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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): July 31, 1998
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BIO-VASCULAR, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-13907 41-1526554
(State of or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
2575 University Avenue, St. Paul, Minnesota 55114-1024
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (651) 603-3700
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 31, 1998 Bio-Vascular, Inc., a Minnesota corporation
("Bio-Vascular") acquired Jer-Neen Manufacturing Co., Inc., a Minnesota
corporation ("Jer-Neen"). The acquisition was completed pursuant to an
Acquisition Agreement and Plan of Reorganization dated as of such date (the
"Acquisition Agreement") by and among Bio-Vascular, Jer-Neen and Jer-Neen
Acquisition, Inc., a Minnesota corporation and a wholly-owned subsidiary of
Bio-Vascular (the "Acquisition Subsidiary"), and George Nelson, Jr., Ronald
Breckner, James Pfau, Willard Sykes and Catherine Sykes as the shareholders of
Jer-Neen (the "Shareholders"). Under the terms of the Acquisition Agreement,
Jer-Neen merged with and into the Acquisition Subsidiary, with the separate
existence of Jer-Neen ceasing and the Acquisition Subsidiary surviving (the
"Merger").
Pursuant to the terms of the Acquisition Agreement, all of the issued and
outstanding shares of common stock of Jer-Neen were converted into the right to
receive an aggregate of $1,750,000 in cash and an aggregate of 585,872 shares of
common stock, $.01 par value per share, of Bio-Vascular ("Bio-Vascular Common
Stock"), with all of such cash paid and shares issued at the closing of the
Merger. The total consideration paid by Bio-Vascular was determined pursuant to
arms' length negotiations and took into account various factors concerning the
business and prospects of Jer-Neen.
The number of shares of Bio-Vascular Common Stock issued in connection with
the Merger was determined pursuant to a letter of intent among Bio-Vascular and
each of the Shareholders, dated May 28, 1998. The letter of intent provided for
the stock portion of the consideration to consist of a number of shares of
Bio-Vascular Common Stock having an aggregate value of $2,750,000, based on the
average closing price of a share of Bio-Vascular Common Stock reported by the
Nasdaq National Market for (i) the ten consecutive trading days prior to public
announcement of execution of the letter of intent and (ii) the ten consecutive
trading days ending July 27, 1998. The 585,872 shares of Bio-Vascular Common
Stock issued to the Shareholders represented approximately 6.5% of the issued
and outstanding shares of Bio-Vascular Common Stock immediately prior to
issuance and approximately 6.1% of the issued and outstanding shares of
Bio-Vascular Common Stock immediately following issuance. All of the shares of
Bio-Vascular Common Stock issued to the Shareholders in connection with the
Merger are "restricted stock," as defined in the rules promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), but the Acquisition
Agreement provides that Bio-Vascular will use reasonable best efforts to
register the resale of such shares under the Securities Act. Under the
Acquisition Agreement, Bio-Vascular will bear all registration, filing and
listing fees, printing expenses, fees and disbursements of counsel and
accountants for Bio-Vascular and all blue sky fees incurred in connection with
registration of such shares of Bio-Vascular Common Stock.
At the closing of the Merger Bio-Vascular also paid an additional $950,000
in cash allocated among the Shareholders in consideration of each Shareholder's
covenant under the Acquisition Agreement, for a period of ten years following
closing of the Merger, not to engage, directly or indirectly, in certain
activities competitive with the business conducted by Jer-Neen prior to the
Merger.
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The total cash portion of the consideration paid to the Shareholders for
their Jer-Neen stock and with respect to the non-competition covenants was paid
out of Bio-Vascular's existing cash at the time of the closing of the Merger.
Jer-Neen is a value-added manufacturer of precision components such as
micro coils, wire forms and spring components used in implantable
defibrillation, interventional medicine and other surgical applications within
the medical device industry. Following the Merger, Bio-Vascular will continue
Jer-Neen's business through the Acquisition Subsidiary, which has been re-named
Jer-Neen Manufacturing Co., Inc.
James F. Pfau will continue to manage Jer-Neen's business as the president
of the Acquisition Subsidiary pursuant to an Employment Agreement among Mr.
Pfau, Bio-Vascular and the Acquisition Subsidiary, dated July 31, 1998. The
Employment Agreement provides for an initial term of three (3) years. Under the
Employment Agreement Bio-Vascular will grant Mr. Pfau restricted shares of
Bio-Vascular Common Stock vesting over a period of four (4) years and options to
purchase Bio-Vascular Common Stock becoming exerciseable over a period of four
(4) years. Bio-Vascular and Mr. Pfau have also entered into a Change in Control
Agreement providing Mr. Pfau with certain benefits in the event of a change in
control of Bio-Vascular. Mr. Pfau's Employment Agreement and Change in Control
Agreement are filed as exhibits to this report and are incorporated herein by
reference. Following the Merger Mr. Pfau will also be appointed as a vice
president of Bio-Vascular.
For accounting purposes, it is intended that the Merger will be treated as
a purchase.
Additional information regarding the Merger is contained in the Acquisition
Agreement, which is an exhibit to this report and is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
A. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
B. PRO FORMA FINANCIAL INFORMATION.
Not applicable.
C. EXHIBITS.
2.1 Acquisition Agreement and Plan of Reorganization by and among
Bio-Vascular, Inc., Jer-Neen Acquisition, Inc., Jer-Neen
Manufacturing Co., Inc., George Nelson, Jr., Ronald Breckner,
James Pfau, Willard Sykes and Catherine Sykes dated July 31,
1998.
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10.1 Employment Agreement dated July 31, 1998 among Bio-Vascular,
Inc., Jer-Neen Manufacturing Co., Inc. and James F. Pfau.
10.2 Change in Control Agreement dated July 31, 1998 between
Bio-Vascular, Inc. and James F. Pfau.
99.1 Press Release, dated June 2, 1998.
99.2 Press Release, dated August 3, 1998.
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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 thereunto duly authorized.
BIO-VASCULAR, INC.
Dated: August 14, 1998 By: /s/ Connie L. Magnuson
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Connie L. Magnuson
Vice President and Chief Financial Officer
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INDEX TO EXHIBITS
Item Method of Filing
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2.1 Acquisition Agreement and Plan of Reorganization by and among Filed electronically
Bio-Vascular, Inc., Jer-Neen Acquisition, Inc., Jer-Neen herewith.
Manufacturing Co., Inc., George Nelson, Jr., Ronald Breckner, James
Pfau, Willard Sykes and Catherine Sykes dated July 31, 1998.
10.1 Employment Agreement dated July 31, 1998 among Bio-Vascular, Inc., Filed electronically
Jer-Neen Manufacturing Co., Inc. and James F. Pfau. herewith.
10.2 Change in Control Agreement dated July 31, 1998 between Filed electronically
Bio-Vascular, Inc. and James F. Pfau. herewith.
99.1 Press Release, dated June 2, 1998. Filed electronically
herewith.
99.2 Press Release, dated August 3, 1998. Filed electronically
herewith.