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):
November 13, 1995
ALPHA 1 BIOMEDICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15070 52-1253406
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
Two Democracy Center
6903 Rockledge Drive
Suite 1200
Bethesda, MD 20817
(Address, including Zip Code, of principal executive offices)
Registrant's telephone number, including area code:
(301) 564-4400
Item 5. Other Events
On November 13, 1995, Alpha 1 Biomedicals, Inc. (the
"Company") entered into an Agreement of Merger (the "Merger
Agreement") with Alpha 1 Acquisition Corp. ("Acquisition"), a
corporation formed by affiliates of The Castle Group, Ltd.
("Castle"). The Company's reasons for entering into the
Merger Agreement are to secure additional financing to fund
continuing operations and to diversify its technology base.
The Merger Agreement
The following summary of the material terms of the
Merger Agreement is qualified in its entirety by reference to
the Merger Agreement, a copy of which is attached hereto as
Exhibit 1 and is hereby incorporated by reference.
Conditions to this Merger. Under the Merger
Agreement, upon the satisfaction of the terms and conditions
thereof, Acquisition would be merged with and into the Company
(the "Merger"). In addition to the satisfaction of customary
conditions, including approval of the Merger by the holders of
a majority of the Company's common stock, par value $.001 per
share ("Company Common Stock"), at a special meeting of
stockholders, completion of the Merger is contingent upon the
following conditions precedent, unless any of them are waived
by the applicable party:
(1) Equity Financing. Currently, Acquisition has
only nominal assets. It is a condition to the obligation of
the Company to effect the Merger that Acquisition complete an
equity financing that raises gross proceeds of at least $5
million (the "Financing Condition"). Under the Merger
Agreement, Acquisition is obligated to commence as soon as
practicable and use commercially reasonable efforts to
complete an equity financing that yield gross proceeds of not
less than $5 million and not more than $10 million (the
"Equity Financing").
In the Equity Financing, Acquisition will be
obligated to (i) pay to Paramount Capital, Inc. ("Paramount"),
an affiliate of Castle, a commission equal to 9% of the
proceeds of the Equity Financing and a nonaccountable expense
allowance equal to 4% of the proceeds of the Equity Financing,
(ii) reimburse Paramount for all legal and other costs
incurred in connection with the offering, and (iii) issue to
Paramount warrants to purchase the number of Acquisition
shares equal to 5% of the Acquisition shares sold in the
Equity Financing (which warrants would be converted into
warrants to purchase Company Common Stock in connection with
the Merger).
(2) New Technology License. As a condition to the
obligation of the Company to complete the Merger, Acquisition
is required (i) to acquire from the National Institutes of
Health (the "NIH") a worldwide license for the commercial
development of antiflammins and (ii) to enter into a
Cooperative Research and Development Agreement with the NIH
for the funding of the clinical development of antiflammins as
a treatment for psoriasis and anterior uveitis.
(3) Fairness Opinion. The Company has conditioned
its obligation to call a special meeting of its stockholders
to vote on the Merger (the "Special Meeting") on the receipt
of an opinion from an investment banking firm of recognized
standing, on or prior to January 15, 1996, that the Merger is
fair to the stockholders of the Company from a financial point
of view (the "Fairness Opinion").
(4) Settlement of Class Action Litigation. It is a
condition of the obligation of Acquisition to complete the
Merger that the settlement agreement in a suit against the
Company, a current director and a former director and officer
captioned In re Alpha 1 Biomedicals, Inc. Securities
Litigation be approved by the District Court.
Terms of the Merger. If the Financing Condition is
satisfied and the other conditions precedent to the Merger are
fulfilled, the Company would issue to the stockholders of
Acquisition in the Merger (i) 24 million shares of the Company
Common Stock in consideration for the first $5 million of
gross proceeds raised in the Equity Financing and (ii) three
additional shares of Company Common Stock for each additional
$1.00 of gross proceeds raised, up to a maximum of 15 million
additional shares of Company Common Stock (which would be
issued if gross proceeds from the Equity Financing total $10
million).
Based on the 8,977,429 shares of Company Common
Stock currently outstanding, after the Merger the former
stockholders of Acquisition would own (i) approximately 73% of
the outstanding shares of Company Common Stock, if $5 million
in gross proceeds are raised by Acquisition in the Equity
Financing, and (ii) approximately 81% of the outstanding
shares of Company Common Stock, if $10 million in gross
proceeds are raised by Acquisition in the Equity Financing.
In its discretion, the Company can elect to proceed
with the Merger if Acquisition raises less than $5 million in
the Equity Financing. In this event, the 24 million shares of
Company Common Stock issuable to the stockholders of
Acquisition in the Merger would be reduced by three shares for
every $1.00 of gross proceeds less than $5 million.
Reverse Stock Split. In connection with the Merger,
the Company would effect a reverse stock split designed to
raise the market price of the Company Common Stock above the
$3.00 level, with the objective of qualifying for the listing
of the Company Common Stock on the Nasdaq Small-Cap Market.
Interim Activities. Prior to the Merger or until
the Merger Agreement is terminated, the Company has agreed to
conduct its business substantially in the same manner as it
has been conducted prior thereto and not to engage in any of a
range of enumerated transactions or actions, without the prior
consent of Acquisition.
Adoption of Stock Incentive Plan. In connection
with the Merger, the Company is obligated at the Special
Meeting to submit to a vote of its stockholders for approval a
1996 Stock Incentive Plan pursuant to which the Company would
be authorized to issue upon the exercise of stock options, or
as restricted stock, shares of Company Common Stock equal to
approximately 15% of the number of shares of Company Common
Stock outstanding immediately after the Merger.
Expansion of Board of Directors. The Company has
agreed that, if the Merger is completed, it will increase the
size of its Board of Directors, which currently consists of
four directors, to seven directors, and will appoint to the
Board (i) Steve H. Kanzer, the President and Chief Executive
Officer of Acquisition, and (ii) two other directors
designated by Acquisition.
Bridge Loan. Under the Merger Agreement,
Acquisition has agreed to make a bridge loan to the Company
prior to the completion of the Merger in an amount up to $2.0
million, with advances to be made over the period December 15,
1995, through March 15, 1996. Acquisition's obligation to
provide financing to the Company is contingent, however, on
Acquisition raising the necessary funds in the Equity
Financing. If the bridge loan is made, it will bear interest
at the rate of 12% per annum, and will be due and payable on
the earlier of (i) June 30, 1996, (ii) the termination of the
Merger Agreement under the circumstances described in clauses
(a), (b), (e) or (f) below, (iii) a breach of the Company of
specified covenants, (iv) the default by the Company on a
payment obligation of $50,000 or more, or (v) the initiation
of a bankruptcy proceeding against the Company. The bridge
loan would be secured by the Company's Thymosin beta 4 patents
and patent applications and by the Company's royalty rights
under a License Agreement with SciClone Pharmaceuticals, Inc.
If the Merger is completed, the bridge loan will be forgiven.
Termination. The Merger Agreement may be terminated
and the Merger abandoned at any time before the effective time
of the Merger, even though the stockholders of either or both
companies have adopted the Merger Agreement, under the
following circumstances: (a) by mutual agreement of the
Company and Acquisition, (b) by either the Company or
Acquisition, if the Merger has not occurred prior to June 30,
1996 (subject to an extension of this date by Acquisition if
the Special Meeting has not been held to vote on the Merger),
(c) by the Company, if Acquisition has materially breached its
obligations under the Merger Agreement, (d) by Acquisition, if
the Company has materially breached its obligations under the
Merger Agreement, (e) by the Company or Acquisition, if the
Company has not received the Fairness Opinion prior to January
15, 1996, (f) by the Company, if it receives a proposal for a
business combination from a third party and the Company's
Board of Directors determines in good faith that the fiduciary
obligations of the directors require that such proposal be
accepted, (g) by the Company or Acquisition, if the Company
stockholders fail to approve the Merger at the Special Meeting
or the Merger is not approved at the special meeting of
Acquisition stockholders called for such purpose, or (h) by
Company, if Acquisition fails to deliver to the Company, prior
to December 7, 1995, its audited financial statements as of
September 30, 1995, or such financial statements or the
auditor's opinion thereon discloses any information not
satisfactory to the Company.
If the Merger Agreement is terminated either (i) as
described in clause (c) or (d) above or (ii) as described in
clause (g) above, following the withdrawal by the Board of
Directors of the nonapproving party of its recommendation of
the Merger, the terminating party will be entitled to
reimbursement for all out-of-pocket fees and expenses
incurred. If the Merger is terminated by the Company as
described in clause (f) and the Company completes the business
combination with the third party, the Company will be
obligated to pay to Acquisition a termination fee of $400,000.
Standstill Agreement
Simultaneously with the execution and delivery of
the Merger Agreement, the Company and RAQ, LLC, a Delaware
limited liability company ("RAQ"), entered into an Agreement,
dated as of November 13, 1995, a copy of which is attached
hereto as Exhibit 2 and is hereby incorporated by reference
(the "Agreement").
RAQ is wholly-owned by Lindsay Rosenwald, who is the
controlling stockholder of Castle and Paramount. RAQ is the
principal stockholder of Acquisition, owning on the date of
the Merger Agreement 75.5% of the outstanding Acquisition
common stock. Under the Agreement, RAQ has agreed as follows
(1) Voting Agreement. At the 1996 Annual Meeting
of the Company, RAQ will (i) vote all shares of Company Common
Stock owned by it (ii) and will use its best efforts to cause
all affiliates and employees of RAQ, and the affiliates and
associates of such persons (collectively "RAQ Related
Parties") to vote any shares of Company Common Stock owned by
them, in for the election of (i) the four current directors of
the Company (or any replacements for any of them nominated by
the Company) and (ii) the three additional directors
contemplated by the Merger Agreement.
(2) Business Combinations. For a period of two
years following the Merger, RAQ will not initiate and will use
its best efforts to prevent any RAQ Related Party from
initiating (i) any tender offer or exchange offer with respect
to any outstanding shares of Company Common Stock, (ii) any
merger, consolidation or other business combination
transaction between the Company and RAQ or any affiliates of
RAQ, or (iii) any transfer of a material amount of assets
between the Company and RAQ or any affiliates of RAQ.
However, these restrictions will not apply to any transaction
that is approved by a majority of the directors of the Company
prior to the Merger (or their successor) or, if there are no
such continuing directors, by a majority vote of the
stockholders of the Company other than RAQ and all RAQ Related
Parties.
Amendment to Right Agreement
As of November 9, 1995, the Company entered into a
First Amendment to the Rights Agreement, dated as of April 29,
1994, between the Company and American Stock Transfer and
Trust Company, as Rights Agent (the "Rights Agreement"), a
copy of which is attached hereto as Exhibit 3 and hereby is
incorporated by reference. The purpose for the amendment was
to permit the execution, delivery and performance of the
Merger Agreement and to permit the stockholders of Acquisition
prior to the Merger to acquire additional stock of the Company
after the Merger without triggering the exercisability of the
Rights. To effect this change, the definition "Acquiring
Person" in the Rights Agreement has been amended to provide
that (i) neither Acquisition nor any of its affiliates and
associates will become an Acquiring Person by reason of the
execution, delivery or performance of the Merger Agreement and
(ii) after the Merger, no person, alone or together with such
person's affiliates and associates, who was a stockholder of
Acquisition immediately prior to the Merger will become an
Acquiring Person without regard to the number of shares of
Company Common Stock acquired in the Merger or thereafter.
Item 7. Financial Statements and Exhibits
(c)(1) Agreement of Merger, dated as of November
13, 1995, between Alpha 1 Biomedicals, Inc. and Alpha 1
Acquisition Corp.
(c)(2) Agreement, dated as of November 13, 1995,
between Alpha 1 Biomedicals, Inc. and RAQ, LLC.
(c)(3) First Amendment to Rights Agreement, dated
as of November 9, 1995, between Alpha 1 Biomedicals, Inc. and
American Stock Transfer & Trust Company, as Rights Agent.
(c)(4) Press release dated November 20, 1995 with regard
to the Merger Agreement.
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.
Date: November 22, 1995 ALPHA 1 BIOMEDICALS, INC.
By: /s/ R.J. Lanham
R.J. Lanham
Vice President and
Chief Financial Officer
Exhibit (c)(1)
AGREEMENT
OF
MERGER
between
ALPHA 1 BIOMEDICALS, INC.
and
ALPHA 1 ACQUISITION CORP.
Dated as of November 13, 1995
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions. . . . . . . . . . . . . . . . . . . 1
1.2 Interpretation . . . . . . . . . . . . . . . . . 6
ARTICLE II
THE MERGER
2.1 The Merger . . . . . . . . . . . . . . . . . . . 7
2.2 Closing. . . . . . . . . . . . . . . . . . . . . 7
2.3 Effective Time of the Merger . . . . . . . . . . 7
2.4 Certificate of Incorporation . . . . . . . . . . 8
2.5 Bylaws . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
CONVERSION OF SECURITIES AND ISSUANCE OF CERTIFICATES
3.1 Conversion of Shares . . . . . . . . . . . . . . 8
3.2 Certificates . . . . . . . . . . . . . . . . . . 9
3.3 Fractional Interests . . . . . . . . . . . . . . 11
3.4 Appraisal Rights . . . . . . . . . . . . . . . . 11
3.5 Stock Transfer Books . . . . . . . . . . . . . . 12
3.6 Exchange of Warrants . . . . . . . . . . . . . . 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
4.1 Organization, Standing and Power . . . . . . . . 13
4.2 Capitalization . . . . . . . . . . . . . . . . . 13
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . 14
4.4 Financial Statements . . . . . . . . . . . . . . 14
4.5 Undisclosed Liabilities. . . . . . . . . . . . . 14
4.6 Absence of Certain Changes or Events . . . . . . 14
4.7 Expenses of Transaction. . . . . . . . . . . . . 16
4.8 Tax Matters. . . . . . . . . . . . . . . . . . . 16
4.9 No Violation of Law. . . . . . . . . . . . . . . 17
4.10 Absence of Defaults. . . . . . . . . . . . . . . 18
4.11 Litigation . . . . . . . . . . . . . . . . . . . 18
4.12 Certain Payments . . . . . . . . . . . . . . . . 19
4.13 No Breach or Violation of Law. . . . . . . . . . 19
4.14 Validity and Authorization . . . . . . . . . . . 19
4.15 Disclosure . . . . . . . . . . . . . . . . . . . 20
4.16 Title to Properties; Encumbrances; Condition . . 20
4.17 Patents. . . . . . . . . . . . . . . . . . . . . 20
4.18 No Misrepresentations. . . . . . . . . . . . . . 21
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ALPHA
5.1 Organization . . . . . . . . . . . . . . . . . . 21
5.2 Capitalization . . . . . . . . . . . . . . . . . 22
5.3 Subsidiaries . . . . . . . . . . . . . . . . . . 22
5.4 Financial Statements . . . . . . . . . . . . . . 23
5.5 Undisclosed Liabilities. . . . . . . . . . . . . 23
5.6 Absence of Certain Changes or Events . . . . . . 23
5.7 Expenses of Transaction. . . . . . . . . . . . . 25
5.8 Tax Matters. . . . . . . . . . . . . . . . . . . 25
5.9 No Violation of Law. . . . . . . . . . . . . . . 26
5.10 Absence of Defaults. . . . . . . . . . . . . . . 27
5.11 Litigation . . . . . . . . . . . . . . . . . . . 27
5.12 Certain Payments . . . . . . . . . . . . . . . . 28
5.13 No Breach or Violation of Law. . . . . . . . . . 28
5.14 Validity and Authorization . . . . . . . . . . . 28
5.15 Disclosure . . . . . . . . . . . . . . . . . . . 29
5.16 Title to Properties; Encumbrances; Condition.. . 29
5.17 Patents. . . . . . . . . . . . . . . . . . . . . 30
5.18 SEC Reports. . . . . . . . . . . . . . . . . . . 30
5.19 Alpha Common Stock . . . . . . . . . . . . . . . 30
5.20 Rights Agreement . . . . . . . . . . . . . . . . 31
5.21 No Misrepresentations. . . . . . . . . . . . . . 31
ARTICLE VI
CERTAIN UNDERSTANDINGS AND AGREEMENTS
6.1 Conduct of the Business Pending the Effective
Date . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Access . . . . . . . . . . . . . . . . . . . . . 33
6.3 Interim Financial Statements of Acquisition
and SEC Reports of Alpha . . . . . . . . . . . . 34
6.4 Registration Statement . . . . . . . . . . . . . 35
6.5 Stockholder Meetings . . . . . . . . . . . . . . 35
6.6 Recommendation of Merger . . . . . . . . . . . . 36
6.7 Fairness Opinion . . . . . . . . . . . . . . . . 36
6.8 Employment Agreements. . . . . . . . . . . . . . 36
6.9 Alpha Stock Incentive Plan . . . . . . . . . . . 36
6.10 Increase of Size of Alpha Board. . . . . . . . . 36
6.11 Acquisition Proposals. . . . . . . . . . . . . . 37
6.12 Acquisition Affiliates . . . . . . . . . . . . . 37
6.13 New Technology Development . . . . . . . . . . . 38
6.14 Bridge Financing . . . . . . . . . . . . . . . . 38
6.15 Equity Financing . . . . . . . . . . . . . . . . 38
6.16 Mutual Cooperation . . . . . . . . . . . . . . . 38
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF EACH PARTY
7.1 Approval of Merger . . . . . . . . . . . . . . . 39
7.2 No Injunction or Legal Bar . . . . . . . . . . . 39
7.3 No Action or Proceeding. . . . . . . . . . . . . 39
7.4 Consents and Approvals . . . . . . . . . . . . . 39
7.5 Registration Statement and Proxy Statement . . . 39
7.6 Appraisal Rights . . . . . . . . . . . . . . . . 39
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ALPHA
8.1 Accuracy of Representations and Warranties . . . 40
8.2 Acquisition's Performance. . . . . . . . . . . . 40
8.3 Closing Certificate. . . . . . . . . . . . . . . 40
8.4 Opinion of Company Counsel . . . . . . . . . . . 40
8.6 Equity Financing . . . . . . . . . . . . . . . . 40
8.7 Technology License . . . . . . . . . . . . . . . 41
8.8 Opinion of Tax Counsel . . . . . . . . . . . . . 41
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF ACQUISITION
9.1 Accuracy of Representations and Warranties . . . 41
9.2 Alpha's Performance. . . . . . . . . . . . . . . 41
9.3 Closing Certificate. . . . . . . . . . . . . . . 42
9.4 Opinion of Alpha Counsel . . . . . . . . . . . . 42
9.5 Certain Litigation . . . . . . . . . . . . . . . 42
9.6 Capitalization of Alpha. . . . . . . . . . . . . 42
ARTICLE X
TERMINATION
10.1 Termination. . . . . . . . . . . . . . . . . . . 43
10.2 Effect or Termination. . . . . . . . . . . . . . 44
ARTICLE XI
MISCELLANEOUS
11.1 Representations and Warranties Not to Survive. . 45
11.2 Expenses . . . . . . . . . . . . . . . . . . . . 45
11.3 Notices. . . . . . . . . . . . . . . . . . . . . 45
11.4 Assignability and Parties in Interest. . . . . . 46
11.5 Governing Law. . . . . . . . . . . . . . . . . . 46
11.6 Counterparts . . . . . . . . . . . . . . . . . . 46
11.7 Publicity. . . . . . . . . . . . . . . . . . . . 46
11.8 Entire Agreement . . . . . . . . . . . . . . . . 46
11.9 Modifications, Amendments and Waivers. . . . . . 47
11.10 Severability . . . . . . . . . . . . . . . . . . 47
AGREEMENT OF MERGER
This AGREEMENT OF MERGER (this "Agreement") is
entered into as of November 13, 1995, by and between Alpha 1
Biomedicals, Inc., a Delaware corporation ("Alpha"), and
Alpha 1 Acquisition Corp. (formerly, MicroBio Inc.), a
Delaware corporation ("Acquisition").
WHEREAS, the respective Boards of Directors of
Alpha and Acquisition deem it advisable and in the best
interests of their respective stockholders that Acquisition
shall merge with and into Alpha pursuant to this Agreement and
the applicable provisions of the General Corporation Law of
the State of Delaware, and have by resolutions duly adopted
this Agreement and directed that this Agreement be submitted
to the stockholders of Alpha and Acquisition, respectively,
for adoption in accordance with the terms hereof and
applicable law;
WHEREAS, the parties desire to state the terms and
conditions of the Merger (as defined in Article I), the mode
of carrying the Merger into effect, the securities which the
holders of the capital stock of Acquisition are to receive in
exchange for such shares upon the consummation of the Merger,
and such other details and provisions as are deemed necessary
or desirable; and
WHEREAS, in connection with the Merger, Alpha
wishes to effect a reverse split of the outstanding shares of
Alpha Common Stock (as defined in Article I).
NOW THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements
contained herein, the parties hereto, intending to be legally
bound, hereby agree as set forth below:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the
following defined terms shall have the meanings indicated.
"Act" means the Securities Act of 1933, as amended.
"Acquisition" means Alpha 1 Acquisition Corp., a Delaware
corporation.
"Acquisition Capital Stock" means, collectively, the
Acquisition Common Stock and the Acquisition Preferred Stock.
"Acquisition Certificate" shall have the meaning ascribed
to such term in Section 3.2(c).
"Acquisition Common Stock" means the common stock, par
value $.001 per share, of Acquisition.
"Acquisition Exchange Ratio" shall mean the number
(rounded to three decimal places) obtained by dividing (a) the
product of (i) the sum of (A) 24.0 million and (B) the lesser
of (x) the gross proceeds of the Equity Financing in excess of
$5.0 million multiplied by a factor of 3.0 and (y) and 15.0
million and (ii) the Reverse Split Factor, by (b) the number
of issued and outstanding shares of Acquisition Common Stock
at the Effective Time (after giving effect to the conversion
of all outstanding shares of Acquisition Preferred Stock into
shares of Acquisition Common Stock in accordance with the
terms thereof).
"Acquisition Financial Statements" shall have the meaning
ascribed to such term in Section 4.4.
"Acquisition Intellectual Property" has the meaning
ascribed to such term in Section 4.17.
"Acquisition Preferred Stock" means the preferred stock,
par value $.001 per share, of Acquisition issued in the Equity
Financing, each share of which shall be mandatorily con-
vertible into shares of Acquisition Common Stock immediately
prior to the Effective Time and shall have such other terms
and conditions as are set forth on Schedule 6.15.
"Acquisition Proposal" has the meaning ascribed to such
term in Section 6.11.
"Acquisition Warrants" shall mean the warrants to
purchase shares of Acquisition Preferred Stock, each having a
term of ten years and entitling the holder to purchase one
share of Acquisition Preferred Stock at an exercise price of
$1.00, which by their terms shall be converted in the Merger
into warrants to purchase shares of Company Common Stock as
provided in Section 3.6.
"Adjusted Acquisition Exchange Ratio" shall mean the
number (rounded to three decimal places) obtained by dividing
(a) the product of (i) the remainder of (A) 24.0 million,
minus (B) the amount by which the gross proceeds of the Equity
Financing are less than $5.0 million multiplied by a factor of
3.0 and (ii) the Reverse Split Factor, by (b) the number of
issued and outstanding shares of Acquisition Common Stock at
the Effective Time (after giving effect to the conversion of
all outstanding shares of Acquisition Preferred Stock into
shares of Acquisition Common Stock in accordance with the
terms thereof).
"Alpha" means Alpha 1 Biomedicals, Inc., a Delaware
corporation.
"Alpha Capital Stock" means, collectively, the Alpha
Common Stock and the Alpha Preferred Stock.
"Alpha Class C Warrants" means the 1.1 million Class C
Warrants issued pursuant to a Class C Warrant Agreement, dated
as of January 29, 1993, between Alpha and American Stock
Transfer & Trust Company, each entitling the holder to
purchase one share of Alpha Common Stock at an exercise price
of $24.00 per share.
"Alpha Financial Statements" shall have the meaning
ascribed to such term in Section 5.4.
"Alpha Intellectual Property" has the meaning ascribed to
such term in Section 5.17
"Alpha Interim Financial Statements" shall have the
meaning ascribed to such term in Section 5.4.
"Alpha Preferred Stock" means the preferred stock, par
value $.001 per share, of Alpha.
"Alpha SEC Reports" means the reports and proxy
statements filed by Alpha with the SEC under the 1934 Act.
"Alpha Special Meeting" has the meaning ascribed to such
term in Section 6.5.
"Business Combination" has the meaning ascribed to such
term in Section 10.1
"Closing" has the meaning ascribed to such term in
Section 2.2.
"Closing Date" has the meaning ascribed to such term in
Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute or codification of the
Federal income tax laws of the United States of America.
"Confidential Information" shall mean any inventions,
concepts, structures, formulas, techniques, processes,
apparatus, know-how, business records, business forecasts,
patent applications and related data, which is designated as
confidential at the time of delivery or, if disclosed in oral
form, is confirmed in writing to be confidential within a
reasonable period of time after such disclosure.
"CRADA" shall have the meaning ascribed to such term in
Section 6.13.
"Effective Date" shall have the meaning ascribed to such
term in Section 2.3.
"Effective Time" shall have the meaning ascribed to such
term in Section 2.3.
"Equity Financing" shall mean the offer and sale by
Acquisition, prior to the time that the Registration Statement
is declared effective, of shares Acquisition Preferred Stock,
which results in gross proceeds to Acquisition of not less
than $5.0 million (the "Minimum Condition") and not more than
$10.0 million on such terms as are more fully set forth on
Schedule 6.15.
"Exchange Agent" shall have the meaning ascribed to such
term in Section 3.2(a).
"Fairness Opinion" shall have the meaning ascribed to
such term in Section 6.7.
"IRS" means the Internal Revenue Service of the United
States of America.
"Letter of Transmittal" shall have the meaning ascribed
to such term in Section 3.2.
"Market Price" with respect to the Alpha Common Stock
shall mean, on any trading day, as applicable, (i) the last
sale price on the Nasdaq Small-Cap Market or (ii) the average
of the closing bid and closing ask on the Nasdaq OTC Bulletin
Board, as reported by the National Association of Securities
Dealers, Inc.
"Material Adverse Effect" means, with respect to either
Alpha or Acquisition, as the case may be, a material adverse
effect on the business, properties, assets, condition
(financial or other), results of operations or prospects of
such company.
"Merger" shall have the meaning ascribed to such term in
Section 2.1.
"Minimum Condition" has the meaning ascribed to such term
in the definition of Equity Financing.
"NASD" means the National Association of Securities
Dealers, Inc.
"New Alpha Investment" shall mean a private equity
financing of Alpha through which it shall be permitted to
raise up to $2.0 million through the issuance of a combination
of (i) up to 6.0 million shares of Alpha Common Stock and (ii)
warrants to purchase up to 1.2 million shares of Alpha Common
Stock, exercisable for up to 24 months following the date of
issuance at an exercise price of not less than $0.50 per
share.
"1934 Act" means the Securities Exchange Act of 1934, as
amended.
"NIH" shall have the meaning ascribed to such term in
Section 6.13.
"Out-of-Pocket Expenses" has the meaning ascribed to such
term in Section 10.2.
"Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company,
trust, unincorporated organization or entity of whatever
nature or government or any agency or political subdivision
thereof.
"Proxy Statement" shall mean and include the joint proxy
statement/prospectus included in the Registration Statement,
together with any letters to stockholders, to be used in
connection with the solicitation of proxies from the stock-
holders of Acquisition and from the stockholders of Alpha in
connection with the Merger.
"Reverse Stock Split" shall have the meaning ascribed to
such term in Section 3.1.
"Reverse Split Factor" shall mean (i) the number equal to
the lowest Market Price of the Alpha Common Stock on any
trading day during the period of 20 trading days immediately
preceding the Effective Date divided by 5.0 and (ii) rounded
to three decimal places.
"Registration Statement" shall have the meaning ascribed
to such term in Section 6.4.
"Rights Agreement" shall have the meaning ascribed to
such term in Section 5.20.
"SEC" shall mean the United States Securities and
Exchange Commission.
"Subsidiary" means any corporation, partnership, firm,
association or business organization, entity or enterprise
that is directly or indirectly through one or more
intermediaries controlled by either Alpha or Acquisition, as
the case may be.
"Surviving Corporation" shall have the meaning ascribed
to such term in Section 2.1.
"Tax" or "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other
additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state
income taxes), estimated taxes, payroll and employee with-
holding taxes, unemployment insurance, social security taxes,
sales and use taxes, ad valorem taxes, excise taxes, capital
stock or franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation
premiums and other governmental charges, and other obligations
of the same or of a similar nature to any of the foregoing,
which a corporation may be required to pay, withhold or
collect.
"Technology" shall mean the use of antiflammins for any
and all purposes.
"Technology License" shall have the meaning ascribed in
such term in Section 6.13.
1.2 Interpretation. In this Agreement, unless the
context otherwise requires:
(a) The term "hereby," "hereunder," or any similar
terms refer to this Agreement;
(b) Any reference to any Article, Section, Schedule
or Exhibit contained in this Agreement shall refer to such
Article, Section, Schedule or Exhibit as set forth in or
attached to this Agreement, notwithstanding use of or failure
to use the term "hereof," "hereto," or "herein" in connection
with such reference;
(c) Words of the masculine gender shall mean and
include correlative words of the feminine and neuter genders;
(d) All headings preceding the text of the several
Articles and Sections of this Agreement and of the Schedules
to this Agreement, and the table of contents of this
Agreement, shall be solely for convenience of reference and
shall not constitute a part of this Agreement, nor shall they
affect the meaning, construction or effect of this Agreement;
(e) The Schedules attached to this Agreement shall
be considered to be incorporated within any Article, Section
or subsection of this Agreement to which they are relevant,
whether or not specifically referenced therein;
(f) Statements herein qualified by "known to
Acquisition," "to the knowledge of Acquisition," or a similar
phrase shall mean that none of the officers of Acquisition has
current actual knowledge of the inaccuracy of such statement;
and
(g) Statements herein qualified by "known to
Alpha," "to the knowledge of Alpha," or a similar phrase shall
mean that none of the officers of Alpha has current actual
knowledge of the inaccuracy of such statement.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, Acquisition shall be merged with
and into Alpha in accordance with the provisions of the
Delaware General Corporation Law (the "Merger"). Alpha shall
be the surviving corporation in the Merger and shall continue
its existence under the laws of the State of Delaware (Alpha,
as such, being sometimes referred to herein as the "Surviving
Corporation"). From and after the Effective Time, Alpha shall
succeed to all rights, privileges, powers, franchises, assets,
liabilities and obligations of Acquisition, all in accordance
with the Delaware General Corporation Law, and the separate
existence of Acquisition shall cease.
2.2 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 A.M., local time, at the offices of
Covington & Burling, Washington, D.C., or at any other
mutually agreeable location, on the second business day
following the day on which the last of the conditions set
forth in Sections 7.1, 8.6, 8.7 and 9.5 have been satisfied
or, to the extent permitted hereunder, waived (the "Closing
Date").
2.3 Effective Time of the Merger. If at the Closing
the conditions to the Merger which are set forth in Articles
VII, VIII and IX hereof are satisfied or, to the extent
permitted hereunder, waived, (i) the appropriate officers of
Alpha and Acquisition shall execute a Certificate of Merger in
the form required by the Delaware General Corporation Law and
(ii) promptly following the Closing on the Closing Date, each
of Alpha and Acquisition shall file the Certificate of Merger
with the Secretary of State of the State of Delaware. The
Merger shall become effective on the date on which said filing
shall be made with the Secretary of State of the State of
Delaware, or such later date set forth therein as shall be
agreed upon in writing by the parties. The time when the
Merger so becomes effective is referred to herein as the
"Effective Time" and the date on which the Effective Time
occurs is referred to herein as the "Effective Date."
Following the Effective Time, the parties shall make any such
other filing or recordings as may be required by applicable
law to give effect to the Merger.
2.4 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation at the Effective
Time shall be the Restated Certificate of Incorporation, as
amended, of Alpha in the form attached hereto as Exhibit A.
2.5 Bylaws. The Bylaws of the Surviving Corporation at
the Effective Time shall be the Bylaws of Alpha as then in
effect.
ARTICLE III
CONVERSION OF SECURITIES AND ISSUANCE OF CERTIFICATES
3.1 Conversion of Shares. At the Effective Time, by
virtue of the Merger:
(a) Each outstanding share of Alpha Common Stock
(other than shares cancelled pursuant to Section 3.1(c) and
shares entitled to dissenters' rights of appraisal), in order
to effect a reverse stock split, shall be converted into a
fraction of a share of Alpha Common Stock equal to the Reverse
Split Factor (the "Reverse Stock Split").
(b) Each outstanding share of Acquisition Common
Stock (other than shares cancelled pursuant to Section 3.1(c)
and shares entitled to dissenters' rights of appraisal) shall
be converted into the right to receive the number of shares of
Alpha Common Stock equal to the Acquisition Exchange Ratio or,
as provided in Section 8.6, the Adjusted Acquisition Exchange
Ratio.
(c) Any outstanding shares of Alpha Common Stock
owned by Acquisition and any outstanding shares of Acquisition
Common Stock owned by Alpha will be cancelled.
(d) No fractional shares of Alpha Common Stock
shall be issued in the Merger. In the case of the Alpha
Common Stock, the aggregate number of shares held by each
holder thereof immediately prior to the Effective Time shall
be multiplied by the Reverse Split Factor. In the case of the
Acquisition Common Stock, the number of shares held by each
holder thereof immediately prior to the Effective Time shall
be multiplied by the Acquisition Exchange Ratio or the
Adjusted Acquisition Exchange Ratio, as the case may be. Any
fractional share interests resulting from either such
calculation to which a holder of Alpha Common Stock or
Acquisition Common Stock otherwise would be entitled shall be
settled in accordance with the provisions of Section 3.3.
(e) If, between the date hereof and the Effective
Time, the outstanding shares of Alpha Common Stock shall be
changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or
exchange of shares, or if a stock dividend thereon shall be
declared with a record date within said period, the
Acquisition Exchange Ratio or the Adjusted Acquisition
Exchange Ratio, as the case may be, shall be correspondingly
adjusted (such adjustment to be rounded to three decimal
places) and, as so adjusted, shall be the Acquisition Exchange
Ratio or the Adjusted Acquisition Exchange Ratio, as the case
may be.
3.2 Certificates.
(a) Prior to the Effective Date, Alpha shall
appoint a bank or trust company reasonably acceptable to
Acquisition to act as the exchange agent for the Merger (the
"Exchange Agent").
(b) Promptly after the Effective Date (but in no
event later than five business days thereafter), Alpha shall
make available for exchange in accordance with this Section
3.2 the certificates for shares of Alpha Common Stock, and
cash in lieu of fractional interests, issuable pursuant to
Section 3.1 in exchange for outstanding shares of Acquisition
Common Stock.
(c) As soon as practicable after the Effective Date
(but in no event later than ten business days thereafter), the
Exchange Agent shall mail to each holder of an outstanding
certificate which immediately prior to the Effective Date
represented outstanding shares of Acquisition Common Stock (a
"Acquisition Certificate") instructions for effecting the
surrender of Acquisition Certificates in exchange for an Alpha
stock certificate, accompanied by a letter of transmittal for
surrender of Acquisition Certificates (the "Letter of
Transmittal"). Upon proper completion of such Letter of
Transmittal and upon surrender of both such Letter of
Transmittal and the Acquisition Certificate(s) to the Exchange
Agent, the holder of the Acquisition Certificate(s) shall be
entitled to receive (i) a certificate representing the number
of whole shares of Alpha Common Stock into which the shares of
Acquisition Common Stock theretofore represented by the
Acquisition Certificate(s) so surrendered shall have been
converted, and (ii) a check in the amount due such holder for
the value (computed in accordance with Section 3.3) of any
fractional share interest of such holder. If more than one
Acquisition Certificate shall be surrendered at one time for
the account of the same holder, the number of whole shares of
Alpha Common Stock for which such certificates shall be
exchanged pursuant to this Article III shall be computed on
the basis of the aggregate of the shares represented by the
Acquisition Certificates so surrendered. Until so
surrendered, each Acquisition Certificate shall represent the
right to receive the number of whole shares of Alpha Common
Stock into which the shares evidenced thereby have been so
converted and cash in lieu of any fractional share interest
(except that Acquisition Certificates representing shares as
to which dissenters' rights of appraisal has been exercised
shall have the rights set forth in Section 262 of the Delaware
General Corporation Law).
(d) Unless and until a Acquisition Certificate
shall be surrendered in accordance with this Section 3.2, no
dividends or other distributions payable to holders of record
of shares of Alpha Common Stock shall be paid to the holder of
such certificate. Upon surrender of such Acquisition
Certificate, there shall be paid, with respect to the number
of whole shares of Alpha Common Stock represented by such
certificate: (i) the amount of dividends or other
distributions, if any, that theretofore became payable, but
were not paid by reason of this Section 3.2, and (ii) on the
payment date, the amount of dividends or other distributions,
if any, with a record date after the Effective Date and a
payment date occurring after such surrender. Notwithstanding
anything to the contrary contained herein, neither the
Exchange Agent nor any party hereto shall have any liability
to a holder of a Acquisition Certificate for the payment of
the Merger consideration to be issued in accordance with the
provisions hereof if such Merger consideration is paid to a
public official pursuant to any applicable abandoned property,
escheat or similar law. If any Acquisition Certificate shall
not have been surrendered prior to three years after the
Effective Date (or immediately prior to such earlier date on
which any payment in respect thereof would otherwise escheat
to or become the property of any governmental unit or agency),
the payment in respect of such Acquisition Certificates shall,
to the extent permitted by applicable law, become the property
of the Surviving Corporation, free and clear of all claims or
interests of any Person previously entitled thereto.
(e) If any certificate for shares of Alpha Common
Stock is to be issued in a name other than the name that the
Acquisition Certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance of such
certificate that the Acquisition Certificate shall be properly
endorsed and otherwise be in proper form for transfer, and
that the Person requesting such exchange either (i) pay to the
Exchange Agent any transfer or other taxes required by reason
of the issuance of a certificate for shares of Alpha Common
Stock in any name other than that of the registered holder of
the Acquisition Certificate or (ii) establish to the
satisfaction of the Exchange Agent that such taxes have been
paid or are not payable.
(f) All shares of Alpha Common Stock and cash in
lieu of any fractional interest issued upon the surrender for
exchange in accordance with this Agreement of shares of
Acquisition Common Stock shall be deemed to have been issued
and delivered in full satisfaction of all rights pertaining to
such shares of Acquisition Common Stock.
(g) As soon as practicable after the Effective
Date, the Exchange Agent shall determine and notify Alpha of
the amount of cash that is required to provide for the
settlement of the fractional interests created by the Reverse
Stock Split. Upon the receipt of such notice, Alpha shall,
within five business days thereafter, deliver such funds to
the Exchange Agent for distribution by the Exchange Agent as
promptly as practicable to the holders of such fractional
share interests.
3.3 Fractional Interests. Should any holder of Alpha
Common Stock or Acquisition Common Stock be entitled to a
fractional share interest in Alpha Common Stock as determined
in accordance with Section 3.1, such holder shall receive in
lieu of such fractional share an amount in cash equal to the
product of such fraction multiplied by Market Price on the
first trading day following the Effective Date, or if Alpha
Common Stock is not so traded on such day, the Market Price on
the next succeeding day on which the Alpha Common Stock is
traded. Fractional interests shall not confer any rights to
dividends or any other rights of a stockholder.
3.4 Appraisal Rights. (a) Notwithstanding the terms of
Section 3.1, shares of Acquisition Common Stock outstanding
immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger and who has demanded
appraisal for such shares in accordance with the applicable
provisions of Delaware General Corporation Law shall not be
converted into the right to receive shares of Alpha Common
Stock (and cash in lieu of any fractional interest) as
provided in Section 3.1, unless and until such holder fails to
perfect or withdraws or otherwise loses his right to
appraisal. If, after the Effective Time, such holder fails to
perfect or withdraws or loses his right to appraisal, such
shares of Acquisition Common Stock shall be treated as if they
had been converted as of the Effective Time into a right to
receive shares of Alpha Common Stock (and cash in lieu of any
fractional interest) as provided in Section 3.1. Acquisition
shall give Alpha prompt notice of any demands received by
Acquisition for appraisal of shares of Acquisition Common
Stock, and Alpha shall have the right to participate in all
negotiations and proceedings with respect to such demands.
Acquisition shall not, except with the prior written consent
of Alpha (which shall not be unreasonably withheld), make any
payment with respect to, or settle or offer to settle, any
such demands.
(b) The holders of shares of Alpha Common Stock
prior to the Effective Time shall be entitled to dissenters'
rights of appraisal in accordance with Section 262 of the
Delaware General Corporation Law.
3.5 Stock Transfer Books. After the Effective Time,
there shall be no registration of transfers on the stock
transfer books of Alpha or its transfer agent of the shares of
Acquisition Common Stock. If, after the Effective Time, a
Acquisition Certificate representing such shares are presented
to Alpha or its transfer agent, it shall be cancelled and
exchanged for a certificate representing shares of Alpha
Common Stock (and cash in lieu of any fractional interest) as
provided in this Agreement.
3.6 Exchange of Warrants. At the Effective Time, each
outstanding Acquisition Warrant shall be converted into a
warrant to purchase, at the same exercise price, the number of
shares of Alpha Common Stock that the holder of such
Acquisition Warrant would have received in the Merger had the
Acquisition Warrant been exercised immediately prior to the
Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition represents and warrants to Alpha as follows:
4.1 Organization, Standing and Power. Acquisition is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Acquisition
is duly licensed or qualified to do business under the laws of
those jurisdictions set forth on Schedule 4.1, and neither the
character nor location of the properties owned by it nor the
nature of the business conducted by it in any other
jurisdiction makes such licensing or qualification necessary
in such other jurisdiction, except where the failure to so
qualify would not have a Material Adverse Effect on
Acquisition. Acquisition has all requisite corporate power
and authority to carry on its business as currently conducted
and to own or hold under lease and operate its assets,
properties and business. Acquisition has furnished to Alpha
correct and complete copies of its Certificate of
Incorporation, and all amendments thereto, and of its Bylaws,
as amended to date. No action has been taken by Acquisition
or its stockholders, officers or directors since September 30,
1995, with respect to an any amendment to its Certificate of
Incorporation or Bylaws, except as contemplated by this
Agreement.
4.2 Capitalization. (a) As of the date of this
Agreement, the authorized capital stock of Acquisition
consists of:
(i) 50 million shares of Acquisition Common
Stock, three million shares of which are issued and
outstanding and no shares are held in treasury; and
(ii) 20 million shares of Acquisition Preferred
Stock, of which no shares are issued or outstanding.
(b) Set forth on Schedule 4.2(b) are the names of
all the record owners of all of the outstanding shares of
Acquisition Common Stock as of the date of this Agreement, and
the numbers of such shares owned by each of them. All of the
issued and outstanding shares of Acquisition Common Stock are
duly authorized, validly issued, fully paid and nonassessable
and, except as will not have a Material Adverse Effect on
Acquisition, were issued in compliance with all applicable
federal and state securities laws.
(c) There are no other issued or outstanding
securities of Acquisition.
(d) There are no outstanding subscriptions,
options, rights (including conversion or preemptive rights),
warrants, proxies, calls, puts, restrictions, commitments,
agreements, or any understandings or arrangements, to which
Acquisition is a party, whether oral or written, relating to
any shares of Acquisition Capital Stock, nor is there any
obligation on the part of Acquisition to issue or enter into
any such subscriptions, options, rights, warrants, proxies,
calls, restrictions, commitments or agreements.
4.3 Subsidiaries. Acquisition has no Subsidiaries.
4.4 Financial Statements. Acquisition has delivered to
Alpha balance sheets of Acquisition at September 30, 1995,
December 31, 1994, and December 31, 1993, and the related
statements of operations, stockholders' equity and cash flows
for the periods then ended and from inception, including the
notes thereto (the "Acquisition Financial Statements"). The
Acquisition Financial Statements present fairly in all
material respects the financial position of Acquisition as of
September 30, 1995, and the results of operations and changes
in financial position of Acquisition for the period from May
18, 1993 (inception) through September 30, 1995, all in
conformity with generally accepted accounting principles
applied on a consistent basis. On or before December 7, 1995,
Acquisition will deliver to Alpha the opinion of Richard A.
Eisner & Company, LLP on the Acquisition Financial Statements.
4.5 Undisclosed Liabilities. Except as set forth on
Schedule 4.5 or as will not have a Material Adverse Effect on
Acquisition, Acquisition does not have any debts, liabilities
or obligations of any nature, secured or unsecured, whether
accrued, absolute, contingent or otherwise, whether due or to
become due, including, but not limited to, liabilities or
obligations on account of Taxes, other governmental charges,
duties, penalties, interest, fines, vacation pay, workmen's
compensation claims, pension plan obligations or indebtedness
for borrowed money, and to the knowledge of Acquisition there
is no basis for the assertion against Acquisition of any such
debt, liability or obligation, except:
(a) to the extent set forth or reserved against in
the Acquisition Financial Statements; or
(b) normal and usual current liabilities incurred,
and normal and usual obligations under agreements entered
into, in the ordinary course of business since September 30,
1995, except obligations evidencing indebtedness for borrowed
money, which shall be disclosed on Schedule 4.5.
4.6 Absence of Certain Changes or Events. Except as
disclosed on Schedule 4.6, since September 30, 1995, the
business of Acquisition has been operated only in the usual
and ordinary course of business and there has not been:
(a) any change in the condition (financial or
other), properties, assets or liabilities of Acquisition,
except normal and usual changes in the ordinary course of
business that have not, individually or in the aggregate, had
a Material Adverse Effect on Acquisition;
(b) any damage, destruction or loss (whether or not
covered by insurance) of properties, assets or business of
Acquisition that has had a Material Adverse Effect on
Acquisition;
(c) any change in the accounting methods or
practices followed by Acquisition or any change in the accrual
of liabilities or in depreciation, amortization or inventory
valuation policies, rates or methods theretofore used or
adopted;
(d) any sale, lease, abandonment or other
disposition by Acquisition of any interest in real property
or, other than in the ordinary course of business and other
than those that will not have a Material Adverse Effect on
Acquisition, of any machinery, equipment or other operating
property;
(e) any sale, assignment, transfer, license or
other disposition by Acquisition of any patent, trademark,
servicemark, trade name, brand name, copyright (or pending
application for any patent, trademark, servicemark or
copyright), invention, process, know-how, formula, pattern,
design, trade secret or interest thereunder or other
intangible asset, other than those that will not have a
Material Adverse Effect on Acquisition;
(f) any issuance of shares of Acquisition Capital
Stock or of any rights to acquire any such shares, or any
declaration, setting aside or payment of any dividend or other
distribution on or in respect of shares of Acquisition Capital
Stock, or any direct or indirect redemption, retirement,
purchase or other acquisition by Acquisition of any such
shares of Acquisition Capital Stock;
(g) capital expenditures, whether made or committed
to by Acquisition, in excess of $25,000;
(h) any change (individually or in the aggregate)
in the contingent obligations of Acquisition by way of
guaranty, endorsement, indemnity, warranty or otherwise, other
than those that will not have a Material Adverse Effect on
Acquisition;
(i) any waiver or compromise by Acquisition of a
valuable right or of a debt in an amount exceeding $25,000
owed to it;
(j) any wage increase to any of its employees; or
(k) any change in the relationship or course of
dealing between Acquisition and any of its suppliers or
customers that has had a Material Adverse Effect on
Acquisition.
4.7 Expenses of Transaction. Acquisition has not paid
or become obligated to pay, and will not incur, any fee or
commission to any investment banker, broker, finder or
intermediary in connection with the transactions contemplated
by this Agreement, other than brokerage commissions in
connection with the Equity Financing.
4.8 Tax Matters. Except as set forth on Schedule 4.8:
(a) Acquisition has duly, properly, accurately and
timely filed all Tax returns required to be filed by it or for
which it may be held responsible, and has paid, or will pay on
a timely basis, all Taxes shown to be due and payable on such
returns, all deficiencies and assessments notice of which has
been received by it, and all other Taxes due and payable by
it, except for Taxes, deficiencies and assessments that are
being contested in good faith and for which appropriate
reserves have been established.
(b) There are no liens for unpaid Taxes (or for
allegedly unpaid Taxes) on any of the assets of Acquisition.
(c) No Tax returns of Acquisition have been audited
by the relevant taxing authorities.
(d) There are no agreements, waivers or other
arrangements providing for an extension of time with respect
to the filing of any Tax returns by Acquisition or the payment
by, or assessment against, Acquisition of any Tax.
(e) There are no suits, actions, claims,
investigations, inquiries or proceedings pending or, to the
knowledge of Acquisition, threatened against Acquisition in
respect of Taxes, or any matters under formal discussion with
any governmental authority relating to Taxes or any claims for
additional Taxes asserted by any such authority.
(f) There is no basis known to Acquisition upon
which any assessment for a material amount of additional Taxes
is reasonably likely to be made.
(g) The accruals made for Taxes, governmental
charges and duties in the Acquisition Financial Statements
represent a reasonable estimate of the anticipated liability
for all unpaid Taxes, governmental charges and duties payable
by Acquisition attributable to all periods ended on or before
September 30, 1995.
(h) Through September 30, 1995, Acquisition has not
incurred, nor is there any obligation to accrue, any debts,
liabilities or obligations (whether absolute, contingent or
otherwise, whether due or to become due and whether or not
presently outstanding) on account of Taxes, other than on
account of Taxes in respect of which accruals have been made
in the Acquisition Financial Statements, and there is no basis
known to Acquisition for the assertion of a claim for any such
debts, liabilities or obligations against it. Since September
30, 1995, Acquisition has made adequate provisions on its
books for all Taxes accruable by it with respect to its
operation after such date.
(i) Acquisition has withheld or collected from each
payment made to each of its employees, Acquisition
stockholders and creditors the amount of all Taxes (including,
but not limited to, United States federal income taxes,
Federal Insurance Contribution Act taxes and any income,
payroll or wage taxes imposed by any state of the United
States or political subdivision thereof or by any jurisdiction
outside the United States) required to be withheld or
collected therefrom and has duly and timely paid the same to
the proper tax receiving officers, except where the failure to
withhold, collect or pay such Taxes will not have a Material
Adverse Effect on Acquisition. Acquisition has not filed a
consent with the IRS pursuant to Section 341(f) of the Code;
no election has been or will be made under Section 336(e),
338(g) or 338(h)(10) of the Code with respect to any sale,
exchange or distribution of the capital stock of Acquisition
(including the transaction herein contemplated).
(j) Acquisition is not, and during the preceding
five years has not been, a "United States real property
holding corporation" (as defined in Section 897(c)(2) of the
Code).
(k) Acquisition is not (nor has it ever been) a
party to any agreement to share income Tax liability with any
other Person.
(l) Acquisition is not, nor has it been, a member
of a group of two or more corporations filing a consolidated
federal income tax return or a consolidated, combined or
unitary return or report for state Tax purposes.
(m) Acquisition has no liability for Taxes of any
other Person as a transferee or successor, by contract or
otherwise.
4.9 No Violation of Law. Except as will not have a
Material Adverse Effect on Acquisition, Acquisition's
operations have been conducted in accordance with all
applicable laws, regulations and other requirements of all
governmental bodies having jurisdiction over it and
Acquisition has all licenses, permits, orders or approvals
from governmental bodies required for the conduct of its
business. Except as will not have a Material Adverse Effect
on Acquisition, none of the real or personal property owned,
leased, occupied or operated by Acquisition, or the ownership,
leasing, occupancy or operation thereof, is in violation of
any applicable law, code, rule, regulation, ordinance, license
or permit (including, but not limited to, those related to
building, zoning, environmental matters or employee health and
safety). No notice from any governmental body or other Person
has been served upon Acquisition or upon any property owned,
leased, occupied or operated by Acquisition claiming any
violation of any such law, code, rule, regulation, ordinance,
license or permit, or requiring, or calling attention to the
need for, any work, repairs, construction, alterations or
installation on or in connection with such property, except
such notices with which Acquisition has complied, or except as
will not have a Material Adverse Effect on Acquisition.
Acquisition has the right to use its properties for the
purpose of conducting its business as such business is and is
expected to be conducted.
4.10 Absence of Defaults. Except as will not have a
Material Adverse Effect on Acquisition, (i) Acquisition is
not, nor is it alleged to be, in default under, or in breach
of any term or provision of, any contract, agreement, lease,
license, commitment, instrument, or fiduciary or other
obligation and (ii) to the knowledge of Acquisition, all
material contracts, agreements, commitments and obligations to
which Acquisition is a party are valid and binding agreements
of the parties thereto and are in full force and effect. No
other party to any contract, agreement, lease, license,
commitment, instrument, or fiduciary or other obligation to
which Acquisition is a party is in default thereunder or in
breach of any term or provision thereof, except as will not
have a Material Adverse Effect on Acquisition. Except as set
forth in Schedule 4.10, there exists no condition or event
which, after notice or lapse of time or both, would constitute
a default by any party to any such contract, agreement, lease,
license, commitment, instrument, or fiduciary or other
obligation, except as will not have a Material Adverse Effect
on Acquisition.
4.11 Litigation. There is (i) no suit, action or claim,
(ii) no investigation or inquiry by any administrative agency
or governmental body, and (iii) no legal, administrative or
arbitration proceeding pending or, to the knowledge of
Acquisition, threatened against Acquisition or any of the
properties, assets or business of Acquisition and, to the
knowledge of Acquisition, there is no basis or grounds for any
such suit, action, claim, investigation, inquiry or
proceeding, including but not limited to labor, equal
employment opportunity, safety and health, environmental and
antitrust laws. There is no outstanding order, writ,
injunction or decree of any court, administrative agency or
governmental body or arbitration tribunal against or relating
to Acquisition or any of the capital stock, properties, assets
or business of Acquisition.
4.12 Certain Payments. Neither Acquisition nor, to the
knowledge of Acquisition, any officer, director, employee,
agent or other representative of Acquisition has, directly or
indirectly, made or authorized any payment, contribution or
gift of money, property or services (i) as a kickback or bribe
to any Person in contravention of any applicable law, or (ii)
to any political organization or the holder of, or any
aspirant to, any elected or appointed office of any nation,
state, county, city or other political subdivision or
governmental instrumentality in contravention of applicable
law.
4.13 No Breach or Violation of Law. The execution and
delivery of this Agreement by Acquisition and the consummation
of the transactions contemplated hereby will not (i) conflict
with, result in the breach of any of the terms or conditions
of, constitute a default under, result in the acceleration of
any obligation under, or require any consent, approval or
notice under, the Certificate of Incorporation or the Bylaws
of Acquisition (other than the consent of the holders of
Acquisition Common Stock required under Section 7.1 hereof)
or, except as will not have a Material Adverse Effect on
Acquisition, any contract, agreement, commitment, indenture,
mortgage, deed of trust, lease, pledge agreement, note, bond,
license or other instrument or obligation to which Acquisition
is a party or by which Acquisition or any of the properties or
assets of Acquisition are bound or affected, or (ii) except as
will not have a Material Adverse Effect on Acquisition,
violate any law, any rule or regulation of any administrative
agency or governmental body, or any order, writ, injunction or
decree of any court, administrative agency or governmental
body.
4.14 Validity and Authorization. Acquisition has full
corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contem-
plated hereby have been duly and validly authorized by its
Board of Directors. Other than the adoption of this Agreement
by Acquisition's stockholders and the filing of the
Certificate of Merger with the Secretary of State of the State
of Delaware, no other corporate acts or proceedings on the
part of Acquisition are necessary to authorize this Agreement
or the transactions contemplated hereby. This Agreement
constitutes a valid and legally binding obligation of
Acquisition, enforceable against Acquisition in accordance
with its terms. No consent or approval by, notice to or
registration with any governmental authority, other than
compliance with applicable federal and state securities laws
and the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, is required on the part of
Acquisition prior to the Effective Date in connection with the
execution and delivery by Acquisition of this Agreement or the
consummation by Acquisition of the Merger and the other
transactions contemplated hereby.
4.15 Disclosure. On the date that Alpha files the
Registration Statement with the SEC, on the date of
effectiveness thereof, on the date that the Proxy Statement is
mailed to the holders of Acquisition Common Stock and the
holders of Alpha Common Stock and on the dates that the
stockholders meetings of Acquisition and Alpha are held, the
information in such Registration Statement and the Proxy
Statement provided in writing by Acquisition or its agents
expressly for use therein will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.16 Title to Properties; Encumbrances; Condition.
Except as will not have a Material Adverse Effect on
Acquisition, Acquisition has good, valid and marketable title
to all properties and assets that it purports to own. All
properties and assets that Acquisition purports to own are
owned free and clear of all liens, claims and encumbrances,
except for (i) any mortgages or security interests described
in the Acquisition Financial Statements, (ii) encumbrances and
imperfections of title, restrictions and zoning laws, if any,
that do not materially detract from the value or impair
Acquisition's use of the property subject thereto or impair
Acquisition's operations, (iii) liens for current taxes not
yet due, and (iv) any other liens, claims or encumbrances
which in the aggregate will not have a Material Adverse Effect
on Acquisition.
4.17 Patents. Acquisition has delivered to Alpha a
complete and accurate list of all patents and patent
applications owned by Acquisition or to which Acquisition
holds a license, including all reissues, divisions, continua-
tions, continuations in part and extensions thereof, and that
have not been exclusively licensed by Acquisition to
unaffiliated third parties (collectively, the "Acquisition
Intellectual Property"), such list consisting of the serial or
patent number, the holder of the patent, the title, the
country and the issue date, if a patent, or the filing date,
if a patent application. Except as set forth on such list,
(i) the patents comprising the Acquisition Intellectual
Property are valid and enforceable, (ii) Acquisition has the
sole and exclusive right to use the Acquisition Intellectual
Property, subject only to such limitations as are imposed by
law or governmental regulations and such exceptions as will
not have a Material Adverse Effect on Acquisition; (iii) no
claims have been asserted by any Person in writing to
Acquisition with respect to the use by Acquisition of the
Acquisition Intellectual Property and, to the knowledge of
Acquisition, there is no valid basis for any such claim; and
(iv) to the knowledge of Acquisition, the use by Acquisition
of the Acquisition Intellectual Property does not violate or
infringe the proprietary rights of any Person and no Person is
infringing the Acquisition Intellectual Property. Except as
will not have a Material Adverse Effect on Acquisition, each
license agreement under which Acquisition holds Acquisition
Intellectual Property (i) is valid, enforceable by Acquisition
and in full force and effect and (ii) to the knowledge of
Acquisition, neither Acquisition nor any other Person is in
default of any provision thereof.
4.18 No Misrepresentations. The representations and
warranties made by Acquisition in this Agreement or in any
Schedule hereto do not contain any untrue statement of a
material fact or omit to state a material fact necessary to
make the statements or facts contained herein or therein not
misleading. The fact that Alpha and its representatives have
conducted an investigation of Acquisition prior to the
execution of this Agreement shall not affect the
representations and warranties contained in this Article IV or
the extent of the obligations or liabilities of Acquisition in
the event of a breach of any such representation or warranty.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ALPHA
Alpha hereby represents and warrants to Acquisition as
follows:
5.1 Organization. Alpha is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware. Alpha is duly licensed or
qualified to do business under the laws of those jurisdictions
set forth on Schedule 5.1, and neither the character nor
location of the properties owned by it nor the nature of the
business conducted by it in any other jurisdiction makes such
licensing or qualification necessary in such other juris-
diction, except where the failure to so qualify would not have
a Material Adverse Effect on Alpha. Alpha has all requisite
corporate power and authority to carry on its business as it
is currently conducted and to own or lease and operate its
assets, properties and business. Alpha has furnished to
Acquisition correct and complete copies of its Restated
Certificate of Incorporation, and all amendments thereto, and
of its Bylaws, as amended to date. No action has been taken
by Alpha or its stockholders, officers or directors since
September 30, 1995, with respect to any amendment to its
Restated Certificate of Incorporation or Bylaws, except as
contemplated by this Agreement.
5.2 Capitalization.
(a) As of the date of this Agreement, the
authorized capital stock of Alpha consists of:
(i) 20,000,000 shares of Alpha Common Stock,
8,977,429 shares of which are issued and outstanding and no
shares are held in treasury; and
(ii) 1,000,000 shares of Alpha Preferred Stock,
of which no shares are issued or outstanding.
(b) All of the issued and outstanding shares of
Alpha Common Stock are duly authorized, validly issued, fully
paid and nonassessable and, except as will not have a Material
Adverse Effect on Alpha, were issued in compliance with all
applicable federal and state securities laws.
(c) The names of the holders and the material
terms of all outstanding options or warrants to purchase Alpha
Capital Stock (other than the Alpha Class C Warrants), as of
the date of this Agreement, are set forth on Schedule 5.2. All
such options and warrants and the Class C Warrants have been
validly issued and, except as will not have a Material Adverse
Effect on Alpha, were issued in compliance with all applicable
federal and state securities laws.
(d) Except for the Class C Warrants and the Rights
issued pursuant to the Rights Agreement and except as set
forth on Schedule 5.2, there are no outstanding subscriptions,
options, rights (including conversion or preemptive rights),
warrants, proxies, calls, puts, restrictions, commitments,
agreements or any understandings or arrangements to which
Alpha is a party, whether oral or written, relating to any
shares of Alpha Capital Stock, nor is there any obligation on
the part of Alpha to issue or enter into any such
subscriptions, options, rights, warrants, proxies, calls,
restrictions, commitments or agreements.
5.3 Subsidiaries. Alpha has no Subsidiaries.
5.4 Financial Statements. Alpha has delivered to
Acquisition audited balance sheets of Alpha at December 31,
1993 and 1994, and the related statements of operations,
stockholders' equity and cash flows for each year then ended,
including the notes thereto (the "Alpha Financial
Statements"), accompanied by the opinion thereon of Price
Waterhouse LLP. Alpha has also delivered to Acquisition the
unaudited balance sheet of Alpha at June 30, 1995, and the
related unaudited statement of operations, stockholders'
equity and cash flow for the six months then ended, including
the notes thereto (the "Alpha Interim Financial Statements").
The Alpha Financial Statements present fairly in all material
respects the financial position of Alpha as of December 31,
1993 and 1994, and the results of operations and changes in
financial position of Alpha for the respective one-year
periods then ended, and the Alpha Interim Financial Statements
present fairly in all material respects the financial position
of Alpha as of June 30, 1995, and the results of operations
and changes in financial position for the six-month period
then ended, in each case in conformity with generally accepted
accounting principles applied on a basis consistent with that
of prior periods, except that the Alpha Interim Financial
Statements may be subject to normal year-end adjustments that
are not in the aggregate material.
5.5 Undisclosed Liabilities. Except as will not have a
Material Adverse Effect on Alpha, Alpha does not have any
debts, liabilities or obligations of any nature, secured or
unsecured, whether accrued, absolute, contingent or otherwise,
whether due or to become due, including, but not limited to,
liabilities or obligations on account of Taxes, other
governmental charges, duties, penalties, interest, fines,
vacation pay, workmen's compensation claims, pension plan
obligations or indebtedness for borrowed money, and to the
knowledge of Alpha there is no basis for the assertion against
Alpha of any such debt, liability or obligation, except:
(a) to the extent set forth or reserved against in
the Alpha Financial Statements or the Alpha Interim Financial
Statements; or
(b) normal and usual current liabilities incurred,
and normal and usual obligations under agreements entered
into, in the ordinary course of business after June 30, 1995,
except obligations evidencing indebtedness for borrowed money,
which shall be disclosed on Schedule 5.5.
5.6 Absence of Certain Changes or Events. Except as
disclosed in the Alpha SEC Filings or Schedule 5.6, since
December 31, 1994, the business of Alpha has been operated
only in the usual and ordinary course of business and there
has not been:
(a) any change in the condition (financial or
other), properties, assets or liabilities of Alpha, except
normal and usual changes in the ordinary course of business
that have not, individually or in the aggregate, had a
Material Adverse Effect on Alpha;
(b) any damage, destruction or loss (whether or not
covered by insurance) of properties, assets or the business of
Alpha that has had a Material Adverse Effect on Alpha;
(c) any change in the accounting methods or
practices followed by Alpha or any change in the accrual of
liabilities or in depreciation, amortization or inventory
valuation policies, rates or methods theretofore used or
adopted;
(d) any sale, lease, abandonment or other
disposition by Alpha of any interest in real property or,
other than in the ordinary course of business and other than
those that will not have a Material Adverse Effect on Alpha,
of any machinery, equipment or other operating property;
(e) any sale, assignment, transfer, license or
other disposition by Alpha of any patent, trademark,
servicemark, trade name, brand name, copyright (or pending
application for any patent, trademark, servicemark or
copyright), invention, process, know-how, formula, pattern,
design, trade secret or interest thereunder or other
intangible asset, other than those that will not have a
Material Adverse Effect on Alpha;
(f) any issuance of shares of Alpha Capital Stock
(other than shares of Alpha Common Stock issuable upon
exercise of outstanding stock options) or of any rights to
acquire any such shares, or any declaration, setting aside or
payment of any dividend or other distribution on or in respect
of shares of Alpha Capital Stock, or any direct or indirect
redemption, retirement, purchase or other acquisition by Alpha
of any such shares of Alpha Capital Stock;
(g) capital expenditures, whether made or committed
to by Alpha, in excess of $25,000;
(h) any change (individually or in the aggregate)
in the contingent obligations of Alpha by way of guaranty,
endorsement, indemnity, warranty or otherwise, or other than
those that will not have a Material Adverse Effect on Alpha;
(i) any waiver or compromise by Alpha of a valuable
right or of a debt in an amount exceeding $25,000 owed to it;
(j) any wage increase to any of its employees; or
(k) any change in the relationship or course of
dealing between Alpha and any of its suppliers or customers
that has had a Material Adverse Effect on Alpha.
5.7 Expenses of Transaction. Except for the payment of
a fee for the Fairness Opinion, Alpha has not paid or become
obligated to pay, and will not incur, any fee or commission to
any investment banker, broker, finder or intermediary in
connection with the transactions contemplated by this
Agreement.
5.8 Tax Matters.
(a) Alpha has duly, properly, accurately and timely
filed all Tax returns required to be filed by it or for which
it may be held responsible, and has paid, or will pay on a
timely basis, all Taxes shown to be due and payable on such
returns, all deficiencies and assessments notice which have
been received by it, and all other Taxes due and payable by
it, except for Taxes, deficiencies and assessments that are
being contested is good faith and for which appropriate
reserves have been established.
(b) There are no liens for unpaid Taxes (or for
allegedly unpaid Taxes) on any of the assets of Alpha.
(c) No Tax returns of Alpha have been audited by
the relevant taxing authorities.
(d) There are no agreements, waivers or other
arrangements providing for an extension of time with respect
to the filing of any Tax returns by Alpha or the payment by,
or assessment against, Alpha of any Tax.
(e) There are no suits, actions, claims, investi-
gations, inquiries or proceedings pending or, to the knowledge
of Alpha, threatened against Alpha in respect of Taxes, or any
matters under discussion with any governmental authority
relating to Taxes or any claims for additional Taxes asserted
by any such authority.
(f) There is no basis known to Alpha upon which any
assessment for a material amount of additional Taxes is
reasonably likely to be made.
(g) The accruals made for Taxes, governmental
charges and duties in the Alpha Financial Statements and the
Alpha Interim Financial Statements represent a reasonable
estimate of the aggregate anticipated liability for all unpaid
Taxes, governmental charges and duties payable by Alpha
attributable to all periods ended on or before June 30, 1995.
(h) Through June 30, 1995, Alpha has not incurred,
nor is there any obligation to accrue, any debts, liabilities
or obligations (whether absolute, contingent or otherwise,
whether due or to become due and whether or not presently
outstanding) on account of Taxes, other than on account of
Taxes in respect of which accruals have been made in the Alpha
Financial Statements or the Alpha Interim Financial
Statements, and there is no basis known to Alpha for the
assertion of a claim for any such debts, liabilities or
obligations against it. Since June 30, 1995, Alpha has made
adequate provisions on its books for all Taxes accruable by it
with respect to its operations after such date.
(i) Alpha has withheld or collected from each
payment made to each of its employees, stockholders and
creditors the amount of all Taxes (including, but not limited
to, United States federal income taxes, Federal Insurance
Contribution Act taxes and any income, payroll or wage taxes
imposed by any state of the United States or political
subdivision thereof or by any jurisdiction outside the United
States) required to be withheld or collected therefrom and has
duly and timely paid the same to the proper tax receiving
officers, except where the failure to withhold, collect or pay
such Taxes will not have a Material Adverse Effect on Alpha.
Alpha has not filed a consent with the IRS pursuant to Section
341(f) of the Code; no election has been or will be made under
Section 336(e), 338(g) or 338(h)(10) of the Code with respect
to any sale, exchange or distribution of the capital stock of
Alpha (including the transaction herein contemplated).
(j) Alpha is not, and during the preceding five
years has not been, a "United States real property holding
corporation" (as defined in Section 897(c)(2) of the Code).
(k) Alpha is not (nor has it ever been) a party to
any agreement to share income Tax liability with any other
Person.
(l) Alpha is not, nor has it been, a member of a
group of two or more corporations filing a consolidated
federal income tax return or a consolidated, combined or
unitary return or report for state Tax purposes.
(m) Alpha has no liability for Taxes of any other
Person as a transferee or successor, by contract or otherwise.
5.9 No Violation of Law. Except as will not have a
Material Adverse Effect on Alpha, Alpha's operations have been
conducted in accordance with all applicable laws, regulations
and other requirements of all governmental bodies having
jurisdiction over it and Alpha has all licenses, permits,
orders or approvals from governmental bodies required for the
conduct of its business. Except as will not have a Material
Adverse Effect on Alpha, none of the real or personal property
owned, leased, occupied or operated by Alpha, or the
ownership, leasing, occupancy or operation thereof, is in
violation of any applicable law, code, rule, regulation,
ordinance, license or permit (including, but not limited to,
those related to building, zoning, environmental matters or
employee health and safety). No notice from any governmental
body or other Person has been served upon Alpha or upon any
property owned, leased, occupied or operated by Alpha claiming
any violation of any such law, code, rule, regulation,
ordinance, license or permit, or requiring, or calling
attention to the need for, any work, repairs, construction,
alterations or installation on or in connection with such
property, except such notices with which Alpha has complied,
or except as will not have a Material Adverse Effect on Alpha.
Alpha has the right to use its properties for the purpose of
conducting its business as such business is and is expected to
be conducted.
5.10 Absence of Defaults. Except as will not have a
Material Adverse Effect on Alpha, (i) Alpha is not, nor is it
alleged to be, in default under, or in breach of any term or
provision of, any contract, agreement, lease, license,
commitment, instrument, or fiduciary or other obligation and
(ii) to the knowledge of Alpha, all material contracts,
agreements, commitments and obligations to which Alpha is a
party are valid and binding agreements of the parties thereto
and are in full force and effect. No other party to any
contract, agreement, lease, license, commitment, instrument,
or fiduciary or other obligation to which Alpha is party is in
default thereunder or in breach of any term or provision
thereof, except as will not have a Material Adverse Effect on
Alpha. There exists no condition or event which, after notice
or lapse of time or both, would constitute a default by any
party to any such contract, agreement, lease, license,
commitment, instrument, or fiduciary or other obligation,
except as will not have a Material Adverse Effect on Alpha.
5.11 Litigation. Except as set forth in the Alpha SEC
Filings, there is (i) no suit, action or claim, (ii) no
investigation or inquiry by any administrative agency or
governmental body, and (iii) no legal, administrative or
arbitration proceeding pending or, to the knowledge of Alpha,
threatened against Alpha or any of the properties, assets or
business of Alpha and, to the knowledge of Alpha, there is no
basis or grounds for any such suit, action, claim,
investigation, inquiry or proceeding, including but not
limited to labor, equal employment opportunity, safety and
health, environmental and antitrust laws. There is no
outstanding order, writ, injunction or decree of any court,
administrative agency or governmental body or arbitration
tribunal against or relating to Alpha or any of the capital
stock, properties, assets or business of Alpha.
5.12 Certain Payments. Neither Alpha nor, to the
knowledge of Alpha, any officer, director, employee, agent or
other representative of Alpha has, directly or indirectly,
made or authorized any payment, contribution or gift of money,
property or services (i) as a kickback or bribe to any Person
in contravention of any applicable law, or (ii) to any
political organization or the holder of, or any aspirant to,
any elected or appointed office of any nation, state, county,
city or other political subdivision or governmental
instrumentality in contravention of applicable law.
5.13 No Breach or Violation of Law. Except as set forth
in Schedule 5.13, the execution and delivery of this Agreement
by Alpha and the consummation of the transactions contemplated
hereby will not (i) conflict with, result in the breach of any
of the terms or conditions of, constitute a default under,
result in the acceleration of any obligation under, or require
any consent, approval or notice under, the Restated
Certificate of Incorporation or the Bylaws of Alpha (other
than the consent of the holders of Alpha Common Stock required
under Section 7.1 hereof) or, except as will not have a
Material Adverse Effect on Alpha, any contract, agreement,
commitment, indenture, mortgage, deed of trust, lease, pledge
agreement, note, bond, license or other instrument or
obligation to which Alpha is a party or by which Alpha or any
of the properties or assets of Alpha are bound or affected, or
(ii) except as will not have a Material Adverse Effect on
Alpha, violate any law, any rule or regulation of any
administrative agency or governmental body, or any order,
writ, injunction or decree of any court, administrative agency
or governmental body.
5.14 Validity and Authorization. Alpha has full
corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
its Board of Directors. Other than the adoption of this
Agreement and the approval of the stock incentive plan
contemplated by Section 6.9 by the stockholders of Alpha and
the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, no other corporate acts or
proceedings on the part of Alpha are necessary to authorize
this Agreement or the transactions contemplated hereby. This
Agreement constitutes the valid and legally binding obligation
of Alpha, enforceable against Alpha in accordance with its
terms. No consent or approval by, notice to or registration
with any governmental authority, other than compliance with
applicable federal and state securities laws and the filing of
the Certificate of Merger with the Secretary of State of the
State of Delaware, is required on the part of Alpha prior to
the Effective Date in connection with the execution and
delivery by Alpha of this Agreement or the consummation by
Alpha of the Merger and the other transactions contemplated
hereby.
5.15 Disclosure.
(a) On the date that Alpha files the Registration
Statement with the SEC, on the date of effectiveness thereof,
on the date that the Proxy Statement is mailed to the holders
of Alpha Common Stock and to the holders of Acquisition Common
Stock and on the dates that the stockholders meetings of
Acquisition and Alpha are held, the information in or
incorporated by reference in such Registration Statement and
the Proxy Statement will not contain any untrue statement of a
material fact or omit to state a material fact necessary to
make the statements made therein, in light of the
circumstances under which they are made, not misleading. On
the date the Registration Statement is filed and on the date
it is declared effective, it will comply in all material
respects with all applicable requirements of the Act and the
1934 Act. No representation or warranty is made in this
Section 5.15 with respect to any information contained in the
Registration Statement or the Proxy Statement with respect to
Acquisition.
(b) The reports to be furnished to Acquisition by
Alpha pursuant to Section 6.3(b) will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in light
of the circumstances under which they are made, not
misleading.
5.16 Title to Properties; Encumbrances; Condition.
Except as will not have a Material Adverse Effect on Alpha,
Alpha has good, valid and marketable title to all properties
and assets that it purports to own. All properties and assets
that Alpha purports to own are owned free and clear of all
liens, claims and encumbrances, except for (i) any mortgages
or security interests described in the Alpha Financial
Statements or the Alpha Interim Financial Statements, (ii)
encumbrances and imperfections of title, restrictions and
zoning laws, if any, that do not materially detract from the
value or impair Alpha's use of the property subject thereto or
impair Alpha's operations, (iii) liens for current taxes not
yet due, and (iv) any other liens, claims or encumbrances
which in the aggregate will not have a Material Adverse Effect
on Alpha.
5.17 Patents. Alpha has delivered to Acquisition a
complete and accurate list of all patents and patent
applications owned by Alpha or to which Alpha holds a license,
including all reissues, divisions, continuations,
continuations in part and extensions thereof, and that have
not been exclusively licensed by Alpha to unaffiliated third
parties (collectively, the "Alpha Intellectual Property"),
such list consisting of the serial or patent number, the
holder of the patent, the title, the country and the issue
date, if a patent, or the filing date, if a patent
application. Except as set forth on such list, (i) the
patents comprising the Alpha Intellectual Property are valid
and enforceable, (ii) Alpha has the sole and exclusive right
to use the Alpha Intellectual Property, subject only to such
limitations as are imposed by law or governmental regulations
and such exceptions as will not have a Material Adverse Effect
on Alpha; (iii) no claims have been asserted by any Person in
writing to Alpha with respect to the use by Alpha of the Alpha
Intellectual Property and, to the knowledge of Alpha, there is
no valid basis for any such claim; and (iv) to the knowledge
of Alpha, the use by Alpha of the Alpha Intellectual Property
does not violate or infringe the proprietary rights of any
Person and no Person is infringing the Alpha Intellectual
Property. Except as will not have a Material Adverse Effect
on Alpha, each license agreement under which Alpha holds Alpha
Intellectual Property (i) is valid, enforceable by Alpha and
in full force and effect and (ii) to the knowledge of Alpha,
neither Alpha nor any other Person is in default of any
provision thereof.
5.18 SEC Reports. Since January 1, 1993, All financial
statements, proxy statements, schedules or reports required to
be filed by Alpha with the SEC pursuant to the Act or the 1934
Act complied in all material respects with the applicable
requirements of the Act and the 1934 Act and the applicable
rules and regulations thereunder, and did not include at the
time of filing any untrue statement of a material fact or omit
to state a material fact concerning Alpha necessary in order
to make the statements contained therein, in light of the
circumstances under which they were made not misleading. True
and completed copies of all materials required to be filed as
exhibits to such reports have been filed with the SEC.
5.19 Alpha Common Stock. The shares of Alpha Common
Stock to be issued or delivered pursuant to this Agreement
will be duly authorized and, upon issuance in accordance with
the terms of this Agreement will be validly issued, fully paid
and nonassessable and will not be subject to any restriction
on transfer, except pursuant to the Act and applicable state
securities laws. No stockholders of Alpha are entitled to
exercise any preemptive rights in connection with the
transactions contemplated by this Agreement.
5.20 Rights Agreement. The execution, delivery and
performance of this Agreement by the parties hereto (i) will
not result in Acquisition or any of its Affiliates or
Associates becoming an Acquiring Person under the Rights
Agreement, dated as of April 29, 1994, between Alpha and
American Stock Transfer & Trust Company, as Rights Agent (as
amended through the date hereof, the "Rights Agreement"), (ii)
will not be the cause of any event described in Section 11 of
the Rights Agreement or in the occurrence of a Distribution
Date under the Rights Agreement, (iii) will not entitle or
permit the holders of the Rights to exercise the Rights, and
(iv) all amendments to the Rights Agreement have been duly and
validly adopted in accordance with Section 26 thereof. No
Acquisition stockholder immediately prior to the Merger shall
become an Acquiring Person after the Merger, without regard to
the number of shares of Alpha Common Stock acquired in the
Merger or thereafter by such Acquisition stockholder (or any
of its Affiliates or Associates). For purposes of this
Section 5.20 and Sections 6.11 and 9.4 only, capitalized terms
used and not defined in this Agreement have the respective
meanings ascribed to such terms in the Rights Agreement.
5.21 No Misrepresentations. The representations and
warranties made by Alpha in this Agreement or in any Schedule
hereto do not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the state-
ments or facts contained herein or therein not misleading.
The fact that Acquisition and its representatives have
conducted an investigation of Alpha prior to the execution of
this Agreement shall not affect the representations and
warranties contained in this Article V or the extent of the
obligations or liabilities of Alpha in the event of a breach
of any such representation or warranty.
ARTICLE VI
CERTAIN UNDERSTANDINGS AND AGREEMENTS
6.1 Conduct of the Business Pending the Effective Date.
Acquisition and Alpha each agree that, pending the Effective
Date, except as expressly contemplated or permitted by this
Agreement:
(a) Each shall carry on its respective businesses
substantially in the same manner as heretofore conducted and,
consistent with such operation, will comply with all
applicable legal and contractual obligations and maintain in
effect its proprietary rights, except as will not have a
Material Adverse Effect on Acquisition or Alpha, as
applicable, and will maintain all of its assets in customary
repair, ordinary wear and tear excepted, and each will not
make any change in any method of reporting income or expenses
for financial accounting or federal income tax purposes. Each
shall use its best efforts to preserve its organization
intact, to keep available the services of its current officers
and employees and to preserve the goodwill of its suppliers,
creditors and customers.
(b) Except as expressly contemplated or permitted
by this Agreement, each will not, without the prior written
consent of the other:
(i) except as permitted by this Section 6.1,
enter into any contract or commitment or engage in any
transaction (including, without limitation, investments
of any kind) or waive or release any material right
relating to or arising out of any existing contract,
arrangement or agreement;
(ii) enter into any joint venture, partnering
or collaboration agreement, whether or not in the
ordinary course of business;
(iii) sell or dispose of any assets or license
any patent or other proprietary rights, other than in the
ordinary course of business;
(iv) make any capital expenditures in an amount
in excess of $25,000, or enter into any leases which, in
the aggregate, would result in annual lease payments in
excess of $50,000;
(v) incur any indebtedness for borrowed money,
other than short-term indebtedness of either party which
shall be repaid prior to the Effective Time;
(vi) issue any additional shares of its capital
stock (except upon the conversion or exercise of out-
standing convertible securities, warrants and options),
any options, warrants or other rights to acquire shares
of capital stock or any security convertible into shares
of capital stock, or repurchase or redeem any shares of
its capital stock;
(vii) make or declare any dividend or
distribution with respect to any shares of its capital
stock, enter into any merger, reorganization,
recapitalization or other fundamental corporate change;
(viii) amend its Certificate of Incorporation
or Bylaws (including any change in the number of shares
of any class of its authorized capital stock);
(ix) issue or sell any bonds or other
securities;
(x) mortgage, pledge or subject to lien or
other encumbrances any material amount of its assets,
tangible or intangible;
(xi) cancel any debt or claim or waive any
right of material significance;
(xii) make or grant any wage increase (other
than normal periodic increases) to any of its employees
or negotiate any amendments to any existing collective
bargaining agreements or any new collective bargaining
agreements;
(xiii) do any act or omit to do any act which
will cause a material breach of any representation,
warranty or covenant contained in this Agreement or the
Schedules hereto;
(xiv) make any loan to or otherwise purchase
the debt of any Person, other than in the ordinary course
of business;
(xv) make any material change in the
relationship between it and any of its customers or
suppliers;
(xvi) incur any obligations or enter into any
transaction outside of the ordinary course of business
and, with respect to Alpha, materially in excess of the
amounts provided for the budget provided to Acquisition;
or
(xvii) enter into any contract, commitment or
agreement with respect to any of the foregoing.
(c) Notwithstanding the provisions of paragraphs (a)
and (b) of this Section 6.2, (i) subject to Acquisition's
consent, not to be unreasonably withheld, Alpha shall be
permitted to take all such actions as are reasonably necessary
to effect the New Alpha Investment and (ii) Acquisition shall
be permitted to take all such actions as are reasonably
necessary to effect the Equity Financing.
6.2 Access. (a) Between the date hereof and the
Effective Date, each party shall allow the authorized
representatives of the other full access, during normal
business hours and in such a manner not unduly disruptive to
its normal business activities, to any and all of its
premises, properties, contracts, books, records and
operations, and will cause its officers to furnish to the
other any and all financial, technical and operating data and
other information pertaining to its business as the other
shall from time to time reasonably request; provided, however,
the foregoing shall not require either party to permit any
access, or to disclose any information, which in the
reasonable judgment of such party would result in the
disclosure of any trade secrets of third parties, violate any
obligation of such party with respect to confidentiality or
constitute a waiver of any attorney-client or other privilege
of such party.
(b) In the event of the termination of this
Agreement, each party shall, and shall cause its
representatives to, deliver to the other all documents and
other written materials, including all copies thereof,
obtained pursuant to Section 6.2(a) or otherwise in connection
with the transactions contemplated by this Agreement, whether
obtained before or after the execution of this Agreement.
Each party agrees that it shall, and shall use its best
efforts to cause its representatives to, keep confidential,
and not use for any purpose other than in connection with the
transaction contemplated by this Agreement, for a period of
five years from the date this Agreement is terminated, all
Confidential Information obtained by it or its representatives
from the other party or its representative (including
Confidential Information obtained or furnished prior to the
date of this Agreement); provided, however, that these
obligations shall not apply to (i) any disclosures required by
applicable law or (ii) any information that (A) previously was
known to the receiving party, (B) was, at the time obtained,
generally known to the public, (C) subsequently became known
to the pubic through no fault of the receiving party or (D)
was disclosed to the receiving party by a third party not
bound to an obligation of confidentiality.
6.3 Interim Financial Statements of Acquisition and SEC
Reports of Alpha. (a) Within 30 days after the end of each
fiscal quarter after the date hereof, Acquisition will deliver
to Alpha an unaudited balance sheet of Acquisition as of the
end of such fiscal quarter, together with an unaudited
statement of operations and changes in stockholders' equity
for the fiscal quarter then ended. Such financial statements
shall be accompanied by a certificate of the President of
Acquisition stating that they fairly present the financial
position and results of operations of Acquisition as of or for
the periods indicated in accordance with generally accepted
accounting principles consistently applied, except as
otherwise indicated in such statements and except that such
financial statements need not contain statements of cash flows
or notes and may be subject to normal year-end adjustments.
(b) Prior to filing any Quarterly Report on Form
10-Q or Annual Report on Form 10-K with the SEC, Alpha shall
provide a draft to Acquisition and afford it an opportunity to
comment on any discussion therein of Acquisition or the
Merger. Promptly following the filing of such report, Alpha
shall deliver a copy thereof to Acquisition.
6.4 Registration Statement. Subject to the provisions
of Sections 6.7 and 6.15, and as soon as practicable after the
execution of this Agreement, Alpha shall (i) prepare and file
with the SEC a registration statement on Form S-4, or other
appropriate form (the "Registration Statement"), to register
the shares of Alpha Common Stock to be issued pursuant to the
Merger and shall use commercially reasonable efforts to cause
the SEC to declare the Registration Statement effective as
soon as practicable and (ii) use commercially reasonable
efforts to cause the shares of Common Stock to be issued in
the Merger to be registered or otherwise qualified for sale
under the securities laws of the States of the United States
in which the holders of Acquisition securities entitled to
vote on the Merger reside. Alpha shall afford Acquisition the
opportunity to review and comment on the Registration
Statement, and any amendments thereto, and on all state
securities law filings prior to the filing thereof.
6.5 Stockholder Meetings. (a) Promptly following the
effectiveness of the Registration Statement, Alpha shall call
a special meeting of its stockholders (the "Alpha Special
Meeting") to be held as soon as practicable thereafter (but in
any event not earlier than 30 business days following the date
that the notice of meeting is sent to stockholders of Alpha)
for the purpose of voting on the Merger and any other of
the matters that are being submitted to a vote of its
stockholders, and in connection therewith shall prepare and
mail to its stockholders an appropriate notice of such
meeting, the Proxy Statement and a form of proxy, all in
accordance with applicable law and Alpha's Restated
Certificate of Incorporation and Bylaws.
(b) Promptly following the effectiveness of the
Registration Statement, Acquisition shall call a special
meeting of its stockholders to be held as soon as practicable
thereafter (but in any event not earlier than 30 days
following the date that the notice of meeting is sent to the
stockholders of Acquisition) for the purpose of voting on the
Merger and any other of the matters that are being submitted
to a vote of its stockholders, and in connection therewith
shall prepare and mail to its stockholders an appropriate
notice of such meeting, the Proxy Statement and a form of
proxy, all in accordance with applicable law and Acquisition's
Certificate of Incorporation and Bylaws.
6.6 Recommendation of Merger. (a) Subject to the
provisions of Section 6.7 and subject to its fiduciary
obligations, the Board of Directors of Alpha shall unanimously
recommend to the stockholders of Alpha the adoption of this
Agreement and the approval of any other of the matters
contemplated hereby that are being submitted to a vote of its
stockholders, and shall use all reasonable efforts to obtain
such adoption and approval.
(b) Subject to its fiduciary obligations, the Board
of Directors of Acquisition shall unanimously recommend to the
stockholders of Acquisition the adoption of this Agreement and
the approval of any other of the matters contemplated hereby
that are being submitted to a vote of its stockholders, and
shall use all reasonable efforts to obtain such adoption and
approval.
6.7 Fairness Opinion. Alpha shall use commercially
reasonable efforts to obtain from an investment bank firm of
recognized standing, on or prior to December 15, 1995, a
written opinion stating that the Merger is fair to the
stockholders of Alpha from a financial point of view (the
"Fairness Opinion"). The receipt of the Fairness Opinion
shall be a condition to the obligations of Alpha under
Sections 6.4 and 6.6(a).
6.8 Employment Agreements. Prior to the Effective
Time, Alpha shall enter into employment agreements with
Michael Berman, Robert Lanham and David Crockford, each having
customary provisions reasonably satisfactory to Acquisition.
6.9 Alpha Stock Incentive Plan. At the Alpha Special
Meeting, Alpha shall submit to a vote of its stockholders the
adoption of a new stock incentive plan substantially in the
form attached hereto as Exhibit B, with the effect that, after
the Effective Time, Alpha shall be authorized to issue upon
the exercise of stock options, or as restricted shares or
other equity incentives, shares of Alpha Common Stock equal to
approximately 15% of the number of shares of Alpha Common
Stock outstanding immediately after the Effective Time.
6.10 Increase of Size of Alpha Board. Prior to the
Effective Time, the Board of Directors of Alpha shall adopt a
resolution fixing at seven the number of persons which shall
constitute the Board of Directors of Alpha as of the Effective
Time. Immediately prior to the Effective Time, Alpha shall
appoint to its Board of Directors, as additional directors,
Steve H. Kanzer and two additional directors designated by
Acquisition and reasonably acceptable to Alpha to serve until
the next Annual Meeting of Stockholders and until their
successors shall be duly elected and qualified or until their
earlier death, resignation or removal in accordance with the
Restated Certificate of Incorporation and By-Laws of Alpha.
6.11 Acquisition Proposals. Neither party shall, nor
shall it authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor,
attorney, accountant or other representative to, directly or
indirectly, (i) solicit or otherwise encourage any inquiry or
the making of any proposal which constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal, or
(ii) except to the extent permitted by the last sentence of
this Section 6.11, engage in discussions or negotiations
concerning, or provide any non-public information to, any
Person relating to any Acquisition Proposal. Each party
immediately shall cease and cause to be terminated any ongoing
activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
Except to the extent permitted by the last sentence of this
Section 6.11, Alpha will not amend the Rights Agreement, make
any determination relating thereto or take any other action in
connection therewith which would result in any Person not
being an Acquiring Person under the Rights Agreement or in any
transaction not being the cause of any event described in
Section 11 of the Rights Agreement or the occurrence of a
Distribution Date under the Rights Agreement. Each party
shall immediately notify the other of any negotiations,
requests for non-public information or discussions relating to
an Acquisition Proposal and will keep the other fully informed
of the status and details of any Acquisition Proposal. As
used in this Agreement, "Acquisition Proposal" means any
proposal or offer for a merger or other business combination
involving such party or any proposal or offer to acquire an
equity interest in, or a material portion of the assets of,
such party other than the transactions contemplated by this
Agreement. Notwithstanding anything in this Section 6.11 to
the contrary, Alpha or Acquisition, to the extent that the
Board of Directors of such party determines in good faith with
the written advice of outside counsel that a failure to do so
could reasonably be expected to result in a breach of its
fiduciary duties under applicable law, may participate in
discussions or negotiations with, furnish information to,
afford access to the properties, books and records of such
party to any Person, or amend the Rights Agreement or taken
any other action thereunder in connection with a possible
Acquisition Proposal with respect to such party by such
Person.
6.12 Acquisition Affiliates. Prior to the Effective
Time, Acquisition shall provide to Alpha a list of the names
of its "affiliates," as such term is defined for purposes of
Rule 145 under the Act. Acquisition shall use its best
efforts to obtain from such "affiliates", prior to the
Effective Time, a letter in customary form regarding the
disposition of shares of Alpha Common Stock following the
Effective Time.
6.13 New Technology Development. Acquisition shall use
commercially reasonable efforts to acquire from the National
Institutes of Health (the "NIH") a worldwide license to the
Technology (the "Technology License") and to enter into a
Cooperative Research and Development Agreement with the NIH to
fund further clinical development of the Technology as a
treatment for psoriasis and anterior uveitis (the "CRADA"), in
each case as soon as practicable following the date hereof and
on terms reasonably satisfactory to Alpha. Prior to the
Effective Time, Acquisition shall pay, when due, all initial
license payments, milestone payments and royalties payable
under the Technology License and provide all funding required
under the CRADA.
6.14 Bridge Financing. To the extent that Alpha does
not complete the New Alpha Investment permitted by Section
6.1(c) before December 1, 1995, then to such extent, if
requested by Alpha, Acquisition shall provide bridge financing
to Alpha of up to $2.0 million, in accordance with the
schedule and terms described in Schedule 6.14. The obligation
of Acquisition under this Section 6.14 shall be contingent
upon Acquisition raising sufficient funds in the Equity
Financing to meet the funding schedule set forth in Schedule
6.14.
6.15 Equity Financing. As soon as practicable
following the date hereof, Acquisition shall commence and use
commercially reasonable efforts to complete the Equity
Financing. It shall be a condition to the obligation of Alpha
to file the Registration Statement that Acquisition has
satisfied the Minimum Condition of the Equity Financing.
Acquisition represents and warrants to Alpha that the Equity
Financing will be effected in compliance with the Act, the
1934 Act, and all other applicable requirements of law.
6.16 Mutual Cooperation. Each of Alpha and Acquisition
shall use all reasonable efforts to cause the fulfillment of
the conditions to its obligations hereunder, and to obtain as
promptly as possible all consents, authorizations, orders or
approvals of any third party, whether private or governmental,
required in connection with the transactions contemplated by
this Agreement. Each shall coordinate and cooperate with the
other in exchanging such information and providing such
reasonable assistance as the other may request in connection
with the foregoing.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF EACH PARTY
The obligation of each party to effect the Merger shall
be subject to the fulfillment, on or prior to the Closing
Date, of the following conditions:
7.1 Approval of Merger. This Agreement shall have been
approved by the affirmative vote of holders of Acquisition
Common Stock and Alpha Common Stock required by the Delaware
General Corporation Law.
7.2 No Injunction or Legal Bar. No temporary
restraining order, preliminary or permanent injunction or
other order by any federal or state court preventing
consummation of the Merger shall have been issued and be
continuing in effect, and the Merger and the other
transactions contemplated hereby shall not be prohibited under
any applicable federal or state law or regulation.
7.3 No Action or Proceeding. No claim, action, suit,
order or other proceeding shall be pending or threatened by
any Person before any court, agency or administrative body
which in the reasonable judgment of Alpha or Acquisition
creates a reasonable possibility that the consummation of the
Merger or any of the transactions contemplated hereby will be
restrained, enjoined or otherwise prevented or will result in
damages or other relief that would have a Material Adverse
effect on Alpha after the Merger.
7.4 Consents and Approvals. There shall have been
obtained all permits, approvals and consents of any
governmental body or agency of any jurisdiction required for
the consummation of the Merger, except as will not have a
Material Adverse Effect on Alpha after the Merger.
7.5 Registration Statement and Proxy Statement. The
Registration Statement shall have become effective under the
Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and the Proxy Statement
shall not be subject to any proceedings commenced or
threatened by the SEC.
7.6 Appraisal Rights. The number of shares of Alpha
Common Stock as to which dissenters' rights of appraisal have
been asserted and not withdrawn shall not exceed 5% of the
number of shares of Alpha Common Stock outstanding immediately
prior to the Effective Time.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ALPHA
The obligation of Alpha to effect the Merger shall be
subject to the fulfillment, at or prior to the Closing Date,
of the following additional conditions, except as may be
waived by Alpha pursuant to Section 11.9:
8.1 Accuracy of Representations and Warranties. The
representations and warranties of Acquisition set forth in
Article IV shall (i) be true and correct in all material
respects as of the date hereof and (ii) shall be true and
correct as of the Closing Date (except to the extent that a
representation or warranty speaks only as of an earlier date
and except for changes resulting from actions contemplated or
permitted by this Agreement); provided, however, that any
inaccuracy of a representation or warranty as of the Effective
Date shall not result in the failure to satisfy this Section
8.1 unless such inaccuracy, individually or in the aggregate
with such other inaccuracies, constitutes facts or
circumstances having a Material Adverse Effect on Alpha or
Acquisition.
8.2 Acquisition's Performance. Acquisition shall have
performed in all material respects all agreements and
covenants that it is obligated to perform on or prior to the
Closing Date.
8.3 Closing Certificate. Alpha shall have received a
certificate signed by the President and Chief Executive
Officer of Acquisition, dated the Closing Date, to the effect
that the conditions of Sections 8.1 and 8.2 have been
satisfied.
8.4 Opinion of Company Counsel. Alpha shall have been
furnished with an opinion of Bachner, Tally, Polovoy & Misher,
counsel to Acquisition, dated the Closing Date, substantially
in the form attached hereto as Exhibit C.
8.5 Fairness Opinion. Alpha shall have received the
Fairness Opinion contemplated by Section 6.7.
8.6 Equity Financing. Acquisition shall have satisfied
the Minimum Condition of the Equity Financing; provided,
however, that in the event the condition of this Section 8.6
is waived by Alpha, the shares of Alpha Common Stock issued
pursuant to Section 3.1(b) shall be based on the Adjusted
Acquisition Exchange Ratio.
8.7 Technology License. Acquisition shall have entered
into the Technology License and the CRADA on terms reasonably
satisfactory to Alpha.
8.8 Opinion of Tax Counsel. Alpha shall have received
an opinion, dated the Closing Date, of Covington & Burling,
substantially to the effect that for federal income tax
purposes (i) Alpha will not recognize gain or loss as a result
of the Merger, (ii) the stockholders of Alpha (except with
respect to cash received in lieu of fractional interests or
upon exercise of dissenters' rights of appraisal pursuant to
the Delaware General Corporation Law) will not recognize gain
or loss as the result of the Merger, (iii) except for such
adjustments as are necessary to give effect to fractional
shares, the basis of the shares of Alpha Common Stock held
Alpha stockholders after the Reverse Stock Split will be the
same as the corresponding shares of Alpha Common Stock held by
such stockholders before the Reverse Stock Split, (iv) the
holding period of the Alpha Common Stock held after the
Reverse Stock Split will include the period during which the
corresponding shares of Alpha Common Stock were held prior to
the Reverse Stock Split. In issuing such opinion, Covington &
Burling may require and rely upon appropriate and customary
representations of the officers or representatives of Alpha.]
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF ACQUISITION
The obligation of Acquisition to effect the Merger shall
be subject to the fulfillment, at or prior to the Closing
Date, of the following additional conditions, except as may be
waived by Acquisition pursuant to Section 11.9.
9.1 Accuracy of Representations and Warranties. The
representations and warranties of Alpha set forth in Article V
(i) shall be true and correct in all material respects as of
the date hereof and (ii) shall be true and correct as of the
Closing Date (except to the extent that a representation or
warranty speaks only as of an earlier date and except for
changes resulting from actions contemplated or permitted by
this Agreement); provided, however, that any inaccuracy of a
representation or warranty as of the Effective Date shall not
result in the failure to satisfy this Section 9.1 unless such
inaccuracy, individually or in the aggregate with such other
inaccuracies, constitutes facts or circumstances having a
Material Adverse Effect on Acquisition or Alpha.
9.2 Alpha's Performance. Alpha shall have performed in
all material respects all agreements and covenants that it is
obligated to perform on or prior to the Closing Date.
9.3 Closing Certificate. Acquisition shall have
received a certificate signed by the President and Chief
Executive Officer of Alpha, dated the Closing Date, to the
effect that the conditions set forth in Sections 9.1 and 9.2
have been satisfied.
9.4 Opinion of Alpha Counsel. Acquisition shall have
been furnished with an opinion of Covington & Burling, counsel
to Alpha, dated the Closing Date, substantially in the form
attached hereto as Exhibit D, including an opinion
substantially to the effect that the execution, delivery and
performance of this Agreement by the parties hereto (i) has
not resulted and will not result in Acquisition or any of its
Affiliates or Associates (as such terms are defined in the
Rights Agreement) being an Acquiring Person under the Rights
Agreement, (ii) has not been and will not be the cause of any
event described in Section 11 of the Rights Agreement or in
the occurrence of a Distribution Date under the Rights
Agreement, (iii) has not entitled or permitted and will not
entitle or permit the holders of the Rights to exercise the
Rights, (iv) no stockholder of Acquisition immediately prior
to the Merger shall become an Acquiring Person after the
Merger, without regard to the number of shares of Alpha Common
Stock acquired in the Merger or thereafter by such Acquisition
stockholder (or any of its Affiliates or Associates) and (v)
that the amendment authorized by the Board of Directors of
Alpha on November 9, 1995, to the Rights Agreement has been
duly and validly authorized, executed and delivered by the
parties to the Rights Agreement.
9.5 Certain Litigation. Prior to the Effective Date,
(i) in the litigation captioned In Re Alpha 1 Biomedicals,
Inc. Securities Litigation, Civil Action No. 94-1138, the
United States District Court for the District of Maryland
shall have entered a Final Judgment and Order of Dismissal (as
such term is used in the Stipulation of Settlement, dated
September 12, 1995), approving the class action settlement
pursuant to Rule 23(e) of the Federal Rules of Civil
Procedure, (ii) no appellate court of appropriate jurisdiction
shall have entered an order vacating or reversing such
approval, and (iii) Alpha shall not have been notified that
either stockholders owning or having owned more than 100,000
shares of Alpha Common Stock in the aggregate have, or any
single stockholder owning or having owned more than 25,000
shares of Alpha Common Stock has, made a request for exclusion
from the class action settlement.
9.6 Capitalization of Alpha. The shares of Alpha
Common Stock outstanding, or reserved for issuance upon the
exercise of outstanding options and warrants, immediately
prior to the Effective Time (excluding any shares of Common
Stock issued, or reserved for issuance upon the exercise of
the warrants issued in connection with the New Alpha
Investment) shall not exceed 12.8 million.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at
any time prior to the Effective Date as follows:
(a) by mutual agreement of Alpha and Acquisition;
(b) by Alpha or Acquisition, if the Effective Time
shall not have occurred on or before June 30, 1996; provided,
however, that in the event that by such date Alpha has not
held the Alpha Special Meeting to approve or disapprove the
Merger, Acquisition may unilaterally extend the period until a
meeting is held at which the holders of a majority of the
outstanding shares of Alpha Common Stock either approve or
disapprove the Merger;
(c) by Alpha, if it is not in material breach of
its obligations under this Agreement and if Acquisition
(i) shall have defaulted in any material respect in the
performance of any obligation under this Agreement and such
default shall not have been remedied within 20 days after
receipt of notice thereof by Acquisition in writing from Alpha
or (ii) any representation or warranty of Acquisition made
herein for the benefit of Alpha, or in any certificate,
schedule or document furnished to Alpha pursuant to this
Agreement was untrue as of the date made, except as will not
have a Material Adverse Effect on Alpha after the Merger;
(d) by Acquisition, if it is not in material breach
of its obligations under this Agreement and if Alpha (i) shall
have defaulted in any material respect in the performance of
any obligation under this Agreement and such default shall not
have been remedied within 20 days after receipt of notice
thereof by Alpha in writing from Acquisition or (ii) if any
representation or warranty of Alpha made herein for the
benefit of Acquisition or in any certificate, schedule or
document furnished to Acquisition pursuant to this Agreement
was untrue as of the date made, except as will not have a
Material Adverse Effect on Alpha after the Merger;
(e) by Alpha or Acquisition at any time if the
Fairness Opinion contemplated by Section 6.7 shall not have
been obtained on or prior to January 15, 1996;
(f) by Alpha, if as the result of a tender offer or
any written offer or proposal with respect to a merger, sale
of a material portion of its assets or other business
combination (in each case, a "Business Combination") by a
Person other than Acquisition or any of its affiliates, the
Board of Directors of Alpha determines in good faith that the
fiduciary obligations of the directors under applicable law
requires that such tender offer or other written offer or
proposal be accepted;
(g) by Alpha or Acquisition, if (i) at the Alpha
Special Meeting, or any adjournment thereof, the stockholders
of Alpha fail to approve the Merger, or (ii) at the
Acquisition Special Meeting, or any adjournment thereof, the
stockholders of Acquisition fail to approve the Merger; or
(h) by Alpha, if (i) Acquisition fails to deliver
to Alpha the opinion on the Acquisition Financial Statements
contemplated by Section 4.4 on or before December 7, 1995, or
(ii) such financial statements or the opinion thereon
disclosed any information not satisfactory to Alpha.
10.2 Effect or Termination. In the event of the
termination of this Agreement pursuant to Section 10.1, this
Agreement shall become void and of no further force or effect,
except that (i) in the event that the Agreement is terminated
pursuant to Section 10.1(c) or 10.1(d), the other party shall
reimburse the terminating party for all out-of-pocket fees and
expenses incurred by the terminating party in connection with
this Agreement, including without limitation the fees
disbursements of all legal, accounting, financial and other
professional advisors ("Out-of-Pocket Expenses"), (ii) if
Alpha (other than under circumstances that result in a
termination under Section 10.1(f)) withdraws its
recommendation that its stockholders approve the Merger and at
the Alpha Special Meeting, or any adjournment thereof, the
stockholders of Alpha fail to approve the Merger, or if
Acquisition withdraws its recommendation that its stockholders
approve the Merger and at the Acquisition Special Meeting, or
any adjournment thereof, the stockholders of Acquisition fail
to approve the Merger, then the other party, upon termination
of this Agreement pursuant to Section 10.1(g), shall be
reimbursed for Out-of-Pocket Expenses, and (iii) in the event
that this Agreement is terminated pursuant to Section 10.1(f),
Alpha shall pay to Acquisition, upon the closing of such
Business Combination, a termination fee of $400,000. The
provisions of this Sections 10.2 and Sections 6.2(b), 11.2,
11.3, 11.4, 11.5, 11.8, 11.9 and 11.10 and the Confidentiality
Agreement shall survive the termination of this Agreement.
The termination of this Agreement pursuant to Section 10.1
shall not relieve either party of any liability it may have
arising from any breach by it of any provision of this
Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Representations and Warranties Not to Survive. The
representations and warranties contained in this Agreement
shall not survive the Effective Time.
11.2 Expenses. In the event the Merger is consummated,
all costs and expenses incurred by Acquisition in connection
with this Agreement and the transactions contemplated hereby
shall be paid by Alpha. In the event the Merger is not
consummated, each party shall bear its own costs and expenses.
11.3 Notices. All notices, requests, demands and other
communications required or permitted to be given under this
Agreement or with respect hereto shall be in writing and may
be given or made by (i) personal service, (ii) first class
United States mail, postage prepaid, (iii) overnight delivery
service or (iv) telecopy, if confirmed promptly by any of the
methods specified in clauses (i) through (iii) of this
sentence, addressed as set forth below, and shall be duly
given or made when received:
If to Alpha:
Alpha 1 Biomedicals, Inc.
Two Democracy Center
6903 Rockledge Drive
Suite 1200
Bethesda, MD 20817
Attention: Michael L. Berman, Ph.D.
with a copy to:
Michael Lefever, Esq.
Covington & Burling
1201 Pennsylvania Ave., N.W.
Washington, DC 20004
If to Alpha 1 Acquisition Corp.:
Alpha 1 Acquisition Corp. Inc.
c/o The Castle Group Ltd.
375 Park Avenue
Suite 1501
New York, New York 10152
Attention: Steve H. Kanzer
with a copy to:
Jill Cohen, Esq.
Bachner, Tally, Polevoy & Misher
380 Madison Ave.
New York, New York 10017
Either party may change its address for such communications by
giving notice thereof to the other party in conformity with
this Section 11.3.
11.4 Assignability and Parties in Interest. This
Agreement shall not be assignable without the prior consent of
the other party. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their successors
and permitted assigns. Nothing in this Agreement is intended
to confer, expressly or by implication, upon any other Person
any rights or remedies under or by reason of this Agreement.
11.5 Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with, the
internal laws of the State of Delaware (without giving effect
to the conflicts of law provisions thereof).
11.6 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original and which together shall constitute a single
instrument.
11.7 Publicity. Acquisition and Alpha agree that the
timing and content of any press release or other public
announcement with respect to this Agreement and the
transactions contemplated hereby shall be subject to mutual
agreement of the parties hereto to the maximum extent feasible
and consistent with their respective legal obligations to
disseminate material information to their stockholders and the
public. The parties further agree that until the Technology
License and the CRADA executed between Acquisition and NIH,
Acquisition and Alpha agree to use their best efforts to hold
the terms thereof in confidence.
11.8 Entire Agreement. This Agreement and the
Schedules, and any documents delivered pursuant hereto,
contain the entire understanding and agreement between the
parties hereto with respect to the transactions contemplated
hereby and supersede all prior and contemporaneous agreements
or understandings, express or implied, oral or written,
between the parties with respect to the subject matter hereof.
11.9 Modifications, Amendments and Waivers.
(a) Subject to the limitations of Section 251(d)
of the Delaware General Corporation Law, at any time prior to
the Effective Date, and notwithstanding that the stockholders
of Acquisition and Alpha shall have approved this Agreement,
the Alpha and Acquisition may mutually agree to terminate,
amend, modify or supplement this Agreement in any or all
respects.
(b) At any time prior to the Effective Date, the
parties hereto may, by written agreement (i) extend the time
for the performance of any of the obligations or other acts of
the parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained in this Agreement or
in any Schedule or document delivered pursuant hereto and
(iii) waive compliance with any of the covenants or agreements
contained in this Agreement.
(c) Any written instrument or agreement referred
to in this Section 11.9 shall be validly and sufficiently
authorized for the purposes of this Agreement if signed on
behalf of Acquisition and Alpha by persons authorized to sign
this Agreement.
11.10 Severability. If any provisions of this
Agreement, or the application thereof, shall for any reason or
to any extent be held invalid or unenforceable as to any
Person or under any circumstances, (i) the remainder of this
Agreement and application of such provision to other Persons
and in other circumstances shall continue in full force and
effect and in no way be affected, impaired or invalidated to
the fullest extent permitted by law and (ii) the parties shall
negotiate in good faith to replace any provision so held
invalid or unenforceable with a valid provision that is as
similar as possible in substance to the invalid or
unenforceable provision.
IN WITNESS WHEREOF, Alpha and Acquisition each have
caused this Agreement to be executed by their respective duly
authorized officers as of the date first above written.
ALPHA 1 BIOMEDICALS, INC.
By: /s/ Michael L. Berman
Michael L. Berman, Ph.D.
President and Chief
Executive Officer
Attest: /s/ Robert J. Lanham
Robert J. Lanham
Secretary
ALPHA 1 ACQUISITION CORP.
By: /s/ Steve H. Kanzer
Steve H. Kanzer
President and Chief
Executive Officer
Attest: /s/ Steve H. Kanzer
Secretary
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION OF ALPHA
EXHIBIT B
ALPHA STOCK INCENTIVE PLAN
EXHIBIT C
FORM OF OPINION OF BACHNER,
TALLY, POLEVOY & MISHER
EXHIBIT D
FORM OF OPINION OF COVINGTON & BURLING
Exhibit (c)(2)
AGREEMENT
This Agreement, dated as of November 13, 1995, is
entered into between Alpha 1 Biomedicals, Inc., a Delaware
corporation ("Alpha"), and the RAQ, LLC, a Delaware limited
liability company ("RAQ").
WHEREAS, on the date hereof, Alpha and Alpha 1
Acquisition Corp., a Delaware corporation ("Acquisition"),
have entered into an Agreement of Merger (the "Merger
Agreement"), pursuant to which, subject to the satisfaction of
the terms and conditions thereof, Acquisition will be merged
into Alpha (the "Merger");
WHEREAS, Lindsay Rosenwald, the sole member of RAQ,
also is the controlling stockholder of The Castle Group, Ltd.,
a New York corporation ("Castle");
WHEREAS, RAQ is the principal stockholder of
Acquisition;
WHEREAS, each of the stockholders of Acquisition on
the date hereof, as listed on Schedule 4.2(b) of the Merger
Agreement, is either an Affiliate, an employee, or a relative
of an employee of Castle; and
WHEREAS, Alpha and RAQ wish to enter into certain
arrangements pertaining to the corporate governance of Alpha
subsequent to the Merger.
NOW, THEREFORE, in consideration of the foregoing
premises and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement,
capitalized terms not otherwise defined have the following
meanings:
(a) "Affiliate" has the meaning ascribed to
such term in Rule 12b-2 under the Exchange Act.
(b) "Associate" has the meaning ascribed to
such term in Rule 12b-2 under the Exchange Act.
(c) "RAQ Related Party" means any Affiliate or
employee of RAQ (and any Associate of such Affiliate or
employee).
(d) "Continuing Directors" means the (i)
individuals who on the date hereof are directors of Alpha and
(ii) any person who becomes a director of Alpha subsequent to
the date hereof (other than the directors contemplated by
Section 6.10 of the Merger Agreement) whose nomination for
election or appointment is approved by a vote of at least a
majority of the then Continuing Directors.
(e) "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
2. Voting Agreement. RAQ hereby agrees that at
the 1996 Annual Meeting of Alpha, if held before June 30,
1996, it (i) will vote all shares of common stock, par value
$.001 per share ("Alpha Common Stock"), owned by it, and (ii)
will use its best efforts to cause all RAQ Related Parties to
vote any shares of Alpha Common Stock owned by them, for the
election as directors of Alpha of (1) the four current
directors of Alpha (or any replacements for any of them
nominated by the Board of Directors of Alpha) and (2) the
three additional directors contemplated by Section 6.10 of the
Merger Agreement.
3. Business Combination Transactions.
(a) For a period of two years following the
closing of the Merger, except as permitted by paragraph (b),
RAQ will not initiate, and will use its best efforts to
prevent any RAQ Related Party from initiating (or, in either
case, causing or encouraging any other person who is a member
of a group within the meaning of Rule 13d-5 under the Exchange
Act of which RAQ or any RAQ Related Party is a member to
initiate), (i) any tender offer or exchange offer with respect
to any outstanding shares of Alpha Common Stock, (ii) any
merger, consolidation, or other business combination
transaction between Alpha and RAQ or any affiliate of RAQ, or
(iii) any transfer of a material amount of assets between
Alpha and RAQ or any affiliates of RAQ.
(b) The provisions of paragraph (a) shall not
apply to (i) any transaction that is approved by a majority of
the Continuing Directors or (ii) if there are no Continuing
Directors, by a majority vote of the stockholders of Alpha
other than RAQ and all RAQ Related Parties.
IN WITNESS WHEREOF, Alpha and RAQ each have caused
this Agreement to be duly executed as of the date first above
written.
ALPHA 1 BIOMEDICALS, INC.
By:___________________________
Michael Berman, President
and Chief Executive Officer
RAQ, LLP
By:___________________________
Lindsey Rosenwald
Chief Executive
Exhibit (c)(3)
FIRST AMENDMENT
To
RIGHTS AGREEMENT
This First Amendment, dated as of November 9,
1995, amends the Rights Agreement, dated as of April 29, 1994 (the
"Rights Agreement"), between Alpha 1 Biomedicals, Inc., a
Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights
Agent").
WHEREAS, the Company and Alpha 1 Acquisition
Corp., a Delaware corporation ("Acquisition"), intend to enter into
an Agreement of Merger, dated as of November 13, 1995 (the
"Merger Agreement"), pursuant to which, on the terms and
conditions set forth therein, Acquisition will be merged
with and into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has
determined that the Merger is in the best interests of the
Company and its stockholders; and
WHEREAS, the Board of Directors, pursuant to
Section 26 of the Rights Agreement, wishes, in connection with the
execution and delivery of the Merger Agreement, to amend the
Rights Agreement to exclude certain persons and certain
transactions from the application of the Rights Agreement.
NOW, THEREFORE, in consideration of these
premises, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. The term "Acquiring Person" as set forth in Section
1 of the Rights Agreement is hereby amended to add at the
end thereof the following sentence:
Notwithstanding the foregoing, (i) neither
Alpha 1 Acquisition Corp. ("Acquisition")
nor any of its Affiliates or Associates
shall become an Acquiring Person by reason
of the execution, delivery or performance
of the Agreement of Merger, dated as of
November 10, 1995, between the Company and
Acquisition, as it may be amended from
time to time (the "Merger Agreement"), and
(ii) after the consummation of the merger
contemplated by the Merger Agreement (the
"Merger") no Person, alone or together
with all Affiliates and Associates of such
Person, who was a stockholder of
Acquisition immediately prior to the
Merger shall be an Acquiring Person,
without regard to the number of Common
Shares acquired in the Merger or
thereafter by such Person or the
Affiliates and Associates of such Person.
2. Notwithstanding any provision of the Rights
Agreement, the execution, delivery and performance of the
Merger Agreement by the parties thereto shall not give rise
to a Distribution Date or cause the Rights to become
exercisable.
3. The Company shall indemnify and defend the Rights
Agent from, and hold it harmless against, any loss,
liability, claim, damage, cost or expense incurred in connection with
or arising out of any claim, action or threatened action
pertaining to this First Amendment.
4. This First Amendment shall be governed by and
construed in accordance with the laws of the State of
Delaware. Except as amended by this First Amendment, the
terms, covenants, conditions and agreements of the Rights
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused
this First Amendment to be duly executed by a duly
authorized officer as of the day and year first above written.
ATTEST: ALPHA 1 BIOMEDICALS, INC.
By: /s/ Robert J. Lanham
Name: Robert J. Lanham
Title: Secretary
By: /s/ Michael Berman
Name: Michael Berman
Title: President and
Chief Executive
Officer
ATTEST: AMERICAN STOCK TRANSFER
& TRUST COMPANY,
Rights Agent
By:
Name:
Title
Exhibit (c)(4)
FOR IMMEDIATE RELEASE
CONTACT: Michael L. Berman, Ph.D. R.J. Lanham
President and Vice President and
Chief Executive Officer Chief Financial
Officer
301-564-4400 301-564-4400
ALPHA 1 BIOMEDICALS
SIGNS DEFINITIVE MERGER AGREEMENT
Bethesda, Maryland, November 20, 1995 -- Alpha 1 Biomedicals, Inc.
(OTC Bulletin Board:ALBM) ("Alpha 1") today announced the signing of
a definitive merger agreement with Alpha 1 Acquisition Corporation
(AAC), a Company formed by the Castle Group, Ltd.
The merger, if completed, would bring cash resources and new
technology into Alpha 1's existing organization. Such resources
would augment Alpha 1's current cash position which will enable the
Company to continue research studies on its Thymosin beta 4
technology as currently planned, and provide resources to conduct
clinical studies involving the new technology to be acquired.
The merger is contingent upon, among other things, the completion by
AAC of an equity financing in an amount up to $10 million, but not
less than $5 million, the acquisition by AAC of a license to a
technology developed at the National Institutes of Health, and the
approval of the merger by shareholders of Alpha 1 and AAC.
The number of shares of Alpha 1 common stock issued in the merger
will depend on the level of financing realized by AAC. If only the
minimum $5 million in gross proceeds are raised, AAC shareholders
before the merger will hold 73% of the outstanding Alpha 1 common
stock after the merger. If the maximum of $10 million is raised, AAC
shareholders will own 81% of the outstanding Alpha 1 common stock
after the merger. It is anticipated that a special meeting of the
stockholders of Alpha 1 to vote on the transaction will be held
during the first quarter of 1996. If approved, the closing would
occur shortly thereafter.
Alpha 1 continues to direct its efforts toward the development of
Thymosin beta 4, a novel actin-sequestering peptide, which could have
applications in the treatment of cystic fibrosis, sepsis, adult
respiratory distress syndrome, chronic bronchitis and asthma. In
July 1995, Alpha 1 held a pre-IND (Investigational New Drug) meeting
with the FDA to present and discuss the development plan for Thymosin
beta 4 in the treatment of cystic fibrosis. The company is presently
conducting pre-clinical toxicology studies of Thymosin beta 4 in
animals in support of its anticipated IND application and plans to
begin a Phase I/II clinical trial in cystic fibrosis patients by July
1996.
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