SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): September 30, 1997 (June 13,
1997)
NOXSO Corporation
(Exact Name of Registrant as Specified in its Charter)
Virginia
(State or Other Jurisdiction of Incorporation)
0-17454 54-1118334
(Commission File Number) (I.R.S. Employer Identification No.)
2414 Lytle Road, Bethel Park, PA 15102
(Address of Principal Executive Offices) (Zip Code)
(412) 854-1200
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events.
Agreement with Republic Financial Corporation
On August 15, 1997, NOXSO Corporation ("NOXSO") entered into a letter of
intent with Republic Financial Corporation ("Republic") for the sale of NOXSO's
facility (the "Facility") for the conversion of elemental sulfur into liquid
sulfur dioxide which NOXSO constructed on property owned by Olin Corporation
("Olin") in Tennessee under a supply agreement with Olin. Republic, a merchant
banking firm which specializes in the acquisition and financing of assets, has
proposed, subject to a number of conditions, to purchase the Facility at a price
of $11 million. A definitive Asset Purchase Agreement setting forth the terms
and conditions of the sale of the Facility to Republic was executed by NOXSO and
Republic on September 17, 1997.
Among the numerous conditions that must be satisfied prior to the
completion of the sale are negotiations with third parties of various associated
agreements, including contracts for the sale of liquid sulfur dioxide and the
purchase of elemental sulfur, an operation and maintenance contract, a technical
support agreement, agreements for the purchase of any other input of process
materials required to operate the Facility effectively, and a land lease for the
Facility. Completion of certain of the associated agreements will require the
cooperation of Olin.
Another condition of sale involving Olin is the resolution of the disputes
between NOXSO and Olin in the course of which NOXSO commenced litigation against
Olin and Olin filed an involuntary petition in bankruptcy against NOXSO and
asserted certain monetary claims. By Stipulation and Order of Court entered
September 12, 1997 ("Stipulation"), Olin and NOXSO conditionally resolved their
disputes on the following basis. In the event that the sale to Republic closes,
Olin will be entitled to payment at closing of claims totaling $5,705,828.84
plus certain accruals and less credits to NOXSO for liquid sulfur dioxide
produced at the Facility and used or stored by Olin since February 1, 1997. As
of August 31, 1997, those credits totaled $1,590,930. Additionally, at the
closing on the Republic sale, NOXSO and Olin shall execute mutual releases
releasing any and all other claims or causes of action. In the event that the
sale to Republic does not close, NOXSO and Olin shall be entitled to pursue any
and all claims and lawsuits which they have against each other. However, any
claim of Olin in excess of the aggregate sum as agreed pursuant to the
Stipulation shall be assertable defensively by set-off and/or counterclaim only
and shall not result in any increase in the aggregate claims of Olin payable by
NOXSO. Any objections to the Stipulation must be filed on or before October 2,
1997.
Because NOXSO is currently reorganizing under Chapter 11 of the Bankruptcy
Code, completion of a sale of the Facility is subject to the approval of the
Bankruptcy Court for the Eastern District of Tennessee (the "Court"). A Motion
for Order Approving (i) Sale of Assets Free and Clear of Liens and Encumbrances
and (ii) Assumption and Assignment of Executory Contract in Connection with Sale
of Assets was filed with the Court on September 22, 1997, and is scheduled for
hearing on October 21, 1997. Subject to satisfaction of all conditions, the
Asset Purchase Agreement targets November 1997 for the closing of the sale.
Copies of each of the definitive Asset Purchase Agreement between Republic
and NOXSO and of the Stipulation are being filed herewith as exhibits. The
summary of the terms thereof set forth above is intended to be merely a summary
and is not complete. Reference is made to the actual agreements which speak for
themselves.
Plan of Reorganization
Pursuant to the provisions of the Bankruptcy Code, NOXSO has the exclusive
right to file a plan of reorganization until October 7, 1997. The sale of the
Facility is a key element of NOXSO's overall reorganization plan to emerge from
Chapter 11. In order to allow NOXSO to close on the sale to Republic and to
continue its search for a host site in order to commercially demonstrate the
NOXSO Process, NOXSO has filed a Motion for Extension of Exclusive Time to File
Plan for an additional 120 days from October 7, 1997. Hearing on Motion is
scheduled for October 2, 1997.
Debtor-in-Possession Financing
On June 30, 1997, the Court preliminarily approved NOXSO's request for
emergency interim debtor-in-possession financing. Pursuant to an agreement with
the lenders (collectively, the "Interim Lenders"), the Interim Lenders agreed to
lend NOXSO the amount of $50,000, interest free for one year. Pursuant to such
agreement, NOXSO also issued to the Interim Lenders 150,000 shares of NOXSO's
Common Stock, par value $.01 per share (the "Common Stock"). A final order
approving the interim debtor-in-possession financing was entered on August 18,
1997.
NOXSO subsequently applied to the bankruptcy court for approval of
additional debtor-inpossession financing in an amount of up to $600,000. On
August 18, 1997, the Court entered a final order authorizing NOXSO to obtain
such financing from a group of lenders (the "DIP Lenders"). Pursuant to such
arrangement, NOXSO is authorized to grant and has granted to the DIP Lenders a
first priority lien in certain of NOXSO's patents and laboratory equipment and
is authorized to issue 300,000 shares of its Common Stock in the aggregate to
the DIP Lenders. To date, the DIP Lenders have loaned $578,666 to NOXSO pursuant
to the financing arrangement, and NOXSO has issued 289,333 shares of Common
Stock to the DIP Lenders. The loans from the DIP Lenders bear interest at the
rate of 20% per annum. Interest for a one-year period (one-half of which will be
refunded to the extent not earned) and a 5% origination fee have been paid from
proceeds.
The loans from both the Interim Lenders and the DIP Lenders are due and
payable on the earlier of the date one year after the specific loans were made
or consummation of NOXSO's plan of reorganization.
Conversion of Subordinated Debentures
Between June 13, 1997 and August 6, 1997, the holders of the Company's
Convertible Subordinated Debentures (the "Debentures") converted the entire
$540,000 principal amount of
the Debentures, plus accrued interest at a rate of 6% per annum, into Common
Stock at rates ranging from 72.3% to 67.5% (depending on the date of conversion)
of the average closing price of the Common Stock for the five trade days prior
to conversion. An aggregate of 3,551,042 shares of Common Stock were issued on
conversion of the Debentures. The Debentures were issued in February 1997 in
reliance on Regulation S promulgated under the Securities Act of 1933, as
amended.
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of September 18, 1997, by and among
NOXSO Corporation and Republic Financial Corporation.
2.2 Stipulation and Order of Court entered September 12, 1997.
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 hereunto duly authorized.
NOXSO CORPORATION
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(Registrant)
By: /s/ Edwin J. Kilpela
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Edwin J. Kilpela, President
Dated: September 30, 1997