Merge restructures top execs, nets $20M in financing

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Merge Healthcare, a provider of medical imaging software and services, has reorganized its business operations and changed its executive management, after completing $20 million financing pursuant to a securities purchase agreement with Merrick RIS, an affiliate of Merrick Ventures.

The Milwaukee-based company said it accepted the resignations of four officers: CEO Kenneth Rardin; Chief Financial Officer (CFO) Steven Norton; President of Merge North America division Gary Bowers; and President of the Cedara/Merge OEM division Loris Sartor. Merge’s board of directors has determined that, “in light of the above-described restructuring steps, these officers are entitled to full severance benefits under their pre-existing employment agreements.”

Justin C. Dearborn, the company’s new CEO, comes to the company with experience in operational, financial and legal roles. Since September 2006, Merge said Dearborn has served as managing director and general counsel of Merrick Ventures. Prior to Merrick, Dearborn spent more than nine years at Click Commerce, a software and services company that was acquired by Illinois Tool Works in October of 2006, the company said.

Pursuant to the terms of the private placement, Merge issued to Merrick a $15 million senior secured term note due 2010 and 6.8 million shares of its common stock as partial consideration for the term note and 14.3 million shares of its common stock.

Under the financing agreement, in addition to the Dearborn CEO appointment, five of the eleven members of the Merge’s board—Michael D. Dunham, Robert A. Barish, Ramamritham Ramkumar, R. Ian Lennox and Kenneth D. Rardin—resigned from the board of the company. Also, in accordance with the purchase agreement, Merge said the board filled the vacancies created by such resignations by appointing the following individuals designated by Merrick to serve on the board: Michael W. Ferro, Jr., Neele Stearns, Jr., Gregg G. Hartemayer, Justin C. Dearborn and Nancy J. Koenig.

The company said it has also agreed that Merrick will continue to have the right to designate five persons to be nominated for future election to the board, subject to reduction upon a decrease in Merrick’s ownership percentage in the company.

Also, Steven M. Oreskovich is Merge’s new CFO. The company said that Oreskovich has served in a number of roles at Merge, starting as its vice president and corporate controller, then becoming as its chief accounting officer and interim treasurer and interim secretary and most recently, serving as its vice president of internal audit. Before joining the company, Oreskovich worked as an auditor at PriceWaterhouseCoopers, Merge said.

Nancy J. Koenig, new president of the company’s newly renamed Merge Fusion Division, comes to Merge from Merrick Healthcare Solutions (a Merrick Ventures portfolio company), where she served as its CEO. Prior to joining Merrick Ventures in the fall of 2007, Koenig was the president of Click during its integration as a subsidiary of ITW, according to the company.

Antonia Wells, new president of the company’s newly renamed Merge OEM Division, has more than 25 years of business management experience, including leadership roles in IT, enterprise system implementation, process re-engineering and human resources. Since joining Merge in 1999, Wells has been responsible for its OEM’s contract management, quality/regulatory affairs, manufacturing, order management, professional services and internal infrastructure, according to the company. Since June of 2005, Merge said that she has served as Merge OEM’s vice president of customer operations.