, prevent, enjoin or otherwise prohibit consummation of the merger or the other transactions contemplated by the merger agreement, to use its reasonable best efforts to take any and all steps necessary to resist, vacate, modify, reverse, suspend, prevent, eliminate, avoid or remove that actual, anticipated or threatened injunction, decision, order, judgment, determination, decree or enactment so as to permit the consummation of the merger on a schedule as close as possible to that contemplated by the merger agreement.

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Employee Matters

For at least one year following the effective time of the merger, Buyer has agreed to provide, or to cause the surviving corporation and its subsidiaries to provide, all individuals who are employees of ours or any of our subsidiaries as of the effective time of the merger, who remain in the employment of Buyer, the surviving corporation or any of their respective subsidiaries, with base salaries, bonus opportunities and employee pension and welfare benefits (other than equity-based or change in control compensation) that are substantially comparable in the aggregate to those provided by us and our subsidiaries to such individuals immediately prior to the effective time of the merger. Buyer has also agreed to cause the surviving corporation and its subsidiaries to comply with the terms, including terms that provide for amendment or termination, of all contracts, agreements, arrangements, policies, plans and written commitments of ours or any of our subsidiaries that are in effect immediately prior to the effective time of the merger that are applicable to any current or former directors or employees of ours or any of our subsidiaries.

Buyer has agreed to provide all individuals who are employees of ours or any of our subsidiaries as of the effective time of the merger, who remain in the employment of Buyer, the surviving corporation or any of their respective subsidiaries, with full credit for their prior service with us or our subsidiary for purposes of eligibility and vesting and, in the case of vacation and severance pay only, benefit accrual under any employee benefit plan, program or arrangement established or maintained by Buyer, the surviving corporation or any of their respective subsidiaries under which those individuals may be eligible to participate from or after the effective time of the merger, except when this credit would result in a duplication of benefits or was not recognized immediately prior to the effective time of the merger for purposes of any comparable plan, program or arrangement of ours or any of our subsidiaries. In addition, Buyer has agreed to cause to be waived pre-existing condition limits and at-work condition limits, to the extent those limits are waived under a comparable plan, program or arrangement of ours or any of our subsidiaries, to cause to be recognized deductible, co-insurance and out-of-pocket expenses paid by employees of ours or any of our subsidiaries during the calendar year in which the merger occurs, to the same extent those payments are recognized under a comparable plan, program or arrangement of ours or any of our subsidiaries, and to waive any waiting period or evidence of insurability requirement that would otherwise affect employees of ours or any of our subsidiaries who remain in the employment of Buyer, the surviving corporation or any of their respective subsidiaries, and their eligible dependents, from or after the effective time of the merger during the calendar year in which the merger occurs.

Indemnification; Directors’ and Officers’ Insurance and Fiduciary Liability Insurance

For a period of six years after the effective time of the merger, the surviving corporation will, and Buyer will cause the surviving corporation to, indemnify and hold harmless, to the fullest extent permitted by law, each person who was as of the date of the merger agreement, has been at any time prior to the date of the merger agreement or becomes prior to the effective time of the merger a director or officer of ours or any of our subsidiaries against any fees, costs or expenses, including reasonable attorneys’ fees and disbursements, judgments, fines, losses, claims, damages, liabilities or amounts paid in settlement incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal administrative or investigative, arising out of or related to that person’s service as a director, officer, employee or agent of ours or any of our subsidiaries or services performed by that person at our or any of our subsidiaries’ request, whether asserted or claimed prior to, at or after the effective time of the merger. Each such person will also be entitled to advancement of expenses as incurred, to the fullest extent permitted by law, subject to that person’s execution of an undertaking to repay any expenses so advanced if it is ultimately determined that such person was not entitled to be indemnified.

For a period of six years after the effective time of the merger, the certificate of incorporation and bylaws of the surviving corporation and the governing documents of each of its subsidiaries must contain, and Buyer will cause the certificate of incorporation and bylaws of the surviving corporation and the governing documents of each of its subsidiaries to contain, provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of directors and officers than were set forth in our certificate of incorporation or bylaws or the governing documents of our applicable subsidiary on the date of the merger agreement.

We will use our commercially reasonable efforts prior to the effective time of the merger to purchase a six year prepaid “tail policy” with terms, conditions, retentions and limits of liability that are at least as favorable to the beneficiaries thereof as provided in our directors’ and officers’ insurance policies and fiduciary liability insurance policies, as in effect on the date of the merger agreement, with respect to matters existing or occurring at or prior to the effective time of the merger. However, we may not purchase that “tail policy” without Buyer’s written consent, which will not be unreasonably withheld, conditioned or delayed, and that “tail policy” must not require the payment of an aggregate annual premium in excess of 300% of the aggregate annual premium most recently paid by us prior to the date of the merger agreement to maintain our directors’ and officers’ insurance policies and fiduciary liability insurance policies. If the aggregate annual premium of that “tail policy” exceeds that amount, we will use our commercially reasonable efforts prior to the effective time of the merger to purchase a prepaid “tail policy” with the greatest coverage available for a cost not exceeding that amount.

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If we fail to obtain a six year prepaid “tail policy” prior to the effective time of the merger, the surviving corporation will, and Buyer will cause the surviving corporation to, maintain in effect for at least six years from the effective time of the merger, at no expense to the beneficiaries thereof, our directors’ and officers’ insurance policies and fiduciary liability insurance policies, with terms, conditions, retentions and limits of liability that are at least as favorable to the beneficiaries thereof as provided in our directors’ and officers’ insurance policies and fiduciary liability insurance policies as of the date of the merger agreement, with respect to matters existing or occurring at or prior to the effective time of the merger. However, neither Buyer nor the surviving corporation will be required to pay an aggregate annual premium for those directors’ and officers’ insurance policies and fiduciary liability insurance policies in excess of 300% of the aggregate annual premium most recently paid by us prior to the date of the merger agreement to maintain our directors’ and officers’ insurance policies and fiduciary liability insurance policies. If the aggregate annual premium of those directors’ and officers’ insurance policies and fiduciary liability insurance policies exceeds that amount, the surviving corporation will, and Buyer will cause the surviving corporation to, obtain directors’ and officers’ insurance policies and fiduciary liability insurance policies with the greatest coverage available for a cost not exceeding that amount.

Our present and former directors and officers will have the right to enforce the provisions of the merger agreement relating to their indemnification and are express third-party beneficiaries of the merger agreement for this purpose.

Conditions to the Merger

The respective obligations of the Company, Buyer and Merger Sub to effect the merger are subject to the satisfaction or waiver (where permissible under applicable law) of the following conditions:

·the merger agreement must have been duly adopted by the holders of a majority of the outstanding common shares;
·any waiting period, and extensions thereof, applicable to the consummation of the merger under the HSR Act relating to the merger must have expired or been earlier terminated (notification of which was received on June 29, 2012) and all required approvals and clearances by any other applicable governmental antitrust entity applicable to the merger under applicable antitrust law must have been obtained and any applicable waiting period, or extension thereof, thereunder must have expired or been earlier terminated; and
·no governmental entity of competent jurisdiction will have enacted, issued, promulgated, enforced or entered any statute, law, common law, ordinance, code, rule, order, judgment, injunction, writ, decree, directive, regulation, guideline or interpretation having the force of law, permit or franchise that is in effect and has the effect of making the merger illegal or otherwise prohibiting consummation of the merger.

The obligations of Buyer and Merger Sub to effect the merger are also subject to the satisfaction or waiver (where permissible under applicable law) of the following additional conditions:

·our representations and warranties regarding the absence of a Company material adverse effect since December 31, 2011 and our and our subsidiaries’ security interests in certain assets of the fertility centers and vein clinics to which we or one of our subsidiaries provides management services must be true and correct in all respects at and as of the effective time of the merger;
·our representations and warranties regarding our capitalization and the absence of encumbrances on our ownership of the capital stock of our subsidiaries must be true and correct in all respects, except for inaccuracies that are de minimis relative to those representations and warranties taken as a whole, at and as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date);
·our representations and warranties regarding the absence of any undisclosed broker’s or finder’s fee and our and our subsidiaries’ indebtedness, without giving effect to any materiality or Company material adverse effect qualifications, must be true and correct in all material respects at and as of the effective time of the merger with the same effect as though made as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date);
·our representations and warranties (other than those referenced in the preceding bullet points), without giving effect to any materiality or Company material adverse effect qualifications, must be true and correct as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date), except for failures to be true and correct that would not have, individually or in the aggregate, a Company material adverse effect;
·we must have performed in all material respects the obligations required to be performed by us under the merger agreement prior to the closing date of the merger;
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·a Company material adverse effect must not have occurred since the date of the merger agreement;
·we must have delivered to Buyer a certificate, dated as of the closing date of the merger, signed on our behalf by a duly authorized officer, certifying as to the satisfaction of the conditions set forth in the preceding six bullet points; and
·if the closing of the merger has not occurred by August 15, 2012, we must have filed a Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012.

Our obligation to effect the merger is also subject to the satisfaction or waiver of the following additional conditions:

·each of the representations and warranties of Buyer and Merger Sub set forth in the merger agreement, without giving any effect to any materiality qualifications, must be true and correct at and as of the effective time of the merger as though made as of the effective time of the merger (except to the extent expressly made as of an earlier date, in which case as of that date), except for failures to be true and correct that would not, individually or in the aggregate, prevent, materially delay or materially impede the ability of Buyer or Merger Sub to consummate the merger and the other transactions contemplated by the merger agreement;
·each of Buyer and Merger Sub must have performed in all material respects all of its obligations required to be performed by it under the merger agreement on or prior to the closing date of the merger; and
·Buyer must have delivered to us a certificate, dated as of the closing date of the merger, signed on behalf of Buyer by a duly authorized officer of Buyer, certifying as to the satisfaction of the conditions set forth in the preceding two bullet points.

Termination

The Company and Buyer may, by mutual written agreement, terminate the merger agreement and abandon the merger at any time prior to the effective time of the merger.

The merger agreement may be terminated, and the merger may be abandoned, at any time prior to the effective time of the merger by either the Company or Buyer, with written notice from the terminating party to the other party, if:

·the merger has not been consummated by November 15, 2012, provided that the termination rights described in this bullet point will not be available to any party whose actions or omissions have been the primary cause of, or the primary factor that resulted in, either the failure to satisfy the conditions to the obligations of the terminating party to consummate the merger prior to that date or the failure of the effective time of the merger to have occurred prior to that date or the Company (if the Company seeks to terminate the merger agreement on or after August 15, 2012), to the extent that the Company has not filed a Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012;
·the meeting of the holders of common shares to consider and vote upon the adoption of the merger agreement has been held and completed, or postponed or adjourned, and the adoption of the merger agreement by the holders of common shares was not obtained at that meeting or at any adjournment or postponement thereof; or
·a governmental entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any statute, law, common law, ordinance, code, rule, order, judgment, injunction, writ, decree, directive, regulation, guideline or interpretation having the force of law, permit or franchise permanently restraining, enjoining or otherwise prohibiting the consummation of the merger that has become final and non-appealable, provided that the termination rights described in this bullet point will not be available to any party whose actions or omissions have been the primary cause of, or the primary factor that resulted in, that statute, law, common law, ordinance, code, rule, order, judgment, injunction, writ, decree, directive, regulation, guideline, interpretation having the force of law, permit or franchise being issued.

The merger agreement may be terminated, and the merger may be abandoned, by us, with written notice to Buyer:

·at any time prior to the time that the merger agreement is duly adopted by the holders of a majority of the outstanding common shares, if (i) our board of directors authorizes us, subject to complying with the terms set forth under “—No Solicitation” beginning on page 69, to enter into an alternative acquisition agreement with respect to a superior proposal, (ii) immediately prior to or substantially concurrently with the termination of the merger agreement, we enter into an alternative acquisition agreement with respect to that superior proposal and (iii) we, immediately prior to or substantially concurrently with the termination of the merger agreement, pay to Buyer or its designees any
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  termination fee that is required to be paid by us pursuant to the merger agreement, as described under “—Termination Fees and Reimbursement of Expenses” beginning on page 77; 
·at any time prior to the effective time of the merger, if there has been a breach of any representation, warranty, covenant or agreement made by Buyer or Merger Sub in the merger agreement, or any representation or warranty made by Buyer or Merger Sub in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following Buyer’s receipt of written notice of the breach from us (or, if earlier, three business days prior to November 15, 2012), provided that the termination right described in this bullet point will not be available to us if we are in material breach of the merger agreement so as to cause the closing conditions not to be satisfied;
·at any time prior to the time that the merger agreement is duly adopted by the holders of a majority of the outstanding common shares, if our board of directors has effected a change of recommendation in response to, or as a result of, an event, development, occurrence or change in circumstances or facts occurring or arising after the date of the merger agreement (other than in connection with an acquisition proposal) and we, immediately prior to or substantially concurrently with the termination of the merger agreement, pay to Buyer or its designees any termination fee that is required to be paid by us pursuant to the merger agreement, as described under “—Termination Fees and Reimbursement of Expenses” beginning on page 77, provided that the termination right described in this bullet point will not be available to us if we are in material breach of the merger agreement so as to cause the closing conditions not to be satisfied;
·at any time prior to the effective time of the merger, if all of the closing conditions have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the closing of the merger or have not been satisfied as a result of Buyer or Merger Sub’s breach of, or failure to perform any of their respective covenants or agreements contained in, the merger agreement) and we have, in good faith, indicated, in writing, to Buyer, at least one business day prior to the date that closing of the merger should have occurred under the merger agreement that we are ready, willing and able to consummate the merger and Buyer fails to close the transactions contemplated by the merger agreement, including the merger, within three business days following the date that the closing of the merger should have occurred under the merger agreement; or
·at any time prior to the effective time of the merger, if (i) the debt commitment letter has been terminated and (ii) a satisfactory replacement debt commitment letter has not been obtained by the 90th day after the termination of the debt commitment letter, and is not obtained prior to our termination of the merger agreement pursuant to the termination right described in this bullet point, provided that the termination right described in this bullet point will not be available to us if, at the time of the potential termination of the merger agreement, (a) we have not filed a Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (if we are seeking to terminate the merger agreement on or after August 15, 2012), (b) we are in material breach of the merger agreement so as to cause the closing conditions not to be satisfied (except if the occurrence of the events described in (i) and (ii) of this bullet point are the primary cause of the material breach), (c) a Company material adverse effect has occurred since the date of the merger agreement (except if the occurrence of the events described in (i) and (ii) of this bullet point are the primary cause of the Company material adverse effect) or (d) Buyer and Merger Sub would be entitled to terminate the merger agreement pursuant to the termination rights that are described in the first two paragraphs of this “—Termination” section (except a right to terminate the merger agreement because the merger has not been consummated by November 15, 2012 that arises solely due to the occurrence of the events described in (i) and (ii) of this bullet point).

The merger agreement may be terminated, and the merger may be abandoned, at any time prior to the effective time of the merger, by Buyer, with written notice to us, if:

·our board of directors has withheld, withdrawn, modified or amended its recommendation that the holders of common shares adopt the merger agreement;
·our board of directors has authorized, adopted, approved, recommended or otherwise declared advisable any acquisition proposal made after the date of the merger agreement that our board of directors determined in good faith (after consultation with our outside legal counsel and financial advisor) is a superior proposal;
·a tender or exchange offer for common shares that constitutes an acquisition proposal (whether or not a superior proposal) has been commenced by a person or entity unaffiliated with Buyer and, within 10 business days after the public announcement of the acquisition proposal, we have not recommended that the holders of common shares reject the acquisition proposal and not tender any common shares into the tender or exchange offer; or
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·there has been a breach of any representation, warranty, covenant or agreement made by us in the merger agreement, or any representation or warranty made by us in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following our receipt of written notice of the breach from Buyer (or, if earlier, three business days prior to November 15, 2012), provided that the termination right described in this bullet point will not be available to Buyer if it or Merger Sub is in material breach of the merger agreement so as to cause the closing conditions not to be satisfied.

The termination of the merger agreement will not relieve any party to the merger agreement for liability for fraud in connection with the merger agreement.

Termination Fees and Reimbursement of Expenses

We must pay Buyer a termination fee of $5,086,087 if the merger agreement is terminated:

·by either Buyer or us because (i) the merger agreement has not been duly adopted by the holders of a majority of the outstanding common shares, and the merger has not been consummated, by November 15, 2012 or (ii) the meeting of the holders of common shares to consider and vote upon the adoption of the merger agreement has been held and completed, or postponed or adjourned, and the adoption of the merger agreement by the holders of common shares was not obtained at that meeting or at any adjournment or postponement thereof, so long as, (a) after the date of the merger agreement but prior to the termination of the merger agreement, a bona fide written acquisition proposal has been publicly announced or otherwise publicly communicated to the holders of common shares and not subsequently withdrawn at least three days prior to the termination of the merger agreement and (b) within nine months following the termination of the merger agreement either an acquisition proposal is consummated or we have entered into a definitive agreement with respect to an acquisition transaction that is subsequently consummated, provided that for purposes of (b) of this bullet point, all references to “20%” and “80%” in the definition of acquisition transaction will be deemed to be references to “50%”;
·by Buyer because:
oour board of directors has withheld, withdrawn, modified or amended its recommendation that the holders of common shares adopt the merger agreement;
oour board of directors has authorized, adopted, approved, recommended or otherwise declared advisable any acquisition proposal made after the date of the merger agreement that our board of directors determined in good faith (after consultation with our outside legal counsel and financial advisor) is a superior proposal;
oa tender or exchange offer for common shares that constitutes an acquisition proposal (whether or not a superior proposal) has been commenced by a person or entity unaffiliated with Buyer and, within 10 business days after the public announcement of the acquisition proposal, we have not recommended that the holders of common shares reject the acquisition proposal and not tender any common shares into the tender or exchange offer; or
othere has been a breach of any representation, warranty, covenant or agreement made by us in the merger agreement, or any representation or warranty made by us in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following our receipt of written notice of the breach from Buyer (or, if earlier, three business days prior to November 15, 2012); or
·by us because:
oour board of directors authorizes us, subject to complying with the terms set forth under “—No Solicitation” beginning on page 69, to enter into an alternative acquisition agreement with respect to a superior proposal and, immediately prior to or substantially concurrently with the termination of the merger agreement, we enter into an alternative acquisition agreement with respect to that superior proposal; or
oour board of directors has effected a change of recommendation in response to, or as a result of, an event, development, occurrence or change in circumstances or facts occurring or arising after the date of the merger agreement (other than in connection with an acquisition proposal).

In addition to the payment of the termination fee described above, in the event that the merger agreement is terminated by either Buyer or us because (i) the merger agreement has not been duly adopted by the holders of a majority of the outstanding common shares, and the merger has not been consummated, by November 15, 2012 or (ii) the meeting of the holders of common shares to consider and vote upon the adoption of the merger agreement has been held and completed, or postponed or adjourned,

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and the adoption of the merger agreement by the holders of common shares was not obtained at that meeting or at any adjournment or postponement thereof, we must, no later than 3 business bays after receiving a demand from Buyer, reimburse Buyer for the out-of-pocket costs and expenses incurred by or on behalf of Buyer or Merger Sub in connection with the transactions contemplated by the merger agreement, up to a maximum amount equal to $2,119,203. If we are required to reimburse any of Buyer’s out-of-pocket costs and expenses, the amount paid by us to reimburse those out-of-pocket costs and expenses will be credited against any termination fee that we must pay to Buyer.

Buyer must pay us a termination fee of $8,476,812 if the merger agreement is terminated:

·by us because:
othere has been a breach of any representation, warranty, covenant or agreement made by Buyer or Merger Sub in the merger agreement, or any representation or warranty made by Buyer or Merger Sub in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following Buyer’s receipt of written notice of the breach from us (or, if earlier, three business days prior to November 15, 2012);
oall of the closing conditions have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the closing of the merger or have not been satisfied as a result of Buyer or Merger Sub’s breach of, or failure to perform any of their respective covenants or agreements contained in, the merger agreement) and we have, in good faith, indicated, in writing, to Buyer, at least one business day prior to the date that closing of the merger should have occurred under the merger agreement that we are ready, willing and able to consummate the merger and Buyer fails to close the transactions contemplated by the merger agreement, including the merger, within three business days following the date that the closing of the merger should have occurred under the merger agreement; or
o(i) the debt commitment letter has been terminated and (ii) a satisfactory replacement debt commitment letter has not been obtained by the 90th day after the termination of the debt commitment letter, and is not obtained prior to the termination of the merger agreement; or
·by either Buyer or us because the merger has not been consummated by November 15, 2012, so long as, at the time of the termination of the merger agreement, the merger agreement could have been terminated by us because (i) there has been a breach of any representation, warranty, covenant or agreement made by Buyer or Merger Sub in the merger agreement, or any representation or warranty made by Buyer or Merger Sub in the merger agreement has become untrue after the date of the merger agreement, which breach would cause the closing conditions not to be satisfied and is not curable or, if curable, is not cured within 30 days following Buyer’s receipt of written notice of the breach from us (or, if earlier, three business days prior to November 15, 2012), or (ii) all of the closing conditions have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the closing of the merger or have not been satisfied as a result of Buyer or Merger Sub’s breach of, or failure to perform any of their respective covenants or agreements contained in, the merger agreement) and we have, in good faith, indicated, in writing, to Buyer, at least one business day prior to the date that closing of the merger should have occurred under the merger agreement that we are ready, willing and able to consummate the merger and Buyer fails to close the transactions contemplated by the merger agreement, including the merger, within three business days following the date that the closing of the merger should have occurred under the merger agreement.

Sagard has agreed, pursuant the limited guaranty, to guarantee the obligation of Buyer to pay us the termination fee. See “The Merger—Limited Guaranty” beginning on page 46.

Expenses

The merger agreement provides that, in general, each of parties will pay its own costs and expenses incurred in connection with the transactions contemplated by the merger agreement and the financing thereof. Nevertheless, (i) we and Buyer have agreed to each pay 50% of the costs and expenses, other than accountants’ and attorneys’ fees, incurred with respect to the printing, filing and mailing of this proxy statement, including any related preliminary materials, (ii) Buyer and Merger Sub have agreed to reimburse us, our subsidiaries and our representatives for any and all costs and expenses that we or they incur in connection with the arrangement of the equity financing and the debt financing, (iii) in the event that the merger agreement is terminated in certain specified circumstances set forth under “—Termination Fees and Reimbursement of Expenses” beginning on page 77, we have agreed to reimburse Buyer for the out-of-pocket costs and expenses incurred by or on behalf of Buyer or Merger Sub in connection with the transactions contemplated by the merger agreement, up to a maximum amount equal to $2,119,203, which out-of-pocket costs and expenses will be credited against any termination fee that we must pay to Buyer, and (iv) we and

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Buyer have agreed to reimburse each other for the reasonable costs and expenses, including reasonable attorneys’ fees, incurred in connection with successful suits to enforce the termination fee provisions of the merger agreement.

Amendment

In general, the merger agreement may be amended at any time by a written instrument signed by each of the Company, Buyer and Merger Sub. However, after the merger agreement has been duly adopted by the holders of common shares, no amendment will be made to the merger agreement that requires the approval of the holders of common shares under applicable law without that approval.

Remedies

In the event that the merger agreement is terminated and we receive the termination fee from Buyer, or Sagard pursuant to the limited guaranty, the receipt of the termination fee, together with any reimbursement and indemnification obligations of Buyer in connection with the costs and expenses incurred by us in connection with the arrangement of the financing of the merger or successful suits to enforce the termination fee provisions of the merger agreement, will be our, our subsidiaries’ and the holders of common shares’ sole and exclusive remedy against Buyer, Merger Sub, Sagard, their debt financing sources, their respective affiliates and certain of their respective related parties for any loss or damage suffered or incurred by us or any other person or entity in connection with the merger agreement, the transactions contemplated by the merger agreement or any matter forming the basis for the termination of the merger agreement. Upon payment of these amounts, none of the Company, any of its affiliates or any other person or entity will be entitled to bring or maintain any other claim, action or proceeding against Buyer, Merger Sub, Sagard, their debt financing sources, their respective affiliates or certain of their respective related parties arising out of the merger agreement, the equity commitment letter, the debt commitment letter, the limited guaranty or any of the transactions contemplated by the merger agreement, or any matters forming the basis for the termination of the merger agreement.

In the event that the merger agreement is terminated and Buyer receives the termination fee from us, the receipt of the termination fee, together with any reimbursement and indemnification obligations of ours in connection with successful suits to enforce the termination fee provisions of the merger agreement, will be the sole and exclusive remedy of Buyer, Merger Sub and their respective affiliates against us, our subsidiaries, the holders of common shares, our and their respective affiliates and certain of our and their respective related parties for any loss or damage suffered or incurred by Buyer, Merger Sub or any other person or entity in connection with the merger agreement, the transactions contemplated by the merger agreement or any matter forming the basis for the termination of the merger agreement. Upon payment of these amounts, none of Buyer, Merger Sub, any of their respective affiliates or any other person or entity will be entitled to bring or maintain any other claim, action or proceeding against us, our subsidiaries, the holders of common shares, our and their respective affiliates or certain of our and their respective related parties arising out of the merger agreement, any of the transactions contemplated by the merger agreement or any matters forming the basis for the termination of the merger agreement.

Under no circumstances will we be entitled to monetary damages in excess of the amount of the termination fee payable by Buyer, except that, in addition to the termination fee payable by Buyer, we will also be entitled to reimbursement and indemnification for the costs and expenses that we incur in connection with the arrangement of the financing of the merger and successful suits to enforce the termination fee provisions of the merger agreement. Similarly, under no circumstances will Buyer be entitled to monetary damages in excess of the amount of the termination fee payable by us, except that, in addition to the termination fee payable by us, Buyer will also be entitled to reimbursement and indemnification for the costs and expenses that it incurs in connection with successful suits to enforce the termination fee provisions of the merger agreement. In addition, although both the Company and Buyer may pursue both a grant of specific performance and the payment of the termination fee by the other party, neither the Company nor Buyer will be entitled to receive both a grant of specific performance and all or any portion of the termination fee payable by the other party.

The parties to the merger agreement are entitled to an injunction or injunctions to prevent breaches of the merger agreement and to specifically enforce the terms and provisions of the merger agreement, in addition to any other remedy to which they are entitled at law or in equity. However, we are only entitled to specifically enforce the obligations of Buyer and Merger Sub to cause the equity financing contemplated by the equity commitment letter to be funded to fund the merger if (i) all conditions to the obligations of Buyer and Merger Sub to effect the merger, described under “—Conditions to the Merger” beginning on page 74, have been satisfied (other than the delivery of items to be delivered at the closing of the merger and other than satisfaction of those conditions that by their nature are to be satisfied at the closing of the merger) at the time when the closing of the merger would have occurred but for the failure of the equity financing contemplated by the equity commitment letter to be funded, (ii) the debt financing contemplated by the debt commitment letter (or alternative financing) has been funded or will be funded at the closing of the merger if the equity financing contemplated by the equity commitment letter is funded at the closing of the merger and (iii) we have irrevocably confirmed that if specific performance is granted and the equity financing contemplated by the equity

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commitment letter and the debt financing contemplated by the debt commitment letter (or the alternative financing) is funded, then we will take all actions required of us to cause the closing of the merger to occur.

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MARKET PRICE AND DIVIDEND INFORMATION

The common shares are currently traded on the Nasdaq Global Market under the trading symbol “INMD.” The following table sets forth the high and low closing sales prices for the common shares for the periods indicated, as reported on the Nasdaq Global Market:

    High ($)   Low ($)
2010        
        First Quarter   8.98   7.24
        Second Quarter   9.08   7.97
        Third Quarter   9.75   7.63
        Fourth Quarter   9.18   8.00
2011        
        First Quarter   10.72   8.60
        Second Quarter   10.30   9.18
        Third Quarter   9.94   7.73
        Fourth Quarter   8.24   7.25
2012        
        First Quarter   12.35   7.96
        Second Quarter   13.85   10.93
        Third Quarter (through August 14, 2012)   14.02   13.85
         

On June 8, 2012, the last full trading day prior to the public announcement of the execution of the merger agreement, the reported closing sales price for the common shares on the Nasdaq Global Market was $11.34 per common share. The $14.05 per common share to be paid for each common share in the merger represents a premium of approximately 23.9% to the closing sales price for the common shares on the Nasdaq Global Market on June 8, 2012. On August 14, 2012, the latest practicable trading day before this proxy statement was printed, the reported closing sales price for the common shares on the Nasdaq Global Market was $13.99 per common share. You are encouraged to obtain current market quotations for common shares in connection with voting your common shares.

On July 26, 2012, the record date for the special meeting, there were 90 holders of record of common shares and approximately 890 beneficial owners of common shares registered in “street name.”

We have not paid dividends on common shares during the last two fiscal years. We do not expect to declare or pay any dividends on common shares prior to the consummation of the merger and, under the merger agreement, we are prohibited from doing so without Buyer’s prior written approval, which approval would be in Buyer’s sole discretion.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of July 26, 2012, the record date for the special meeting, certain information concerning the ownership of common shares by all persons and entities known by us to own beneficially 5% or more of the common shares, each of our directors, each of our named executive officers and all of our directors and executive officers as a group. Except as indicated in the footnotes to this table, we believe that each person and entity set forth in this table has sole voting and dispositive power with respect to all common shares attributable to that person or entity.

Name and Address of Beneficial Owner Amount and
Nature of
Beneficial
Ownership(1)
Percent of Class
       Sagard Capital Partners, L.P.
              325 Greenwich Avenue, 2nd Floor, Greenwich, CT 06830
3,666,184 (2)(3)  30.6%
       Peter R. Kellogg
              IAT Reinsurance Company Ltd., 120 Broadway, New York, NY 10271
3,221,286 (3)(4)  26.9%
       Diamondback Capital Management, LLC
               One Landmark Square, 15th Floor, Stamford, CT 07901
905,040 (5)  7.6%
       Blue Line Catalyst Fund IX, L.P.
               319 Diablo Road, Suite 200, Danville, CA 94526
742,490 (6)  6.2%
       
Directors and Executive Officers      
        Jay Higham 244,481 (7)  2.0%
        Timothy P. Sheehan 25,474   *
        Daniel P. Doman 49,113 (7)  *
        Scott Soifer 67,428 (7)  *
        Claude E. White 4,976   *
       
        Gerardo Canet 47,730   *
        Michael C. Howe 5,586   *
        Lawrence J. Stuesser 80,556   *
        Elizabeth E. Tallett 99,100   *
        Yvonne S. Thornton, M.D. 23,056   *
       
        All directors and executive officers as a group (12 persons) 647,724 (8)  5.3%
 
* Represents less than 1% of outstanding common shares
(1)   For the purposes of this proxy statement, beneficial ownership is defined in accordance with the rules and regulations of the Securities and Exchange Commission and generally means the power to vote and/or to dispose of the securities regardless of any economic interest therein.
(2) Based on a Schedule 13D filing made on June 20, 2012. Represents 445,100 common shares owned directly by Sagard and 3,221,084 common shares owned by IAT, Wilshire and Peter R. Kellogg. The common shares owned directly by Sagard may also be deemed to be beneficially owned by Buyer, Merger Sub, Sagard Capital Partners GP, Inc., Sagard’s general partner, and Sagard Capital Partners Management Corp., Sagard’s investment manager. By virtue of the voting agreement, Sagard, Buyer, Merger Sub, Sagard Capital Partners GP, Inc. and Sagard Capital Partners Management Corp. may be deemed to beneficially own the 3,221,084 common shares owned by IAT, Wilshire and Mr. Kellogg. However, Sagard, Buyer, Merger Sub, Sagard Capital Partners GP, Inc. and Sagard Capital Partners Management Corp. expressly disclaim beneficial ownership of those common shares.
(3) In connection with the execution of the merger agreement, Buyer, IAT, Wilshire and Mr. Kellogg entered into the voting agreement, pursuant to which IAT, Wilshire and Mr. Kellogg agreed, among other things, to: (i) vote all of the common shares beneficially owned by them in favor of the merger and against any other acquisition proposals relating to the Company or any action, proposal, transaction or agreement that would either (a) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the merger agreement or of IAT, Wilshire or Mr. Kellogg contained in the voting agreement or (b) would impede, interfere with, delay, discourage, adversely affect or inhibit the transactions contemplated by the merger agreement, including the merger; (ii) grant an irrevocable proxy to Buyer with respect to the common shares beneficially owned by them; (iii) not transfer, directly or indirectly, any common shares beneficially owned by them; and (iv) not solicit or encourage submission of an acquisition proposal relating to the Company or participate in any discussions or negotiations concerning any other acquisition proposals relating to the Company. The voting agreement will automatically terminate upon the earliest to occur of (a) the mutual consent of Buyer, IAT, Wilshire and Mr. Kellogg, (b) the
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  effective time of the merger, (c) the termination of the merger agreement in accordance with its terms, (d) our board of directors expressly withdrawing its recommendation that the holders of common shares adopt the merger agreement and (e) upon written notice by IAT, Wilshire and Mr. Kellogg to Buyer upon a third party having made a bona fide written proposal which is a superior proposal to acquire all of the common shares for cash at a per share price of at least $16.50 per common share. 
(4)   Based on a Form 4 filed with the Securities and Exchange Commission on March 2, 2010. Represents 202 common shares owned by Mr. Kellogg and 3,221,084 common shares owned by IAT. Mr. Kellogg is the sole owner of IAT’s voting stock.
(5) Based on a Schedule 13G filing made on January 9, 2012 with respect to common shares owned by Diamondback Master Fund, Ltd. as of December 31, 2011. Diamondback Capital Management, LLC is the investment manager of Diamondback Master Fund, Ltd. and DBMC Partners, LLC is the managing member of Diamondback Capital Management, LLC and, accordingly, they may be deemed the beneficial owner of the 905,040 common shares beneficially owned by Diamondback Master Fund, Ltd.
(6) Based on an amendment to Schedule 13D filing made on January 9, 2012 with respect to common shares owned by BlueLine Capital Partners, L.P., BlueLine Capital Partners II, L.P., BlueLine Capital Partners III, L.P., BlueLine Catalyst Fund IX, L.P., BlueLine Partners, L.L.C., and BlueLine Partners II, L.L.C. as of December 31, 2011. These entities may have been deemed to be a “group” under Section 13(d) of the Securities Exchange Act of 1934, as amended, and accordingly each entity may have been deemed to have beneficial ownership of the common shares.
(7) Includes exercisable options to purchase common shares within 60 days of July 26, 2012 as follows: Jay Higham—61,898; Daniel P. Doman—24,363; and Scott Soifer—21,374.
(8) Includes 107,635 exercisable options to purchase common shares within 60 days of July 26, 2012. The address for each of our directors and executive officers is c/o IntegraMed America, Inc., Two Manhattanville Road, 3rd Floor, Purchase, NY 10577.
   

Transactions by the Company’s Directors and Executive Officers

Other than sales pursuant to Rule 10b5-1 plans, there have been no transactions in common shares by our directors and executive officers within the 60 days prior to the date of this proxy statement.

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APPRAISAL RIGHTS

Under the DGCL, you have the right to dissent from the merger and to receive payment in cash for the “fair value” of your common shares as determined by the Delaware Court of Chancery, together with interest, if any, as determined by the court, but exclusive of any element of value arising from the accomplishment or expectation of the merger, in lieu of the consideration you would otherwise be entitled to pursuant to the merger agreement. These rights are known as appraisal rights. Stockholders electing to exercise appraisal rights must comply with the provisions of Section 262 of the DGCL in order to perfect their rights. We will require strict compliance with the statutory procedures.

The following is intended as a brief summary of the material provisions of the Delaware statutory procedures required to be followed by a stockholder in order to dissent from the merger and perfect appraisal rights.

This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to Section 262 of the DGCL, the full text of which appears in Annex C to this proxy statement, which we encourage you to read in its entirety. Failure to precisely follow any of the statutory procedures set forth in Section 262 of the DGCL may result in a termination or waiver of your appraisal rights. All references in Section 262 of the DGCL and this summary to a “stockholder” are to the holder of record of common shares immediately prior to the effective time of the merger as to which appraisal rights are asserted, unless otherwise indicated.

Section 262 of the DGCL requires that stockholders, who were stockholders on the record date for notice of the stockholders’ meeting at which the merger will be voted upon and who are entitled to exercise appraisal rights, be notified not less than 20 days before that stockholders’ meeting that appraisal rights will be available. A copy of Section 262 of the DGCL must be included with that notice. This proxy statement constitutes our notice to stockholders of the availability of appraisal rights in connection with the merger in compliance with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 of the DGCL contained in Annex C to this proxy statement, because failure to timely and properly comply with the requirements of Section 262 of the DGCL will result in the loss of your appraisal rights under the DGCL.

If you elect to demand appraisal of your common shares, you must satisfy each of the following conditions:

·You must deliver to us a written demand for appraisal of your common shares before the vote on whether to adopt and approve the merger agreement is taken. This written demand for appraisal must be in addition to and separate from any proxy or vote abstaining from or voting against the adoption and approval of the merger agreement. Voting against or failing to vote for the adoption and approval of the merger agreement by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL.
·You must not vote in favor of, or consent in writing to, the adoption and approval of the merger agreement. A vote in favor of the adoption and approval of the merger agreement, by proxy, over the internet, by telephone or in person, will constitute a waiver of your appraisal rights in respect of the common shares so voted and will nullify any previously filed written demands for appraisal. A proxy which does not contain voting instructions will, unless revoked, be voted in favor of the adoption and approval of the merger agreement. Therefore, a stockholder who votes by proxy and who wishes to exercise and perfect appraisal rights must vote against the merger agreement or abstain from voting on the merger agreement.
·You must continue to hold your common shares through the effective date of the merger. Therefore, a stockholder who is the holder of record of common shares on the date the written demand for appraisal is made but who thereafter transfers the common shares prior to the effective date of the merger will lose any right to appraisal with respect to those common shares.

If you fail to comply with any of these conditions or any other applicable requirements of Section 262 of the DGCL and the merger is completed, you will be entitled to receive $14.05 per common share in cash, without interest and less applicable withholding tax, but you will have no appraisal rights with respect to your common shares.

All demands for appraisal should be addressed to IntegraMed America, Inc., Two Manhattanville Road, 3rd Floor, Purchase, New York 10577, Attention: Secretary, and must be delivered before the vote on whether to adopt and approve the merger agreement is taken at the special meeting and must be executed by, or on behalf of, the holder of record of the common shares. The demand must reasonably inform us of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its common shares.

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To be effective, a demand for appraisal by a stockholder must be made by, or in the name of, such registered stockholder, fully and correctly, with respect to common shares evidenced by certificates, as the stockholder’s name appears on his, her or its stock certificate(s) or, with respect to book entry common shares, on the stock ledger. Beneficial owners who do not also hold the common shares of record may not directly make appraisal demands to us. The beneficial holder must, in such cases, have the registered owner, such as a broker, bank, trust or other nominee, submit the required demand in respect of those common shares. If common shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal should be made by or for the fiduciary; and if the common shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he, she or it is acting as agent for the record owner. A record owner, such as a broker, who holds common shares as a nominee for others, may exercise his, her or its right of appraisal with respect to the common shares held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of common shares as to which appraisal is sought. If you hold common shares through a broker who in turn holds the common shares through a central securities depositary nominee such as Cede & Co., a demand for appraisal must be made by or on behalf of the depositary nominee and must identify the depositary nominee as record holder. Where no number of common shares is expressly mentioned, the demand will be presumed to cover all common shares held in the name of the record owner.

If you hold your common shares in an account with a bank, broker or other nominee and you wish to exercise appraisal rights, you are urged to consult with your broker, bank or the other nominee to determine the appropriate procedures for the making of a demand for appraisal. A person having a beneficial interest in common shares held of record in the name of another person, such as a broker, bank or other nominee, must act promptly to cause the record holder to follow properly and in a timely manner the steps necessary to perfect appraisal rights in accordance with Section 262 of the DGCL.

Within 10 days after the effective time of the merger, the surviving corporation must give written notice that the merger has become effective to each stockholder who has properly filed a written demand for appraisal and who did not vote in favor of the adoption and approval of the merger agreement. At any time within 60 days after the effective time of the merger, any stockholder who has demanded an appraisal, and who has not commenced an appraisal proceeding or joined that proceeding as a named party, will have the right to withdraw the demand and to accept the cash payment specified by the merger agreement for his, her or its common shares; after this period, the stockholder may withdraw his, her or its demand for appraisal only with the written consent of the surviving corporation. Within 120 days after the effective date of the merger, any stockholder who has complied with Section 262 of the DGCL will, upon written request to the surviving corporation, be entitled to receive a written statement setting forth the aggregate number of common shares not voted in favor of the adoption and approval of the merger agreement and with respect to which demands for appraisal rights have been received and the aggregate number of holders of those common shares. A person who is the beneficial owner of common shares held in a voting trust or by a nominee on behalf of such person may, in such person’s own name, request from the surviving corporation the statement described in the previous sentence. Such written statement will be mailed to the requesting stockholder within 10 days after such written request is received by the surviving corporation or within 10 days after expiration of the period for delivery of demands for appraisal, whichever is later. Within 120 days after the effective time of the merger, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL and who is otherwise entitled to appraisal rights may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the common shares held by all stockholders entitled to appraisal. A person who is the beneficial owner of common shares held in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file the petition described in the previous sentence. Upon the filing of the petition by a stockholder, service of a copy of such petition will be made upon us, as the surviving corporation. The surviving corporation has no obligation to file such a petition in the event there are dissenting stockholders. Accordingly, the failure of a stockholder to file such a petition within the period specified could nullify the stockholder’s previously written demand for appraisal. There is no present intent on our part to file an appraisal petition, and stockholders seeking to exercise appraisal rights should not assume that we will file such a petition or that we will initiate any negotiations with respect to the fair value of such common shares. Accordingly, stockholders who desire to have their common shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262 of the DGCL.

If a petition for appraisal is timely filed by a stockholder and a copy of the petition is delivered to the surviving corporation, the surviving corporation will then be obligated, within 20 days after receiving service of a copy of the petition, to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their common shares and with whom agreements as to the value of their common shares have not been reached by the surviving corporation. After notice is made to dissenting stockholders who demanded appraisal of their common shares as required by the Delaware Court of Chancery, the Delaware Court of Chancery is empowered to conduct a hearing upon the petition to determine those stockholders who have complied with Section 262 of the DGCL and who have become entitled to

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the appraisal rights provided thereby. The Delaware Court of Chancery may require stockholders who have demanded appraisal for their common shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder.

After the Delaware Court of Chancery determines which stockholders are entitled to appraisal of their common shares, the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will appraise the common shares, determining the fair value of the common shares exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. When the value is determined, the Delaware Court of Chancery will direct the payment of such value, with interest thereon accrued during the pendency of the proceeding, if the Delaware Court of Chancery so determines, to the stockholders entitled to receive the same, upon surrender by such stockholders of the certificates representing those common shares.

In determining fair value, and, if applicable, interest, the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “fair price obviously requires consideration of all relevant factors involving the value of a company.”

Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 of the DGCL to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

You should be aware that the fair value of your common shares as determined under Section 262 of the DGCL could be more than, the same as or less than the value that you are entitled to receive under the terms of the merger agreement if you did not seek appraisal of your common shares. Investment banking opinions as to the fairness from a financial point of view of the consideration payable in a sale transaction, such as the merger, are not opinions as to, and do not in any manner address, fair value under Section 262 of the DGCL.

Costs of the appraisal proceeding may be imposed upon the surviving corporation and the stockholders participating in the appraisal proceeding by the Delaware Court of Chancery as the Court deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, to be charged pro rata against the value of all common shares entitled to appraisal. Any stockholder who had demanded appraisal rights will not, after the effective time of the merger, be entitled to vote common shares subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those common shares, other than with respect to payment as of a record date prior to the effective time of the merger; however, if no petition for appraisal is filed within 120 days after the effective time of the merger, or if the stockholder delivers a written withdrawal of his, her or its demand for appraisal and an acceptance of the terms of the merger within 60 days after the effective time of the merger, then the right of that stockholder to appraisal will cease and that stockholder will be entitled to receive the cash payment for common shares of his, her or its common shares pursuant to the merger agreement. If the stockholder fails to perfect, withdraws or loses the appraisal right, the stockholder’s common shares will be converted into the right to receive the per common share merger consideration, without interest and less applicable withholding tax. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the prior approval of the Court, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party will maintain the right to withdraw its demand for appraisal and to accept the cash that such holder would have received pursuant to the merger agreement within 60 days after the effective date of the merger.

In view of the complexity of Section 262 of the DGCL, stockholders who may wish to dissent from the merger and pursue appraisal rights should consult their legal advisors. To the extent there are any inconsistencies between the foregoing summary and Section 262 of the DGCL, the DGCL shall govern.

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STOCKHOLDER PROPOSALS FOR 2013 ANNUAL MEETING

If the merger is completed, we will no longer be a publicly held company, and there will be no public participation in any future meetings of our stockholders. However, if the merger is not completed, the holders of common shares will continue to be entitled to attend and participate in our stockholder meetings, and we will hold a 2013 annual meeting of stockholders. In that event, holders of common shares that intend to present a proposal at our 2013 annual meeting of stockholders must give notice of the proposal to us no later than December 27, 2012 to be considered for inclusion in the proxy statement and form of proxy relating to that meeting. Holders of common shares that intend to present a proposal at the 2013 annual meeting of stockholders that will not be included in the proxy statement and form of proxy relating to that meeting must give notice of the proposal to us no earlier than February 5, 2013 and no later than March 7, 2013. Receipt by us of any such proposal from a qualified holder of common shares in a timely manner will not guarantee its inclusion in our proxy materials or its presentation at the 2013 annual meeting of stockholders because there are other requirements in the proxy rules. Pursuant to Rule 14a-4 under the Securities Exchange Act of 1934, as amended, we intend to retain discretionary authority to vote proxies with respect to stockholder proposals for which the proponent does not seek inclusion of the proposed matter in our proxy statement for the 2013 annual meeting of stockholders, except in circumstances where (i) we receive notice of the proposed matter no earlier than February 7, 2013 and no later than March 5, 2013 and (ii) the proponent complies with the other requirements set forth in Rule 14a-4 under the Securities Exchange Act of 1934, as amended.

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OTHER MATTERS

As of the date of this proxy statement, our board of directors knows of no other matter which may be presented for consideration at the special meeting. However, if any other matter is presented properly for consideration and action at the special meeting or any adjournment or postponement of the special meeting, it is intended that the proxies will be voted with respect to that matter in accordance with the best judgment and in the discretion of the proxy holders.

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WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy these reports, proxy statements and other information at the Securities and Exchange Commission’s Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a website, located as www.sec.gov, that contains reports, proxy statements and other information regarding us and other companies and individuals that file electronically with the Securities and Exchange Commission.

You may also obtain free copies of the documents that we file with the Securities and Exchange Commission, including this proxy statement, by going to our website at www.integramed.com. The information provided on our website is not part of this proxy statement and is not incorporated herein by reference.

If you have any questions about the merger, need assistance in submitting your proxy or voting your common shares or need additional copies of this proxy statement or the enclosed proxy card, please contact us at IntegraMed America, Inc., Two Manhattanville Road, 3rd Floor, Purchase, New York 10577, Attention: Secretary, telephone (914) 253-8000.

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT TO VOTE YOUR COMMON SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED AUGUST 20, 2012. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO HOLDERS OF COMMON SHARES SUBSEQUENT TO THAT DATE DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

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ANNEX A

 

AGREEMENT AND PLAN OF MERGER

by and among

SCP-325 HOLDING CORP.,

SCP-325 MERGER SUB, INC.

and

INTEGRAMED AMERICA, INC.

Dated as of June 10, 2012

 

 

 
 

TABLE OF CONTENTS

    Page
 
ARTICLE I. DEFINITIONS; INTERPRETATION; CONSTRUCTION A-1
1.1 Definitions A-1
1.2 Interpretation; Construction A-11
ARTICLE II. THE MERGER A-13
2.1 The Merger A-13
2.2 Closing A-13
2.3 Effective Time A-13
2.4 Certificate of Incorporation A-13
2.5 Bylaws A-13
2.6 Directors A-14
2.7 Officers A-14
2.8 Effect On Capital Stock A-14
2.9 Exchange of Certificates and Book-Entry Shares A-14
2.10 Treatment of Outstanding Company Options and Company Restricted Stock Under Stock Plans A-17
2.11 Withholding Taxes A-18
2.12 Adjustments to Prevent Dilution A-18
2.13 Necessary Further Actions A-19
ARTICLE III. REPRESENTATIONS AND WARRANTIES A-19
3.1 Representations and Warranties of the Company A-19
3.2 Representations and Warranties of Parent and Merger Sub A-36
ARTICLE IV. COVENANTS A-42
4.1 Interim Operations A-42
4.2 No Solicitation A-46
4.3 Proxy Statement A-49
4.4 Stockholders Meeting A-49
4.5 Filings; Other Actions; Notification A-50
4.6 Access A-52
4.7 Stock Exchange De-listing A-53
4.8 Publicity A-53
4.9 Employee Benefits A-53
4.10 Expenses A-55
4.11 Indemnification; Directors’ and Officers’ Insurance A-55
4.12 Anti-takeover Laws A-57
4.13 Stockholder Consent A-57
4.14 Financing A-57
4.15 Litigation A-62
4.16 Rule 16b-3 A-63
4.17 Notification of Certain Matters A-63
4.18 Company Affidavit A-63

 

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4.19 Confidentiality A-63
4.20 Company Stockholder, Director and Employee Arrangements A-64
ARTICLE V. CONDITIONS A-64
5.1 Conditions to Each Party’s Obligation to Effect the Merger A-64
5.2 Conditions to Obligations of Parent and Merger Sub A-64
5.3 Conditions to Obligation of the Company A-65
5.4 Frustration of Closing Conditions A-66
ARTICLE VI. TERMINATION A-66
6.1 Termination by Mutual Consent A-66
6.2 Termination by Either the Company or Parent A-66
6.3 Termination by the Company A-67
6.4 Termination by Parent A-68
6.5 Effect of Termination A-68
ARTICLE VII. MISCELLANEOUS AND GENERAL A-71
7.1 Survival A-71
7.2 Amendment A-72
7.3 Extension; Waiver A-72
7.4 Counterparts A-72
7.5 Governing Law A-72
7.6 Consent to Jurisdiction A-72
7.7 Waiver of Jury Trial A-73
7.8 Remedies A-73
7.9 Notices A-74
7.10 Entire Agreement A-75
7.11 No Third Party Beneficiaries A-75
7.12 Obligations of Parent, the Company and the Surviving Corporation A-76
7.13 Transfer Taxes A-76
7.14 Severability A-77
7.15 Company Disclosure Letter A-77
7.16 Assignment A-77
EXHIBIT A   FORM OF VOTING AGREEMENT  
EXHIBIT B FORM OF SURVIVING CORPORATION CERTIFICATE OF INCORPORATION  

 

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of June 10, 2012 by and among SCP-325 Holding Corp., a Delaware corporation (“Parent”), SCP-325 Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and IntegraMed America, Inc., a Delaware corporation (the “Company”).

RECITALS

WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub and the Company have approved the merger of Merger Sub with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth in this Agreement and have approved and declared advisable this Agreement;

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, each of IAT Reinsurance Company Ltd. (“IAT”), Wilshire Insurance Company (“Wilshire”) and Peter R. Kellogg (“Kellogg”) is entering into a voting agreement with Parent, in the form attached hereto as Exhibit A (the “Voting Agreement”), pursuant to which, among other things, and subject to the terms and conditions contained therein, each of Kellogg, IAT and Wilshire has agreed to vote the Common Shares beneficially owned by him or it in favor of the Merger, this Agreement and the other transactions contemplated hereby;

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition to the willingness of the Company to enter into this Agreement, Sagard Capital Partners, L.P., a Delaware limited partnership (the “Guarantor”), is entering into a limited guaranty with the Company (the “Limited Guaranty”), pursuant to which the Guarantor is guaranteeing certain obligations of Parent and Merger Sub in connection with this Agreement as specified therein; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

Article I.
DEFINITIONS; INTERPRETATION; CONSTRUCTION

1.1              Definitions.

(a)                For purposes of this Agreement, each of the following terms has the meaning assigned to such term in this Section 1.1(a):

ARTIC” means Assisted Reproductive Technology Insurance Company, Ltd., a limited liability company domiciled in the Cayman Islands.

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Acceptable Confidentiality Agreement” means an agreement with respect to the confidentiality of material non-public information concerning the Company and its Subsidiaries that is either (i) in effect on the date hereof or (ii) executed and delivered after the date hereof and, in each case, does not prohibit the Company from providing the notifications required by Section 4.2(e) and contains customary terms not materially more favorable to the recipient of such information than those contained in the Confidentiality Agreement (it being understood that an Acceptable Confidentiality Agreement need not contain “standstill” or other similar provisions).

Acquisition Proposal” means any bona fide offer or proposal (other than an offer or proposal by Parent or Merger Sub) to engage in an Acquisition Transaction.

Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (i) the purchase or other acquisition from the Company by any Person or “group,” within the meaning of Section 13(d) of the Exchange Act, directly or indirectly, of more than twenty percent (20%) of the Common Shares outstanding as of the consummation of such purchase or other acquisition, or any tender offer or exchange offer by any Person or “group,” within the meaning of Section 13(d) of the Exchange Act, that, if consummated in accordance with its terms, would result in such Person or “group” beneficially owning more than twenty percent (20%) of the Common Shares outstanding as of the consummation of such tender or exchange offer; (ii) a merger, consolidation, business combination or other similar transaction involving the Company, pursuant to which the stockholders of the Company immediately preceding such merger, consolidation, business combination or transaction own less than eighty percent (80%) of the voting equity interests in the surviving or resulting entity of such merger, consolidation, business combination or transaction; or (iii) a sale, transfer, acquisition or disposition, directly or indirectly, of more than twenty percent (20%) of the consolidated assets of the Company and its Subsidiaries, taken as a whole, measured by the fair market value thereof.

Affiliate” means, when used with respect to any Person, any other Person that is an “affiliate” of that Person within the meaning of Rule 405 promulgated under the Securities Act.

Antitrust Law” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act and all other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

Benefit Plans” means all benefit and/or compensation plans, contracts, policies or other arrangements, whether written or unwritten, maintained, sponsored, contributed or required to be contributed to (i) by the Company or any of its Subsidiaries relating to or covering Employees and/or current or former directors of the Company or any of its Subsidiaries or any dependent or beneficiary thereof (ii) by any Company ERISA Affiliate under which there is or may be any liability or obligation (contingent or otherwise) of the Company or any of its Subsidiaries, in each case, including “employee benefit plans,” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA), and deferred compensation, consulting, employment, termination or severance, retention, equity compensation, stock option, stock

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purchase, stock appreciation rights, stock unit, stock based, incentive, change in control, bonus, medical, hospitalization, supplemental unemployment, health or life insurance, long- or short-term disability, vacation, sick leave, scholarship, fringe benefits, welfare, profit sharing and pension plans, contracts, policies or other arrangements.

Book-Entry Shares” means the Common Shares held in the Direct Registration System.

Business Day” means any day other than a Saturday or Sunday or a day on which banks are required or authorized to close in the City of New York.

Closing Date” means the date on which the Closing actually occurs.

Company Credit Agreement” means that certain Third Amended and Restated Loan Agreement, dated as of May 21, 2010, among the Company, as Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the Lenders party thereto, as amended as of the date of this Agreement.

Company Material Adverse Effect” means a change, event or occurrence that has, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the financial condition, business, operations, assets or results of operations of the Company and its Subsidiaries taken as a whole; provided, however, that none of the following, and no changes, events or occurrences, individually or in the aggregate, to the extent arising out of, resulting from or attributable to any of the following, shall constitute or be taken into account in determining whether a Company Material Adverse Effect has occurred or may, would or could occur: (i) changes generally affecting the economy, credit, securities, currency or other financial markets or political conditions in the United States or elsewhere in the world, including changes in interest or exchange rates or any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market; (ii) changes that are the result of acts of war (whether or not declared), armed hostilities, sabotage or terrorism, or any escalation or worsening of any such acts of war (whether or not declared), armed hostilities, sabotage or terrorism; (iii) epidemics, pandemics, earthquakes, tsunamis, hurricanes, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions or other force majeure events; (iv) changes that are the result of factors generally affecting the industries in which the Company and its Subsidiaries operate or in which the products or services of the Company and its Subsidiaries are used or distributed; (v) any loss of, or adverse change in, the relationship of the Company or any of its Subsidiaries with any of their respective customers, employees, Physician Practices (including physicians employed by the Physician Practices), financing sources, distributors or suppliers caused by the pendency or the announcement of the transactions contemplated by this Agreement; (vi) other than for purposes of Section 3.1(d), changes or effects from the entry into, announcement or performance of this Agreement or the consummation of the transactions contemplated by the Agreement, including any litigation arising from allegations of any breach of fiduciary duty or violation of Law relating to this Agreement or the transactions contemplated by this Agreement, or compliance by the Company with the terms of this Agreement; (vii) changes or prospective changes in any Law or GAAP or interpretation or enforcement thereof after the date hereof; (viii) any failure by the Company to meet any internal or public projections or forecasts or estimates of revenues,

A-3
 

earnings or other financial performance or results of operations for any period (it being understood that the exception in this clause shall not prevent or otherwise affect a determination that any change, event or occurrence underlying such failure has resulted in, or contributed to, a Company Material Adverse Effect); (ix) any actions taken or failure to take action, in each case, to which Parent has approved, consented to or requested in writing, or the failure to take any action that is prohibited by this Agreement; (x) any change resulting or arising from the identity of, or any facts or circumstances relating to, Parent, Merger Sub or their respective Affiliates; (xi) any decline in the price or trading volume of the Common Shares on NASDAQ (it being understood that the exception in this clause shall not prevent or otherwise affect a determination that any change, event or occurrence underlying such decline has resulted in, or contributed to, a Company Material Adverse Effect); or (xi) any actions taken pursuant to Section 4.5(d)(ii); provided, further, that any change, event or occurrence referred to in clause (i), (ii), (iii), (iv) or (vii) may be taken into account in determining whether there has been a Company Material Adverse Effect solely if and to the extent such change, event or occurrence has a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, as compared to other companies operating in the industries in which the Company and its Subsidiaries operate.

Company Restricted Stock” means any Common Share that is subject to restrictions on transfer and/or forfeiture granted pursuant a Stock Plan.

Company Stock-Based Award” means each right of any kind, contingent or accrued, to receive Common Shares or benefits measured in whole or in part by the value of a number of Common Shares issued under a Stock Plan (including performance shares, restricted stock units, phantom units, deferred stock units and dividend equivalents, but not including any 401(k) plan of the Company), other than Company Options and Company Restricted Stock.

Contract” means a written or oral agreement, lease, license, contract, note, bond, mortgage, indenture or other instrument or obligation.

Control” means the possession, directly or indirectly, of the power (i) to vote fifty percent (50%) or more of the securities having ordinary voting power for the election of directors of a Person or (ii) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by Contract or otherwise.

Copyrights” means registered and unregistered copyrights, including all applications therefor and renewals thereof, as well as software, designs and other works of authorship.

Direct Registration System” means the service of The Depository Trust Company that provides for electronic direct registration of securities in an investor’s name on the books for the transfer agent or issuer, and allows securities to be transferred between a transfer agent and broker electronically.

EDGAR” means the SEC’s Electronic Data Gathering, Analysis, and Retrieval system.

Employee” means a current or former employee or officer of the Company or any of its Subsidiaries.

A-4
 

Environmental Law” means any applicable law, regulation, code, license, permit, order, judgment, decree or injunction from any Governmental Entity concerning (i) the protection of human health as it relates to exposure to any Hazardous Substance or the protection, investigation or restoration of the environment, including air (both ambient air and indoor air), surface water, groundwater, drinking water, soil, wildlife and natural resources, or (ii) the production, use, storage, handling, treatment, transport, release or disposal of Hazardous Substances, in each case as presently in effect.

ERISA” means the Employee Retirement Income Security Act of 1974.

Financing Sources” means the Persons that have committed to provide or otherwise entered into agreements in connection with the Debt Financing or other financings (other than the Equity Financing) in connection with the transactions contemplated hereby, including the parties to the Debt Financing Commitment and any joinder agreements, credit agreements or other definitive agreements with respect thereto.

Hazardous Substance” means any substance, material or waste listed, defined, designated, classified or regulated as hazardous, toxic or a pollutant (or terms of like meaning) under any applicable Environmental Law, including asbestos or asbestos-containing material, polychlorinated biphenyls, petroleum, radioactive materials and any by-product thereof.

Indebtedness” means, with respect to a Person, without duplication, (i) any liability of that Person (A) for borrowed money, including any accrued but unpaid interest thereon and any cost or penalty associated with prepaying any such liability, (B) evidenced by a note, debenture or similar instrument, (C) for the deferred purchase price of property or services, (D) under a capital lease agreement or (E) arising out of interest rate or currency swap arrangements and other arrangements designed to provide protection against fluctuations in interest or currency rates or (ii) any guaranty by that Person of any liability described in clause (i) of another Person; provided, however, that trade payables and accrued expenses arising in the ordinary course of business and intercompany indebtedness among the Company and/or its wholly-owned Subsidiaries shall not be deemed to be Indebtedness.

Intellectual Property” means (i) Trademarks, (ii) Patents, (iii) trade secrets and other tangible or intangible proprietary or confidential information and know-how, including trade secrets in process, business methods, processes, formulae, designs, customer or patient lists and supplier or payor lists, and (iv) Copyrights.

Knowledge of Parent” means the actual knowledge of Michael Braner or Dan Friedberg.

Knowledge of the Company” means the actual knowledge of the persons listed on Section 1.1(a) of the Company Disclosure Letter.

Material Contract” means:

(i)                 any Contract (other than a Stock Plan) listed as an exhibit, pursuant to Item 601(b)(10) of Regulation S-K, to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC;

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(ii)               any Contract pursuant to which the Company or any of its Subsidiaries provides services to any Physician Practice (or any other similar professional corporation, association, limited liability company, service company, limited liability partnership, doctor or other entity, even if such Person is not a Physician Practice), together with all side agreements, supplements, annexes, addenda or exhibits relating thereto;

(iii)             any Contract or group of related Contracts pursuant to which the Company and its Subsidiaries paid, or were paid, in the aggregate during the Company’s fiscal year ended December 31, 2011, or reasonably expect to pay, or be paid, in the aggregate during the Company’s current fiscal year, Two Hundred Thousand Dollars ($200,000) or more;

(iv)             any Contract with any of the top ten (10) suppliers or third party payors of the Company, its Subsidiaries and the Vein Clinics, taken as a whole, for the Company’s fiscal year ended December 31, 2011;

(v)               (A) any joint venture or partnership Contract or (B) any so-called “Attain IVF” or affiliate agreement in connection with which or pursuant to which, in the case of this clause (B), the Company and its Subsidiaries paid, or were paid, in the aggregate during the Company’s fiscal year ended December 31, 2011, or reasonably expect to pay, or be paid, in the aggregate during the Company’s current fiscal year, One Hundred Thousand Dollars ($100,000) or more;

(vi)             (A) any Contract for or relating to the employment by the Company or any of its Subsidiaries of any director or officer involving base salary in excess of $200,000 per annum or (B) any other type of Contract with any of the directors or officers of the Company or any of its Subsidiaries that, in the case of this clause (B), cannot be terminated without the Company and its Subsidiaries incurring aggregate obligations and liabilities of One Hundred Thousand Dollars ($100,000) or more, including any Contract requiring the Company or any of its Subsidiaries to make aggregate payments of One Hundred Thousand Dollars ($100,000) or more to the directors, officers or employees of the Company or any of its Subsidiaries, taken as a whole, as a result of the Merger, any transaction contemplated by this Agreement or any Contract that is entered into in connection with this Agreement;

(vii)           any Contract relating to outstanding Indebtedness of the Company or any of its Subsidiaries (other than certain guaranties by the Company and/or its Subsidiaries of certain business related credit card obligations of employees of the Company and/or its Subsidiaries);

(viii)         any Contract of guarantee, support or assumption to which the Company or any of its Subsidiaries is a party with respect to the Indebtedness of, or any other obligations or liabilities (whether accrued, absolute, contingent or otherwise) of, any Physician Practice;

(ix)             any Contract to which the Company or any of its Subsidiaries is a party that materially restricts it from (A) engaging in any aspect of its business, (B) participating or competing in any line of business, market or geographic area or (C) freely setting prices for its products, services or technologies (including most favored customer pricing provisions);

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(x)               any Contract to which the Company or any of its Subsidiaries is a party that grants any material exclusive rights, rights of refusal, rights of first negotiation or similar rights to any Person;

(xi)             any Contract to which the Company or any of its Subsidiaries is a party relating to the sale, issuance, grant, exercise, award, purchase, repurchase or redemption of any shares of its capital stock or other securities or any options, warrants or other rights to purchase or otherwise acquire any such shares of capital stock, other securities or options, warrants or other rights therefor, except for those Contracts in substantially the form of the standard agreements evidencing equity awards under a Stock Plan;

(xii)           (A) any Contract to which the Company or any of its Subsidiaries is a party with any labor union or any collective bargaining agreement or similar Contract with its employees or (B) any employee leasing Contract (other than Contracts that provide for the hiring of employees on a temporary basis); or

(xiii)         any Contract to which the Company or any of its Subsidiaries is a party that is required to be disclosed in the Company Reports pursuant to Section 404(a) of Regulation S-K.

NASDAQ” means the NASDAQ Global Market.

Partner FC” means the fertility center physician practices to which the Company provides management services as of the date hereof, as listed on Section 3.1(a) of the Company Disclosure Letter.

Patents” means patents and pending patent applications, invention disclosures and all renewals, reissues, reexaminations, divisionals, continuations, continuations-in-part and extensions thereof.

Permitted Lien” means (i) a Lien imposed by Law, including a carrier’s, warehousemen’s, landlord’s, mechanic’s, materialmen’s or similar Lien, the underlying debt or obligation of which is not yet due and payable or is being contested in good faith through appropriate proceedings, (ii) a Lien for Taxes, assessments or other charges of a Governmental Entity not yet due and payable or which are being contested in good faith through appropriate proceedings and for which adequate reserves have been established, in accordance with GAAP, in the books and records of the Company and its Subsidiaries, (iii) an encumbrance or restriction on real property (including an easement, covenant, right of way, minor defect or irregularity in title or similar restriction of record) that does not materially and adversely interfere with the present use of such real property, (iv) a zoning, entitlement, building or other land use regulation imposed by a Governmental Entity that does not materially and adversely interfere with the present use of the real property subject thereto, (v) a pledge or deposit to secure the performance of a bid, trade contract, lease, surety or appeal bond, performance bond or other obligation of a similar nature, in each case in the ordinary course of business, (vi) a license granted to a third party in the ordinary course of business by the Company or a Subsidiary of the Company, (vii) a Lien created or permitted under the Company Credit Agreement that will be able to be terminated at Closing upon payoff of the Indebtedness under the Company Credit Agreement,

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(viii) a Lien that will be released prior to or as of the Closing, (ix) a Lien arising under this Agreement, (x) a Lien created by or through Parent or Merger Sub or (xi) a Lien that does not materially and adversely impair the use or value of the asset subject thereto.

Person” means any individual, corporation (including a not-for-profit corporation and/or professional corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.

Physician Practice” means a Partner FC or a Vein Clinic, and, collectively, means the Partner FCs and the Vein Clinics.

Record Holder” means, with respect to any Common Shares, a Person who was, immediately prior to the Effective Time, the holder of record of such Common Shares.

Regulation S-K” means Regulation S-K promulgated by the SEC.

Representatives” means, with respect to a Person, the Affiliates, directors, officers, employees, financial advisors, investment bankers, financing sources, consultants, attorneys, accountants and other advisors, agents and representatives of such Person.

Sagard Entity” means any of Sagard Capital Partners, L.P., Sagard Capital Partners Management Corp. or any fund or investment entity to which Sagard Capital Partners Management Corp. provides management services.

Solvent” means, with respect to any Person as of any date of determination, that (i) the amount of the “fair saleable value” of the assets of such Person, as of such date, exceeds the value of all “liabilities of such Person, including a reasonable estimate of contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable Laws governing determinations of the insolvency of debtors, (ii) such Person does not have, as of such date, an unreasonably small amount of capital for the operation of the business in which it is engaged or proposed to be engaged and (iii) such Person has the ability to pay its liabilities, as of such date, including a reasonable estimate of contingent and other liabilities, as they mature. For purposes of the foregoing, “not have, as of such date, an unreasonably small amount of capital for the operation of the business in which it is engaged or proposed to be engaged” and “the ability to pay its liabilities, as of such date, including a reasonable estimate of contingent and other liabilities, as they mature” means that, as of the applicable date of determination, such Person has the ability to generate enough cash from operations, asset dispositions or refinancings, or a combination thereof, to meet its obligations as they become due.

Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions is directly or indirectly owned or Controlled by such Person and/or by one or more of its Subsidiaries; provided, however, that solely for purposes of Section 3.1 and the first sentence of Section 4.1(a), each Vein Clinic shall be deemed to be a Subsidiary of the Company.

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Superior Proposal” means a bona fide written Acquisition Proposal for an Acquisition Transaction (with the percentages set forth in the definition of such term changed from twenty percent (20%) or eighty percent (80%), as the case may be, to fifty percent (50%)) that the Board of Directors of the Company determines in good faith (after consultation with the Company’s outside legal counsel and financial advisor) (i) is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of such Acquisition Proposal (including the financing thereof and any conditions thereto) and the Person or Persons making such Acquisition Proposal and (ii) if consummated, would result in a transaction more favorable to the Company’s stockholders (in their capacity as such) from a financial point of view than the transactions contemplated by this Agreement, taking into account all of the terms and conditions of such Acquisition Proposal and this Agreement, including any written proposal by Parent and Merger Sub to amend the terms of this Agreement and any break-up fees, expense reimbursement or similar provisions.

Tax Returns” means any and all material returns, forms, declarations, claims for refund or information returns or statements, reports and forms relating to Taxes filed or required to be filed with any Governmental Entity having jurisdiction over the assessment, determination, collection or imposition of any such Tax, including any schedule or attachment thereto and any amendment thereof.

Taxes” means any and all federal, state, local and foreign income, profits, corporation, franchise, gross receipts, capital gains, environmental, customs duty, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, workers’ compensation, alternative or add-on minimum, sales, use, property, withholding, excise, production, value added, ad valorem, franchise, capital, transfer, estimated, occupancy and other taxes, charges, fees, levies, imposts, duties and governmental fees or other like assessments or charges of any nature whatsoever, together with all interest, penalties and additions imposed with respect thereto.

Trademarks” means registered and unregistered trademarks, service marks, internet domain names, logos, trade dress, trade names and other indicia of origin, all applications and registrations for the foregoing, including all renewals of the same, and all goodwill associated therewith and symbolized thereby.

Treasury Regulations” means the regulations promulgated under the Code.

Vein Clinic” means the vein clinic physician practices to which the Company or a Subsidiary of the Company provides management services as of the date hereof, as listed on Section 3.1(a) of the Company Disclosure Letter.

(b)               For purposes of this Agreement, each of the terms set forth below has the meaning assigned to such term in the Section of this Agreement set forth opposite such term.

Term

Section in Agreement

Affected Employees 4.9(a)
Agreement Preamble
Alternative Acquisition Agreement 4.2(a)

 

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Term

Section in Agreement

Applicable Date 3.1(e)(i)
Attain IVF Programs 3.1(u)(i)
Bankruptcy and Equity Exception 3.1(c)(i)
Bylaws 2.5
Capitalization Date 3.1(b)(i)
Certificate 2.8(a)
Change of Recommendation 4.2(c)(ii)
Charter 2.4
Closing 2.2
Code 2.11
Common Share 2.8(a)
Company Preamble
Company Disclosure Letter 3.1
Company ERISA Affiliate 3.1(h)(iv)
Company Intellectual Property 3.1(n)(i)
Company Option 2.10(a)
Company Recommendation 3.1(c)(ii)
Company Related Parties 6.5(e)
Company Reports 3.1(e)(i)
Company Requisite Vote 3.1(c)(i)
Confidentiality Agreement 4.19
Current D&O Insurance Policies 4.11(b)
Debt Financing 3.2(e)(i)
Debt Financing Commitment 3.2(e)(i)
Delaware Certificate of Merger 2.3
DGCL 2.1
Dissenting Shares 2.8(a)
Dissenting Stockholders 2.8(a)
Effective Time 2.3
Equity Financing 3.2(e)(i)
Equity Financing Commitment 3.2(e)(i)
Exchange Act 3.1(d)(i)
Exchange Fund 2.9(a)
Excluded Shares 2.8(a)
Financing 3.2(e)(i)
Financing Commitments 3.2(e)(i)
GAAP 3.1(e)(iii)
Governmental Antitrust Entity 4.5(d)(i)(A)
Governmental Entity 3.1(d)(i)
Guarantor Recitals
HIPAA 3.1(u)(iv)
HITECH 3.1(u)(iv)
HSR Act 3.1(d)(i)
IAT Recitals
Indemnified Parties 4.11(a)
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Term

Section in Agreement

Insurance Policies 3.1(o)(i)
IRS 3.1(h)(i)
Jefferies 3.1(c)(iii)
Kellogg Recitals
Laws 3.1(i)
Leased Real Property 3.1(p)(ii)
Licenses 3.1(i)
Lien 3.1(b)(iv)
Limited Guaranty Recitals
Material Lease 3.1(p)(ii)
Material Leased Real Property 3.1(p)(ii)
Merger Recitals
Merger Sub Preamble
Option Consideration 2.10(a)
Order 5.1(c)
Parent Preamble
Parent Fee 6.5(c)
Parent Related Parties 6.5(f)
Parent Welfare Benefit Plans 4.9(c)
Partner FC Insurance Policies 3.1(o)(i)
Paying Agent 2.9(a)
Per Share Merger Consideration 2.8(a)
Preferred Shares 3.1(b)(i)
Proxy Statement 4.3(a)
Registered Intellectual Property 3.1(n)(ii)
Restricted Stock Consideration 2.10(b)
SEC 3.1
Satisfactory Replacement Debt Financing Commitment 4.14(c)
Securities Act 3.1(b)(iv)
Service Provider 3.1(h)(vii)
Stock Plans 3.1(b)(ii)
Stockholders Meeting 4.4
Surviving Corporation 2.1
Termination Date 6.2(a)
Termination Fee 6.5(b)(i)
Voting Agreement Recitals
Wilshire Recitals

 

1.2              Interpretation; Construction.

(a)                The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect the meaning or interpretation of this Agreement.

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(b)               No summary of this Agreement prepared by a party hereto shall affect the meaning or interpretation of this Agreement.

(c)                Where a reference in this Agreement is made to an Article, Section or Exhibit, such reference shall be to an Article or Section of or Exhibit to this Agreement, unless otherwise indicated.

(d)               Where a reference in a Section of this Agreement is made to clause, such reference shall be to a clause of such Section, unless otherwise indicated.

(e)                The words “hereof,” “herein,” “hereunder,” “hereby” and “herewith” and words of similar import when used in this Agreement shall, unless otherwise indicated, refer to this Agreement as a whole and not to any particular provision of this Agreement.

(f)                Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” unless otherwise indicated.

(g)               All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the Person may require.

(h)               Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(i)                 A reference to any party to this Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns.

(j)                 A reference to any Law in this Agreement means such Law as amended, modified, codified, replaced or reenacted, and all rules and regulations promulgated thereunder.

(k)               All accounting terms used and not defined herein have the respective meanings given to them under GAAP.

(l)                 All references to “dollars” or “$” in this Agreement are to United States dollars.

(m)             The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

(n)               The phrase “made available” or any like phrase means that the document, information or Contract in question has been posted to the Intralinks “data room” managed by or on behalf of the Company, is available through EDGAR, has been made available to Parent, Merger Sub or one or more of their respective Representatives for review at the offices of the Company or any of its Subsidiaries or has been transmitted to Parent, Merger Sub or one or more

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of their respective Representatives in writing or by electronic transmission, in each case no later than 12:01 a.m., New York City time, on the calendar day prior to the date hereof.

Article II.
THE MERGER

2.1              The Merger. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company in accordance with the provisions of the General Corporation Law of the State of Delaware (the “DGCL”) and the separate corporate existence of Merger Sub shall thereupon cease. The Company shall be the surviving corporation in the Merger (sometimes referred to herein as the “Surviving Corporation”), and the separate corporate existence of the Company, with all its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger, except as set forth in this Article II. The Merger shall have the effects specified in the DGCL.

2.2              Closing. Unless otherwise mutually agreed in writing between the Company and Parent or unless this Agreement has been terminated in accordance with its terms, the closing of the Merger (the “Closing”) shall take place at the offices of Dorsey & Whitney LLP, 51 West 52nd Street, New York, New York 10019, at 10:00 a.m. (Eastern Time) on the third (3rd) Business Day following the satisfaction or waiver in accordance with this Agreement of all of the conditions set forth in Article V (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions).

2.3              Effective Time. Subject to the provisions of this Agreement, prior to the Closing, the Company and Parent will jointly prepare, and as soon as practicable following the Closing, the Company and Parent will cause to be filed with the office of the Secretary of State of the State of Delaware, a certificate of merger (the “Delaware Certificate of Merger”), in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL. The Merger shall become effective at the time when the Delaware Certificate of Merger has been duly filed with the office of the Secretary of State of the State of Delaware or at such later time as may be agreed by the Company and Parent in writing and specified in the Delaware Certificate of Merger (the “Effective Time”).

2.4              Certificate of Incorporation. At the Effective Time, the certificate of incorporation of the Company shall be amended as a result of the Merger so as to read in its entirety as set forth in Exhibit B and, as so amended, shall be the certificate of incorporation of the Surviving Corporation (the “Charter”), until duly amended as provided therein or by applicable Law (subject to Section 4.11).

2.5              Bylaws. Parent shall take all actions necessary so that, immediately following the Effective Time, the bylaws of the Company are amended to be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that all references to the name of Merger Sub therein shall be changed to refer to the name of the Company, and, as so amended, such bylaws shall be the bylaws of the Surviving Corporation (the “Bylaws”), until duly amended as provided therein or by applicable Law (subject to Section 4.11).

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2.6              Directors. The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office until his or her successor has been duly elected or appointed and qualified or until his or her earlier death, resignation or removal in accordance with the Charter and the Bylaws.

2.7              Officers. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office until his or her successor has been duly elected or appointed and qualified or until his or her earlier death, resignation or removal in accordance with the Charter and the Bylaws.

2.8              Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of the holder of any capital stock of the Company or the sole stockholder of Merger Sub:

(a)                Merger Consideration. Each share of the common stock, par value $0.01 per share, of the Company (a “Common Share”) issued and outstanding immediately prior to the Effective Time (other than issued and outstanding Common Shares (i) that are owned by Parent, Merger Sub or any other direct or indirect wholly-owned Subsidiary of Parent, (ii) that are owned by the Company as treasury stock or any direct or indirect wholly-owned Subsidiary of the Company, (iii) that are also shares of Company Restricted Stock or (iv) that are owned by stockholders (“Dissenting Stockholders”) that have perfected and not withdrawn a demand for, or lost their right to, appraisal pursuant to Section 262 of the DGCL with respect to such Common Shares (the “Dissenting Shares,” and, together with the Common Shares referred to in the immediately preceding clauses (i), (ii) and (iii), the “Excluded Shares”)) shall be automatically converted into the right to receive $14.05 per Common Share in cash (the “Per Share Merger Consideration”), without interest. At the Effective Time, all of the Common Shares shall cease to be outstanding, shall be cancelled and shall cease to exist, and each certificate (a “Certificate”) formerly representing any of the Common Shares (other than Excluded Shares) shall thereafter represent only the right to receive the Per Share Merger Consideration for each such Common Share, without interest, in accordance with this Article II.

(b)               Cancellation of Excluded Shares. Each Excluded Share shall cease to be outstanding, shall be cancelled without payment of any consideration therefor and shall cease to exist, subject to the right of the Record Holder of any Dissenting Shares to receive the payment for such Dissenting Shares pursuant to Section 2.9(f) and subject to the right of a holder of any shares of Company Restricted Stock that are not Dissenting Shares to receive the Restricted Stock Consideration therefor pursuant to Section 2.10(b).

(c)                Merger Sub. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically converted into one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

2.9              Exchange of Certificates and Book-Entry Shares.

(a)                Paying Agent. Immediately prior to, or at, the Effective Time, Parent shall deposit, or shall cause to be deposited, with American Stock Transfer & Trust Company or such

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other bank or trust company mutually acceptably to Parent and the Company (the “Paying Agent”), for the benefit of the Record Holders of Common Shares (other than Excluded Shares), a cash amount in immediately available funds necessary for the Paying Agent to make payments under Section 2.8(a) (such cash amount, the “Exchange Fund”). If a Dissenting Stockholder effectively withdraws its demand for, or fails to perfect or otherwise loses its rights to, appraisal pursuant to Section 262 of the DGCL with respect to any Dissenting Shares, (i) such Common Shares shall cease to be Excluded Shares and (ii) Parent shall make available, or cause to be made available, to the Paying Agent additional cash funds in an amount equal to the product of (x) the number of Dissenting Shares for which the Dissenting Stockholder has withdrawn its demand for, or failed to perfect or otherwise lost its rights to, appraisal pursuant to Section 262 of the DGCL and (y) the Per Share Merger Consideration.

(b)               Exchange Procedures. Promptly (and in any event within three (3) Business Days) after the Effective Time, Parent shall cause the Paying Agent to mail to each Record Holder of Common Shares (other than Excluded Shares) (i) a letter of transmittal specifying that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof as provided in Section 2.9(e)) to the Paying Agent, such letter of transmittal to be in customary form and to have such other provisions as Parent and the Company may reasonably agree, and (ii) instructions for use in effecting the surrender of the Certificates (or affidavits of loss in lieu thereof as provided in Section 2.9(e)) or Book-Entry Shares in exchange for the amount to which such Record Holder is entitled as a result of the Merger pursuant to Section 2.8(a). If any Excluded Shares cease to be Excluded Shares pursuant to Section 2.9(a), the Surviving Corporation shall cause the Paying Agent promptly (and in any event within three (3) Business Days) after the date on which such Excluded Shares cease to be Excluded Shares to mail to the Record Holder of such Common Shares the letter of transmittal and instructions referred to in the immediately preceding sentence, with respect to such Common Shares. Upon delivery of such letter of transmittal by any Record Holder of Common Shares (other than Excluded Shares), duly completed and duly executed in accordance with its instructions, and the surrender to the Paying Agent of a Certificate that immediately prior to the Effective Time represented such Common Shares (or affidavit of loss in lieu thereof as provided in Section 2.9(e)), or receipt by the Paying Agent of an “agent’s message” or other evidence of transfer of Book-Entry Shares as the Paying Agent may reasonably request, the holder of such Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor a cash amount by check or wire transfer of immediately available funds to an account designated by such holder (less any required Tax withholdings as provided in Section 2.11) equal to the product of (x) the number of Common Shares represented by such Certificate (or affidavit of loss in lieu thereof as provided in Section 2.9(e)) or Book-Entry Shares immediately prior to the Effective Time and (y) the Per Share Merger Consideration, and the Certificate so surrendered shall immediately be cancelled. No interest will be paid or accrued on any amount payable upon due surrender of the Certificates or Book-Entry Shares. In the event of a transfer of ownership of Common Shares that is not registered in the transfer records of the Company, a check for any cash to be delivered upon compliance with the procedures described above may be issued to the transferee if the applicable letter of transmittal is accompanied by all documents reasonably required by the Surviving Corporation to evidence and effect such transfer and to evidence that any applicable stock transfer Taxes have been paid or are not applicable.

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(c)                No Further Registration of Transfers. From and after the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Company of the Common Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificate is presented to the Surviving Corporation, Parent or the Paying Agent for transfer, it shall be cancelled and, subject to compliance with the procedures set forth in Section 2.9(b), exchanged for the cash amount to which the Record Holder thereof is entitled pursuant to this Article II (less any required Tax withholdings as provided in Section 2.11), to be paid by check or wire transfer of immediately available funds to an account designated by such holder.

(d)               Termination of Exchange Fund. Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains unclaimed by the Record Holders of the Common Shares for one (1) year after the Effective Time shall be delivered to the Surviving Corporation upon demand. Any Record Holder of Common Shares (other than Excluded Shares) that has not theretofore complied with this Article II shall thereafter look only to the Surviving Corporation for payment of the amount to which such Record Holder is entitled as a result of the Merger pursuant to Section 2.8(a) (less any required Tax withholdings as provided in Section 2.11), without any interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the Paying Agent or any other Person shall be liable to any holder of Common Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws.

(e)                Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in the form and amount reasonably required by Parent as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Paying Agent will issue a check in the amount (less any required Tax withholdings as provided in Section 2.11) equal to the product of (i) the number of Common Shares represented by such lost, stolen or destroyed Certificate and (ii) the Per Share Merger Consideration.

(f)                Dissenting Shares. Notwithstanding anything to the contrary contained in this Agreement, no Person that has perfected a demand for appraisal rights pursuant to Section 262 of the DGCL with respect to any Dissenting Shares shall be entitled to receive the Per Share Merger Consideration with respect to such Dissenting Shares unless and until such Person shall have effectively withdrawn its demand for, or failed to perfect or otherwise lost its right to, appraisal under the DGCL with respect to such Dissenting Shares. Notwithstanding anything to the contrary contained in this Agreement, unless and until a Dissenting Stockholder shall have effectively withdrawn its demand for, or failed to perfect or otherwise lost its right to, appraisal under the DGCL with respect to Dissenting Shares, each Dissenting Stockholder shall be entitled to receive only the payment provided by Section 262 of the DGCL with respect to such Dissenting Shares. If any Dissenting Stockholder effectively withdraws it demand for, or fails to perfect or otherwise loses its rights to, appraisal pursuant to Section 262 of the DGCL with respect to any Dissenting Shares, then the right of such Dissenting Stockholder to receive the payment provided by Section 262 of the DGCL shall cease and such Dissenting Shares shall be deemed to have been automatically converted into, as of the Effective Time, and shall represent

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only, the right to receive the Per Share Merger Consideration, without interest, pursuant to the provisions of this Section 2.9. At the Effective Time, the Dissenting Shares shall cease to be outstanding, shall be cancelled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except such rights provided in this Section 2.9(f). The Company shall give Parent (i) prompt notice of any written demands for appraisal pursuant to Section 262 of the DGCL received by the Company prior to the Effective Time, any withdrawals of such demands and any other demands, notices or instruments delivered to the Company pursuant to Section 262 of the DGCL prior to the Effective Time that relate to such demands and (ii) the opportunity to make decisions in respect of all negotiations and proceedings with respect to any such demand, notice or instrument. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.

2.10          Treatment of Outstanding Company Options and Company Restricted Stock Under Stock Plans.

(a)                Company Options. Immediately prior to the Effective Time, each outstanding and unexercised option to purchase Common Shares issued under a Stock Plan (a “Company Option”), whether or not then vested or exercisable, shall become fully vested and exercisable and, at the Effective Time, each such Company Option not theretofore exercised shall be cancelled and shall only entitle the holder thereof to receive an amount (less any required Tax withholdings as provided in Section 2.11) in cash equal to the product of (i) the total number of Common Shares subject to such Company Option immediately prior to the Effective Time and (ii) the excess, if any, of (A) the Per Share Merger Consideration over (B) the exercise price per Common Share under such Company Option (the “Option Consideration”), without interest. For the avoidance of doubt, in the event that the exercise price per Common Share of any Company Option is equal to or greater than the Per Share Merger Consideration, at the Effective Time, such Company Option shall be cancelled without any consideration being payable in respect thereof. As soon as reasonably practicable after the Effective Time (but in any event no later than three (3) Business Days after the Effective Time), Parent shall, or shall cause the Surviving Corporation to, pay to (or pay to the Surviving Corporation’s payroll provider for payment to) each holder of a Company Option the Option Consideration owed to such holder pursuant to this Section 2.10(a).

(b)               Company Restricted Stock. Immediately prior to the Effective Time, each outstanding share of Company Restricted Stock, whether or not then vested, shall become free of all restrictions, fully vested and transferable and, at the Effective Time, each such share of Company Restricted Stock shall be cancelled and shall only entitle the holder thereof to receive an amount (less any required Tax withholdings as provided in Section 2.11) in cash equal to the Per Share Merger Consideration (the “Restricted Stock Consideration”), without interest, subject, however, to any rights of the holder of such share of Restricted Stock pursuant to Section 2.9(f). As soon as reasonably practicable after the Effective Time (but in any event no later than three (3) Business Days after the Effective Time), Parent shall, or shall cause the Surviving Corporation to, pay to each holder of a share of Company Restricted Stock (other than a Dissenting Share) the Restricted Stock Consideration owed to such holder pursuant to this Section 2.10(b). If any shares of Company Restricted Stock that are also Dissenting Shares cease to be Dissenting Shares pursuant to Section 2.9(a), Parent shall, or shall cause the Surviving

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Corporation to, promptly (and in any event within three (3) Business Days) pay to the holder of such shares of Company Restricted Stock the Restricted Stock Consideration owed to such holder pursuant to this Section 2.10(b).

(c)                Corporate Actions.

(i)                 Prior to the Effective Time, if and as required by the applicable Stock Plan, the Company shall provide notice to each holder of a Company Option or Company Restricted Stock describing the treatment of and payment for such Company Option or Company Restricted Stock under Section 2.10(a) or Section 2.10(b), as applicable.

(ii)               At or prior to the Effective Time, the Company, the Board of Directors of the Company and the Compensation Committee of the Board of Directors of the Company, as applicable, shall adopt resolutions and shall take such other appropriate actions (including obtaining any required consents) to implement the provisions of Section 2.10(a) and Section 2.10(b) and to terminate the Stock Plans at the Effective Time.

(iii)             From and after the Effective Time, each Company Option and each Company Stock-Based Award shall no longer represent the right to acquire Common Shares. The Company shall take all actions necessary to ensure that, from and after the Effective Time, neither Parent nor the Surviving Corporation shall be required to deliver Common Shares or other capital stock of the Company to any Person pursuant to or in settlement of Company Options or Company Stock-Based Awards.

2.11              Withholding Taxes. Each of Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable in respect of the Common Shares, Company Options and Company Restricted Stock cancelled at the Effective Time such amounts as it is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986 (the “Code”) or any other applicable state, local or foreign Tax Law. To the extent that amounts are so withheld by the Surviving Corporation, Parent or the Paying Agent, as the case may be, such withheld amounts (i) shall be remitted by the Surviving Corporation, Parent or the Paying Agent, as applicable, to the applicable Governmental Entity and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of Common Shares, Company Options or Company Restricted Stock in respect of which such deduction and withholding was made by the Surviving Corporation, Parent or the Paying Agent, as the case may be.

2.12              Adjustments to Prevent Dilution. In the event that, after the date hereof and prior to the Effective Time, the Company changes the number of Common Shares or securities convertible or exchangeable into or exercisable for Common Shares issued and outstanding prior to the Effective Time, in each case as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, issuer tender or exchange offer, or other similar transaction (and, in each case, only with the consent of Parent pursuant to Section 4.1(a)), the Per Share Merger Consideration shall be equitably adjusted to reflect such change and as so adjusted shall, from and after the date of such event, be the Per Share Merger Consideration.

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2.13              Necessary Further Actions. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, properties, rights, privileges, powers and franchises of the Company and Merger Sub, the Company, Parent and Merger Sub shall, and shall be authorized to, cause their respective directors and officers to take all such lawful and necessary or desirable action, so long as such action is not inconsistent with this Agreement.

Article III.
REPRESENTATIONS AND WARRANTIES

3.1              Representations and Warranties of the Company. Except as set forth in (i) the Company Reports filed with the Securities and Exchange Commission (the “SEC”) prior to the date hereof, in each case, only if the nature and content of the applicable disclosure in such Company Report is such that its relevance to a representation or warranty in this Section 3.1 is reasonably apparent (but specifically excluding (x) any risk factor disclosures set forth under the heading “Risk Factors” and (y) any disclosure of risks included in any “forward-looking statements” disclaimer or any other forward-looking statements of risk that do not contain a reasonable level of detail about the specific risks of which the statements warn) or (ii) the disclosure letter delivered to Parent by the Company simultaneously with entering into this Agreement (the “Company Disclosure Letter”), the Company hereby represents and warrants to Parent and Merger Sub that:

(a)                Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries and, to the Knowledge of the Company, each of the Partner FCs is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is duly qualified to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such qualification, except where any such failure to be so organized, validly existing, qualified, in good standing or to have such power or authority would not, individually or in the aggregate, have a Company Material Adverse Effect. Section 3.1(a) of the Company Disclosure Letter contains a correct and complete list, as of the date hereof, of each Subsidiary of the Company that is not a Vein Clinic, together with the jurisdiction of organization of each such Subsidiary, the authorized and issued capital stock or other equity interests of each such Subsidiary and the name of each holder thereof. Section 3.1(a) of the Company Disclosure Letter also lists, as of the date hereof, each Partner FC, each Vein Clinic and the Subsidiary of the Company which contracts with each such Physician Practice. The Company has made available to Parent complete and correct copies of the Company’s and its Subsidiaries’ governing documents, each as amended to the date of this Agreement, and each as so made available is in full force and effect.

(b)               Capital Structure.

(i)                 The authorized capital stock of the Company consists of twenty million (20,000,000) Common Shares and five million (5,000,000) shares of preferred stock, par value $1.00 per share (the “Preferred Shares”). As of the close of business on June 5, 2012 (the

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Capitalization Date”), (A) 11,986,713 Common Shares were issued and outstanding, (B) 37,208 Common Shares were held by the Company as treasury shares and (C) no Preferred Shares were issued and outstanding. From the Capitalization Date to the date of this Agreement, no Company Options or Preferred Shares have been granted and no Common Shares or Preferred Shares have been issued, except for the issuance of Common Shares upon the exercise of Company Options or the vesting of Company Restricted Stock in accordance with its terms.

(ii)               As of the close of business on the Capitalization Date, there were 687,840 Common Shares reserved for issuance under the Company’s Amended and Restated 1992 Incentive and Non-Incentive Stock Option Plan, the Company’s 2000 Long-Term Compensation Plan and the Company’s 2007 Long-Term Compensation Plan (collectively, the “Stock Plans”). Section 3.1(b)(ii) of the Company Disclosure Letter contains a correct and complete list, as of the close of business on the Capitalization Date, of (A) all outstanding Company Options, indicating with respect to each such Company Option the name of the holder thereof, the Stock Plan under which such Company Option was issued, the number of Common Shares subject to such Company Option, the date of grant of such Company Option, the vesting schedule of such Company Option and the exercise price of such Company Option, and (B) all outstanding awards of Company Restricted Stock, indicating with respect to each such award of Company Restricted Stock the name of the holder thereof, the Stock Plan under which such Company Restricted Stock was issued, the number of Common Shares subject to such award of Company Restricted Stock, the date of grant of such award of Company Restricted Stock and the vesting schedule of such award of Company Restricted Stock. As of the close of business on the Capitalization Date, there were no outstanding Company Stock-Based Awards under the Stock Plans. The Company has made available to Parent complete and correct copies of all Stock Plans, the forms of all stock option agreements evidencing Company Options and the forms of all agreements evidencing Company Restricted Stock and Company Stock-Based Awards.

(iii)             All outstanding Common Shares are, and all Common Shares subject to issuance as set forth in Section 3.1(b)(ii), upon issuance in accordance with the terms of the applicable Stock Plan, will be, duly authorized, validly issued, fully paid and nonassessable.

(iv)             Each of the outstanding shares of capital stock of each of the Company’s Subsidiaries is duly authorized, validly issued, fully paid, nonassessable and owned by the Company or by a direct or indirect wholly-owned Subsidiary of the Company, free and clear of any lien, charge, pledge, security interest, mortgage, easement, claim or other encumbrance (each, a “Lien”), except for (A) such transfer restrictions of general applicability as may be provided under the Securities Act of 1933 (the “Securities Act”) and other applicable securities Laws and (B) Permitted Liens. Neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other equity securities, or any securities or obligations convertible or exchangeable into or exercisable for capital stock or other equity securities, of any Person that is not a Subsidiary of the Company, other than securities in a publicly traded company held for investment by the Company or any of its Subsidiaries and consisting of less than five percent (5%) of the outstanding capital stock of such Company.

(v)               Except (A) as set forth in this Section 3.1(b) and (B) as reserved for future grants under the Stock Plans, as of the date of this Agreement, there are no preemptive

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or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other equity securities of, or voting interests in, the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any equity securities of, or voting interests in, the Company or any of its Subsidiaries, or that obligate the Company or any of its Subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or amend or enter into any such option, warrant, equity security, call, right, commitment or agreement, and no securities or obligations evidencing such rights are authorized, issued or outstanding.

(vi)             The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

(vii)           The Company does not have any stock appreciation or other equity compensation arrangements measured by the value of, or otherwise relating to, the capital stock of the Company. Except for this Agreement and the Voting Agreement, neither the Company nor any of its Subsidiaries is a party to or is bound by any agreements or understandings with respect to the voting (including voting trusts and proxies) or sale or transfer (including agreements imposing transfer restrictions) of any shares of capital stock or other equity interests of the Company. There are no registration rights by which the Company or any of its Subsidiaries is bound with respect to any equity security of any class of the Company or any of its Subsidiaries.

(viii)         There are no obligations, contingent or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Common Shares or other equity securities of the Company or any of its Subsidiaries or to provide funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, the Company or any Subsidiary of the Company or any other Person for any purpose other than as provided in award agreements relating to Company Options or Company Restricted Stock as they relate to using Common Shares to pay the exercise price thereof or to pay required withholding of income Taxes.

(c)                Corporate Authority; Approval and Fairness; Opinion of Financial Advisor.

(i)                 The Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute and deliver this Agreement and, subject only to, assuming the representations and warranties of Parent and Merger Sub set forth in Section 3.2 are true and correct, adoption of this Agreement by the holders of a majority of the outstanding Common Shares entitled to vote on such matter at a stockholders’ meeting duly called and held for such purpose (the “Company Requisite Vote”), to perform its obligations under this Agreement and to consummate the Merger. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement by Parent and Merger Sub, constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy,

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insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “Bankruptcy and Equity Exception”).

(ii)               As of the date hereof, the Board of Directors of the Company has, by resolutions duly ad