<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
Amendment No. 1
FORM 10-K/A
(Mark one)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 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 No. 1-10492
EPITOPE, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-0779127
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8505 S.W. Creekside Place
Beaverton, Oregon 97008
(Address of principal executive offices) (Zip code)
(503) 641-6115
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of voting stock held by non-affiliates
of the registrant, as of January 31, 1997: $195,522,605.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of January 31, 1997: Common Stock, no par value,
13,713,939.
Documents Incorporated by Reference:
None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS
The following table presents the name, age as of January 31, 1997,
principal occupation, period of service, and term of office for each director of
the Company.
<TABLE>
<CAPTION>
NAME OF DIRECTOR
DIRECTOR PRINCIPAL OCCUPATION AGE SINCE
<S> <C> <C> <C>
Class I (Directors Whose Terms of Office Expire in 1997):
W. Charles Armstrong Private Investor 52 1989
Adolph J. Ferro, Ph.D. President and Chief Executive 54 1990
Officer of the Company
Roger L. Pringle President of The Pringle Company, 56 1989
a management consulting firm,
Portland, Oregon
Class II (Directors Whose Terms of Office Expire in 1999):
Andrew S. Goldstein Senior Vice President of Advanced 48 1981
Technology Development -
Epitope Medical Products
R. Douglas Norby Senior Vice President and Chief 61 1989
Financial Officer of Mentor
Graphics Corporation, a computer
software manufacturer,
Wilsonville, Oregon
G. Patrick Sheaffer Chairman, President and Chief 57 1983
Executive Officer of Riverview
Savings Bank, Camas, Washington
Class III (Directors Whose Terms of Office Expire in 1998):
Richard K. Donahue Vice Chairman of NIKE, Inc., a 69 1991
sporting goods manufacturer,
Beaverton, Oregon
Margaret H. Jordan President and Chief Executive 54 1995
Officer of Dallas Medical
Resource, a not-for-profit
medical referral firm,
Dallas, Texas
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Michael J. Paxton Chairman, President and Chief 50 1995
Executive Officer of
O'Cedar Holdings, Inc., a
manufacturer of household
cleaning products,
Springfield, Ohio
</TABLE>
W. Charles Armstrong is a director of Pacificorp. He was Chairman and
Chief Executive Officer of Bank of America Oregon from September 1992 until
September 1996. From April to September 1992, he was Chairman and Chief
Executive Officer of Bank of America Idaho. Mr. Armstrong served as President
and Chief Operating Officer of Honolulu Federal Savings Bank from February 1989
to April 1992. Prior to February 1989, he was President and Chief Executive
Officer of West One Bank, Oregon.
Richard K. Donahue has been Vice Chairman of NIKE, Inc. since June
1994. Mr. Donahue served as President and Chief Operating Officer of NIKE, Inc.
from 1990 to June 1994 and has served as a director of that company since 1977.
Mr. Donahue is also a partner in the law firm of Donahue & Donahue, Lowell,
Massachusetts, and a director of Courier Corp.
Adolph J. Ferro, Ph.D., has been President and Chief Executive Officer
of the Company since April 1990. Dr. Ferro was Senior Vice President from
November 1988 until April 1990. From July 1987 until November 1988, he was Vice
President of Research and Development. He was a cofounder of Agricultural
Genetic Systems, Inc., which the Company acquired in 1987. Dr. Ferro is also the
President of Agritope, Inc., the Company's wholly owned subsidiary. Prior to
joining the Company, he was a Professor in the Department of Microbiology at
Oregon State University ("OSU"). From 1981 to 1986, he was an Associate
Professor at OSU, and from 1978 to 1981, he was an Assistant Professor at OSU.
From 1975 to 1978, he was Assistant Professor at the University of Illinois at
Chicago in the Department of Biological Sciences. Dr. Ferro received a B.A.
degree from the University of Washington in 1965, an M.S. degree in biology from
Western Washington University in 1970, and a Ph.D. in bacteriology and public
health from Washington State University in 1973.
Andrew S. Goldstein is a Senior Vice President of the Company's Epitope
Medical Products group, a position he has held since June 1990. Prior to that
time, he had been Vice President of Product Development from December 1988, Vice
President of Scientific Affairs from July 1987 to December 1988, and Vice
President of Research and Development from 1981 until July 1987. He also has
served as Secretary from December 1988 to February 1993 and from November 1995
to the present and served as Treasurer until March 1991. Mr. Goldstein was
Research Associate and supervisor of the Histocompatibility Laboratory at the
Oregon Health Sciences University ("OHSU"), where he was engaged in paternity
testing and transplantation immunology, from 1974 to 1981. Mr. Goldstein
received a B.S. degree in microbiology from Cornell University in 1969 and an
M.S. degree in cytology from Fordham University in 1973.
Margaret H. Jordan joined Dallas Medical Resource ("DMR") as President
and Chief Executive Officer in February 1996. DMR is a not-for-profit alliance
of major medical organizations of Dallas, Texas, created to make Dallas a
regional, national and international center for medical referrals. Ms. Jordan
had been Vice President of Health Care & Employee Services at Southern
California Edison Co. since December 1992. She had been a Vice President and
Regional Manager with the Kaiser Foundation Health Plan of Texas, Inc. beginning
in 1986, and was an Associate Regional Manager of Kaiser Foundation Health Plan
of Georgia, Inc. from 1984 to 1986. Ms. Jordan received a B.S. degree in Nursing
from Georgetown University in 1964 and an M.S. degree in Public Health from the
University of California, Berkeley, in 1972. She also serves on the board of
directors of Eckerd Corporation.
R. Douglas Norby became Executive Vice President and Chief Financial
Officer of LSI Logic Corporation in October 1996. From July 1993 until assuming
his present position, he was Senior Vice President and Chief Financial Officer
of Mentor Graphics Corporation. Prior to joining Mentor Graphics Corporation, he
had been President and Chief Executive Officer of Pharmetrix Corporation, a
biopharmaceutical company in Menlo Park, California, since July 1992. Prior to
that time, he had been President of Lucasfilm, Ltd., since 1985 and President
and Chief Executive Officer of LucasArts Entertainment Company since 1990. Prior
to joining Lucasfilm, Ltd.,
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Mr. Norby was Senior Vice President and Chief Financial Officer of Syntex
Corporation from 1979 to 1985. Mr. Norby also serves on the board of directors
of LSI Logic Corporation.
Michael J. Paxton became Chairman, President and Chief Executive Officer
of O'Cedar Holdings, Inc. in January 1996. From March 1992 until joining O'Cedar
Holdings, Inc., he was President and Chief Executive Officer of The Haagen-Dazs
Company, Inc. Prior to that he was President of the Baked Goods Division of The
Pillsbury Company. Both companies are subsidiaries of Grand Metropolitan PLC. He
has been a director of Agritope, Inc. since September 1992 and is also a
director of Transport Corporation of America, Inc.
Roger L. Pringle has been Chairman of the Board of the Company since
April 1990, and is also a director of Agritope, Inc. He is President of The
Pringle Company, a management consulting firm in Portland, Oregon, which he
founded in 1975.
G. Patrick Sheaffer has been President of Riverview Savings Bank in
Camas, Washington, since 1979, and has served as a director of the bank since
1983. In 1993, Mr. Sheaffer also became Chairman and Chief Executive Officer of
Riverview Savings Bank and Riverview Mutual Holding Company, a bank holding
company. He has been a director of the Washington Savings League since 1980.
EXECUTIVE OFFICERS
The following table presents the names, ages and positions of the
Company's executive officers at January 31, 1997.
NAME OF
EXECUTIVE OFFICER AGE POSITION
Adolph J. Ferro, Ph.D. 54 President, Chief Executive
Officer and Director
Gilbert N. Miller 55 Executive Vice President,
Chief Financial Officer and
Treasurer
John H. Fitchen, M.D. 51 Senior Vice President and
Chief Operating Officer--
Epitope Medical Products
Andrew S. Goldstein 48 Senior Vice President of
Advanced Technology
Development--Epitope Medical
Products, Secretary and
Director
Richard K. Bestwick, Ph.D. 42 Senior Vice President and Chief
Operating Officer--
Agritope
Joseph A. Bouckaert 56 President and Chief Executive
Officer--Vinifera, Inc.
Byron A. Allen, Jr. 64 Vice President of Corporate
Communications
Officers of the Company hold office at the discretion of the Board.
For biographical summaries of Dr. Ferro and Mr. Goldstein, see
"Directors" above.
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<PAGE>
Gilbert N. Miller joined the Company in June 1989 as Executive Vice
President and Chief Financial Officer and has served as the Company's Treasurer
since March 1991. He has also been a Senior Vice President of Agritope, Inc.
since September 1992 and its Chief Financial Officer since December 1991. From
1987 to 1989, he was Executive Vice President, Finance and Administration, of
Northwest Marine Iron Works, a privately held ship repair contractor located in
Portland, Oregon. From 1986 to 1987, he was Vice President/Controller of the
Manufacturing Group of Morgan Products, Ltd., a manufacturer and distributor of
specialty building products based in Oshkosh, Wisconsin. He also held the
position of Senior Vice President/Finance of Nicolai Company, a Portland wood
door manufacturing concern which became a wholly owned subsidiary of Morgan
Products, Ltd., in 1986. Mr. Miller received a B.S. degree from Oregon State
University and a Master of Business Administration degree from University of
Oregon. He is a certified public accountant.
John H. Fitchen, M.D., joined the Company in July 1990 as Vice
President of Research and Clinical Activities, was appointed Senior Vice
President in September 1993, and assumed the additional position of Chief
Operating Officer-Epitope Medical Products in November 1994. Prior to joining
the Company, Dr. Fitchen was Associate Chief of Staff for Research at the
Portland Veterans Administration Medical Center in Portland, Oregon, and
Professor of Medicine at OHSU. Dr. Fitchen received his M.D. degree from the
University of Rochester School of Medicine and a B.A. degree from Amherst
College. He completed his clinical training in Internal Medicine at OHSU in 1976
and in Hematology/Oncology at the University of California, Los Angeles, in
1978.
Richard K. Bestwick, Ph.D., joined Epitope in August 1987 and was
appointed Senior Vice President of Agritope, Inc. in September 1992. He was
appointed to the additional position of Chief Operating Officer of Agritope,
Inc. in October 1996. Prior to joining Epitope, he was a Research Assistant
Professor in the Department of Biochemistry at the Oregon Health Sciences
University, where he also completed his postdoctoral training. Dr. Bestwick
received a Ph.D. in Biochemistry and Biophysics from Oregon State University and
a B.S. degree from Evergreen State College.
Joseph A. Bouckaert joined Vinifera, Inc. as its President and Chief
Executive Officer at the inception of the Company in March 1993. From 1988 to
1991 he was Vice Chairman of DNA Plant Technology Corporation, a publicly held
agricultural biotechnology company with offices in Cinnaminson, New Jersey, and
Oakland, California. He also was a co-founder and member of the board of
directors of Florigene, B.V., an agricultural biotechnology company focused on
the flower business and located in the Netherlands. From 1985 to 1988, he served
as President and Chief Executive Officer of Advanced Genetic Sciences Inc. a
publicly held biotechnology company located in Oakland, California. In 1982, Mr.
Bouckaert co-founded Plant Genetic Systems, N.V., a privately held agricultural
biotechnology company located in Brussels, Belgium, and served as its first
Managing Director from 1982 through 1986. Mr. Bouckaert received a Juris Doctor
degree from the University of Leuven in Belgium and postgraduate degrees in
Business Administration from the University of Ghent in Belgium, and the
University of Kentucky in Lexington, Kentucky.
Byron A. Allen, Jr., joined the Company in July 1995. Prior to joining
the Company, from 1993 to 1995, Mr. Allen was Senior Vice President, Equity
Portfolio Manager, for C.J. Lawrence/Deutsche Bank Securities Corporation, New
York. From 1978 to 1993, he was Director of Retail Brokerage Service, C.J.
Lawrence, Incorporated. Mr. Allen holds an A.B. degree from Dartmouth College
and a Master of Business Administration degree from the Amos Tuck School of
Business Administration.
There are no family relationships between any of the Company's
directors or executive officers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10 percent of the Epitope Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Reporting persons are required by the Commission's regulations to furnish the
Company with copies of all Section 16(a) forms they file.
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<PAGE>
Based solely on its review of the copies of such forms and written
representations regarding the absence of a filing requirement received from
Reporting Persons, the Company believes that with respect to the 1996 fiscal
year, all Reporting Persons complied with all applicable filing requirements,
except that T. J. Paulsen, the Company's principal accounting officer until
November 11, 1996, filed one report relating to one transaction after the filing
deadline; Richard K. Bestwick, Ph.D., Senior Vice President and Chief Operating
Officer--Agritope, and Joseph A. Bouckaert, President and Chief Executive
Officer--Vinifera, Inc., each filed his initial report of his stockholdings upon
becoming an executive officer of Epitope after the filing deadline; and Byron A.
Allen, Jr., Vice President of Corporate Communications of the Company, and
Richard K. Donahue, a director of the Company, each filed one report of an
option grant after the filing deadline.
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for the last three
fiscal years of the Chief Executive Officer and the four other most highly
compensated executive officers of the Company (together, the "Named Executive
Officers") during the 1996 fiscal year.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities All Other
Underlying Compen-
Name and Principal Position Year Salary Bonus Options (#)(1) sation(2)
<S> <C> <C> <C> <C> <C>
Adolph J. Ferro, Ph.D. 1996 $214,183 $ 50,000 - $ 4,237
President and Chief Executive 1995 200,769 113,245 74,000 5,390
Officer 1994 135,000 - - 3,375
Gilbert N. Miller 1996 128,510 33,075 - 3,206
Executive Vice President, 1995 130,962 - 34,000 5,021
Chief Financial Officer, 1994 120,000 - - 3,000
and Treasurer
John H. Fitchen, M.D. 1996 147,548 37,200 - 3,540
Senior Vice President and 1995 148,606 - 43,000 3,578
Chief Operating Officer-- 1994 131,250 - - 3,057
Epitope Medical Products
Andrew S. Goldstein 1996 128,510 30,000 - 3,206
Senior Vice President of 1995 126,923 - 34,000 3,182
Advanced Technology 1994 105,000 - - 2,625
Development--Epitope Medical
Products
Richard K. Bestwick, Ph.D.(3) 1996 91,385 20,160 - 2,280
Senior Vice President and
Chief Operating Officer--
Agritope
</TABLE>
(1) Represents the number of shares for which options were awarded. No SARs
have been granted to any Named Executive Officer during the years
indicated.
(2) Represents amounts contributed to the Company's 401(k) Profit Sharing
Plan as employer matching contributions in the form of Epitope Common
Stock.
(3) Dr. Bestwick was not an executive officer of Epitope during fiscal 1995
or 1994.
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<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES(1)
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Shares Options at Fiscal Year-End Options at Fiscal Year-End(2)
Acquired On Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Adolph J. Ferro, Ph.D. 20,000 $173,722 496,061 60,143 $2,800,693 $69,583
Gilbert N. Miller 16,000 141,440 181,299 27,805 1,024,121 642
John H. Fitchen, M.D. - - 160,133 28,667 1,001,375 -
Andrew S. Goldstein 25,000 188,034 165,444 28,556 1,092,090 37,910
Richard K. Bestwick, Ph.D. 2,750 32,313 57,632 18,472 31,058 642
</TABLE>
(1) The Named Executive Officers did not hold any SARs at September 30,
1996.
(2) In-the-money stock options are options for which the exercise price is
less than the market value of the underlying stock on a particular
date. The values shown in the table are based on the difference between
$15.0625, which was the average of the high and low sales prices of the
Epitope Common Stock on the AMEX on September 30, 1996, and the
applicable exercise price.
COMPENSATION OF DIRECTORS
Under the terms of the Epitope, Inc. 1991 Stock Award Plan (the "Award
Plan") in effect during the 1996 fiscal year, nonemployee directors of the
Company were eligible to receive nonqualified stock options granted on a
nondiscretionary basis, as described below.
INITIAL OPTIONS. Upon becoming a nonemployee director, each such
director has been granted a stock option to purchase 50,000 shares of Epitope
Common Stock (an "Initial Option"). A newly-elected Chairman of the Board has
been entitled to receive an Initial Option to purchase an additional 25,000
shares (75,000 shares if not previously a nonemployee director). Until December
1994, Initial Options were granted at an exercise price equal to 75 percent of
the fair market value of a share of Epitope Common Stock on the date of grant;
beginning in December 1994, Initial Options have been granted at an exercise
price equal to the fair market value of a share on the date of grant minus the
lesser of (a) $2.00 or (b) 25 percent of the fair market value. Each Initial
Option becomes exercisable in annual installments based on continued service as
a director and expires at the end of five years following the director's
retirement or one year following the director's death, disability or cessation
of service as a director for any other reason. An Initial Option will generally
become fully exercisable by the date of the fourth annual meeting of
shareholders through which the director has served on the Board. Initial Options
become exercisable in full immediately upon the happening of a change in control
of the Company. A change in control of the Company would occur on the happening
of such events as the beneficial ownership by a person or group of 30 percent or
more of the outstanding common stock, certain changes in Board membership
affecting a majority of positions, certain mergers or consolidations, a sale or
other transfer of all or substantially all the Company's assets, or approval by
the shareholders of a plan of liquidation or dissolution of the Company, as well
as any change in control required to be reported by the proxy disclosure rules
of the Commission.
Payment of the exercise price may be made in cash or by delivery of
previously acquired shares of common stock having a fair market value equal to
the aggregate exercise price. To the extent that payment is made in previously
acquired shares, the director is automatically granted a replacement ("reload")
option for a number of shares equal to the number delivered upon exercise with
an exercise price equal to the fair market value of a share of common stock on
the date of exercise. Reload options become exercisable in full six months after
the grant date.
RENEWAL OPTIONS. Additional nonqualified stock options have also been
granted to each nonemployee director to purchase 15,000 shares of Epitope Common
Stock ("Renewal Options") as of the December 15 prior to the annual meeting of
shareholders at which the options most recently granted to the nonemployee
director fully vest. Renewal Options vest in three equal annual installments
beginning with the second annual meeting of shareholders following the date of
grant, subject to acceleration of vesting upon the occurrence of a change in
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control of the Company. The other terms of Renewal Options are comparable to
those of Initial Options, except that Renewal Options do not provide for reload
options.
AGRITOPE OPTIONS. Mr. Paxton and Mr. Pringle, as nonemployee directors
of Agritope, were each awarded nonqualified options for 50,000 shares of
Agritope common stock under the Agritope, Inc. 1992 Stock Award Plan. The
options have an exercise price of $5.625 per share, which was equal to 75
percent of the fair market value of Agritope, Inc. common stock on the date of
grant, September 14, 1992, based on a good faith determination of fair market
value by Agritope, Inc. board of directors. The options are fully vested. Until
Agritope, Inc. ceases to be a wholly owned subsidiary of the Company, shares of
Agritope, Inc. common stock received upon exercise of the foregoing options must
be exchanged for shares of Epitope Common Stock based on a ratio of 2.433 shares
of Agritope, Inc. common stock for each share of Epitope Common Stock.
Accordingly, upon exercise of the foregoing options in full, Messrs. Paxton and
Pringle would each receive a total of 20,552 shares of Epitope Common Stock, or
a corresponding number of shares of Medical Products Stock and Agritope Stock if
the Agritope Stock Proposal is approved.
EMPLOYMENT AGREEMENTS
Pursuant to written employment agreements with the Company, the Named
Executive Officers each are entitled to receive one year of salary in the event
of termination without cause (two years in the case of Dr. Ferro) or two years
of salary if terminated without cause within 12 months following a change in
control (within the meaning of the Exchange Act) or sale of substantially all
the assets of the Company (three years in the case of Dr. Ferro). The agreements
in each case prohibit the officer from competing with the Company for one year
unless the officer elects to waive the right to amounts otherwise payable. The
agreements do not expire by their terms and are terminable by the Company on 90
days' notice with cause or, subject to payment of the salary amounts described
above, without cause.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information as of September 30, 1996,
regarding the beneficial ownership of Epitope Common Stock by (a) each person
who is known to the Company to be the beneficial owner of more than 5 percent of
Epitope Common Stock outstanding, (b) each director and nominee for election as
director, (c) each of the Named Executive Officers, and (d) all directors and
executive officers of the Company as a group.
Amount and Nature Percent
5% Shareholders, Directors and of Beneficial of
Officers Ownership(1)(2) Class
Groupe des Assurances Nationales 1,242,108(3) 9.1%
61 Rue Monceau
Paris 75008 France
W. Charles Armstrong 59,540(4) *
Richard K. Bestwick, Ph.D. 67,382 *
Richard K. Donahue 57,000(4) *
Adolph J. Ferro, Ph.D. 496,901(5) 3.7
John H. Fitchen, M.D. 164,461(4) 1.3
Andrew S. Goldstein 427,921(5) 3.3
Margaret H. Jordan 10,000 *
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<PAGE>
Gilbert N. Miller 182,961(5) 1.4
R. Douglas Norby 58,750 *
Michael J. Paxton 30,552 *
Roger L. Pringle 114,677 *
G. Patrick Sheaffer 80,000 *
All directors and executive
officers as a group
(14 persons) 1,794,545(4)(5) 12.5
*Less than 1%
(1) Subject to community property laws where applicable, beneficial
ownership consists of sole voting and investment power except as
otherwise indicated.
(2) Includes shares subject to options and warrants exercisable within 60
days of September 30, 1996, by directors and executive officers as
follows: Mr. Armstrong, 55,000 shares; Dr. Bestwick, 67,382 shares
(including options for 9,750 shares held by his wife); Mr. Donahue,
50,000 shares; Dr. Ferro, 496,061 shares; Dr. Fitchen, 160,133 shares;
Dr. Goldstein, 165,444 shares; Ms. Jordan, 10,000 shares; Mr. Miller,
181,299 shares; Mr. Norby, 55,000 shares; Mr. Paxton, 30,552 shares;
Mr. Pringle, 100,552 shares; Mr. Sheaffer, 67,500 shares; and all
directors and executive officers as a group, 1,454,173 shares.
(3) Includes 595,000 shares subject to warrants exercisable within 60 days
of September 30, 1996 and 128,008 shares issuable upon conversion of
convertible notes.
(4) Includes shares as to which the individual has shared voting and
dispositive power as follows: Mr. Armstrong, 165 shares; Mr. Donahue,
1,000 shares; Dr. Fitchen, 100 shares; and all directors and executive
officers as a group, 2,265 shares.
(5) Does not include 17,035 shares of Epitope Common Stock held in the
401(k) Plan, as to which Messrs. Ferro, Goldstein and Miller share
voting power as trustees of the 401(k) Plan. Messrs. Ferro, Goldstein
and Miller disclaim any economic beneficial interest in such shares
other than the 798, 636, and 711 shares, respectively, allocated to
their individual accounts under the 401(k) Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with the December 1987 merger of Agricultural Genetic
Systems, Inc. ("AGS"), with and into Agritope, Inc. Dr. Ferro, as an executive
officer and principal shareholder of AGS, was granted a royalty equal to 4
percent of net sales of products resulting from the technology transferred to
Agritope pursuant to the merger; royalties with respect to a particular product
were to be paid for a period equal to the life of the patent on the product or
an equivalent period if a patent is not issued. On November 11, 1996, Dr. Ferro
agreed to accept a one-time payment of $590,000 in lieu of the royalties that
would otherwise be due him.
In September 1996, the Company extended the expiration date of certain
warrants issued in private placement transactions in September 1991, December
1992, and July and August 1993, to purchase Epitope Common Stock at prices of
$16.00, $16.00, $20.00 and $18.50 per share, respectively. The warrants would
have otherwise expired in September 1996 and March 1997, if not exercised. The
Company extended the expiration date of the warrants to September 30, 1997. The
warrants were extended because they represent a significant potential source of
additional capital.
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<PAGE>
Holders of the warrants included Groupe des Assurances Nationales
("GAN"), which beneficially owns more than 5 percent of the Epitope Common Stock
outstanding. As of September 30, 1996, GAN held 1991 warrants to purchase 80,000
shares of Epitope Common Stock, 1992 warrants to purchase 270,000 shares of
Epitope Common Stock, July 1993 warrants to purchase 195,000 shares of Epitope
Common Stock, and August 1993 warrants to purchase 50,000 shares of Epitope
Common Stock.
On November 14, 1996, the Company agreed to exchange $3,380,000
principal amount of Agritope 4% Convertible Notes Due 1997 for 250,367 shares of
Epitope Common Stock at a reduced exchange price of $13.50 per share. The
original terms of the notes permitted the holders to exchange them for Epitope
Common Stock at an exchange price of $19.53 per share. Holders exchanging their
notes at the reduced exchange price included GAN, which exchanged $2,500,000
principal amount of notes for 185,185 shares of Epitope Common Stock.
In connection with the acquisition of A&W on December 12, 1996, the
Company renegotiated the terms of a $6.5 million line of credit extended to A&W
by Wells Fargo Bank, National Association. The line of credit had previously
been guaranteed by the four former shareholders of A&W, including Fred L.
Williamson, who is expected to be appointed an executive officer of the Company
in February 1997. Under the renegotiated terms of the line of credit, Epitope,
Inc. will guarantee A&W's obligations under the line of credit and the
guarantees of the former shareholders will be released.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Amendment No. 1 to its report on Form 10-K
for the fiscal year ended September 30, 1996, to be signed on its behalf by the
undersigned, thereunto duly authorized, on February 10, 1997.
EPITOPE, INC.
By /s/ GILBERT N. MILLER
Gilbert N. Miller
Executive Vice President and
Chief Financial Officer
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