Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported) April
19, 2006
iCAD,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or
Other Jurisdiction of
Incorporation)
|
1-9341
|
02-0377419
|
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
| |
|
|
4
Townsend West, Suite 17, Nashua, New Hampshire
|
03063
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(603)
882-5200
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
Item
3.02. Unregistered Sales of Equity
Securities.
On
April
19, 2006, iCAD, Inc (the “Company”) entered into an employment agreement with
Kenneth Ferry that provides for Mr. Ferry’s employment as the Company’s Chief
Executive Officer and President for a term commencing on May 15, 2006 and
expiring on December 31, 2008, subject to automatic one-year renewals after
the
expiration of the initial term under certain conditions, at an annual base
salary of $300,000. The
agreement also provided for Mr. Ferry to receive a signing bonus of $35,000
and
for his eligibility to receive during each employment year during the term
of
the Agreement an annual incentive bonus (“Incentive Bonus”) in each calendar
year of up to $100,000 (except for the 2006 fiscal year where the Incentive
Bonus will not be less than $50,000) if the Company achieves goals and
objectives mutually agreed upon by the Board and Mr. Ferry.
Mr.
Ferry
is also entitled to customary benefits, including participation in employee
benefit plans, and reasonable travel and entertainment expenses as well as
a
monthly automobile allowance. The employment agreement provides that if his
employment is terminated without cause, Mr. Ferry will receive an amount equal
to his base salary then in effect for the greater of the remainder of his
original term of employment or one (1) year plus the pro rata portion of any
Incentive Bonus earned in any employment year through the date of his
termination. In the event that within six months of a “change in control”,
either (i) Mr. Ferry is terminated by the Company without “cause” or
(ii) he terminates his agreement for “good reason,” as all such terms are
defined in the employment agreement, he will be entitled to receive his base
salary then in effect for the greater of the remainder of his original term
of
employment or two (2) years from the date of termination plus any Incentive
Bonus which otherwise would have been payable to him for any employment year
in
which the date of his termination occurred.
Pursuant
to the agreement and as an inducement to his joining the Company,
Mr. Ferry
was
also granted on April 19, 2006 Non-Qualified
Stock Options outside of a shareholder approved plan to purchase 800,000 shares
of the Company's common stock, par value $0.01 per share, with an exercise
price
equal to $1.59, the closing sale price of the common stock on April 17, 2006,
which was the employment inducement date. The options become exercisable as
to
(i) 160,000 shares on May 15, 2006, (ii) an additional
160,000 shares on December 31, 2006; (iii) an additional 160,000
shares on May 15, 2007; (iv) an additional 160,000 shares on
May 15, 2008 and (v) an additional 160,000 shares on May 15,
2009. Vesting of the options accelerates as to the 160,000 shares to which
the
options become exercisable at the latest date (to the extent any such shares
remain unvested at the time), upon the closing sale price of the Company’s
common stock for a period of twenty (20) consecutive trading days exceeding
(i) 200% of the exercise price of the per share of the options;
(ii) 300% of the exercise price per share of the options or (iv) 400% of
the exercise price per share of the options. The options expire on
March 15, 2011, subject to earlier expiration under certain conditions. The
unvested portion of these options will automatically vest if Mr. Ferry’s
employment is terminated without cause within six (6) months of a change in
control.
On
April 19, 2006, the Company entered into an employment agreement with
Jeffrey Barnes that provides for Mr. Barnes’ employment as the Company’s Senior
Vice President of Sales for a term commencing on May 15, 2006 and expiring
on December 31, 2006 subject to automatic one year renewals at the end of
the initial term, subject to certain conditions, at an annual base salary of
$185,000. The agreement also provided for Mr. Barnes to receive a signing
bonus of $20,000 and for his eligibility to receive during each employment
year
during the term of the Agreement an annual Incentive Bonus in each calendar
year
of up to $74,000 (except for the 2006 fiscal year where the Incentive Bonus
will
not be less than $37,000) if the Company achieves goals and objectives mutually
agreed upon by the Board and Mr. Barnes.
Mr.
Barnes is also entitled to customary benefits, including participation in
employee benefit plans and reasonable travel and entertainment expenses. The
employment agreement provides that if his employment is terminated without
cause, Mr. Barnes will receive an amount equal to his base salary then in effect
for the greater of the remainder of his original term of employment or one
(1)
year from the date of termination plus the pro rata portion of any Incentive
Bonus earned in any employment year through the date of his termination. In
the
event that within three months of a “change in control” either (i) Mr.
Barnes is terminated by the Company without “cause” or (ii) he terminates
his agreement for “good reason,” as all such terms are defined in the employment
agreement, he will be entitled to receive his base salary then in effect for
the
greater of the remainder of his original term of employment or one (1) year
from
the date of termination plus any Incentive Bonus which otherwise would have
been
payable to him for any employment year in which the date of his termination
occurred.
Pursuant
to the agreement and
as an
inducement to his joining the Company, Mr. Barnes was also granted on April
19, 2006 Non-Qualified
Stock Options outside of a shareholder approved plan to purchase 225,000 shares
of the Company's common stock on, with an exercise price equal to $1.59, the
closing sale price of the common stock on April 17, 2006. The options become
exercisable as to (i) 45,000 shares on May 15, 2006, (ii) an
additional 45,000 shares on December 31, 2006; (iii) an additional
45,000 shares on May 15, 2007; (iv) an additional 45,000 shares on
May 15, 2008 and (v) an additional 45,000 shares on May 15, 2009.
Vesting of the options accelerates as to the 45,000 shares to which the options
become exercisable at the latest date (to the extent any such Shares remain
unvested at the time), upon the closing sale price of the Company’s common stock
for a period of twenty (20) consecutive trading days exceeding
(i) 200% of the exercise price of the per share of the option;
(ii) 300% of the exercise price per share of the options or (iv) 400%
of the exercise price per share of the options. The options expire on
March 15, 2011, subject to earlier expiration under certain conditions. The
unvested portion of these options will automatically vest if Mr. Barnes’
employment is terminated without cause within six (6) months of a change in
control.
The
options granted to Mr. Ferry and Mr. Barnes were issued in private transactions
pursuant to exemptions from registration under Section 2(a)(3) or Section
4(2)
of the Securities Act of 1933, as amended.
On
April 19, 2006 the Company entered into a separation agreement and release
with W. Scott Parr, its Chief Executive Officer and President, providing for
his
resignation from those positions with the Company effective May 15, 2006.
Pursuant to the agreement Mr. Parr will receive his current salary through
May 15, 2006 and a separation payment equal to $480,000 less applicable
taxes and withholding, payable in 24 monthly installments.
On
April 19, 2006 the Board agreed to enter into Indemnification agreement
with each of the Company’s directors and officers which will provide for the
Company to Indemnify each of such persons to the fullest extent authorized
or
permitted by the Delaware General Corporation law.
Item
5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
On
April 19, 2006, W. Scott Parr resigned as Chief Executive Officer and
President of the Company effective May 15, 2006. Mr. Parr will remain as a
Director of the Company and was appointed by the Board as its Vice Chairman,
a
non-officer position. On April 19, 2006, the Board of Directors of
the Company appointed Kenneth M. Ferry as the Company’s President, Chief
Executive Officer and a Class I member of the Company’s Board of Directors
effective May 15, 2006.
Mr.
Ferry, age 52, has over 20 years of experience in the healthcare
technology field, with more than 10 years experience in senior management
positions with P&L responsibilities. He was most recently Senior Vice
President and General Manager for the Global Patient Monitoring business for
Philips Medical Systems, the market leader in a $2.5 billion industry. In this
role he was responsible for Research & Development, Marketing, Business
Development, Supply Chain and Manufacturing, Quality and Regulatory, Finance
and
Human Resources. Since 2001, Mr. Ferry was also a Senior Vice President for
the
parent company, Philips Electronics Medical Systems Division.
From
1983
to 2001, Mr. Ferry served in a number of management positions with Hewlett
Packard and Agilent Technologies. As a Vice President and General Manager in
the
Hewlett Packard / Agilent Technologies Healthcare Solutions Group, he was one
of
the key executives responsible for the sale of Agilent’s Medical Solutions Group
to Philips in August 2001. Prior to this, beginning in 1997, he served as Vice
President and General Manager of North American Field Operations for Hewlett
Packard and Agilent Technologies. He was responsible for sales, service, and
marketing for Patient Monitoring, Cardiac Ultrasound, Defibrillation, Diagnostic
EKG and Information Technology solutions. Mr. Ferry is a graduate of the
Boston College School of Management in Newton, Massachusetts.
The
description of Mr. Ferry’s employment agreement contained in Item 1.01 of this
Form 8-K is incorporated by reference into this Item 5.02.
Item
5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
On
April 19, 2006 the Company amended its By Laws as follows:
1) Article
II, Section 2.11 was amended to provide that special meetings of the Company’s
shareholders may be called by the Board of Directors or the Secretary at the
request in writing of holders of a majority of shares entitled to vote at a
meeting. The prior provision provided that special meetings of shareholders
could be called by the board or the President or holders of record of a majority
of the outstanding shares entitled to vote at the meeting.
2) Article
III, Section 3.11 was added to provide for the directors to elect a Chairman
and
Vice Chairman from its members, to specify that the Chairman, or in the
Chairman’s absence, the Vice Chairman, or in the absence of both, a director or
officer of the Company chosen by the directors shall preside over meetings
of
shareholders.
3) Article
IV, Section 4.10 was amended to delete the reference to Chairman as an officer
position.
4) Article
IV, Section 4.30 was amended to delete the sentence relating to the duties
of the Chairman of the Board and the sentence that provided that in the absence
of the Chairman, the President shall perform all of the duties of the Chairman.
Item
8.01. Other Events
On
April 19, 2006 the panel of arbitrators in the case entitled R2 Technology
(“R2”) and Shih-Ping Wang vs. iCAD, Inc. rejected all of the claims of R2 ,
finding that the Company did not infringe any patent asserted by R2. The
arbitrators also found that R2 did not infringe any of the Company’s
patents.
9.01 Financial
Statements and Exhibits.
(d) Exhibits
Exhibit
3(ii) Amendment
dated April 19, 2006 to the Company’s Bylaws
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| |
|
|
| |
iCAD,
INC.
(Registrant)
|
|
|
|
| |
By: |
/s/ Annette
Heroux |
| |
Annette
Heroux
Vice
President of Finance, Chief Financial Officer
|
| |
|
EXHIBIT
INDEX
| Exhibit No. |
|
Description of Document |
| |
|
|
| 3.ii |
|
Amendment dated April 19, 2006 to
the
Registrant’s By-Laws. |