UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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) October 1, 2004
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THE QUIGLEY CORPORATION
(Exact Name of Registrant as Specified in Charter)
Nevada 0-21617 23-2577138
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Kells Building, 621 Shady Retreat Road, P.O. Box 1349, Doylestown, PA 18901
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (215) 345-0919
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
In connection with the closing on October 1, 2004 (the "Closing") of the
previously announced purchase by The Quigley Corporation (the "Company") of
substantially all of the assets of JOEL, Inc. ("JOEL"), the Company entered into
an addendum (the "Addendum") with JOEL to the asset purchase and sale agreement
by and between JOEL and the Company dated August 18, 2004 (the "Agreement"). The
Addendum primarily sets forth the procedure for determining the allocation of
the purchase price among certain assets in the event JOEL elects to question the
allocation established by the Company's independent appraisals.
In connection with the Closing, the Company also executed a Term Note dated
October 1, 2004 in the amount of $3.0 million payable to PNC Bank, National
Association (the "Note"). As collateral, the Note is secured by (i) an Open-End
Mortgage and Security Agreement dated October 1, 2004 on real property located
in Lebanon, Pennsylvania (the "Lebanon Mortgage") and (ii) an Open-End Mortgage
and Security Agreement dated October 1, 2004 on real property located in
Elizabethtown, Pennsylvania (the "Elizabethtown Mortgage").
In addition, concurrently with the Closing, the Company entered into a
Registration Rights Agreement with the stockholders of JOEL dated October 1,
2004 (the "Registration Rights Agreement") to register the resale of 113,097
shares of the Company's common stock that were issued to such stockholders (the
"Shares"). The Registration Rights Agreement requires the Company to file a
registration statement with the Securities and Exchange Commission (the "SEC")
for the resale of the Shares by such stockholders within twenty days of October
1, 2004 and to have such registration statement declared effective within 120
days of October 1, 2004.
On October 1, 2004 and in connection with the Closing, the Company's wholly
owned subsidiary, Quigley Manufacturing Inc., entered into (i) an employment
agreement with David B. Deck, the former [president] of JOEL, at an annual
salary of $125,000 and (ii) an employment agreement with David Hess, the former
[chief operating officer] of JOEL, at an annual salary of $104,000
(collectively, the "Employment Agreements") for the period from October 1, 2004
through December 31, 2006. The payment and performance of Quigley Manufacturing
Inc. under the Employment Agreements is unconditionally and irrevocably
guaranteed by the Company.
The foregoing summary of the terms of the Addendum, the Note, the Lebanon
Mortgage, the Elizabethtown Mortgage, the Registration Statement and the
Employment Agreements does not purport to be complete and is qualified in its
entirety by reference to the full text of such agreements, copies of which are
attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 and
incorporated herein by reference.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On October 5, 2004, the Company issued a press release announcing it had
closed the previously announced purchase of substantially all of the assets of
JOEL for approximately $5.1 million, which includes $4.1 million in cash and
$1.0 million of the Company's common stock, on October 1, 2004. The transaction
was completed pursuant to an asset purchase and sale agreement by and between
JOEL and the Company dated August 18, 2004 (the "Agreement") which was
previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K
dated August 18, 2004 and filed with the Securities and Exchange Commission on
August 20, 2004.
The Company funded the $4.1 million cash portion of the purchase price with
proceeds from the Note and through its current working capital. To satisfy the
common stock component of the purchase price, the Company issued 113,097 shares
of its common stock to the stockholders of JOEL. Pursuant to the Agreement, the
number of shares to be issued was determined by the average closing price of the
Company's common stock for the period September 23, 2003 to September 23, 2004.
Pursuant to the Agreement, the Company acquired substantially all of the
assets of JOEL, including inventory and land, buildings, machinery and equipment
of two manufacturing facilities located in Lebanon and Elizabethtown,
Pennsylvania.
JOEL is a FDA approved contract manufacturer of lozenges and other candy
food products that has been the exclusive manufacturer of the Company's
Cold-Eeze(R) Lozenge since its launch in 1995. The terms of the transaction were
determined by arms-length negotiations between the Company, JOEL and the
stockholders of JOEL.
A copy of the Company's press release announcing the closing of the
acquisition of substantially all of the assets of JOEL is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On October 1, 2004, the Company incurred a direct financial obligation in
the amount of $3.0 million payable to PNC Bank, National Association that was
used to finance the majority of the cash portion of the purchase price of
substantially all of the assets of JOEL. As collateral, the Note is secured by
mortgages on real property located in each of Lebanon, Pennsylvania and
Elizabethtown, Pennsylvania. Depending on the Company's election of interest
rate options for each one, two, three or six month period, the loan bears
interest at either the Prime Rate or LIBOR plus 200 basis points. The loan is
payable in eighty four equal monthly principal payments of $35,714 commencing
November 1, 2004. Accrued interest is payable monthly under the Prime Rate
option or at the end of the one, two, three or six month period elected by the
Company for the LIBOR plus 200 basis points option.
The foregoing summary of the terms of the Note, the Lebanon Mortgage and
the Elizabethtown Mortgage does not purport to be complete and is qualified in
its entirety by reference to the full text of such agreements, copies of which
are attached hereto as Exhibits 10.2, 10.3 and 10.4 and incorporated herein by
reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
It is currently impractical to provide the financial statements
required by Rule 3.05 of Regulation S-X. The required financial
statements will be filed as soon as they are available, but not later
than 71 calendar days after the date on which this Current Report on
Form 8-K must be filed.
(b) Pro Forma Financial Information.
It is currently impractical to provide the pro forma financial
information required by Article 11 of Regulation S-X. The pro forma
financial information will be filed as soon as it is available, but
not later than 71 calendar days after the date on which this Current
Report on Form 8-K must be filed.
(b) Exhibits.
EXHIBIT NO. DESCRIPTION
10.1 Addendum dated October 1, 2004 by and between
the Company and JOEL to the asset purchase and
sale agreement dated August 18, 2004.
10.2 Term Note dated October 1, 2004 in the amount
of $3.0 million executed by the Company in
favor of PNC Bank, National Association.
10.3 Open-End Mortgage and Security Agreement dated
October 1, 2004 on real property located in
Lebanon, Pennsylvania executed by Quigley
Manufacturing Inc. in favor of PNC Bank,
National Association.
10.4 Open-End Mortgage and Security Agreement dated
October 1, 2004 on real property located in
Elizabethtown, Pennsylvania executed by
Quigley Manufacturing Inc. in favor of PNC
Bank, National Association.
10.5 Registration Rights Agreement dated October 1,
2004 by and among the Company and the
shareholders signatory thereto.
10.6 Employment Agreement dated October 1, 2004
between Quigley Manufacturing Inc. and David
B. Deck.
10.7 Employment Agreement dated October 1, 2004
between Quigley Manufacturing Inc. and David
Hess.
99.1 Press Release dated October 5, 2004.
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.
THE QUIGLEY CORPORATION
(Registrant)
Date: October 7, 2004
By: /s/ George J. Longo
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Name: George J. Longo
Title: Vice President and Chief
Financial Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.1 Addendum dated October 1, 2004 by and between the Company and
JOEL to the asset purchase and sale agreement dated August 18,
2004.
10.2 Term Note dated October 1, 2004 in the amount of $3.0 million
executed by the Company in favor of PNC Bank, National
Association.
10.3 Open-End Mortgage and Security Agreement dated October 1, 2004
on real property located in Lebanon, Pennsylvania executed by
Quigley Manufacturing Inc. in favor of PNC Bank, National
Association.
10.4 Open-End Mortgage and Security Agreement dated October 1, 2004
on real property located in Elizabethtown, Pennsylvania
executed by Quigley Manufacturing Inc. in favor of PNC Bank,
National Association.
10.5 Registration Rights Agreement dated October 1, 2004 by and
among the Company and the shareholders signatory thereto.
10.6 Employment Agreement dated October 1, 2004 between Quigley
Manufacturing Inc. and David B. Deck.
10.7 Employment Agreement dated October 1, 2004 between Quigley
Manufacturing Inc. and David Hess.
99.1 Press Release dated October 5, 2004.
