UNITED STATES
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 4, 1998
BELL NATIONAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
California 0-935 94-1451828
(State of Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
900 North Franklin Street, Suite 210, Chicago, Illinois 32805
(Address of Principal Executive Offices) (Zip Code)
(312) 640-8810
(Registrant's Telephone Number, Including Area Code)
360 Rio Vista Avenue, Suite A, Orlando, Florida 32805
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT.
(a) On December 4, 1998, Bell National Corporation (the "Company")
entered into three agreements (described below) which may be deemed to have
resulted in a change in control of the Company.
THE EXCHANGE AGREEMENT.
The Company entered into a Stock and Membership Interest Exchange
Agreement dated December 4, 1998 (the "Exchange Agreement") with InPath,
LLC ("InPath"), a Delaware limited liability company; Peter P. Gombrich, as
an individual and as Trustee of the InPath, LLC Voting Trust; Theodore L.
Koenig as Trustee of The EAG Trust, The CMC Trust, The MDG Trust, and The
MSD Trust; William J. Ritger; AccuMed International, Inc. ("AccuMed"), a
Delaware corporation; Northlea Partners Ltd. ("Northlea"), a Colorado
limited partnership; Fred H. Pearson, as Trustee of Fred H. Pearson's
Trust; Walter Herbst, as Trustee of the Sandra Herbst Trust; and Monroe
Investments, Inc. ("Monroe"), an Illinois corporation (collectively, the
"InPath Members"). Mr. Koenig is the sole shareholder of Monroe. Pursuant
to the Exchange Agreement, the InPath Members, who owned all the units of
membership interest in InPath (the "Units"), exchanged all of the Units for
shares of the Company's common stock, no par value (the "Common Stock"),
and warrants to purchase shares of Common Stock (the "Warrants"), causing
the Company to become the sole member of InPath and InPath to become a
wholly owned subsidiary of the Company. InPath is a molecular-biology,
medical-device company currently developing point-of-care diagnostic
products.
The number of Units exchanged by each InPath Member in each of their
respective capacities was as follows:
For their Units, the Company issued to the InPath Members, in the
aggregate, 4,288,790 shares of Common Stock, and Warrants to purchase
3,175,850 shares of Common Stock. The number of Units exchanged, the
number of shares of Common Stock received, and the number of shares of
Common Stock purchasable by the Warrants received, by each of the InPath
Members in each of their respective capacities, were as follows:
SHARES
SHARES PURCHASABLE
UNITS RECEIVED BY WARRANTS
----- -------- -----------
Mr. Gombrich, individually 52,616 2,256,590 1,671,005
Mr. Gombrich, as Trustee of the 3,240 138,957 102,897
InPath, LLC Voting Trust
Mr. Koenig, as Trustee of
The EAG Trust 6,428 275,683 204,144
Mr. Koenig, as Trustee of
The CMC Trust 6,428 275,683 204,144
Mr. Koenig, as Trustee of
The MDG Trust 6,428 275,683 204,144
Mr. Koenig, as Trustee of
The MSD Trust 5,500 235,883 174,672
Mr. Ritger 360 15,440 11,433
AccuMed 2,000 85,776 63,517
Northlea 2,500 107,220 79,396
<PAGE>
SHARES
SHARES PURCHASABLE
UNITS RECEIVED BY WARRANTS
----- -------- -----------
Mr. Pearson, as Trustee
of Fred H. Pearson's Trust 2,500 107,220 79,396
Mr. Herbst, as Trustee
of the Sandra Herbst Trust 8,000 343,103 254,068
Monroe 4,000 171,552 127,034
The Warrants issued by the Company to the InPath Members are not yet
exercisable, and will only become exercisable if approved by the Company's
stockholders at a meeting contemplated to be held on or about March 30,
1999, as more particularly described below. At the time of this filing,
the Company does not have sufficient shares of Common Stock authorized to
permit the exercise of the Warrants.
The percentage (rounded to the nearest tenth of a percentage point)
of the Company's outstanding Common Stock beneficially owned by each of the
InPath Members at the time of this filing is as follows:
Mr. Gombrich 20.0
Mr. Koenig(1) 10.3
Mr. Ritger 0.1
AccuMed 0.7
Northlea 0.9
Mr. Pearson 0.9
Mr. Herbst 2.9
Monroe 1.4
Upon the exercise of the Warrants, the InPath Members will
beneficially own the following percentages (rounded to the nearest tenth of
a percentage point) of the Company's outstanding Common Stock:
Mr. Gombrich 27.9
Mr. Koenig(2) 14.4
Mr. Ritger 0.2
AccuMed 1.0
Northlea 1.3
Mr. Pearson 1.3
Mr. Herbst 4.0
Monroe 2.0
- --------------------
(1) Mr. Koenig's percentage includes the percentage of the
outstanding Common Stock owned by Monroe, which is controlled by
Mr. Koenig.
(2) Mr. Koenig's percentage includes the percentage of the
outstanding Common Stock owned by Monroe.
<PAGE>
The purposes of the Exchange Agreement were for the Company to
acquire the business of InPath, for the InPath Members to acquire control
of the Company, to provide working capital for the business of InPath
through utilization of the Company's funds, and to create a vehicle for
further growth of the InPath business.
Under Section 7.4(a) of the Exchange Agreement, the Company must,
promptly after December 4, 1998, but in no event later than March 30, 1999
or such later date as is approved by Mr. Gombrich, take all actions
necessary to incorporate a wholly owned subsidiary, to be named (if
available) Ampersand Medical Corporation ("Ampersand"), under the laws of
the State of Delaware.
Under Section 7.4(b) of the Exchange Agreement, promptly after
December 4, 1998, the Company must call a stockholder meeting to be held no
later than March 30, 1999 or such later date as is agreed to by Mr.
Gombrich, for purposes which include (i) approving the merger of the
Company with and into Ampersand, with Ampersand as the surviving
corporation; (ii) authorizing additional shares of Common Stock in an
amount at least sufficient to permit the issuance of Common Stock issuable
upon exercise of the Warrants; (iii) authorizing shares of so-called "blank
check" preferred stock; (iv) electing a slate of directors of Mr. Gombrich,
Alexander M. Milley, Dr. John H. Abeles, Dr. Denis M. O'Donnell, and an
additional director to be selected by Mr. Gombrich and Mr. Milley; and (v)
ratifying the transactions contemplated by the Exchange Agreement and
certain other agreements entered into by the Company on December 4, 1998.
Under Section 7.4(c) of the Exchange Agreement, the existing members
of the Company's Board of Directors must recommend that the Company's
stockholders vote in favor of each of the proposals listed above.
Under Section 7.4(e) of the Exchange Agreement, promptly after
December 4, 1998, the directors of the Issuer must appoint Mr. Gombrich,
Thomas R. Druggish, Dr. O'Donnell, Mr. Milley and Robert C. Shaw to the
Company's Board of Directors, with Mr. Gombrich serving as Chairman. Under
Section 1.3(a) of the Agreement, the Company must take such actions as may
be necessary and appropriate so that those persons shall be the directors
of the Company at and as of December 4, 1998.
Under Section 7.4(f) of the Exchange Agreement, on December 4, 1998
the Board of Directors of the Company appointed Mr. Gombrich and Dr.
O'Donnell as directors of the Company and the following persons as officers
of the Company: (i) Mr. Gombrich, as Chairman, Chief Executive Officer and
Secretary; (ii) Leonard R. Prange, as President and Chief Financial
Officer; (iii) Richard A. Domanik, as Vice President and Chief Technology
Officer; (iv) David M. Doolittle, as Vice President and Treasurer. Under
Section 1.3(b) of the Exchange Agreement, the Company must take such
actions as may be necessary and appropriate so that those persons shall be
the officers of the Company with the stated positions, at and as of
December 4, 1998.
THE CLAIMS AGREEMENT.
On December 4, 1998, the Company entered into a Claims Settlement
Agreement (the "Claims Agreement") with Mr. Milley, a current director of
the Company and formerly the Chairman of the Board of the Company; Mr.
Shaw, a current director of the Company and formerly the President and
Chief Financial Officer of the Company; Cadmus Corporation ("Cadmus"), a
Massachusetts corporation which is an affiliate of Mr. Milley and which has
provided management services to the Company; and Milley Management
Incorporated ("Milley Management"), a Delaware corporation which is an
affiliate of Mr. Milley and which has provided management services to the
Company (collectively, the "Claimants"); and Liberty Associates Limited
Partnership ("Liberty"), a Delaware limited partnership and an affiliate of
Mr. Milley. Pursuant to the Claims Agreement, the Company issued shares of
Common Stock to the Claimants in settlement of debts the Company owed to
them on account of employment compensation, management fees, and other
amounts payable. The dollar amount of each Claimant's claim and the number
of shares of Common Stock issued to each Claimant in settlement thereof is
shown below.
<PAGE>
DOLLAR AMOUNT NO. OF
OF CLAIM SHARES RECEIVED
------------- ---------------
Mr. Milley $ 63,000 210,000
Mr. Shaw $139,000 463,333
Cadmus $180,000 600,000
Milley Management $151,000 503,333
Also pursuant to the Claims Agreement, the Company and Liberty agreed
that, effective immediately, warrants owned by Liberty to purchase 957,373
shares of Common Stock would be cancelled.
THE STOCKHOLDERS AGREEMENT.
Also on December 4, 1998, pursuant to both the Exchange Agreement and
the Claims Agreement, the Company entered into a Stockholders Agreement
with the InPath Members, the Claimants, and Winchester National, Inc.
("Winchester"), a Delaware corporation (collectively, the "Stockholders"),
whereby the Company and the Stockholders agreed to certain matters
(described below) relating to the Stockholders' rights as owners of Common
Stock.
Under Section 1.01 of the Stockholders Agreement, the Stockholders
have agreed to, as soon as practicable after December 4, 1998, vote their
shares of Common Stock in favor of and to take all other actions necessary
to elect as directors of the Company, two directors designated by Mr.
Gombrich, two directors designated by Mr. Milley, and an additional
director to be selected by Mr. Gombrich and Mr. Milley. The Stockholders
Agreement provides further that at the first meeting of the Company's
shareholders to be held after December 4, 1998, the directors to be elected
to the Company's Board of Directors shall be Mr. Gombrich, Mr. Milley, Dr.
Abeles, Dr. O'Donnell, and an additional director to be selected by Mr.
Gombrich and Mr. Milley.
Under Section 1.02 of the Stockholders Agreement, the Stockholders
must, after December 4, 1998, take all actions necessary to cause the
Company's Board of Directors to appoint the same persons to the same
positions as officers of the Company as provided for in Section 7.4(f) of
the Exchange Agreement described above.
Under Section 1.03 of the Stockholders Agreement, the Stockholders
must, when presented at a meeting of shareholders or through a solicitation
for consents, vote their Common Stock and take all other reasonable actions
necessary to approve or authorize, among other actions, each of the
approvals or authorizations (i) through (iii) indicated above which are
called for by Section 7.4(b) of the Exchange Agreement.
Under Section 2.01 of the Stockholders Agreement, if a shareholder or
group of shareholders beneficially owning more than 50% of the outstanding
Common Stock held by parties to the Stockholders Agreement ("Majority
Shareholders") should transfer shares that constitute more than 50% of such
outstanding Common Stock, such Majority Shareholders may require, subject
to certain notice and other requirements, all, but not less than all, of
the other shareholders of the Company that are parties to the Stockholders
Agreement to participate in such transfer at the same price and on the same
terms and conditions obtained by the Majority Shareholders.
<PAGE>
Under Article III of the Stockholders Agreement, Majority
Shareholders or other Stockholders may, subject to certain specified
conditions, demand and obtain from the Company the Company's best efforts
to register shares of Common Stock under the Securities Act of 1933.
Majority Shareholders may, subject to certain conditions, require the
Company to undertake two such registrations, unless the registration is to
be effected on Form S-3, in which case the number of such registrations the
Majority Shareholders may require is unlimited. Subject to certain
qualifications, whenever the Company proposes to register any of the Common
Stock (whether or not at the demand of Majority Shareholders), the Company
must provide notice of the proposed registration to all Stockholders.
Stockholders may, subject to certain conditions, require the Company to use
its best efforts to include the shares of Common Stock owned by them in the
proposed registration. After the Company becomes eligible for registration
of securities using Form S-3, Stockholders who are not Majority
Shareholders may themselves, subject to certain conditions, require the
Company an unlimited number of times to use its best efforts to register
shares of Common Stock. Notwithstanding the foregoing, the Company is not
required under the Stockholders Agreement to undertake more than one
registration of Common Stock (whether at the demand of Majority
Shareholders or other Stockholders) in any twelve-month period.
PERSONS WHO MAY HAVE ACQUIRED CONTROL.
As a result of the Exchange Agreement, the Claims Agreement, and the
Stockholders Agreement, the Stockholders may be deemed to have acquired
control of the Company on December 4, 1998, by virtue of the power to vote
the shares of Common Stock which some of them acquired and their agreement
to vote their shares in a common manner for the purposes described above.
The Stockholders disclaim any intent to exercise control of the Company
except to the extent of voting their shares of Common Stock in the manners
described above as specified by the Stockholders Agreement.
(b) After the meeting of the Company's shareholders to be held
pursuant to the Exchange Agreement (described above), it is anticipated
that the Warrants to purchase shares of Common Stock will become
exercisable. Upon their exercise, the InPath Parties will own 50% of the
outstanding shares of Common Stock on a fully diluted basis. Except as
described herein, the Company knows of no arrangements the operation of
which may at a date subsequent to this filing result in a change in control
of the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) As described above, on December 4, 1998, pursuant to the
Exchange Agreement the Company acquired InPath from the InPath Members in
exchange for the issuance of Common Stock and Warrants to the InPath
Members. InPath's assets consist of computer equipment, laboratory
equipment, leasehold improvements, office furniture and equipment,
telecommunications equipment, and patents and trademarks. As noted above,
after exercise of the Warrants, the InPath Members will have acquired
ownership of 50% of the outstanding Common Stock of the Company on a fully
diluted basis. The Company's Board of Directors determined the price of
the InPath Units to be fair in light of the relative values and prospects
of InPath, on the one hand, and the relative prospects of the Company, on
the other. Before the date of the Exchange Agreement, to the Company's
best knowledge, none of the InPath Members had a material relationship with
the Company, its affiliates, any of its directors or officers, or any
associates of its directors or officers.
(b) The Company intends to continue to use the assets of InPath
described in subsection (a) of this Item in the manner in which InPath has
used those assets in its business of developing point-of-care diagnostic
products.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
It is impracticable for the Company to file herewith the required
financial statements in this Current Report on Form 8-K. The required
financial statements will be filed by amendment as soon as practicable, but
not later than 60 days after the date this Current Report on Form 8-K is
required to be filed.
(b) Pro Forma Financial Information.
It is impracticable for the Company to file herewith the required pro
forma financial information in this Current Report on Form 8-K. The
required pro forma financial information will be filed by amendment as soon
as practicable, but not later than 60 days after the date this Current
Report on Form 8-K is required to be filed.
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
----------- ----------
Exhibit 1. Exchange Agreement dated December 4,
1998 by and among the Company, InPath,
Mr. Gombrich, Mr. Koenig, Mr. Ritger,
Mr. Pearson, Mr. Herbst, AccuMed, Northlea,
and Monroe (incorporated herein
by reference to Exhibit 1 to the
Schedule 13D filed jointly by the InPath
Members on December 14, 1998).
Exhibit 2. Form of Common Stock Purchase Warrant
(incorporated herein by reference to
Exhibit 3 to the Schedule 13D filed
jointly by the InPath Members on
December 14, 1998).
Exhibit 3. Claims Settlement Agreement dated
December 4, 1998, by and among the
Company, Mr. Milley, Mr. Shaw, Cadmus,
Milley Management, and Liberty
(incorporated herein by reference to
Exhibit 4 to the Schedule 13D filed
jointly by the InPath Members on
December 14, 1998).
Exhibit 4. Stockholders Agreement dated
December 4, 1998 by and among the
Company, Mr. Milley, Mr. Shaw, Cadmus,
Milley Management, Winchester,
Mr. Gombrich, Mr. Koenig, Mr. Ritger,
Mr. Pearson, Mr. Herbst, AccuMed,
Northlea, and Monroe (incorporated
herein by reference to Exhibit 2 to the
Schedule 13D filed jointly by the
InPath Members on December 14, 1998).
<PAGE>
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.
BELL NATIONAL CORPORATION
(Registrant)
/s/ Leonard R. Prange
---------------------------------------
(President and Chief Financial Officer)
Date: December 18, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
Exhibit 1. Exchange Agreement dated December 4, 1998 by and
among the Company, InPath, Mr. Gombrich, Mr. Koenig,
Mr. Ritger, Mr. Pearson, Mr. Herbst, AccuMed,
Northlea, and Monroe (incorporated herein by
reference to Exhibit 1 to the Schedule 13D
filed jointly by the InPath Members on
December 14, 1998).
Exhibit 2. Form of Common Stock Purchase Warrant (incorporated
herein by reference to Exhibit 3 to the
Schedule 13D filed jointly by the InPath Members
on December 14, 1998).
Exhibit 3. Claims Settlement Agreement dated December 4, 1998,
by and among the Company, Mr. Milley, Mr. Shaw,
Cadmus, Milley Management, and Liberty (incorporated
herein by reference to Exhibit 4 to the Schedule
13D filed jointly by the InPath Members on
December 14, 1998).
Exhibit 4. Stockholders Agreement dated December 4, 1998 by
and among the Company, Mr. Milley, Mr. Shaw,
Cadmus, Milley Management, Winchester, Mr. Gombrich,
Mr. Koenig, Mr. Ritger, Mr. Pearson, Mr. Herbst,
AccuMed, Northlea, and Monroe (incorporated herein
by reference to Exhibit 2 to the Schedule 13D filed
jointly by the InPath Members on December 14,
1998).
