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): January 2, 2001
CYTOMEDIX, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-28443 23-3011702
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
Three Parkway North, Deerfield, Illinois 60015
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(847) 405-7800
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name or Former Address,
if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The terms "Cytomedix," "our" and "we," as used in this current report,
refer to Cytomedix, Inc. Unless otherwise specified, all agreements referenced
below in connection with our asset acquisition were dated as of December 26,
2000. The closing date for this transaction was January 2, 2001.
ACQUISITION OF CERTAIN ASSETS FROM CURATIVE HEALTH SERVICES, INC. AND CHS
SERVICES, INC.
We have acquired certain technology and other assets of Curative Health
Services, Inc., a Minnesota corporation ("Curative"), and CHS Services, Inc., a
Delaware corporation ("CHS"), pursuant to the amended and restated asset
purchase agreement (the "asset purchase agreement") attached hereto as Exhibit
2.1, effective as of October 12, 2000 and executed as of December 26, 2000,
between us, as buyer, and Curative and CHS, as sellers. The technology and other
assets acquired by us include the intellectual property rights related to
development and production of Curative's chronic wound treatment agent,
Procuren(R), and all production equipment, leasehold improvements and certain
other fixed assets. In addition, we have hired approximately fifty of Curative's
employees associated with Procuren production, whose employment with Curative
was terminated immediately prior to the closing of this transaction. We have
also acquired a number of patents related to the isolation of growth factors
from platelets, as well as platelet-derived peptides. Procuren is a topical
solution used for the treatment of chronic, non-healing wounds and is similar in
its indications to our existing product, AuTolo-Gel(TM). Both Procuren and
AuTolo-Gel products belong to the industry of molecular biotechnology and
cellular therapies. With the technology and other assets we have acquired from
Curative, we will continue to produce and sell the Procuren product and intend
to develop other products associated with it, which will compliment our current
portfolio of products. Prior to this transaction, neither we nor any of our
affiliates, directors or officers, nor any associate of any such director or
officer, had any relationship with Curative or CHS.
The consideration paid by us to Curative and CHS at closing was the sum of
(i) $3,782,571 in cash and promissory note (the net book value of the assets
acquired), (ii) the assumption of the liabilities arising after the closing in
connection with any contracts sold or assigned to us by Curative or CHS and
relating to the Procuren operations, and (iii) our obligation to pay future
royalties as set forth in the royalty agreement between us and Curative, which
is attached hereto as Exhibit 10.2. We and Curative determined the amount of
this consideration as a result of the negotiation of the asset purchase
agreement and the related agreements described in this report.
In connection with this transaction, we have entered into supply and
royalty agreements with Curative. Under the supply agreement, attached hereto as
Exhibit 10.1, we will be responsible for supplying all of Curative's
requirements for Procuren in the United States. Curative will have the exclusive
right to sell Procuren to third party end-users in the United States; however,
we will have the unrestricted right to sell Procuren on our own behalf outside
the United States. We will sell Procuren to Curative at fixed prices based on
the number of units sold in connection with leases for which a consent to
assignment was not obtained as of the closing date of this transaction. Under
certain conditions, we will have no obligation exclusively to supply Curative
with its needs for Procuren, either in any individual state where the product is
made, or in the United States as a whole, if the same would result in a net loss
for us, unless Curative agrees to make up the net loss amount. The exclusive
supply agreement will remain in effect until we receive regulatory approval from
the U.S. Food and Drug Administration for the Procuren product. We expect to
submit an investigational new drug application to the FDA for Procuren during
this fiscal year. However, we cannot offer any assurance that we will be able to
obtain such FDA approval in the foreseeable future, or at all.
Under the royalty agreement, we will pay a royalty to Curative for sales of
Procuren that we make to customers other than Curative. The royalty will be
equal to a fixed percentage of sales of Procuren made in certain countries, so
long as we retain patent rights for Procuren in those countries. We will also
make royalty payments to Curative for sales of products that we may develop
through the intellectual property we have acquired pursuant to the asset
purchase agreement. This royalty will be a slightly higher percentage of net
sales, up to a maximum amount of sales of the newly developed products, after
which the royalty will decrease by a percentage point.
Further, we and Curative entered into a transitional services agreement,
which is attached hereto as Exhibit 10.3. Pursuant to this agreement, during six
months after the closing date, Curative will provide to us certain quality
assurance services, warehouse services, finance, accounting and information
services and other transitional assistance, for a monthly fee plus cost
reimbursement. We and Curative have also entered into an assignment and
assumption agreement, attached hereto as Exhibit 10.4, pursuant to which we have
agreed to assume liabilities which may arise after the closing in connection
with any contracts sold or assigned to us by Curative or CHS.
2
We and Curative have also entered into a lease assignment and assumption
agreement, attached hereto as Exhibit 10.5, which assigned to us Curative's
interest in approximately thirty leases relating to cell processing facilities
engaged in Procuren production operations.
In addition, each of Curative and CHS executed documents containing
assignment of marks, assignment of patents and assignment of copyrights, as
contemplated by the asset purchase agreement, attached hereto as Exhibits 10.6,
10.7 and 10.8, respectively. These agreements assigned to us the intellectual
property rights formerly held by Curative and CHS in connection with the
Procuren technology and operations.
FINANCING OF OUR ACQUISITION OF ASSETS
We have financed the asset purchase price through a combination of a loan
from Curative evidenced by a 10% convertible secured promissory note, given by
us to Curative in the amount of $1,682,571 (attached hereto as Exhibit 4.4 (the
"Curative note")), and loans from third-party lenders in the aggregate amount of
$2,100,000. The principal amount of the Curative note and interest thereon will
mature on April 15, 2001. If we do not repay the Curative note in full by its
maturity date, we will be required to pay additional annual default interest of
5%. At any time between the issuance date and the repayment date, Curative has
the option to convert this note into shares of our common stock, at a conversion
price per share equal to the lesser of (i) $1.00 and (ii) the price equal to
eighty percent of the average of the three intraday sale prices as reported by
Bloomberg during the twenty trading days preceding the date of any request by
Curative to exercise its conversion option. This conversion price is subject to
adjustment for stock splits and combinations, dividends and distributions,
reclassifications, reorganizations, mergers, consolidations or sales of assets,
as well as issuances of our common stock at a share price below the applicable
conversion price. Until we fulfill all of our obligations under the Curative
note, Curative may send a non-voting representative to attend all meetings of
our board of directors.
We have also issued Curative a warrant to purchase 600,846 shares of our
common stock, attached hereto as Exhibit 4.8 (the "Curative warrant"). The
purchase price per share is the lesser of (i) $0.50, and (ii) the price equal to
eighty percent of the average of the three intraday sale prices as reported by
Bloomberg during the twenty trading days preceding the date on which Curative
may elect to exercise its warrant. The Curative warrant vested fully upon
Curative's funding of the Curative note. This exercise price is subject to
adjustment for stock splits and combinations, dividends and distributions,
reclassifications, reorganizations, mergers, consolidations or sales of assets,
as well as issuances of our common stock at a share price below the applicable
exercise price. The exercise period of the Curative warrant remains in effect
until December 26, 2010.
In connection with the loan in the aggregate amount of $2,100,000 obtained
by us from three separate lenders (TSENVI, LLC, Bel-Cap Delaware, LLC and
Bristol Investment Fund, Ltd.), each lender received from us a 10% convertible
secured promissory note in the amount of $700,000 (the "TSENVI note," "Bel-Cap
note" and "Bristol note," respectively, attached hereto as Exhibits 4.1, 4.2 and
4.3). We issued these notes substantially on the same terms as the Curative
note. Each lender also received a warrant to purchase 250,000 shares of our
common stock (the "TSENVI warrant," "Bel-Cap warrant" and "Bristol warrant,"
respectively, attached hereto as Exhibits 4.5, 4.6 and 4.7). We issued these
warrants substantially on the same terms as the Curative warrant.
Each of the Curative note, Curative warrant, TSENVI note, TSENVI warrant,
Bel-Cap note, Bel-Cap warrant, Bristol note and Bristol warrant were issued in a
private placement pursuant to Rule 506 under Regulation D promulgated under the
Securities Act of 1933, as amended (the "Act"), and are governed by the
securities purchase agreement (attached hereto as Exhibit 10.9) and the
registration rights agreement (attached hereto as Exhibit 10.10). The securities
purchase agreement sets forth the terms of the issuance and sale of the above
notes and warrants, and states that, unless done to repurchase all outstanding
notes, without the consent of a majority-in-interest of the lenders, we may not
offer: (i) common stock at a discount to its market price on the issuance date;
(ii) securities convertible into an indeterminate number of shares of our common
stock; or (iii) warrants, until the later of 180 days after the closing date, or
150 days from the effective date of the registration statement described below.
For two years after the end of such 180 days or 150 days period, we must also
give prior notice to Curative and the lenders of a proposed securities offering,
and offer them to purchase a
3
pro rata share of the securities being offered, subject to certain exceptions
and unless the offering is made to repurchase all outstanding notes at maturity.
The securities purchase agreement also provides for agreements by our directors,
officers and certain stockholders not to dispose of any shares of our common
stock until the above notes have been repaid or converted in full. Subject to
certain exceptions, such lock-up agreements have been executed by all our
directors, officers and the following stockholders: BDR Consulting, Inc., Quasar
Investments LLC, Discretionary Investment Trust, KAB Investments, GUR Trust,
Steven Kriegsman, William Brown, Michael Chunn, Dennis Hendren and The Charles
Worden Trust.
Further, the above registration rights agreement sets forth the
registration rights applicable to each of the Curative note, Curative warrant,
TSENVI note, TSENVI warrant, Bel-Cap note, Bel-Cap warrant, Bristol note and
Bristol warrant. In connection therewith and within 45 days following the
closing date, we agreed to file with the Securities and Exchange Commission (the
"SEC"), and use our best efforts to obtain effectiveness of (as soon as
practicable thereafter), a shelf registration statement covering the resale of
the securities underlying the above notes and warrants; our failure to do so,
and some other events specified in this agreement, will result in our obligation
to make certain penalty payments to the holders in partial relief for the
damages due to such delay or reduced ability to sell the securities underlying
the above notes and warrants. We have also granted piggyback registration rights
for the securities underlying the above notes and warrants, in connection with
any registration statement we may file with the SEC (other than on certain
forms, including Form S-4 and Form S-8), until such time when such securities
may be immediately sold to the public without registration or restriction under
the Act. We have agreed to bear all reasonable expenses of registration under
the registration rights agreement, and also to afford certain information rights
to the holders of the notes and the warrants.
We have also entered into the security agreement, attached hereto as
Exhibit 10.11, which grants to each lender and Curative a pro rata security
interest in all of our personal property and assets in connection with the
TSENVI note, Bel-Cap note and Bristol note. We are also a party to certain other
agreements relating to our acquisition of the Procuren assets. A copy of our
press release regarding completion of the above asset acquisition from Curative
and CHS is attached as Exhibit 99.1 to this current report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a)(1) FINANCIAL STATEMENTS. Audited financial statements of the Procuren
business of Curative Health Services and CHS Services for the fiscal years ended
December 31, 1999 and 1998 with Independent Accountant's Report, and unaudited
financial statements as of September 30, 2000 and for the nine-month periods
ended September 30, 1999 and 1998 shall be filed no later than 60 days after
the date that this initial report on Form 8-K must be filed.
(b)(2) PRO FORMA FINANCIAL INFORMATION. Pro forma financial information relative
to the acquisition of the Procuren business for the fiscal year ended December
31, 1999 and for the interim period ended September 30, 2000, shall be filed not
later than 60 days after the date that this initial report on Form 8-K must be
filed.
4
(C) EXHIBITS.
2.1 Amended and Restated Asset Purchase Agreement, effective as of October
12, 2000 and executed as of December 26, 2000, by and among Cytomedix,
Inc., Curative Health Services, Inc. and CHS Services, Inc.
4.1 Convertible Promissory Note issued to TSENVI, LLC, dated as of December
26, 2000.
4.2 Convertible Promissory Note issued to Bel-Cap Delaware, LLC, dated as
of December 26, 2000.
4.3 Convertible Promissory Note issued to Bristol Investment Fund, Ltd.,
dated as of December 26, 2000.
4.4 Convertible Promissory Note issued to Curative Health Services, Inc.,
dated as of December 26, 2000.
4.5 Warrant issued to TSENVI, LLC, dated as of December 26, 2000.
4.6 Warrant issued to Bel-Cap Delaware, LLC, dated as of December 26, 2000.
4.7 Warrant issued to Bristol Investment Fund, Ltd., dated as of December
26, 2000.
4.8 Warrant issued to Curative Health Services, Inc., dated as of December
26, 2000.
10.1 Supply Agreement, dated as of December 26, 2000, by and between
Cytomedix, Inc. and Curative Health Services, Inc.
10.2 Royalty Agreement, dated as of December 26, 2000, by and between
Cytomedix, Inc. and Curative Health Services, Inc.
10.3 Transitional Services Agreement, dated as of December 26, 2000, by and
between Cytomedix, Inc. and Curative Health Services, Inc.
10.4 Assignment and Assumption Agreement, dated as of December 26, 2000, by
and between Cytomedix, Inc. and Curative Health Services, Inc.
10.5 Form of Lease Assignment and Assumption Agreement, dated as of December
26, 2000, by and between Cytomedix, Inc. and Curative Health Services,
Inc.
10.6 Assignment of Marks, dated as of December 26, 2000, by and among
Cytomedix, Inc., Curative Health Services, Inc. (formerly known as
Curative Technologies, Inc. and Curatech, Inc.) and CHS Services, Inc.
10.7 Assignment of Patents, dated as of December 26, 2000, by and among
Cytomedix, Inc., Curative Health Services, Inc. (formerly known as
Curative Technologies, Inc. and Curatech, Inc.) and CHS Services, Inc.
10.8 Assignment of Copyrights, dated as of December 26, 2000, by and among
Cytomedix, Inc., Curative Health Services, Inc. and CHS Services, Inc.
10.9 Securities Purchase Agreement, dated as of December 26, 2000, by and
among Cytomedix, Inc., TSENVI, LLC, Bel-Cap Delaware, LLC, Bristol
Investment Fund, Ltd. and Curative Health Services, Inc.
10.10 Registration Rights Agreement, dated as of December 26, 2000, by and
among Cytomedix, Inc., TSENVI, LLC, Bel-Cap Delaware, LLC, Bristol
Investment Fund, Ltd. and Curative Health Services, Inc.
10.11 Security Agreement, dated as of December 26, 2000, by and among
Cytomedix, Inc., TSENVI, LLC, Bel-Cap Delaware, LLC, Bristol Investment
Fund, Ltd. and Curative Health Services, Inc.
99.1 Press Release of Cytomedix, Inc. dated January 2, 2001.
5
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.
CYTOMEDIX, INC.
-----------------------------------------
(Registrant)
Dated: January 17, 2001 By: /s/ James A. Cour
--------------------------------------
James A. Cour
President and Chief Executive Officer
6
EXHIBIT LIST
2.1 Amended and Restated Asset Purchase Agreement, effective as of October
12, 2000 and executed as of December 26, 2000, by and among Cytomedix,
Inc., Curative Health Services, Inc. and CHS Services, Inc.
4.1 Convertible Promissory Note issued to TSENVI, LLC, dated as of December
26, 2000.
4.2 Convertible Promissory Note issued to Bel-Cap Delaware, LLC, dated as
of December 26, 2000.
4.3 Convertible Promissory Note issued to Bristol Investment Fund, Ltd.,
dated as of December 26, 2000.
4.4 Convertible Promissory Note issued to Curative Health Services, Inc.,
dated as of December 26, 2000.
4.5 Warrant issued to TSENVI, LLC, dated as of December 26, 2000.
4.6 Warrant issued to Bel-Cap Delaware, LLC, dated as of December 26, 2000.
4.7 Warrant issued to Bristol Investment Fund, Ltd., dated as of December
26, 2000.
4.8 Warrant issued to Curative Health Services, Inc., dated as of December
26, 2000.
10.1 Supply Agreement, dated as of December 26, 2000, by and between
Cytomedix, Inc. and Curative Health Services, Inc.
10.2 Royalty Agreement, dated as of December 26, 2000, by and between
Cytomedix, Inc. and Curative Health Services, Inc.
10.3 Transitional Services Agreement, dated as of December 26, 2000, by and
between Cytomedix, Inc. and Curative Health Services, Inc.
10.4 Assignment and Assumption Agreement, dated as of December 26, 2000, by
and between Cytomedix, Inc. and Curative Health Services, Inc.
10.5 Form of Lease Assignment and Assumption Agreement, dated as of December
26, 2000, by and between Cytomedix, Inc. and Curative Health Services,
Inc.
10.6 Assignment of Marks, dated as of December 26, 2000, by and among
Cytomedix, Inc., Curative Health Services, Inc. (formerly known as
Curative Technologies, Inc. and Curatech, Inc.) and CHS Services, Inc.
10.7 Assignment of Patents, dated as of December 26, 2000, by and among
Cytomedix, Inc., Curative Health Services, Inc. (formerly known as
Curative Technologies, Inc. and Curatech, Inc.) and CHS Services, Inc.
10.8 Assignment of Copyrights, dated as of December 26, 2000, by and among
Cytomedix, Inc., Curative Health Services, Inc. and CHS Services, Inc.
10.9 Securities Purchase Agreement, dated as of December 26, 2000, by and
among Cytomedix, Inc., TSENVI, LLC, Bel-Cap Delaware, LLC, Bristol
Investment Fund, Ltd. and Curative Health Services, Inc.
10.10 Registration Rights Agreement, dated as of December 26, 2000, by and
among Cytomedix, Inc., TSENVI, LLC, Bel-Cap Delaware, LLC, Bristol
Investment Fund, Ltd. and Curative Health Services, Inc.
7
10.11 Security Agreement, dated as of December 26, 2000, by and among
Cytomedix, Inc., TSENVI, LLC, Bel-Cap Delaware, LLC, Bristol Investment
Fund, Ltd. and Curative Health Services, Inc.
99.1 Press Release of Cytomedix, Inc. dated January 2, 2001.
8