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Epitope Signs Agreement to Rescind Acquisition

    BEAVERTON, Ore., May 6 /PRNewswire/ -- Epitope, Inc. (Nasdaq: EPTO) today
announced that it has signed an agreement with the former owners of Andrew and
Williamson Sales Co. (A&W) to rescind its December 1996 acquisition of A&W.
    The former owners will return all 520,000 shares of Epitope common stock
in exchange for the A&W common stock Epitope received in the December
transaction.  Epitope will also receive A&W Class A and Class B nonvoting
preferred stock with a liquidation preference of $5.7 million, in satisfaction
of intercompany loans in that amount.  The preferred stock will receive
dividends equal to any dividends paid on the common stock.  A&W will redeem
all Class A shares for $2.2 million, payable in annual installments of
$440,000 beginning April 15, 2000.  A&W may redeem the 100 Class B shares at
its option for $28,000 per share until April 15, 2002, and for $31,500 per
share thereafter.
    Two former owners will operate the business and will guaranty the
$6.5 million line of credit provided by A&W's bank.  The credit line, under
which loans of approximately $3 million are currently outstanding, is secured
by A&W accounts receivable and inventory.  Epitope will continue its guaranty
of the facility through November 1, 1998.  Epitope, A&W and the former A&W
owners will release each other from liabilities arising from events occurring
before the rescission, including claims asserted in a lawsuit Epitope filed
against A&W and the former owners in April 1997.  A&W will indemnify Epitope
for certain third party claims.  The agreement is subject to the satisfaction
of certain conditions which are expected to be satisfied in the near future.
    "Recent events have convinced us that A&W is no longer a suitable
distribution arm for the fruit and vegetable products we are developing," said
Adolph J. Ferro, president and chief executive officer of Epitope.  "It was
imperative that we rescind the acquisition transaction and recover the Epitope
stock used to acquire A&W.  We are pleased to have accomplished those goals so
quickly, avoiding the distraction and costs of extended litigation to force
    Epitope, Inc. is a biotechnology company that develops and markets medical
diagnostic products through its Epitope Medical Products group.  Its Agritope
group is focused on the development and commercialization of novel
agricultural products using plant genetic engineering and other modern

Source: EPITOPE Inc.

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