September 29, 2006
Via U.S. Mail
Kenneth Ferry
Chief Executive Officer and President
iCAD, Inc.
4 Townsend West, Suite 17
Nashua, NH 03603
Re: iCAD, Inc.
Schedule TO-I filed September 22, 2006
SEC File No. 5-37722
Dear Mr. Ferry:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with information so we
may
better understand your disclosure. After reviewing this
information,
we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects. We welcome
any
questions you may have about our comments or any other aspect of
our
review. Feel free to call us at the telephone numbers listed at
the
end of this letter.
Schedule TO
1. We note your indication in response to Item 6(c). that this
disclosure is "not applicable." If you mean to say that you have
no
such plans, please revise to state this.
Exhibit (a)(1) - Offer to Exchange
2. We note that your offer is expected to expire at 5:00 PM.
Please
note that the offer must remain open at least twenty full business
days, which means your offer should be revised to stay open until
at
least midnight Eastern time on the twentieth business day. This
is
because October 9th is a federal holiday and, therefore, is not
counted as a business day. Please ensure that your offer remains
open
at least twenty full business days and consistently revise your
offering materials to reflect the revised expiration time. Refer
to
Q&A No. 8 in SEC Release 34-16623 (March 5, 1980).
3. It appears that you are relying upon the exemptive order issued
by
the Commission on March 21, 2001. Accordingly, please advise us
what
consideration, if any, has been given to whether each category of
eligible persons, in particular the Consultants, is included
within
the meaning of "employee benefit plan" as defined in Rule 405.
Ensure
that you discuss the nature of the consulting or advisory services
that this category of eligible persons provides to you. In
particular, please refer to the categories of consultants
discussed in
Release No. 33-7646 and confirm, if true, that the services
rendered
by these option holders fall into one of the "permissible"
categories
discussed in the release. We may have further comment upon
receipt of
your response.
4. In the first paragraph on page 3 and elsewhere throughout your
Offer to Exchange, you indicate that your Board of Directors "will
retain the authority, in its sole discretion, to terminate,
modify,
amend or postpone the Offer to Exchange..." without qualification.
Please advise us under what circumstances, other than failure of a
condition, you intend to terminate the offer or revise to clarify
that
you may only terminate the offer upon the failure of a condition.
Summary Term Sheet, page 1
5. You indicate under Q&A #3 that "current consultants of the
Company,
who are not employees, are also eligible to participate in the
offer,"
however, on the first page of the Offer to Exchange you state that
"certain consultants" may participate. Please revise to clarify.
6. Under Q&A #11, you refer readers to the discussion of "Material
Federal Income Tax Consequences," however, this discussion
contains no
mention of the adverse tax consequences that may occur to
optionees
who do not tender. Please revise.
5. Change in Election/Withdrawal Rights, page 12
7. You have indicated that optionees may withdraw [their] tendered
options "only if [they] comply with the provisions of this Section
5."
Revise to disclose that options not yet accepted for payment or
exchange after the expiration of forty business days from the
commencement of the offers may be withdrawn. See Rule 13e-
4(f)(2)(ii).
6. Acceptance of Eligible Options for Cancellation and
Repurchase; Issuance of New Options, page 14
8. Under "Issuance of New Options on Replacement Grant Date," you
indicate that you expect to grant the New Options on or about
October
23, 2006 and that you "expect to send [optionees] option
agreements
evidencing the New Options within two weeks of such date." What
will
option holders receive reflecting their receipt of consideration
in
the offer, if not the documentation of the grant itself? Please
advise with a view towards satisfying the requirement that you
promptly pay consideration after the expiration of the offer
pursuant
to Rule 13e-4(f)(5) and Rule 14e-1(c).
7. Conditions of the Offer, page 15
9. See the first paragraph, which relates to the company`s
determination whether the triggering of a condition "makes it
inadvisable" to proceed with the offer. Please note that, when a
condition is triggered and the company decides to proceed with the
offer anyway, we believe that this constitutes a waiver of the
triggered condition(s). You may not rely on this language to
tacitly
waive a condition of the offer by failing to assert it. Please
confirm your understanding on a supplemental basis.
10. A tender offer may only be subject to conditions that are
drafted
with sufficient specificity to allow for objective verification
that
the conditions have been satisfied. In this regard, we note the
following:
* the reference to "any action or omission to act" by you in the
first
paragraph;
* the references to "could" in the second bullet point;
* the references to "threatened" in the second and third bullet
points;
* the references to "indirectly" in the second, third and fourth
bullet points;
* the references to "contemplated future conduct of [y]our
business"
and "contemplated benefits of the offer" in the second and third
bullet points; and
* the reference to "significant" in the fourth bullet point.
Please revise to clarify the conditions in accordance with this
comment.
11. The disclosure in the last bullet point states that your offer
may
be terminated if "any change or changes shall have occurred in the
business, condition (financial or other), assets, income,
operations,
prospects or stock ownership of iCAD ... that, in [y]our
reasonable
judgment, is or may be material to iCAD...." This condition
appears
to include both positive and negative effects on the business and
may
be so broad as to render the offer illusory because your reference
to
"is or may be" material is too vague to allow an option holder to
judge the scope of this condition. Please revise your disclosure
to
clarify those changes or events that would allow termination of
the
offer.
10. Information concerning iCad, page 20
12. We note that you have incorporated by reference the financial
information required by Item 1010(a) of Regulation M-A and have
provided some of the summary information required by Item 1010(c)
of
Regulation M-A. It does not, however, appear that you have
included
all of the summary information required by Item 1010(c);
specifically,
it does not appear that Items 1010(c)(4) or (5) have been
provided.
Please revise to include this information and disseminate the
additional summary financial information to option holders.
Exhibit (a)(3) - Letter of Transmittal
13. We note your request that the security holder acknowledge that
they have "read and understand" the tender offer. It is not
appropriate to require security holders to attest to the fact that
they "read and understand" the terms of the offer as such language
effectively operates as a waiver of liability. Please delete this
language throughout these materials or confirm to us that you will
not
use this language as a defense to any claims of liability. This
comment also applies to the Notice of Withdrawal.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Detailed cover letters
greatly facilitate our review. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the filing persons are in possession
of
all facts relating to their disclosure, they are responsible for
the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide, in
writing, a statement from all filing persons acknowledging that:
* the bidder is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the bidder may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division
of Corporation Finance in our review of your filing or in response
to
our comments on your filing.
If you have any questions regarding our comments, please do
not
hesitate to contact me at (202) 551-3264. You may also reach me
by
facsimile at (202) 772-9203.
Sincerely,
Mara L. Ransom
Special Counsel
Office of Mergers and
Acquisitions
cc via facsimile at (212) 885-5001:
Robert J. Mittman, Esq.
Ethan Seer, Esq.
Blank Rome LLP
iCAD, Inc.
September 29, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-3628
DIVISION OF
CORPORATION FINANCE