UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 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): November
13, 2009
Merge
Healthcare Incorporated
(Exact
name of registrant as specified in its charter)
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Delaware
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39-1600938
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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6737
West Washington Street, Suite 2250
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Milwaukee,
Wisconsin
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53214
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(Address
of Principal Executive Offices)
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(ZIP
Code)
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(414)
977-4000
(Registrant's
telephone number, including area code)
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
On
November 13, 2009, Merge Healthcare Incorporated (the “Company”) entered into a
placement agency agreement (the “Agency Agreement”) with William Blair &
Company, L.L.C., Craig-Hallum Capital Group LLC and Robert W. Baird & Co.
Incorporated (the “Placement Agents”), pursuant to which the
Placement Agents agreed to use their reasonable best efforts to arrange for the
sale of up to 9,084,032 shares of the Company’s common stock in a
registered direct public offering (the “Registered Direct Offering”). The
Company has agreed to pay the Placement Agents an aggregate fee equal to 6% of
the gross proceeds received in the offering. The Company has also agreed to
reimburse the Placement Agents for expenses incurred by them in connection with
the offering, with a maximum expense reimbursement in such amount that, when
aggregated with the 6% fee, does not exceed the lesser of $150,000 and 8% of the
gross proceeds received by the Company in the offering.
The
Agency Agreement contains customary representations, warranties and covenants by
the Company. It also provides for customary indemnification by each of the
Company and the Placement Agents for losses or damages arising out of or in
connection with the sale of the securities being offered. The Company has agreed
to indemnify the Placement Agents against liabilities under the Securities Act
of 1933, as amended. The Company has also agreed to contribute to payments the
Placement Agents may be required to make in respect of such
liabilities.
Also on
November 13, 2009, the Company and certain institutional investors entered into
subscription agreements (the “Subscription Agreements”) in connection with the
Registered Direct Offering, pursuant to which the Company agreed to sell an
aggregate of up to 9,084,032 shares of its common stock to such
investors for aggregate gross proceeds, before deducting fees to the Placement
Agents and other estimated offering expenses payable by the Company, of
approximately $27.3 million. The purchase price for one share of common stock is
$3.00. The Registered Direct Offering was effected as a takedown off
the Company’s shelf registration statement on Form S-3 (File No. 333-161691),
which became effective on November 5, 2009 (the “Registration Statement”)
pursuant to a prospectus supplement to be filed with the Securities and Exchange
Commission.
The
Company intends to use $18.1 million of the net proceeds from the Registered
Direct Offering to prepay in full its senior secured note due June 2010 (the
“Note”), which includes all amounts owed under the Note of $15.0 million and an
additional amount $3.1 million payable as a result of the prepayment of the
Note. Per the terms of the Note, the Company expects to record an
additional $0.6 million non-cash charge related to acceleration of costs
previously being amortized over the life of the loan resulting in a $3.7 million
expense in the fourth quarter of 2009. The Company intends to use the
remaining net proceeds from the Registered Direct Offering for general corporate
purposes, including working capital. The Note is held by Merrick RIS, LLC
(“Merrick”) and bears interest at 13.0% per annum, payable quarterly, and
becomes payable in a single installment in June 2010. As a result of
the prepayment, the Company is required to pay 118% of the outstanding principal
of the Note, together with accrued and unpaid interest. The Company
agreed to prepay the Note in exchange for Merrick’s agreement to waive its
piggyback registration rights with respect to the Registered Direct Offering and
for Merrick’s and Michael W. Ferro, Jr.’s agreement not to offer, sell, offer or
agree to sell, grant any option to purchase or otherwise dispose (or announce
any offer, sale, grant of an option to purchase or other disposition) of,
directly or indirectly, any of the Company’s common stock (or any securities
convertible into, exercisable for or exchangeable or exercisable for shares of
Common Stock) prior to 90 days following November 13, 2009, except for transfers
(i) to Mr. Ferro’s spouse, relatives or lineal descendants or ancestors, natural
or adopted (collectively, “Relatives”), provided that the transferee agrees in
writing to be bound by the terms of these restrictions, (ii) any trust,
partnership or other entity for the direct or indirect benefit of Mr. Ferro or
the Relatives, (iii) transfers upon the death of Mr. Ferro pursuant to the laws
of descent and distribution or pursuant to wills, (iv) gifts, provided that the
transferee agrees in writing to be bound by the terms of these restrictions, or
(iv) to the Company.
Merrick
RIS, LLC beneficially owns, as of September 30, 2009, 42.7% of the Company’s
outstanding common stock. Michael W. Ferro, Jr., the Company’s
Chairman of the Board, and trusts for the benefit of Mr. Ferro’s family members
beneficially own a majority of the equity interest in Merrick RIS,
LLC. Mr. Ferro also serves as the chairman and chief executive
officer of Merrick RIS, LLC. Accordingly, Mr. Ferro indirectly owns
or controls the Note and all of the shares of common stock owned by Merrick RIS,
LLC. In addition, Justin C. Dearborn, the Company’s Chief Executive
Officer and a Director, served as Managing Director and General Counsel of
Merrick Ventures, LLC, an affiliate of Merrick RIS, LLC, from January 2007 until
his appointment as Chief Executive Officer on June 4, 2008.
The
Registered Direct Offering is expected to close on November 18, 2009, subject to
the satisfaction of customary closing conditions. After giving effect to the
Registered Direct Offering, as described in this Item 1.01, the Company will
have 75,211,822 shares of common stock outstanding.
The
foregoing summaries of the terms of the Agency Agreement and the form of
Subscription Agreements are subject to, and qualified in their entirety by, such
documents attached hereto as Exhibits 10.1 and 10.2, respectively, which are
incorporated herein by reference.
A shelf
registration statement, as amended, relating to these securities was previously
filed on September 3, 2009 and declared effective by the Securities and Exchange
Commission (SEC No. 333-161691). A prospectus supplement related to the offering
will be filed with the Securities and Exchange Commission. Any offer
will be made only by means of a prospectus, including a prospectus supplement,
forming a part of the effective registration statement. This press
release does not constitute an offer to sell or the solicitation of offers to
buy any security and shall not constitute an offer, solicitation, or sale of any
security in any jurisdiction in which such offer, solicitation, or sale would be
unlawful. A copy of the base prospectus can be obtained at the Securities and
Exchange Commission's website http://www.sec.gov or via written request to Merge
Healthcare Incorporated, 6737 W. Washington Street, Suite 2250, Milwaukee,
Wisconsin 53214, Attn: General Counsel.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
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Opinion
of McDermott Will & Emery LLP
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Placement
Agency Agreement dated November 12, 2009 by and between the Company and
William Blair & Company, L.L.C., Craig-Hallum Capital Group LLC and
Robert W. Baird & Co.
Incorporated
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Form
of Subscription Agreement
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23.1
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Consent
of McDermott Will & Emery LLP (included in Exhibit
5.1)
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News
Release dated November 13, 2009
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News
Release dated November 13, 2009
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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.
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MERGE
HEALTHCARE INCORPORATED
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November
13, 2009
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/s/
Ann Mayberry-French
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Ann
Mayberry-French, General Counsel
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