<PAGE>
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): December 15, 1998
NM HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 0-22247 41-1756256
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
9850 51st Avenue North, Suite 110, Minneapolis, Minnesota 55442
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 551-9595
--------------------
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
a. Sale of Pump and Plastic Disposables Product Line
On December 23, 1998, Nutrition Medical, Inc.(now known as NM
Holdings, Inc.) (the "Company") completed the sale of its pump and
plastic disposables product line to ZEVEX, Inc., a wholly-owned
subsidiary of ZEVEX International, Inc. ("ZEVEX"), pursuant to an
Asset Purchase Agreement dated as of July 27, 1998 and amended as of
December 23, 1998 (collectively, the "ZEVEX Agreement") by and between
ZEVEX and the Company. The terms of the sale were determined through
negotiations between the parties. In connection with such sale, ZEVEX
acquired, among other things, all tangible personal property,
inventory, supplies, intellectual property and goodwill of the Company
relating to the Company's enteral feeding pump and plastic disposables
business. As consideration, the Company received a total purchase
price of (i) $765,141 in cash, $126,514 of which was placed in escrow
and $265,141 of which represents an amount equal to the Company's
actual cost of (x) all parts and materials for the repair of enteral
feeding pumps, (y) parts and materials for the manufacture of delivery
sets and feeding tubes and (z) finished products consisting of
delivery sets and feeding tubes and (ii) 115,000 shares of common
stock, $.001 par value, of ZEVEX International, Inc. (the "ZEVEX
Shares").
In connection with this sale, the Company retired in full a
promissory note dated January 13, 1997 in the initial principal amount
of $3,000,000 issued by the Company to Elan Pharma Inc. that was
subsequently transferred to Elan International Services Ltd. ("Elan")
and repurchased 213,750 shares of the Company's common stock owned by
Elan in exchange for $450,000 cash, the ZEVEX Shares and a warrant to
purchase 50,000 shares of the Company's common stock at $3.50 per
share over a three year period.
b. Sale of Critical Care Nutrition Product Line
On December 23, 1998, the Company completed the sale of its
critical care nutrition product line to GalaGen Inc. ("GalaGen")
pursuant to an Asset Purchase Agreement dated as of September 1, 1998
and amended as of October 28, 1998 and December 23, 1998
(collectively, the "GalaGen Agreement") by and between GalaGen and the
Company. The terms of the sale were determined through negotiations
between the parties. In connection with such sale, GalaGen acquired,
among other things, equipment, supplies, inventory, warranties,
intellectual property and goodwill of the Company relating to the
Company's critical care business. As consideration, the Company
received a total purchase price of $569,641, consisting of $71,516 in
cash and 318,800 shares of common stock, $.01 par value, of GalaGen
valued at $498,125. In addition, GalaGen has agreed to pay the
Company a royalty equal to 9% of net sales received by GalaGen from
sales of the Company's critical care nutrition products (other than
Glutasorb Ready to Use) by GalaGen in the United States that exceed
(i) $5 million during the year ending December 31, 2000, (ii) $6
million during the year ending December 31, 2001 and (iii) $7.5
million during the year ending December 31, 2002. GalaGen has also
agreed to pay the Company an international royalty for sales by
GalaGen of the Company's critical care nutrition products (other than
Glutasorb Ready to
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Use) in all countries other than the United States and of Glutasorb
Ready to Use in all countries other than the United States and certain
other foreign countries equal to 5% of net sales (less uncollectible
accounts) that exceed $200,000 during the year ending December 23,
1999 and 2.5% of net sales (less uncollectible accounts) that exceed
$200,000 during the year ending December 23, 2000.
Mr. William L. Rush, who resigned as a director, President,
Chief Executive Officer and Chairman of the Board of the Company
effective August 31, 1998, and an entity wholly-owned by him have
entered into agreements with GalaGen whereby Mr. Rush will (i)
provide certain consulting services related to the development of
functional food and medical food products and (ii) act as an
independent sales representative for soliciting orders for and
distributing certain products marketed and sold by GalaGen outside
of the United States.
Item 5. OTHER EVENTS.
a. Corporate Name Change
The Company amended its articles of incorporation by changing its
corporate name to "NM Holdings, Inc." effective December 31, 1998 in
order to reflect the revised nature of its business.
b. Settlement of Novartis Litigation
Effective December 15, 1998, the Company entered into a
Settlement Agreement and Mutual Release (the "Settlement Agreement")
with Novartis Nutrition Corporation a/k/a Novartis Nutrition, Inc.
("Novartis") settling the case NOVARTIS NUTRITION, INC. V. NUTRITION
MEDICAL, INC. Pursuant to the terms of the settlement agreement,
Novartis agreed to release all claims against the Company, and the
Company paid Novartis $450,000 and agreed to discontinue production of
its L-Emental-TM- Plus product.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION
The required pro forma financial information is not provided
with this report. The required pro forma financial information
will be provided in an amendment to this report prior to
March 9, 1999.
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
2.1 Asset Purchase Agreement (the "ZEVEX Agreement") dated
as of July 27, 1998 by and between ZEVEX, Inc. and the
Company (incorporated by reference to Exhibit 2.1 to
the Company's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1998)
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<PAGE>
2.2 First Amendment to the ZEVEX Agreement dated as of
December 23, 1998
2.3 Second Amendment to the ZEVEX Agreement dated as of
December 23, 1998
2.4 Asset Purchase Agreement (the "GalaGen Agreement")
dated as of September 1, 1998 by and between GalaGen
Inc. and the Company (incorporated by reference to
Exhibit 2.1 to the Company's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1998)
2.5 First Amendment to the GalaGen Agreement dated as of
October 28, 1998 (incorporated by reference to Exhibit
B to the Company's Definitive Proxy Statement on
Schedule 14A filed with the Securities and Exchange
Commission on December 9, 1998)
2.6 Second Amendment to the GalaGen Agreement dated as of
December 23, 1998
3.1 Second Restated Articles of Incorporation of the
Company, as amended
</TABLE>
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<PAGE>
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.
Date: January 6, 1999
NUTRITION MEDICAL, INC.
By: /s/ Richard J. Hegstrand
------------------------------------------
Richard J. Hegstrand, Chief Operating
Officer
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Asset Purchase Agreement (the "ZEVEX Agreement") dated as of July
27, 1998 by and between ZEVEX, Inc. and the Company (incorporated
by reference to Exhibit 2.1 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1998)
2.2 First Amendment to the ZEVEX Agreement dated as of December 23,
1998
2.3 Second Amendment to the ZEVEX Agreement dated as of December 23,
1998
2.4 Asset Purchase Agreement (the "GalaGen Agreement") dated as of
September 1, 1998 by and between GalaGen Inc. and the Company
(incorporated by reference to Exhibit 2.1 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September
30, 1998)
2.5 First Amendment to the GalaGen Agreement dated as of October 28,
1998 (incorporated by reference to Exhibit B to the Company's
Definitive Proxy Statement on Schedule 14A filed with the
Securities and Exchange Commission on December 9, 1998)
2.6 Second Amendment to the GalaGen Agreement dated as of December
23, 1998
3.1 Second Restated Articles of Incorporation of the Company,
as amended
</TABLE>
<PAGE>
EXHIBIT 2.2
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (the "Amendment") is
entered into as of December 23, 1998, by and between ZEVEX, Inc. a Delaware
corporation, ("Buyer") and Nutrition Medical, Inc., a Minnesota corporation
("Target").
The parties to this Amendment have previously entered into the Asset
Purchase Agreement, dated July 27, 1998, (the "Purchase Agreement").
The Parties now desire to amend the Purchase Agreement in certain respects
as provided in this Amendment.
Now, therefore, in consideration of the covenants made herein and the
Purchase Agreement, the Parties hereby agree as follows.
1. AMENDMENTS.
a. Section 2(a)(vii) is hereby amended to read in its entirety as
follows:
"(vii) agreements, contracts, purchase orders, sales
orders, indentures, mortgages, instruments, Security
Interests, guaranties, commitments, other similar
arrangements and rights thereunder (other than the Pump
Lease Agreements) as listed Schedule 2(a)(vii)(A), and Pump
Lease Agreements as described in Schedule 2(a)(vii)(B)
(collectively, the "Assumed Contracts");"
b. Section 2(e)(iii) is hereby amended to read in its entirety as
follows:
"(iii) an amount equal to the estimated actual cost of
the Parts Inventory on the Closing Date less seventy five
thousand dollars ($75,000) (the "Estimated Parts Inventory
Amount"), subject to adjustment as set forth in Section 2(g)
below)."
c. The fifth sentence of Section 2(f) is hereby amended to read in its
entirety as follows:
"The Parties further agree that the Buyer shall withhold an
additional One Hundred Thousand Dollars ($100,000) from the
cash portion of the Purchase Price to be delivered at the
Closing and that this amount, less deductions pursuant to
Section 6(i) or Section 8(b) will
<PAGE>
be delivered to the Target on a deferred basis no later than 270 days
following Closing.
d. The third sentence of Section 2(g) is hereby amended to read in its
entirety as follows:
"Within thirty (30) days after the completion of such
inventory, the Target shall prepare and deliver to the Buyer
a statement (the "Inventory Statement"), which has been
reviewed and reported on by Buyer's independent auditors in
accordance with procedures to be established by Buyer and
the Target, without exception or qualification, setting
forth the actual cost of the Parts Inventory minus seventy
five thousand dollars ($75,000) (the "Final Parts Inventory
Amount").
2. MISCELLANEOUS. This Amendment to the Purchase Agreement is incorporated in
and supersedes the terms of the Purchase Agreement only with regard to the
sections specifically identified herein. All other terms and provisions in the
Purchase Agreement remain in full force and effect. The Purchase Agreement and
this Amendment contain the entire understanding between the parties related to
the subject matter hereof and thereof and supersede all prior oral or written
agreements or understandings with respect to the subject matter hereof and
thereof. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
ZEVEX, INC.,
a Delaware corporation
By /s/ Phillip L. McStotts
-----------------------------------
Name: Phillip L. McStotts
Title: Chief Financial Officer
NUTRITION MEDICAL, INC.,
a Minnesota corporation
By /s/ Richard J. Hegstrand
-----------------------------------
Name: Richard J. Hegstrand
Title: Chief Operating Officer
<PAGE>
EXHIBIT 2.3
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
This Second Amendment to Asset Purchase Agreement (the "Amendment") is
entered into as of December 23, 1998, by and between ZEVEX, Inc. a Delaware
corporation, ("Buyer") and Nutrition Medical, Inc., a Minnesota corporation
("Target").
The parties to this Amendment have previously entered into the Asset
Purchase Agreement, dated July 27, 1998, which was amended by the First
Amendment to Asset Purchase Agreement, dated December 23, 1998 (collectively,
the "Purchase Agreement").
The parties now desire to amend the Purchase Agreement in certain respects
as provided in this Amendment.
Now, therefore, in consideration of the covenants made herein and the
Purchase Agreement, the parties hereby agree as follows.
1. AMENDMENT. Schedule 2(a)(vii)(A) is hereby amended to delete the phrase
"Agreement between Venusa, Ltd. and Elan Pharma, dated 5/28/97".
2. MISCELLANEOUS. This Amendment to the Purchase Agreement is incorporated in
and supersedes the terms of the Purchase Agreement only with regard to the
sections specifically identified herein. All other terms and provisions in the
Purchase Agreement remain in full force and effect. The Purchase Agreement and
this Amendment contain the entire understanding between the parties related to
the subject matter hereof and thereof and supersede all prior oral or written
agreements or understandings with respect to the subject matter hereof and
thereof. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
ZEVEX, INC., NUTRITION MEDICAL, INC.,
a Delaware corporation a Minnesota corporation
By: By:
------------------------ ---------------------------
Name: Phillip L. McStotts Name: Richard J. Hegstrand
Title: Chief Financial Officer Title: Chief Operating Officer
1
<PAGE>
EXHIBIT 2.6
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT to that certain Asset Purchase Agreement dated
September 1, 1998 (the "Purchase Agreement") by and between GalaGen Inc., a
Delaware corporation ("Buyer"), and Nutrition Medical, Inc., a Minnesota
corporation ("Seller"), is made as of this 23rd day of December, 1998.
Capitalized terms not otherwise defined herein are used with the meaning given
such terms in the Purchase Agreement.
RECITALS
The Purchase Agreement provides for Buyer to acquire certain assets of
Seller subject to the terms and conditions thereof.
The Purchase Agreement was amended by an Amendment To Asset Purchase
Agreement (the "Amendment") dated as of September 28, 1998.
The Amendment provides that Buyer will pay to Seller an International
Royalty on certain sales of the Products. Buyer and Seller wish to further
specify in this Second Amendment the sales of the Products to which the
International Royalty applies.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties do hereby amend
the Purchase Agreement as follows:
1. Section 2.2 is amended and restated in its entirety to read as follows:
2.2 INTERNATIONAL ROYALTY. Buyer will pay to Seller an international
royalty (the "International Royalty") (a) of five percent (5%) of net
International Sales (as defined herein), reduced by uncollectible accounts,
in excess of $200,000 during the year ending on the first anniversary of
the Closing Date, and (b) of two and one half percent (2 1/2%) of net
International Sales, reduced by uncollectible accounts, in excess of
$200,000 during the year ending on the second anniversary of the Closing
Date. Buyer will make payment, if any, of the International Royalty no
later than 120 days after the end of the year to which such royalty
relates, accompanied by such documentation as may be agreed upon by Buyer
and Seller. "International Sales" as used herein means sales made directly
by Buyer of the Product known as "Glutasorb Ready to Use" to customers in
all countries
<PAGE>
except the United States, Japan, France, England, Scotland, Belgium,
Holland, Switzerland, Denmark, Sweden, Norway and Finland and sales made
directly by Buyer of all Products other than "Glutasorb Ready to Use" to
customers in all countries except the United States.
2. Except as expressly set forth herein, the terms and conditions of the
Purchase Agreement, as amended by the Amendment, remain unmodified and in
full force and effect.
3. This Second Amendment may be executed in counterparts, each of which shall
be considered an original.
IN WITNESS WHEREOF, the parties have caused this Second Amendment to
be executed by their duly authorized representatives to be effective as of the
date first given above.
NUTRITION MEDICAL, INC. GALAGEN INC.
By/s/ Richard J. Hegstrand By/s/ Greg A. Waldon
--------------------------------- --------------------------------------
Its Chief Operating Officer Its Chief Financial Officer
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<PAGE>
EXHIBIT 3.1
ARTICLES OF AMENDMENT
OF
SECOND RESTATED ARTICLES OF INCORPORATION
OF
NUTRITION MEDICAL, INC.
The undersigned, Chief Operating Officer of Nutrition Medical, Inc., a
Minnesota corporation (the "Company"), hereby certifies that pursuant to Chapter
302A of the Minnesota Business Corporation Act, the following resolution was
duly adopted by the board of directors of the Company in a written action dated
September 1, 1998, and by the shareholders of the Company at a meeting on
December 22, 1998, and that such resolution has not been subsequently modified
or rescinded:
NAME CHANGE
RESOLVED, that Article 1 of the Second Restated Articles of Incorporation
of the Company is hereby amended in its entirety to read as follows:
ARTICLE 1. NAME
The name of the corporation is "NM Holdings, Inc."
IN WITNESS WHEREOF, the undersigned, the Chief Operating Officer of
the Company, being duly authorized on behalf of the Company has executed this
document this 30th day of December 1998.
/s/ Richard J. Hegstrand
----------------------------------------
Richard J. Hegstrand
Chief Operating Officer
<PAGE>
ARTICLES OF AMENDMENT
OF
SECOND RESTATED ARTICLES OF INCORPORATION
OF
NUTRITION MEDICAL, INC.
1. The name of this corporation is Nutrition Medical, Inc., a
Minnesota corporation (the "Company").
2. The following amendment to the Second Restated Articles of
Incorporation of the Company was adopted by the Board of Directors of the
Company on May 27, 1998, pursuant to Section 302A.402, Subdivision 3 of the
Minnesota Business Corporation Act:
RESOLVED, that Article 3 of the currently existing Articles of
Incorporation is hereby amended in its entirety to read as follows:
"Article 3. AUTHORIZED SHARES. The aggregate number of authorized
shares of the corporation is 6,250,000 shares, par value of $.04 per share,
of which 1,250,000 are undesignated preferred stock. The remaining shares
shall be divisible into classes and series, have the designations, voting
rights, and other rights and preferences, and be subject to the
restrictions, that the board of directors may from time to time establish,
fix, and determine, consistent with these articles of incorporation.
Unless otherwise designated by the board of directors, all issued shares
shall be deemed common stock with equal rights and preferences."
3. The amendment will not adversely affect the rights or
preferences of the holders of outstanding shares of any class or series and
will not result in the percentage of authorized shares of any class or series
that remain unissued after such amendment exceeding the percentage of
authorized shares that were unissued before such amendment.
4. The document attached hereto as Exhibit A sets forth
resolutions duly adopted by the Board of Directors of the Company at a
meeting thereof duly called and held on May 27,
<PAGE>
1998, at which a quorum was present and acted throughout, which resolutions
state the manner in which the Company's share combination will be effected.
5. The amendment has been adopted pursuant to Chapter 302A of the
Minnesota Business Corporation Act.
<PAGE>
IN WITNESS WHEREOF, the undersigned, the Chief Financial Officer
and Secretary of Nutrition Medical, Inc., being duly authorized on behalf of
Nutrition Medical, Inc., has executed this document on this 8th day of June,
1998.
/S/ANWAR H. BHIMANI
------------------------------
Anwar H. Bhimani
Chief Financial Officer and Secretary
<PAGE>
ARTICLES OF AMENDMENT
OF
SECOND RESTATED ARTICLES OF INCORPORATION
OF
NUTRITION MEDICAL, INC.
The undersigned, Richard J. Hegstrand, Chief Financial Officer of
Nutrition Medical, Inc., a Minnesota Corporation, hereby certifies that the
following resolution was duly adopted by the board of directors of the
corporation pursuant to Chapter 302A of the Minnesota Business Corporation
Act on December 2, 1996, and that such resolution has not been subsequently
modified or rescinded:
REGISTERED ADDRESS CHANGE
RESOLVED, that Article 2 of the Second Restated Articles of
Incorporation of the corporation is hereby amended in its entirety to read as
follows:
ARTICLE 2. REGISTERED OFFICE
The address of the registered office of the corporation in Minnesota is
9850 51st Avenue North, Suite 110, Minneapolis, Minnesota 55442.
IN WITNESS WHEREOF, the undersigned, the Chief Financial Officer of
Nutrition Medical, Inc., being duly authorized on behalf of Nutrition
Medical, Inc., has executed this document as of February 28, 1997.
/S/ RICHARD J. HEGSTRAND
------------------------------
Richard J. Hegstrand
Chief Financial Officer
<PAGE>
SECOND RESTATED
ARTICLES OF INCORPORATION
OF
NUTRITION MEDICAL, INC.
Under and pursuant to the Minnesota Business Corporation Act, the board
of directors and shareholders of Nutrition Medical, Inc., have resolved to
amend the restated articles of incorporation of the corporation, which are
restated as follows:
ARTICLE 1. NAME
The name of the corporation is Nutrition Medical, Inc.
ARTICLE 2. REGISTERED OFFICE AND REGISTERED AGENT
The address of the registered office of the corporation is 308 12th
Street South, Buffalo, MN 55313.
ARTICLE 3. AUTHORIZED SHARES
The aggregate number of authorized shares of the corporation is
25,000,000, par value of $.01 per share, of which 5,000,000 are undesignated
preferred stock. The remaining shares shall be divisible into classes and
series, have the designations, voting rights, and other rights and
preferences, and be subject to the restrictions, that the board of directors
may from time to time establish, fix, and determine, consistent with these
articles of incorporation. Unless otherwise designated by the board of
directors, all issued shares shall be deemed common stock with equal rights
and preferences.
ARTICLE 4. NO CUMULATIVE VOTING
There shall be no cumulative voting by the shareholders of the corporation.
ARTICLE 5. NO PREEMPTIVE RIGHTS
The shareholders of the corporation shall not have any preemptive rights
to subscribe for or acquire securities or rights to purchase securities of
any class, kind or series of the corporation.
<PAGE>
ARTICLE 6. ISSUANCE OF SHARES TO
HOLDERS OF ANOTHER CLASS OR SERIES
Shares of any class or series of the corporation, including shares of
any class or series which are then outstanding, may be issued to the holders
of shares of another class or series of the corporation, whether to effect a
share dividend or split, including a reserve share split, or otherwise,
without authorization, approval or vote of the holders of shares of any class
or series of the corporation.
ARTICLE 7. WRITTEN ACTION BY DIRECTORS
An action required or permitted to be taken at a meeting of the board of
directors of the corporation may be taken by a written action signed, or
counterparts of a written action signed in the aggregate, by all of the
directors unless the action need not be approved by the shareholders of the
corporation, in which case the action may be taken by a written action
signed, or counterparts of a written action signed in the aggregate, by the
number of directors that would be required to take the same action at a
meeting of the board of directors of the corporation at which all of the
directors were present.
ARTICLE 8. DIRECTOR LIABILITY
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under sections 302A.559 or 80A.23 of the
Minnesota Statutes; (iv) for any transaction from which the director derived
an improper personal benefit; or (v) for any act or omission occurring prior
to the date when this article 8 became effective.
If the Minnesota Business Corporation Act is hereafter amended to
authorize any further limitation of the liability of a director, then the
liability of a director of the corporation shall be eliminated or limited to
the fullest extent permitted by the Minnesota Business Corporation Act, as
amended.
Any repeal or modification of the foregoing provisions of this article 8
by the stockholders of the corporation shall not adversely affect any right
or protection of a director of the corporation existing at the time of such
repeal or modification.
