SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15070
Alpha 1 Biomedicals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-1253406
(State or other jurisdiction of (I.R.S. Employer
incorporation ororganization) Identification Number))
6707 Democracy Boulevard
Suite 111
Bethesda, MD 20817-1129
(Address of principal executive offices, including zip code)
(301) 564-4400
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of April 30, 1996, 9,102,429 shares of the registrant's
common stock, par value $.001 per share, were issued and
outstanding.
ALPHA 1 BIOMEDICALS, INC.
FORM 10-Q
QUARTER ENDED March 31, 1996
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at March 31, 1996
(unaudited) and December 31, 1995
(audited) 3
Statements of Operations for the three-
months period ended March 31, 1996
and 1995 (unaudited) 4
Statements of Cash Flows for the three-
month period ended March 31, 1996 and
1995 (unaudited) 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit (a) (1) Sublease Agreement between Alpha 1
Biomedicals, Inc. and Snyder
Communications, L.P. 14-17
Exhibit (a) (2) Sublease Agreement between Alpha 1
Biomedicals, Inc.
and Niceco, Inc. 18-21
Part I. Financial Information
ALPHA 1 BIOMEDICALS, INC.
BALANCE SHEETS
March 31, December 31,
1996 1995
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 291,994 $ 546,797
Short term investments - 284,538
Prepaid insurance 108,692 130,951
Other current assets 13,806 15,753
Total current assets 414,492 978,039
Fixed assets, net 53,120 59,530
Proprietary rights, net - 64,672
Due from related party 72,770 80,596
Other assets 14,610 14,610
Total assets $ 554,992 $ 1,197,447
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 581,509 $ 258,051
Accrued expenses 1,080,450 976,600
Total current liabilities 1,661,959 1,234,651
Long-term liabilities - -
Total liabilities 1,661,959 1,234,651
Stockholders' equity
Preferred stock, $.001
par value per share,
1,000,000 authorized;
no shares issued - -
Common stock, par value
$.001 per share,
20,000,000 shares
authorized; 8,977,429 issued
and outstanding 8,977 8,977
Additional paid-in capital 35,578,289 35,578,289
Accumulated deficit (36,694,233) (35,624,470)
Total stockholders' equity (1,106,967) (37,204)
Total liabilities
and stockholders' equity $ 554,992 $ 1,197,447
ALPHA 1 BIOMEDICALS, INC.
STATEMENTS OF OPERATIONS
Revenues
Product sales, royalties and
consultin g $ 8,288 $ 11,042
Total Revenues 8,288 11,042
Expenses
Research and product development 787,528 349,567
General and administrative 260,094 565,718
Total expenses 1,047,622 915,285
Operating loss (1,039,334) (904,243)
Other income 3,599 81,364
Equity in loss of VTI - (76,200)
Loss on sale of VTI (34,028) -
Net loss $ (1,069,763) $ (899,079)
Net loss per common share $ (0.12) $ (0.10)
Weighted average number of
common shares outstanding 8,977,429 8,977,429
ALPHA 1 BIOMEDICALS, INC.
STATEMENTS OF CASH FLOWS
Three Months ended
March 31,
1996 1995
(unaudited)
Cash flows from operating activities:
Net loss $ (1,069,763) $ 899,079)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 6,410 26,444
Amortization 64,672 64,672
Equity in losses of VTI - 76,200
Litigation settlement in common stock (60,000) -
Loss on disposal/writedown of fixed assets - 32,703
Changes in operating assets and
liabilities:
Decrease in prepaid insurance 22,259 78,738
Decrease in other current assets 1,947 154,137
Decrease in due from related party 7,826 55,263
Decrease in other assets - 67,300
Increase (decrease) in accounts payable 323,458 (124,441)
Increase (decrease) in accrued expenses 163,850 (200,537)
Net cash used in operating activities (539,341) (668,600)
Cash flows from investing activities:
Sale of short term investing activities:
Sale of short term investments, net 284,538 1,759,927
Advances to VTI - (76,200)
Proceeds from the sale of fixed assets - 120,500
Net cash used in investing activities 284,538 1,804,227
Cash flows from financing activities:
Proceeds from issuance of common
stock/warrants - -
Net cash provided by financing activities - -
Net (decrease) increase in cash and cash
equivalents (254,803) 1,135,627
Cash and cash equivalents at beginning
of period 546,797 13,705
Cash and cash equivalents at end
of period $ 291,994 $ 1,149,332
ALPHA 1 BIOMEDICALS, INC.
NOTES TO FINANCIAL STATEMENTS
Alpha 1 Biomedicals, Inc. (the "Company"), a Delaware
corporation, was incorporated in 1982. The Company operates
predominantly in a single industry segment, the biotechnology
industry, which consists of researching and developing new
pharmaceutical products for the treatment of diseases or
conditions that arise as a result of immune system disorders,
including chronic viral infections, cancer and autoimmune disease.
In December 1994, the Company reached a decision to focus its
development efforts on Thymosin beta 4, a chemically synthesized
copy of a natural hormone-like peptide that has shown promise in
animal testing and laboratory studies as a treatment for cystic
fibrosis.
The Company, in February 1996, took action to delay its
development program for Thymosin beta 4. No other products of the
Company have received regulatory approval. The Company has not
generated significant revenues from operations and does not
anticipate generating product revenues for the foreseeable future.
The Company will require substantial funding in order to conduct
further research and development activities and to manufacture and
market the products which the Company intends to develop.
Management plans include strategic alliances or other partnership
arrangements with entities interested in and with resources to
develop Thymosin beta 4, or other business transactions which
would allow the Company to generate resources to assure
continuation of the Company's operations. Management believes
that significant revenue may be generated under a license
agreement with SciClone Pharmaceuticals, Inc. ("SciClone"), which
provides for the Company to receive royalty revenues from the sale
of SciClone's product, Zadaxin, Thymosin alpha 1. However,
existing financial resources will be exhausted before any such
revenues are realized.
Cash and short-term investment balances at March 31, 1996
total $291,994. This amount, based on the Company's commitments,
is insufficient to satisfy current requirements. As of February
20, 1996, the board of directors approved a plan which provides
for termination of all ongoing research and development
activities, a reduction of leased space, a reduction of certain
salaries and the severance of administrative staff. The Company
has entered into letter agreements or is negotiating with major
vendors regarding the deferral of approximately $1,500,000 in
payments that are due in exchange for a commitment to the vendors
that payments will be made by the Company from future royalties to
be received under the SciClone license agreement until the full
amount of the liabilities have been liquidated. In the event that
substantial funding is not acquired, management estimates that the
Company's financial resources will fund operations, on a
substantially scaled-down basis, to the third quarter of 1996. If
additional financing cannot be obtained prior to that time, the
Company will likely be forced to discontinue operations.
Should the Company obtain additional funding, other factors
relating to competition, dependence on third parties, uncertainty
regarding patents, protection of proprietary rights, manufacturing
of peptides and technology obsolescence could have a significant
impact on the Company and its operations.
Financial Statements
The Balance Sheet as of March 31, 1996, the Statement of
Operations for the three-month periods ended March 31, 1996 and
1995, and the Statements of Cash Flows for the three-month
periods ended March 31, 1996 and 1995, have been prepared without
audit. In the opinion of the management, all adjustments (which
include only normal recurring adjustments) necessary to present
fairly the financial position at March 31, 1996 and the results
of operations and changes in cash flows for such period have been
made. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. These financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's December 31, 1995 audited financial
statements. The results of operations for the three-month period
ended March 31, 1996, are not necessarily indicative of the
operating results for the full year.
ALPHA 1 BIOMEDICALS, INC.
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations for the Three-Month Period Ended March 31,
1996
Compared to the Three-Month Period Ended March 31, 1995
Revenues. Revenues for the three-month period ended March
31, 1996 were $8,288 as compared to $11,042 during the comparable
period a year earlier. Current period revenues consisted of
$4,288 in royalty payments and $4,000 in consulting fees whereas
the comparable period a year earlier consisted solely of payments
under a consulting agreement.
Expenses. Expenses for the three-month period ended March
31, 1996 were $1,047,622, an increase of $132,337 over the
comparable period a year earlier.
Research and development expense during the current period were
$787,528, an increase of $437,961 over the comparable period a
year earlier. The increase was primarily attributable to
expenses incurred for the purchase of Thymosin beta 4 material,
and cost incurred for the conduct of preclinical studies.
General and administrative expenses during the current period
were $260,094, a decrease from the comparable period a year
earlier of $305,624. The decrease was primarily the result of:
1)decreased facility cost and related expense as a result of the
closing of the Sunnyvale, California facility during March 1995,
and subsequent assignment of the lease; 2)decreased legal expense
during the current period; 3)and an adjustment reflecting a
decrease in the market value assigned at December 31, 1995 to the
500,000 shares of common stock that the Company will issue in
settlement of the class action suit. See Part II, Item 1 Legal
Proceedings.
Other Items. Other income during the current three-month
period totaled $3,599, a decrease of $77,765 from the comparable
period a year earlier. The decrease was primarily attributable
to the recognition during the comparable period of the recapture
of unrealized losses on short term investments. Additionally the
current period reflects a decrease in interest income from the
comparable period as a result of a smaller investment balance in
the current period.
During the last quarter of fiscal 1995, the Company sold its
50% interest in Viral Technologies, Inc. ("VTI") to CEL-SCI
Corporation. Accordingly, the Company did not provide funds to
VTI for operating expenses during the current three-month period
and, therefore, Equity in loss of VTI, reflected a decrease of
$76,200 from the comparable period a year earlier. In
consideration for the sale of its interest in VTI, the Company
received 159,170 shares of CEL-SCI common stock, which on the
date of the transaction had a market value of $648,628. Prior to
the end of fiscal 1995, the Company sold 80,000 of the shares.
During the first quarter of fiscal 1996, the Company sold the
remaining balance of the shares from which it realized net
proceeds of $250,510. A loss of $34,028 was recorded during the
current period as a result of the change in the market value when
the shares were sold.
Capital Resources and Liquidity
Since its inception in 1982, the Company's efforts have been
directed toward conducting research and development, sponsoring
clinical trials of its proprietary products, the construction and
equipping of laboratory and production facilities, and the
manufacture of product for research, testing and clinical trials.
The Company's accumulated deficit of $36,694,233 through
March 31, 1996 has been primarily funded by the proceeds from the
issuance of equity securities (and interest earned on such funds),
the licensing of technology developed or acquired by the Company
and limited product sales.
During the first quarter of 1996, revenues consisted of
consulting services and royalty income from SciClone. These
revenue sources are substantially below the level required to
cover fully the Company's expenses or to provide adequate cash
flow. The Company currently has no other revenue-generating
sources. Although the Company believes that royalty income from
product sales of Thymosin alpha 1 by SciClone could be
significant in the future, existing financial resources will be
exhausted before any such revenues are realized. The Company
currently believes, based on its existing resources, that it will
have sufficient cash to sustain its operations to the third
quarter of 1996. If additional financing cannot be obtained
prior to that time, the Company will likely be forced to
discontinue operations.
Beginning with the halting of Thymosin alpha 1 clinical
studies and the licensing to SciClone of additional rights to
Thymosin alpha 1 under the New SciClone License Agreement in
1994, the Company has undertaken a cost reduction program
including the approval by the Board of Directors on February 20,
1996, of a plan which provides for termination of all ongoing
research and development activities, a reduction of leased space,
a reduction of certain salaries and the severance of
administrative staff. As a result, the Company has reduced
staffing levels from 29 employees to its current three employees
and has closed all facilities except for its headquarters space.
During April 1996, the Company further reduced costs by
subletting its headquarters and relocating to more economical
office space.
During 1995, the Company refocused its research efforts to
Thymosin beta 4. Research activities and pre-clinical studies
were initiated and accelerated based on anticipated cash resources
that the Company expected to realize from the proposed merger with
a company affiliated with The Castle Group, Ltd. In anticipation
of the merger and the cash that was to become available, the
Company commenced placing orders for the conduct of research
studies and for the purchase of Thymosin beta 4 material totaling
$2,704,000. In January 1996, the Company learned of the issuance
of a U.S. patent that could block the commercialization of
Thymosin beta 4 as a mucolytic for the treatment for cystic
fibrosis. Thereafter, the merger agreement was terminated by
mutual agreement. The Company has delayed its development program
for Thymosin beta 4, and has no products that have received
regulatory approval. The Company has not generated significant
revenues from operations and does not anticipate generating
product revenues for the foreseeable future. The Company will
require substantial funding in order to conduct further research
and development activities and to manufacture and market the
products which the Company intends to develop.
Management's current plans include strategic alliances or
other partnership arrangements with entities interested in and
with resources to develop Thymosin beta 4, or other business
transactions which would allow the Company to generate resources
to assure continuation of the Company's operations. However,
there is no assurance that any such transaction can be completed.
As a result of the termination of research and development
activities, the Company canceled its research orders with certain
vendors. The Company was able to cancel $1,204,000 of work not
yet performed on outstanding orders of $2,704,000. Management
has also entered into letter agreements and continues
negotiations with these major vendors in which it is seeking to
defer the remaining payments of approximately $1.5 million that
are due in exchange for a commitment to the vendors of revenues
received by the Company in the future under the SciClone license
agreement until the full amounts of the liabilities have been
liquidated. In the event that sufficient funding is obtained for
the Thymosin beta 4 program, all amounts then due would become
payable immediately. If substantial funding is not acquired,
management estimates that the Company's financial resources would
fund operations, on a substantially scaled-down basis, to the
third quarter of 1996.
The effect of inflation and changing prices on the continuing
operations of the Company is not expected to be significant.
ALPHA 1 BIOMEDICALS, INC.
Part II - Other Information
Item 1. Legal Proceedings
On April 29, 1994, a suit was filed in United States
District Court for the District of Maryland against the Company,
Dr. Allan Goldstein and Dr. Vincent F. Simmon, the Company's
former President and Chief Executive Officer. The named
plaintiff in the suit was Schulman, Rogers, Gandal, Pordy &
Ecker, P.A. The suit, as to which the plaintiff sought
certification as a class action, alleged that during the period
May 11, 1993, through April 27, 1994, the Company and certain of
its officers made or are responsible for certain false or
misleading public statements regarding the Company, Thymosin
alpha 1, the results of Thymosin alpha 1 in the treatment of
chronic hepatitis B, and the prospects for success of Thymosin
alpha 1 in clinical trials and the impact on the Company. The
complaint contended that these alleged misleading statements
violated Section 10(b) of the Securities Exchange Act of 1934, as
amended, and Rule 10b-5 thereunder. The complaint further alleged
that Dr. Goldstein and Dr. Simmon are liable for such statements
by reason of their status as controlling persons of the Company.
On May 26, 1994, a second suit was filed in the United States
District Court for the District of Maryland by Harry T. Cole
against the Company, Dr. Goldstein and Dr. Simmon. This suit,
which also sought certification as a class action, alleged
violations of Rule 10b-5, negligent representations and control
person liability based on substantially the same facts alleged in
the Schulman complaint. On May 27, 1994, a suit was filed in the
United States District Court for the District of Maryland by
Allison and Sidney Formal against the Company, Dr. Goldstein and
Dr. Simmon. The allegations and the relief sought in this suit
were identical to those in the Schulman complaint. The three
suits have been consolidated as a single action captioned In re
Alpha 1 Biomedicals, Inc. Securities Litigation. In a
consolidated amended complaint, the plaintiffs expanded their
claims to include the allegation that the Company made false or
misleading public statements concerning its ability to satisfy
its contractual obligation to supply product to SciClone. On
March 13, 1995, the District Court issued an order dismissing all
but one of the claims. While the Company believed that the
remaining claim was without merit, it entered into the settlement
agreement to avoid the continuing cost of litigation. On
September 26, 1995, the parties filed a Stipulation of Settlement
with the District Court under which the Company would issue
500,000 shares of its common stock and make a payment in
settlement of the remaining claim. The settlement was approved
by the District Court on April 8, 1996.
In March 1996, a complaint was filed against the Company by a
former employee in the Circuit Court of Montgomery County,
Maryland, alleging discrimination in employment, wrongful
termination and breach of contract. The Company believes that the
claim is without merit and intends to contest the claim to the
extent that its resources will allow.
In March 1996, the Company received a complaint which was
filed by a former consultant to the Company in the Circuit Court
for Wayne County, Michigan, alleging negligence, fraud, statutory
indemnification and detrimental reliance. The plaintiff is
seeking legal expenses and related costs associated with the
investigation of the consultant by the Securities and Exchange
Commission. The Company believes that the claim is without merit
and intends to contest the claim to the extent that its resources
will allow.
Item 6. Exhibits and Reports on Form 8-K
(a) (1) Sublease Agreement between Alpha 1
Biomedicals, and Inc. and Snyder
Communications, L.P.
(2) Sublease Agreement between Alpha 1
Biomedicals, Inc. and Niceco Inc.
(b) No reports on Form 8-K were filed during the
quarter ended March 31, 1996
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.
Alpha 1 Biomedicals, Inc.
(Registrant)
Date: May 13, 1996 By: /s/ R.J. Lanham
R.J. Lanham
Vice President and
Chief Financial Officer
EXHIBIT (a) (1)
SUBLEASE AGREEMENT BETWEEN ALPHA 1 BIOMEDICALS, INC. AND
SNYDER COMMUNICATIONS, L.P.
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (hereinafter referred to as "Agreement")
is made and executed the 18th day of April, 1996, by and between
Alpha 1 Biomedicals, Inc., a Delaware Corporation (hereinafter
referred to as "Tenant"), and Snyder Communications, L.P., a
Delaware Limited Partnership, (hereinafter referred to as
"Subtenant").
W I T N E S S E T H
WHEREAS, Tenant and Democracy Associates Limited Partnership
(hereinafter referred to as "Landlord") entered into a lease
executed April 9, 1992 (hereinafter referred to as the "Master
Lease" and attached as "Exhibit B" to this Agreement) for 7,792
rentable square feet on the twelfth (12th) floor (hereinafter
referred to as "Demised Premises") of 6903 Rockledge Drive,
Bethesda, Maryland 20817 (hereinafter referred to as "Building").
NOW THEREFORE, Tenant and Subtenant hereby covenant and agree to
the sublease of the Demised Premises. The parties hereby agree
as follows:
1. Demised Premises: Upon and subject to the terms, covenants
and conditions hereinafter set forth, Tenant hereby
subleases to Subtenant and Subtenant hereby subleases from
Tenant the Demised Premises, outlined in red on "Exhibit A"
to this Agreement, together with all parking rights of
Tenant under the Master Lease.
2. Term: The Term of this Agreement shall commence on April
20, 1996 and expire on June 30, 1997, subject to earlier
termination of the Master Lease. Subtenant agrees that if
the Master Lease is terminated for any reason prior to June
30, 1997, this Agreement shall automatically terminate and
Subtenant shall vacate the Demised Premises on the date on
which the Master Lease is terminated.
3. Use: The Subtenant shall use and occupy the Demised
Premises in connection with its conduct of general office
usage, except as otherwise provided herein. Subtenant may
place its name on whichever door or doors are used for
ingress and egress to the Demised Premises, provided that
the installation of such signs is not in conflict with the
terms and conditions of the Master Lease.
4. Condition of Demised Premises: Tenant shall deliver the
Demised Premises in its present and "as is" condition.
5. Base Rent Payments: Subtenant shall pay base rent directly
to Landlord for the Demised Premises at an annual rate of
nineteen dollars ($19.00) per rentable square foot, in
monthly payments of twelve thousand three hundred thirty
seven and 33/100 dollars ($12,337.33) payable in advance, on
or before the first day of each and every month during the
Term at the office of the Landlord herein designated or such
other place as Landlord may designate by written notice to
the Subtenant. However, Tenant shall remain liable to
Landlord for all base rental and additional rental payments
due pursuant to the Master Lease (except for additional
services requested by Subtenant which have not been
requested through Tenant as required under the terms of the
Master Lease) and Tenant shall pay to Landlord base rental
and additional rental payments in accordance with the Master
Lease less the amount which Subtenant pays directly to
Landlord. Notwithstanding any provision in the Master
Lease, there shall be no base rental escalations, operating
expenses or additional rent of any kind payable by
Subtenant. Notwithstanding the foregoing, Subtenant shall
pay directly to Tenant, upon execution this Sublease, the
sum of four thousand five hundred twenty-three and 69/100
dollars ($4,523.69) representing base rental payment due
Tenant from Subtenant for April 20, 1996 through April 30,
1996. If Subtenant fails to pay Landlord any amount due,
Tenant is responsible to pay such amount to Landlord.
6. Security Deposit: Simultaneously with execution of this
Agreement, Subtenant shall deposit with Tenant the sum of
fourteen thousand six hundred ten dollars ($14,610.00), as
a security deposit. Such security deposit shall be
considered as security for the payment and performance by
Subtenant of all of Subtenant's obligations, covenants,
conditions and agreements under this Agreement. Upon the
expiration of the term hereof and following a walk-through
inspection, Tenant shall (provided that Subtenant is not in
default under the terms hereof) return and pay back such
security deposit to Subtenant with respect to any of
Subtenant's aforesaid obligations, covenant, conditions or
agreements. In the event of any default by Subtenant
hereunder, Tenant shall have the right, but shall not be
obligated, to apply all or any portion of the Security
Deposit to cure such default in which event Subtenant shall
be obligated to promptly deposit with Tenant the amount
necessary to restore the security deposit to its original
amount. Tenant shall retain all rights, title and interest
in and to the security deposit provided to Landlord under
the Master Lease.
7. Hold Harmless: Subtenant agrees to indemnify, defend, and
hold harmless the Landlord and Tenant from any and all
liability, damages, expenses, claims, suits or judgements
arising out of injury or damage to persons or property on
the Leased Premises occurring during the Term of this
Sublease or arising out of the use and occupancy of said
premises during the Term of this Sublease or of Subtenant's
operations therein, and from any taxes, claims, liabilities
and attorney's fees arising out of or related to Subtenant's
failure to vacate the Demised Premises strictly in
accordance with the terms of this Sublease. Notwithstanding
the foregoing, Tenant agrees to indemnify and hold Subtenant
harmless from any claims liability, damages, expenses, suits
or judgements by Landlord arising out of (i) any occurrence
or state of facts existing prior to the Term of this
Sublease, and (ii) Tenant's breach or termination of the
Master Lease, provided that Subtenant has paid the specified
rent to Landlord and is not in default of this Sublease.
These obligations shall survive the termination of this
Sublease.
8. Default: Tenant agrees to provide Subtenant, within five
(5) business days of receiving notice of any default, and
within five (5) days of receipt of notice of non-payment of
any rental payment from Subtenant to Landlord when due, with
written notice of such default or non-payment. Subtenant
shall have ten (10) business days to cure such default after
receipt of such notice.
9. Master Lease: It is hereby understood and agreed between Tenant and
Subtenant that the Lease now in existence between the Landlord and the
Tenant, a copy of which is attached to this Agreement as "Exhibit B,"
shall be incorporated by reference in whole in this Agreement.
Provided, however, that all references to Landlord in the Lease between
Tenant and Landlord shall mean the present Owner of the Building, or its
assigns or transferees. Tenant shall have no obligation to provide any
of the services to the Subtenant which are called for in the Lease of
the Tenant with the Landlord, but such services and obligations shall
be fully provided by the Landlord or by its transferees as set forth
in this Agreement in the foregoing paragraphs. Tenant shall have no
liability for any failure by Landlord to provide such services. The
rights and obligations of the Subtenant to Tenant and Landlord shall
be those obligations as set forth for the Tenant in the Lease between
Tenant hereunder and Landlord including any limitation of liability,
attached hereto as "Exhibit B." Notwithstanding the foregoing,
Tenant shall have all the rights of Landlord under the
Master Lease in the event of a default by Subtenant
hereunder.
10. Liability Insurance: In full accordance with the Master
Lease, Subtenant shall procure and maintain comprehensive
general liability insurance, including contractual liability
and any other insurance required under the Master Lease.
11. Subletting of Demised Premises: Subtenant shall not have
the right to further sublease or assign its Sublease of the
Demised Premises.
12. Broker: Tenant recognizes Robert D. Allnutt as the sole
broker and procuring cause in this transaction and Tenant
shall pay said broker a market leasing commission pursuant
to a separate agreement.
13. Access: Upon full execution of this Agreement by Subtenant,
Tenant & Landlord, Tenant shall grant access to the Demised
Premises in order to install telecommunications cabling,
between the hours of 8:00 a.m. to 5:00 p.m. Monday through
Friday. Upon occupancy, Subtenant will permit Tenant to
enter the Demised Premises without charge or diminution to
examine and inspect and protect the Demised Premises with 24
hours prior notice.
14. Landlord's Consent:
(a) The Agreement shall be effective only upon obtaining
written consent of the Landlord, but nothing herein shall make
Landlord a party to this Agreement, nor shall Landlord's consent
to this Sublease create any contractual liability or duty by the
Landlord to the Subtenant, and Tenant, as the Landlord and Tenant
under the Master Lease. If Landlord's consent to this Agreement
is not obtained, the sublease shall not be in effect and there
shall be no further rights or liabilities of the parties hereunder.
(b) Landlord's consent to this Sublease shall not mean that
Landlord has reviewed and approved the plans for Subtenant's
proposed alterations as required pursuant to the terms of
the Master Lease. Landlord shall not review any plans,
except for preliminary plans, for Subtenant's proposed
renovations unless and until Subtenant has provided Landlord
with evidence that any and all plans for Subtenant's
proposed renovations conform to and comply with all rules
and regulations established from time to time by the
Underwriter's Association of the State of Maryland
governments and any other public or quasi-public authority
having jurisdiction over the Demised Premises or the
Building.
15. Miscellaneous: This constitutes the entire agreement
between the parties, any additional amendment or
notification of the terms hereto shall not be effective
unless made in writing and attached to the original hereof,
executed by all parties. This Agreement shall be binding
upon the successors, assigns and heirs of the respective
parties.
IN WITNESS WHEREOF, the parties have caused this Sublease to be
duly executed as of the day and year first above written.
WITNESS: SUBTENANT: Snyder Communications,
L.P.
By: Vincent Candida By: Michele Synder
Title: Title: E.V.P. / C.O.O.
WITNESS: TENANT: Alpha 1 Biomedicals, Inc.
By: Robert Allnutt By: R.J. Lanham
Title: Title: CFO
WITNESS: LANDLORD: Democracy Associates
Limited Partnership
By: Anne B. Dumont By: Raymond A. Ritchey (agent for)
Title: Asst. VP Title: Sr. Vice President
EXHIBIT (a) (2)
SUBLEASE AGREEMENT BETWEEN ALPHA 1 BIOMEDICALS, INC. AND
NICECO INC.
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (hereinafter referred to as "Agreement")
is made and executed the 12th day of April, 1996, by and between
Niceco, Inc., a Maryland Corporation (hereinafter referred to as
"Tenant"), and Alpha 1 Biomedicals, Inc., a Delaware Limited
Partnership, (hereinafter referred to as "Subtenant").
W I T N E S S E T H
WHEREAS, Tenant and Second Rock Spring Park Limited Partnership
(hereinafter referred to as "Landlord") entered into a lease
executed November 5, 1991 (hereinafter referred to as the "Master
Lease" and attached as "Exhibit B" to this Agreement) for 553
rentable square feet on the first (1st) floor (hereinafter
referred to as "Demised Premises") of 6707 Democracy Boulevard,
Bethesda, Maryland 20817 (hereinafter referred to as "Building").
NOW THEREFORE, Tenant and Subtenant hereby covenant and agree to
the sublease of the Demised Premises. The parties hereby agree
as follows:
1. Demised Premises: Upon and subject to the terms, covenants
and conditions hereinafter set forth, Tenant hereby
subleases to Subtenant and Subtenant hereby subleases from
Tenant the Demised Premises, outlined in red on "Exhibit A"
to this Agreement.
2. Term: The Term of this Agreement shall commence on April
20, 1996 and expire on March 31, 1997.
3. Use: The Subtenant shall use and occupy the Demised
Premises in connection with its conduct of general office
usage, except as otherwise provided herein. Subtenant may
replace Tenant's existing sign (in accordance with
Landlord's standard procedure), provided that the
installation of such signs is not in conflict with the terms
and conditions of the Master Lease.
4. Condition of Demised Premises: Tenant shall deliver the
Demised Premises in its present and "as is" condition.
5. Base Rent Payments: On or before April 19, 1996, Subtenant
shall pay Tenant fifteen thousand three hundred twenty three
dollars ($15,323,00) represent the total base rent payable by
Subtenant during the Term. Tenant shall remain liable to
Landlord for all base rental and additional rental payments
due pursuant to the Master Lease (except for additional
services requested by Subtenant). Notwithstanding any
provision in the Master Lease, there shall be no base rental
escalations, operating expenses or additional rent of any
kind payable by Subtenant.
6. Security Deposit: Simultaneously with execution of this
Agreement, Subtenant shall deposit with Tenant the sum of
one thousand two hundred twenty one and 21/100 dollars
($1,221.20) as a security deposit. Such security deposit
shall be considered as security for the payment and
performance by Subtenant of all of Subtenant's obligations,
covenants, conditions and agreements under this Agreement.
Upon the expiration of the term hereof and following a walk-
through inspection, Tenant shall (provided that Subtenant is
not in default under the terms hereof) return and pay back
such security deposit to Subtenant with respect to any of
Subtenant's aforesaid obligations, covenant, conditions or
agreements. In the event of any default by Subtenant
hereunder, Tenant shall have the right, but shall be
obligated, to apply all or any portion of the security
deposit to cure such default in which event Subtenant shall
be obligated to promptly deposit with Tenant the amount
necessary to restore the security deposit to its original
amount.
7. Hold Harmless: Subtenant agrees to indemnify, defend, and
hold harmless the Landlord and Tenant from any and all
liability, damages, expenses, claims, suits or judgements
arising out of injury or damage to persons or property on
the Leased Premises or arising out of the use and occupancy
of said premises or of Subtenant's operations therein.
Notwithstanding the foregoing, Tenant agrees to indemnify
and hold Subtenant harmless from any claims by Landlord,
provided that Subtenant has paid the specified rent to
Tenant and is not in default of this Sublease.
8. Default: Tenant agrees to provide Subtenant, within five
(5) business days of receiving notice of any default, with
written notice of such default. Subtenant shall have ten
(10) business days to cure such default after receipt of
such notice.
9. Master Lease: It is hereby understood and agreed between
Tenant and Subtenant that the Lease now in existence between
the Landlord and the Tenant, a copy of which is attached to
this Agreement as "Exhibit B," shall be incorporated by
reference in whole in this Agreement. Provided, however,
that all references to Landlord in the Lease between Tenant
and Landlord shall mean the present Owner of the Building,
or its assigns or transferees. Tenant shall have no
obligation to provide any of the services to the Subtenant
which are called for in the Lease of the Tenant with the
Landlord, but such services and obligations shall be fully
provided by the Landlord or by its transferees as set forth
in this Agreement in the foregoing paragraphs. The rights
and obligations of the Subtenant to Tenant and Landlord
shall be those obligations as set forth for the Tenant in
the Lease between Tenant hereunder and Landlord (including
any limitation of liability) attached hereto as "Exhibit B."
10. Liability Insurance: In full accordance with the Master
Lease, Subtenant shall procure and maintain comprehensive
general liability insurance, including contractual liability
and any other insurance required under the Master Lease.
11. Subletting of Demised Premises: Subtenant shall not have
the right to further sublease or assign its Sublease of the
Demised Premises.
12. Broker: Tenant and Subtenant acknowledge that no brokerage
commission shall be payable in this transaction.
13. Access: Upon full execution of this Agreement by Subtenant,
Tenant & Landlord, Tenant shall grant access to the Demised
Premises in order to install telecommunications cabling,
between the hours of 8:00 a.m. to 5:00 p.m. Monday through
Friday. Upon occupancy, Subtenant will permit Tenant to
enter the Demised Premises without charge or diminution to
examine and inspect and protect the Demised Premises with 24
hours prior notice.
14. Landlord's Consent:
(a) The Agreement shall be effective only upon obtaining
written consent of the Landlord, but nothing herein shall
make Landlord a party to this Agreement, nor shall
Landlord's consent to this Sublease create any contractual
liability or duty by the Landlord to the Subtenant, and
Tenant, as the Landlord and Tenant under the Master Lease.
If Landlord's consent to this Agreement is not obtained, the
sublease shall not be in effect and there shall be no
further rights or liabilities of the parties hereunder.
(b) Landlord's consent to this Sublease shall not mean that
Landlord has reviewed and approved the plans for Subtenant's
proposed alterations as required pursuant to the terms of
the Master Lease. Landlord shall not review any plans,
except for preliminary plans, for Subtenant's proposed
renovations unless and until Subtenant has provided Landlord
with evidence that any and all plans for Subtenant's
proposed renovations conform to and comply with all rules
and regulations established from time to time by the
Underwriter's Association of the State of Maryland
governments and any other public or quasi-public authority
having jurisdiction over the Demised Premises or the
Building.
15. Miscellaneous: This constitutes the entire agreement
between the parties, any additional amendment or
notification of the terms hereto shall not be effective
unless made in writing and attached to the original hereof,
executed by all parties. This Agreement shall be binding
upon the successors, assigns and heirs of the respective
parties.
IN WITNESS WHEREOF, the parties have caused this Sublease to be
duly executed as of the day and year first above written.
WITNESS: SUBTENANT: Alpha 1 Biomedicals, Inc.
By: Robert Allnutt By: R.J. Lanham
Title: Title: VP
WITNESS: TENANT: Niceco, Inc.
By: Kyle R. Weierbach By: David Nicewarner
Title: President, Niceco, Inc.
WITNESS/ATTEST: LANDLORD: Second Rock Spring Park
Limited Partnership
By: Jennifer E. Thompson By: Robert Kochod
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 291,994
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 414,492
<PP&E> 212,083
<DEPRECIATION> (158,963)
<TOTAL-ASSETS> 554,992
<CURRENT-LIABILITIES> 1,661,959
<BONDS> 0
<COMMON> 35,587,266
0
0
<OTHER-SE> (36,694,233)
<TOTAL-LIABILITY-AND-EQUITY> (1,106,967)
<SALES> 8,288
<TOTAL-REVENUES> 8,288
<CGS> 0
<TOTAL-COSTS> 1,047,622
<OTHER-EXPENSES> 30,429
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,069,763)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,069,763)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> 0<F1>
<FN>
<F1>LOSS PER SHARE ON A FULLY DILUTED BASIS IS NOT CALCULATED SINCE THE EFFECT IS
ANTIDILUTIVE
</FN>
</TABLE>
