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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 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) December 14, 1999
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INTEGRATED SURGICAL SYSTEMS, INC.
(Exact name of registrant as specified in charter)
Delaware 1-12471 68-0232575
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(State or other jurisdiction (Commission (IRS
Employer
of incorporation) File Number) Identification No.)
1850 Research Park, Davis, California 95616-4884
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (530) 792-2600
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N/A
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(Former name or former address, if changed since last report.)
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Item 1. Change in Control of Registrant.
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On December 14, 1999, the Registrant issued and sold to ILTAG International
Licensing Holding S.A.L., Bernd Herrmann and Urs Wettstein an aggregate of
2,922,396 shares of Common Stock and three-year warrants to purchase an
additional 11,700,000 shares of Common Stock pursuant to a Stock and Warrant
Purchase Agreement dated as of October 1, 1999. The purchase price for the
shares and warrants was $4 million. The exercise price of the warrants is
$1.02656 per share. The sale was approved by the Registrant's stockholders at a
special meeting on November 17, 1999. As a result of the sale, the purchasers
own approximately 23% of the outstanding shares of Common Stock. ILTAG
purchased one-half of the shares and warrants and Messrs. Herrmann and Wettstein
each purchased one-quarter of the shares and warrants.
ILTAG is a Lebanese company that invests in health care and information
technology companies. ILTAG's corporate parent, The Dogmoch Group of Companies,
provides consulting and support services to over 20 German companies doing
business in countries throughout the Middle East. Bernd Herrmann is a German
venture capitalist who was an asset manager at Deutsche Bank A.G. and
Commerzbank A.G. Urs Wettstein is a Swiss tax and accounting consultant.
As a condition of the sale, James C. McGroddy, Paul A.H. Pankow, Gerald D.
Knudson and Patrick G. Hays resigned from the Registrant's Board of Directors
immediately prior to the closing of the sale, and were replaced by Messrs.
Herrmann, Wettstein and Falah Al-Kadi, the Vice Chairman of Dogmoch. Dr. John
N. Kapoor continues to serve as director and Dr. Ramesh C. Trivedi, President
and Chief Executive Officer of the Registrant, has been appointed to fill the
remaining vacancy on the Board. Dr. Kapoor and each of the new directors will
continue to serve as directors until his successor is duly elected and qualified
following the next Annual Meeting of Stockholders or his earlier resignation.
Since the purchasers have control of the Board of Directors and effective voting
control of the Registrant, the sale resulted in a change in control.
Messrs. Herrmann and Wettstein have advised the Registrant that they used their
personal funds to pay the purchase price and ILTAG has advised the Registrant
that Dogmoch contributed all but $100,000 of the purchase price to ILTAG, with
the balance provided by its available cash.
Item 5. Other Events.
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The Registrant has entered into a distribution agreement with Spark 1st Vision
GmbH & Co. KG, a German company, that gives the distributor the exclusive right
to distribute the Registrant's products in Europe, the Middle East and Africa
through 2003. The distributor is obligated to purchase a minimum of 24 ROBODOC
systems during 2000 and 32 ROBODOC systems during 2001. The distributor is
required to pay the Registrant advance payments of $200,000 per month for the
first six months of 2000, $300,000 per month for the remainder of 2000, and
$400,000 per month for 2001, offset by the purchase price of products purchased.
However, the distributor has no minimum purchase or advance payment obligation
after 2001, even through it will retain exclusive rights to distribute the
Registrant's products in Europe, the Middle East and Africa through 2003. The
distributor's only obligation to the Registrant after 2001 is to pay for
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products that it purchases. The distributor's liability to the Registrant under
the distribution agreement is limited to $1 million, exclusive of the minimum
purchase obligation. The Registrant will continue to receive service contract
revenues and bear the cost of maintenance, training and customer support. It is
anticipated that the Registrant's European sales and marketing personnel, as
well as its European field support staff, will join the distributor.
The distribution agreement will eliminate marketing, sales and administrative
expenses associated with the Registrant's European activities and provide the
Registrant with a more predictable source of revenues based upon the minimum
purchase commitments of the distributor. The distributor is controlled by
Manfred Schmitt, a German venture capitalist. As of August 20, 1999, Mr. Schmitt
beneficially owned slightly more than five percent of the Common Stock. The
Registrant believes that the terms of the distribution agreement are as fair to
the Registrant as those that could have been obtained from an unaffiliated
party.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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1.1 Stock and Warrant Purchase Agreement dated as of October 1,1999*
2.1 Form of Warrant (included as Exhibits B to Exhibit 1.1)*
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* Incorporated by reference from the Registrant's proxy statement
dated October 5, 1999
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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.
INTEGRATED SURGICAL SYSTEMS,
INC.
Dated: December 14, 1999 By: \s\ Mark W. Winn
Davis, California ------------
Mark W. Winn
Chief Financial Officer
