SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
MARCH 10, 1999
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(Date of Report)
VERSAILLES CAPITAL CORPORATION
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(Exact Name of Registrant as specified in its charter)
COLORADO 0-22865 84-1044910
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
21550 OXNARD STREET, SUITE 830, WOODLAND HILLS, CA 91367
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(Address of principal executive offices including zip code)
(818) 676-0404
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(Registrant's telephone number including area code)
N/A
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(Former name or former address, if changed since last report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
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On February 23, 1999 (the "Effective Date"), Versailles Capital
Corporation, a Colorado corporation ("Company") completed a merger between
its wholly-owned subsidiary, Amerimmune, Inc. ("Amerimmune"), and British
Lion Medical, Inc. (British Lion), pursuant to an Agreement and Plan of
Merger dated February 17, 1999 ("Merger"), as discussed in Item 2 below.
In connection with the Merger, each share of common stock of British Lion
issued and outstanding on the Effective Date was exchanged for 7.13397
shares of the Issuer's common stock, $.05 par value per share ("Common
Stock"), resulting in the shareholders of British Lion acquiring
approximately 97 percent of the outstanding voting shares of the Issuer.
Subsequent to the Effective Date of the Merger Agreement, all
directors and officers of the Company resigned and new directors and
officers were elected. The following table sets forth the names and
positions of the current directors and executive officers of the Company:
Name Age Position
- ---- --- --------
Michael A. Davis 57 President, CEO and Director
Wellington A. Ewen 59 Chief Financial Officer
Pamela M. Kapustay 43 Vice President, Clinical and
Regulatory Affairs
Kimberlie L. Cerrone 46 Director
O. B. Parrish 65 Director
Lois Rezler 46 Director
Daniel L. Azarnoff 72 Director
Roy S. Azarnoff 67 Director
The following sets forth biographical information concerning the
Company's directors and executive officers.
MICHAEL A. DAVIS, M.D., Sc.D., M.B.A. currently serves as President,
CEO and a Director for the Company, and is Professor of Radiology and
Director, Division of Radiologic Research in the Department of Radiology at
the University of Massachusetts Medical Center ("UMMC"), Worcester,
Massachusetts since 1980. Dr. Davis also serves as the Associate Medical
Director of the Center for Advanced Clinical Technology at UMMC, which was
formed to aid medical device and pharmaceutical manufacturers in obtaining
safety and efficacy data required by the Food and Drug Administration (FDA)
and other world-wide regulatory bodies prior to granting marketing
approval. Since 1989, Dr. Davis has served as Medical Director for the
E-Z-EM Company, and was
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subsequently appointed as Technical Director, Chief Scientific Officer and
Director. Since 1982, Dr. Davis has been an Adjunct Professor in Nuclear
Medicine at Tufts University School of Veterinary Medicine, an Affiliate
Professor of Biomedical Engineering at Worcester Polytechnic Institute
since 1986, and has held faculty positions at Harvard Medical School and
Northeastern University. Currently, Dr. Davis serves as President of
Synergy Consulting Group, Ltd., a medical device and drug consulting group
comprising contract research organizations, which helps in the design,
monitoring and implementation of clinical trials and serves as liaison with
the FDA. He is a member of various medical and honorary societies and has
participated on various advisory committees for the United States Army and
National Institutes of Health. Dr. Davis is the listed inventor on seven
issued United States patents for scientific developments in the areas of
radiology and nuclear medicine, has lectured extensively and authored over
136 peer-reviewed, scientific publications. Dr. Davis received his B.S. and
M.S. degrees in chemistry from Worcester Polytechnic Institute, his M.S.
and Sc.D. degrees in radiation biology from the Harvard School of Public
Health, an M.D. from the University of Massachusetts Medical School, and an
M.B.A. from Northeastern University.
WELLINGTON A. EWEN, C.P.A., MBA currently serves as the Company's
Chief Financial Officer, and has been the Chief Financial Officer of
Entropin since March, 1998. For the past ten years, Mr. Ewen has been the
owner and manager of Wellington A. Ewen & Associates, a business consulting
firm in Malibu, California. He has acted as a financial and accounting
officer for various businesses during that time. Prior to that, Mr. Ewen
served as senior manager at the public accounting firms of Coopers &
Lybrand, Los Angeles, California and Arthur Andersen & Co., New York, New
York. Mr. Ewen is a C.P.A. in the States of New York, Oregon and California
and has M.B.A. and B.S. degrees from Cornell University.
PAMELA M. KAPUSTAY, R.N., M.N. currently serves as the Company's Vice
President, Clinical and Regulatory Affairs. Ms. Kapustay is Senior
Research Associate in Clinical Management and Research Development for
Entropin, Inc., and serves in the same capacity for Western Center for
Clinical Studies. In addition, she serves as an independent consultant to
Amgen, Inc. assisting in the coordination of a large multi-center
pharmacoeconomic research project. Ms. Kapustay has held administrative,
clinical research and practice positions in both corporate and university
settings within and outside the United States, including the University of
Texas, M.D. Anderson Hospital and Tumor Institute with a concentrated
clinical focus in oncology and HIV/AIDS care. She has lectured and
published peer-reviewed articles and books on various aspects of peripheral
blood stem cell transplantation. Ms. Kapustay received a B.S. degree in
nursing from the University of Texas Health Science Center in Houston,
Texas and an M.S. degree in nursing from the University of California, Los
Angeles.
KIMBERLIE L. CERRONE, M.S., M.B.A., J.D. currently serves as a
Director of the Company and a business development consultant to early
stage high technology and life sciences companies. Ms. Cerrone is a
licensed California patent attorney who has practiced technology law at
Gunderson Dettner and Venture Law Group and was in house counsel at a
software company. Ms. Cerrone is admitted to practice patent law before
the United States Patent and Trademark Office. In 1987, she
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co-founded Neurobiological Technologies, Inc., and led this biotechnology
company's business development, regulatory affairs and financing efforts
for its first three years. Ms. Cerrone served on the Board of Directors of
Neurobiological Technologies, Inc., prior to its initial public offering
in 1994. She has authored several articles and book chapters on business
strategies that maximize the strategic value of intellectual property and
is frequently invited to speak at legal and business conferences. Ms.
Cerrone received a B.S. degree from the University of Illinois, and a
Master of Science degree in Biochemical Pharmacology from New York
University. She was awarded a Master of Business Administration degree from
University of San Francisco and a J.D. from the University of California,
Hastings College of the Law.
O. B. PARRISH currently serves as a Director of the Company and is the
President and a Director of Phoenix Health Care of Illinois, Inc. Mr.
Parrish is also Chairman, CEO and a Director of the Female Health Company
of Chicago, Illinois. In addition, he is Chairman of VistaCare Ltd., of
Minneapolis, which provides financial services to the terminally ill. Mr.
Parrish was Co-Chairman and a Director of Inhalon Pharmaceuticals, Inc, of
Bethlehem, Pennsylvania. He is also a Trustee of Lawrence University. From
1977 until 1986, he served as President of the Pharmaceutical Group of G.D.
Searle in Chicago, responsible for the management of its global
pharmaceutical business. From 1974 until 1977, Parrish was President of
Searle International and was responsible for the pharmaceutical diagnostics
and hospital business outside of the United States. Mr. Parrish has also
served as Executive President of the International Division of Pfizer,
Inc., and responsible for the management of the pharmaceutical, animal
health, consumer and chemical businesses in Canada, Latin America and
Germany, as well as staff pharmaceutical marketing, licensing and
regulatory activities outside of the United States. Mr. Parrish holds a
B.S. degree from Lawrence University and an M.B.A. from the University of
Chicago
LOIS REZLER, Ph.D. currently serves as a Director of the Company, and
formerly served as a Director and President of British Lion since October
1998. Since April 1998, Dr. Rezler has served as Vice President of Science
and Regulatory Affairs of Entropin, Inc. For more than ten years, Dr.
Rezler was engaged in consulting for various pharmaceutical and
biotechnology corporations including Smith Kline, Smith & Nephew,
Cheesborough Ponds, CIBA, Merck Sharpe Dome, Baxter Travenol and others.
Since January 1996, Dr. Rezler has been a Director and President of
Western Center for Clinical Studies. On behalf of various clients, Dr.
Rezler's duties and responsibilities have included working at bench level
to assist in drug design and development, preparing and submitting grant
applications to various government agencies, consulting in all aspects of
preparing IND and NDA submissions to the FDA, including biologics, devices,
new drugs, priority drugs and orphan drugs. Dr. Rezler's duties also
include responsibility for developing time lines and budgets for the
project. Dr. Rezler received her Ph.D. in Public Health from Edinburgh
University.
DANIEL L. AZARNOFF, M.D. currently serves as a Director for the
Company and formerly served as Director and Vice President of British Lion
from October 1998. Since January 1996, Dr. Azarnoff has been a Director
and Vice President of Western Center for Clinical Studies, Inc. From 1988
to present, Dr. Azarnoff has served as President of D. L. Azarnoff
Associates, a company
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engaged in consulting for various pharmaceutical and biotechnology
companies including Sandoz, Orion Pharma, DeNovo, Inc., Cibus
Pharmaceutical and Cellegy Pharmaceuticals, Inc. From 1978 to 1985, Dr.
Azarnoff was Corporate Senior Vice President of G.D. Searle & Co., an
international pharmaceutical company, and from 1978 through 1985 served as
President of Searle Research and Development, a division of G. D. Searle &
Co. Dr. Azarnoff was on the faculty of the University of Kansas Medical
School ("KUMC") from 1962 through 1978 rising to the rank of KUMC
Distinguished Professor of Medicine and Pharmacology. Dr. Azarnoff has
also held faculty positions at Northwestern University Medical School, the
University of Chicago Medical School, St. Louis University School of
Medicine and was a Fulbright Scholar at the Karolinska Institute in
Stockholm, Sweden. Dr. Azarnoff is a member of various medical and
honorary societies including the Institute of Medicine of the National
Academy of Sciences. He has lectured extensively within and outside the
United States, and published numerous scientific articles and books on
various aspects of clinical pharmacology. Dr. Azarnoff has served on
various advisory committees, including the Endocrine and Metabolism and
other Ad Hoc advisory committees of the Food and Drug Administration, World
Heath Organization, American Medical Association, National Institutes of
Health and National Research Council of the National Academy of Sciences.
Dr. Azarnoff has served on the Science Advisory Board of various
corporations which include Neurobiological Technologies, Inc., Gilead
Science, Inc., Oread, Inc., Cibus Pharmaceutical and Sandoz Research
Institute. Dr. Azarnoff has served or is serving as a director on the
following pharmaceutical drug and development companies: Entropin, Inc.,
Oread, Inc., Cibus Pharmaceutical and DeNovo, Inc. Dr. Azarnoff serves as
Vice President, Medical/Regulatory Affairs for Cellegy Pharmaceutical, Inc,
and was appointed President of Entropin, Inc., in April 1998. None of the
above corporations are developing drugs similar to the Company's products.
Dr. Azarnoff received a B.S. degree in biology and a M.S. degree in zoology
from Rutgers University. Dr. Azarnoff received an M.D. degree from the
University of Kansas Medical School.
ROY S. AZARNOFF, Ph.D. currently serves as a Director and
Secretary/Treasurer of the Company and formerly served as a Director and
Secretary/Treasurer of British Lion from October 1998. Dr. Azarnoff
currently serves as the chief operating officer for Western Center for
Clinical Studies (since 1995), a consulting firm that provides research
support assistance to community hospitals and medical groups for clinical
trials with pharmaceutical, biotechnology, diagnostic and medical device
companies, and as Chief Executive Officer of Medical Research Consultant
Associates Inc. (since 1989), a consulting firm that provides research
support assistance to community hospitals, research institutes and drug and
medical device companies. In addition, Dr. Azarnoff became Chief Operating
Officer of Entropin, Inc. in April, 1998. From 1986 to 1989, Dr. Azarnoff
served as director of the Office of Research and Sponsored Projects at
California State University, Northridge, and from 1977-79 and 1981-83,
served as administrator for Technical Assistance Projects at California
State University, Northridge, Foundation. Dr. Azarnoff was chief executive
officer for Eldercare Management Group from 1984 to 1986. Dr. Azarnoff
developed and then directed the fourth largest area agency on aging in the
United States as the director for the Office for the Aging for the City of
Los Angeles from 1972 to 1977. In addition, Dr. Azarnoff has authored
numerous articles and served as assistant professor at Boston University
from 1957 to 1966. Dr. Azarnoff received his B.A. from New York
University, M.A. from State University of
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Iowa and his Ph.D. in Communications from the University of Missouri.
The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have
been elected and qualified. Officers of the Company are elected annually
by the Board of Directors and hold office until their successors are
elected and qualified.
Daniel L. Azarnoff, M.D., the Company's Director, and Roy S. Azarnoff,
Ph.D., the Company's Secretary/Treasurer and Director, are brothers.
CHANGE IN CONTROL OF THE BENEFICIAL OWNERSHIP OF COMPANY
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Pursuant to the terms of the Merger Agreement, the Company is
required to issue, and is in the process of issuing, shares of its Common
Stock to the shareholders of British Lion as of February 23, 1999, on the
basis of 7.13397 shares of Common Stock for each 1 share of British Lion
common stock issued and outstanding which resulted in a change in control
of the beneficial ownership of the Company.
The following table sets forth, as of the date hereof, the ownership
of the Company's Common Stock, $.05 par value per share, by (i) each
director and executive officer of the Company, (ii) all executive officers
and directors of the Company as a group, and (iii) all persons known by
the Company to beneficially own more than 5% of the Company's Common Stock:
Amount and Nature Percent
Name and Address of Beneficial of Class
Title of Class of Shareholder Ownership(1) Owned
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Common Stock, Michael A. Davis 214,019 .5%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Wellington A. Ewen 356,699 .8%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Pamela Kapustay 107,010 .3%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Kimberlie L. Cerrone -0- -0-
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, O. B. Parrish -0- -0-
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
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Common Stock, Lois Rezler 28,357,561(2) 66.2%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Daniel L. Azarnoff 28,357,561(2) 66.2%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Roy S. Azarnoff 28,357,561(2) 66.2%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Three R Associates, Inc. 28,357,561(3) 66.2%
$.05 par value 21550 Oxnard Street #830
Woodland Hills, CA 91367
Common Stock, Cytodyn(R) of New Mexico, Inc. 4,280,387(4) 10.0%
$.05 par value 4236 Longridge Avenue #302
Studio City, CA 91604
Common Stock, Allen D. Allen 6,420,580(5) 15.0%
$.05 par value 4236 Longridge Avenue #302
Studio City, CA 91604
Common Stock, Maya, LLC 5,018,753 11.7%
$.05 par value 2325-A Renaissance Drive
Las Vegas, NV 89119
Common Stock, Rex Lewis 5,018,753(6) 11.7%
$.05 par value 2325-A Renaissance Drive
Las Vegas, NV 89119
Common Stock, Battersea Capital, Inc. 4,280,387(7) 9.7%
$.05 par value P. O. Box 153
Santa Monica, CA 90403
Common Stock, J. Matt Lepo 4,280,387(8) 9.7%
$.05 par value P. O. Box 153
Santa Monica, CA 90403
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Common Stock, All Directors and Executive
$.05 par value Officers as a group
(8 persons) 29,035,289 67.78%
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(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole
voting and investment power with respect to all such shares. Under
Rule 13d-3(d), shares not outstanding which are subject to options,
warrants, rights or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but are not deemed outstanding
for the purpose of calculating the percentage owned by each other
person listed.
(2) Includes 28,357,561 shares beneficially owned by Three R Associates,
Inc. ("Three R"). The shareholders and directors of Three R are: Lois
Rezler; Daniel L. Azarnoff; and, Roy S. Azarnoff.
(3) Includes: (i) 21,936,981 shares owned by Three R; and, (ii) 2,140,193
shares owned by Allen D. Allen and 4,280,387 shares owned by
Cytodyn(R) of New Mexico, Inc ("Cytodyn(R)") for which Three R holds
an irrevocable proxy to vote all such shares.
(4) Ctyodyn(R) granted an irrevocable proxy coupled with interest to vote
its shares to Three R.
(5) Includes: (i) 4,280,387 shares owned by Ctyodyn(R), of which Allen D.
Allen ("Allen") is a director and controlling shareholder; and, (ii)
2,140,193 shares owned by Allen. Allen granted an irrevocable proxy
coupled with interest to vote his shares to Three R.
(6) The shares are owned by Maya, LLC., a limited liability company of
which Mr. Lewis is the manager.
(7) Includes options to purchase an aggregate of 2,140,193 shares of
Common Stock which consists of: 1,426,796 shares, immediately
exercisable for a period of five (5) years, at $.42 per share, as
adjusted post-merger granted by the Issuer; and, an option granted by
Three R to purchase 713,398 shares of the Issuer's Common Stock owned
by Three R, immediately exercisable for a period of five (5) years, at
$.42 per share.
(8) The shares, which include an aggregate of 2,140,193 shares underlying
options held in the name of Battersea Capital, Inc. ("Battersea"), are
owned by Battersea, of which Mr. Lepo is the managing director.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On February 23, 1999 (the "Effective Date"), Versailles Capital
Corporation, a Colorado corporation ("Company"), Amerimmune, Inc., a
Colorado corporation and wholly owned subsidiary of the Company
("Amerimmune"), and British Lion Medical, Inc. ("British Lion"), completed
an acquisition whereby the Company acquired all of the outstanding shares
of British Lion pursuant to an Agreement and Plan of Merger dated February
17, 1999 ("Merger"), among the Company, Amerimmune and British Lion (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, the
following actions occurred:
(1) For and in consideration of the exchange of all shares of the
common stock of British Lion issued and outstanding on the Effective Date,
the Company issued 41,758,743 shares of its Common Stock,$.05 par value per
share, to shareholders of all the issued and outstanding common
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stock of British Lion in exchange therefore on a 7.13397 for one basis,
resulting in the shareholders of British Lion acquiring approximately 97
percent of the outstanding voting shares of the Company.
(2) The Company assumed the obligations of British Lion regarding all
outstanding stock options to purchase shares of common stock upon the same
terms and conditions.
(3) Each share of the Common Stock of British Lion which was issued
and outstanding on the Effective Date, by virtue of the merger and without
any action on the part of British Lion, was retired and cancelled.
In connection with the Merger, British Lion conducted a private
placement of its no par value common stock consisting of a maximum of 107
Units, each Unit consisting of 10,000 shares of Common Stock, or 1,070,000
shares (the "Units"), at an offering price of $30,000 per Unit, or
$3,210,000. These shares were exchanged for the Issuer's Common Stock in
connection with the Merger. The offering was made pursuant to the federal
registration exemption contained in Section 4(2) of the Securities Act of
1922, as amended, and Rule 506 of Regulation D promulgated thereunder only
to "accredited investors" as that term is defined in Rule 501(a) of
Regulation D.
ITEM 5. OTHER EVENTS.
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Subsequent to the acquisition of British Lion Medical, Inc, as
discussed in Item 2 above, Amerimmune, Inc., the wholly owned subsidiary of
the Company, will succeed to the business of British Lion and become
engaged in the pharmaceutical research business with the primary purpose of
developing Cytolin(R), a drug designed to protect the immune system,
especially in patients suffering from Human Immunodeficiency Virus ("HIV").
The Company believes that Cytolin(R) is important for the growing number of
patients who have become resistant to drugs currently used to treat the
HIV/AIDS virus.
Background
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Allen D. Allen, the founding scientist of Cytolin(R), developed a
family of monoclonal antibodies, one of which is called Cytolin(R), that
blocks certain adhesion molecules on one of the disease fighting cells of
the immune system, protecting the immune system's ability to keep itself
functioning effectively. Working with the current scientific evidence
gathered to 1993, Allen discerned that adhesion molecules appearing on the
killer white blood cells of individuals infected with Human
Immunodeficiency Virus (HIV) cause the killer cells of the immune system to
destroy CD4 cells, eventually resulting in the syndrome known as AIDS.
Adhesion molecules appear in large numbers on the killer-type T cells of
the immune system that proliferate in HIV-infected persons. In general,
killer cells that carry an abundance of adhesion molecules tend to turn the
human immune system against itself. Cytolin(R) keeps the immune system in
check by blocking predetermined adhesion molecules on killer-type T cells.
Acquired Immune Deficiency Syndrome ("AIDS") is a disease caused by
the Human
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Immunodeficiency Virus ("HIV"). First described as an infectious disease
in the early 1980s, HIV has infected over 20 million persons worldwide and
about 900,000 in the United States. This retrovirus attacks some of the
body's immune system cells and eventually causes the immune system to
damage itself, reducing the ability of the immune system to protect the
body against fungal, bacterial, parasitic and viral organisms, as well as
several types of cancer. The medical community generally believes that
most people becoming infected with HIV will eventually develop AIDS and
die.
Allen and his associates formed Cytodyn(R) of New Mexico, Inc.
("Cytodyn(R)") for the purposes of developing his theory and a drug which
could diminish destruction of CD4 cells. Cytodyn(R) raised and expended
$1,500,000 over the next couple of years for development and testing. In
1994, Allen granted Cytodyn(R) of New Mexico, a New Mexico corporation
("Cytodyn(R)"), of which Allen owns 100% of the Class A voting stock, an
exclusive worldwide license to use the patent rights and technology. In
addition, Cytodyn(R) obtained a trademark name for the product, Cytolin(R).
In August 1998, Allen and Cytodyn(R) entered into a Termination, Sale
and Shareholder Agreement with Three R Associates, Inc., a California
corporation ("Three R"), wherein: (i) Cytodyn(R) agreed to relinquish the
exclusive license to Cytolin(R) and grant an exclusive license to the
trademark name, Cytolin(R), to Three R, in exchange for 600,000 shares of
the Company's stock; and, (ii) Allen agreed to sell all United States
Patent and foreign patent rights and technological know-how underlying the
drug, Cytolin(R), to Three R, in exchange for a minimum of $180,000
("Purchase Agreement"). In August, 1998, Cytodyn(R) granted to Three R
Associates, Inc. ("Three R"), an exclusive license to the trademark name.
In October 1998, Three R entered into a Patent and Trademark License
Agreement ("License Agreement") with British Lion, whereby British Lion
received: (i) irrevocable exclusive worldwide rights to use all present and
future patent rights, know-how and background technology of Three R, relating
to the product, Cytolin(R); and, (ii) a sublicense to the trademark name,
Cytolin(R). British Lion granted Three R 3,075,000 Shares of its Stock upon
execution of the License Agreement, and agreed to assume Three R's obligations
under a consulting agreement between Three R and Allen D. Allen, the inventor
of the technology. The License Agreement was contingent upon: (i) British
Lion's entering into a management agreement with Western Center for Clinical
Studies, Inc., a California corporation ("WCCS") for purposes of assisting
British Lion in obtaining FDA approval to market Cytolin(R) for commercial
use; and, (ii) the completion of British Lion's merger with a publicly held
company. Lois Rezler, Daniel L. Azarnoff and Roy S. Azarnoff, British Lion's
directors and officers, collectively own 100% of the issued and outstanding
stock of WCCS and Three R. In October 1998, British Lion entered into a
management agreement with WCCS which was subsequently ratified by disinterested
directors of the Company.
In October 1998, British Lion sold 200,000 shares of its stock for a
total of $300,000, to certain accredited investors, as that term is defined
under Rule 501(a) of Regulation D of the Act, in a private offering exempt
from registration under Section 4(2) of the Act and Rule 506 of
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Regulation D promulgated thereunder, through its officers and directors.
The proceeds of the offering were used as short term working capital.
In December 1998, British Lion sold 1,070,000 shares of its stock for
a total of $3,210,000, to accredited investors, as that term is defined
under Rule 501(a) of Regulation D of the Act, in a private offering exempt
from registration under Section 4(2) of the Act and Rule 506 of Regulation
D promulgated thereunder, through its officers and directors. The offering
terminated on February 22, 1999 and funds were held in escrow until
February 23, 1999, the Effective Date of the Merger Agreement. The
proceeds of the offering will be used for research and development of the
Company's product, Cytolin(R).
Testing of Cytolin
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The safety of Cytolin(R) was tested in a series of toxicology studies
and it was found safe for administering to humans. During the period when
no especially effective treatments for HIV were on the market, a number of
physicians in the United States using the compound made by manufacturer
under the current Good Manufacturing Practices ("GMP"), administered
Cytolin(R) to their HIV-infected patients over the course of more than
three years. As results from the initial use became available, other
physicians obtained and administered it to their patients as well. Four of
those physicians allowed an independent, professional monitor into their
offices to inspect the medical records of 188 patients they had treated
with Cytolin(R) once or twice a month over 18 months. These data were
recorded and summarized and form part of the material presented to the FDA
as an indication of the safety of Cytolin(R). The FDA has authorized a
clinical trial, the preparation of which will begin shortly.
Overview of the FDA Approval Process
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GENERAL. The manufacturing and marketing of the Company's proposed
products and its research and development activities are and will continue
to be subject to regulation by federal, state and local governmental
authorities in the United States and other countries. In the United
States, pharmaceuticals are subject to rigorous regulation by the FDA's
Center for Biologic and Drug Evaluation and Research, which reviews and
approves marketing of drugs. The Federal Food, Drug and Cosmetic Act, the
regulations promulgated thereunder, and other federal and state statutes
and regulations govern, among other things, the testing, manufacture,
labeling, storage, record keeping, advertising and promotion of the
Company's potential products.
APPROVAL PROCESS. The process of obtaining FDA approval for a new
drug takes several years and generally involves the expenditure of
substantial resources. The steps required before a new drug can be
produced and marketed for human use include pre-clinical and clinical
trials and the approval of the New Drug Application ("NDA"). However, the
FDA offers an accelerated drug approval program for new drugs which treat
serious or life-threatening illnesses. SEE Accelerated Drug Approval.
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PRE-CLINICAL TESTING. The compound is subjected to extensive
laboratory and animal testing to determine if the compound is biologically
safe and has the functionality for which its therapeutic use is intended.
All animal safety studies must be performed under current good laboratory
practices.
INVESTIGATIONAL NEW DRUG ("IND"). Before human tests can begin, the
drug sponsor must file an IND application with the FDA, showing how the
drug and drug product(s) are made and the results of animal testing. If
the FDA does not reject the application within 30 days, IND status permits
the sponsor to undertake initial studies in human volunteer subjects.
HUMAN TESTING (CLINICAL). Under an IND, the human clinical testing
program involves three phases. Clinical trials are conducted in accordance
with protocols that detail the objectives of the study, the parameters to
be used to monitor safety and the efficacy criteria to be evaluated,
including the type of statistical analysis that will be done. Each
protocol is submitted to the FDA as part of the IND filing. At the present
time, two well-controlled clinical trials using a placebo for some subjects
are required to establish efficacy and safety. Each clinical study is
conducted under the auspices of an independent Institutional Review Board
("IRB") for each institution at which the study will be conducted. The IRB
considers, among other things, information on the product, ethical factors,
the risk to human subjects, and the potential benefits of therapy relative
to risk.
For drugs that are not intended for HIV treatment, Phase I clinical
trials are usually conducted on healthy volunteers to determine the maximum
tolerated dose, adverse effects and pharmacokinetics of a product.
Efficacy endpoints, even if surrogate measures, are also obtained if
possible. Phase II studies are conducted on a statistically relevant
number of patients having a specific disease to determine initial efficacy
in humans for that specific disease, and possible adverse effects and
safety risks. Phase III normally involves the pivotal trials of a drug,
consisting of wide-scale studies on patients with the disease for which the
drug is intended, in order to evaluate the overall benefits and risks of
the drug for the treated disease. In addition to a placebo, these studies
may compare the Company's drug product with other available products.
Phase I, II and III studies are planned to demonstrate safety and efficacy
as required for FDA approval. The FDA continually reviews the clinical
trial plans and results and may suggest design changes or may discontinue
the trials at any time if significant safety or other issues arise. The
data obtained from the IND studies are the basis for the official label or
package insert that tells the prescribing physician about the drug product
and how to use it appropriately.
NEW DRUG APPLICATION ("NDA"). Upon completion of Phase III, the
drug sponsor may file a NDA containing all pre-clinical, pharmacology and
toxicology information, and clinical and chemical, manufacturing and
control ("CMC") information that has been gathered, as well as all other
information that is known from any other sources. The information must
include essentially all the data collected during the IND phase (e.g.
chemical structure and characterization of the drug, formula and
manufacturing process, stability in the proposed packaging, animal and
laboratory studies, results of all human tests, etc.) and proposed
labeling. Once submitted, the FDA has 90 days to accept the application.
If the application is accepted, the Company must pay the FDA
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approximately $200,000 as a user fee in order to continue with the review
process.
APPROVAL. Once a NDA is approved, the manufacturer is required to
keep the FDA informed at all times regarding any adverse reactions.
Moreover, contract manufacturers that the Company may use must adhere at
all times to current GMP regulations enforced by the FDA through its
facilities inspection program. These facilities must pass a pre-approval
plant inspection before the FDA will issue a pre-market approval of the
product. The FDA may also require post-marketing testing (Phase IV) to
support the conclusion of efficacy and safety of the product, or answer
specific questions that arose during the IND studies. Phase IV can involve
significant expense. After FDA approval is obtained for initial
indications, further clinical trials are necessary to gain approval for the
use of the product for additional indications.
The testing and approval process is likely to require substantial time
and effort, and there can be no assurance that any FDA approval will be
granted on a timely basis, if at all. The approval process is affected by
a number of factors, primarily the adverse effects of the drug (safety) and
its therapeutic benefits (efficacy). Additional preclinical or clinical
trials may be required during the FDA review period and may delay marketing
approval. A task force established by the FDA has recently proposed
significant changes in the design, analysis and reporting of clinical
studies conducted under INDs, in response to the results of a Phase III
trial of a drug by another company in which severe complications and death
occurred. The task force recommended increased requirements for reporting
adverse effects and new, more stringent rules that would require clinical
trial investigators to assume that toxicities reported by patients are
drug-related. If these recommendations are implemented, the costs
associated with obtaining market approval by the FDA are likely to be
increased.
Outside the United States, the Company will be subject to foreign
regulatory requirements governing human clinical trials and marketing
approval for its products. Although the requirements governing the conduct
of clinical trials, product licensing, pricing and reimbursements vary
widely from country to country, these differences have been minimized in
Europe and Asia as a result of publication and acceptance of the
International Committee on Harmonization guidelines.
Accelerated Drug Approval
- -------------------------
The FDA allows patients with serious and life-threatening diseases,
such as HIV, to benefit from earlier access to important new drugs through
an "accelerated drug approval" program. To be eligible for this program,
the products must treat serious or life-threatening illnesses and provide
meaningful therapeutic benefits beyond existing treatments. Under this
program, a significant new therapy could be approved for marketing at the
earliest possible point at which safety and effectiveness are reasonably
established under existing law. For example, the approval of a drug could
be accelerated by demonstrating a favorable effect on a well-documented
surrogate endpoint to predict clinical benefit, instead of requiring that
the drug demonstrate actual clinical benefit, which may take many months or
years. Approval would be granted only if the sponsor agrees to conduct
additional post-marketing studies to confirm the product's effectiveness
and/or agrees to restrict distribution of the product. In addition, if the
further clinical trials do not bear out the product's effectiveness or if
restricted distribution is inadequate to assure safe use, approval of the
product
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would be withdrawn.
The Current Status of FDA Approval/Proposed Research and Development Plan
- -------------------------------------------------------------------------
The Company believes that the research and development effort invested
in Cytolin(R) undertaken by Allen and his affiliated company has produced
an existing base of data which, in the view of management, may reduce the
time, risk and cost associated with commercializing the product. With the
FDA's current accelerated drug approval program, the Company believes that
the approval process for Cytolin(R) may be accelerated.
The first study, a tolerability study which is designed to determine
the optimum dosage, has received FDA approval and can begin soon after
the drug is manufactured. At the conclusion of the tolerability (dose-
ranging) study, about ten to twelve months after initiation, the Company
anticipates that the FDA will grant approval to sell the drug to HIV-infected
persons while the Phase II/III study is on-going. Upon completion of the
first study, with FDA approval, the Company will initiate a Phase II/III
study to determine that the drug is effective for a wide range of patients
and what side-effects, if any, exist. Additional studies may not be
required. Should one or more be required, these studies will involve more
patients at a number of sites and will be designed to add data about
Cytolin(R)'s effectiveness, side-effects and appropriate use. A NDA will be
filed with the FDA as soon as feasible after the last required study.
Approval of the NDA will permit the Company to market Cytolin(R) through
normal channels.
Manufacturing
- -------------
The Company does not have, and does not intend to establish,
manufacturing facilities to produce products. The Company plans to control
its initial capital expenditures by using contract manufacturers to make
its products. The Company believes that there are a sufficient number of
high quality FDA-approved contract manufacturers available to fulfill its
near-term production needs for both clinical and commercial uses.
The manufacture of the Company's products by outside contractors will
be subject to rigorous regulations, including the need to comply with the
FDA's current GMP standards. As part of obtaining FDA approval for the
product, each of the manufacturing facilities must be inspected, approved
by and registered with the FDA. In addition to obtaining FDA approval of
the prospective manufacturer's quality control and manufacturing
procedures, domestic and foreign manufacturing facilities are subject to
periodic inspection by the FDA and/or foreign regulatory authorities.
Patents
- -------
Cytolin(R) is protected by the following United States Composition
Patents: Patent #5,424,066 granted June 13, 1995 to Allen; and, Patent
#5,651,970 granted July 29, 1997 to Allen, both of which patents will
expire 17 years from date of grant. Allen granted Cytodyn, an exclusive
worldwide license to use the patent rights and technology. In August 1998,
Three R entered into an
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agreement with Cytodyn(R) and Allen wherein Cytodyn(R) relinquished the
exclusive license to Cytolin(R) and in turn, Allen agreed to sell all
United States Patent and foreign patent rights and technological know-how
underlying the drug, Cytolin(R), to Three R. In October 1998, Three R
granted British Lion an exclusive irrevocable worldwide license to develop,
manufacture and market Cytolin(R), subject to certain contingencies.
Risk Factors
- ------------
1. The Company's principal development efforts will be centered on the
development of a new drug, Cytolin(R), which management believes will
protect the immune system in patients suffering from Human Immunodeficiency
virus ("HIV"). In a series of toxicology studies, Cytolin(R) was found
safe for administering to humans. In addition, independent professional
studies of 188 HIV/AIDS patients treated with Cytolin(R) over a three (3)
year period were presented to the Food and Drug Administration ("FDA") as
an indication of the safety of the drug. As a result, the FDA has
authorized a clinical trial which can begin as soon as funds become
available. The FDA has developed a "fast track" process for approval, for
which the Company believes Cytolin(R) should be eligible. The Company
expects to obtain FDA approval for regular sales in three (3) years or
less.
While limited clinical experience with Cytolin(R) has to date produced
favorable results, significant additional trials are required, and no
assurance can be given that the drug will ultimately be approved by the
FDA. The Company intends to develop additional products using the same
technology; however, there can be no assurances that such plans will
materialize. The Company has never commercially introduced a product, and
no assurance can be given that commercialization of the Company's product
in any country in which it may be approved will be financially successful,
which could materially adversely effect the Company.
2. The Company has not yet generated any operating revenues. The
Company cannot predict when marketing approvals for Cytolin(R) will be
obtained, if ever. Even if such approvals are obtained, there can be no
assurance that Cytolin(R) will be successfully commercialized. Since
anti-HIV/AIDS drugs are not necessarily required to follow the FDA's usual
approval process and may be sold, but not marketed, as soon as their safety
is established, the Company anticipates sales can be made to physicians
soon after the completion of the first clinical trial. Nevertheless, the
Company expects its operating expenses to increase over the next several
years as it funds development, clinical testing and other expenses of
seeking FDA approval. The Company's ability to achieve a profitable level
of operation is dependent in large part on obtaining regulatory approvals
for its products, entering into agreements for product development and
commercialization, and expanding from development into successful
marketing, all of which will require significant amounts of capital. There
can be no assurance that the Company will ever achieve a profitable level
of operations.
3. The Company has obtained the exclusive irrevocable worldwide rights to
develop and market the product, Cytolin(R), from Three R Associates, Inc.
("Three R"). However, patents are not a guarantee of protection from
competitors, especially in an area characterized by rapid advances, and
enforcement of patents and proprietary rights in many countries can be
expected to be problematic or unpredictable. There can be no assurance
that any patents issued or licensed to the Company or Three R will not be
challenged, invalidated, infringed upon, or designed around by others or
that the
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claims contained in such patents will not infringe the patent claims of
others. Furthermore, there can be no assurance that others will not
independently develop similar products. Although management believes that
patents provide significant protection for the Company's product, the
Company's business may be adversely affected by competitors who develop a
substantially equivalent product. Patent litigation can be extremely
expensive, and the Company may find that it is unable to fund litigation
necessary to defend its rights.
4. The research, preclinical development, clinical trial, manufacturing,
marketing and sale of pharmaceuticals are subject to extensive regulation
by governmental authorities. Products developed by the Company cannot be
marketed commercially in any jurisdiction in which they have not been
approved. The process of obtaining regulatory approvals is lengthy and
extremely expensive. Approval by United States authorities does not
guarantee, nor at times even facilitate or expedite, approval in other
countries. Further, government regulations are subject to change and it is
possible that additional criteria may be established or imposed which could
prevent or delay regulatory approval of any products of the Company.
5. The Company may require substantial and increasing amounts of funds to
conduct necessary research and development and preclinical and clinical
testing of its product, and to market any products which may receive
regulatory approval. Although the Company may sell, but not market,
Cytolin(R) as an anti-HIV/AIDS drug to physicians following the completion
of the first clinical trial and prior to FDA approval, the Company does not
expect to generate revenue from operations within the next year. The
Company's ability to meet its cash obligations as they become due and
payable is expected to depend for at least the next several years on its
ability to obtain equity and or debt capital. There can be no assurance
that the Company will be successful in raising the necessary funds. The
Company's future capital requirements will depend upon many factors,
including progress with preclinical testing and clinical trials; the time
and costs involved in obtaining regulatory approvals; competing
technological and market developments; the ability of the Company to
establish collaborative arrangements; and, effective commercialization and
marketing activities. In any event, the Company may incur negative cash
flows and net losses for the foreseeable future.
The Company may require significant capital in order to complete the
FDA approval process and New Drug Application Phase. Additional funds will
be sought, most likely through sale of equity or debt securities. If
adequate funds are not available, the Company may delay, scale back or
eliminate certain programs, or may seek funds through collaborative
arrangements with strategic partners or others. Such arrangements could
require relinquishment of rights to certain technologies, products or
markets which it would not otherwise relinquish.
6. The Company may experience cash flow difficulties from time to time
due to its substantial capital needs. For the foreseeable future, the
Company's ability to meet its cash obligations as they become due and
payable will depend on its ability to obtain debt and/or equity funding.
In the event that the Company can not raise sufficient capital when needed
to sustain or expand its operations, the Company would suspend research and
development activities.
7. The pharmaceutical industry is characterized by intense competition
and is subject to rapid and significant technological change. Rapid
technological development may cause the products to
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become obsolete before the Company recoups all or any portion of the
related expenses. The Company's competitors include major pharmaceutical
companies, biotechnology firms and universities and other research
institutions, both in the United States and abroad, which are actively
engaged in research and development of products in the therapeutic areas
being pursued by the Company. Most of the Company's competitors have
substantially greater financial, technical, manufacturing, marketing and
human resource capabilities than the Company. In addition, many of the
Company's competitors have significantly greater experience in testing new
or improved therapeutic products and obtaining regulatory approval of
products. Accordingly, the Company's competitors may succeed in obtaining
regulatory approval for products more rapidly than the Company. If the
Company commences significant commercial sales of its products, it will
also be competing with respect to manufacturing efficiencies and marketing
capabilities, areas in which it has little experience.
8. The Company is significantly dependent on its officers and directors.
If the Company fails to retain the services of one or more of these
individuals, the Company's operations may be adversely affected. The
Company does not have key man insurance on any of its officers or
directors.
9. The Company entered into a management agreement with WCCS for purposes
of assisting the Company in obtaining FDA approval necessary to market the
Company's product, Cytolin(R), for commercial use. Although the Company
could contract with other companies for comparable services, the Termination,
Sale and Shareholder Agreement by and among Three R, Allen D. Allen and
Cytodyn(R) which conveys the patents to Three R, required the Company to enter
into the abovementioned management agreement, as a condition to Three R's
granting the Company an exclusive worldwide license to develop the product.
Three R and WCCS are controlled by some of the officers and directors
of the Company, Lois Rezler, Daniel L. Azarnoff and Roy S. Azarnoff, all of
whom will basically control the rights to all pharmaceutical products which
will be licensed to the Company. The Company will be obligated to provide
certain funding, including funding for the development and testing of the
product, at specified times. There can be no assurance that the Company
will be able to meet future payments or funding obligations under the WCCS
agreement, which would have a material adverse effect on the Company.
10. All of the Company's product development efforts are based upon
technologies and therapeutic approaches that have not been widely tested or
used. There is, therefore, significant risk that these approaches will not
prove to be successful. While the Company believes that the results
obtained to date in preclinical and limited clinical studies support
further research and development, those results are not necessarily
indicative of results that will be obtained in further human clinical
testing.
11. Government health administration authorities, together with private
health insurers, increasingly are attempting to contain health care costs
by limiting the price or reimbursement levels for medical products and
services. In certain foreign markets, pricing or profitability of
prescriptive
-17-
pharmaceuticals is subject to government control. In the United States,
there have been a number of federal and state proposals to implement
similar government controls or otherwise significantly reform the existing
health care system. Due to uncertainties as to the ultimate features of
this or any other reform initiatives that may be enacted, the Company
cannot predict which, if any, of such reform proposals will be adopted,
when they may be adopted, or what impact they may have on the Company. It
is possible that any legislation which is enacted will include provisions
resulting in price limits, utilization controls or other consequences that
may adversely affect the Company.
12. The Company's business will expose it to potential product liability
risks which are inherent in the testing, manufacturing, marketing and sale
of pharmaceutical products, and product liability claims may be asserted
against the Company. Product liability insurance for the pharmaceutical
industry generally is expensive to the extent that it is available at all.
There can be no assurance that adequate insurance coverage will be
available at acceptable costs, if at all, or that a product liability claim
would not adversely affect the business or financial condition of the
Company.
Certain Relationships and Related Transactions
- ----------------------------------------------
Allen D. Allen is the present owner of all United States Patent and
foreign patent rights to the technology and know-how underlying the
product, Cytolin(R). In 1994, Allen granted Cytodyn(R) of New Mexico, a
New Mexico corporation ("Cytodyn(R)"), of which Allen owns 100% of the
Class A voting stock, an exclusive worldwide license to use the patent
rights and technology. In August 1998, Allen and Cytodyn(R) entered into
a Termination, Sale and Shareholder Agreement with Three R Associates,
Inc., a California corporation ("Three R"), wherein: (i) Cytodyn(R) agreed
to relinquish the exclusive license to Cytolin(R) and grant an exclusive
license to the trademark name, Cytolin(R), to Three R, in exchange for a
number of shares equivalent to 10% of the issued and outstanding shares in
the subsequent public company; and (ii) Allen agreed to sell all United
States Patent and foreign patent rights and technological know-how
underlying the drug, Cytolin(R), to Three R, in exchange for a minimum of
$180,000. Lois Rezler, Daniel L. Azarnoff and Roy Azarnoff, directors of
the Company, are the officers, directors and sole shareholders of Three R.
In October 1998, Three R entered into a Patent and Trademark License
Agreement with British Lion ("License Agreement"), pursuant to which Three R
granted British Lion an irrevocable exclusive worldwide rights to use all
present and future patent rights, know-how and background technology of Three R,
relating to the product, Cytolin(R). In addition, the License Agreement
contains a provision whereby Three R granted British Lion a sublicense to
the trademark name, Cytolin(R). In exchange for the License, British Lion
issued 3,075,000 shares of its Stock to Three R, and subsequently assumed
Three R's obligations under a consulting agreement between Three R and
Allen, the inventor of the technology. The License Agreement is subject
to: (i) British Lion's entering into a management agreement with WCCS for
purposes of assisting the British Lion in obtaining FDA approval to market
Cytolin(R) for commercial use; and, (ii) British Lion's entering into a
business combination with a publicly held company.
In October 1998, British Lion entered into a management agreement with
WCCS ("WCCS Agreement"), for purposes of assisting British Lion in
obtaining FDA approval to market Cytolin(R) for commercial use. Lois
Rezler, Daniel L. Azarnoff and Roy Azarnoff, are the officers, directors
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and sole shareholders of WCCS, as well as directors of the Company. To
avoid potential conflict of interest issued, the WCCS Agreement was
ratified by disinterested directors of the Company subsequent to the
Merger.
Pursuant to the Termination, Sale and Shareholder Agreement,
Cytodyn(R) granted an irrevocable proxy coupled with interest to vote its
Shares to Three R, which is solely owned by Lois Rezler, Daniel L. Azarnoff
and Roy S. Azarnoff, all of which are directors of the Company. Pursuant
to a Subscription, Share Restriction and Proxy Agreement dated October 23,
1998, Allen D. Allen granted irrevocable proxy coupled with interest to
vote his shares to Lois Rezler, Daniel L. Azarnoff and Roy S. Azarnoff.
The following shareholders have agreed not to sell any of the shares
of the Company's Stock issued to them for a period of two (2) years from
date of grant: Three R; Allen; Cytodyn(R); Wellington Ewen; Pamela
Kapustay; Michael A. Davis; and, Joseph J. McCann. In addition, Allen and
Cytodyn(R) have granted to Lois Rezler, Daniel L. Azarnoff and Roy S.
Azarnoff, directors of the Company, a first right of refusal to purchase
their stock.
Three R entered into an agreement with Allen D. Allen, the inventor of
Cytolin(R), dated August 1, 1998, whereby Allen agreed to provide
scientific expertise regarding the patents, technology and know-how
underlying the product, Cytolin(R), to the Company for a period of 15 years
in exchange for a consulting fee of $10,000 per year; provided, however,
Three R can terminate the consulting agreement with one year's notice,
beginning February 23, 2000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a)(b) Financial Statements of Business Acquired; Pro forma
Financial Information:
The pro forma financial information reflecting the transaction
and financial statements of Versailles Capital Corporation will be filed by
an amendment to this Form 8-K within the time period specified by statute.
(c) Exhibits:
Exhibit 2.1 Agreement and Plan of Merger, dated February 17,
1999, by and among Versailles Capital
Corporation, Amerimmune, Inc. and British Lion
Medical, Inc.
Exhibit 3.3 Articles of Merger, as filed with the Colorado
Secretary of State on February 23, 1999.
Exhibit 10.1 Patent and Trademark License Agreement between
British Lion Medical, Inc. and Three R
Associates, Inc., dated October 24, 1998.
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Exhibit 10.2 Termination, Sale and Shareholder Agreement by
and among Three R Associates, Inc., Allen D.
Allen and Cytodyn(R) of New Mexico, Inc., dated
August 1, 1998.
Exhibit 10.3 Management Agreement between British Lion
Medical, Inc. and WCCS, Inc., dated October 24,
1998.
Exhibit 10.4 Subscription, Share Restriction and Proxy
Agreement between British Lion Medical, Inc. and
Allen D. Allen, dated October 23, 1998.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: March 10, 1999
VERSAILLES CAPITAL CORPORATION
By: /s/ WELLINGTON A. EWEN
-------------------------------
Wellington A. Ewen
Chief Financial Officer
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