SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
OCTOBER 25, 1999
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)
3 BETHESDA METRO CENTER, SUITE 700
BETHESDA, MD 20814
(Address, including Zip Code, of principal executive offices)
Registrant's telephone number, including area code: 301-564-4400
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Item 5. Other Events
Attached is a letter which is provided to stockholders inquiring about
Alpha 1 Biomedicals, Inc's current operations and copies of the documents
related to the consultants referred to in the letter.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit
(99.1) Letter of Alpha 1 Biomedicals, Inc., dated October 25, 1999.
(99.2) Consulting Agreement.
(99.3) Form of Consultant Stock Option Agreement.
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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 1, 1999 ALPHA 1 BIOMEDICALS, INC.
By: /s/ALLAN L. GOLDSTEIN
------------------------------------
Allan L. Goldstein
Chairman and Chief Executive Officer
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EXHIBIT 99.1
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P.O. Box 34598
Bethesda, MD 20817
[LOGO]
Ph: 301.564.4400
Fax: 301.961.1991
Email: [email protected]
November 1999
Dear Stockholder:
As you know, Alpha 1 Biomedicals, Inc. indicated in its last quarterly
report, filed with the SEC in August 1998, that we were suspending research and
development activities pending our raising additional capital to pay creditors
and fund ongoing operations. Since that time, we have conducted limited
operations as we continue to face significant financial hurdles. For example, we
have experienced a 67% decrease in value of one of our primary assets, SciClone
Pharmaceutical, Inc. common stock, which we received in exchange for our royalty
rights pertaining to sales of Thymosin alpha 1. We had intended to use proceeds
from the sale of this stock to pay current liabilities and temporarily fund
operations.
During the past year, we have been focusing on all possible options
available to re-establish our research and development operations. In August
1999, our president resigned and we subsequently retained a group of outside
consultants to advise us on the most viable approaches for raising the necessary
capital to continue in business and developing our technology. These consultants
have significant operational, legal, and financial experience and are currently
in the process of reviewing all pertinent company materials and research
activities, including research being conducted at the National Institutes of
Health on Thymosin beta 4. The consultants will present recommendations and a
business plan to Alpha's Board of Directors as soon as they have completed their
analysis. Please be assured that we are continuing to explore all capital
raising opportunities available to us.
We have a substantial amount of hard work ahead of us and we anticipate it
will take at least throughout the rest of 1999 and into the first quarter of
2000 to develop and implement a new business plan. There is no assurance we can
overcome many of the difficult obstacles we face in order to continue as a
viable entity. As a fellow stockholder, I intend to do everything in my power to
give us the best opportunity to succeed.
Sincerely,
Dr. Allan L. Goldstein
Chairman and CEO
EXHIBIT 99.2
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CONSULTING AGREEMENT
This Agreement will confirm the arrangements, terms and conditions, whereby
the Undersigned (hereinafter referred to as the "Consultants") have been
retained by Alpha 1 Biomedicals, Inc. (the "Company") to serve as financial and
business consultants and advisors to the Company on a non-exclusive basis for a
period of nine months commencing as of August 16, 1999. The undersigned hereby
agree to the following terms and conditions:
1. CONSULTING SERVICES. The Consultants will render financial and
business consulting and advice pertaining to the Company as may from
time to time be requested by the Company. Without limiting the
generality of the foregoing, the Consultants will prepare a business
plan specifying a proposed business strategy for the Company, study
and evaluate financing and recapitalization proposals and prepare
other reports and studies when advisable.
2. SHORT-TERM FINANCING. Consultants will contact creditors and, if
possible, try to utilize SciClone stock sales proceeds for short term
funding purposes. Alternatively, Consultants and potentially certain
other investors shall fund a short-term operating plan by raising
approximately $50,000-$150,000 in the form of a convertible debenture
pursuant to the following terms:
(a) Up to $150,000 investment.
(b) An interest rate of 10% on the debenture, which interest shall
accrue and be applied at conversion.
(c) A conversion rate of 50% of the average July 1999 bid price of
the Company's common stock.
(d) An obligation by the Company to register such shares at the
earliest practicable time.
3. RIGHT TO PARTICIPATE IN SUBSEQUENT FINANCINGS: Upon next subsequent
round of financing, Consultants shall have the right to participate at
the same level as the then participating parties, or, it there is a
Rights Offering, Consultants shall have the right to purchase any or
all shares not purchased by the current stockholders.
4. SHORT-TERM MANAGEMENT OF COMPANY. Consultants shall manage the affairs
of the Company on a short-term basis as follows:
(a) Develop a plan and work with creditors in order to eliminate or
restructure all corporate debts.
(b) Evaluate and work with current professional organizations
necessary to the Company's mission, i.e. legal and auditing
firms.
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(c) Work with the SEC, NASD, NIH, Patent and Trademark Office to
bring the Company in compliance with government regulations or to
allow continuation of Company business.
(d) Set up a temporary office for the Company.
(e) Recommend changes in Corporate Governance, if necessary.
(f) Recommend recapitalization and financial strategy.
(g) Help recruit necessary management for Company.
(h) Negotiate with companies interested in licensing or other
business and financial relationships with the Company.
(i) Other issues as they occur.
5. COMPENSATION.
(a) Upon the execution of this Agreement, the Company shall deliver
to the Consultants a total of 7,500,000 option shares of common
stock at an exercise price of $.04 per share duly registered in
equal amounts in each Consultants name. The option term shall be
ten years. The shares to be delivered upon exercise of the option
shall not be registered under the Securities Act of 1933, as
amended (the "Act") and shall only be eligible for resale subject
to the provisions of Rule 144 as promulgated under the Act or
pursuant to any other available exemptions front registration
under the Act. Notwithstanding the foregoing, it is agreed that
if the Company should elect to register its securities for sale
to the public after one year, that the Company will so notify the
Consultants in writing, after which time Consultant shall have
fifteen (15) days in which to advise the Company as to whether it
wants its shares included in the Registration Statement. The
Consultants agree to be responsible for its counsel fees and
other fees related directly to the inclusion of its shares in any
offering.
(b) J.J. Finkelstein also shall receive a monthly fee on a month to
month basis of $5,000, which fee shall be accrued and shall
become due and payable on first day of each month.
(c) All reasonable out-of-pocket expenses incurred by the Consultants
in the performance of the services to be rendered shall be borne
by the Company.
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6. AVAILABLE TIME. Consultant shall be available at either one of their
offices or at the offices of the Company upon reasonable notice.
7. RELATIONSHIP. Nothing herein shall constitute the appointment of any
Consultant as an employee or agent of the Company except to such an
extent as might hereafter be agreed upon for a particular purpose.
Except as expressly agreed, the Consultant shall not have the
authority to obligate or commit the Company in any manner whatsoever.
8. ADDITIONAL SERVICES BY CONSULTANTS. Nothing herein shall preclude the
engagement by the Company of any one of the Consultants to provide
other services to the Company on such basis as agreed to between the
Company and such Consultant or Consultants.
9. ASSIGNMENT. The parties hereto recognize that the nature of the
services to be offered by the Consultants are personal and that this
agreement may not be assigned by the Consultants to another Company or
individuals, unless otherwise approved in writing by the Company. This
agreement, including obligations under paragraph 4(a) and 4(b) hereof
shall be binding upon the Company and its successors and assigns so
long as the Consultants or its authorized assigns are providing the
services hereunder.
10. CONFIDENTIAL INFORMATION. The Consultants understand that prior to and
during the term of this Agreement, the Company will, from time to
time, make available to the Consultants and its agents, certain
financial, business and other information concerning the Company's
operations and that such information may otherwise come into the
possession of the Consultants. The Consultants acknowledge and agree
that any financial, business and other information. including any
memorandum and/or reports relating to the Company's assets, plans,
research, customers, employees, financial condition and business
activities generally supplied or furnished by the Company to the
Consultants or their agents or which the Consultants may otherwise
obtain shall be confidential. (The foregoing financial, business and
other information including all reports and memoranda shall be
collectively referred to as "Confidential Information".) The
Consultants agree that all Confidential Information furnished or
disclosed to the Consultants or otherwise obtained by them will be
treated as confidential and will not be disclosed or divulged by the
Consultants or their agents and the Consultants will use their best
efforts to prevent disclosure by others of Confidential Information to
third parties without the Company's written consent. The provisions of
this paragraph 8 shall survive the termination of this Agreement.
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11. NOTICES. Any notice to be given hereunder shall be sufficient if in
writing and delivered in person or sent by certified or registered
mail, return receipt requested, addressed as follows:
(a) If to the Company:
Alpha 1 Biomedicals, Inc.
P.O. Box 34598
West Bethesda, MD 20827-0598
(b) If to the Consultants:
Richard J. Hindin
2401 Pennsylvania Avenue, 2nd Floor
Washington, DC 20037
Sidney J. Silver
1100 New York Avenue, N.W.
Washington, DC 20005
J.J. Finkelstein
9009 Burning Tree Road
Bethesda, MD 20817
Allan L. Goldstein
800 25th Street, N.W.
Apartment 1005
Washington, DC 20037
Either party may change the address for such party herein set forth by
giving like notice of such change to the other party.
12. ENTIRE AGREEMENT. This Agreement contains all the understandings and
representations between the parties hereto pertaining to the subject
matter hereof and supersedes all undertakings and agreements, if any,
whether oral or in writing, previously entered into by them with
respect thereto.
13. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may
be amended or waived unless such amendment or waiver is agreed to in
writing by the parties hereto.
14. SEVERABILITY. If any provision of this Agreement shall be determined
by a court of competent jurisdiction to be invalid or unenforceable,
the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent
permitted by law.
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15. This Agreement shall be construed and enforced in accordance with the
laws of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 16th of August 1999.
ALPHA 1 BIOMEDICALS, INC.
By: /s/ Albert Rosenfeld
-------------------------
ALBERT ROSENFELD
Secretary-Treasurer
/s/ Richard J. Hindin
--------------------------
RICHARD J. HINDIN
/s/ Sidney J. Silver
--------------------------
SIDNEY J. SILVER
/s/ J. J. Finkelstein
--------------------------
J.J. FINKELSTEIN
/s/ Allan L. Goldstein
--------------------------
ALLAN L. GOLDSTEIN
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EXHIBIT 99.3
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ALPHA 1 BIOMEDICALS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
NQSO NO. 4
This option is granted on August 16, 1999 (the "Grant Date") by ALPHA 1
BIOMEDICALS, INC. (the "Corporation") to __________________ (the "Consultant"),
in accordance with the following terms and conditions:
1. OPTION GRANT AND EXERCISE PERIOD. The Corporation hereby grants to the
Consultant an Option (the "Option") to purchase pursuant to the Consulting
Agreement dated August 16, 1999 between the Consultant and the Corporation and
upon the terms and conditions hereinafter set forth, an aggregate of 1,875,000
shares (the "Option Shares") of the Common Stock, par value $.01 per share
("Common Stock"), of the Corporation at the price (the "Exercise Price") of $.04
per share.
This Option shall be exercisable only during the period (the "Exercise
Period") commencing on August 16, 1999 and ending at 5:00 P.M., August 15, 2009
time, such later time and date being hereinafter referred to as the "Expiration
Date". During the Exercise Period, this Option shall be exercisable in whole at
any time or in part from time to time subject to the provisions of this
Agreement.
2. METHOD OF EXERCISE OF THIS OPTION. This Option may be exercised at any
time during the Exercise Period by giving written notice to the Corporation
specifying the number of Option Shares to be purchased. The notice must be
directed to the address set forth in Section 9 below. The date of exercise is
the date on which such notice is received by the Corporation. Such notice must
be accompanied by payment in full of the aggregate Exercise Price for the Option
Shares to be purchased upon such exercise. Payment shall be made in cash.
Promptly after such payment, subject to Section 3 below, the Corporation shall
issue and deliver to the Consultant or other person exercising this Option a
certificate or certificates representing the shares of Common Stock so
purchased, registered in the name of the Consultant (or such other person), or,
upon request, in the name of the Consultant (or such other person) and in the
name of another jointly with right of survivorship.
3. DELIVERY AND REGISTRATION OF SHARES OF COMMON STOCK. The Corporation's
obligation to deliver shares of Common Stock hereunder shall, if the Corporation
so requests, be conditioned upon the receipt of a representation as to the
investment intention of the Consultant or any other person to whom such shares
are to be delivered, in such form as the Corporation shall determine to be
necessary or advisable to comply with the provisions of the Securities Act of
1933, as amended (the "Securities Act"), or any other federal, state or local
securities law or regulation. In requesting any such representation, it may be
provided that such representation shall become inoperative upon a registration
of such shares or other action eliminating the necessity of such representation
under such Securities Act or other securities legislation.
NQSO-1
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4. TRANSFERABILITY OF THIS OPTION. This Option may be assigned, encumbered,
or transferred. The provisions of this Option shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto, the successors and
assigns of the Corporation and any person to whom this Option is transferred.
5. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF THE CORPORATION. In the
event of any change in the outstanding shares of Common Stock by reason of any
reorganization, recapitalization, stock split, stock dividend, cash distribution
in excess of normal dividend levels, combination or exchange of shares, merger,
consolidation, or any change in the corporate structure of the Corporation or in
the shares of Common Stock, the number and class of shares covered by this
Option and the Exercise Price shall be appropriately adjusted.
6. EFFECT OF MERGER. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation, or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding shares of Common Stock being converted into or
exchanged for different securities, cash or other property, or any combination
thereof) pursuant to a plan or agreement the terms of which are binding upon all
stockholders of the Corporation (except to the extent that dissenting
stockholders may be entitled, under statutory provisions or provisions contained
in the certificate of incorporation, to receive the appraised or fair value of
their holdings), the Consultant shall have the right, thereafter and during the
Exercise Period, to receive upon exercise of this Option an amount equal to the
excess of the fair market value on the date of such exercise of the securities,
cash or other property, or combination thereof, receivable upon such merger,
consolidation or combination in respect of a share of Common Stock over the
Exercise Price, multiplied by the number of Option Shares with respect to which
this Option shall have been exercised. Such amount may be payable fully in cash,
fully in one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the same proportion as would have been
distributed had the Option been exercised prior to such transaction..
7. STOCKHOLDER RIGHTS NOT GRANTED BY THIS OPTION. The Consultant is not
entitled by virtue hereof to any rights of a stockholder of the Corporation or
to notice of meetings of stockholders or to notice of any other proceedings of
the Corporation.
8. WITHHOLDING TAX. Upon the exercise of this Option, the Corporation shall
have the right to require the Consultant or such other person as is entitled to
exercise this Option to pay to the Corporation the amount of any taxes which the
Corporation is required to withhold with respect to such Option Shares, or, in
lieu thereof, withhold a sufficient number of shares to cover the amount
required to be withheld. The Corporation's method of satisfying its withholding
obligations shall be solely in the discretion of the Corporation, subject to
applicable federal, state and local law.
9. NOTICES. All notices hereunder to the Corporation shall be delivered or
mailed to it addressed to the Secretary of the Corporation at Alpha 1
Biomedicals, Inc., P.O. Box 34598, West Bethesda, MD 20827-0598. Any notices
hereunder to the Consultant shall be delivered personally or mailed to the
NQSO-2
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Consultant's address noted below. Such addresses for the service of notices may
be changed at any time provided written notice of the change is furnished in
advance to the Corporation or the Consultant, as the case may be.
10. CONSULTANT SERVICE. Nothing in this Option shall limit the rights of
the Corporation to terminate the Consultant's service or otherwise impose upon
the Corporation any obligation to employ or accept the services of the
Consultant.
11. CONSULTANT ACCEPTANCE. The Consultant shall signify his acceptance of
the terms and conditions of this Option by signing in the space provided below
and returning a signed copy hereof to the Corporation at the address set forth
in Section 9 above.
IN WITNESS WHEREOF, the parties hereto have caused this NON-QUALIFIED STOCK
OPTION AGREEMENT to be executed as of the date first above written.
ALPHA 1 BIOMEDICALS, INC.
By:
ALBERT ROSENFELD
Secretary-Treasurer
ACCEPTED:
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NQSO-3
