SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
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: May 28, 1997
Intercell Corporation
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(Exact Name of Registrant as Specified in Charter)
Colorado 0-14306 84-0928627
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(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
370 Seventeenth Street, Suite 3290
Denver, Colorado 80202
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 592-7753
999 West Hastings Street, Suite 750 Vancouver, British Columbia, Canada V6C 2W2
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(Former Name or Former Address, if Change Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
At a meeting of the Board of Directors (the "Board") of Intercell
Corporation (the "Company") held on May 28, 1997, the Board authorized
the Company's executive officers to acquire control of Sigma 7
Corporation, a Delaware corporation ("Sigma 7"). The Company closed
the acquisition on June 6, 1997. Sigma 7 conducts its business
operations at facilities located in San Diego, California, through its
wholly owned subsidiary BMI Acquisition Group, Inc. ("BMI"). BMI
currently utilizes its proprietary patch technology to produce
fully-functional memory modules. BMI buys memory chips from major chip
manufacturers, tests the chips, and mounts them on boards to make
memory modules for use in work stations and personal computers. BMI
has developed and uses proprietary testing software and a proprietary
patch technology that allows it to use defective memory chips
("partial memories") to make fully functional memory modules by
bypassing and replacing the flawed portion of the chips with small
chips on the memory board. BMI purchases packaged part fails and wafer
rejected die from semiconductor memory manufacturers and suppliers,
for use in its proprietary patch process. This proprietary patch
process permits semiconductor manufacturers to recover and receive
value for all the parts manufactured which otherwise would be (as has
been historically true in the past) disposed of at a loss to the
manufacturer or sold at discounted prices, without risking any
exposure to the manufacturer for the utilization of this product. The
patch technology is the subject of a provisional patent application
filed with the U.S. Patent and Trademark Office. The Company currently
is preparing an additional provisional patent application to protect
improvements and refinements of the proprietary patch technology.
Pursuant to the transaction, the Company acquired 4,500,000
shares of Sigma 7's common stock in exchange for the payment of
$550,000 for the shares and for providing approximately $1,985,419.80
in additional financing, consisting primarily of secured loans and
standby letters of credit. The funds were used for inventory
purchases, standby letters of credit to a major memory manufacturer,
payment of obligations, the settlement of litigation, working capital
and the redemption of preferred stock from two individuals holding
such preferred stock. As a result of the transaction, the Company owns
approximately 90% of the 5,000,000 issued and outstanding common
shares of Sigma 7. In addition, the Company may issue 2,500 shares of
a new class of its preferred stock at $1,000 per share (the "Preferred
Series"), to the holders of certain preferred shares of BMI, to
eliminate such preferred shares of BMI. The Preferred Series would, if
issued, contain terms and conditions similar to the preferred shares
of BMI which they replace which management of the Company considers
favorable to the Company.
The Company appointed Charles E. Bauer, Alan M. Smith, Paul H.
Metzinger, Charles Peddle, A.B. Goel and Jim Farooquee to the Board of
Directors of Sigma 7. In addition, Charles E. Bauer was appointed
Chief Executive Officer, Charles Peddle, President, Alan M. Smith,
Chief Financial Officer and Jim Farooquee, Vice President of Marketing
and Sales.
Mr. Charles Peddle was reconfirmed as President of BMI Acquisition
Group, Inc.
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ITEM 5. OTHER EVENTS
At the May 28, 1997 Board meeting and in subsequent action taken by
unanimous written consent on May 30, 1997, the Board also approved the
following transactions and matters:
1. Gordon J. Sales resigned as Chairman of the Board, President and
Chief Executive Officer of the Company effective May 28, 1997.
2. Terry W. Neild resigned as a director and Executive Vice
President of the Company effective May 28, 1997.
3. Theodore A. Waibel, a director of the Company, was appointed
Chairman of the Board effective May 28, 1997.
4. Paul H. Metzinger, previously the Company's general counsel, was
appointed to the Board and elected as President and Chief
Executive Officer of the Company effective May 28, 1997.
5. Charles E. Bauer, a director of the Company, was appointed Chief
Operating Officer effective May 28, 1997.
6. On May 30, 1997, the disinterested directors of the Board, upon
receipt of a fairness opinion from William Scott & Company, LLC
("William Scott"), an independent investment banking company,
unanimously approved the material terms of a proposed transaction
relating to the sale of the Company's wholly-owned subsidiaries,
Intercell Wireless Corp. and Cellular Magnetics, Inc., to Terry
W. Neild and certain other non-affiliated third parties (the
"Neild Group"). At the time this transaction was proposed, Mr.
Neild was an officer and director of the Company.
Under the terms of the proposed transaction, the Neild Group
will cause Intercell Technologies Corporation ("ITC"), a Colorado
corporation, which the Neild Group acquired for purposes of the
transaction and controls, to: (i) issue to the Company one share
of common stock of ITC for every five shares of the Company's no
par value common stock ("Common Stock") issued and outstanding on
the date of closing of the proposed transaction (the "Closing
Date"); (ii) register within one year of the Closing Date the
shares of ITC delivered to the Company for distribution to the
Company's stockholders; (iii) return 1,100,000 shares of Common
Stock currently held by the Neild Group to the Company as
treasury shares; (iv) execute and deliver a $2,200,000 ITC
corporate promissory note bearing interest at 10% per annum; (v)
provide the Company with a 10% royalty on future revenues earned
on the antenna technology with a cap of $5,000,000 on total
royalties; (vi) issue warrants to the Company to purchase 500,000
shares of ITC at $2 per share and an additional 500,000 shares of
ITC at $3 per share, with all warrants having a term of three
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years from the Closing Date and containing standard
registration rights; (vii) execute a secured promissory note,
dated as of the Closing Date, in the principal amount of $375,000
and bearing interest at the rate of 10% per annum, payable by ITC
to the Company on November 30, 1997; (viii) enter into a sublease
with the Company, dated as of the Closing Date, providing for
ITC, as the sublessee to sublease the premises located in
Scottsdale, Arizona, presently occupied by the Company for the
balance of the rental term and upon the same terms and conditions
as currently paid by the Company; and (ix) enter into agreements
assuming full liability for all operating expenses associated
with such entities, including all related personnel and
compensation expenses.
Pursuant to the proposed transaction, the Company has agreed
to: (i) assign its entire ownership interest in Intercell
Wireless Corp. and Cellular Magnetics, Inc. and the related
antenna technology to ITC; (ii) make a $300,000 loan to ITC,
payable on or before November 30, 1997 and secured by certain
assets of ITC; (iii) assign to ITC the Company's entire right,
title and interest in and to the patent application relating to
the cellular antenna technology; (iv) pay all sums due and
payable pursuant to the employment and consulting agreements
between the Company and Terry W. Neild and Lou Ross through June
30, 1997, without any termination or penalty payments, upon which
date such employment agreements and consulting agreements will be
terminated; (v) pay legal fees in the approximate amount of
$28,000 incurred by Mr. Lou Ross relating to his defense of the
American Microcell Litigation which was settled; (vi) confirm
that the existing stock options, with respect to the Common
Stock, held by Terry W. Neild and Lou Ross remain in full force
and effect; and (vii) execute and deliver a bill of sale dated as
of the Closing Date, providing for the sale of all of the office
furniture and equipment presently located on the premises of the
offices of the Company in Scottsdale, Arizona for an aggregate
sale price in the amount of $75,000, which is included in the
Promissory Note of $375,000 from ITC payable to the Company on
November 30, 1997.
The Common Stock of ITC is currently traded on the NASDAQ
Bulletin Board under its former name and the symbol EPDK. The
stock price is currently $0.55 bid and no offering price.
7. The Board's decision to sell the Company's rights, title
and interest in Intercell Wireless Corp. and Cellular Magnetics,
Inc. was, in part, the result of an independent evaluation of the
Company's activities conducted by William Scott. The sale of
Intercell Wireless Corp. and Cellular Magnetics, Inc. are subject
to the execution of definitive agreements and the completion of
due diligence. Therefore, the Company can provide no assurances
that such transaction will be completed or that such transaction
will have a positive effect on the Company's operations.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements of Business Acquired.
Financial Statements of Sigma 7 and its subsidiaries will be
provided within the time period specified by the rules relating
to filing reports on a Current Report on Form 8-K, by amendment,
if required.
C. Exhibit.
2.01 Stock Sale and Purchase Agreement dated June 6, 1997 between
Intercell Corporation and Sigma 7 Corporation.
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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.
INTERCELL CORPORATION
Date: June 9, 1997 By: /s/ Paul H. Metzinger
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Paul H. Metzinger, President and Chief
Executive Officer
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EXHIBIT 2.01
STOCK SALE AND PURCHASE AGREEMENT
Dated: June 6, 1997
Sigma 7 Corporation, a Delaware corporation, hereby sells to Intercell
Corporation, a Colorado corporation, Four Million, Five Hundred Thousand
(4,500,000) of the common shares of Sigma 7 Corporation and as full payment and
consideration received from Intercell Corporation acknowledges receipt of:
(a) Five Hundred Fifty Thousand Dollars ($550,000.00) cash for the
acquisition cost of the shares; and
(b) One Million, Nine Hundred and Eighty-Five Thousand, Four Hundred and
Nineteen Dollars and Eighty Cents ($1,985,419.80) by way of secured
loans.
Sigma 7 Corporation, by execution hereof appoints to its Board of Directors:
Charles E. Bauer, Alan M. Smith, Paul H. Metzinger and Charles Peddle.
Sigma 7 Corporation acknowledges that as of this date, Sigma 7 Corporation has
Five Million (5,000,000) shares issued and outstanding, no preferred shares
outstanding, one (1) warrant for Fifty Thousand (50,000) shares, exercisable at
Ten Cents ($0.10) per share outstanding and that there are no other securities
of any type authorized, issued or outstanding.
INTERCELL CORPORATION SIGMA 7 CORPORATION
(A Colorado Corporation) (A Delaware Corporation)
By /s/ Paul H. Metzinger By /s/ Jim Farooquee
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Paul H. Metzinger, President & Jim Farooquee, President
Chief Executive Officer
