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As filed with the Securities and Exchange Commission on November 13, 1998
REGISTRATION STATEMENT NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
ALPHA-BETA TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2997834
(State of incorporation) (I.R.S. Employer Identification Number)
THREE BIOTECH PARK
ONE INNOVATION DRIVE
WORCESTER, MASSACHUSETTS 01605
(508) 798-6900
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
-------------------------------
SPIROS JAMAS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ALPHA-BETA TECHNOLOGY, INC.
THREE BIOTECH PARK
ONE INNOVATION DRIVE
WORCESTER, MASSACHUSETTS 01605
(508) 798-6900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
With copies to:
JOHN J. EGAN III, P.C.
GOODWIN, PROCTER & HOAR LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109-2881
(617) 570-1000
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
Title of Shares Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered (1) Offering Price Per Share (2) Aggregate Offering Registration Fee
Price (2)
Common Stock, par 9,503,323 shares $1.09375 $10,394,260 $2,990
value $.01 per share
("Common Stock")
(1) The 9,503,323 shares of Common Stock being registered hereunder
include (i) the number of shares of Common Stock determined by
multiplying 3.00 times the 3,151,941 shares of Common Stock (the
"Conversion Shares") issuable upon conversion of the 1,500 shares of
Series F Convertible Preferred Stock issued in a private placement
transaction on October 21, 1998 and the 1,500 shares of Series F
Convertible Preferred Stock issuable in a private placement transaction
upon effectiveness of this registration statement and certain other
closing conditions, (ii) 25,000 shares of Common Stock issuable upon the
exercise of certain warrants held by Reedland Capital Partners and World
Capital Funding LLC (together, the "Consultants"), and (iii) 22,500
shares of Common Stock currently held by the Consultants. The number of
Conversion Shares is calculated as of November 13, 1998. In accordance
with Rule 416 under the Securities Act of 1933, as amended (the "Act"),
this registration statement also covers such indeterminate number of
shares of Common Stock that may be offered or issued pursuant to terms
which provide for a change in the amount of shares of Common Stock being
offered or issued to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
(2) Based upon the average of the high and low prices per share of Common
Stock reported on the NASDAQ National Market system on November 11,
1998, and estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED __________, 1998
PROSPECTUS
9,503,323 Shares
ALPHA-BETA TECHNOLOGY, INC.
COMMON STOCK
The Selling Stockholders of Alpha-Beta Technology, Inc. referenced
below are offering to sell up to a maximum of 9,503,323 shares of Alpha-Beta
Common Stock under this prospectus.
HFTP Investments LLC is offering up to a maximum of 9,455,823 shares
of Alpha-Beta Common Stock issuable upon its conversion of any of its 3,000
shares of Alpha-Beta Series F Convertible Preferred Stock. HFTP Investments
acquired 1,500 shares of Alpha-Beta Series F Convertible Preferred Stock in a
private placement transaction on October 21, 1998. Subject to certain other
closing conditions, HFTP Investments is obligated to purchase the additional
1,500 shares of Alpha-Beta Series F Convertible Preferred Stock in another
private placement transaction upon effectiveness of the registration statement
relating to this prospectus.
The maximum of 9,455,823 shares of Alpha-Beta Common Stock being
offered by HFTP Investments equals 3.00 times the 3,151,941 shares of Alpha
Beta Common Stock (the "Conversion Shares") issuable upon conversion of both
tranches of Alpha-Beta Series F Convertible Preferred Stock and any other shares
of Alpha-Beta Common Stock that Alpha-Beta may issue upon or after conversion of
the Alpha-Beta Series F Convertible Preferred Stock as a result of stock splits
and stock dividends. For purposes of this prospectus, the number of Conversion
Shares is calculated as of November 13, 1998, and assumes completion of the sale
of the second tranche of Alpha-Beta Series F Convertible Preferred Stock as of
such date. If the sale of the second tranche of Alpha-Beta Series F Convertible
Preferred Stock is not completed, the number of Conversions Shares as of such
date is 1,578,944. The actual number of Conversion Shares fluctuates and is
determined by dividing the purchase price of the Alpha-Beta Series F Convertible
Preferred Stock ($1,000 per share) plus a premium, which accrues at the rate of
6% per year, by the conversion price. The conversion price is the lesser of
$1.50 or the average of the closing bid prices for Alpha-Beta Common Stock as
reported on the Nasdaq National Market for the five consecutive trading days
preceding the date of determination. The conversion price is subject to
adjustment for certain dilutive transactions and other events. On November 13,
1998, the conversion price was $.9536 (based on 85% of the average of the
closing bid prices of Alpha-Beta Common Stock for the five consecutive trading
days ending November 12, 1998).
Pursuant to the Registration Rights Agreement between Alpha-Beta and
HFTP Investments, Alpha-Beta is required to register a number of shares of
Alpha-Beta Common Stock equal to at least 2.00 times the number of Conversion
Shares at all times. In order to minimize the likelihood of having to file an
amendment to the registration statement relating to this prospectus in the event
the market value of the Alpha-Beta Common Stock decreases after November 13,
1998, Alpha-Beta is registering 3.00 times the number of Conversion Shares as of
such date.
Reedland Capital Partners and World Capital Funding LLC are offering up
to an aggregate of 47,500 shares of Alpha-Beta Common Stock under this
prospectus of which 22,500 shares are currently held by Reedland and World
Capital and 25,000 shares are issuable to Reedland and World Capital upon the
conversion of certain warrants. Alpha-Beta issued Reedland and World Capital the
22,500 shares of Alpha-Beta Common Stock and the warrants as partial
consideration for their consulting services in connection with the
above-mentioned private placement transactions.
Alpha-Beta Common Stock is quoted on the NASDAQ National Market system
under the trading symbol "ABTI." The last reported sale price of Alpha-Beta
Common Stock on the NASDAQ National Market system on November 12, 1998 was
$1.1875 per share.
INVESTING IN ALPHA-BETA COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is _______, 1998
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RISK FACTORS
An investment in Alpha-Beta Common Stock involves various risks. This
prospectus contains forward-looking statements within the meaning of the federal
securities laws. You are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties. Actual
events or results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including the factors
referenced in Alpha-Beta's documents which are filed with the SEC and which are
incorporated by reference herein. In deciding whether or not to invest in
Alpha-Beta Common Stock, you should consider the following risk factors:
DEVELOPMENT STAGE OF ALPHA-BETA'S PRODUCTS; UNCERTAINTIES RELATING TO
CLINICAL TRIALS
Alpha-Beta has not completed the development of any products.
Alpha-Beta's products require significant additional clinical testing and
investment prior to commercialization. In order to obtain government approval,
Alpha-Beta's products will be evaluated in extensive clinical trials to
determine their safety and effectiveness. Occurrences such as toxicity or
adverse event reporting during clinical trials may require Alpha-Beta to
terminate such trials at any time. Alpha-Beta cannot assure you that any of its
products will be successfully developed, prove to be safe and effective in
clinical trials, meet applicable regulatory standards, obtain required
regulatory approvals, be capable of being produced in commercial quantities at
reasonable costs or be successfully marketed. In addition, Alpha-Beta cannot
assure you that it will not encounter problems in clinical trials that will
cause it to delay or suspend product development. None of Alpha-Beta's products
are expected to be commercially available prior to mid-1999 at the earliest.
UNCERTAINTY REGARDING BETAFECTIN(R)
On August 4, 1997, Alpha-Beta announced its preliminary analysis of the
results of its Phase III study of Betafectin for the prevention of serious
infections in patients at high-risk for post-operative infections. In the
overall study, 21% of placebo patients suffered serious post-operative
infections compared with 17% of Betafectin(R)-treated patients. These results
did not achieve statistical significance in the incidence of patients who
developed serious infections by day 30 post-surgery, the primary end-point of
the trial.
In October 1997, Alpha-Beta met with FDA officials to review the results
of its recently completed Phase III trial. As a result of these discussions,
Alpha-Beta is conducting another Phase III trial of Betafectin(R) in
non-colorectal gastrointestinal surgery patients. The confirmatory Phase III
study is designed to verify the efficacy and safety of Betafectin(R) in patients
undergoing non-colorectal GI surgeries who are at risk of post-operative
infections. The double blind, placebo-controlled study will enroll approximately
600 patients at 30 sites throughout the United States. The study is expected to
be completed by the end of 1999 and will include an interim
analysis in early 1999.
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
Alpha-Beta has been operating at a loss since its inception in March
1988. As of September 30, 1998, Alpha-Beta had accumulated net losses of
approximately $157 million. Alpha-Beta will continue to make substantial
expenditures in connection with its research and preclinical and clinical
development programs, its development of manufacturing capabilities, its
establishment of sales and marketing capabilities, and its expansion of quality
control, regulatory and administrative capabilities. As a result, Alpha-Beta
expects to continue to incur substantial operating losses for the next several
years. Alpha-Beta cannot predict the size of such losses or if or when it will
reach sustained profitability. To achieve profitability Alpha-Beta must, among
other things, successfully complete development of its products, obtain
regulatory approvals, develop its manufacturing capabilities and establish sales
and marketing capabilities. Accordingly, Alpha-Beta cannot assure you that it
will be able to achieve profitability at all or on a sustained basis.
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ADDITIONAL FINANCING REQUIREMENTS AND ACCESS TO CAPITAL
To date, Alpha-Beta has funded its operations and capital expenditures
primarily through equity financings and a debt financing with RIPA. Since its
inception, Alpha-Beta has raised approximately $164 million through equity
financings and approximately $36 million through debt financings. Alpha-Beta
will require substantial funds for further research and development, clinical
trials, regulatory approvals, expansion of its manufacturing capabilities, and
the marketing of its products. Based upon its current rate of expenditures,
Alpha-Beta expects that its current funds and the funds to be received from the
sale of the second tranche of Alpha-Beta Series F Convertible Preferred Stock
are sufficient to meet its operating expenses and capital requirements through
January 1999. Alpha-Beta currently does not have any committed source of capital
to fund its business after January 1999.
Alpha-Beta needs to raise substantial additional capital to fund its
operations, including clinical trials. Alpha-Beta is seeking such additional
funding through public or private equity or debt financings, licensing,
marketing and distribution arrangements with pharmaceutical or biotechnology
companies and from other sources. Alpha-Beta's ability to raise additional funds
or to enter into collaborative or other arrangements may depend upon a number of
factors including the results of Alpha-Beta's clinical development programs,
discussions with the FDA and the overall market for biotechnology stocks.
Alpha-Beta cannot assure you that additional financing will be available on
acceptable terms, if at all. If adequate funds are not available, Alpha-Beta's
business will be materially adversely affected as Alpha-Beta will have to reduce
certain areas of research, product development, manufacturing or marketing
activity and administration, or otherwise modify its business strategy.
NO ASSURANCE OF FDA APPROVAL; COMPREHENSIVE GOVERNMENT REGULATION
Numerous governmental authorities in the United States and other
countries including the FDA regulate Alpha-Beta's research, development and
clinical programs and its manufacturing operations. All of Alpha-Beta's products
require governmental approvals for commercialization which have not yet been
obtained. Preclinical and clinical trials and manufacturing of many of
Alpha-Beta's products will be subject to the rigorous testing and approval
processes of the FDA and corresponding foreign regulatory authorities. The
regulatory process, which includes preclinical, clinical and post-clinical
testing of Alpha-Beta's products to establish their safety and effectiveness,
requires many years to complete and the expenditure of substantial resources.
Data obtained from preclinical and clinical activities are susceptible to
varying interpretations which could delay, limit or prevent regulatory approval.
In addition, changes in regulatory policies for drug approval during
Alpha-Beta's product development and regulatory review may result in delays or
rejection. Delays in obtaining such approvals could adversely affect the
marketing of products developed by Alpha-Beta and Alpha-Beta's ability to
generate commercial product revenues. Alpha-Beta cannot assure you that it will
obtain the requisite regulatory approvals within a reasonable period of time, if
at all. Moreover, if Alpha-Beta obtains regulatory approval of a product, such
approval may limit the uses for which the product may be marketed. Further, even
if regulatory approval is obtained, Alpha-Beta will still be subject to
continual regulatory review and periodic inspections. If a regulatory authority
discovers previously unknown problems, such authority may impose further
restrictions, including requiring the removal of the product from the market. If
Alpha-Beta fails to comply with applicable regulatory requirements, it may be
subject to, among other things, fines, suspensions of regulatory approvals,
product recalls, operating restrictions and criminal prosecution.
COMPETITION AND RISK OF TECHNOLOGICAL OBSOLESCENCE
The biotechnology and pharmaceutical industries are subject to rapid and
significant technological change. Alpha-Beta has numerous competitors in the
United States and abroad. Such competitors include pharmaceutical and
biotechnology companies, universities and other research institutions. To be
successful, Alpha-Beta must develop and maintain a competitive position in the
development of products and technologies in its area of focus. Competition from
other biotechnology and pharmaceutical companies is intense, and Alpha-Beta
expects that such competition will increase as new products enter the market and
new technologies become available. In addition, Alpha-Beta's competitors may
succeed in developing technologies and products that are more effective than any
which have been or are being developed by Alpha-Beta or that render Alpha-Beta's
technologies or products obsolete or noncompetitive. In addition, Alpha-Beta's
competitors may obtain patent protection or other intellectual property rights
that could block Alpha-Beta's ability to develop its potential products.
Moreover, Alpha-Beta's competitors may obtain
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regulatory approval for the commercialization of their products more rapidly or
effectively than Alpha-Beta. Finally, many of Alpha-Beta's competitors have
substantially greater research and development capabilities, clinical,
manufacturing, regulatory and marketing experience and financial and managerial
resources than Alpha-Beta has.
COMMERCIAL MANUFACTURING CAPABILITY AND RISKS RELATING TO RIPA LOAN
In June 1994, Alpha-Beta completed construction of a commercial-scale
manufacturing facility in Smithfield, Rhode Island. This facility is presently
being operated to manufacture clinical quantities of Betafectin. Alpha-Beta
believes this facility will have the capacity to manufacture sufficient
quantities of Betafectin for clinical trials and the commercial introduction of
the product. To be successful, Alpha-Beta will have to manufacture its products
in commercial quantities, within regulatory requirements and at competitive
costs. Alpha-Beta has no experience in commercial manufacturing. Alpha-Beta
cannot assure you that the Betafectin plant will have sufficient capacity to
satisfy Alpha-Beta's product requirements, that Alpha-Beta will be able to
manufacture Betafectin at acceptable costs or that Alpha-Beta will be able to
obtain all applicable FDA licenses with respect to the Betafectin plant.
In February 1993, Alpha-Beta completed a $30 million debt financing
through RIPA to finance, in large part, the costs of its Betafectin plant.
Because this facility was constructed prior to the issuance of final FDA
approval for the commercial sale of Betafectin, Alpha-Beta is obligated to repay
the RIPA loan regardless of whether Betafectin is approved for commercial sales.
Alpha-Beta is required to make payments of approximately $300,000 per month to
RIPA over the 20 year term of the RIPA loan. Alpha-Beta's obligation to repay
the loan is subject to acceleration if Alpha-Beta fails to make any monthly debt
service payments, or if certain other events of default occur. Alpha-Beta may
also be required to repay the loan on an accelerated basis over five years if
the enabling legislation under which RIPA issued the bonds used to fund the loan
to Alpha-Beta is eliminated or if the state of Rhode Island or RIPA is subject
to any bankruptcy proceeding. The terms of the RIPA loan are subject to
adjustment in connection with a possible refinancing of the RIPA bonds by RIPA
on December 1, 1999. The financial obligations incurred by Alpha-Beta in
connection with the RIPA debt refinancing could have a material impact on its
ability to conduct its operations.
LACK OF COMMERCIAL SALES AND MARKETING EXPERIENCE
Alpha-Beta has no experience in marketing, sales or distribution of
commercial products. To market any of its products, Alpha-Beta will need to
develop a substantial marketing and sales force with technical expertise and the
capability to support distribution. Alpha-Beta is currently seeking a strategic
partner with the necessary sales and distribution capabilities and expertise to
assist in the commercialization of Betafectin. Alpha-Beta cannot assure you that
it will be able to enter into such a strategic relationship without undue delays
or expenditures, that it will be able to establish the necessary sales and
distribution capabilities or that it will be successful in gaining market
acceptance for its products.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY
To be successful, Alpha-Beta must be able to obtain patent protection
for its products and manufacturing processes, preserve its trade secrets and
operate without infringing the proprietary rights of third parties. In addition
to Alpha-Beta's own patents and patent applications, the Massachusetts Institute
of Technology and The Brigham and Women's Hospital have exclusively licensed
rights in certain patents and patent applications to Alpha-Beta. Alpha-Beta's
future performance is partly dependent upon its ability to achieve certain
milestones and make specified royalty payments required by the governing license
agreements. Alpha-Beta cannot assure you that it will satisfy any of these
requirements.
Alpha-Beta anticipates seeking additional patents in the future as it
continues to conduct research. However, the patent position of biotechnology and
pharmaceutical firms is often highly uncertain and usually involves complex
legal and factual questions. In addition, the United States Patent and Trademark
Office is substantially backlogged with biotechnology patent applications, and
no consistent policy has emerged regarding the breadth of claims covered in
biotechnology patents. Accordingly, Alpha-Beta cannot assure you that patent
applications relating to its products or technology will result in patents being
issued or that, if issued, such patents will afford adequate protection to
Alpha-Beta or not be challenged, invalidated or infringed. Furthermore,
Alpha-Beta cannot assure you that others will not independently develop similar
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products and processes, duplicate any of Alpha-Beta's products or design around
any of Alpha-Beta's patents. In addition, Alpha-Beta may incur substantial costs
in defending itself in suits brought against it or in suits in which Alpha-Beta
may assert its patents against others. If the outcome of any such litigation is
adverse to Alpha-Beta, Alpha-Beta's business could be adversely affected. To
determine the priority of inventions, Alpha-Beta may also have to participate in
interference proceedings declared by the United States Patent and Trademark
Office. Such proceedings could result in substantial costs to Alpha-Beta.
In addition, Alpha-Beta may be required to obtain licenses to patents or
other proprietary rights of third parties. Alpha-Beta cannot assure you that any
licenses required under any such patents or proprietary rights would be made
available on acceptable terms, if at all. If Alpha-Beta does not obtain such
licenses, it could encounter delays in product market introductions while it
attempts to design around such patents or other rights, or be unable to develop,
manufacture or sell products.
In addition to its patents and patent applications, Alpha-Beta also has
proprietary technology which is not patented or patentable. Alpha-Beta may seek
to protect such technology in part with confidentiality agreements and, if
applicable, inventors' rights agreements with its collaborators, advisors,
employees and consultants. Alpha-Beta cannot assure you that these agreements
will not be breached, that Alpha-Beta will have adequate remedies for any
breach, or that Alpha-Beta's trade secrets will not otherwise be disclosed to,
or discovered by, competitors. Moreover, Alpha-Beta conducts a significant
amount of research through academic advisors and collaborators who are
prohibited from entering into confidentiality or inventors' rights agreements by
their academic institutions.
PRODUCT LIABILITY
The testing, marketing and sale of human therapeutic products involve an
inherent risk of allegations of product liability. Alpha-Beta cannot assure you
that substantial product liability claims will not be asserted against it. While
Alpha-Beta has clinical trials liability insurance, it does not have product
liability insurance coverage for the commercial sale of Betafectin. Alpha-Beta
cannot assure you that it will be able to maintain clinical trials liability
insurance on acceptable terms or that such insurance will provide adequate
coverage against potential liabilities. Alpha-Beta will seek to obtain product
liability insurance if and when its products are commercialized. However,
Alpha-Beta cannot assure you that adequate insurance coverage will be available
at acceptable costs, if at all, or that a product liability claim would not
materially adversely affect the business or financial condition of Alpha-Beta.
THIRD-PARTY REIMBURSEMENT
In both domestic and foreign markets, sales of Alpha-Beta's proposed
products will depend in part on the availability of reimbursement from
third-party payors such as government health administration authorities, private
health insurers and other organizations. Third-party payors are increasingly
challenging the price and cost-effectiveness of medical products and services.
In addition, significant uncertainty exists as to the reimbursement status of
newly approved health care products. Alpha-Beta cannot assure you that its
proposed products will be considered cost effective or that adequate third-party
reimbursement will be available to enable Alpha-Beta to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Legislation and regulations affecting the pricing of
pharmaceuticals may change before any of Alpha-Beta's proposed products are
approved for commercialization. Adoption of such legislation could further limit
reimbursement for medical products and services. Other changes in the U.S.
health care system are likely to have a substantial impact over time on the
manner in which Alpha-Beta conducts its business and may impose additional
regulations governing the conduct of Alpha-Beta's business.
DEPENDENCE UPON KEY PERSONNEL
Alpha-Beta is highly dependent on the members of its management and
scientific staff, the loss of some of whom could have a material adverse effect
on Alpha-Beta. Alpha-Beta also depends on its collaborators, each of which have
commitments that may limit their availability to Alpha-Beta. In addition,
Alpha-Beta believes that its future success will depend in large part upon its
ability to attract and retain highly skilled scientific, managerial and
marketing personnel, particularly as Alpha-Beta expands its activities in
clinical trials, the regulatory approval process, sales and manufacturing.
Alpha-Beta faces significant competition for such personnel from other
companies, research and academic institutions,
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government entities and other organizations. Alpha-Beta cannot assure you that
it will be successful in hiring or retaining the personnel it requires for
continued growth. The failure to hire and retain such personnel could materially
and adversely affect Alpha-Beta's prospects.
VOLATILITY OF STOCK PRICE; DELISTING OF ALPHA-BETA COMMON STOCK
The market prices for securities of biotechnology companies, including
Alpha-Beta, have historically been highly volatile, and the market has, from
time to time, experienced significant price and volume fluctuations that are
unrelated to the operating performance of such companies. Factors such as
announcements of technological innovations or new commercial products by
Alpha-Beta or its competitors, disclosure of results of clinical testing or
regulatory proceedings, governmental regulation and approvals, developments in
patent or other proprietary rights, public concern as to the safety of products
developed by Alpha-Beta and general market conditions may have a significant
effect on the market price of Alpha-Beta Common Stock. In addition, future sales
of Alpha-Beta Common Stock in the public market by existing stockholders could
have an adverse effect on the price of Alpha-Beta Common Stock.
The rules of the Nasdaq Stock Market require, among other things, that
Companies listed on the Nasdaq National Market system maintain a minimum bid
price $1 per share. In light of the volatility of its stock price, Alpha-Beta
cannot assure you that the bid price for Alpha-Beta Common Stock will not drop
below the $1 per share requirement. In addition, Alpha-Beta cannot assure you
that it will be able to meet the other requirements for listing on the Nasdaq
National Market system, including the $4 million net tangible asset requirement.
If the Nasdaq Stock Market delists Alpha-Beta Common Stock from the Nasdaq
National Market system, the ability of stockholders of Alpha-Beta to buy and
sell shares of Alpha-Beta Common Stock may be materially impaired. In addition,
the continued delisting of Alpha-Beta Common Stock could adversely affect
Alpha-Beta's ability to enter into future equity financing transactions.
RISKS RELATING TO THE HFTP INVESTMENTS PRIVATE PLACEMENT TRANSACTION
In connection with the private placement of 3,000 shares of Alpha-Beta
Series F Convertible Preferred stock to HFTP Investments, Alpha-Beta is required
to, among other things, register with the SEC and reserve for issuance a minimum
number of shares of Alpha-Beta Common Stock issuable upon conversion of the
Alpha-Beta Series F Convertible Preferred Stock. In addition, under certain
circumstances, the rules of the Nasdaq Stock Market may require Alpha-Beta to
obtain stockholder approval of the issuance of Alpha-Beta Common Stock upon
conversion of the Alpha-Beta Series F Convertible Preferred Stock. Alpha-Beta
cannot assure you that it will be able to obtain such stockholder approval if
necessary or that it will be able satisfy its other obligations in connection
with the HFTP Investments transaction. If Alpha-Beta fails to satisfy certain of
its obligations, it may have to pay cash penalties and may have to redeem the
Alpha-Beta Series F Convertible Preferred Stock at a premium. Such penalties and
redemption could have a material adverse effect on Alpha-Beta. See "Summary of
the HFTP Investments Transaction" below.
NECESSITY OF INCREASING THE NUMBER OF AUTHORIZED SHARES OF ALPHA-BETA
COMMON STOCK
Under its Restated Articles of Organization, Alpha-Beta currently has
30,000,000 shares of Alpha-Beta Common Stock authorized for issuance. 27,568,394
shares of Alpha-Beta Common Stock are currently outstanding or reserved for
issuance for committed purposes. Accordingly, Alpha-Beta only has 2,431,606
shares of Alpha-Beta Common Stock available for future issuances including
additional equity financing transactions.
Alpha-Beta currently intends to hold a special meeting of its
stockholders in order to, among other things, obtain stockholder approval of an
increase in the number of authorized shares of Alpha-Beta Common Stock to
60,000,000. Alpha-Beta cannot assure you that its stockholders will approve the
proposed increase. If Alpha-Beta's stockholders do not approve the increase,
Alpha-Beta's ability to enter into future equity financing transactions will be
materially impaired.
In addition, in connection with the HFTP Investments transaction,
Alpha-Beta is required to keep a minimum number of shares of Alpha-Beta Common
Stock reserved for issuance upon conversion of the Alpha-Beta Series F
Convertible Preferred Stock. If Alpha-Beta's stockholders do not approve the
proposed increase in authorized shares, Alpha-Beta cannot assure you that it
will be able to satisfy this requirement.
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If Alpha-Beta fails to reserve minimum shares required, it may have to pay cash
penalties and may have to redeem the Alpha-Beta Series F Convertible Preferred
Stock at a premium, each of which could have a material adverse effect on
Alpha-Beta. See "Summary of HFTP Investments Transaction" below.
ANTI-TAKEOVER PROVISIONS
Alpha-Beta's Restated Articles of Organization and By-Laws include
provisions that may discourage or prevent certain types of transactions
involving an actual or potential change in control of Alpha-Beta, including
transactions in which the stockholders might otherwise receive a premium for
their shares over then-current market prices. In addition, these provisions may
limit the ability of the stockholders to approve transactions that they may deem
to be in their best interests. For example, Alpha-Beta's Restated Articles of
Organization enable the Board of Directors to fix the rights and preferences of
and to issue shares of Preferred Stock. The Board of Directors could avail
itself of this authority to discourage or to prevent certain types of
transactions involving an actual or potential change of control of Alpha-Beta,
which could have an adverse effect on the price of Alpha-Beta Common Stock. In
addition, Chapter 110F of the Corporation Law of The Commonwealth of
Massachusetts prohibits Alpha-Beta from engaging in certain business
combinations with interested stockholders unless special super-majority
stockholder votes are obtained. These provisions may have the effect of delaying
or preventing a change in control of Alpha-Beta and therefore could adversely
affect the price of Alpha-Beta Common Stock. Alpha-Beta also has adopted a
Shareholder Rights Plan which could have a similar effect.
YEAR 2000 PREPAREDNESS
Alpha-Beta plans to modify certain portions of its software so that its
computer and non-information technology systems will function properly with
respect to dates in the year 2000 and thereafter. The total cost of compliance
and the effect on Alpha-Beta's future results is currently being determined as
part of the conversion planning. Alpha-Beta anticipates substantial completion
of the conversion process by June 1999. Alpha-Beta has begun as assessment of
the Year 2000 preparedness of third parties with which it has a material
relationship. Alpha-Beta cannot assure you that its or its suppliers' Year 2000
conversion will be successfully completed, or that the failure to complete such
conversion will not have material adverse effect on Alpha-Beta.
THE COMPANY
Alpha-Beta is a Massachusetts corporation with its principal executive
offices at Three Biotech Park, One Innovation Drive, Worcester, Massachusetts
01605. Its telephone number is (508) 798-6900.
USE OF PROCEEDS
Alpha-Beta will not receive any proceeds from the sale of the Alpha-Beta
Common Stock under this prospectus.
SUMMARY OF THE HFTP INVESTMENTS TRANSACTION
ISSUANCE OF THE ALPHA-BETA SERIES F CONVERTIBLE PREFERRED STOCK
On October 21, 1998, Alpha-Beta entered into a Securities Purchase
Agreement with HFTP Investments (the "Securities Purchase Agreement"), pursuant
to which the HFTP Investments (i) purchased 1,500 shares of Alpha-Beta Series F
Convertible Preferred Stock in a private placement transaction, and (ii) is
obligated to purchase an additional 1,500 shares of Alpha-Beta Series F
Convertible Preferred Stock in a private placement transaction upon
effectiveness of the registration statement relating to this prospectus (the
"Resale Registration Statement") and the satisfaction of certain other
conditions, including the following:
1. effectiveness of the Resale Registration Statement covering at
least 200% of the Conversion Shares issuable upon conversion of
both tranches of Alpha-Beta Series F Convertible Preferred Stock;
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2. Alpha-Beta having reserved out of its authorized and unissued
Alpha-Beta Common Stock, 200% of the Conversion Shares issuable
upon conversion of both tranches of Alpha-Beta Series F
Convertible Preferred Stock; and
3. Alpha-Beta being able to issue 200% of the Conversion Shares upon
conversion of both tranches of Alpha-Beta Series F Convertible
Preferred Stock in accordance with the Rule 4460 of the Nasdaq
Stock Market. See "--Nasdaq National Market Rule 4460 - Exchange
Cap" below.
The purchase price for both tranches of the Alpha-Beta Series F
Convertible Preferred Stock is $1,000 per share, or $1,500,000 for the first
tranche and $1,500,000 for the second tranche.
Alpha-Beta will use the net proceeds from the sale of the Alpha-Beta
Series F Convertible Preferred Stock for its ongoing Phase III clinical trial of
Betafectin AE for the prevention of serious post-operative infections, as well
as its novel antifungal research program.
In connection with the foregoing transaction, Alpha-Beta issued Reedland
and World Capital an aggregate 22,500 shares of Alpha-Beta Common Stock and
warrants exercisable for 25,000 shares of Alpha-Beta Common Stock as partial
consideration for their consulting services.
TERMS OF THE ALPHA-BETA SERIES F CONVERTIBLE PREFERRED STOCK
The rights, preferences, privileges and terms of the Series F Preferred
Stock are as set forth in the Certificate of Vote of Directors of the Company
Amending and Restating Terms of Series F Preferred Stock Prior to Issuance filed
with the Secretary of State of The Commonwealth of Massachusetts on October 21,
1998 (the "Certificate of Designations").
Subject to certain anti-dilution provisions, the Alpha-Beta Series F
Convertible Preferred Stock is convertible into shares of Alpha-Beta Common
Stock pursuant to a formula (the "Conversion Rate") whereby the purchase price
of the shares of Alpha-Beta Series F Convertible Preferred Stock to be converted
(plus a premium which accrues at the rate of 6% per annum) is divided by a
conversion price equal to the lower of a fixed cap and a price equal to a 15%
discount to the average closing price of the Alpha-Beta Common Stock for the
five trading days immediately preceding the date of conversion. Initially, the
fixed cap equals $1.50. Upon issuance of the second tranche of Series F
Preferred Stock, the fixed cap will be redetermined utilizing a formula which is
based in part on the number of shares of Alpha-Beta Common Stock reserved for
issuance upon conversion of the Alpha-Beta Series F Convertible Preferred Stock
at such time. The Alpha-Beta Series F Convertible Preferred Stock is convertible
for a period of four years commencing on the date of issuance and is subject to
mandatory conversion upon expiration of such four year period.
The Certificate of Designations prohibits HFTP Investments from
converting any shares of the Alpha-Beta Series F Preferred Stock to the extent
such conversion would result in HFTP Investments beneficially owning in excess
of 4.99% of the outstanding shares of Alpha-Beta Common Stock following such
conversion.
Upon the occurrence of certain "Major Transactions" (which include the
merger or consolidation of the Alpha-Beta into another entity, the sale of all
or substantially all of the assets of Alpha-Beta or the acceptance of a tender
offer or exchange offer by the holders of more than 40% of the outstanding
shares of Alpha-Beta Common Stock) or "Triggering Events" (which include failure
of the Alpha-Beta to obtain the effectiveness of the Resale Registration
Statement, suspension of sales under the Resale Registration Statement,
suspension of trading in Alpha-Beta Common Stock on the Nasdaq National Market,
failure of Alpha-Beta to convert shares of the Series F Preferred Stock as
required (including due to the Exchange Cap described below), failure of
Alpha-Beta's stockholders to approve certain proposals regarding (i) an increase
in the authorized shares of Alpha-Beta Common Stock and (ii) the issuance of a
number of shares of Alpha-Beta Common Stock in excess of the Exchange Cap (as
defined below) upon conversion of the Alpha-Beta Series F Convertible Preferred
Stock, or failure of Alpha-Beta to have 200% of the Conversion Shares reserved
for issuance at all times), HFTP Investments may require Alpha-Beta to redeem
the outstanding shares of Alpha-Beta Series F Convertible Preferred Stock at a
premium equal to at least 130% of the original purchase price per share of
Alpha-Beta Series F Convertible Preferred Stock redeemed (the "Redemption
Premium").
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In the event of any liquidation, dissolution or winding up of
Alpha-Beta, the holders of the Series F Preferred Stock are entitled to receive
cash, before any amount is paid to the holders of any securities that rank
junior to the Alpha-Beta Series F Convertible Preferred Stock, in an amount per
share of Alpha-Beta Series F Convertible Preferred Stock outstanding equal to
the purchase price for such share plus a premium, which accrues at the rate of
6% per annum. If the amounts available for distribution are insufficient to pay
the full amount due to the holders of the Alpha-Beta Series F Convertible
Preferred Stock and any other securities which are pari passu with the
Alpha-Beta Series F Convertible Preferred Stock, Alpha-Beta shall distribute the
available funds to such persons pro rata.
The holders of the Alpha-Beta Series F Convertible Preferred Stock have
no voting rights except as required by law or as specified in the Certificate of
Designations. Pursuant to the Certificate of Designations, the affirmative vote
of the holders of two-thirds of the outstanding shares of Alpha-Beta Series F
Convertible Preferred Stock is required for (i) any authorization or issuance of
securities senior to, or pari passu with, the Alpha-Beta Series F Convertible
Preferred Stock, (ii) any amendment to the Certificate of Designations or
Alpha-Beta's Restated Articles of Organization which would change or repeal any
of the preferences and rights of the Alpha-Beta Series F Convertible Preferred
Stock, (iii) any amendment to Alpha-Beta's Restated Articles of Organization or
Bylaws which would impair the rights and preferences of the holders of the
Alpha-Beta Series F Convertible Preferred Stock relative to the holders of any
other securities of Alpha-Beta, (iv) any issuance of shares of Alpha-Beta Series
F Convertible Preferred Stock other than pursuant to the Securities Purchase
Agreement, and (v) any redemption or declaration or payment of a dividend with
respect to the Alpha-Beta Common Stock.
NASDAQ NATIONAL MARKET RULE 4460 - EXCHANGE CAP
Rule 4460 of the Nasdaq National Market, which is applicable to
Alpha-Beta because the Alpha-Beta Common Stock is presently included for
quotation on the Nasdaq National Market, sets forth certain corporate governance
standards for issuers whose securities are listed on the Nasdaq National Market.
Rule 4460 requires, among other things, that Alpha-Beta obtain shareholder
approval for the sale or issuance of a number of shares of Alpha-Beta Common
Stock (or securities convertible into or exchangeable for Alpha-Beta Common
Stock) equal to or in excess of 20% of the number or shares of Alpha-Beta Common
Stock outstanding prior to such issuance if such issuance is for a purchase
price which is less than the greater of the book or market value of the
Alpha-Beta Common Stock.
Because the application of the Conversion Rate may result in issuances
of Alpha-Beta Common Stock at less than book or market value upon conversion of
the Alpha-Beta Series F Convertible Preferred Stock, Rule 4460 is applicable to
such issuances to the extent they exceed, in the aggregate, 20% of the number of
shares of Alpha-Beta Common Stock outstanding immediately prior to the issuance
of the first tranche of Alpha-Beta Series F Convertible Preferred Stock.
The Certificate of Designations provides that Alpha-Beta is not
obligated to issue upon conversion of the Alpha-Beta Series F Convertible
Preferred Stock, in the aggregate, a number of shares of Alpha-Beta Common Stock
which exceeds 19.99% of the number of shares of Alpha-Beta Common Stock
outstanding immediately prior to the issuance of the first tranche of Alpha-Beta
Series F Convertible Preferred Stock (the "Exchange Cap"). However, upon
issuance of the second tranche of Alpha-Beta Series F Convertible Preferred
Stock, if the market price of the Alpha-Beta Common Stock drops below a certain
level, the Exchange Cap may operate to prevent the HFTP Investments from being
able to convert all of its shares of Alpha-Beta Series F Convertible Preferred
Stock. For this reason, HFTP Investments has required that Alpha-Beta be able to
issue 200% of the Conversion Shares upon conversion of the Alpha-Beta Series F
Convertible Preferred Stock in accordance with the Rule 4460 of the Nasdaq Stock
Market as a condition to HFTP Investments' obligation to purchase the second
tranche of Alpha-Beta Series F Convertible Preferred Stock.
REGISTRATION OF CONVERSION SHARES
Pursuant to the Registration Rights Agreement between Alpha-Beta and
HFTP Investments, Alpha-Beta is required to register a number of shares of
Alpha-Beta Common Stock equal to at least 2.00 times the number of Conversion
Shares. Alpha-Beta is required to maintain the effectiveness of such
registration until the earlier of the sale of all of the Conversion Shares under
the Resale Registration Statement or the saleability
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of such shares pursuant to Rule 144(k) of the Securities Act of 1933, as amended
(the "Securities Act"). If Alpha-Beta fails to cause or maintain such
effectiveness, it may be required to pay penalties as provided in the
Registration Rights Agreement. In order to minimize the likelihood of having to
file an amendment to the registration statement relating to this prospectus in
the event the market value of the Alpha-Beta Common Stock decreases after
November 13, 1998, Alpha-Beta is registering 3.00 times the number of Conversion
Shares as of such date.
SELLING STOCKHOLDERS
NUMBER OF SHARES OF NUMBER OF SHARES OF PERCENTAGE
ALPHA-BETA COMMON STOCK NUMBER OF SHARES OF ALPHA-BETA COMMON STOCK OWNERSHIP
NAME OF SELLING BENEFICIALLY OWNED AS OF ALPHA-BETA COMMON STOCK BENEFICIALLY OWNED AFTER
STOCKHOLDER NOVEMBER 13, 1998(1) OFFERED HEREBY AFTER OFFERING (8) OFFERING
HFTP
Investments LLC 3,151,941(2) 3,151,941(5) 0 *(9)
Reedland Capital 23,750(3) 23,750(6) 0 *
Partners
World Capital 23,750(4) 23,750(7) 0 *
Funding LLC
* LESS THAN ONE PERCENT.
- ------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities and includes any securities
which the person has the right to acquire within 60 days of November 13,
1998 through the conversion or exercise of any security or other right.
(2) Beneficial ownership is determined as of November 13, 1998, is based upon a
conversion price of the Alpha-Beta Series F Convertible Preferred Stock
equal to $.9536 (which is 85% of the average of the closing bid prices of
Alpha-Beta Common Stock for the five consecutive trading days ended
November 12, 1998) and assumes completion of the second tranche of
Alpha-Beta Series F Convertible Preferred Stock as of such date.
Beneficial ownership without the second tranche of Alpha-Beta Series F
Convertible Preferred Stock is 1,578,944 shares of Alpha-Beta Common Stock
as of November 13, 1998. The actual number of shares of Alpha-Beta Common
Stock issuable upon conversion of the Alpha-Beta Series F Convertible
Preferred Stock is that number of shares of Alpha-Beta Common Stock equal
to the quotient of (i) the aggregate purchase price of the Alpha-Beta
Series F Convertible Preferred Stock ($1,000 per share) plus a premium,
which accrues at the rate of 6% per annum, divided by (ii) the conversion
price. The conversion price is the lesser of (a) $1.50 per share or (b) 85%
of the market price of Alpha-Beta Common Stock, where the market price is
the average of the closing bid prices for Alpha-Beta Common Stock for the
five consecutive trading days immediately preceding such date of
determination. The conversion price is subject to adjustment upon certain
dilutive transactions and other events. No holder of Alpha-Beta Series F
Convertible Preferred Stock is entitled to convert or exercise such
securities to the extent that the shares of Alpha-Beta Common Stock to be
received by such holders upon such conversion or exercise would cause such
holders in the aggregate to beneficially own more than 4.99% of the
outstanding shares of Alpha-Beta Common Stock (other than shares deemed to
be beneficially owned through ownership of the Alpha-Beta Series F
Convertible Preferred Stock). In addition, pursuant to the rules of the
Nasdaq National Market, in the absence of shareholder approval, the
aggregate number of shares issuable to the Selling Stockholders upon the
conversion of the Alpha-Beta Series F Convertible Preferred Stock may not
exceed 19.99% of the outstanding shares of Alpha-Beta Common Stock as of
October 21, 1998 (approximately 4,094,894 shares). Unless such shareholder
approval is obtained, none of the Selling Stockholders will be able to
acquire more than its proportionate share of such maximum amount.
Alpha-Beta may be required to redeem any shares of Alpha-Beta Series F
Convertible Preferred Stock which may not be converted because of such
limitation.
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(3) Beneficial ownership is determined as of November 13, 1998 and represents
11,250 shares of Alpha-Beta Common Stock held by Reedland and warrants
exercisable for 12,500 shares of Alpha-Beta Common Stock held by Reedland.
(4) Beneficial ownership is determined as of November 13, 1998 and represents
11,250 shares of Alpha-Beta Common Stock held by World Capital and warrants
exercisable for 12,500 shares of Alpha-Beta Common Stock held by World
Capital.
(5) Represents the shares of Alpha-Beta Common Stock potentially issuable as of
November 13, 1998, upon conversion of the 3,000 shares of Alpha-Beta Series
F Convertible Preferred Stock held or to be acquired by HFTP Investments
which Alpha-Beta is registering pursuant to the Registration Rights
Agreement between Alpha-Beta and HFTP Investments. The number of shares of
Alpha-Beta Common Stock registered pursuant to the Registration Statement
on behalf of HFTP Investments and the number of shares of Alpha-Beta Common
Stock offered hereby by HFTP Investments have been determined by agreement
between Alpha-Beta and HFTP Investments. Because the number of shares of
Alpha-Beta Common Stock that will ultimately be issued upon conversion of
the Alpha-Beta Series F Convertible Preferred Stock is dependent, subject
to certain limitations, upon the average of certain closing bid prices of
the Alpha-Beta Common Stock prior to conversion, as described in footnote
(2) above, and certain antidilution adjustments, such number of shares (and
therefore the number of shares offered hereby) cannot be determined at this
time. The information contained above represents a good faith estimate of
the number of shares of Alpha-Beta Common Stock which may be issuable upon
such conversion. The number of shares being offered by HFTP Investments, in
accordance with Rule 416 under the Securities Act, also includes such
presently indeterminate number of additional shares as may be issuable upon
conversion of the Series F Convertible Preferred Stock, based upon stock
splits, stock dividends or similar transactions.
(6) Represents 11,250 shares of Alpha-Beta Common Stock held by Reedland and
warrants exercisable for 12,500 shares of Alpha-Beta Common Stock held by
Reedland Capital.
(7) Represents 11,250 shares of Alpha-Beta Common Stock held by World Capital
and warrants exercisable for 12,500 shares of Alpha-Beta Common Stock held
by World Capital.
(8) Gives effect to the conversion or exercise (as applicable) of all of the
shares of Alpha-Beta Series F Convertible Preferred Stock and all of the
warrants held by Reedland and World Capital and sale of the shares of
Alpha-Beta Common Stock upon such conversion or exercise.
(9) Promethean Investment Group L.L.C. is the investment manager of HFTP
Investments and consequently has voting control and investment discretion
over securities held by HFTP Investments, and is indirectly controlled by
Mr. James F. O'Brien, Jr. Promethean Investment Group and Mr. O'Brien
disclaim beneficial ownership of the shares of Alpha-Beta Common Stock
beneficial owned by HFTP Investments.
PLAN OF DISTRIBUTION
The shares of Alpha-Beta Common Stock offered by this prospectus (the
"Shares") are being offered on behalf of the Selling Stockholders. Such Shares
may be sold or distributed from time to time by the Selling Stockholders, or by
donees or transferees of, or other successors in interest to, the Selling
Stockholders, directly to one or more purchasers or through brokers, dealers or
underwriters who may act solely as agents or may acquire such Shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices, or at fixed prices,
which may be changed. The sale of the Shares offered hereby may be effected in
one or more of the following methods: (i) ordinary brokers' transactions; (ii)
transactions involving cross or block trades or otherwise on the Nasdaq National
Market; (iii) purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this prospectus;
(iv) "at the market" to or through market makers or into an existing market for
Alpha-Beta Common Stock; (v) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (vi) through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise); (vii) in privately
negotiated transactions; (viii) to cover short sales; or (ix) any combination of
the foregoing.
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From time to time, one or more of the Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such Shares have been
hypothecated shall, upon foreclosure in the event of default, be deemed to be
Selling Stockholders hereunder. The number of Shares beneficially owned by those
Selling Stockholders who so transfer, pledge, donate or assign such Shares will
decrease as and when they take such actions. The plan of distribution for the
Shares sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be Selling Stockholders
hereunder. In addition, a Selling Stockholder may, from time to time, sell short
the Shares, and in such instances, this prospectus may be delivered in
connection with such short sales and the shares of Alpha-Beta Common Stock
offered hereby may be used to cover such short sales.
A Selling Stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of Alpha-Beta
Common Stock in the course of hedging the positions they assume with such
Selling Stockholder, including, without limitation, in connection with
distributions of Alpha-Beta Common Stock by such broker-dealers. A Selling
Stockholder may also enter into option or other transactions with broker-dealers
that involve the delivery of the Shares to the broker-dealers, who may then
resell or otherwise transfer such shares of Alpha-Beta Common Stock. A Selling
Stockholder may also loan or pledge its Shares to a broker-dealer and the
broker-dealer may sell the Shares so loaned or upon a default may sell or
otherwise transfer the pledged Shares.
Brokers, dealers, underwriters or agents participating in the
distribution of the Shares as agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders and/or
purchasers of the Shares for whom such broker-dealers may act as agent, or to
whom they may sell as principal, or both (which compensation as to a particular
broker-dealer may be less than or in excess of customary commissions). The
Selling Stockholders and any broker-dealers who act in connection with the sale
of the Shares hereunder may be deemed to be "Underwriters" within the meaning of
the Securities Act, and any commissions they receive and proceeds of any sale of
the Shares may be deemed to be underwriting discounts and commissions under the
Securities Act. Neither Alpha-Beta nor any Selling Stockholders can presently
estimate the amount of such compensation. Alpha-Beta knows of no existing
arrangements between any Selling Stockholders, any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the Shares.
Alpha-Beta will pay substantially all of the expenses incident to the
registration, offering and sale of the Shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents. Alpha-Beta
has also agreed to indemnify the Selling Stockholders and certain related
persons against certain liabilities, including liabilities under the Securities
Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Alpha-Beta, Alpha-Beta has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore, unenforceable.
Alpha-Beta has advised the Selling Stockholders that during such time
as they may be engaged in a distribution of the Shares included herein they are
required to comply with Regulation M promulgated under the Exchange Act. With
certain exceptions, Regulation M precludes any Selling Stockholder, any
affiliated purchasers, and any broker-dealer or other person who participates in
such distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of the
distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security. All of the
foregoing may affect the marketability of the Shares.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This prospectus is part of a registration statement Alpha-Beta filed
with the SEC to register the Alpha-Beta Common Stock offered in this offering.
It does not repeat important information that you can find in the registration
statement or in the reports and other documents that Alpha-Beta files with the
SEC. The SEC allows Alpha-Beta to "incorporate by reference" the information it
files with them. This means that Alpha-Beta can disclose important information
to you by referring to other documents that are legally considered to be part of
this prospectus, and later information that it files with the SEC will
automatically update and supersede the information in this prospectus and the
documents listed below. Alpha-Beta incorporates by reference the documents
listed below, and any future filings made with the SEC under Section 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until the Selling
Stockholders sell all the shares of Alpha-Beta Common Stock offered under this
prospectus:
1. the Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
2. the Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998;
3. the Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1998;
4. the Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1998;
5. the Current Report on Form 8-K filed with the SEC on October
23, 1998;
6. the Form 8-A/A filed with the SEC on October 23, 1998; and
7. the description of Alpha-Beta Common Stock contained in the
Form 8-A filed with the SEC on April 11, 1992, as amended by
the Form 8-A/A filed with the SEC on November 1, 1993.
You may request a copy of these filings at no cost by writing or
telephoning Alpha-Beta at the following address: Finance Department, Alpha-Beta
Technology, Inc., Three Biotech Park, One Innovation Drive, Worcester,
Massachusetts 01605 (Telephone: (508) 798-6900).
You should rely only on the information incorporated by reference or
contained in this prospectus or any supplement. Alpha-Beta has not authorized
anyone else to provide you with different or additional information. The Selling
Stockholders are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the front of those documents.
Alpha-Beta files annual, quarterly and special reports, proxy
statements and other information electronically with the SEC. You may read a
copy of any reports, statements or other information that Alpha-Beta files with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information
on the Public Reference Room. Alpha-Beta's SEC filings are also available from
the Internet site maintained by the SEC at http://www.sec.gov.
LEGAL MATTERS
The validity of the shares of Alpha-Beta Common Stock has been passed
upon for Alpha-Beta by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
EXPERTS
The financial statements of Alpha-Beta which are incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein upon the authority of said firm as experts in giving said
reports.
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YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
CONTAINED IN THIS PROSPECTUS OR ANY SUPPLEMENT. ALPHA-BETA HAS NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. THE SELLING
STOCKHOLDERS ARE NOT MAKING AN OFFER OF THE ALPHA-BETA COMMON STOCK IN ANY STATE
WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE
ON THE FRONT OF THOSE DOCUMENTS.
TABLE OF CONTENTS
PAGE
Risk Factors.................................................... 2
The Company..................................................... 7
Use of Proceeds................................................. 7
Summary of HFTP Investments
Transaction................................................... 7
Selling Stockholders............................................ 10
Plan of Distribution............................................ 11
Incorporation of Certain
Documents by Reference........................................ 13
Legal Matters................................................... 13
Experts......................................................... 13
9,503,323 Shares
ALPHA-BETA
TECHNOLOGY, INC.
COMMON STOCK
PROSPECTUS
___________, 1998
17
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
Alpha-Beta Common Stock being registered are set forth in the following table
(all amounts except the registration fee are estimated):
Registration fee $ 2,990
Consulting fees 300,000
Legal fees and expenses 100,000
Printing fees 30,000
Transfer Agent fees 5,000
Miscellaneous 25,000
--------
TOTAL $462,990
========
All expenses referenced above will be borne by Alpha-Beta.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Alpha-Beta is a Massachusetts corporation. Reference is made to Chapter
156B, Section 13 of the Massachusetts Business Corporation Law (the "MBCL"),
which enables a corporation in its original articles of organization or an
amendment thereto to eliminate or limit the personal liability of a director for
monetary damages for violations of the director's fiduciary duty, except (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Sections
61 and 62 of the MBCL (providing for liability of directors for authorizing
unauthorized distributions and for making loans to directors, officers and
certain shareholders) or (iv) for any transaction from which a director derived
an improper personal benefit.
Reference also is made to Chapter 156B, Section 67 of the MBCL, which
provides that a corporation may indemnify directors, officers, employees and
other agents and persons who serve at its request as directors, officers,
employees or other agents of another organization or who serve at its request in
any capacity with respect to any employee benefit plan, to the extent specified
or authorized by the articles of organization, a by-law adopted by the
stockholders or a vote adopted by the holders of a majority of the shares of
stock entitled to vote on the election of directors. Such indemnification may
include payment by the corporation of expenses incurred in defending a civil or
criminal action or proceeding in advance of the final disposition of such action
or proceeding, upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be adjudicated to be not entitled to indemnification
under Section 67 which undertaking may be accepted without reference to the
financial ability of such person to make repayment. Any such indemnification may
be provided although the person to be indemnified is no longer an officer,
director, employee or agent of the corporation or of such other organization or
no longer serves with respect to any such employee benefit plan. No
indemnification shall be provided, however, for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation or to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interest of the
participants or beneficiaries of such employee benefit plan.
Article VI of the Restated Articles of Organization of Alpha-Beta
provides that, except under certain circumstances, directors of Alpha-Beta shall
not be personally liable to Alpha-Beta or its stockholders for monetary damages
for breach of fiduciary duties as a director.
Article VI of the Restated Articles of Organization of Alpha-Beta
provides for indemnification of the officers and directors of Alpha-Beta to the
full extent permitted by applicable law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or persons controlling Alpha-Beta pursuant to the foregoing provisions,
the Commission has expressed its opinion that such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
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ITEM 16. EXHIBITS.
Exhibit No. Description
4.1 Registration Rights Agreement, dated as of October 21, 1998, by
and among Alpha-Beta Technology, Inc. and HFTP Investments. (1)
4.2 Certificate of Vote of Directors of Alpha-Beta Technology, Inc.
Amending and Restating Terms of Series F Convertible Preferred
Stock Prior to Issuance filed with the Secretary of State of The
Commonwealth of Massachusetts on October 21, 1998. (2)
4.3 Securities Purchase Agreement, dated as of October 21, 1998, by
and among Alpha-Beta Technology, Inc. and HFTP Investments LLC.
(3)
4.4 Warrant Agreement, dated as of October 21, 1998, by and among
Alpha-Beta Technology, Inc. and Reedland Capital Partners.*
4.5 Warrant Agreement, dated as of October 21, 1998, by and among
Alpha-Beta Technology, Inc. and World Capital Funding, LLC.*
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
Alpha-Beta Common Stock being registered.*
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Powers of Attorney (included on signature page of Registration
Statement as filed).
- -------------------------
(1) Incorporated by reference from Exhibit 4.2 to Alpha-Beta Technology, Inc.'s
current report on Form 8-K dated October 21, 1998.
(2) Incorporated by reference from Exhibit 4.3 to Alpha-Beta Technology, Inc.'s
current report on Form 8-K dated October 21, 1998.
(3) Incorporated by reference from Exhibit 4.1 to Alpha-Beta Technology, Inc.'s
current report on Form 8-K dated October 21, 1998.
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the undersigned registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in
the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
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(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by
a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Alpha-Beta
Technology, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Worcester, Massachusetts, on the thirteenth day of November,
1998.
ALPHA-BETA TECHNOLOGY, INC.
By: /s/ Spiros Jamas
--------------------
Spiros Jamas
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Alpha-Beta Technology, Inc. hereby severally constitute Spiros
Jamas, D. Davidson Easson Jr. and Joseph M. Grimm, and each of them singly, our
true and lawful attorneys with full power to them to sign for us in our names
and in the capacities indicated below, the Registration Statement filed herewith
and any and all amendments to said Registration Statement (and any registration
statement pursuant to Rule 462(b)), and generally to do all such things in our
names and in our capacities as officers and directors to enable Alpha-Beta
Technology, Inc. to comply with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorneys, or either of them, to said Registration Statement and either and all
amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
/s/ Spiros Jamas President, Chief Executive November 13, 1998
- ------------------------------ Officer and Director (Principal
Spiros Jamas Executive Officer)
/s/ D. Davidson Easson Jr. Executive Vice President, November 13, 1998
- ------------------------------ Treasurer, Chief Operating
D. Davidson Easson Jr. Officer and Director
/s/ Joseph M. Grimm Chief Financial Officer,
- ------------------------------ Vice President, Finance November 13, 1998
Joseph M. Grimm
/s/ Gustav A. Christensen Chairman of the Board of November 13, 1998
- ------------------------------ Directors
Gustav A. Christensen
/s/ Bernard Canavan Director November 13, 1998
- ------------------------------
Bernard Canavan
/s/ Lawrence C. Hoff Director November 13, 1998
- ------------------------------
Lawrence C. Hoff
/s/ Michael E. Porter Director November 13, 1998
- ------------------------------
Michael E. Porter
/s/ Peter H. Levine, M.D. Director November 13, 1998
- ------------------------------
Peter H. Levine, M.D.
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EXHIBIT INDEX
Exhibit No. Description
4.1 Registration Rights Agreement, dated as of October 21, 1998, by
and among Alpha-Beta Technology, Inc. and HFTP Investments. (1)
4.2 Certificate of Vote of Directors of Alpha-Beta Technology, Inc.
Amending and Restating Terms of Series F Convertible Preferred
Stock Prior to Issuance filed with the Secretary of State of The
Commonwealth of Massachusetts on October 21, 1998. (2)
4.3 Securities Purchase Agreement, dated as of October 21, 1998, by
and among Alpha-Beta Technology, Inc. and HFTP Investments LLC.
(3)
4.4 Warrant Agreement, dated as of October 21, 1998, by and among
Alpha-Beta Technology, Inc. and Reedland Capital Partners.*
4.5 Warrant Agreement, dated as of October 21, 1998, by and among
Alpha-Beta Technology, Inc. and World Capital Funding, LLC.*
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
Alpha-Beta Common Stock being registered.*
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Powers of Attorney (included on signature page of Registration
Statement as filed).
(1) Incorporated by reference from Exhibit 4.2 to Alpha-Beta Technology, Inc.'s
current report on Form 8-K dated October 21, 1998.
(2) Incorporated by reference from Exhibit 4.3 to Alpha-Beta Technology, Inc.'s
current report on Form 8-K dated October 21, 1998.
(3) Incorporated by reference from Exhibit 4.1 to Alpha-Beta Technology, Inc.'s
current report on Form 8-K dated October 21, 1998.
* To be filed by amendment.
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