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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934.
Date of Report May 8, 1996
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IVAC MEDICAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 34- 95-3177311
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
10221 WATERIDGE CIRCLE 92121-2733
SAN DIEGO, CALIFORNIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (619) 458-7000
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ITEM 5. OTHER EVENTS.
The Company entered into a May 8, 1996 letter agreement with Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC"), providing for DLJSC to act
as the Company's exclusive financial advisor for 12 months with respect to any
Transaction (as defined in the letter agreement).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
None.
(b) Pro forma financial information.
None.
(c) Exhibits
99.1 Letter Agreement between IVAC Medical Systems, Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation.
1
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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 hereunto duly authorized.
IVAC MEDICAL SYSTEMS, INC.
Date: August 30, 1996 By: /s/ Debra P. Crawford
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Debra P. Crawford
Chief Financial Officer and
Vice President of Finance
and Administration
2
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May 8, 1996
PRIVATE AND CONFIDENTIAL
IVAC Medical Systems, Inc.
10221 Wateridge Circle
San Diego, CA 92121
Attention: William J. Mercer
President and Chief Executive Officer
Gentlemen:
This letter agreement (the "Agreement") confirms our understanding that
IVAC Medical Systems (which together with its subsidiaries is hereinafter
referred to as the "Company") has engaged Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") to act as its exclusive financial advisor for a
period of twelve months, commencing upon your acceptance of this Agreement, with
respect to the sale, merger, consolidation or any other business combination, in
one or a series of transactions, involving all or a substantial amount of the
business, securities or assets of the Company (each, a "Transaction").
As discussed, we propose to undertake certain services on your behalf
including to the extent requested by you: (i) assisting you in preparing an
offering memorandum describing the Company, its operations, its historical
performance and its future prospects; (ii) identifying and contacting selected
qualified acquirers acceptable to you; (iii) arranging for potential acquirers
to conduct business investigations; (iv) negotiating the financial aspects of
any proposed Transaction under your guidance; and (v) delivering an opinion to
the Board of Directors of the Company, if requested, as to the fairness from a
financial point of view of the consideration to be received by the Company's
stockholders in any proposed Transaction.
As compensation for the services to be provided by DLJ hereunder, the
Company agrees (i) to pay to DLJ (a) cash compensation as set forth below and
(b) a fee of $400,000 at the time DLJ notifies the Board of Directors of the
Company that it is prepared to deliver DLJ's opinion referred to in clause (v)
of the preceding paragraph and an additional fee of $50,000 for each additional
or updated opinion delivered by DLJ with respect to a Transaction, and (ii) upon
request by DLJ from time-to-time, to reimburse DLJ promptly for all out-of-
pocket expenses (including the reasonable fees and expenses of counsel) incurred
by DLJ in connection with its engagement hereunder, whether or not a Transaction
is consummated. As DLJ will be acting on your behalf, the Company agrees to the
indemnification and other obligations set forth in Schedule I attached hereto,
which Schedule is an integral part hereof.
The cash compensation referred to in clause (i)(a) above shall be in the
amount equal to one percent (1.0%) of the aggregate amount of consideration
received by the Company and/or its shareholders (treating any shares issuable
upon exercise of options, warrants or other rights of conversion as
outstanding), plus the amount of any debt assumed or repaid or preferred stock
redeemed or remaining
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IVAC Corporation May 8, 1996
Page 2
outstanding in connection with the Transaction, including, in the case of a sale
or other disposition by the Company of assets, the net value of any assets not
sold by the Company, less the amount paid by the Company pursuant to clause
(i)(b) above. Such additional compensation shall be payable in cash promptly
upon consummation of a Transaction. For purposes of this Agreement, a
Transaction shall be deemed to have been consummated upon the earliest of any of
the following events to occur: (a) the acquisition of a majority of the
outstanding common stock of the Company calculated on a fully-diluted basis; (b)
a merger or consolidation of the Company with another person; c) the acquisition
by another person of assets of the Company representing a majority of the
Company's book value; or (d) in the case of any other Transaction, the
consummation thereof.
In the event that the consideration received in a Transaction is paid in
whole or in part in the form of securities or other assets, the value of such
securities or other assets, for purposes of calculating our additional
compensation, shall be the fair market value thereof, as the parties hereto
shall mutually agree, on the day prior to the consummation of the Transaction;
provided, that if such consideration includes securities with an existing public
trading market, the value thereof shall be determined by the last sales price
for such securities on the last trading day thereof prior to such consummation;
provided further, that if any such consideration is to be paid subsequent to the
consummation of the transaction, for purposes of the portion of the fee payable
pursuant to the immediately preceding paragraph, that is attributable to such
consideration, the consideration shall be discounted to its present value (using
a reasonable discount rate mutually agreed upon by the Company and DLJ).
The Company shall make available to DLJ all financial and other information
concerning its business and operations which DLJ reasonably requests as well as
any other information relating to any Transaction prepared by the Company or any
of its other advisors. In performing its services hereunder (including, without
limitation, in giving an opinion of the type referred to in the second paragraph
hereof), DLJ shall be entitled to rely without investigation upon all
information that is available from public sources as well as all other
information supplied to it by or on behalf of the Company or its advisors and
shall not in any respect be responsible for the accuracy or completeness of, or
have any obligation to verify, the same or to conduct any appraisal of assets.
To the extent consistent with legal requirements, all information given to DLJ
by the Company, unless publicly available or otherwise available to DLJ without
restriction or breach of any confidentiality agreement, will be held by DLJ in
confidence and will not be disclosed to anyone other than DLJ's agents and
advisors without the Company's prior approval or used for any purpose other than
those referred to in this Agreement. Any confidential information of the
Company provided to any potential acquirer by DLJ shall be accompanied by
customary confidentiality provisions that have been reviewed by the Company.
Any opinion requested by the Company and any advice, written or oral,
provided by DLJ pursuant to this Agreement will be treated by the Company as
confidential, will be solely for the information and assistance of the Company
in connection with its consideration of a transaction of the type referred to in
the first paragraph of this Agreement and will not be used, circulated, quoted
or otherwise referred to for any other purpose, nor will it be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in each case with our prior
written consent.
In order to coordinate our efforts with respect to a possible Transaction
satisfactory to the Company, during the period of our engagement hereunder
neither the Company nor any representative thereof (other than DLJ) will
initiate discussions regarding a Transaction except through DLJ. In the event
the Company or its management receives an inquiry regarding a Transaction, it
will promptly advise DLJ
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IVAC Corporation May 8, 1996
Page 3
of such inquiry in order that we may evaluate such prospective purchaser and its
interest and assist the Company in any resulting negotiations.
This Agreement may be terminated by either the Company or DLJ upon receipt
of written notice to that effect by the other party. Upon any termination or
expiration of this Agreement, DLJ will be entitled to prompt payment of all fees
accrued prior to such termination or expiration and reimbursement of all out-of-
pocket expenses as described above. The indemnity and other provisions
contained in Schedule I and the confidentiality provisions contained herein will
also remain operative and in full force and effect regardless of any termination
or expiration of this Agreement.
If at any time prior to 12 months after the termination or expiration of
this Agreement a Transaction is consummated, DLJ will be entitled to payment in
full of the compensation described in the fourth paragraph of this letter. In
addition, if at any time prior to 18 months after the termination or expiration
of this Agreement a Transaction is consummated with a party that has received
from DLJ during the term of this Agreement an information package and/or
offering memorandum with respect to the Company, DLJ will be entitled to payment
in full of the compensation described in the fourth paragraph of this letter.
Promptly following any termination or exemption of this Agreement, DLJ will
provide the Company with written notice of the parties to whom DLJ delivered
information packages and/or offering memoranda regarding a Transaction during
the period of our engagement.
It is understood that if the Company completes a transaction in lieu of any
Transaction for which DLJ is entitled to compensation pursuant to this Agreement
(including, but not limited to, a recapitalization or a partial or complete
liquidation), DLJ and the Company will in good faith mutually agree upon
acceptable compensation for DLJ taking into account, among other things, the
results obtained and the custom and practice of investment bankers acting in
similar transactions.
The Company further agrees that it will not enter into any transaction
referred to in either of the two preceding paragraphs unless, prior to or
simultaneously with such transaction, adequate provision is made with respect to
the payment of compensation to DLJ as contemplated by such paragraphs.
Please note that DLJ is a full service securities firm engaged in
securities trading and brokerage activities, as well as providing investment
banking and financial advisory services. In the ordinary course of our trading
and brokerage activities, DLJ or its affiliates may at any time hold long or
short positions, and may trade or otherwise effect transactions, for our own
account or on the accounts of customers, in debt or equity securities of the
Company or other entities that may be involved in the Transaction. We recognize
our responsibility for compliance with Federal laws in connection with any such
activities.
The Company acknowledges and agrees that DLJ has been retained solely to
provide the advice or services set forth in this Agreement. DLJ shall act as an
independent contractor, and any duties of DLJ arising out of its engagement
hereunder shall be owed solely to the Company.
This Agreement shall be binding upon and inure to the benefit of the
Company, DLJ, each Indemnified Person (as defined in Schedule I hereto) and
their respective successors and assigns.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
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IVAC Corporation May 8, 1996
Page 4
The Company irrevocably and unconditionally submits to the exclusive
jurisdiction of any State or Federal court sitting in New York City over any
suit, action or proceeding arising out of or relating to this letter (including
Schedule I hereto). The Company hereby agrees that service of any process,
summons, notice or document by U.S. registered mail addressed to the Company
shall be effective service of process for any action, suit or proceeding brought
in any such court. The Company irrevocably and unconditionally waives any
objection to the laying of venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding brought
in such a court has been brought in an inconvenient form. The Company agrees
that a final judgment in any such suit, action or proceeding brought in any such
court shall be conclusive and binding upon the Company and may be enforced in
any other courts to whose jurisdiction the Company is or may be subject, by suit
upon such judgment.
If any term, provision, covenant or restriction contained in this
Agreement, including Schedule I, is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
This Agreement, together with the Schedule hereto, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
completely supersedes all prior or contemporaneous agreements, understandings,
arrangements, commitments, negotiations and discussions of the parties, whether
oral or written (all of which shall have no substantive significance or
evidentiary effect), except for the letter agreement dated December 30, 1994 by
and between IVAC Holdings, Inc. and DLJ, which shall remain in full force and
effect.
After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning to me the duplicate
of this letter attached hereto, whereupon it shall be our binding Agreement.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Laurence E. Paul
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Laurence E. Paul, M.D.
Vice President
Accepted and agreed to this
8th day of May , 1996
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IVAC Medical Systems, Inc.
By: /s/ William J. Mercer
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William J. Mercer
President and Chief Executive Officer
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SCHEDULE I
This Schedule I is a part of and is incorporated into that certain letter
agreement (together, the "Agreement"), dated May 8, 1996 by and between IVAC
Medical Systems, Inc. (the "Company") and Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ").
The Company agrees to indemnify and hold harmless DLJ, its affiliates and
its parent and its affiliates, and the respective directors, officers, agents
and employees of DLJ, its affiliates and its parent and its affiliates (DLJ and
each such entity or person, an "Indemnified Person") from and against any
losses, claims, damages, judgments, assessments, costs and other liabilities
(collectively "Liabilities"), and will reimburse each Indemnified Person for all
fees and expenses (including the reasonable fees and expenses of counsel)
(collectively, "Expenses") as they are incurred in investigating, preparing,
pursuing or defending any claim, action, proceeding or investigation, whether or
not in connection with pending or threatened litigation or arbitration
(collectively, "Actions"), (i) caused by, or arising out of or in connection
with, any untrue statement or alleged untrue statement of a material fact
contained in the exclusive sale memorandum or offering memorandum and in the
proxy statement, registration statement or prospectus, if any, provided to the
Company's shareholders (including any amendments thereof and supplements
thereto, collectively, the "Disclosure Documents") or by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (other than untrue statements or alleged untrue statements in, or
omissions or alleged omissions from, information relating to an Indemnified
Person furnished in writing by or on behalf of such Indemnified Person expressly
for use in the Disclosure Documents) or (ii) otherwise arising out of or in
connection with advice or services rendered or to be rendered by any Indemnified
Person pursuant to this Agreement, the transactions contemplated hereby or any
Indemnified Person's actions or inactions in connection with any such advice,
services or transactions; provided that, in the case of clause (ii) only, the
Company will not be responsible for any Liabilities or Expenses of any
Indemnified Person that are determined by a judgment of a court of competent
jurisdiction which is no longer subject to appeal or further review to have
resulted solely from such Indemnified Person's gross negligence or willful
misconduct in connection with any of the advice, actions, inactions or services
referred to above. If multiple claims are brought against an Indemnified Person
in an arbitration, with respect to at least one of which indemnification is
permitted under applicable law and provided for under this Agreement, the
Company agrees that any arbitration award shall be conclusively deemed to be
based on claims as to which indemnification is permitted and provided for,
except to the extent the arbitration award expressly states that the award, or
any portion thereof, is based solely on a claim as to which indemnification is
not available. The Company also agrees to reimburse each Indemnified Person for
all Expenses as they are incurred in connection with enforcing such Indemnified
Person's rights under this Agreement (including, without limitation, its rights
under this Schedule I), subject to the Indemnified Person providing an
undertaking to the Company to repay any such Expenses if such Indemnified Person
is ultimately determined not to be entitled to such reimbursement hereunder.
Upon receipt by an Indemnified Person of actual notice of an Action against
such Indemnified Person with respect to which indemnity may be sought under this
Agreement, such Indemnified Person shall promptly notify the Company in writing
and shall provide reasonable assistance to the Company in the defense or
settlement process; provided that failure so to notify or provide reasonable
assistance to the Company shall not relieve the Company from any liability which
the Company may have on account of this indemnity or otherwise, except to the
extent the Company shall have been materially prejudiced by such failure. The
Company shall assume the defense of any such Action upon notification by such
Indemnified Person including the employment of counsel reasonably satisfactory
to DLJ. Any Indemnified Person shall have the right to employ separate counsel
in any such Action and participate in the defense thereof, but the
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fees and expenses of such counsel shall be at the expense of such Indemnified
Person, unless: (i) the Company has failed promptly to assume the defense and
employ counsel or (ii) the named parties to any such Action (including any
impleaded parties) include such Indemnified Person and the Company, and such
Indemnified Person shall have been advised by counsel that there may be a
conflict of interest between the Company and such Indemnified Person; provided
that the Company shall not in such event be responsible hereunder for the fees
and expenses of more than one firm of separate counsel in connection with any
Action in the same jurisdiction, in addition to any local counsel. The Company
shall not be liable for any settlement of any Action effected without its
written consent (which shall not be unreasonably withheld). In addition, the
Company will not, without prior written consent of DLJ, settle, compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened Action in respect of which indemnification or contribution
may be sought hereunder (whether or not any Indemnified Person is a party
thereto) unless (i) such settlement, compromise, consent or termination includes
an unconditional release of each Indemnified Person from all Liabilities arising
out of such Action or (ii) the Company reaffirms in writing to DLJ its
obligations under this Schedule I with respect to Liabilities not covered by
such settlement, comprise or consent.
In the event that the foregoing indemnity is unavailable to an Indemnified
Person other than in accordance with this Agreement, the Company shall
contribute to the Liabilities and Expenses paid or payable by such Indemnified
Person in such proportion as is appropriate to reflect (i) the relative benefits
to the Company and its shareholders, on the one hand, and to DLJ, on the other
hand, of the matters contemplated by this Agreement or (ii) if the allocation
provided by the immediately preceding clause is not permitted by the applicable
law, not only such relative benefits but also the relative fault of the Company,
on the one hand, and DLJ, on the other hand, in connection with the matters as
to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the
aggregate, are not liable for any Liabilities and Expenses in excess of the
amount of fees actually received by DLJ pursuant to this Agreement. For
purposes of this paragraph, the relative benefits to the Company and its
shareholders, on the one hand, and to DLJ, on the other hand, of the matters
contemplated by this Agreement shall be deemed to be in the same proportion as
(a) the total value paid or contemplated to be paid or received or contemplated
to be received by the Company or the Company's shareholders, as the case may be,
in the transaction or transactions that are within the scope of this Agreement,
whether or not any such transaction is consummated, bears to (b) the fees paid
to DLJ under this Agreement.
The Company also agrees that no Indemnified Person shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with advice or services rendered or to be rendered by any
Indemnified Person pursuant to this Agreement, the transactions contemplated
hereby or any Indemnified Person's actions or inactions in connection with any
such advice, services or transactions except for Liabilities (and related
Expenses) of the Company that are determined by a judgment of a court of
competent jurisdiction which is no longer subject to appeal or further review to
have resulted solely from such Indemnified Person's gross negligence or willful
misconduct in connection with any such advice, actions, inactions or services.
The reimbursement, indemnity and contribution obligations of the Company
set forth herein shall apply to any modification of this Agreement and shall
remain in full force and effect regardless of any termination of, or the
completion of any Indemnified Person's services under or in connection with,
this Agreement.
