-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DmlA/4oPyshngelGv99rKjKByzKkYvd7MRep0V/T/jDCdqNUQN9wJqZRplNqOGsg cUeB5WiefECmKEVPHi+q7Q== 0001047469-99-000334.txt : 19990107 0001047469-99-000334.hdr.sgml : 19990107 ACCESSION NUMBER: 0001047469-99-000334 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981223 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALAGEN INC CENTRAL INDEX KEY: 0000889872 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 411719104 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27976 FILM NUMBER: 99501725 BUSINESS ADDRESS: STREET 1: 4001 LEXINGTON AVE N CITY: ARDEN HILLS STATE: MN ZIP: 55440 BUSINESS PHONE: 6124812105 MAIL ADDRESS: STREET 1: 4001 LEXINGTON AVE NORTH CITY: ARDEN HILLS STATE: MN ZIP: 55126 8-K 1 FORM 8K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 2054 ------------- FORM 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 23, 1998 ------------------------------ GALAGEN INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 0-27976 41-1719104 - ------------------------------------------------------------------------------- (State or other (Commission File Number) (IRS Employer jurisdiction Identification No.) of incorporation) 1275 RED FOX ROAD M-S 7420 ARDEN HILLS, MINNESOTA 55112 - ------------------------------------------------------------------------------- (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (651) 634-4233 ---------------------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On December 23, 1998 GalaGen Inc., a Delaware corporation (the "Company"), acquired certain assets of Nutrition Medical, Inc., a Minnesota corporation ("NMI"), pursuant that certain Asset Purchase Agreement, dated as of September 1, 1998, as amended on October 28, 1998 and December 23, 1998 (the "Purchase Agreement"), by and between the Company and NMI. Pursuant to the terms of the Purchase Agreement, the Company acquired certain assets of NMI used in connection with NMI's critical care business. The acquired assets include: (i) all of NMI's rights to the Acquired Products (as defined herein); (ii) certain fixed assets of NMI; (iii) all of NMI's interest in inventories of the Acquired Products, supplies, raw materials, parts, finished goods, work-in-process, product labels and packaging materials used in connection with the Acquired Products and NMI's interest in all orders or contracts for the purchase of supplies, raw materials, parts, product labels and packaging materials used in connection with the Acquired Products after December 23, 1998; (iv) all of NMI's rights under contracts, purchase orders and agreements pursuant to which the Company has agreed to purchase and sell the Acquired Products after December 23, 1998; (v) all of NMI's rights under any warranty or guarantee by any applicable manufacturer, supplier or other transferor of the Acquired Products; (vi) copies of all sales and purchase records, customer lists, supplier lists, production records and other similar records related to the Acquired Products or associated with the Acquired Products; (vii) all advertising, marketing and promotional materials associated with the Acquired Products; (viii) all of NMI's rights to indentures, guarantees, leases commitments and other agreements related to the Acquired Products; (ix) all of NMI's interest in any copyrights, patents, trademarks, trade names, logos, trade secrets, inventions, know how, other confidential information and other intellectual property of any nature related to or arising from the Acquired Products, together with pending applications for any of the foregoing; (x) NMI's interest in those franchises, approvals, permits, licenses, orders, registrations, certificates, variances and similar rights obtained from governments and government agencies related to or associated with the Acquired Products that are assignable to the Company; and (xi) all goodwill and other general intangibles of NMI related to or arising from the Acquired Products. The "Acquired Products" consist of: Fiber-PRO, Glutasorb-TM- Ready to Use, GlucoPro-TM- Vanilla, L-Emental-TM- Hepatic, L-Emental-TM- Pediatric, L-Emental-TM-, Nitro-PRO, Pro-Peptide-TM- for Kids, Pro-Peptide-TM- Unflavored, Pro-Peptide-TM- VHN, Pro-Peptide-TM- Vanilla, Nutrition Liquid, Nutrition Plus Liquid, Instant Nutrition, Instant Nutrition (Lactose Free), ISO-PRO, ISO-LAN, ULTRA-PRO, ULTRA-LAN, and NUTRA-LAN. The assets acquired were used by NMI in the critical care nutritional products market and the Company intends to continue such use. 2 In connection with the acquisition, the Company delivered $71,516.29 in cash and a certificate for 318,800 shares of common stock, par value $.01, of the Company (the "Shares") to NMI. The Company also agreed to pay NMI a royalty equal to 9% of net sales received by the Company for sales of the Acquired Products (other than Glutasorb Ready to Use) in the United States that exceed (i) $5 million during the year ended December 31, 2000, (ii) $6 million during the year ended December 31, 2001, and (iii) $7.5 million during the year ended December 31, 2002. In addition, the Company agreed to pay NMI an international royalty for direct sales of the Acquired Products (other than Glutasorb Ready to Use) made by the Company in all countries other than the United States and of Glutasorb Ready to Use in all countries except the United States, Japan, France, England, Scotland, Belgium, Holland, Switzerland, Denmark, Sweden, Norway and Finland equal to 5% of net sales (less uncollectible accounts) that exceed $200,000 during the year ending December 23, 1999 and 2.5% of net sales (less uncollectible accounts) that exceed $200,000 during the year ending December 23, 2000. The amount of consideration paid for the acquired assets was determined through arm's length negotiations between the Company and NMI. The cash consideration was paid from the cash reserves of the Company. The Shares were issued from the authorized but unissued shares of common stock of the company. The acquisition will be accounted for using the purchase method of accounting. The Company and NMI were parties to a Marketing Agreement dated September 1, 1998 and an amendment dated October 1, 1998 (collectively, the "Marketing Agreement") pursuant to which NMI granted the Company the right to market, sell and distribute the Acquired Products in the United States and worldwide, pending closing of the transactions contemplated by the Purchase Agreement, at prices and terms determined by the Company. NMI granted the Company a royalty-free license to use NMI's trademarks, trade names and other identifying slogans in connection with the distribution of the Acquired Products under the Marketing Agreement. NMI agreed to purchase Acquired Products from Acquired Product manufacturers for resale and shipping to the Company at a price to be paid by the Company equal to NMI's invoice price from the applicable Acquired Product manufacturer, plus shipping, labor and other specified costs. In addition, the Company agreed to pay NMI an amount equal to 15% of the Company's selling price to its customers for such Acquired Products that covered NMI's warehouse rent and support services, invoicing services and collection services. NMI also made its computer systems and customer databases available to the Company's employees and permitted the Company's employees to process orders at NMI's facility. The Company agreed to pay NMI certain 3 office space charges. The Marketing Agreement terminated on December 23, 1998 upon the closing of transactions contemplated by the Purchase Agreement. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statement of business acquired: not required (b) PRO FORMA financial information: not required (c) Exhibits:
Method of Exhibit No. Description Filing ----------- ----------- ------ 2.1 Asset Purchase Agreement by and Incorporated between the Registrant and Nutrition by Reference Medical, Inc. dated as of September 1, 1998. (1) The Registrant hereby agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Commission upon request. 2.2 Amendment to Asset Purchase Agreement Electronic dated as of October 28, 1998. Transmission 2.3 Second Amendment to Asset Purchase Electronic Agreement, dated December 23, 1998. Transmission
(1) Incorporated by reference to Exhibit 10.26 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1998 (File No. 0-27976). 4 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. GALAGEN INC. Date: January 6, 1999 By /s/ Gregg A. Waldon ------------------------------------------- Gregg A. Waldon Vice President, Chief Financial Officer, Treasurer and Secretary 5 EX-2.2 2 AMENDMENT TO ASSET PURCHASE AGMT (10/28/98) AMENDMENT TO ASSET PURCHASE AGREEMENT THIS AMENDMENT to that certain Asset Purchase Agreement dated September 1, 1998 (the "Purchase Agreement") by and between GalaGen Inc., a Delaware corporation ("Buyer"), and Nutrition Medical, Inc., a Minnesota corporation ("Seller"), is made as of this 28th day of October, 1998. Capitalized terms not otherwise defined herein are used with the meaning given such terms in the Purchase Agreement. RECITALS The Purchase Agreement provides for Buyer to acquire certain assets of Seller subject to the terms and conditions thereof. The Purchase Agreement contemplates that prior to the Closing Date, Buyer will enter into an International Marketing Agreement with an International Marketing Entity whereby, effective upon the Closing, Buyer will license to the International Marketing Entity the exclusive right to market, sell and distribute certain Products in certain countries other than the United States in return for the International Marketing Consideration. The Purchase Agreement further provides that the International Marketing Consideration to be received by Buyer from the International Marketing Entity pursuant to the International Marketing Agreement will be delivered or assigned to Seller. Buyer and Seller no longer anticipate that Buyer will enter into the International Marketing Agreement and wish to provide that Buyer will retain all international marketing, sales and distribution rights related to the Products in exchange for making certain payments to Seller in lieu of the International Marketing Consideration. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and conditions contained herein, the parties do hereby amend the Purchase Agreement as follows: 1. Section 2.1(a) is amended and restated in its entirety to read as follows: (a) Cash in the amount of $206,000, adjusted as set forth in Section 2.4 hereof, by wire transfer of immediately available funds to the cash account or accounts as may be specified by Seller, and; 2. Section 2.2 is amended and restated in its entirety to read as follows: 2.2 INTERNATIONAL ROYALTY. Buyer will pay to Seller an international royalty (the "International Royalty") (a) of five percent (5%) of net International Sales (as defined herein), reduced by uncollectible accounts, of the Products in excess of $200,000 during the year ending on the first anniversary of the Closing Date, and (b) of two and one half percent (2 1/2%) of net International Sales, reduced by uncollectible accounts, of the Products in excess of $200,000 during the year ending on the second anniversary of the Closing Date. Buyer will make payment, if any, of the Intentional Royalty no later than 120 days after the end of the year to which such royalty relates, accompanied by such documentation as may be agreed upon by Buyer and Seller. "International Sales" as used herein means sales of the Product known as "Glutasorb Ready to Use" in all countries except the United States, Japan, France, England, Scotland, Belgium, Holland, Switzerland, Denmark, Sweden, Norway and Finland and sales of all Products other than "Glutasorb Ready to Use" in all countries except the United States. 3. Section 2.3 is amended and restated in its entirety to read as follows: 2.3 DOMESTIC ROYALTY. Buyer will pay Seller a domestic royalty (the "Domestic Royalty") of nine percent (9%) of net Domestic Sales (as defined herein), reduced by uncollectible accounts, of the Products in excess of (a) $5,000,000 during the year ending December 31, 2000, (b) $6,000,000 during the year ending December 31, 2001, and (c) $7,500,000 during the year ending December 31, 2002. Buyer will make payment, if any, of the Domestic Royalty no later than 120 days after the end of the year to which such royalty relates, accompanied by such documentation as may be agreed upon by the parties. Buyer will promptly inform Seller if it discontinues sales of any of the Products for any reason, including due to development of alternative products. "Domestic Sales" as used herein means all sales of the Products except International Sales. 4. Section 4 is amended and restated in its entirety to read as follows: 4. CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Faegre & Benson LLP, Minneapolis, Minnesota, at 10:00 a.m. on the seventh business day following fulfillment or appropriate waiver of all of the conditions specified in Sections 10 and 11 hereof, or such other date as Buyer and Seller may mutually agree (the "Closing Date"). At the Closing (a) Buyer shall (i) pay to Seller cash in the amount specified in Section 2.1(a) hereof, (ii) deliver to Seller a certificate for the number of Shares as specified in Section 2.1(b) hereof, and (iii) deliver to Seller the various certificates, instruments and documents referred to in Section 11 hereof, and (b) Seller shall (i) deliver to Buyer such bills of sale, assignments and other documents of transfer reasonably required to transfer to Buyer the interest of Seller in the Assets and (ii) deliver to Buyer the various certificates, instruments and documents referred to in Section 10 hereof. 5. Section 11.11 and all references thereto are deleted and Sections 11.12 and 11.13 and all references thereto are renumbered 11.11 and 11.12, respectively. 6. Section 14.3 and all references thereto are deleted and Sections 14.4, 14.5, 14.6, 14.7 and 14.8 and all references thereto are renumbered 14.3, 14.4, 14.5, 14.6 and 14.7, respectively. 7. A new Section 14.8 is added and reads in its entirety as follows: 14.8 PROHIBITED SALES. After the Closing Buyer will not sell any Products to Prime Companies or to any companies affiliated with Dr. Samin until Buyer receives notice from Seller that all amounts owed by Prime Companies to Seller have been paid. 8. Except as expressly set forth herein, the terms and conditions of the Purchase Agreement remain unmodified and in full force and effect. 9. This Amendment may be executed in counterparts, each of which shall be considered an original. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives to be effective as of the date first given above. NUTRITION MEDICAL, INC. GALAGEN INC. By /s/ Richard J. Hegstrand By /s/ Gregg A. Waldon ------------------------------ ------------------------------ Its COO Its CFO --------------------------- ---------------------------- EX-2.3 3 SECOND AMEND TO ASSET PURCH AGMT (12/23/98) SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT THIS SECOND AMENDMENT to that certain Asset Purchase Agreement dated September 1, 1998 (the "Purchase Agreement") by and between GalaGen Inc., a Delaware corporation ("Buyer"), and Nutrition Medical, Inc., a Minnesota corporation ("Seller"), is made as of this 23rd day of December, 1998. Capitalized terms not otherwise defined herein are used with the meaning given such terms in the Purchase Agreement. RECITALS The Purchase Agreement provides for Buyer to acquire certain assets of Seller subject to the terms and conditions thereof. The Purchase Agreement was amended by an Amendment To Asset Purchase Agreement (the "Amendment") dated as of September 28, 1998. The Amendment provides that Buyer will pay to Seller an International Royalty on certain sales of the Products. Buyer and Seller wish to further specify in this Second Amendment the sales of the Products to which the International Royalty applies. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and conditions contained herein, the parties do hereby amend the Purchase Agreement as follows: 1. Section 2.2 is amended and restated in its entirety to read as follows: 2.2 INTERNATIONAL ROYALTY. Buyer will pay to Seller an international royalty (the "International Royalty") (a) of five percent (5%) of net International Sales (as defined herein), reduced by uncollectible accounts, in excess of $200,000 during the year ending on the first anniversary of the Closing Date, and (b) of two and one half percent (2 1/2%) of net International Sales, reduced by uncollectible accounts, in excess of $200,000 during the year ending on the second anniversary of the Closing Date. Buyer will make payment, if any, of the International Royalty no later than 120 days after the end of the year to which such royalty relates, accompanied by such documentation as may be agreed upon by Buyer and Seller. "International Sales" as used herein means sales made directly by Buyer of the Product known as "Glutasorb Ready to Use" to customers in all countries except the United States, Japan, France, England, Scotland, Belgium, Holland, Switzerland, Denmark, Sweden, Norway and Finland and sales made directly by Buyer of all Products other than "Glutasorb Ready to Use" to customers in all countries except the United States. 2. Except as expressly set forth herein, the terms and conditions of the Purchase Agreement, as amended by the Amendment, remain unmodified and in full force and effect. 3. This Second Amendment may be executed in counterparts, each of which shall be considered an original. IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed by their duly authorized representatives to be effective as of the date first given above. NUTRITION MEDICAL, INC. GALAGEN INC. By /s/ Richard J. Hegstrand By /s/ Gregg A. Waldon ------------------------------ ------------------------------ Its COO Its CFO --------------------------- ---------------------------- -----END PRIVACY-ENHANCED MESSAGE-----