INFUSYSTEM HOLDINGS, INC FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits
(Edgar Glimpses Via Acquire Media NewsEdge) Item 1.01. Entry into a Definitive Material Agreement.
On April 24, 2012, InfuSystem Holdings, Inc. (the "Company") entered into a
Settlement Agreement ("Settlement Agreement"), by and among the Company;
Kleinheinz Capital Partners ("Kleinheinz"), Meson Capital Partners ("Meson"),
Boston Avenue Capital ("Boston Avenue" and, together with Kleinheinz and Meson,
the "Investors") and certain affiliates of the Investors; each member of the
Company's Board of Directors (the "Board") as of such date, David Dreyer,
Timothy Kopra, Pat LaVecchia, Sean McDevitt, Jean-Pierre Millon, John Voris and
Wayne Yetter; and Dilip Singh, John Climaco, Charles Gillman, Ryan Morris and
Joseph Whitters (the "New Directors"). Pursuant to the Settlement Agreement, the
following actions were taken by the Board: (i) the size of the Board was
increased from seven (7) to twelve (12) authorized directors, (ii) to fill the
resulting vacancies, the New Directors were appointed to the Board, (iii) each
member of the current Board other than Messrs. Dreyer and Yetter resigned from
the Board (such resigning directors, the "Resigning Directors") and (iv) the
size of the Board was decreased from twelve (12) to seven (7) members. The
Settlement Agreement provides for the termination of the Investors' solicitation
of designations to request a special meeting of the Company's stockholders, the
withdrawal of the Investors' request to call the special meeting and the
Investors' director nominations for the Company's 2012 annual meeting of
stockholders (the "Annual Meeting") and cancellation of the Company's special
meeting of stockholders. Pursuant to the Settlement Agreement, there will be a
single slate of nominees for election at the Annual Meeting, consisting of
Messrs. Dreyer and Yetter (the "Continuing Directors") and the New Directors.
Through the date of the Company's 2013 annual meeting of stockholders, each
committee of the Board shall include at least one Continuing Director, to the
extent willing or permitted under applicable law or regulation to serve.
Under the terms of the Settlement Agreement, the Company has agreed to reimburse
the Investors for their expenses in connection with the solicitation of
designations to request a special meeting of stockholders, their request to call
the special meeting, their director nominations for the Company's 2012 annual
meeting of stockholders, the solicitation of proxies for the special meeting and
the preparation of related documentation. The Investors have agreed that, within
two business days of the date of the Settlement Agreement, they will file an
Amendment to Schedule 13D reflecting the actions contemplated by the Settlement
Agreement, and reflecting the termination of the treatment of the Investors as a
"group" within the meaning of Section 13(d)(3) of the Exchange Act.
As part of the Settlement Agreement, each of the Investors has agreed
individually with the Company, during the period between the date of the
Settlement Agreement and the date of the Company's 2013 Annual Meeting of
Stockholders, not to, among other things (a) acquire or seek to acquire,
directly or indirectly, by purchase or otherwise, more than 5% of the
outstanding shares of any securities of the Company or any subsidiary of the
Company; (b) submit any stockholder proposal or nominate any candidate for
election to the Board, other than as set forth in the Settlement Agreement;
(c) form, join or in any other way participate in a "group," as defined by
Exchange Act Section 13(d)(3), other than as permitted by the Settlement
Agreement; (d) solicit proxies, agent designations, written consents of
stockholders or conduct any nonbinding referendum with respect to any matter, or
become a participant in any contested solicitation for director, other than in
support of all the nominees of the Board at the Company's 2012 and 2013 annual
meetings; (e) seek to call or request the call of a special meeting of the
Company's stockholders; (f) effect or seek to effect any acquisition of any
material assets or businesses of the Company; (g) publicly disclose any plan or
proposal of the Company that is inconsistent with the Settlement Agreement;
(h) seek election or appointment to the Board, or seek any director's
resignation, other than as provided in the Settlement Agreement;
(i) (1) knowingly sell, transfer or otherwise dispose of any shares of Common
Stock to any person or entity that is (or will become upon consummation of such
sale, transfer or other disposition) the holder of 15% or more of the
outstanding Common Stock or (2) without the prior written consent of the Company
(acting through the Board) on any single day, sell, transfer or otherwise
dispose of more than 5% of the outstanding shares of Common Stock through the
The Settlement Agreement also provides for mutual releases among the Company,
the Investors, the Continuing Directors and the Resigning Directors and
non-disparagement obligations among the Company, the Investors, the New
Directors and the Continuing Directors. The Settlement Agreement also requires
the Company to provide (i) continued indemnification of the Continuing
Directors, the Resigning Directors and certain other past directors and officers
in accordance with the Company's current Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws and (ii) directors' and officers'
indemnification insurance coverage for the benefit of the persons currently
covered consistent with the Company's current policy.
The foregoing description of the Settlement Agreement is only a summary, does
not purport to be complete and is qualified in its entirety by reference to the
. . .
Item 1.02 Termination of a Material Definitive Agreement
Pursuant to a Consulting Agreement, dated as of April 24, 2012, by and between
the Company and Sean McDevitt, the Share Award Agreement, dated as of April 6,
2010, by and between the Company and Mr. McDevitt, was terminated. A description
of the material terms of the Consulting Agreement is provided below in
Item 5.02(e), which is incorporated herein by reference in response to this
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(a) Not applicable.
(b) Pursuant to the Settlement Agreement described in Item 1.01 above, on
April 24, 2012, the Board increased the size of the Board from seven (7) to
twelve (12) authorized directors and filled the resulting vacancies with the
appointment of the New Directors as described in Item 5.02(d) below. Immediately
following such appointment, the Resigning Directors, Timothy Kopra, Pat
LaVecchia, Sean McDevitt, Jean-Pierre Millon and John Voris resigned as
directors, effective immediately. In addition, Sean McDevitt resigned as Chief
Executive Officer of the Company, effective April 24, 2012. Following the
resignation of the Resigning Directors, the Board decreased the size of the
Board from twelve (12) to seven (7) directors.
(c) The Board has appointed Dilip Singh as Interim Chief Executive Officer of
the Company effective April 24, 2012.
Mr. Singh, age 63, most recently served as the Chief Executive Officer and a
Director of MRV Communications, Inc. from July 2010 to December 2011. Prior to
joining MRV, Mr. Singh was Chief Executive Officer of Telia-Sonera Spice Nepal,
a large Asian mobile operator, from December 2008 to May 2009, where he was
responsible for turning a new acquisition to sustained growth and profitability.
From 2004 to 2008, Mr. Singh was President and Chief Executive Officer of
Telenity, Inc., a convergence applications, service delivery platform and value
added services telecom software company. Mr. Singh was President of NewNet, a
telecom infrastructure software startup, which was acquired by ADC
Telecommunications Inc., from 1994 to 1998. He remained an executive consultant
to ADC through 2000 and returned in 2003 to 2004 as the president of ADC's
software systems division. In the interim 2001 to 2003 period, he was Executive
Chairman of IntelliNet and Entrepreneur in Residence with MC Venture Partners
and in such capacity acted as an executive consultant and board advisor to
several companies. From 1988 to 1994, Mr. Singh was an executive director at
Sprint Corporation, where he directed strategic planning and development of
intelligent network services, network management and call center applications
for consumer and business customers, and supported marketing and sales with an
annual revenue impact of over $2 billion. Prior to Sprint, he co-founded United
Database Corporation, a start-up that led the introduction of yellow pages in
three major metropolitan cities in India and had $12 million in revenue during
its first 18 months. Mr. Singh began his career as an executive
telecommunication consultant with Alcatel-Lucent switching systems divisions in
the United States, England, Germany and Italy for over 10 years. Mr. Singh
earned a Masters degree in Electronics and Communications Electrical Engineering
from the Indian Institute of Technology and a Masters of Science in Physics from
the University of Jodhpur.
In connection with Mr. Singh's appointment as Interim Chief Executive Officer,
the Company entered into an Employment Agreement, dated as of April 24, 2012,
with Mr. Singh (the "Singh Employment Agreement"). The Singh Employment
Agreement provides for an initial term (the "Initial Term") of six months, and
the Company and Mr. Singh may renew the agreement for additional six month terms
following the Initial Term.
Under the Singh Employment Agreement, Mr. Singh will receive a salary of
$150,000 for the Initial Term and is eligible for a performance bonus, up to a
maximum of $500,000, based upon satisfaction of performance objectives to be
developed by the Compensation Committee, including stock price performance. In
the event that the Compensation Committee, in its sole discretion, determines
that the performance bonus criteria have not been satisfied in full for the
Initial Term or for any subsequent term of the agreement, the performance bonus
can be earned on a partial basis, as determined by the Compensation Committee.
In the event of a "change in control," as defined in the agreement, the
performance bonus for the term in which such change of control occurs will be
paid on the date of the closing of the transaction that gives rise to the change
of control. In addition, under the Singh Employment Agreement, Mr. Singh
received an option grant to purchase 500,000 shares of the Company's Common
Stock, at an exercise price equal to the closing price of the Common Stock on
the date of grant (i.e., $2.25 per stock option). The options will vest ratably
over the Initial Term, with 1/6 of the options vesting on the 24thday of each
month, and expire on the third anniversary of the date of grant. In the event of
a "change of control" or upon any termination of Mr. Singh's employment other
than for "cause" (as defined in the agreement), or otherwise at the direction of
the Compensation Committee, all options shall vest and become immediately
exercisable. Mr. Singh will also be entitled to reimbursement from the Company
for all reasonable temporary living expenses associated with his residence in or
around Madison Heights, Michigan, and regular travel between Madison Heights and
Mr. Singh's place of residence in the U.S.
The foregoing description of the Singh Employment Agreement is only a summary,
does not purport to be complete and is qualified in its entirety by the terms of
the Singh Employment Agreement, which is filed as Exhibit 10.4 hereto and
incorporated by reference herein.
(d) Pursuant to the Settlement Agreement, on April 24, 2012, the Board increased
the size of the Board from seven (7) to twelve (12) authorized directors and
filled the resulting vacancies with the appointment of the New Directors, Dilip
Singh, John Climaco, Charles Gillman, Ryan Morris and Joseph Whitters, to the
Board and the Resigning Directors, Timothy Kopra, Pat LaVecchia, Sean McDevitt,
Jean-Pierre Millon and John Voris, resigned from the Board, in each case,
effective immediately. Following such actions, the size of the Board was
decreased from twelve (12) to seven (7) members. As a result, the Board consists
of Messrs. Climaco, Dreyer, Gillman, Morris, Singh, Whitters and Yetter. The
description of the Settlement Agreement set forth in the first paragraph under
the heading "Settlement Agreement" under Item 1.01 above is incorporated by
The biographies of the New Directors are set forth below:
John Climaco, age 43, is the President and Chief Executive Officer, as well as
member of the board of directors, of Axial Biotech, Inc., a venture-backed
company specializing in spine disorders, which he co-founded in 2003. Under
Mr. Climaco's leadership, and through partnerships he created with companies
including Medtronic, Johnson & Johnson and Smith & Nephew, Axial successfully
developed and commercialized ScoliScore, the first molecular prognostic test in
the orthopaedic industry. Among other accolades, Orthopaedics This Week
recognized ScoliScore as the Best New Diagnostics Technology for Spine Care
2010. Mr. Climaco has been involved with start-up ventures in various capacities
for the last twelve years. Prior to founding Axial Biotech, Mr. Climaco served
as a Producer in 1998 and Director of Programming from 1999 to 2000 for Quokka
Sports, a venture-backed online media company that went public in 1999. While
. . .
Item 8.01 Other Events.
On April 24, 2012, the Company issued a press release announcing the
implementation of the Settlement Agreement, including the appointment of
Mr. Singh as interim Chief Executive Officer. A copy of this press release is
filed as Exhibit 99.1 hereto and incorporated by reference herein.
On April 25, 2012, the Company issued a press release announcing the
rescheduling of the Company's 2012 annual meeting of stockholders for May 25,
2012 and a record date of April 30, 2012 to determine shareholders entitled to
vote at such meeting. A copy of this press release is filed as Exhibit 99.2 and
incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits
10.1 Settlement Agreement by and among the Company, Kleinheinz Capital
Partners, Meson Capital Partners, Boston Avenue Partners and the
individuals named therein, dated as of April 24, 2012.
10.2 Fifth Amendment dated April 24, 2012 to the Credit Agreement by and among
the Company, Bank of America, N.A. and Keybank National Association, dated
as of June 15, 2010.
10.3 Consulting Agreement by and between the Company and Sean McDevitt, dated
as of April 24, 2012.
10.4 Employment Agreement by and between the Company and Dilip Singh, dated as
of April 24, 2012.
10.5 Employment Agreement by and between the Company and Ryan J. Morris, dated
as of April 24, 2012.
99.1 Press Release of InfuSystem Holdings, Inc. dated April 24, 2012.
99.2 Press Release of InfuSystem Holdings, Inc. dated April 26, 2012.
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