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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) July 25, 1996
OSMONICS, INC.
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation)
1-12714 41-0955759
(Commission File Number) (IRS Employer Identification No.)
5951 Clearwater Drive, Minnetonka, Minnesota 55343
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 933-2277
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On July 25, 1996, Osmonics, Inc. ("Osmonics") completed the
previously announced acquisition of Desalination Systems, Inc.
("DSI"). The shareholders of DSI approved an Agreement and
Plan of Merger dated May 17, 1996 (the "Merger Agreement"),
among DSI, Osmonics, and a subsidiary of Osmonics (the
"Subsidiary"), pursuant to which the Subsidiary was merged with
and into DSI. Under the Merger Agreement the outstanding
shares of DSI Common Stock were converted, in a tax-free
reorganization, into shares of Osmonics Common Stock. Each
share of Class A Common Stock of DSI, no par value per share
(the "DSI Class A Common Share"), issued and outstanding
immediately prior to the merger was exchanged for approximately
144.070 shares of Common Stock of Osmonics, par value $0.01 per
share (the "Osmonics Common Shares"), and each share of Class B
Common Stock of DSI, no par value per share (the "DSI Class B
Common Share"), issued and outstanding immediately prior to the
merger was exchanged for approximately 157.107 shares of the
Osmonics Common Shares. Osmonics issued an aggregate of
1,312,827 shares (maximum number of shares issuable as a result
of the acquisition; actual number of shares issued may be less
due to fractional shares) of Osmonics Common Stock to the
former DSI shareholders. As a result of the merger, DSI
shareholders are shareholders of Osmonics and DSI is a wholly-
owned subsidiary of Osmonics.
DSI's primary business is the manufacture of membranes used for
reverse osmosis, nanofiltration, ultrafiltration and
microfiltration. These membranes are made into spiral
elements. Osmonics intends to continue the business of DSI.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of the Businesses Acquired (Previously
reported in the Registrant's Registration Statement on Form S-3
[File No. 333-05029]).
(b) Pro Forma Financial Information (Previously reported in the
Registrant's Registration Statement on Form S-3
[File No. 333-05029]).
(c) Exhibits
Exhibit
No. Description of Exhibit
2 Agreement and Plan of Merger dated May 17, 1996
among Osmonics, DSI, and DSI Acquisition
Corporation. Upon request of the Commission,
Osmonics agrees to furnish supplementally to the
Commission a copy of any schedules to the Agreement
and Plan of Merger, described as follows:
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Schedule 1.1 - Agreement of Merger; Agreement of
Merger; Certificate of Approval of Agreement of
Merger (Desalination Systems, Inc.); Certificate of
Approval of Agreement of Merger (DSI Acquisition
Corp.)
Schedule 1.3.1 - Buyer's Common Shares
Schedule 1.7.2 - Letter of Transmittal; Letter to
Shareholders; Instruction Sheet; Shareholder
Representations & Warranties
Schedule 1.7.3 - Escrow Agreement
Schedule 2.2.3 - Opinion of Seller's Counsel
Schedule 2.2.5 - Merger Expense Adjustments
Schedule 2.2.6 - Investment Representation Letter
Schedule 2.2.7 - Non-Competition Agreement
Schedule 2.2.8 - Consulting Agreement
Schedule 2.2.9A - Shareholders and Key Employees
Schedule 2.2.9B - Nondisclosure Agreements
Schedule 2.2.10 - Assignments and Releases
Schedule 2.2.12 - Amendments to Option Agreements
of Donald T. Bray; Amendment to Stock Option
Agreement dated March 18, 1994, Amendment to Stock
Option Agreement dated December 1, 1990
Schedule 2.2.13 - Amendments to Option Agreements
of Bjarne Nicolaisen; Amendment to Stock Option
Agreement dated September 1, 1993; Amendment to
Stock Option Agreement dated September 1, 1991;
Amendment to Stock Option Agreement dated
September 1, 1990
Schedule 2.2.19 - Bjarne Nicolaisen Employment
Agreement
Schedule 2.3.3 - Opinion of Buyer's Counsel
Schedule 2.3.5 - Registration Rights Agreement
Schedule 4.4.3 - Defaults or Termination of Rights
or Obligations; Wells Fargo Letter of Credit
relating to Bond Agreement; Wells Fargo Line of
Credit Facility (Working Capital Line) and Term
Loan
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Schedule 4.5.1 - Holders of Outstanding Securities
Schedule 4.5.2A - Option Agreement; Non-Qualified
Stock Option Agreement of Donald T. Bray dated
March 18, 1994
Schedule 4.5.2B - Option Agreement; Non-Qualified
Stock Option Agreement of Donald T. Bray dated
December 1, 1990
Schedule 4.5.2C - Option Agreement; Incentive Stock
Option Agreement of Bjarne Nicolaisen dated
September 1, 1993
Schedule 4.5.2D - Option Agreement; Incentive Stock
Option Agreement of Bjarne Nicolaisen dated
September 1, 1991; Incentive Stock Option Agreement
of Bjarne Nicolaisen dated September 1, 1990
Schedule 4.5.2E - Option Holders
Schedule 4.6 - Subsidiaries
Schedule 4.6.2 - Outstanding Capital Stock of Each
Subsidiary
Schedule 4.8 - Financial Statements; Exception to
Schedule 4.8 Financial Statements; 1995 Financial
Statement
Schedule 4.8.2 - Accounts Receivable Allowance for
Doubtful Accounts
Schedule 4.10 - Material Adverse Change
Schedule 4.10.10 - Deferred Compensation
Plans/Salary Increases; Stock Appreciation Rights;
History of Salary Increases, 1996; Employment
Contract of Markus Kyburz dated March 20, 1989;
Employment Contract of Janine Nahari-Zimmerli
effective June 14, 1993; December 6, 1994, letter
to Hans A. Thomassen outlining employment
arrangement; December 20, 1993, letter to
Stephan Schutze outlining employment arrangement;
July 1, 1993 letter to Bjarne Skaarup-Jorgensen
outlining employment arrangement
Schedule 4.11 - Real Property and Leaseholds; 1996
Tax Statement for Shadowridge Drive property; 1996
Tax Statement for Thibodo Road, Parcel C, property;
1996 Tax Statement for Thibodo Road, Parcel D,
property; Listing of Real Property and Leaseholds;
Addendum to Agreement to Extend Lease Term dated
March 23, 1995 with Simpson Way Associates;
Standard Industrial/Commercial Single-Tenant Lease-
Net dated February 13, 1995, with Simpson Way
Associates for 1240 Simpson Way, Escondido, CA;
Second Lease Extension Amendment dated
November 1, 1995, with Escondido Associates;
Standard Industrial/Commercial Single-Tenant Lease-
Net dated March 30, 1995, with Kenneth W. and
Judith A. Elsberry for 1236 Simpson Way, Escondido,
CA; Desal Europe Office Lease; List of Real
Property with marketable and insurable,
indefensible, fee simple title
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Schedule 4.11.2.1 - Mortgages and Other Security
Interests in Real Property
Schedule 4.11.2.5 - Encroachments of Real Property
Schedule 4.12 - Tangible Personal Property; List of
Tangible Personal Property; Lease with Mercedes-
Benz for Markus Kyburz dated September 13, 1993;
Lease with Mercedes-Benz for Hans A. Thomassen
terminated February, 1996 with attached letter
stating leased car was returned without penalty;
Lease for Chevrolet Astro Van 4x4 for Bjarne
Skaarup-Jorgensen; Lease with BMW for Stephan
Schutze; List of personal Property Not Located on
the Business Premises
Schedule 4.13.1 - Intellectual Property; Unexpired
U.S. Patents; January 11, 1996, letter discussing
status of patents and trademarks; January 26, 1996,
letter discussing filing applications for new
trademark and renewing registrations for red and
blue color bands; January 30, 1996, letter
authorizing renewing the red and blue color bands
to facilitate securing single trademark to cover
all colors; February 1, 1996, letter acknowledging
authorization to apply for new trademark and renew
red and blue color bands trademark and discussing
registration of DESAL in U.S.; February 1, 1996,
letter regarding DESAL trademark in Europe;
February 20, 1996, letter enclosing Application for
Registration of the trademark Band Design;
March 7, 1996, enclosing copies of application
papers to register DESAL and DESAL plus in the
U.S.; List of nondisclosure Agreements; List of
Representative Agreements; List of
Confidential/Secrecy Agreements; List of Contract
for Research Agreement; List of Other Agreements
Schedule 4.13.3 - Patent Infringement Claims
Schedule 4.13.5 - Employee Confidentiality
Agreements; Employee List; Employee Invention
Assignment and Confidentiality Agreement; Letters
to European employees enclosing Confidentiality
Agreements; Addendum to Jack Opdycke Employee
Invention Assignment and Confidentiality Agreement;
Addendum to Ron Fox Employee Invention Assignment
and Confidentiality Agreement
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Schedule 4.13.6 - Software License Not
Valid/Transferable
Schedule 4.14 - License, Franchise, Permit
Owned/Used; January 16, 1996 memo with attached
Permits; January 29, 1996 memo setting forth all
licenses, franchises, permits, and governmental
authorizations; March 11, 1996 memo to Osmonics
regarding unresolved issues concerning licenses and
permits; March 12, 1996, letter to Osmonics
following up on March 11, 1996 memo
Schedule 4.16 - Litigation Pending
Schedule 4.17 - Taxes Not Filed
Schedule 4.18 - Employee Welfare Benefits/Pension
Plan
Schedule 4.19.1 - Material Contracts
Schedule 4.19.3 - Persons Authorized to Obligate
Company
Schedule 4.20 - Insurance Claims; Policy Loss
Record Report; Underwriting Review of Reserved
Claims for Policy 0035325291
Schedule 4.23 - Employee Compensation
Schedule 4.23.2 - Severance Pay
Schedule 4.24 - Product Compliance
Schedule 4.26 - Environmental Law Compliance;
January 29, 1996 memo; January 23, 1996 list of
Chemicals Subject to Environmental Regulation;
Environmental Site Assessment of 760 Shadowridge
Drive, Vista, CA
Schedule 4.27.1 - Twenty Largest Customers and
Suppliers
Schedule 4.27.2 - Shortages or Unavailability of
Products or Raw Materials
Schedule 4.28 - Company Indebtedness to Persons
Schedule 4.29 - bank Accounts and Authorizations
Schedule 5.6.2 - Ownership of Buyer's Subsidiaries
Schedule 5.8 - Buyer's Financial Statements
Schedule 5.10 - Absence of Certain Changes
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Schedule 5.12 - Pending Litigation of Buyer
Schedule 5.13 - Buyer's Compliance with Laws
Schedule 6.1.5 - Severance or Termination Pay
Schedule 6.9 - Company Ownership of Subsidiaries
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SIGNATURE
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.
OSMONICS, INC.
Date: August 8, 1996 By: /s/ D. Dean Spatz
D. Dean Spatz
President