<PAGE> 1
As filed with the Securities and Exchange Commission on September 30, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON FORM S-3
UNDER THE SECURITIES ACT OF 1933
TECHNICLONE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3698422
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14282 FRANKLIN AVENUE,
TUSTIN, CALIFORNIA 92780-7017
(714) 508-6000
(Address, including zip code, and telephone
number, including area code, of registrant's principal executive offices)
WITH COPIES TO:
LARRY O. BYMASTER THOMAS J. CRANE, ESQ.
14282 FRANKLIN AVENUE, KENT M. CLAYTON, ESQ.
TUSTIN, CALIFORNIA 92780-7017 RUTAN & TUCKER, LLP
(714) 508-6000 611 ANTON BLVD.
(Name, address, including zip code, and telephone number, SUITE 1400
including area code, of agent for service) COSTA MESA, CA 92626
(714) 641-5100
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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, 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. [ ]
Pursuant to Rule 429 under the Securities Act, this Registration Statement
also relates to and may be used in connection with the securities previously
registered under the Securities Act pursuant to Registration Statement No.
333-34209.
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE (2) PRICE (2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value (3) 818,187 $ 1.25 $1,022,734 $302
- -----------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, 204,551 $ 1.25 $ 255,689 $ 76
$.001 par value, Issuable Upon
Exercise of Warrants to
Purchase Common Stock (4)
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Common Stock, $.001 par value (5) 1,120,065 $ 1.25 $1,400,082 $414
- -----------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, 280,015 $ 1.25 $ 350,019 $104
$.001 par value, Issuable Upon
Exercise of Warrants to
Purchase Common Stock (6)
- -----------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, 240,000 $ 1.25 $ 300,000 $ 89
$.001 par value, Issuable Upon
Exercise of Warrants to
Purchase Common Stock (7)
- -----------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, 95,000 $ 1.375 $ 130,625 $ 39
$.001 par value, Issuable Upon
Exercise of Warrants to
Purchase Common Stock (8)
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value (9) 147,235 $ 1.25 $ 184,044 $ 55
- -----------------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, 500,000 $ 1.25 $ 625,000 $185
$.001 par value, Issuable Upon
Exercise of Warrants to
Purchase Common Stock (10)
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</TABLE>
(1) In the event of a stock split, stock dividend or similar transaction
involving the Registrant's Common Stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act
of 1933, as amended (the "Securities Act").
(2) In accordance with Rule 457(c), the aggregate offering price of shares of
Common Stock of the Registrant (sometimes referred to herein as the
"Company") is estimated solely for purposes of calculating the
registration fees payable pursuant hereto, as determined in accordance
with Rule 457(c), using the average of the high and low sales price
reported by the Nasdaq SmallCap Market for the Common Stock on September
24, 1998, which was $1.25 per share. In accordance with Rule 457(g), the
aggregate offering price of shares of Common Stock of the Company issuable
upon exercise of warrants is calculated solely for purposes of calculating
the registration fees payable pursuant hereto, as determined in accordance
with Rule 457(g), using the highest of (i) the exercise price of such
warrants, (ii) the offering price of securities of the same class included
in this registration statement or (iii) the price of securities of the
same class, as determined in accordance with Rule 457(c).
(3) Represents 150% of the number of shares of Common Stock issuable to the
holders of 325 shares ($325,000) of 5% Adjustable Convertible Class C
Preferred Stock of the Company ("Class C Stock") upon conversion of such
shares of Class C Stock at a conversion price of $0.5958 (the "Conversion
Cap"), as required to be registered pursuant to the terms of a
Registration Rights Agreement by and among the Company and the holders of
the Class C Stock (the "Class C Registration Rights Agreement").
(4) Represents 150% of the number of shares of Common Stock issuable to the
holders of 325 shares of Class C Stock upon exercise of warrants to be
issued to such holders upon conversion of such shares of Class C Stock at
a conversion price equal to the Conversion Cap, as required to be
registered pursuant to the terms of the Class C Registration Rights
Agreement.
(5) Represents shares of Common Stock issued to 8 investors (the "April 1998
Private Placement Investors") in connection with a private placement by
the Company in April 1998 (the "April 1998 Private Placement").
(6) Represents shares of Common Stock issuable upon exercise of outstanding
warrants issued to the April 1998 Private Placement Investors in
connection with the April 1998 Private Placement.
(7) Represents shares of Common Stock issuable upon exercise of outstanding
warrants issued in connection with the extension of the repayment of
certain indebtedness of the Company to an unrelated entity.
(8) Represents shares of Common Stock issuable upon exercise of outstanding
warrants issued in connection with the extension of the repayment of
certain indebtedness of the Company to an unrelated entity.
(9) Represents shares of Common Stock issued in lieu of the repayment of
accrued and unpaid interest on the principal amount of certain
indebtedness of the Company to an unrelated entity.
(10) Represents shares of Common Stock issuable upon exercise of outstanding
warrants issued in connection with the establishment of a commitment for
a $2,000,000 bridge loan credit facility by the Company in March 1998.
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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<PAGE> 3
SUBJECT TO COMPLETION DATED SEPTEMBER 30, 1998
PROSPECTUS
3,405,053 SHARES
[TECHNICLONE CORPORATION LOGO]
COMMON STOCK
This Prospectus may be used only in connection with the resale, from
time to time, of up to 3,405,053 shares (the "Shares") of common stock, par
value $.001 per share ("Common Stock"), of Techniclone Corporation, a Delaware
corporation ("Techniclone" or the "Company"), by the holders thereof named
herein (the "Registered Stockholders") for their own benefit in transactions in
the over-the-counter market, at prevailing market prices, at negotiated prices
or otherwise. This Prospectus has been prepared for the purposes of registering
the Shares under the Securities Act of 1933, as amended (the "Securities Act")
to allow for future sales by the Registered Stockholders to the public without
restriction. To the knowledge of the Company, the Registered Stockholders have
made no arrangement with any brokerage firm for the sale of the Shares. Many of
the Shares offered by the Registered Stockholders may be acquired by such
Registered Stockholders upon exercise of warrants to purchase Common Stock
issued by the Company to the Registered Stockholders (collectively, the
"Warrants"). Of the 3,405,053 Shares offered hereby, (i) up to 818,187 Shares
are issuable upon conversion of 325 shares of 5% Adjustable Convertible Class C
Preferred Stock of the Company (the "Class C Stock") and up to 204,551 Shares
are issuable upon exercise of warrants to be issued to the holders of such
shares of Class C Stock upon conversion of such shares of Class C Stock (the
"Class C Warrants"), which represents 150% of the number of shares of Common
Stock issuable to the holders of the Class C Stock upon conversion of the Class
C Stock and upon exercise of the Class C Warrants (as required pursuant to the
Company's agreement with such holders), (ii) 1,120,065 Shares were issued in
April 1998 to certain of the Registered Stockholders in connection with a
private placement by the Company in April 1998 (the "April 1998 Private
Placement") and 280,015 Shares are issuable upon exercise of outstanding
warrants issued to such Registered Stockholders in connection with the April
1998 Private Placement (the "April 1998 Private Placement Warrants"), (iii) up
to 335,000 Shares are issuable upon the exercise of outstanding warrants issued
in connection with the extension of the repayment of certain indebtedness of the
Company (the "Repayment Extension Warrants") and 147,235 Shares were issued in
lieu of the repayment of accrued and unpaid interest on the principal amount of
such indebtedness, which indebtedness was repaid in full on August 17, 1998, and
(iv) up to 500,000 Shares are issuable upon the exercise of outstanding warrants
issued in connection with the establishment of a commitment for a $2,000,000
bridge loan credit facility by the Company in March 1998 (the "Bridge Loan
Commitment Warrants"). See "Description of Securities."
All or a portion of the Shares offered by this Prospectus may be offered
for sale, from time to time, by the Registered Stockholders, pursuant to this
Prospectus, in one or more private or negotiated transactions, in open market
transactions on The Nasdaq SmallCap Market ("Nasdaq SmallCap Market"), in
settlement of short sale transactions, in settlement of options transactions, or
otherwise, or by a combination of these methods, at fixed prices that may be
changed, at market prices prevailing at the time of the sale, at prices related
to such market prices, or at negotiated prices, or otherwise. The Registered
Stockholders may effect these transactions by selling the Shares (i) to or
through underwriters; (ii) to or through broker-dealers or agents (which may
include underwriters) including: (a) in a block trade in which the broker or
dealer so engaged will attempt to sell the shares of Common Stock as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) in purchases by a broker or dealer and resale by such broker or
dealer as a principal for its account pursuant to this Prospectus; (c) in
ordinary brokerage transactions and (d) in transactions in which the broker
solicits purchasers; or (iii) directly to one or more purchasers. The Registered
Stockholders and any underwriters, dealers, brokers, or agents executing selling
orders on behalf of the Registered Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act and any profits on the
sale of the Shares by them and any discounts, commissions or concessions
received by such underwriters, dealers, brokers or agents may be deemed to be
underwriting discounts and commissions under the Securities Act. The
compensation to a particular underwriter, broker-dealer or agent may be in
excess of customary commissions. The Registered Stockholders will pay all
commissions, transfer taxes and other expenses associated with the sales of the
Shares by them. The Company will pay the expenses of the preparation of this
prospectus. The Company has agreed to indemnify the Registered Stockholders
against certain liabilities, including liabilities arising under the Securities
Act. The Company will not receive any of the proceeds from the sale of the
Shares by the Registered Stockholders. Upon exercise of the Warrants, assuming
the full exercise thereof by each of the holders thereof and the payment by such
holders of the exercise price therefor in cash (instead of a cashless exercise,
as permitted by the express terms of the Warrants), the Company will receive the
proceeds thereof. If all of the holders of the Warrants exercise all of the
Warrants for cash, the Company will receive proceeds of $1,179,703. Concurrently
with sales under this Prospectus, the Registered Stockholders may effect other
sales of Common Stock or Shares under Rule 144 or other exempt resale
transactions. There can be no assurance that the Registered Stockholders, or any
of them, will sell any or all of the Shares offered hereby. See "Plan of
Distribution."
The Company's Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is listed
on the Nasdaq SmallCap Market under the symbol "TCLN". On September 24, 1998,
the last reported sale price of the Company's Common Stock on the Nasdaq
SmallCap Market was $1.16 per share.
------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7, FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Available Information .................................................... 2
Incorporation of Certain Documents By Reference .......................... 3
Cautionary Statement Regarding Forward-Looking Statement ................. 4
The Company .............................................................. 5
Risk Factors ............................................................. 7
Use of Proceeds .......................................................... 19
Recent Developments ...................................................... 19
Registered Stockholders .................................................. 21
Plan of Distribution ..................................................... 25
Description of Securities ................................................ 27
Legal Matters ............................................................ 29
Experts .................................................................. 30
Indemnification of Directors and Officers ................................ 30
</TABLE>
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with the
offering described herein other than those contained or incorporated by
reference in this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any of the Registered Stockholders. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, nor shall there be any sale
of these securities by any person in any jurisdiction in which such an offer,
solicitation or sale would be unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
time subsequent to the date hereof.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act relating to the Shares being offered pursuant to this Prospectus.
For further information pertaining to the Common Stock and the Shares to which
this Prospectus relates, reference is made to such Registration Statement. This
Prospectus constitutes the prospectus of the Company filed as a part of the
Registration Statement and it does not contain all information set forth in the
Registration Statement, certain portions of which have been omitted in
accordance with the rules and regulations of the Commission. In addition, the
Company is subject to the informational requirements of the Exchange Act and, in
accordance therewith, files reports, proxy statements and other information with
the Commission relating to its business, financial statements and other matters.
Reports and proxy and information statements filed pursuant to Section 14(a) and
14(c) of the Exchange Act and other information filed with the Commission as
well as copies of the Registration Statement can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Midwest Regional Offices at 500 West Madison Street, Chicago, Illinois 60606 and
Northeast Regional Office at 7 World Trade Center, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
obtained electronically by visiting the Commission's web site on the Internet at
http://www.sec.gov. The Common Stock of the Company is traded on the Nasdaq
SmallCap Market under the symbol "TCLN". Reports, proxy statements and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc., at 1735 K Street, N.W., Washington D.C. 20006.
2
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by this reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1998, as filed with the Commission on July 29, 1998 pursuant to
Section 13(a) of the Exchange Act.
(2) The Company's Definitive Proxy Statement with respect to the
Annual Meeting of Stockholders to be held on October 13, 1998, as filed with the
Commission on August 27, 1998.
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1998, as filed with the Commission on September 14, 1998.
(4) The Company's Current Report on Form 8-K, as filed with the
Commission on June 29, 1998.
(5) The Company's Current Report on Form 8-K, as filed with the
Commission on March 9, 1998.
(6) The Company's Current Report on Form 8-K, as filed with the
Commission on November 24, 1997.
(7) The Company's Current Report on Form 8-K, as filed with the
Commission on May 12, 1997, as amended by Form 8-K/A Amendment No. 1 to such
Form 8-K as filed with the Commission on October 2, 1997, and as further amended
by Form 8-K/A Amendment No. 2 to such Form 8-K as filed with the Commission on
October 14, 1997.
(8) The Company's Definitive Proxy Statement with respect to the
Annual Meeting of Stockholders held on April 23, 1998, as filed with the
Commission on March 17, 1998.
(9) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A and Form 8-B (Registration of
Successor Issuers) filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description
(10) All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the Company's fiscal year
ended April 30, 1998.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which re-registers all
securities then remaining unsold, shall be deemed to be incorporated herein by
this reference and to be made a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the foregoing documents and information
3
<PAGE> 6
that has been or may be incorporated by reference herein (other than exhibits to
such documents). Requests for such documents and information should be directed
to Techniclone Corporation, Attention: Elizabeth A. Gorbett-Frost, Chief
Financial Officer, 14282 Franklin Avenue, Tustin, California 92780-7017,
telephone number (714) 508-6000.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference from documents filed with the
Commission by the Company are or may constitute forward-looking statements. Such
statements include those contained herein or therein regarding the development
or possible assumed future results of operations of the Company's business, the
markets for the Company's products, anticipated capital expenditures, regulatory
developments, any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," or similar expression, and other
statements contained or incorporated by reference herein regarding matters that
are not historical facts. Because such statements are subject to risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. The risks and uncertainties that may
cause actual results to differ materially include, among others, risks and
uncertainties associated with completing pre-clinical and clinical trials of the
Company's technologies; obtaining additional financing to support the Company's
operations; obtaining regulatory approval for such technologies; complying with
other governmental regulations applicable to the Company's business; obtaining
the raw materials necessary in the development of such compounds; consummating
collaborative arrangements with corporate partners for product development;
achieving milestones under collaborative arrangements with corporate partners;
developing the capacity to manufacture, market and sell the Company's products,
either directly or indirectly with collaborative partners; developing market
demand for and acceptance of such products; competing effectively with other
pharmaceutical and biotechnological products; attracting and retaining key
personnel; protecting proprietary rights; accurately forecasting operating and
capital expenditures, other commitments, or clinical trial costs, general
economic conditions, pricing pressures and uncertainties of litigation.
Assumptions relating to budgeting, marketing, product development and other
management decisions are subjective in many respects and thus susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause the Company to alter its capital
expenditure or other budgets, which may in turn affect the Company's business,
financial position and results of operations. As a result of these factors, the
Company's revenue and expenses could vary significantly from quarter to quarter,
and past financial performance should not be considered a reliable indicator of
future performance. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements set forth or referred
to above in this paragraph. Investors are cautioned not to place undue reliance
on such statements which speak only as of the date hereof. The Company
undertakes no obligation to release publicly any revision to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events, except as may be
required by the federal securities laws.
4
<PAGE> 7
THE COMPANY
GENERAL
Techniclone Corporation was incorporated in the State of Delaware on
September 25, 1996. On March 24, 1997, Techniclone International Corporation, a
California corporation (a predecessor company incorporated in June 1981), was
merged with and into Techniclone Corporation, a Delaware corporation
(collectively "Techniclone"). This merger was effected for the purpose of
effecting a change in the Company's state of incorporation from California to
Delaware and making certain changes in the Company's charter documents. The
"Company" refers to Techniclone Corporation, Techniclone International
Corporation, its former subsidiary, Cancer Biologics Incorporated ("CBI"), which
was merged into the Company on July 26, 1994 and its wholly-owned subsidiary
Peregrine Pharmaceuticals, Inc., a Delaware corporation ("Peregrine").
The Company is engaged in the research, development and commercialization
of novel cancer therapeutics in two principal areas: 1) direct tumor targeting
agents for the treatment of refractory malignant lymphoma and 2) collateral
targeting agents for the treatment of solid tumors.
Oncolym(R), the Company's most advanced direct tumor targeting agent
candidate, is an investigational murine monoclonal antibody radiolabeled with
I131 which is being studied in a Phase II/III trial for the treatment of
intermediate and high-grade relapsed or refractory B-cell non-Hodgkins lymphoma
("NHL"). The clinical trials are currently being held at participating medical
centers, including, M.D. Anderson Cancer Center, George Washington University
Medical Center, Iowa City VA Medical Center, Queen's Medical Center-Hawaii,
University of Illinois at Chicago Medical Center and University of Miami
Hospital. The Company currently anticipates adding up to four additional
clinical trial sites for Oncolym(R). Following the completion of the clinical
trials, the Company expects to file an application with the United States Food
and Drug Administration ("FDA") to market Oncolym(R) in the United States.
Collateral tumor targeting is broadly described as the therapeutic
strategy of targeting peripheral structures and cell types, other than the
viable cancer cells directly, as a means to treat solid tumors. The Company's
three leading advanced collateral targeting agents for solid tumors are Tumor
Necrosis Therapy ("TNT"), Vascular Targeting Agents ("VTAs"), and Vasopermeation
Enhancement Agents ("VEAs").
TNT is a universal tumor targeting therapy potentially capable of treating
a wide range of solid tumors. Radiolabeled TNT agents are believed to act by
binding to dead or dying cells at the core of the tumor and irradiating the
tumor from the inside out. TNT is potentially capable of carrying a wide variety
of therapeutic agents to the interior of solid tumors. The Company's first TNT
based product is an investigational, chimeric monoclonal antibody radiolabeled
with the I131 isotope. During March 1998, the Company began enrolling patients
into a Phase I study of TNT for the treatment of malignant glioma (brain
cancer). The Company has since filed a protocol with the FDA to begin a Phase II
study of TNT for the treatment of malignant glioma, which is currently expected
to commence in December 1998. The clinical trials are currently being conducted
at The Medical University of South Carolina with additional clinical sites to be
added in the future. The Company has also recently received an unrestricted
grant to conduct Phase I/II systemic trials of TNT for prostate, pancreatic and
liver cancers at a clinical site in Mexico City.
VTAs are believed to act by destroying the vasculature of solid tumors.
VTAs are multi-functional molecules that target the capillaries and blood
vessels of solid tumors. Once there, these agents block the flow of oxygen and
nutrients to the underlying tissue by creating a blood clot in the tumor. In
preclinical trials, VTAs have caused clots in animals and within hours of the
clot's formation, the tumor begins to die and necrotic regions are formed. Since
every tumor in excess of 2mm in size forms an expanding vascular network during
tumor growth, VTAs could be effective against all types of solid tumors.
Techniclone's scientists are
5
<PAGE> 8
doing preliminary studies on VTAs. The VTA technology was acquired in April of
1997 through the Company's acquisition of Peregrine Pharmaceuticals, Inc.
VEAs use vasoactive compounds (molecules that cause tissues to become more
permeable) linked to monoclonal antibodies, such as the TNT antibody, to
increase the vasoactive permeability at the tumor site and are believed to act
by increasing the concentration of killing agents at the core of the tumor. In
pre-clinical studies, the Company's scientists were able to increase the uptake
of drugs or isotopes within a tumor by 200% to 400% if a vasoactive agent was
given several hours prior to the therapeutic treatment. The therapeutic drug can
be a chemotherapy drug, a radioactive isotope or other cancer fighting agent.
This enhancement of toxic drug dosing is achieved by altering the physiology
and, in particular, the permeability of the blood vessels and capillaries that
serve the tumor. As the tumor vessels become more permeable, the amount of
therapeutic treatment reaching the tumor cells increases.
The principal executive offices of the Company are located at 14282
Franklin Avenue, Tustin, California 92780-7017. The Company's telephone number
is (714) 508-6000.
6
<PAGE> 9
RISK FACTORS
An investment in the shares of Common Stock being offered hereby involves
a high degree of risk. The following factors should be considered carefully in
evaluating the Company and its business before making an investment in the
Common Stock offered hereby, together with all of the other information set
forth herein or incorporated herein by reference in this Prospectus.
FLUCTUATION OF FUTURE OPERATING RESULTS. A number of factors could cause
actual results to differ materially from anticipated future operating results.
These factors include worldwide economic and political conditions and industry
specific factors. If the Company is to remain competitive and is to timely
develop and produce commercially viable products at competitive prices in a
timely manner, it must maintain access to external financing sources until it
can generate revenue from licensing transactions or sales of products. The
Company's ability to obtain financing and to manage its expenses and cash
depletion rate ("burn rate") is the key to the Company's continued development
of product candidates and the completion of ongoing clinical trials. The Company
expects that its burn rate will vary substantially from quarter to quarter as it
funds non-recurring items associated with clinical trials, product development,
antibody manufacturing and radiolabeling expansion and scale-up, patent legal
fees and various consulting fees. The Company has limited experience with
clinical trials and if the Company encounters unexpected difficulties with its
operations or clinical trials, it may have to expend additional funds, which
would increase its burn rate.
EARLY STAGE OF DEVELOPMENT. Since its inception, the Company has been
engaged in the development of drugs and related therapies for the treatment of
people with cancer. The Company's product candidates are generally in the early
stages of development, with two product candidates currently in clinical trials.
Revenues from product sales have been insignificant and throughout the Company's
history there have been minimal revenues from product royalties. If the initial
results from any of the clinical trials are poor, then management believes that
those results will adversely effect the Company's ability to raise additional
capital, which will affect the Company's ability to continue full-scale research
and development for its antibody technologies. Additionally, product candidates
resulting from the Company's research and development efforts, if any, are not
expected to be available commercially for at least the next year. No assurance
can be given that the Company's product development efforts, including clinical
trials, will be successful, that required regulatory approvals for the
indications being studied can be obtained, that its product candidates can be
manufactured and radiolabeled at an acceptable cost and with appropriate quality
or that any approved products can be successfully marketed.
NEED FOR ADDITIONAL CAPITAL. The Company has experienced negative cash
flows from operations since its inception and expects the negative cash flow
from operations to continue for the foreseeable future. The Company currently
has commitments to expend additional funds for facilities construction, clinical
trials, radiolabeling contracts, consulting, and for the repurchase of LYM-1
(hereinafter referred to as "Oncolym(R)") marketing rights from Alpha
Therapeutic Corporation ("Alpha"). The Company expects operating expenditures
related to clinical trials to increase in the future as the Company's clinical
trial activity increases and scale-up for clinical trial production continues.
As a result of increased activities in connection with the Phase II/III clinical
trials for Oncolym(R) and Phase I and Phase II clinical trials for TNT and the
development costs associated with VEAs and VTAs, the Company expects that the
monthly negative cash flow will continue.
The Company has entered into an agreement for the sale and subsequent
leaseback of its facilities, which consists of two buildings located in Tustin,
California. The sale/leaseback transaction is with an unrelated entity and
provides for the leaseback of the Company's facilities for a ten-year period
with two five-year options to renew. While the sale/leaseback agreement is in
escrow, it is subject to completion of normal due diligence procedures by the
buyer and there is no assurance that the transaction will be completed on a
timely basis or at all.
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Without obtaining additional financing or completing the aforementioned
sale/leaseback transaction, the Company believes that it has sufficient cash on
hand and available pursuant to an equity line financing facility established by
the Company in June 1998 to meet its obligations on a timely basis through
November 30, 1998. Should the Company complete the sale and subsequent leaseback
of its facilities by November 30, 1998, the Company believes it would have
sufficient cash on hand and available pursuant to such equity line financing
facility to meet its obligations on a timely basis through February 1999. The
Company's ability to access funds under such equity line financing facility is
subject to the satisfaction of certain conditions precedent and the failure to
satisfy these conditions may limit or preclude the Company's ability to access
such funds, which could adversely affect the Company's business, financial
position and results of operations unless additional financing sources are
available.
The Company must raise additional funds to sustain its research and
development efforts, provide for future clinical trials, expand its
manufacturing and radiolabeling capabilities, and continue its operations until
it is able to generate sufficient additional revenue from the sale and/or
licensing of its products. The Company will be required to obtain financing
through one or more methods, including the aforementioned sale and subsequent
leaseback of its facilities, obtaining additional equity or debt financing
and/or negotiating a licensing or collaboration agreement with another company.
There can be no assurance that the Company will be successful in raising these
funds on terms acceptable to it, or at all, or that sufficient additional
capital will be raised to complete the research, development, and clinical
testing of the Company's product candidates. The Company's future success is
dependent upon raising additional money to provide for the necessary operations
of the Company. If the Company is unable to obtain additional financing, the
Company's business, financial position and results of operations would be
adversely affected.
ANTICIPATED FUTURE LOSSES. The Company has experienced significant losses
since inception. As of July 31, 1998, the Company's accumulated deficit was
approximately $76,487,000. The Company expects to incur significant additional
operating losses in the future and expects cumulative losses to increase
substantially due to expanded research and development efforts, preclinical
studies and clinical trials, and scale-up of manufacturing and radiolabeling
capabilities. The Company expects losses to fluctuate substantially from quarter
to quarter. All of the Company's products are in development, preclinical
studies or clinical trials, and no significant revenues have been generated from
product sales. To achieve and sustain profitable operations, the Company, alone
or with others, must successfully develop, obtain regulatory approval for,
manufacture, introduce, market and sell its products. The time frame necessary
to achieve market success is long and uncertain. The Company does not expect to
generate significant product revenues for at least two years. There can be no
assurance that the Company will ever generate product revenues sufficient to
become profitable or to sustain profitability.
TECHNOLOGICAL UNCERTAINTY. The Company's future success depends
significantly upon its ability to develop and test workable products for which
the Company will seek FDA approval to market to certain defined groups. A
significant risk remains as to the technological performance and commercial
success of the Company's technology and products. The products currently under
development by the Company will require significant additional laboratory and
clinical testing and investment over the foreseeable future. The research,
development and testing activities, together with the resulting increases in
associated expenses, are expected to result in operating losses for the
foreseeable future. Although the Company is optimistic that it will be able to
complete development of one or more of its products, (i) the Company's research
and development activities may not be successful; (ii) proposed products may not
prove to be effective in clinical trials; (iii) the Company's product candidates
may cause harmful side effects during clinical trials; (iv) the Company's
product candidates may take longer to progress through clinical trials than has
been anticipated; (v) the Company's product candidates may prove impracticable
to manufacture in commercial quantities at a reasonable cost and/or with
acceptable quality; (vi) the Company may not be able to obtain all necessary
governmental clearances and approvals to market its products; (vii) the
Company's product candidates may not prove to be commercially viable or
successfully marketed; or (viii) the Company may not ever achieve
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significant revenues or profitable operations. In addition, the Company may
encounter unanticipated problems, including development, manufacturing,
distribution, financing and marketing difficulties. The failure to adequately
address these difficulties could adversely affect the Company's business,
financial position and results of operations.
The results of initial preclinical and clinical testing of the products
under development by the Company are not necessarily indicative of results that
will be obtained from subsequent or more extensive preclinical studies and
clinical testing. The Company's clinical data gathered to date with respect to
its Oncolym(R) antibody are primarily from a Phase II dose escalation trial
which was designed to develop and refine the therapeutic protocol to determine
the maximum tolerated dose of total body radiation and to assess the safety and
efficacy profile of treatment with a radiolabeled antibody. Further, the data
from this Phase II dose escalation trial were compiled from testing conducted at
a single site and with a relatively small number of patients. Substantial
additional development and clinical testing and investment will be required
prior to seeking any regulatory approval for commercialization of this potential
product. There can be no assurance that clinical trials of Oncolym(R), TNT or
other product candidates under development will demonstrate the safety and
efficacy of such products to the extent necessary to obtain regulatory approvals
for the indications being studied, or at all. Companies in the pharmaceutical
and biotechnology industries have suffered significant setbacks in advanced
clinical trials, even after obtaining promising results in earlier trials. The
failure to adequately demonstrate the safety and efficacy of Oncolym(R), TNT or
any other therapeutic product under development could delay or prevent
regulatory approval of the product and would adversely affect the Company's
business, financial condition and results of operations.
LENGTHY REGULATORY PROCESS; NO ASSURANCE OF REGULATORY APPROVALS. Testing,
manufacturing, radiolabeling, advertising, promotion, export and marketing,
among other things, of the Company's proposed products are subject to extensive
regulation by governmental authorities in the United States and other countries.
In the United States, pharmaceutical products are regulated by the FDA under the
Federal Food, Drug, and Cosmetic Act and other laws, including, in the case of
biologics, the Public Health Service Act. At the present time, the Company
believes that its products will be regulated by the FDA as biologics.
Manufacturers of biologics may also be subject to state regulation.
The steps required before a biologic may be approved for marketing in the
United States generally include (i) preclinical laboratory tests and animal
tests, (ii) the submission to the FDA of an Investigational New Drug ("IND")
application for human clinical testing, which must become effective before human
clinical trials may commence, (iii) adequate and well-controlled human clinical
trials to establish the safety and efficacy of the product, (iv) the submission
to the FDA of a Product License Application ("PLA") or a Biologics License
Application ("BLA"), (v) the submission to the FDA of an Establishment License
Application ("ELA"), (vi) FDA review of the ELA and the PLA or BLA, and (vii)
satisfactory completion of an FDA inspection of the manufacturing facility or
facilities at which the product is made to assess compliance with Current Good
Manufacturing Practices ("CGMP"). The testing and approval process requires
substantial time, effort and financial resources and there can be no assurance
that any approval will be granted on a timely basis, if at all. There can be no
assurance that Phase I, Phase II or Phase III testing will be completed
successfully within any specific time period, if at all, with respect to any of
the Company's product candidates. Furthermore, the FDA may suspend clinical
trials at any time on various grounds, including a finding that the subjects or
patients are being exposed to an unacceptable health risk.
The results of preclinical and clinical studies, together with detailed
information on the manufacture and composition of a product candidate, are
submitted to the FDA as a PLA or BLA requesting approval to market the product
candidate. Before approving a PLA or BLA, the FDA will inspect the facilities at
which the product is manufactured, and will not approve the marketing of the
product candidate unless CGMP compliance is satisfactory. The FDA may deny a PLA
or BLA if applicable regulatory criteria are not satisfied, require additional
testing or information, and/or require post-marketing testing and surveillance
to monitor the
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safety or efficacy of a product. There can be no assurance that FDA approval of
any PLA or BLA submitted by the Company will be granted on a timely basis or at
all. Also, if regulatory approval of a product is granted, such approval may
entail limitations on the indicated uses for which it may be marketed.
Both before and after approval is obtained, violations of regulatory
requirements, including the preclinical and clinical testing process, or the PLA
or BLA review process may result in various adverse consequences, including the
FDA's delay in approving or refusing to approve a product, withdrawal of an
approved product from the market, and/or the imposition of criminal penalties
against the manufacturer and/or license holder. For example, license holders are
required to report certain adverse reactions to the FDA, and to comply with
certain requirements concerning advertising and promotional labeling for their
products. Also, quality control and manufacturing procedures must continue to
conform to CGMP regulations after approval, and the FDA periodically inspects
manufacturing facilities to assess compliance with CGMP. Accordingly,
manufacturers must continue to expend time, monies and effort in the area of
production and quality control to maintain CGMP compliance. In addition,
discovery of problems may result in restrictions on a product, manufacturer,
including withdrawal of the product from the market. Also, new government
requirements may be established that could delay or prevent regulatory approval
of the Company's product candidates.
The Company will also be subject to a variety of foreign regulations
governing clinical trials and sales of its products. Whether or not FDA approval
has been obtained, approval of a product candidate by the comparable regulatory
authorities of foreign countries must be obtained prior to the commencement of
marketing of the product in those countries. The approval process varies from
country to country and the time may be longer or shorter than that required for
FDA approval. At least initially, the Company intends, to the extent possible,
to rely on licensees to obtain regulatory approval for marketing its products in
foreign countries.
COMMERCIAL PRODUCTION. To conduct clinical trials on a timely basis,
obtain regulatory approval and be commercially successful, the Company must
scale-up its manufacturing and radiolabeling processes and ensure compliance
with regulatory requirements of its product candidates so that those product
candidates can be manufactured and radiolabeled in increased quantities. As the
Company's products currently in clinical trials, Oncolym(R) and TNT, move
towards FDA approval, the Company or contract manufacturers must scale-up the
production processes to enable production and radiolabeling in commercial
quantities. The Company has expended significant funds for the scale-up of its
antibody manufacturing capabilities for clinical trial requirements for its
Oncolym(R) and TNT products and for refinement of its radiolabeling processes.
If the Company were to commercially self-manufacture either of these products,
it will have to expend an estimated additional six to ten million dollars for
production facility expansion and an estimated additional five to eight million
dollars for radiolabeling facilities. However, the Company believes it can
successfully negotiate an agreement with contract antibody manufacturers to have
these products produced on a "per run basis", thereby deferring or reducing the
significant expenditure (six to ten million dollars) estimated to scale-up
manufacturing. The Company believes that it can successfully negotiate an
agreement with contract radiolabeling companies to provide radiolabeling
services to meet commercial demands. Such a contract would, however, require a
substantial investment by the Company (estimated at five to eight million
dollars over the next two years) for equipment and related production area
enhancements required by these vendors, and for vendor services associated with
technology transfer assistance, scale-up and production start-up, and for
regulatory assistance. The Company anticipates that production of its products
in commercial quantities will create technical and financial challenges for the
Company. The Company has limited manufacturing experience, and no assurance can
be given as to the Company's ability to scale-up its manufacturing operations,
the suitability of the Company's present facility for clinical trial production
or commercial production, the Company's ability to make a successful transition
to commercial production and radiolabeling or the Company's ability to reach an
acceptable agreement with contract manufacturers to produce and radiolabel
Oncolym(R), TNT, or the Company's other product candidates, in clinical or
commercial quantities. The failure
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of the Company to scale-up its manufacturing and radiolabeling for clinical
trial or commercial production or to obtain contract manufacturers, could
adversely affect the Company's business, financial position and results of
operations.
SHARES ELIGIBLE FOR FUTURE SALE; DILUTION. The decline in the market price
of the Company's Common Stock has lead to substantial dilution to holders of
Common Stock. Under the terms of the Company's agreement with the holders of the
Class C Stock, the shares of the Class C Stock are convertible into shares of
the Company's Common Stock at the lower of a conversion cap of $0.5958 (the
"Conversion Cap") or a conversion price equal to the average of the lowest
trading price of the Company's Common Stock for the five consecutive trading
days ending with the trading date prior to the date of conversion reduced by 27
percent. The Company's agreement with the holders of the Class C Stock also
provides that upon conversion, the holders of the Class C Stock will also
receive warrants to purchase one-fourth of the number of shares of Common Stock
issued upon conversion of the Class C Stock at an exercise price of $0.6554 per
share (or 110% of the Conversion Cap), which warrants will expire in April 2002
(the "Class C Warrants"). Dividends on the Class C Stock are payable quarterly
in shares of Class C Stock or cash, at the option of the Company, at the rate of
$50.00 per share per annum.
From September 26, 1997 (the date the Class C Stock became convertible
into Common Stock) through August 31, 1998, 13,619 shares of Class C Stock,
including Class C dividend shares and additional shares of Class C Stock issued
during fiscal year 1998 (as described below), were converted into 24,578,437
shares of Common Stock, resulting in substantial dilution to the common
stockholders. In addition, in conjunction with the conversion of the Class C
Stock, the holders were granted warrants to purchase shares of Common Stock of
the Company. Warrants to purchase 6,144,537 shares of common stock have been
exercised through August 31, 1998, at an exercise price of $.6554 per share, in
exchange for 5,831,980 shares of Common Stock and proceeds to the Company of
$3,599,901. During fiscal year 1998, the registration statement required to be
filed by the Company pursuant to the Company's agreement with the holders of the
Class C Stock was not declared effective by the 180th day following the closing
date of such offering, and therefore, the Company was required to issue an
additional 325 shares of Class C Stock, calculated in accordance with the terms
of such agreement. At August 31, 1998, 354 shares of Class C Stock remained
outstanding and may be converted into shares of Common Stock at the lower of a
27% discount from the average of the lowest market trading price for the five
consecutive trading days preceding the date of conversion or the Conversion Cap.
Assuming the conversion of all of such remaining shares of Class C Stock at the
Conversion Cap, the Company is required to issue to the holders of the Class C
Stock upon conversion thereof an aggregate of approximately 594,000 shares of
Common Stock and Class C Warrants to purchase an aggregate of up to
approximately 149,000 shares of Common Stock at an exercise price of $.6554 per
share. Pursuant to the Company's agreement with the holders of the Class C
Stock, the Company is required to have registered up to 150% of the number of
shares of Common Stock that would otherwise be issuable upon conversion of the
Class C Stock and upon exercise of the Class C Warrants (including up to 818,187
Shares to which this Prospectus relates issuable upon conversion of 325 shares
of Class C Stock and up to 204,551 Shares to which this Prospectus relates
issuable upon exercise of Class C Warrants).
Sales, particularly short selling, of substantial amounts of shares of
Common Stock in the public market have adversely affected and may continue to
adversely affect the prevailing market price of the Common Stock and, depending
upon the then current market price of the Common Stock, increase the risks
associated with the possible conversion of the Class C Stock and the Class C
Warrants. From September 26, 1997, the date on which the Class C Stock was first
convertible, through March 1998, the price of the Company's Common Stock
steadily declined while the average trading volume increased significantly.
Pursuant to the terms of a Regulation D Common Stock Equity Line
Subscription Agreement dated as of June 16, 1998 (the "Equity Line Agreement"),
between the Company and two institutional investors (the
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"Equity Line Investors") (and assuming, solely for purposes of this Prospectus,
a 10-day low closing bid price per share of not less than $1.00, which allows
the Company to sell the maximum number of shares of Common Stock to the Equity
Line Investors for maximum proceeds of $16,500,000), the Company may, at its
option, sell to the Equity Line Investors up to 20,625,000 shares of Common
Stock (the "Equity Line Investor Shares") and issue warrants to the Equity Line
Investors to purchase up to an additional 2,062,500 shares of Common Stock (the
"Equity Line Investor Warrants"). The price at which the Equity Line Investor
Shares will be issued and sold by the Company to the Equity Line Investors will
be equal to (i) 82.5% of the lowest closing bid price during the ten trading
days (the "10 day low closing bid price") immediately preceding the date on
which such shares are sold to the Institutional Investors, or (ii) if 82.5% of
such 10 day low closing bid price results in a discount of less than twenty
cents ($0.20) per share from such 10 day low closing bid price, such 10 day low
closing bid price minus twenty cents ($0.20). In addition, the Company may be
obligated to issue to the Equity Line Investors an additional 954,545 shares of
Common Stock upon adjustment of the purchase price of shares of Common Stock
already issued to the Institutional Investors on the three-month and six-month
anniversary of the date on which the registration statement with respect to such
shares is declared effective by the Commission (the "Adjustment Shares"). In
addition, pursuant to the terms of a Placement Agent Agreement dated as of June
16, 1998 entered into by the Company in connection with the execution and
delivery of the Equity Line Agreement (the "Placement Agent Agreement"), the
Company may also be obligated to issue to the placement agent up to
1,726,364 shares of Common Stock (the "Equity Line Placement Agent Shares") and
warrants to purchase up to an additional 165,000 shares of Common Stock (the
"Equity Line Placement Agent Warrants"). The Company will not receive any
proceeds from the exercise of the Equity Line Investor Warrants or the Equity
Line Placement Agent Warrants, which may only be exercised pursuant to a
cashless exercise in accordance with the express terms thereof.
In addition to the Class C Warrants and the Warrants, at August 31, 1998,
the Company had outstanding warrants and options to employees, directors,
consultants and other parties to issue approximately 8,572,000 shares of
Common Stock at an average price of $1.08 per share.
The sale and issuance of the Equity Line Investor Shares may result in
substantial dilution to the existing holders of Common Stock. The issuance of
the Equity Line Investor Shares, the Adjustments Shares and the Equity Line
Placement Agent Shares to the Registered Stockholders, and the issuance of
shares of Common Stock issuable upon conversion of the remaining Class C Stock
and upon exercise of the remaining Class C Warrants, the Equity Line Investor
Warrants, the Equity Line Placement Agent Warrants, the Warrants and such other
outstanding warrants and options, as well as subsequent sales of the Shares, the
Equity Line Investor Shares, the Adjustment Shares, the Equity Line Placement
Agent Shares and such shares of Common Stock in the open market, could adversely
affect the market price of the Company's Common Stock and impair the Company's
ability to raise additional capital.
STOCK PRICE FLUCTUATIONS AND LIMITED TRADING VOLUME. The market price of
the Company's Common Stock, and the market prices of securities of companies in
the biotechnology industry generally, have been highly volatile. Also, at times
there is a limited trading volume in the Company's Common Stock. Announcements
of technological innovations or new commercial products by the Company or its
competitors, developments or disputes concerning patent or proprietary rights,
publicity regarding actual or potential medical results relating to products
under development by the Company or its competitors, regulatory developments in
both the United States and foreign countries, public concern as to the safety of
biotechnology products and economic and other external factors, as well as
period-to-period fluctuations in financial results may have a significant impact
on the market price of the Company's Common Stock. The volatility in the stock
price and the potential additional new shares of common stock that may be issued
on the exercise of warrants and options and the historical limited trading
volume are significant risks investors should consider.
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MAINTENANCE CRITERIA FOR NASDAQ SMALLCAP MARKET, RISKS OF LOW-PRICED
SECURITIES. The Company's Common Stock is presently traded on the Nasdaq
SmallCap Market. To maintain inclusion on the Nasdaq SmallCap Market, the
Company's Common Stock must continue to be registered under Section 12(g) of the
Exchange Act, and the Company must continue to have either net tangible assets
of at least $2,000,000, market capitalization of at least $35,000,000, or net
income (in either its latest fiscal year or in two of its last three fiscal
years) of at least $500,000. In addition, the Company must meet other
requirements, including, but not limited to, having a public float of at least
500,000 shares and $1,000,000, a minimum bid price of $1.00 per share of Common
Stock (without falling below this minimum bid price for a period of 30
consecutive business days), at least two market makers and at least 300
stockholders, each holding at least 100 shares of Common Stock. For the period
of January 29, 1998 through May 4, 1998, the Company failed to maintain a $1.00
minimum bid price. From May 5, 1998, through September 2, 1998, the Company met
this requirement. On September 3, 1998 and September 4, 1998, the Company again
failed to maintain a $1.00 minimum bid price. However, since then, the Company
has met this requirement. If the Company were to fail to meet the minimum bid
price of $1.00 for a period of 30 consecutive business days, it would be
notified by the Nasdaq and would then have a period of 90 calendar days from
such notification to achieve compliance with the applicable standard by meeting
the minimum requirement for at least 10 consecutive business days during such 90
day period. There can be no assurance that the Company will be able to maintain
these requirements in the future. If the Company fails to meet the Nasdaq
SmallCap Market listing requirements, the market value of the Common Stock could
decline and holders of the Company's Common Stock would likely find it more
difficult to dispose of and to obtain accurate quotations as to the market value
of the Common Stock. In addition, if the Company's Common Stock ceases to be
included on the Nasdaq SmallCap Market, the Company would not be able to access
funds under the Equity Line Agreement.
If the Company's Common Stock ceases to be included on the Nasdaq SmallCap
Market, the Company's Common Stock could become subject to rules adopted by the
Commission regulating broker-dealer practices in connection with transactions in
"penny stocks." Penny stocks generally are equity securities with a price per
share of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on Nasdaq, provided that current price and volume
information with respect to transactions in these securities is provided). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the Commission which provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its sales person in the transaction and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from these
rules, the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to these penny stock rules. If the
Company's Common Stock becomes subject to the penny stock rules, investors may
be unable to readily sell their shares of Common Stock.
INTENSE COMPETITION. The biotechnology industry is intensely competitive
and changing rapidly. Virtually all of the Company's existing competitors have
greater financial resources, larger technical staffs, and larger research
budgets than the Company and greater experience in developing products and
running clinical trials. Two of the Company's competitors, Idec Pharmaceuticals
Corporation ("Idec") and Coulter Pharmaceuticals, Inc. ("Coulter"), each has a
lymphoma antibody that may compete with the Company's Oncolym(R) product. Idec
is currently marketing its lymphoma product for low grade non-Hodgkins Lymphoma
and the Company believes that Coulter will be marketing its respective lymphoma
product prior to the time the Oncolym(R)
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product will be submitted to the FDA for marketing approval. Coulter has also
announced that it intends to seek to conduct clinical trials of its antibody
treatment for intermediate and/or high grade non-Hodgkins lymphomas. In
addition, there are several companies in preclinical studies with angiogenesis
technologies which may compete with the Company's VTA technology. There can be
no assurance that the Company will be able to compete successfully or that
competition will not adversely affect the Company's business, financial position
and results of operations. There can be no assurance that the Company's
competitors will not be able to raise substantial funds and to employ these
funds and their other resources to develop products which compete with the
Company's other product candidates.
UNCERTAINTIES ASSOCIATED WITH CLINICAL TRIALS. The Company has limited
experience in conducting clinical trials. The rate of completion of the
Company's clinical trials will depend on, among other factors, the rate of
patient enrollment. Patient enrollment is a function of many factors, including
the nature of the Company's clinical trial protocols, existence of competing
protocols, size of the patient population, proximity of patients to clinical
sites and eligibility criteria for the study. Delays in patient enrollment will
result in increased costs and delays, which could adversely effect the Company.
There is no assurance that patients enrolled in the Company's clinical trials
will respond to the Company's product candidates. Setbacks are to be expected in
conducting human clinical trials. Failure to comply with FDA regulations
applicable to this testing can result in delay, suspension or cancellation of
the testing, or refusal by the FDA to accept the results of the testing. In
addition, the FDA may suspend clinical trials at any time if it concludes that
the subjects or patients participating in such trials are being exposed to
unacceptable health risks. Further, there can be no assurance that human
clinical testing will show any current or future product candidate to be safe
and effective or that data derived from the testing will be suitable for
submission to the FDA. Any suspension or delay of any of the clinical trials
could adversely effect the Company's business, financial condition and results
of operations.
UNCERTAINTY OF MARKET ACCEPTANCE. Even if the Company's products are
approved for marketing by the FDA and other regulatory authorities, there can be
no assurance that the Company's products will be commercially successful. If the
Company's two products in clinical trials, Oncolym(R) and TNT, are approved,
they would represent a departure from more commonly used methods for cancer
treatment. Accordingly, Oncolym(R) and TNT may experience under-utilization by
oncologists and hematologists who are unfamiliar with the application of
Oncolym(R) and TNT in the treatment of cancer. As with any new drug, doctors may
be inclined to continue to treat patients with conventional therapies, in most
cases chemotherapy, rather than new alternative therapies. The Company or its
marketing partner will be required to implement an aggressive education and
promotion plan with doctors in order to gain market recognition, understanding
and acceptance of the Company's products. Market acceptance also could be
affected by the availability of third party reimbursement. Failure of Oncolym(R)
and TNT to achieve market acceptance would adversely affect the Company's
business, financial condition and results of operations.
SOURCE OF RADIOLABELING SERVICES. The Company currently procures its
radiolabeling services pursuant to negotiated contracts with one domestic entity
and one European entity. There can be no assurance that these suppliers will be
able to qualify their facilities, label and supply antibody in a timely manner,
if at all, or that governmental clearances will be provided in a timely manner,
if at all, and that clinical trials will not be delayed or disrupted. Prior to
commercial distribution, the Company will be required to identify and contract
with a commercial radiolabeling company for commercial services. The Company is
presently in discussions with several companies to provide commercial
radiolabeling services. A commercial radiolabeling service agreement will
require the investment of substantial funds by the Company. See "Risk
Factors-Commercial Production." The Company expects to rely on its current
suppliers for all or a significant portion of its requirements for the
Oncolym(R) and TNT antibody products to be used in clinical trials for the
immediate future. Radiolabeled antibody cannot be stockpiled against future
shortages due to the eight-day half-life of the I131 radioisotope. Accordingly,
any change in the Company's existing or future contractual relationships with,
or an interruption in supply from, its third-party suppliers could adversely
affect the Company's ability to complete its ongoing
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clinical trials and to market the Oncolym(R) and TNT antibodies, if approved.
Any such change or interruption would adversely affect the Company's business,
financial condition and results of operations.
HAZARDOUS AND RADIOACTIVE MATERIALS. The manufacturing and use of the
Company's Oncolym(R) and TNT require the handling and disposal of the
radioactive isotope I131. The Company is relying on its current contract
manufacturers to radiolabel its antibodies with I131 and to comply with various
local, state and or national and international regulations regarding the
handling and use of radioactive materials. Violation of these local, state,
national or international regulations by these radiolabeling companies or a
clinical trial site could significantly delay completion of the trials.
Violations of safety regulations could occur with these manufacturers, so there
is a risk of accidental contamination or injury. The Company could be held
liable for any damages that result from an accident, contamination or injury
caused by the handling and disposal of these materials, as well as for
unexpected remedial costs and penalties that may result from any violation of
applicable regulations, which could adversely effect the Company's business,
financial condition and results of operations. In addition, the Company may
incur substantial costs to comply with environmental regulations. In the event
of any noncompliance or accident, the supply of Oncolym(R) and TNT for use in
clinical trials or commercially could be interrupted, which could adversely
affect the Company's business, financial condition and results of operations.
DEPENDENCE ON THIRD PARTIES FOR COMMERCIALIZATION. The Company intends to
sell its products in the United States and internationally in collaboration with
marketing partners. At the present time, the Company does not have a sales force
to market Oncolym(R) or TNT. If and when the FDA approves Oncolym(R) or TNT, the
marketing of Oncolym(R) and TNT will be contingent upon the Company either
licensing or entering into a marketing agreement with a large company or rely
upon it recruiting, developing, training and deploying its own sales force. The
Company does not presently possess the resources or experience necessary to
market Oncolym(R), TNT or its other product candidates. Other than the agreement
with Biotechnology Development, Ltd., which is currently under renegotiation,
the Company presently has no agreements for the licensing or marketing of its
product candidates, and there can be no assurance that the Company will be able
to enter into any such agreements in a timely manner or on commercially
favorable terms, if at all. Development of an effective sales force requires
significant financial resources, time and expertise. There can be no assurance
that the Company will be able to obtain the financing necessary or to establish
such a sales force in a timely or cost effective manner, if at all, or that such
a sales force will be capable of generating demand for the Company's product
candidates.
PATENTS AND PROPRIETARY RIGHTS. The Company's success depends, in large
part, on its ability to maintain a proprietary position in its products through
patents, trade secrets and orphan drug designations. The Company has several
United States patents, United States patent applications and numerous
corresponding foreign patent applications, and has licenses to patents or patent
applications owned by other entities. No assurance can be given, however, that
the patent applications of the Company or the Company's licensors will be issued
or that any issued patents will provide competitive advantages for the Company's
products or will not be successfully challenged or circumvented by its
competitors. The patent position worldwide of biotechnology companies in
relation to proprietary products is highly uncertain and involves complex legal
and factual questions. Moreover, any patents issued to the Company or the
Company's licensors may be infringed by others or may not be enforceable against
others. In addition, there can be no assurance that the patents, if issued,
would be held valid or enforceable by a court of competent jurisdiction.
Enforcement of the Company's patents may require substantial financial and human
resources. The Company may have to participate in interference proceedings if
declared by the United States Patent and Trademark Office to determine priority
of inventions, which typically take several years to resolve and could result in
substantial costs to the Company.
A substantial number of patents have already been issued to other
biotechnology and biopharmaceutical companies. Particularly in the monoclonal
antibody and angiogenesis fields, competitors may have filed applications for or
have been issued patents and may obtain additional patents and proprietary
rights relating to products or processes competitive with or similar to those of
the Company. To date, no consistent policy has
15
<PAGE> 18
emerged regarding the breadth of claims allowed in biopharmaceutical patents.
There can be no assurance that patents do not exist in the United States or in
foreign countries or that patents will not be issued that would have an adverse
effect on the Company's ability to market any product which it develops.
Accordingly, the Company expects that commercializing monoclonal antibody-based
products may require licensing and/or cross-licensing of patents with other
companies in this field. There can be no assurance that the licenses, which
might be required for the Company's processes or products, would be available,
if at all, on commercially acceptable terms. The ability to license any such
patents and the likelihood of successfully contesting the scope or validity of
such patents is uncertain and the costs associated therewith may be significant.
If the Company is required to acquire rights to valid and enforceable patents
but cannot do so at a reasonable cost, the Company's ability to manufacture its
products would be adversely affected.
The Company also relies on trade secrets and proprietary know-how, which
it seeks to protect, in part, by confidentiality agreements with its employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
developed by competitors.
PRODUCT LIABILITY. The manufacture and sale of human therapeutic products
involve an inherent risk of product liability claims. The Company has only
limited product liability insurance. There can be no assurance that the Company
will be able to maintain existing insurance or obtain additional product
liability insurance on acceptable terms or with adequate coverage against
potential liabilities. Product liability insurance is expensive, difficult to
obtain and may not be available in the future on acceptable terms, if at all. An
inability to obtain sufficient insurance coverage on reasonable terms or to
otherwise protect against potential product liability claims brought against the
Company in excess of its insurance coverage, if any, or a product recall could
adversely affect the Company's business, financial condition and results of
operations.
HEALTH CARE REFORM AND THIRD-PARTY REIMBURSEMENT. Political, economic and
regulatory influences are subjecting the health care industry in the United
States to fundamental change. Recent initiatives to reduce the federal deficit
and to reform health care delivery are increasing cost-containment efforts. The
Company anticipates that Congress, state legislatures and the private sector
will continue to review and assess alternative benefits, controls on health care
spending through limitations on the growth of private health insurance premiums
and Medicare and Medicaid spending, the creation of large insurance purchasing
groups, price controls on pharmaceuticals and other fundamental changes to the
health care delivery system. Any such changes could affect the Company's
ultimate profitability. Legislative debate is expected to continue in the
future, and market forces are expected to drive reductions of health care costs.
The Company cannot predict what impact the adoption of any federal or state
health care reform measures or future private sector reforms may have on its
business.
The Company's ability to successfully commercialize its product candidates
will depend in part on the extent to which appropriate reimbursement codes and
authorized cost reimbursement levels of such products and related treatment are
obtained from governmental authorities, private health insurers and other
organizations, such as health maintenance organizations ("HMOs"). The Health
Care Financing Administration ("HCFA"), the agency responsible for administering
the Medicare program, sets requirements for coverage and reimbursement under the
program, pursuant to the Medicare law. In addition, each state Medicaid program
has individual requirements that affect coverage and reimbursement decisions
under state Medicaid programs for certain health care providers and recipients.
Private insurance companies and state Medicaid programs are influenced, however,
by the HCFA requirements.
There can be no assurance that any of the Company's product candidates,
once available, will be included within the then current Medicare coverage
determination. In the absence of national Medicare coverage determination, local
contractors that administer the Medicare program, within certain guidelines, can
make their own coverage decisions. Favorable coverage determinations are made in
those situations where a procedure falls within allowable Medicare benefits and
a review concludes that the service is safe, effective and not
16
<PAGE> 19
experimental. Under HCFA coverage requirements, FDA approval for marketing will
not necessarily lead to a favorable coverage decision. A determination will
still need to be made as to whether the product is reasonable and necessary for
the purpose used. In addition, HCFA has proposed adopting regulations that would
add cost-effectiveness as a criterion in determining Medicare coverage. Changes
in HCFA's coverage policy, including adoption of a cost-effective criterion,
could adversely affect the Company's business, financial condition and results
of operations.
Third-party payers are increasingly challenging the prices charged for
medical products and services. Also, the trend toward managed health care in the
United States and the concurrent growth of organizations such as HMOs, which
could control or significantly influence the purchase of health care services
and products, as well as legislative proposals to reform health care or reduce
government insurance programs, may all result in lower prices for the Company's
product candidates than it expects. The cost containment measures that health
care payers and providers are instituting and the effect of any health care
reform could adversely affect the Company's ability to operate profitably.
DEPENDENCE ON MANAGEMENT AND OTHER KEY PERSONNEL. The Company is dependent
upon a limited number of key management and technical personnel. The loss of the
services of one or more of these key employees could adversely affect the
Company's business, financial condition and results of operations. In addition,
the Company's success is dependent upon its ability to attract and retain
additional highly qualified management and technical personnel. The Company
faces intense competition in its recruiting activities, and there can be no
assurance that the Company will be able to attract and/or retain qualified
personnel.
IMPACT OF THE YEAR 2000. The Company has identified substantially all of
its major hardware and software platforms in use and is continually modifying
and upgrading its software and information technology ("IT") and non-IT systems.
The Company has modified its current financial software to be Year 2000 ("Y2K")
compliant. The Company does not believe that, with upgrades of existing software
and/or conversion to new software, the Y2K issue will pose significant
operational problems for its internal computer systems. The Company expects all
systems to be Y2K compliant by April 30, 1999 through the use of internal and
external resources. The Company has incurred insignificant costs to date
associated with Y2K compliance and the Company presently believes estimated
future costs will not be material. However, the systems of other companies on
which the Company may rely also may not be timely converted, and failure to
convert by another company could have an adverse effect on the Company's
systems. The Company presently believes the Y2K problem will not pose
significant operational problems and is not anticipated to have a material
effect on its financial position or results of operations in any given year.
However, actual results could differ materially from the Company's expectations
due to unanticipated technological difficulties or project delays by the Company
or its suppliers. If the Company and third parties upon which it relies are
unable to address the issue in a timely manner, it could result in a material
financial risk to the Company. In order to assure that this does not occur, the
Company is in the process of developing a contingency plan and plans to devote
all resources required to attempt to resolve any significant Y2K issues in a
timely manner.
EARTHQUAKE RISKS. The Company's corporate and research facilities, where
the majority of its research and development activities are conducted, are
located near major earthquake faults which have experienced earthquakes in the
past. The Company does not carry earthquake insurance on its facility due to its
prohibitive cost and limited available coverage. In the event of a major
earthquake or other disaster affecting the Company's facilities, the operations
and operating results of the Company could be adversely affected.
FORWARD LOOKING STATEMENTS. Based on current expectations, this
Prospectus, the Company's Annual Report on Form 10-K and its quarterly and
periodic reports contain certain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. In
light of the important factors that can materially affect results, including
those set forth above, the inclusion of forward-looking information should not
be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved. The Company may encounter
competitive, technological,
17
<PAGE> 20
financial and business challenges making it more difficult than expected to
continue to develop, market and manufacture its products; competitive conditions
within the industry may change adversely; upon development of the Company's
products, demand for the Company's products may weaken; the market may not
accept the Company's products; the Company may be unable to retain existing key
management personnel; the Company's forecasts may not accurately anticipate
market demand; and there may be other material adverse changes in the Company's
operations or business. Certain important factors affecting the forward-looking
statements made herein include, but are not limited to accurately forecasting
capital expenditures and obtaining new sources of external financing prior to
the expiration of existing support arrangements or capital. Assumptions relating
to budgeting, marketing, product development and other management decisions are
subjective in many respects and thus susceptible to interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause the Company to alter its capital expenditure or other budgets,
which may in turn affect the Company's business, financial position and results
of operations.
18
<PAGE> 21
USE OF PROCEEDS
The proceeds from the sale of the Shares will be received directly
by the Registered Stockholders. The Company will not receive any proceeds from
the sale of the Shares offered hereby.
However, the Company will receive the proceeds, if any, from the
exercise of the Warrants. Holders of Warrants are not obligated to exercise
their Warrants and there can be no assurance that the holders of the Warrants
will choose to exercise all or any of their Warrants or, if some or all of such
holders do choose to exercise all or any of their Warrants, that such holders
will exercise such Warrants for cash (instead of a cashless exercise, as
permitted by the express terms of the Warrants). If all of the holders of the
Warrants exercise all of the Warrants for cash, the Company will receive
proceeds of approximately $1,179,703. Any proceeds received by the Company from
the exercise of Warrants will be used for general working capital purposes.
RECENT DEVELOPMENTS
On July 17, 1998, the Company notified the holders of the Class C
Stock of its intent to redeem the Class C Warrants issued in conjunction with
the Class C Stock offering in April 1997, if such Class C Warrants were not
exercised on or before August 6, 1998. As a result, the holders of the Class C
Warrants elected to exercise 4,076,157 of the Class C Warrants on a combined
cash and cashless basis and the Company issued to such holders an aggregate of
3,763,600 shares of its Common Stock for which it received an aggregate of
$2,244,264. At August 31, 1998, 354 shares of Class C Stock remained outstanding
and, assuming the conversion of all of such remaining shares of Class C Stock at
the Conversion Cap, the Company is required to issue to the holders of the Class
C Stock upon conversion thereof an aggregate of approximately 594,000 shares of
Common Stock and Class C Warrants to purchase an aggregate of up to
approximately 149,000 shares of Common Stock at a purchase price of $.6554 per
share.
In July 1998, the Company renegotiated its short-term note payable
for $2,385,000 with a construction contractor to provide for an extension of
time until July 29, 1998, to repay such note, and issued to the contractor a
warrant, expiring on March 31, 2001, to purchase up to 240,000 shares of Common
Stock at an exercise price of $.5625 per share. On July 29, 1998, the Company
repaid $500,000 of the note to the contractor and renegotiated the payment terms
of the note to provide for an extension of time until August 17, 1998 to repay
the remaining balance of the note. In connection with this subsequent extension
agreement, the Company issued to the contractor a warrant, expiring in July
2001, to purchase up to 95,000 shares of the Company's common stock at an
exercise price of $1.375 per share and also issued an aggregate of 147,235
shares of Common Stock in lieu of repayment of accrued and unpaid interest on
such note. On August 17, 1998, the Company utilized funds received from the
exercise of Class C Warrants during July 1998 and August 1998 to repay the
remaining balance of $1,885,000 of such note in full, plus related legal fees in
the amount of $5,000.
The Company has entered into an agreement for the sale and
subsequent leaseback of its facilities, which consists of two buildings located
in Tustin, California. The sale/leaseback transaction is with an unrelated
entity and provides for the leaseback of the Company's facilities for a ten-year
period with two five-year options to renew. While the sale/leaseback agreement
is in escrow, it is subject to completion of normal due diligence procedures by
the buyer and there is no assurance that the transaction will be completed on a
timely basis or at all.
19
<PAGE> 22
On February 29, 1996, the Company entered into a Distribution
Agreement with Biotechnology Development, Ltd. ("BTD"), a limited partnership
controlled by a former director and stockholder of the Company. Under the terms
of the agreement, BTD was granted the right to market and distribute LYM
products in Europe and other designated foreign countries in exchange for a
nonrefundable fee of $3,000,000 and the performance of certain duties by BTD as
outlined in the agreement. The agreement also provides that the Company will
retain all manufacturing rights to the LYM antibodies and will supply the LYM
antibodies to BTD at preset prices. In conjunction with the agreement, the
Company was granted an option to repurchase the marketing rights to the LYM
antibodies through August 29, 1998 at its sole discretion. The repurchase price
under the option, if exercised by the Company, would include a cash payment of
$4,500,000, the issuance of stock options for the purchase of 1,000,000 shares
of the Company's Common Stock at a price of $5.00 per share with a five-year
term and royalties equal to 5% of gross sales on LYM products in designated
geographic areas. Although the Company has not exercised its rights under the
repurchase option, it continues to negotiate with BTD for the repurchase of the
LYM rights with terms that are acceptable to the Company and BTD. There can be
no assurance, however, that the Company will be able to reacquire such marketing
rights.
On September 8, 1998, Edward J. Legere II resigned from the Board of
Directors and the remaining directors appointed Mr. William C. Shepherd to fill
the vacancy on the Board of Directors caused by Mr. Legere's resignation. Mr.
Legere's resignation was not due to any disagreement with the Company on any
matter relating to the Company's operations, policies or practices.
20
<PAGE> 23
REGISTERED STOCKHOLDERS
The following table sets forth certain information as of September 18,
1998, with respect to each Registered Stockholder for whom the Company is
registering securities for resale to the public. The Company will not receive
any of the proceeds from the sale of the Shares by the Registered Stockholders.
<TABLE>
<CAPTION>
MAXIMUM NUMBER
SHARES BENEFICIALLY OF SHARES TO BE SOLD SHARES BENEFICIALLY
NAME OF OWNED PRIOR TO OFFERING(1) PURSUANT TO THIS PROSPECTUS OWNED AFTER OFFERING(2)
-------------------------- --------------------------- -----------------------
REGISTERED STOCKHOLDER NUMBER PERCENT NUMBER PERCENT
- ---------------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Laredo Capital Partners(3)......... 15,735 * 15,735 - 0 - 0.0%
Pelain Partners(4) ................ 6,294 * 6,294 - 0 - 0.0%
Capital Ventures International(5).. 129,063 * 129,022 41 *
CC Investments, LDC(6)............. 654,769 1.0 % 434,267 220,502 *
Arbco Associates, L.P.(7) ......... 40,910 * 40,910 - 0 - 0.0%
Kayne Anderson Non-Traditional
Investments, Inc.(8)............. 84,967 * 84,967 - 0 - 0.0%
Offence Group, L.P.(9)............. 84,967 * 84,967 - 0 - 0.0%
Fortune Fund LTD Seeker III(10).... 173,078 * 173,078 - 0 - 0.0%
Linda Cappello(11)................. 6,294 * 6,294 - 0 - 0.0%
Gerard Cappello(12)................ 6,294 * 6,294 - 0 - 0.0%
Proprietary Convertible
Investments Group, Inc.(13)...... 40,912 * 40,910 2 *
Jack R. Light, as Trustee
of The Light Family Trust(14).... 185,042 * 105,042 80,000 *
Sugarman Family Partners(15)....... 610,008 * 339,674 270,334 *
Eugene S. Scarcello(16)............ 420,168 * 420,168 - 0 - 0.0%
Peter E. Horner(17)................ 59,521 * 52,521 7,000 *
Mark Brownstein(18)................ 52,521 * 52,521 - 0 - 0.0%
Donaldson Lufkin
Jenrette Securities
Corporation, as
Custodian F/B/O
James S. Dailey IRA,
Custodian Rollover
Account(19) ..................... 220,070 * 220,070 - 0 - 0.0%
</TABLE>
21
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C> <C>
Carl C. Chen, M.D., Inc.
Profit Sharing Plan
U/A/D 8-1-89(20)................. 105,042 * 105,042 - 0 - 0.0%
Elizabeth A. Gorbett-
Frost(21)........................ 225,576 * 105,042 120,534 *
Rudolph & Sletten,
Inc.(22) ........................ 417,235 * 417,235 - 0 - 0.0%
John H. Rudolph.................... 15,000 * 15,000 - 0 - 0.0%
Dennis R. Giles.................... 10,000 * 10,000 - 0 - 0.0%
Allen A. Rudolph................... 10,000 * 10,000 - 0 - 0.0%
Gary L. Walz....................... 16,000 * 10,000 6,000 *
Martin P. Eckert, Jr............... 10,000 * 10,000 - 0 - 0.0%
Karen M. Rudolph................... 10,000 * 10,000 - 0 - 0.0%
Edward J.
Legere II(23).................... 3,632,920 5.4 % 500,000 3,132,920 4.7%
</TABLE>
- --------------
* Less than 1%
(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. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them. Based on an aggregate of 66,386,493 shares of Common Stock issued
and outstanding as of September 18, 1998.
(2) Assumes that all of the Shares are sold pursuant to this Prospectus.
(3) Includes up to 12,588 Shares issuable upon conversion of 5 shares of Class
C Stock and up to 3,147 Shares issuable upon exercise of Warrants to be
issued to such Registered Stockholder upon conversion of such shares of
Class C Stock. See "Description of Securities."
(4) Includes up to 5,035 Shares issuable upon conversion of 2 shares of Class
C Stock and up to 1,259 Shares issuable upon exercise of Warrants to be
issued to such Registered Stockholder upon conversion of such shares of
Class C Stock. See "Description of Securities."
(5) Includes up to 103,217 Shares issuable upon conversion of 41 shares of
Class C Stock and up to 25,805 Shares issuable upon exercise of Warrants
to be issued to such Registered Stockholder upon conversion of such shares
of Class C Stock. See "Description of Securities."
(6) Includes up to 347,413 Shares issuable upon conversion of 138 shares of
Class C Stock and up to 86,854 Shares issuable upon exercise of Warrants
to be issued to such Registered Stockholder upon conversion of such shares
of Class C Stock. See "Description of Securities."
(7) Includes up to 32,728 Shares issued or issuable to such Registered
Stockholder upon conversion of 13 shares of Class C Stock and up to 8,182
Shares issuable to such Registered Stockholder upon exercise of Warrants
issued to such Registered Stockholder upon conversion of shares of Class C
Stock, which Warrants are currently exercisable. See "Description of
Securities."
22
<PAGE> 25
(8) Includes up to 67,973 Shares issued or issuable to such Registered
Stockholder upon conversion of 27 shares of Class C Stock and up to 16,994
Shares issuable to such Registered Stockholder upon exercise of Warrants
issued to such Registered Stockholder upon conversion of shares of Class C
Stock, which Warrants are currently exercisable. See "Description of
Securities."
(9) Includes up to 67,973 Shares issued or issuable to such Registered
Stockholder upon conversion of 27 shares of Class C Stock and up to 16,994
Shares issuable to such Registered Stockholder upon exercise of Warrants
issued to such Registered Stockholder upon conversion of shares of Class C
Stock, which Warrants are currently exercisable. See "Description of
Securities."
(10) Includes up to 138,462 shares of Common Stock issuable upon conversion of
55 shares of Class C Stock and up to 34,616 shares of Common Stock
issuable upon exercise of warrants to be issued to such Registered
Stockholder upon conversion of such shares of Class C Stock. See
"Description of Securities."
(11) Includes up to 5,035 Shares issuable upon conversion of 2 shares of Class
C Stock and up to 1,259 Shares issuable upon exercise of Warrants to be
issued to such Registered Stockholder upon conversion of such shares of
Class C Stock. See "Description of Securities."
(12) Includes up to 5,035 Shares issuable upon conversion of 2 shares of Class
C Stock and up to 1,259 Shares issuable upon exercise of Warrants to be
issued to such Registered Stockholder upon conversion of such shares of
Class C Stock. See "Description of Securities."
(13) Includes up to 32,728 Shares issuable upon conversion of 13 shares of
Class C Stock and up to 8,182 Shares issuable upon exercise of Warrants to
be issued to such Registered Stockholder upon conversion of such shares of
Class C Stock. See "Description of Securities."
(14) Includes 21,008 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(15) Includes 67,935 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(16) Includes 84,034 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(17) Includes 10,504 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(18) Includes 10,504 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(19) Includes 44,014 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(20) Includes 21,008 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(21) Includes 70,588 issued and outstanding Shares and 17,647 Shares issuable
upon exercise of outstanding Warrants which are currently exercisable,
held by Ms. Gorbett-Frost, as Trustee of the Doug & Lisa Family Trust, and
13,446 issued and outstanding Shares and 3,361 Shares issuable upon
23
<PAGE> 26
exercise of outstanding Warrants which are currently exercisable, held by
Ms. Gorbett-Frost, as Trustee of The Gorbett-Frost Children's Trust. Also
includes 3,600 shares of Common Stock owned by members of Ms.
Gorbett-Frost's family, as to which she may be deemed to be the beneficial
owner, and 113,334 shares of Common Stock issuable upon exercise of
outstanding stock options which are currently exercisable. Ms.
Gorbett-Frost is the Company's Chief Financial Officer and Secretary.
(22) Includes 335,000 Shares issuable upon exercise of outstanding Warrants
which are currently exercisable.
(23) Includes 500,000 Shares issuable upon exercise of outstanding Warrants
owned by Biotechnology Development, Ltd., a limited partnership controlled
by Mr. Legere, issued in connection with the establishment of a commitment
for a $2,000,000 bridge loan credit facility by the Company in March 1998,
which Warrants are currently exercisable. Also includes 3,123,333 shares
owned Legere Enterprises, Ltd., a Nevada limited partnership owned by
Mr. Legere and members of his family, and 9,587 shares of Common Stock
issuable upon exercise of outstanding stock options which are currently
exercisable.
The Company will prepare and file such amendments and supplements to the
registration statement as may be necessary in accordance with the rules and
regulations of the Securities Act to keep it effective until the earlier to
occur of (i) the date as of which all Shares may be resold in a public
transaction without volume limitations or other material restrictions without
registration under the Securities Act, including without limitation, pursuant to
Rule 144 under the Securities Act or (ii) the date as of which all Shares
offered hereby have been resold.
The Company has agreed to pay the expenses (other than broker discounts
and commissions, if any) in connection with this Prospectus.
24
<PAGE> 27
PLAN OF DISTRIBUTION
The Company has been advised by the Registered Stockholders that all or a
portion of the Shares offered by this Prospectus may be offered for sale, from
time to time, by the Registered Stockholders in one or more private or
negotiated transactions, in open market transactions on the Nasdaq SmallCap
Market, in settlement or short sale transactions, in settlement of option
transactions, or otherwise, or a combination of these methods, at prices and
terms then obtainable, at fixed prices, at prices then prevailing at the time of
sale, at prices related to such prevailing prices, or at negotiated prices, or
otherwise. The Registered Stockholders may effect these transactions by selling
the Shares (i) to or through underwriters; (ii) to or through broker-dealers or
agents (which may include underwriters) including: (a) in a block trade in which
the broker or dealer so engaged will attempt to sell the shares of Common Stock
as agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (b) in purchases by a broker or dealer and resale by
such broker or dealer as a principal for its account pursuant to this
Prospectus; (c) in ordinary brokerage transactions and (d) in transactions in
which the broker solicits purchasers; or (iii) directly to one or more
purchasers. The Registered Stockholders and any underwriters, dealers, brokers
or agents executing selling orders on behalf of the Registered Stockholders may
be deemed to be "underwriters" within the meaning of the Securities Act and any
profits on the sale of the Shares by them and any discounts, commissions or
concessions received by such underwriters, dealers, brokers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
The compensation to a particular underwriter, broker-dealer or agent may be in
excess of customary commissions. To the knowledge of the Company, the Registered
Stockholders have made no arrangement with any brokerage firm for the sale of
the Shares.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Registered Stockholders (and, if they act as agent for the
purchaser of such Shares, from such purchaser). Broker-dealers may agree with
the Registered Stockholders to sell a specified number of Shares at a stipulated
price per share and, to the extent such a broker-dealer is unable to do so
acting as agent for the Registered Stockholder, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer commitment to
the Registered Stockholder. Broker-dealers who acquire Shares as principal may
thereafter resell such Shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above. To the extent required under the
Securities Act, a supplemental prospectus will be filed, disclosing (a) the name
of any such broker-dealers; (b) the number of Shares involved; (c) the price at
which such Shares are to be sold; (d) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable; (e) that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus, as supplemented; and (f)
other facts material to the transaction.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to the Shares for a period beginning when such
person becomes a distribution participant and ending upon such person's
completion of participation in the distribution, including stabilization
activities in the Common Stock to effect covering transactions, to impose
penalty bids or to effect passive marketing making bids. In addition to and
without limiting the foregoing, in connection with transactions in the Shares,
the Registered Stockholders and any underwriters, dealers, brokers or agents
executing selling orders on behalf of the Registered Stockholders may be subject
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Rule 10b-5 thereof and, insofar as
the Company and the Registered Stockholders are distribution participants,
Regulation M and Rules 100, 101, 102, 103, 104 and 105 thereof.
All of the foregoing may affect the marketability of the Shares.
25
<PAGE> 28
The Registered Stockholders will pay all commissions, transfer taxes and
other expenses associated with the sales of the Shares by them. The Shares
offered hereby are being registered pursuant to contractual obligations of the
Company, and the Company has agreed to pay the expenses of the preparation of
this prospectus. The Company has also agreed to indemnify the Registered
Stockholders against certain liabilities, including, without limitation,
liabilities arising under the Securities Act.
The Company will receive the proceeds, if any, from the exercise of the
Warrants. Holders of Warrants are not obligated to exercise their Warrants and
there can be no assurance that the holders of the Warrants will choose to
exercise all or any of their Warrants or, if some or all of such holders do
choose to exercise all or any of their Warrants, that such holders will exercise
such Warrants for cash (instead of a cashless exercise, as permitted by the
express terms of the Warrants). If all of the holders of the Warrants exercise
all of the Warrants for cash, the Company will receive proceeds of $1,179,703.
The Company will not receive any of the proceeds from the sale of the Shares by
the Registered Shareholders.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless the Shares have been registered or qualified for
sale in these states or an exemption from registration or qualification is
available and complied with.
The Common Stock of the Company is currently traded on the Nasdaq SmallCap
Market under the symbol "TCLN". Concurrently with sales under this prospectus,
the Registered Stockholders may effect other sales of Shares under Rule 144 or
other exempt resale transactions. There can be no assurance that the Registered
Stockholders, or any of them, will sell any or all of the Shares offered
hereunder.
26
<PAGE> 29
DESCRIPTION OF SECURITIES
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 120,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock, par value $.001 per share, of
which 10,000 shares are designated as Series B Convertible Preferred Stock
("Series B Stock") and 17,200 shares are designated as 5% Adjustable Convertible
Class C Preferred Stock ("Class C Stock"). As of August 31, 1998, there were
66,386,493 shares of Common Stock outstanding held by 5,805 stockholders of
record, 354 shares of Class C Stock outstanding held by 8 holders of record and
no shares of Series B Stock outstanding.
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Subject to preferences that may be
applicable to the holders of outstanding shares of Preferred Stock, if any, the
holders of Common Stock are entitled to receive such lawful dividends as may be
declared by the Board of Directors. In the event of liquidation, dissolution or
winding up of the Company, and subject to the rights of the holders of
outstanding shares of Preferred Stock, if any, the holders of shares of Common
Stock shall be entitled to receive pro rata all of the remaining assets of the
Company available for distribution to its stockholders. There are no redemption
or sinking fund provisions applicable to the Common Stock. All outstanding
shares of Common Stock are fully paid and nonassessable, and shares of Common
Stock to be issued pursuant to this offering shall be fully paid and
nonassessable.
In April 1997, the Company issued 12,000 shares of Class C Stock, at a
price of $1,000 per share, for net proceeds of $11,068,971. The holders of the
Class C Stock do not have voting rights except as provided under Delaware law.
Under the terms of the Company's agreement with the holders of the Class C
Stock, the shares of the Class C Stock are convertible into shares of the
Company's Common Stock at the lower of $0.5958 per share or a conversion price
equal to the average of the lowest trading price of the Company's Common Stock
for the five consecutive trading days ending with the trading date prior to the
date of conversion reduced by 27 percent. The Company's agreement with the
holders of the Class C Stock also provides that upon conversion, the holders of
the Class C Stock will also receive warrants to purchase one-fourth of the
number of shares of Common Stock issued upon conversion of the Class C Stock at
an exercise price of $0.6554 per share (or 110% of the Conversion Cap).
Dividends on the Class C Stock are payable quarterly in shares of Class C Stock
or cash, at the option of the Company, at the rate of $50.00 per share per
annum. During fiscal year 1998, the Company issued 448 Class C Stock dividend
shares and paid cash dividends of $12,473 for fractional shares thereon.
From September 26, 1997 (the date the Class C Stock became convertible
into Common Stock) through September 18, 1998, 13,619 shares of Class C Stock,
including Class C dividend shares and additional shares of Class C Stock issued
during fiscal year 1998 (as described below), were converted. In addition, in
conjunction with the conversion of the Class C Stock, the holders were granted
warrants to purchase shares of Common Stock of the Company. Warrants to purchase
6,144,537 shares of common stock have been exercised through September 18, 1998,
at an exercise price of $.6554 per share. During fiscal year 1998, the
registration statement required to be filed by the Company pursuant to the
Company's agreement with the holders of the Class C Stock was not declared
effective by the 180th day following the closing date of such offering, and
therefore, the Company was required to issue an additional 325 shares of Class C
Stock. The shares of Common Stock issuable upon conversion of such 325 shares of
Class C Stock and the shares of Common Stock issuable upon exercise of the Class
C Warrants issuable upon conversion of such shares of Class C Stock constitute a
portion of the Shares to which this Prospectus relates. Shares of Common Stock
issued or issuable upon conversion of the other shares of Class C Stock and
shares of Common Stock issued or issuable upon exercise of Class C Warrants
issued or issuable upon conversion of such other shares of Class C Stock have
been separately registered for resale under the Securities Act and are the
subject of a separate prospectus.
27
<PAGE> 30
The Class C Stock is subject to mandatory redemption upon certain
events as defined in the Class C Stock agreement. Some of the mandatory
redemption features are within the control of the Company. For those mandatory
redemption features that are not within the control of the Company, the Company
has the option to redeem the Class C Stock in cash or common stock. On July 17,
1998, the Company notified the holders of the Class C Stock of its intent to
redeem the Class C Warrants issued in conjunction with the Class C Stock
offering in April 1997, if such Class C Warrants were not exercised on or before
August 6, 1998. As a result, the holders of Class C Warrants elected to exercise
4,076,157 of the Class C Warrants on a combined cash and cashless basis and the
Company issued to such holders an aggregate of 3,763,600 shares of its Common
Stock for which it received an aggregate of $2,244,264.
At September 18, 1998, 354 shares of Class C Stock remained
outstanding and may be converted into shares of Common Stock at the lower of a
27% discount from the average of the lowest market trading price for the five
consecutive trading days preceding the date of conversion or $0.5958 per share.
Assuming the conversion of all of such remaining shares of Class C Stock at the
Conversion Cap, the Company is required to issue to the holders of the Class C
Stock upon conversion thereof an aggregate of approximately 594,000 shares of
Common Stock and Class C Warrants to purchase an aggregate of up to
approximately 149,000 shares of Common Stock at an exercise price of $.6554 per
share. Pursuant to the Company's agreement with the holders of the Class C
Stock, the Company is required to have registered up to 150% of the number of
shares of Common Stock that would otherwise be issuable upon conversion of the
Class C Stock and upon exercise of the Class C Warrants (including up to 818,187
Shares to which this Prospectus relates issuable upon conversion of 325 shares
of Class C Stock and up to 204,551 Shares to which this Prospectus relates
issuable upon exercise of Class C Warrants).
In April 1998, through a private placement, the Company sold
1,120,065 shares of restricted common stock for $625,000, including 84,034
shares to an officer of the Company, which shares constitute a portion of the
Shares to which this Prospectus relates. In conjunction with the private
placement, the Company issued the April 1998 Private Placement Warrants to
purchase up to 280,015 shares of Common Stock, which shares constitute a portion
of the Shares to which this Prospectus relates.
In July 1998, the Company renegotiated its short-term note payable
for $2,385,000 with a construction contractor to provide for an extension of
time until July 29, 1998, to repay such note, and issued to the contractor a
warrant, expiring on March 31, 2001, to purchase up to 240,000 shares of Common
Stock at an exercise price of $.5625 per share. On July 29, 1998, the Company
repaid $500,000 of the note to the contractor and renegotiated the payment terms
of the note to provide for an extension of time until August 17, 1998 to repay
the remaining balance of the note. In connection with this subsequent extension
agreement, the Company issued to the contractor a warrant, expiring in July
2001, to purchase up to 95,000 shares of the Company's common stock at an
exercise price of $1.375 per share and also issued an aggregate of 147,235
shares of Common Stock in lieu of repayment of accrued and unpaid interest on
such note. On August 17, 1998, the Company utilized funds received from the
exercise of Class C Warrants during July 1998 and August 1998 to repay the
remaining balance of $1,885,000 of such note in full, plus related legal fees in
the amount of $5,000. The shares of Common Stock underlying such Repayment
Extension Warrants and the shares of Common Stock issued in lieu of repayment of
accrued and unpaid interest on such note constitute a portion of the Shares to
which this Prospectus relates.
In March 1998, the Company obtained a commitment for a $2,000,000
bridge loan credit facility from Legere Enterprises, Ltd., a Nevada limited
partnership ("LEL"). The commitment expired May 31, 1998 and the Company did not
exercise its rights to borrow under the commitment. In connection with the
establishment of such bridge loan commitment, the Company issued to BTD,
28
<PAGE> 31
an affiliate of Edward Legere, a former director of the Company, warrants to
purchase up to 500,000 shares of Common Stock, at an exercise price of $1.00 per
share. The Shares issuable upon exercise of the Bridge Loan Commitment Warrants
constitute a portion of the Shares to which this Prospectus relates.
The Class C Warrants will be exercisable at any time beginning on
the date of issuance thereof and ending in April 2002, at an exercise price of
$.6554 per share. The April 1998 Private Placement Warrants are exercisable at
any time beginning on the date of issuance thereof and ending in April 2001, at
an exercise price of $1.00 per share. Of the 335,000 Shares issuable upon
exercise of the Repayment Extension Warrants, warrants to purchase up to 240,000
Shares are exercisable at any time beginning on the date of issuance thereof and
ending in March 2001, at an exercise price of $.5625 per share, and warrants to
purchase up to 95,000 Shares are exercisable at any time beginning on the date
of issuance thereof and ending in July 2001, at an exercise price of $1.375 per
share. The Bridge Loan Commitment Warrants are exercisable at any time beginning
on the date of issuance thereof and ending in March, 2003, at an exercise price
of $1.00 per share. The shares of Common Stock underlying the Warrants, when
issued upon exercise in whole or in part, will be fully paid and nonassessable,
and the Company will pay any transfer tax incurred as a result of the issuance
of the Common Stock to the holder upon its exercise.
Each of the Warrants contain provisions that protect the holder
against dilution by adjustment of the exercise price. Such adjustments will
occur in the event, among others, of a merger, stock split or reverse stock
split, stock dividend or recapitalization. The Company is not required to issue
fractional shares upon the exercise of any Warrant. The holder of the Warrant
will not possess any rights as a stockholder of the Company until such holder
exercises the Warrant. The Warrant may be exercised upon surrender on or before
the expiration date of the Warrant at the offices of the Company, with an
exercise form completed and executed as indicated, accompanied by payment of the
exercise price for the number of shares with respect to which the Warrant is
being exercised. The exercise price is payable either (i) by check or bank draft
payable to the order of the Company or by wire transfer to an account designated
by the Company or (ii) by a "cashless exercise," in which that number of shares
of Common Stock underlying the Warrant having a fair market value equal to the
aggregate exercise price are canceled as payment of the exercise price.
For the life of each of the Warrants, the holder thereof has the
opportunity to profit from a rise in the market price of the Common Stock
without assuming the risk of ownership of the shares of Common Stock issuable
upon the exercise of the Warrant. The Warrant holder may be expected to exercise
the Warrant at a time when the Company would, in all likelihood, be able to
obtain any needed capital by an offering of Common Stock on terms more favorable
than those provided for by the Warrant. Furthermore, the terms on which the
Company could obtain additional capital during the life of the Warrant may be
adversely affected.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for
the Company by Rutan & Tucker, LLP, Costa Mesa, California.
29
<PAGE> 32
EXPERTS
The consolidated financial statements and related consolidated
financial statement schedule, incorporated in this Prospectus by reference from
Techniclone Corporation's Annual Report on Form 10-K for the year ended April
30, 1998, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify its
directors and officers and may indemnify its employees and other agents to the
fullest extent permitted by law. The Company believes that indemnification under
its Bylaws covers at least negligence and gross negligence by indemnified
parties, and permits the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
indemnified party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification. The Company has liability
insurance for its officers and directors.
In addition, the Company's Certificate of Incorporation provides
that, pursuant to Delaware law, its directors shall not be liable for monetary
damages for breach of the directors' fiduciary duty as a director to the Company
and its stockholders. This provision in the Certificate of Incorporation does
not eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.
Provisions of the Company's Bylaws require the Company, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors or officers (other than liabilities
arising from actions not taken in good faith or in a manner the indemnitee
believed to be opposed to the best interests of the Company) to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified and to obtain directors' insurance if available on
reasonable terms. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. The Company believes that its Certificate of
Incorporation and Bylaw provisions are necessary to attract and retain qualified
persons as directors and officers.
The Company has in place a directors' and officers' liability
insurance policy that, subject to the terms and conditions of the policy,
insures the directors and officers of the Company against loses arising from any
wrongful act (as defined by the policy) in his or her capacity as a director of
officer. The policy reimburses the Company for amounts which the Company
lawfully indemnifies or is required or permitted by law to indemnify its
directors and officers.
30
<PAGE> 33
================================================================================
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF THE REGISTERED STOCKHOLDERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES BY ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH AN OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
----------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information .................................................... 2
Incorporation of Certain Documents
By Reference .......................................................... 3
Cautionary Statement Regarding
Forward-Looking Statements ............................................ 4
The Company .............................................................. 5
Risk Factors ............................................................. 7
Use of Proceeds .......................................................... 19
Recent Developments ...................................................... 19
Registered Stockholders .................................................. 21
Plan of Distribution ..................................................... 25
Description of Securities ................................................ 27
Legal Matters ............................................................ 29
Experts .................................................................. 30
Indemnification of Directors
and Officers .......................................................... 30
</TABLE>
-------------------------------
3,405,053 Shares
TECHNICLONE
Corporation
COMMON STOCK
-----------------
PROSPECTUS
-----------------
, 1998
================================================================================
<PAGE> 34
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the Offering described in this Registration Statement:
<TABLE>
<S> <C>
SEC registration fee ....................................... $ 1,264
Printing and engraving expenses ............................ 5,000
Legal fees and expenses .................................... 25,000
Blue Sky fees and expenses ................................. 2,500
Accounting fees and expenses ............................... 25,000
Miscellaneous .............................................. 10,000
-------
Total .............................................. $68,764
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation (the "Certificate") and Bylaws
include provisions that eliminate the directors' personal liability for monetary
damages to the fullest extend possible under Delaware Law or other applicable
law (the "Director Liability Provision"). The Director Liability Provision
eliminates the liability of Directors to the Company and its stockholders for
monetary damages arising out of any violation by a director of his fiduciary
duty of due care. However, the Director Liability Provision does not eliminate
the personal liability of a director for (i) breach of the director's duty of
loyalty, (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violation of law, (iii) payment of dividends or
repurchases or redemption of stock other than from lawfully available funds, or
(iv) any transactions from which the director derived an improper benefit. The
Director Liability Provision also does not affect a director's liability under
the federal securities laws or the recovery of damages by third parties.
Furthermore, pursuant to Delaware Law, the limitation liability afforded by the
Director Liability Provision does not eliminate a director's personal liability
for breach of the director's duty of due care. Although the directors would not
be liable for monetary damages to the corporation or its stockholders for
negligent acts or commissions in exercising their duty of due care, the
directors remain subject to equitable remedies, such as actions for injunction
or rescission, although these remedies, whether as a result of timeliness or
otherwise, may not be effective in all situations. With regard to directors who
also are officers of the Company, these persons would be insulated from
liability only with respect to their conduct as directors and would not be
insulated from liability for acts or omissions in their capacity as officers.
These provisions may cover actions undertaken by the Board of Directors, which
may serve as the basis for a claim against the Company under the federal and
state securities laws. The Company has been advised that it is the position of
the Commission that insofar as the foregoing provisions may be involved to
disclaim liability for damages arising under the Securities Act, such provisions
are against public policy as expressed in the Act and are therefore
unenforceable.
Delaware Law provides a detailed statutory framework covering
indemnification of directors, officers, employees or agents of the Company
against liabilities and expenses arising out of legal proceedings brought
against them by reason of their status or service as directors, officers,
employees or agents. Section 145 of the Delaware General Corporation Law
("Section 145") provides that a director, officer, employee or agent of a
corporation (i) shall be indemnified by the corporation for expenses actually
and reasonably incurred in defense of any action or proceeding if such person is
sued by reason of his service to the corporation, to the extent that
II-1
<PAGE> 35
such person has been successful in defense of such action or proceeding, or in
defense of any claim, issue or matter raised in such litigation, (ii) may, in
actions other than actions by or in the right of the corporation (such as
derivative actions), be indemnified for expenses actually and reasonably
incurred, judgments, fines and amounts paid in settlement of such litigation,
even if he is not successful on the merits, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation (and in a criminal proceeding, if he did not have reasonable
cause to believe his conduct was unlawful), and (iii) may be indemnified by the
corporation for expenses actually and reasonably incurred (but not judgments or
settlements) of any action by the Corporation or of a derivative action (such as
a suit by a stockholder alleging a breach by the director or officer of a duty
owed to the corporation), even if he is not successful, provided that he acted
in good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation, provided that no indemnification is permitted
without court approval if the director has been adjudged liable to the
corporation.
Delaware Law also permits a corporation to elect to indemnify its
officers, directors, employees and agents under a broader range of circumstances
than that provided under Section 145. The Certificate contains a provision that
takes full advantage of the permissive Delaware indemnification laws (the
"Indemnification Provision") and provides that the Company is required to
indemnify its officers, directors, employees and agents to the fullest extent
permitted by law, including those circumstances in which indemnification would
otherwise be discretionary, provided, however, that prior to making such
discretionary indemnification, the Company must determine that the person acted
in good faith and in a manner he or she believed to be in the best interests of
the Company and, in the case of any criminal action or proceeding, the person
had no reason to believe his or her conduct was unlawful.
In furtherance of the objectives of the Indemnification Provision, the
Company has also entered into agreements to indemnify its directors and
executive officers, in addition to the indemnification provided for in the
Company's Certificate and Bylaws (the "Indemnification Agreements"). The Company
believes that the Indemnification Agreements are necessary to attract and retain
qualified directors and executive officers. Pursuant to the Indemnification
Agreements, an indemnitee will be entitled to indemnification to the extent
permitted by Section 145 or other applicable law. In addition, to the maximum
extent permitted by applicable law, an indemnitee will be entitled to
indemnification for any amount or expense which the indemnitee actually and
reasonably incurs as a result of or in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, preparing to be a witness, or
otherwise participating in any threatened, pending or completed claim, suit,
arbitration, inquiry or other proceeding (a "Proceeding") in which the
indemnitee is threatened to be made or is made a party or participant as a
result of his or her position with the Company, provided that the indemnitee
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company and had no reasonable cause to
believe his or her conduct was unlawful. If the Proceeding is brought by or in
the right of the Company and applicable law so provides, the Indemnification
Agreement provides that no indemnification against expenses shall be made in
respect of any claim, issue or matter in the Proceeding as to which the
indemnitee shall have been adjudged liable to the Company.
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 the Company pursuant to the foregoing
provisions, the Company 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 and is, therefore, unenforceable.
II-2
<PAGE> 36
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1................... Certificate of Incorporation of Techniclone Corporation,
a Delaware corporation (Incorporated by reference to
Exhibit B to the Company's 1996 Proxy Statement as
filed with the Commission on or about August 20, 1996)
3.2................... Bylaws of Techniclone Corporation, a Delaware
corporation (Incorporated by reference to Exhibit C to the
Company's 1996 Proxy Statement as filed with the
Commission on or about August 20, 1996)
3.3................... Certificate of Designation of 5% Adjustable Convertible
Class C Preferred Stock as filed with the Delaware
Secretary of State on April 23, 1997. (Incorporated by
reference to Exhibit 3.1 contained in Registrant's Current
Report on Form 8-K as filed with the Commission on or
about May 12, 1997)
4.1................... Form of Certificate for Common Stock (Incorporated by
reference to the exhibit of the same number contained in
the Registrants' Annual Report on Form 10-K for the
fiscal year ended April 30, 1988)
4.4................... Form of Subscription Agreement entered into with Series
B Convertible Preferred Stock Subscribers (Incorporated
by reference to Exhibit 4.1 contained in Registrant's
Report on Form 8-K dated December 27, 1995, as filed
with the Commission on or about January 24, 1996)
4.5................... Registration Rights Agreement dated December 27, 1995,
by and among Swartz Investments, Inc. and the holders
of the Registrant's Series B Convertible Preferred Stock
(incorporated by reference to Exhibit 4.2 contained in
Registrant's Current Report on Form 8-K dated
December 27, 1995 as filed with the Commission on or
about January 24, 1996)
4.6................... Warrant to Purchase Common Stock of Registrant issued
to Swartz Investments, Inc. (Incorporated by reference to
Exhibit 4.3 contained in Registrant's Current Report on
Form 8-K dated December 27, 1995 as filed with the
Commission on or about January 24, 1996)
</TABLE>
II-3
<PAGE> 37
<TABLE>
<S> <C>
4.7................... 5% Preferred Stock Investment Agreement between
Registrant and the Investors named therein (Incorporated
by reference to Exhibit 4.1 contained in Registrant's
Current Report on Form 8-K as filed with the
Commission on or about May 12, 1997)
4.8................... Registration Rights Agreement between the Registrant
and the holders of the Class C Preferred Stock
(Incorporated by reference to Exhibit 4.2 contained in
Registrant's Current Report on Form 8-K as filed with
the Commission on or about May 12, 1997)
4.9................... Form of Stock Purchase Warrant to be issued to the
holders of the Class C Preferred Stock upon conversion
of the Class C Preferred Stock (Incorporated by reference
to Exhibit 4.3 contained in Registrant's Current Report
on Form 8-K as filed with the Commission on or about
May 12, 1997)
4.10.................. Regulation D Common Equity Line Subscription
Agreement dated as of June 16, 1998 between the
Registrant and the Subscribers named therein (the "Equity
Line Subscribers") (Incorporated by reference to Exhibit
4.4 contained in Registrant's Report on Form 8-K dated
as filed with the Commission on or about June 29, 1998)
4.11.................. Form of Amendment to Regulation D Common Stock
Equity Line Subscription Agreement (Incorporated by
reference to Exhibit 4.5 contained in Registrant's Current
Report on Form 8-K filed with the Commission on or
about June 29, 1998)
4.12.................. Registration Rights Agreement dated as of June 16, 1998
between the Registrant and the Equity Line Subscribers
(Incorporated by reference to Exhibit 4.6 contained in
Registrant's Current Report on Form 8-K as filed with
the Commission on or about June 29, 1998)
4.13.................. Form of Stock Purchase Warrant to be issued to the
Equity Line Subscribers pursuant to the Regulation D
Common Stock Equity Subscription Agreement
(Incorporated by reference to Exhibit 4.7 contained in
Registrant's Current Report on Form 8-K as filed with
the Commission on or about June 29, 1998)
</TABLE>
II-4
<PAGE> 38
<TABLE>
<S> <C>
4.14.................. Placement Agent Agreement dated as of June 16, 1998, by
and between the Registrant and Swartz Investments LLC,
a Georgia limited liability company d/b/a Swartz
Institutional Finance (Incorporated by reference to the
exhibit contained in Registrant's Registration Statement
on Form S-3 (File No. 333-63773))
4.15.................. Second Amendment to Regulation D Common Stock
Equity Line Subscription Agreement dated as of
September 16, 1998, by and among the Registrant, The
Tail Wind Fund, Ltd. and Resonance Limited
(Incorporated by reference to the exhibit contained in
Registrant's Registration Statement on Form S-3 (File
No. 333-63773))
4.16.................. Form of Stock Purchase Warrant issued to investors (the
"April 1998 Private Placement Investors") in connection
with the private placement by the Registrant in April
1998 (the "April 1998 Private Placement")*
4.17.................. Form of Registration Rights Agreement between the
Registrant and the April 1998 Private Placement
Investors*
4.18.................. Stock Purchase Warrant to purchase up to 240,000 Shares
of Common Stock of the Registrant issued to Rudolph &
Sletten, Inc.*
4.19.................. Stock Purchase Warrant to purchase up to 95,000 Shares
of Common Stock of the Registrant issued to Rudolph &
Sletten, Inc.*
4.20.................. Form of Registration Rights Agreement between the
Registrant and Rudolph & Sletten, Inc.*
4.21.................. Stock Purchase Warrant to purchase up to 500,000 Shares
of Common Stock of the Registrant issued to Biotechnology
Development Ltd.*
5..................... Opinion of Rutan & Tucker, LLP*
10.22................. 1982 Stock Option Plan (Incorporated by reference to the
exhibit contained in Registrant's Registration Statement
on Form S-8 (File No. 2-85628))
10.23................. Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan - 1986 (Incorporated by
reference to the exhibit contained in Registrant's
Registration Statement on Form S-8 (File No. 33-15102))
</TABLE>
II-5
<PAGE> 39
<TABLE>
<S> <C>
10.24................. Cancer Biologics Incorporated Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock
Purchase Plan - 1987 (Incorporated by reference
to the exhibit contained in Registrant's Registration
Statement on Form S-8 (File No. 33-8664))
10.25................. Amendment to 1982 Stock Option Plan dated March 1,
1988 (Incorporated by reference to the exhibit of the
same number contained in Registrants' Annual Report on
Form 10-K for the year ended April 30, 1988)
10.26................. Amendment to 1986 Stock Option Plan dated March 1,
1988 (Incorporated by reference to the exhibit of the
same number contained in Registrant's Annual Report on
Form 10-K for the year ended April 30, 1988)
10.31................. Agreement dated February 5, 1996, between Cambridge
Antibody Technology, Ltd. and Registrant (Incorporated
by reference to Exhibit 10.1 contained in Registrant's
Current Report on Form 8-K dated February 5, 1996, as
filed with the Commission on or about February 8, 1996)
10.32................. Distribution Agreement dated February 29, 1996,
between Biotechnology Development, Ltd. and Registrant
(Incorporated by reference to Exhibit 10.1 contained in
Registrant's Current Report on Form 8-K dated February
29, 1996, as filed with the Commission on or about
March 7, 1996)
10.33................. Option Agreement dated February 29, 1996, by and
between Biotechnology Development, Ltd. And
Registrant (Incorporated by reference to Exhibit 10.2
contained in Registrant's Current Report on Form 8-K
dated February 29, 1996, as filed with the Commission
on or about March 7, 1996)
10.34................. Purchase Agreement for Real Property and Escrow
Instructions dated as of March 22, 1996, by and between
TR Koll Tustin Tech Corp. and Registrant (Incorporated
by reference to Exhibit 10.1 contained in Registrant's
Current Report on Form 8-K dated March 25, 1996, as
filed with the Commission on or about April 5, 1996)
10.35................. Incentive Stock Option and Nonqualified Stock Option
Plan-1993 (Incorporated by reference to the exhibit
contained in Registrants' Registration Statement on Form
S-8 (File No. 33-87662))
</TABLE>
II-6
<PAGE> 40
<TABLE>
<S> <C>
10.36................. Promissory Note dated October 24, 1996 in the original
principal amount of $1,020,000 payable to Imperial
Thrift and Loan Association by Registrant
(Incorporated by reference to Exhibit
10.1 to Registrants' Current Report on Form
8-K dated October 25, 1996)
10.37................. Deed of Trust dated October 24, 1996 among Registrant
and Imperial Thrift and Loan Association (Incorporated
by reference to Exhibit 10.2 to Registrants' Current
Report on Form 8-K dated October 25, 1996)
10.38................. Assignment of Lease and Rents dated October 24, 1996
between Registrant and Imperial Thrift and Loan
Association (Incorporated by reference to
Exhibit 10.3 on Registrants' Current Report on
Form 8-K dated October 25, 1996)
10.39................. Commercial Security Agreement dated October 24, 1996
between Imperial Thrift and Loan Association and
Registrant (Incorporated by reference to Exhibit 10.4 on
Registrants' Current Report on Form 8-K dated October
25, 1996)
10.40................. 1996 Stock Incentive Plan (Incorporated by reference to
the exhibit contained in Registrants' Registration
Statement on Form S-8 (File No. 333-17513))
10.41................. Stock Exchange Agreement dated as of January 15, 1997
among the stockholders of Peregrine Pharmaceuticals,
Inc. and Registrant (Incorporated by reference to Exhibit
2.1 to Registrants' Quarterly Report on Form 10-Q for
the quarter ended January 31, 1997)
10.42................. First Amendment to Stock Exchange Agreement among
the Stockholders of Peregrine Pharmaceuticals, Inc. and
Registrant (Incorporated by reference to Exhibit 2.1
contained in Registrant's Current Report on Form 8-K as
filed with the Commission on or about May 12, 1997)
10.43................. Termination and Transfer Agreement dated as of
November 14, 1997 by and between Registrant and Alpha
Therapeutic Corporation (Incorporated by reference to
Exhibit 10.1 contained in Registrant's Current Report on
Form 8-K as filed with the Commission on or about
November 24, 1997)
23.1.................. Consent of Rutan & Tucker, LLP (contained in Exhibit 5)*
23.2.................. Consent of Deloitte & Touche LLP*
</TABLE>
II-7
<PAGE> 41
- -------------------------
* filed herewith
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. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total value of securities offered would
not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price present no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(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 (1)(i) and (1)(ii) 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 Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 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.
(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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 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 the time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act 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
II-8
<PAGE> 42
indemnification is against public policy as expressed in the Securities Act 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 Act and will be governed by the final adjudication of
such issue.
II-9
<PAGE> 43
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant 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 the City of Tustin, State of California, on September 24, 1998.
TECHNICLONE CORPORATION
By: /s/ LARRY O. BYMASTER
------------------------------------
Larry O. Bymaster, President
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Larry O. Bymaster President, Chief Executive September 24, 1998
- ------------------------------ Officer and Director (Principal
Larry O. Bymaster Executive Officer)
/s/ Elizabeth A. Gorbett-Frost Chief Financial Officer and September 28, 1998
- ------------------------------ Secretary (Principal Financial and
Elizabeth A. Gorbett-Frost Principal Accounting Officer)
/s/ Thomas R. Testman Chairman of the Board September 25, 1998
- ------------------------------
Thomas R. Testman
/s/ Rock Hankin Director September 25, 1998
- ------------------------------
Rock Hankin
Director September __, 1998
- ------------------------------
William C. Shepherd
/s/ Carmelo J. Santoro, Ph.D. Director September 25, 1998
- ------------------------------
Carmelo J. Santoro, Ph.D.
Director September __, 1998
- ------------------------------
Clive R. Taylor, M.D., Ph.D.
</TABLE>
II-10
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
<S> <C> <C>
3.1 Certificate of Incorporation of Techniclone Corporation,
a Delaware corporation (Incorporated by reference to
Exhibit B to the Company's 1996 Proxy Statement as
filed with the Commission on or about August 20, 1996)
3.2 Bylaws of Techniclone Corporation, a Delaware
corporation (Incorporated by reference to Exhibit C to the
Company's 1996 Proxy Statement as filed with the
Commission on or about August 20, 1996)
3.3 Certificate of Designation of 5% Adjustable Convertible
Class C Preferred Stock as filed with the Delaware
Secretary of State on April 23, 1997. (Incorporated by
reference to Exhibit 3.1 contained in Registrant's Current
Report on Form 8-K as filed with the Commission on or
about May 12, 1997)
4.1 Form of Certificate for Common Stock (Incorporated by
reference to the exhibit of the same number contained in
the Registrants' Annual Report on Form 10-K for the
fiscal year ended April 30, 1988)
4.4 Form of Subscription Agreement entered into with Series
B Convertible Preferred Stock Subscribers (Incorporated
by reference to Exhibit 4.1 contained in Registrant's
Report on Form 8-K dated December 27, 1995, as filed
with the Commission on or about January 24, 1996)
4.5 Registration Rights Agreement dated December 27, 1995,
by and among Swartz Investments, Inc. and the holders
of the Registrant's Series B Convertible Preferred Stock
(incorporated by reference to Exhibit 4.2 contained in
Registrant's Current Report on Form 8-K dated
December 27, 1995 as filed with the Commission on or
about January 24, 1996)
4.6 Warrant to Purchase Common Stock of Registrant issued
to Swartz Investments, Inc. (Incorporated by reference to
Exhibit 4.3 contained in Registrant's Current Report on
Form 8-K dated December 27, 1995 as filed with the
Commission on or about January 24, 1996)
4.7 5% Preferred Stock Investment Agreement between
Registrant and the Investors named therein (Incorporated
by reference to Exhibit 4.1 contained in Registrant's
Current Report on Form 8-K as filed with the
Commission on or about May 12, 1997)
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
<S> <C> <C>
4.8 Registration Rights Agreement between the Registrant
and the holders of the Class C Preferred Stock
(Incorporated by reference to Exhibit 4.2 contained in
Registrant's Current Report on Form 8-K as filed with
the Commission on or about May 12, 1997)
4.9 Form of Stock Purchase Warrant to be issued to the
holders of the Class C Preferred Stock upon conversion
of the Class C Preferred Stock (Incorporated by reference
to Exhibit 4.3 contained in Registrant's Current Report
on Form 8-K as filed with the Commission on or about
May 12, 1997)
4.10 Regulation D Common Equity Line Subscription
Agreement dated as of June 16, 1998 between the
Registrant and the Subscribers named therein (the "Equity
Line Subscribers") (Incorporated by reference to Exhibit
4.4 contained in Registrant's Report on Form 8-K dated
as filed with the Commission on or about June 29, 1998)
4.11 Form of Amendment to Regulation D Common Stock
Equity Line Subscription Agreement (Incorporated by
reference to Exhibit 4.5 contained in Registrant's Current
Report on Form 8-K filed with the Commission on or
about June 29, 1998)
4.12 Registration Rights Agreement dated as of June 16, 1998
between the Registrant and the Equity Line Subscribers
(Incorporated by reference to Exhibit 4.6 contained in
Registrant's Current Report on Form 8-K as filed with
the Commission on or about June 29, 1998)
4.13 Form of Stock Purchase Warrant to be issued to the
Equity Line Subscribers pursuant to the Regulation D
Common Stock Equity Subscription Agreement
(Incorporated by reference to Exhibit 4.7 contained in
Registrant's Current Report on Form 8-K as filed with
the Commission on or about June 29, 1998)
4.14 Placement Agent Agreement dated as of June 16, 1998, by
and between the Registrant and Swartz Investments LLC,
a Georgia limited liability company d/b/a Swartz
Institutional Finance (Incorporated by reference to the
exhibit contained in Registrant's Registration Statement
on Form S-3 (File No. 333-63773))
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
<S> <C> <C>
4.15 Second Amendment to Regulation D Common Stock
Equity Line Subscription Agreement dated as of
September 16, 1998, by and among the Registrant, The
Tail Wind Fund, Ltd. and Resonance Limited
(Incorporated by reference to the exhibit contained in
Registrant's Registration Statement on Form S-3 (File
No. 333-63773))
4.16 Form of Stock Purchase Warrant issued to investors (the
"April 1998 Private Placement Investors") in connection
with the private placement by the Registrant in April
1998 (the "April 1998 Private Placement")
4.17 Form of Registration Rights Agreement between the
Registrant and the April 1998 Private Placement
Investors
4.18 Stock Purchase Warrant to purchase up to 240,000 Shares
of Common Stock of the Registrant issued to Rudolph &
Sletten, Inc.
4.19 Stock Purchase Warrant to purchase up to 95,000 Shares
of Common Stock of the Registrant issued to Rudolph &
Sletten, Inc.
4.20 Form of Registration Rights Agreement between the
Registrant and Rudolph & Sletten, Inc.
4.21 Stock Purchase Warrant to purchase up to 500,000 Shares
of Common Stock of the Registrant issued to Biotechnology
Development Ltd.
5 Opinion of Rutan & Tucker, LLP
10.22 1982 Stock Option Plan (Incorporated by reference to the
exhibit contained in Registrant's Registration Statement
on Form S-8 (File No. 2-85628))
10.23 Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan - 1986 (Incorporated by
reference to the exhibit contained in Registrant's
Registration Statement on Form S-8 (File No. 33-15102))
10.24 Cancer Biologics Incorporated Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock
Purchase Plan - 1987 (Incorporated by reference
to the exhibit contained in Registrant's Registration
Statement on Form S-8 (File No. 33-8664))
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
<S> <C> <C>
10.25 Amendment to 1982 Stock Option Plan dated March 1,
1988 (Incorporated by reference to the exhibit of the
same number contained in Registrants' Annual Report on
Form 10-K for the year ended April 30, 1988)
10.26 Amendment to 1986 Stock Option Plan dated March 1,
1988 (Incorporated by reference to the exhibit of the
same number contained in Registrant's Annual Report on
Form 10-K for the year ended April 30, 1988)
10.31 Agreement dated February 5, 1996, between Cambridge
Antibody Technology, Ltd. and Registrant (Incorporated
by reference to Exhibit 10.1 contained in Registrant's
Current Report on Form 8-K dated February 5, 1996, as
filed with the Commission on or about February 8, 1996)
10.32 Distribution Agreement dated February 29, 1996,
between Biotechnology Development, Ltd. and Registrant
(Incorporated by reference to Exhibit 10.1 contained in
Registrant's Current Report on Form 8-K dated February
29, 1996, as filed with the Commission on or about
March 7, 1996)
10.33 Option Agreement dated February 29, 1996, by and
between Biotechnology Development, Ltd. And
Registrant (Incorporated by reference to Exhibit 10.2
contained in Registrant's Current Report on Form 8-K
dated February 29, 1996, as filed with the Commission
on or about March 7, 1996)
10.34 Purchase Agreement for Real Property and Escrow
Instructions dated as of March 22, 1996, by and between
TR Koll Tustin Tech Corp. and Registrant (Incorporated
by reference to Exhibit 10.1 contained in Registrant's
Current Report on Form 8-K dated March 25, 1996, as
filed with the Commission on or about April 5, 1996)
10.35 Incentive Stock Option and Nonqualified Stock Option
Plan-1993 (Incorporated by reference to the exhibit
contained in Registrants' Registration Statement on Form
S-8 (File No. 33-87662))
10.36 Promissory Note dated October 24, 1996 in the original
principal amount of $1,020,000 payable to Imperial
Thrift and Loan Association by Registrant
(Incorporated by reference to Exhibit
10.1 to Registrants' Current Report on Form
8-K dated October 25, 1996)
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
<S> <C> <C>
10.37 Deed of Trust dated October 24, 1996 among Registrant
and Imperial Thrift and Loan Association (Incorporated
by reference to Exhibit 10.2 to Registrants' Current
Report on Form 8-K dated October 25, 1996)
10.38 Assignment of Lease and Rents dated October 24, 1996
between Registrant and Imperial Thrift and Loan
Association (Incorporated by reference to
Exhibit 10.3 on Registrants' Current Report on
Form 8-K dated October 25, 1996)
10.39 Commercial Security Agreement dated October 24, 1996
between Imperial Thrift and Loan Association and
Registrant (Incorporated by reference to Exhibit 10.4 on
Registrants' Current Report on Form 8-K dated October
25, 1996)
10.40 1996 Stock Incentive Plan (Incorporated by reference to
the exhibit contained in Registrants' Registration
Statement on Form S-8 (File No. 333-17513))
10.41 Stock Exchange Agreement dated as of January 15, 1997
among the stockholders of Peregrine Pharmaceuticals,
Inc. and Registrant (Incorporated by reference to Exhibit
2.1 to Registrants' Quarterly Report on Form 10-Q for
the quarter ended January 31, 1997)
10.42 First Amendment to Stock Exchange Agreement among
the Stockholders of Peregrine Pharmaceuticals, Inc. and
Registrant (Incorporated by reference to Exhibit 2.1
contained in Registrant's Current Report on Form 8-K as
filed with the Commission on or about May 12, 1997)
10.43 Termination and Transfer Agreement dated as of
November 14, 1997 by and between Registrant and Alpha
Therapeutic Corporation (Incorporated by reference to
Exhibit 10.1 contained in Registrant's Current Report on
Form 8-K as filed with the Commission on or about
November 24, 1997)
23.1 Consent of Rutan & Tucker, LLP (contained in Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
</TABLE>
<PAGE> 1
EXHIBIT 4.16
FORM OF STOCK PURCHASE WARRANT
ISSUED TO THE APRIL 1998 PRIVATE PLACEMENT INVESTORS
<PAGE> 2
STOCK PURCHASE WARRANT Warrant No. ______
WARRANT TO PURCHASE __________ SHARES OF COMMON STOCK
EXPIRATION: UNLESS EARLIER EXERCISED OR
TERMINATED AS HEREIN PROVIDED, THIS WARRANT
SHALL EXPIRE AT 5:00 PM, PACIFIC TIME, ON APRIL 30,
2001
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
TECHNICLONE CORPORATION
This certifies that _______________________________________, the
registered holder hereof or assigns (the "Warrantholder") is entitled to
purchase from Techniclone Corporation, a Delaware corporation (the "Company"),
at any time after April 10, 1998 and before 5:00 pm Pacific Time on April 30,
2001 (the "Expiration Time") at the purchase price of One Dollar ($1.00) per
share (the "Warrant Price"), the number of shares shown above.
SECTION 1. TRANSFERABILITY AND FORM OF WARRANT.
1.1 REGISTRATION. This Warrant shall be numbered and shall be
registered on the books of the Company.
1.2 TRANSFERABILITY. The Warrants shall not be transferable or
assignable except to an Affiliate (as defined herein) of the Holder without the
prior written consent of the Company, which consent shall not be unreasonably
withheld. The Holder may transfer or assign the shares of Common Stock issuable
upon exercise of the Warrants; provided, however, that (i) a registration
statement with respect thereto has become effective under the Securities Act; or
(ii) in the opinion of counsel to the Holder such registration is not necessary;
or (iii) such transfer complies with the provisions of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). The legend imprinted
on the certificates pursuant to Section 10 shall be removed, and the Company
shall issue a new certificate without such legend to the Holder of such security
if such security is registered under the Securities Act or, in the opinion of
counsel to the Holder such legend is no longer required under the Securities Act
or the conditions for a permissible sale or transfer under Rule 144(k) have been
complied with. For purposes of this Warrant, "Affiliate" shall mean any
wholly-owned subsidiary or parent of, or any corporation, entity or other person
which is, within the meaning of the 1933 Act, controlling, controlled by or
under common control with, the Holder or the Company, as the case may be.
-1-
<PAGE> 3
1.3 FORM OF WARRANT. The Warrant shall be executed on behalf of the
Company by an authorized officer, and shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange,
substitution or transfer. A Warrant bearing the signature of an individual who
was at any time a proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant.
SECTION 2. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of shares to the Warrantholder; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any secondary transfer of the Warrant or the
shares.
SECTION 3. MUTILATED OR MISSING WARRANTS.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant of like tenor, but only upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant. The applicant shall
also comply with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
SECTION 4. RESERVATION OF SHARES.
There has been reserved, and the Company shall at all times keep
reserved so long as this Warrant remains outstanding, out of its authorized
shares of capital stock, such number and class of shares as shall be subject to
purchase under this Warrant and such reserved shares shall be used solely for
issuances upon exercise of this Warrant.
SECTION 5. EXERCISE OF WARRANT.
5.1 EXERCISE. Prior to the Expiration Time the Holder of this
Warrant shall have the right at any time and from time to time to exercise this
Warrant in full or in part by surrender of this Warrant to the Company
accompanied by payment to the Company in cash or by certified or cashier's check
or by wire transfer of funds of the aggregate Warrant Price for the number of
shares in respect of which this Warrant is then exercised. In addition, and
notwithstanding anything to the contrary contained in this Warrant, this Warrant
may be exercised by presentation and surrender of this Warrant to the Company
with a written notice of the Warrant Holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the Warrant
Price in cash, the Holder shall surrender this Warrant for, and the Company
shall issue in respect thereof, that number of shares of Common Stock determined
by multiplying the number of shares of Common Stock to which the Holder would
otherwise be entitled upon a cash exercise hereof by a fraction, the numerator
of which shall be the difference between the then Current Market Price (as
herein defined) and the Warrant Price, and the denominator of which shall be the
then Current Market Price.
5.2 DELIVERY OF CERTIFICATES. Upon exercise of this Warrant the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number
-2-
<PAGE> 4
of full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in respect of any fractional shares. The Company shall effect
such issuance immediately and shall transmit the certificates to reach the
address designated by the Warrantholder within five business days after receipt
of the Warrant Price or, in the case of a Cashless Exercise, after the receipt
of the Warrant. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such shares as of the date of surrender of the
Warrant and, to the extent applicable, payment of the Warrant Price, as
aforesaid, notwithstanding that the certificates representing such shares shall
not actually have been delivered or that the stock transfer books of the Company
shall then be closed. In the event of partial exercise a new Warrant evidencing
the remaining portion of this Warrant will be issued by the Company.
SECTION 6. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
6.1 ADJUSTMENTS. The number and kind of securities purchasable upon
the exercise of the Warrants and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
6.1.1 In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its Common Stock other securities of the Company,
the number of shares purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
the kind and number of shares or other securities of the Company which it would
have owned or would have been entitled to receive after the happening of any of
the events described above, had the Warrants been exercised immediately prior to
the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this Section 6.1.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
6.1.2 In case the Company shall issue rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, entitling them to subscribe
for or to purchase shares of Common Stock at a price per share which is lower at
the record date mentioned below than the then Current Market Price (as defined
in Section 7), the number of shares thereafter purchasable upon the exercise of
the Warrants shall be determined by multiplying the number of shares theretofore
purchasable upon exercise of each Warrant by a fraction, of which the numerator
shall be (1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such rights, options or warrants plus (2) the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options or
warrants plus (y) the number of shares which the aggregate offering price of the
total number of shares offered would purchase at the Current Market Price.
Such adjustment shall be made whenever such rights, options or warrants are
issued, and shall become effective immediately and retroactively after the
record date for the determination of shareholders entitled to receive such
rights, options or warrants.
6.1.3 In case the Company shall distribute to all or
substantially all holders of its shares of Common Stock evidences of its
indebtedness or assets (excluding non-extraordinary cash dividends or
distributions out of current earnings) or rights, options, warrants or
convertible securities
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containing the right to subscribe for or purchase shares of Common Stock
(excluding those referred to in paragraph (b) above), then, in each case, the
number of shares thereafter purchasable upon the exercise of the Warrants shall
be determined by multiplying the number of shares theretofore purchasable upon
exercise of the Warrants by a fraction, of which the numerator shall be the then
Current Market Price on the date of such distribution, and of which the
denominator shall be such Current Market Price on such date minus the then fair
value of the portion of the assets or evidence of indebtedness so distributed or
of such subscription rights, options or warrants applicable to one share. Such
adjustment shall be made whenever any such distribution is made and shall become
effective on the date of distribution retroactive to the record date for the
determination of shareholders entitled to receive such distribution.
6.1.4 If, at any time after the initial issuance of this
Warrant, any event occurs of the type contemplated by the adjustment provisions
of this Section 6.1 but not expressly provided for by such provisions, the
Company's Board of Directors will make an appropriate adjustment in the Warrant
Price and the number of shares of Common Stock acquirable upon exercise of this
Warrant so that the rights of the holder shall be neither enhanced nor
diminished by such event.
6.1.5 No adjustment in the number of shares purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of shares then purchasable
upon the exercise of a Warrant; provided, however, that any adjustments which by
reason of this Section 6.1.5 are not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
6.1.6 Whenever the number of shares purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price payable
upon exercise of a Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares purchasable upon the exercise of a Warrant immediately
prior to such adjustment, and of which the denominator shall be the number of
shares so purchasable immediately thereafter.
6.1.7 Whenever the number of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by the Board of
Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of shares purchasable upon the exercise of a
Warrant and the Warrant Price after such adjustment, together with a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
6.1.8 The term "Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section, the Warrantholder shall
become entitled to purchase any securities other than shares of Common Stock,
thereafter the number of such other securities so purchasable upon exercise of
the Warrant and the Warrant Price of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in this
Section.
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<PAGE> 6
6.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Subsection
6.1, no adjustment in respect of any dividends shall be made during the term of
the Warrant or upon the exercise of the Warrant.
6.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any reclassification of the securities of the
Company or any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another corporation
of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall provide by agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such action to purchase upon exercise of the
Warrant the kind and amount of shares and other securities and property which he
would have owned or have been entitled to receive after the happening of such
reclassification, consolidation, merger, sale or conveyance had the Warrant been
exercised (without regard to any limitations on exercise contained herein or the
Securities Purchase Agreements) immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The provisions of
this subsection shall similarly apply to successive reclassifications,
consolidations, mergers, sales or conveyances.
6.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Warrant Price or the number of securities purchasable upon
the exercise of the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price and number of
securities as are stated in the similar Warrant certificates initially issuable
pursuant to this Agreement.
SECTION 7. FRACTIONAL INTERESTS; CURRENT MARKET PRICE; CLOSING BID
PRICE.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Price multiplied by such fraction. The term "Current Market
Price" shall mean (i) if the Common Stock is traded in the over-the-counter
market or on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share closing bid prices of the
Common Stock on the 5 consecutive trading days immediately preceding the date in
question, as reported by NASDAQ or an equivalent generally accepted reporting
service, or (ii) if the Common Stock is traded on a national securities
exchange, the average for the 5 consecutive trading days immediately preceding
the date in question of the daily per share closing prices of the Common Stock
on the principal stock exchange on which it is listed, as the case may be, or
(iii) if the Common Stock is not so listed or traded, the fair market value of
the Common Stock as reasonably determined in good faith by the board of
directors of the Company. The term "closing bid price" shall mean the last bid
price on the day in question as reported by NASDAQ or an equivalent
generally accepted reporting service or (as the case may be) as reported by the
principal stock exchange on which the Common Stock is listed, or if not so
reported, as reasonably determined in good faith by the Board of Directors of
the Company.
SECTION 8. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to
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<PAGE> 7
consent or to receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrant and prior to its
exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Sections 6.1 or 6.3 (excluding 6.1.1(i) and 6.1.1(ii)); or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property, assets
and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books or such other applicable date, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
SECTION 9. TERMINATION OF WARRANT.
9.1 If not theretofore exercised, this Warrant shall terminate at
5:00 p.m. Pacific time on April 30, 2001.
SECTION 10. LEGENDS.
It is understood that the certificates evidencing the Common Stock
purchased upon exercise of this Warrant may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT
AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
SECTION 11. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholder shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 12. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
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SECTION 13. APPLICABLE LAW, SPECIFIC PERFORMANCE AND CONSENT TO
JURISDICTION.
13.1 This Warrant shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the laws of said State.
13.2 The Company and the Warrantholder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Warrant or the other agreements, documents or instruments contemplated hereby
(collectively, the "Transaction Documents") were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of the Transaction Documents and to enforce
specifically the terms and provisions thereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity. No
provision of any Transaction Documents providing for any remedy to a
Warrantholder shall limit any remedy which would otherwise be available to such
Investor at law or in equity. Each of Warrantholder (with respect to compliance
by the Company with Section 4(2) of the Securities Act of 1933) and the Company
(each an "Indemnitor") shall indemnify and hold harmless the other for a breach
by the Indemnitor of its representations, warranties or obligations under any of
the Transaction Documents.
13.3 Each of the Company and the Warrantholder (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in Orange County, California for the
purposes of any suit, action or proceeding arising out of or relating to this
Warrant and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Warrantholder consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Warrant and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by a duly authorized officer of the Company.
Techniclone Corporation
By: ______________________________
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EXHIBIT 4.17
FORM OF REGISTRATION RIGHTS AGREEMENT
BETWEEN THE REGISTRANT AND THE
APRIL 1998 PRIVATE PLACEMENT INVESTORS
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
_________, 1998, by and among Techniclone Corporation, a Delaware corporation
(the "Company"), and the Purchasers listed on Exhibit 1 attached hereto
(individually a "Holder" and collectively the "Holders").
RECITAL:
In connection with the Company's issuance of shares of common stock
("Common Stock") and warrants (the "Warrants"), pursuant to that certain Summary
of Proposed Terms and Conditions for the Purchase and Sale of up to $2,000,000
of Common Stock and Warrants, dated March 31, 1998, the Company and the Holders
have agreed to enter into this Agreement. The Common Stock and the Warrants
shall be collectively referred to herein as the "Securities."
AGREEMENT:
NOW THEREFORE, in consideration of the mutual agreements, covenants
and conditions and releases contained herein, the Company and the Holders hereby
agree as follows:
1. REGISTRATION RIGHTS
The Company hereby grants to the Holders the registration rights set
forth in this Section 1, with respect to the Registrable Securities (as
hereinafter defined) owned by the Holders. The Company and the Holders agree
that the registration rights provided herein set forth the sole and entire
agreement on the subject matter between the Company and the Holders.
1.1 Definitions. As used in this Section 1:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by filing with the Securities
and Exchange Commission (the "SEC") a registration statement (the "Registration
Statement") in compliance with the Securities Act of 1933, as amended (the "1933
Act") and the declaration or ordering by the SEC of the effectiveness of such
Registration Statement.
(b) The term "Registrable Securities" means Common Stock
issued pursuant to the Subscription Agreements or the exercise of the Warrants
or other security that is issued as a dividend or other distribution with
respect to, or in exchange or in replacement of, such Registrable Securities (as
defined herein). In the event of any recapitalization by the Company, whether by
stock split, reverse stock split, stock dividend or the like, the number of
shares of Registrable Securities used throughout this Agreement for various
purposes shall be proportionately increased or decreased.
1.2 Registration.
(a) On or prior to September 30, 1998, the Company shall
prepare and file with the SEC a registration statement to effect a registration
of all of the Common Stock ("Registration Statement") issued or that may be
purchased pursuant to the issuance of the Warrants ("Registrable Securities")
covering the resale of all of the Registrable Securities.
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<PAGE> 3
1.3 Expenses of Registration. All expenses incurred in
connection with the registration effected pursuant to Section 1.2 and all
registrations effected pursuant to Section 1.8 including without limitation all
registration, filing, and qualification fees (including blue sky fees and
expenses), printing expenses, escrow fees, fees and disbursements of counsel for
the Company for any such registration, and expenses of any special audits
incidental to or required by such registration, shall be borne by the Company;
provided, however, that the Company shall not be required to pay stock transfer
taxes or underwriters' discounts or commissions relating to Registrable
Securities. Notwithstanding anything to the contrary above, the Company shall
not be required to pay for any expenses of any registration proceeding under
Section 1.2 if the registration request is subsequently withdrawn at the request
of the Holders. Notwithstanding the preceding sentence, however, if at the time
of the withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities and use its best efforts
to cause such Registration Statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such Registration Statement effective for a period of up to one
hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended to a total of not more than two-hundred seventy (270)
days, if necessary, to keep the Registration Statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the 1933 Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the 1933 Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (A) includes any prospectus required by Section
10(a)(3) of the 1933 Act or (B) reflects facts or events representing a material
or fundamental change in the information set forth in the Registration
Statement, the incorporation by reference of information required to be included
in (A) and (B) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 Act, as amended (the
"1934 Act"), in the Registration Statement.
(b) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such Registration Statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them;
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(d) Use its commercially reasonable best efforts to
register and qualify the securities covered by such Registration Statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) Notify the Holders of Registrable Securities covered
by such Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event as a
result of which the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and
(f) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
1.5 Indemnification.
(a) The Company will, and does hereby undertake to,
indemnify and hold harmless the Holders of Registrable Securities, each of the
Holders' officers, directors and partners, and each person controlling the
Holders, together with the respective agents of such persons, with respect to
any registration, qualification, or compliance effected pursuant to this Section
1, and each underwriter, if any, and each person who controls any underwriter,
of the Registrable Securities held by or issuable to the Holders, against all
claims, losses, damages, and liabilities (or actions in respect thereto) to
which they may become subject under the 1933 Act or the 1934 arising out of or
based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular, or other similar document
(including any related Registration Statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any violation or alleged violation by the Company of any federal, state or
common law rule or regulation applicable to the Company in connection with any
such registration, qualification, or compliance, and will reimburse, as
incurred, the Holders, each such underwriter, and each such director, officer,
partner, agent and controlling person, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action; provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense, arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by the Holders or underwriter and stated to be
specifically for use therein.
(b) The Holders will, if Registrable Securities held by
or issuable to the Holders are included in such registration, qualification, or
compliance, severally and not jointly, indemnify the Company, each of its
directors, each officer, and each person controlling the Company, each
underwriter, if any, and, each person who controls any underwriter, together
with the respective agents of such persons, of the Company's securities covered
by such a Registration Statement, against all claims, losses, damages, and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such Registration Statement, prospectus, offering circular, or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
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<PAGE> 5
misleading, and will reimburse, as incurred, the Company and each such
underwriter, for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) was made in such Registration Statement, prospectus, offering
circular, or other document, in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Holders and stated to be specifically for use therein; provided, however, that
the liability of each Holder hereunder shall be limited to the net proceeds
received by such Holder from the sale of securities under such Registration
Statement. In no event will any Holder be required to enter into any agreement
or undertaking in connection with any registration under this Section 1
providing for any indemnification or contribution obligations on the part of
such Holder greater than such Holder's obligations under this Section 1.5.
(c) Each party entitled to indemnification under this
Section 1.5 (the "Indemnified Party") shall give notice to the party required to
provide such indemnification (the "Indemnifying Party") of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom; provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be subject to approval by the Indemnified Party (whose
approval shall not be unreasonably withheld) and the Indemnified Party may
participate in such defense with its separate counsel at the Indemnifying
Party's expense if representation of such Indemnified Party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding; and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 1, except to the extent that such failure to give
notice shall materially adversely affect the Indemnifying Party in the defense
of any such claim or any such litigation. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff therein, to such Indemnified Party, of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section
1.5 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection
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<PAGE> 6
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control.
(f) The obligations of the Company and Holders under
this Section 1.5 shall survive the completion of any offering of Registrable
Securities in a Registration Statement under this Section 1, and otherwise.
1.6 Information by the Holders. If the Holders of Registrable
Securities include Registrable Securities in any registration, the Holders shall
furnish to the Company such information regarding the Holders and the
distribution proposed by the Holders, as the Company may reasonably request in
writing and as shall be required in connection with any registration,
qualification, or compliance referred to in this Section 1.
1.7 Transfer of Registration Rights. Subject to such other
restrictions as may exist under any agreement between any Holder and the
Company, the rights of the Holders contained in Sections 1.2 and 1.8 hereof, to
cause the Company to register the Registrable Securities, may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder" for purposes of this Section 1; provided that
such transferee or assignee, (a)receives such securities as a partner in
connection with partnership distributions of the Holder, or (b) acquires 100% of
the Registrable Securities held by the Holder; provided further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee be restricted under the
1933 Act and that the Company is given written notice by the Holder at the time
of or within a reasonable time after said transfer stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned.
1.8 Form S-3. In the case the Company shall be eligible to
register securities on Form S-3 and shall receive from any Holder or Holders of
at least fifty percent (50%) of the Outstanding Registrable Securities a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders at any time on or after
September 30, 1998, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.8: (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $10,000,000; (iii) if the
Company shall furnish to Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board
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<PAGE> 7
of Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such Form S-3 registration to be effected at such time,
in which event the Company shall have the right to defer the filing of the Form
S-3 Registration Statement for a period of not more than 120 days after receipt
of the request of the Holder or Holders under this Section 1.8; (iv) if the
Company has, within the twelve (12) month period preceding the date of such
request, already effected a registration on Form S-3 for the Holders pursuant to
this Section 1.8; or (v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
Registration Statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
1.9 Delay of Registration. The Holders shall not have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of a majority of the Holders, enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder to include any securities in any registration
filed under Section 1.2 hereof unless (i) under the terms of such agreement with
any person other than an institutional or venture capital investor, such holder
or prospective holder may include such securities in any such registration only
to the extent that the inclusion of such securities will not diminish the amount
of Registrable Securities which are included in such registration, and (ii)
under the terms of such agreement with an institutional or venture capital
investor, such holder or prospective holder may include such securities in any
such registration only on a pari passu basis with the Holders of Registrable
Securities. Any agreement for such registration rights will include the
equivalent of Section 1.14 as a term.
1.11 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the 1933 Act, at all times commencing ninety (90) days
after the effective date of the first registration filed by the Company for an
offering of its securities to the general public;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the 1933 Act and 1934 Act; and
(c) So long as the Holders own any Registrable
Securities, furnish to any Holder forthwith upon request: a written statement by
the Company as to its compliance with the reporting requirements of said Rule
144 of the 1933 Act, and of the 1934 Act (at any time after it has become
subject to such reporting requirements); and such other reports and documents as
any Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.
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<PAGE> 8
1.12 "Market Stand-Off" Agreement. The Holders hereby agree that
during the 180-day period following the effective date of a Registration
Statement of the Company filed under the 1933 Act, it shall not, to the extent
requested by the Company and any underwriter, sell or otherwise transfer or
dispose of (other than to donees who agree to be similarly bound) any Common
Stock of the Company held by it at any time during such period except Common
Stock included in such registration; provided, however, that all officers and
directors of the Company enter into similar agreements. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registrable Securities of the Holders until the end of such
period.
1.13 Amendment of Registration Rights. Any provision of this
Section 1 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Holders of not less than a
majority of the Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Section shall be binding upon the Holders, each
future holder of Registrable Securities and the Company.
1.14 Termination of Registration Rights. The Holders shall not
be entitled to exercise any right provided for in Sections 1.2 and 1.8 after the
date that such Holder shall be free to transfer such shares without restriction
as to volume pursuant to Rule 144(k) under the 1933 Act.
2. COMPANY COVENANTS
The Company hereby covenants and agrees as follows:
2.1 Basic Financial Information.
(a) The Company hereby covenants and agrees to furnish
the following reports to the Holders until July 31, 2001.
(i) As soon as practicable after the end of each
fiscal year, and in any event within 110 days thereafter, audited consolidated
balance sheets of the Company and its subsidiaries, if any, as at the end of
such fiscal year, and audited consolidated statements of income and cash flows
of the Company and its subsidiaries, if any, for such fiscal year, prepared in
accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a report and opinion thereon, by
independent public accountants of national reputation selected by the Company's
board of directors.
(ii) As soon as practicable after the end of
each of the first three (3) fiscal quarters of the fiscal year, but in any event
within fifty-five (55) days after the end of each such fiscal quarter, the
Company's unaudited consolidated balance sheet as of the end of such quarter,
and its unaudited consolidated statements of income and cash flows for such
quarter, all in reasonable detail and prepared in accordance with generally
accepted accounting principles and certified by the principal financial or
accounting officer of the Company.
(b) The rights granted pursuant to this Section 2.1 may
not be assigned or otherwise conveyed by the Holders or by any subsequent
transferee of any such rights without the written consent of the Company, which
consent shall not be unreasonably withheld; provided that the Company may refuse
such written consent if the proposed transferee is a competitor of the Company;
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<PAGE> 9
and provided further, that no such written consent shall be required if the
transfer is in connection with the transfer of the Securities to any partner or
retired partner of any Holder or to any such partner's estate.
2.2 Reservation of Common Stock. At all times after November 1,
1998, the Company will reserve and keep available solely for issuance and
delivery upon exercise of the Warrants, the number of shares of Common Stock
issuable upon such exercise.
2.3 Expiration of Covenants. The covenants set forth in this
Section 2 (other than those set forth in Section 2.1(a)) shall expire and be of
no further force or effect upon the consummation of a Qualified Public Offering.
3. MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all
respects by the law of the State of California, without giving effect to its
principles regarding conflicts of law.
3.2 Entire Agreement; Amendment. This Agreement constitutes the
full and entire understanding and agreement between the parties with respect to
the subject matter hereof. Except as otherwise provided in Section 1.15 above,
this Agreement may be amended, waived, discharged or terminated only by written
consent of the Company and the Holders of at least a majority of the then
outstanding Registrable Securities.
3.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
mailed by first class mail, postage prepaid, or delivered by Federal Express
overnight delivery, at the respective addresses of the parties as set forth in
the Subscription Agreement, or at such other address as the parties shall have
furnished to the other parties in writing. Notices that are mailed shall be
deemed received three (3) days after deposit in the United States mail or one
(1) day after deposit with Federal Express for overnight delivery.
3.4 Counterparts; Facsimile. This Agreement may be executed in
any number of counterparts and may be delivered by telecopy or facsimile, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.5 Severability. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not be any way affected or
impaired thereby.
3.6 Titles and Subtitles. The titles of the sections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
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<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the date first above written.
TECHNICLONE CORPORATION
By:
NAME OF HOLDER: By:
Name:
Title:
ADDRESS TO WHICH NOTICES AND OTHER
COMMUNICATIONS ARE TO BE SENT:
Business: Home:
Telephone No.
Business: Home:
Fax No.
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<PAGE> 1
EXHIBIT 4.18
STOCK PURCHASE WARRANT TO
PURCHASE UP TO 240,000 SHARES OF COMMON STOCK
OF REGISTRANT ISSUED TO RUDOLPH & SLETTEN, INC.
<PAGE> 2
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 240,000 SHARES OF COMMON STOCK
EXPIRATION: UNLESS EARLIER EXERCISED OR
TERMINATED AS HEREIN PROVIDED, THIS WARRANT
SHALL EXPIRE AT 5:00 PM, PACIFIC TIME, ON MARCH 31,
2001
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
TECHNICLONE CORPORATION
This certifies that Rudolph and Sletten, Inc., a California
corporation, the registered holder hereof or assigns (the "Warrantholder") is
entitled to purchase from Techniclone Corporation, a Delaware corporation (the
"Company"), at any time after July 17, 1998 and before 5:00 pm Pacific Time on
March 31, 2001 (the "Expiration Time") at the purchase price of $.5625 per share
(the "Warrant Price"), the number of shares shown above.
SECTION 1. TRANSFERABILITY AND FORM OF WARRANT.
1.1 REGISTRATION. This Warrant shall be registered on the books of
the Company.
1.2 TRANSFERABILITY. The Warrant shall not be transferable or
assignable except to an Affiliate (as defined herein) of the Holder without the
prior written consent of the Company, which consent shall not be unreasonably
withheld. The Holder may transfer or assign the shares of Common Stock issuable
upon exercise of the Warrants; provided, however, that (i) a registration
statement with respect thereto has become effective under the Securities Act; or
(ii) in the opinion of counsel to the Holder such registration is not necessary;
or (iii) such transfer complies with the provisions of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). The legend imprinted
on the certificates pursuant to Section 10 shall be removed, and the Company
shall issue a new certificate without such legend to the Holder of such security
if such security is registered under the Securities Act or, in the opinion of
counsel to the Holder such legend is no longer required under the Securities Act
or the conditions for a permissible sale or transfer under Rule 144(k) have been
complied with. For purposes of this Warrant, "Affiliate" shall mean any
wholly-owned subsidiary or parent of, or any corporation, entity or other person
which is, within the meaning of the 1933 Act, controlling, controlled by or
under common control with, the Holder or the Company, as the case may be.
1.3 FORM OF WARRANT. The Warrant shall be executed on behalf of the
Company by an authorized officer, and shall be dated as of the date of signature
thereof by the Company either upon
<PAGE> 3
initial issuance or upon division, exchange, substitution or transfer. A
Warrant bearing the signature of an individual who was at any time a proper
officer of the Company shall bind the Company, notwithstanding that such
individual shall have ceased to hold such office prior to the delivery of such
Warrant.
SECTION 2. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of shares to the Warrantholder; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any secondary transfer of the Warrant or the
shares.
SECTION 3. MUTILATED OR MISSING WARRANTS.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant of like tenor, but only upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant. The applicant shall
also comply with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
SECTION 4. RESERVATION OF SHARES.
There has been reserved, and the Company shall at all times keep
reserved so long as this Warrant remains outstanding, out of its authorized
shares of capital stock, such number and class of shares as shall be subject to
purchase under this Warrant and such reserved shares shall be used solely for
issuances upon exercise of this Warrant.
SECTION 5. EXERCISE OF WARRANT.
5.1 EXERCISE. Prior to the Expiration Time the Holder of this
Warrant shall have the right at any time and from time to time to exercise this
Warrant in full or in part by surrender of this Warrant to the Company
accompanied by payment to the Company in cash or by certified or cashier's check
or by wire transfer of funds of the aggregate Warrant Price for the number of
shares in respect of which this Warrant is then exercised. In addition, and
notwithstanding anything to the contrary contained in this Warrant, this Warrant
may be exercised by presentation and surrender of this Warrant to the Company
with a written notice of the Warrant Holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the Warrant
Price in cash, the Holder shall surrender this Warrant for, and the Company
shall issue in respect thereof, that number of shares of Common Stock determined
by multiplying the number of shares of Common Stock to which the Holder would
otherwise be entitled upon a cash exercise hereof by a fraction, the numerator
of which shall be the difference between the then Current Market Price (as
herein defined) and the Warrant Price, and the denominator of which shall be the
then Current Market Price.
5.2 DELIVERY OF CERTIFICATES. Upon exercise of this Warrant the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number of
full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in
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<PAGE> 4
respect of any fractional shares. The Company shall effect such issuance
immediately and shall transmit the certificates to reach the address designated
by the Warrantholder within five business days after receipt of the Warrant
Price or, in the case of a Cashless Exercise, after the receipt of the Warrant.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such shares as of the date of surrender of the Warrant and, to the
extent applicable, payment of the Warrant Price, as aforesaid, notwithstanding
that the certificates representing such shares shall not actually have been
delivered or that the stock transfer books of the Company shall then be closed.
In the event of partial exercise a new Warrant evidencing the remaining portion
of this Warrant will be issued by the Company.
SECTION 6. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
6.1 ADJUSTMENTS. The number and kind of securities purchasable upon
the exercise of the Warrants and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
6.1.1 In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its Common Stock other securities of the Company,
the number of shares purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
the kind and number of shares or other securities of the Company which it would
have owned or would have been entitled to receive after the happening of any of
the events described above, had the Warrants been exercised immediately prior to
the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this Section 6.1.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
6.1.2 In case the Company shall issue rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, entitling them to subscribe
for or to purchase shares of Common Stock at a price per share which is lower at
the record date mentioned below than the then Current Market Price (as defined
in Section 7), the number of shares thereafter purchasable upon the exercise of
the Warrants shall be determined by multiplying the number of shares theretofore
purchasable upon exercise of each Warrant by a fraction, of which the numerator
shall be (1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such rights, options or warrants plus (2) the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options or
warrants plus (y) the number of shares which the aggregate offering price of the
total number of shares offered would purchase at the Current Market Price. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately and retroactively after the record date
for the determination of shareholders entitled to receive such rights, options
or warrants.
6.1.3 In case the Company shall distribute to all or
substantially all holders of its shares of Common Stock evidences of its
indebtedness or assets (excluding non-extraordinary cash dividends or
distributions out of current earnings) or rights, options, warrants or
convertible securities containing the right to subscribe for or purchase shares
of Common Stock (excluding those referred to
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<PAGE> 5
in paragraph (b) above), then, in each case, the number of shares thereafter
purchasable upon the exercise of the Warrants shall be determined by multiplying
the number of shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the then Current Market Price on the
date of such distribution, and of which the denominator shall be such Current
Market Price on such date minus the then fair value of the portion of the assets
or evidence of indebtedness so distributed or of such subscription rights,
options or warrants applicable to one share. Such adjustment shall be made
whenever any such distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution.
6.1.4 If, at any time after the initial issuance of this
Warrant, any event occurs of the type contemplated by the adjustment provisions
of this Section 6.1 but not expressly provided for by such provisions, the
Company's Board of Directors will make an appropriate adjustment in the Warrant
Price and the number of shares of Common Stock acquirable upon exercise of this
Warrant so that the rights of the holder shall be neither enhanced nor
diminished by such event.
6.1.5 No adjustment in the number of shares purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of shares then purchasable
upon the exercise of a Warrant; provided, however, that any adjustments which by
reason of this Section 6.1.5 are not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
6.1.6 Whenever the number of shares purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price payable
upon exercise of a Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares purchasable upon the exercise of a Warrant immediately
prior to such adjustment, and of which the denominator shall be the number of
shares so purchasable immediately thereafter.
6.1.7 Whenever the number of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by the Board of
Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of shares purchasable upon the exercise of a
Warrant and the Warrant Price after such adjustment, together with a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
6.1.8 The term "Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section, the Warrantholder shall
become entitled to purchase any securities other than shares of Common Stock,
thereafter the number of such other securities so purchasable upon exercise of
the Warrant and the Warrant Price of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in this
Section.
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<PAGE> 6
6.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Subsection
6.1, no adjustment in respect of any dividends shall be made during the term of
the Warrant or upon the exercise of the Warrant.
6.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any reclassification of the securities of the
Company or any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another corporation
of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall provide by agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such action to purchase upon exercise of the
Warrant the kind and amount of shares and other securities and property which he
would have owned or have been entitled to receive after the happening of such
reclassification, consolidation, merger, sale or conveyance had the Warrant been
exercised (without regard to any limitations on exercise contained herein or the
Securities Purchase Agreements) immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The provisions of
this subsection shall similarly apply to successive reclassifications,
consolidations, mergers, sales or conveyances.
6.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Warrant Price or the number of securities purchasable upon
the exercise of the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price and number of
securities as are stated in the similar Warrant certificates initially issuable
pursuant to this Agreement.
SECTION 7. FRACTIONAL INTERESTS; CURRENT MARKET PRICE; CLOSING BID
PRICE.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Price multiplied by such fraction. The term "Current Market
Price" shall mean (i) if the Common Stock is traded in the over-the-counter
market or on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share closing bid prices of the
Common Stock on the 5 consecutive trading days immediately preceding the date in
question, as reported by NASDAQ or an equivalent generally accepted reporting
service, or (ii) if the Common Stock is traded on a national securities
exchange, the average for the 5 consecutive trading days immediately preceding
the date in question of the daily per share closing prices of the Common Stock
on the principal stock exchange on which it is listed, as the case may be, or
(iii) if the Common Stock is not so listed or traded, the fair market value of
the Common Stock as reasonably determined in good faith by the board of
directors of the Company. The term "closing bid price" shall mean the last bid
price on the day in question as reported by NASDAQ or an equivalent generally
accepted reporting service or (as the case may be) as reported by the principal
stock exchange on which the Common Stock is listed, or if not so reported, as
reasonably determined in good faith by the Board of Directors of the Company.
SECTION 8. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to
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<PAGE> 7
consent or to receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrant and prior to its
exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Sections 6.1 or 6.3 (excluding 6.1.1(i) and 6.1.1(ii)); or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property, assets
and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books or such other applicable date, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
SECTION 9. TERMINATION OF WARRANT.
9.1 If not theretofore exercised, this Warrant shall terminate at
5:00 p.m. Pacific time on March 31, 2001.
SECTION 10. LEGENDS.
It is understood that the certificates evidencing the Common Stock
purchased upon exercise of this Warrant may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT
AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
SECTION 11. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholder shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 12. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
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<PAGE> 8
SECTION 13. APPLICABLE LAW, SPECIFIC PERFORMANCE AND CONSENT TO
JURISDICTION.
13.1 This Warrant shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the laws of said State.
13.2 The Company and the Warrantholder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Warrant or the other agreements, documents or instruments contemplated hereby
(collectively, the "Transaction Documents") were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of the Transaction Documents and to enforce
specifically the terms and provisions thereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity. No
provision of any Transaction Documents providing for any remedy to a
Warrantholder shall limit any remedy which would otherwise be available to such
Investor at law or in equity. Each of Warrantholder (with respect to compliance
by the Company with Section 4(2) of the Securities Act of 1933) and the Company
(each an "Indemnitor") shall indemnify and hold harmless the other for a breach
by the Indemnitor of its representations, warranties or obligations under any of
the Transaction Documents.
13.3 Each of the Company and the Warrantholder (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in Orange County, California for the
purposes of any suit, action or proceeding arising out of or relating to this
Warrant and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Warrantholder consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Warrant and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by a duly authorized officer of the Company.
TECHNICLONE CORPORATION
By: /s/ Elizabeth Gorbett-Frost
------------------------------------
Name: Elizabeth Gorbett-Frost
------------------------------------
Title: CFO
------------------------------------
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<PAGE> 1
EXHIBIT 4.19
STOCK PURCHASE WARRANT TO
PURCHASE UP TO 95,000 SHARES OF COMMON STOCK
OF REGISTRANT ISSUED TO RUDOLPH & SLETTEN, INC.
<PAGE> 2
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 95,000 SHARES OF COMMON STOCK
EXPIRATION: UNLESS EARLIER EXERCISED OR TERMINATED AS HEREIN
PROVIDED, THIS WARRANT SHALL EXPIRE AT 5:00 PM, PACIFIC TIME, ON
JULY 31, 2001
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER.
TECHNICLONE CORPORATION
This certifies that Rudolph and Sletten, Inc., a California
corporation, the registered holder hereof or assigns (the "Warrantholder") is
entitled to purchase from Techniclone Corporation, a Delaware corporation (the
"Company"), at any time after July 17, 1998 and before 5:00 pm Pacific Time on
July 31, 2001 (the "Expiration Time") at the purchase price of $1.375 per share
(the "Warrant Price"), the number of shares shown above.
SECTION 1. TRANSFERABILITY AND FORM OF WARRANT.
1.1 REGISTRATION. This Warrant shall be registered on the books of
the Company.
1.2 TRANSFERABILITY. The Warrant shall not be transferable or
assignable except to an Affiliate (as defined herein) of the Holder without the
prior written consent of the Company, which consent shall not be unreasonably
withheld. The Holder may transfer or assign the shares of Common Stock issuable
upon exercise of the Warrants; provided, however, that (i) a registration
statement with respect thereto has become effective under the Securities Act; or
(ii) in the opinion of counsel to the Holder such registration is not necessary;
or (iii) such transfer complies with the provisions of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). The legend imprinted
on the certificates pursuant to Section 10 shall be removed, and the Company
shall issue a new certificate without such legend to the Holder of such security
if such security is registered under the Securities Act or, in the opinion of
counsel to the Holder such legend is no longer required under the Securities Act
or the conditions for a permissible sale or transfer under Rule 144(k) have been
complied with. For purposes of this Warrant, "Affiliate" shall mean any
wholly-owned subsidiary or parent of, or any corporation, entity or other person
which is, within the meaning of the 1933 Act, controlling, controlled by or
under common control with, the Holder or the Company, as the case may be.
1.3 FORM OF WARRANT. The Warrant shall be executed on behalf of the
Company by an authorized officer, and shall be dated as of the date of signature
thereof by the Company either upon
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<PAGE> 3
initial issuance or upon division, exchange, substitution or transfer. A Warrant
bearing the signature of an individual who was at any time a proper officer of
the Company shall bind the Company, notwithstanding that such individual shall
have ceased to hold such office prior to the delivery of such Warrant.
SECTION 2. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of shares to the Warrantholder; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any secondary transfer of the Warrant or the
shares.
SECTION 3. MUTILATED OR MISSING WARRANTS.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant of like tenor, but only upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant. The applicant shall
also comply with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
SECTION 4. RESERVATION OF SHARES.
There has been reserved, and the Company shall at all times keep
reserved so long as this Warrant remains outstanding, out of its authorized
shares of capital stock, such number and class of shares as shall be subject to
purchase under this Warrant and such reserved shares shall be used solely for
issuances upon exercise of this Warrant.
SECTION 5. EXERCISE OF WARRANT.
5.1 EXERCISE. Prior to the Expiration Time the Holder of this
Warrant shall have the right at any time and from time to time to exercise this
Warrant in full or in part by surrender of this Warrant to the Company
accompanied by payment to the Company in cash or by certified or cashier's check
or by wire transfer of funds of the aggregate Warrant Price for the number of
shares in respect of which this Warrant is then exercised. In addition, and
notwithstanding anything to the contrary contained in this Warrant, this Warrant
may be exercised by presentation and surrender of this Warrant to the Company
with a written notice of the Warrant Holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the Warrant
Price in cash, the Holder shall surrender this Warrant for, and the Company
shall issue in respect thereof, that number of shares of Common Stock determined
by multiplying the number of shares of Common Stock to which the Holder would
otherwise be entitled upon a cash exercise hereof by a fraction, the numerator
of which shall be the difference between the then Current Market Price (as
herein defined) and the Warrant Price, and the denominator of which shall be the
then Current Market Price.
5.2 DELIVERY OF CERTIFICATES. Upon exercise of this Warrant the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number of
full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in
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<PAGE> 4
respect of any fractional shares. The Company shall effect such issuance
immediately and shall transmit the certificates to reach the address designated
by the Warrantholder within five business days after receipt of the Warrant
Price or, in the case of a Cashless Exercise, after the receipt of the Warrant.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such shares as of the date of surrender of the Warrant and, to the
extent applicable, payment of the Warrant Price, as aforesaid, notwithstanding
that the certificates representing such shares shall not actually have been
delivered or that the stock transfer books of the Company shall then be closed.
In the event of partial exercise a new Warrant evidencing the remaining portion
of this Warrant will be issued by the Company.
SECTION 6. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
6.1 ADJUSTMENTS. The number and kind of securities purchasable upon
the exercise of the Warrants and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
6.1.1 In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its Common Stock other securities of the Company,
the number of shares purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
the kind and number of shares or other securities of the Company which it would
have owned or would have been entitled to receive after the happening of any of
the events described above, had the Warrants been exercised immediately prior to
the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this Section 6.1.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
6.1.2 In case the Company shall issue rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, entitling them to subscribe
for or to purchase shares of Common Stock at a price per share which is lower at
the record date mentioned below than the then Current Market Price (as defined
in Section 7), the number of shares thereafter purchasable upon the exercise of
the Warrants shall be determined by multiplying the number of shares theretofore
purchasable upon exercise of each Warrant by a fraction, of which the numerator
shall be (1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such rights, options or warrants plus (2) the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options or
warrants plus (y) the number of shares which the aggregate offering price of the
total number of shares offered would purchase at the Current Market Price. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately and retroactively after the record date
for the determination of shareholders entitled to receive such rights, options
or warrants.
6.1.3 In case the Company shall distribute to all or
substantially all holders of its shares of Common Stock evidences of its
indebtedness or assets (excluding non-extraordinary cash dividends or
distributions out of current earnings) or rights, options, warrants or
convertible securities containing the right to subscribe for or purchase shares
of Common Stock (excluding those referred to
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<PAGE> 5
in paragraph (b) above), then, in each case, the number of shares thereafter
purchasable upon the exercise of the Warrants shall be determined by multiplying
the number of shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the then Current Market Price on the
date of such distribution, and of which the denominator shall be such Current
Market Price on such date minus the then fair value of the portion of the assets
or evidence of indebtedness so distributed or of such subscription rights,
options or warrants applicable to one share. Such adjustment shall be made
whenever any such distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution.
6.1.4 If, at any time after the initial issuance of this
Warrant, any event occurs of the type contemplated by the adjustment provisions
of this Section 6.1 but not expressly provided for by such provisions, the
Company's Board of Directors will make an appropriate adjustment in the Warrant
Price and the number of shares of Common Stock acquirable upon exercise of this
Warrant so that the rights of the holder shall be neither enhanced nor
diminished by such event.
6.1.5 No adjustment in the number of shares purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of shares then purchasable
upon the exercise of a Warrant; provided, however, that any adjustments which by
reason of this Section 6.1.5 are not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
6.1.6 Whenever the number of shares purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price payable
upon exercise of a Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares purchasable upon the exercise of a Warrant immediately
prior to such adjustment, and of which the denominator shall be the number of
shares so purchasable immediately thereafter.
6.1.7 Whenever the number of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by the Board of
Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of shares purchasable upon the exercise of a
Warrant and the Warrant Price after such adjustment, together with a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
6.1.8 The term "Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section, the Warrantholder shall
become entitled to purchase any securities other than shares of Common Stock,
thereafter the number of such other securities so purchasable upon exercise of
the Warrant and the Warrant Price of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in this
Section.
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<PAGE> 6
6.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Subsection
6.1, no adjustment in respect of any dividends shall be made during the term of
the Warrant or upon the exercise of the Warrant.
6.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any reclassification of the securities of the
Company or any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another corporation
of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall provide by agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such action to purchase upon exercise of the
Warrant the kind and amount of shares and other securities and property which he
would have owned or have been entitled to receive after the happening of such
reclassification, consolidation, merger, sale or conveyance had the Warrant been
exercised (without regard to any limitations on exercise contained herein or the
Securities Purchase Agreements) immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The provisions of
this subsection shall similarly apply to successive reclassifications,
consolidations, mergers, sales or conveyances.
6.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Warrant Price or the number of securities purchasable upon
the exercise of the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price and number of
securities as are stated in the similar Warrant certificates initially issuable
pursuant to this Agreement.
SECTION 7. FRACTIONAL INTERESTS; CURRENT MARKET PRICE; CLOSING BID
PRICE.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Price multiplied by such fraction. The term "Current Market
Price" shall mean (i) if the Common Stock is traded in the over-the-counter
market or on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share closing bid prices of the
Common Stock on the 5 consecutive trading days immediately preceding the date in
question, as reported by NASDAQ or an equivalent generally accepted reporting
service, or (ii) if the Common Stock is traded on a national securities
exchange, the average for the 5 consecutive trading days immediately preceding
the date in question of the daily per share closing prices of the Common Stock
on the principal stock exchange on which it is listed, as the case may be, or
(iii) if the Common Stock is not so listed or traded, the fair market value of
the Common Stock as reasonably determined in good faith by the board of
directors of the Company. The term "closing bid price" shall mean the last bid
price on the day in question as reported by NASDAQ or an equivalent generally
accepted reporting service or (as the case may be) as reported by the principal
stock exchange on which the Common Stock is listed, or if not so reported, as
reasonably determined in good faith by the Board of Directors of the Company.
SECTION 8. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to
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<PAGE> 7
consent or to receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrant and prior to its
exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Sections 6.1 or 6.3 (excluding 6.1.1(i) and 6.1.1(ii)); or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property, assets
and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books or such other applicable date, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
SECTION 9. TERMINATION OF WARRANT.
9.1 If not theretofore exercised, this Warrant shall terminate at
5:00 p.m. Pacific time on July 31, 2001.
SECTION 10. LEGENDS.
It is understood that the certificates evidencing the Common Stock
purchased upon exercise of this Warrant may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT
AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
SECTION 11. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholder shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 12. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
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<PAGE> 8
SECTION 13. APPLICABLE LAW, SPECIFIC PERFORMANCE AND CONSENT TO
JURISDICTION.
13.1 This Warrant shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the laws of said State.
13.2 The Company and the Warrantholder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Warrant or the other agreements, documents or instruments contemplated hereby
(collectively, the "Transaction Documents") were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of the Transaction Documents and to enforce
specifically the terms and provisions thereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity. No
provision of any Transaction Documents providing for any remedy to a
Warrantholder shall limit any remedy which would otherwise be available to such
Investor at law or in equity. Each of Warrantholder (with respect to compliance
by the Company with Section 4(2) of the Securities Act of 1933) and the Company
(each an "Indemnitor") shall indemnify and hold harmless the other for a breach
by the Indemnitor of its representations, warranties or obligations under any of
the Transaction Documents.
13.3 Each of the Company and the Warrantholder (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in Orange County, California for the
purposes of any suit, action or proceeding arising out of or relating to this
Warrant and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Warrantholder consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Warrant and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by a duly authorized officer of the Company.
TECHNICLONE CORPORATION
By: /s/ Elizabeth Gorbett-Frost
------------------------------------
Name: Elizabeth Gorbett-Frost
------------------------------------
Title: CFO
------------------------------------
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<PAGE> 1
EXHIBIT 4.20
FORM OF REGISTRATION RIGHTS AGREEMENT
BETWEEN REGISTRANT AND RUDOLPH & SLETTEN, INC.
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
_________, 1998, by and among Techniclone Corporation, a Delaware corporation
(the "Company"), and Rudolph and Sletten, Inc., a California corporation (the
"Contractor").
RECITAL:
In connection with the Company's issuance of _______ shares of
common stock ("Common Stock") (representing interest from ________, 1998 through
_______, 1998, on outstanding construction contract balances), and the Company's
issuance of a stock purchase warrant to purchase _______ shares of the Company's
common stock at $_____ per share (the "Warrant"), pursuant to that certain
Extension Agreement dated __________, 1998. The Company, the Contractor and the
Holders have agreed to enter into this Agreement. The Common Stock and the
Warrants shall be collectively referred to herein as the "Securities."
AGREEMENT:
NOW THEREFORE, in consideration of the mutual agreements, covenants
and conditions and releases contained herein, the Company and the Holders hereby
agree as follows:
1. REGISTRATION RIGHTS
The Company hereby grants to the Holders the registration rights set
forth in this Section 1, with respect to the Registrable Securities (as
hereinafter defined) owned by the Holders. The Company and the Holders agree
that the registration rights provided herein set forth the sole and entire
agreement on the subject matter between the Company and the Holders.
1.1 Definitions. As used in this Section 1:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by filing with the Securities
and Exchange Commission (the "SEC") a registration statement (the "Registration
Statement") in compliance with the Securities Act of 1933, as amended (the "1933
Act") and the declaration or ordering by the SEC of the effectiveness of such
Registration Statement.
(b) The term "Registrable Securities" means
Common Stock issued pursuant to the payment of interest on construction contract
balances or the exercise of the Warrants or other security that is issued as a
dividend or other distribution with respect to, or in exchange or in replacement
of, such Registrable Securities (as defined herein). In the event of any
recapitalization by the Company, whether by stock split, reverse stock split,
stock dividend or the like, the number of shares of Registrable Securities used
throughout this Agreement for various purposes shall be proportionately
increased or decreased.
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<PAGE> 3
1.2 Registration.
(a) On or prior to September 30, 1998, the
Company shall prepare and file with the SEC a registration statement to effect a
registration of all of the Common Stock ("Registration Statement") issued or
that may be purchased pursuant to the issuance of the Warrants ("Registrable
Securities") covering the resale of all of the Registrable Securities.
1.3 Expenses of Registration. All expenses incurred in
connection with the registration effected pursuant to Section 1.2 and all
registrations effected pursuant to Section 1.8 including without limitation all
registration, filing, and qualification fees (including blue sky fees and
expenses), printing expenses, escrow fees, fees and disbursements of counsel for
the Company for any such registration, and expenses of any special audits
incidental to or required by such registration, shall be borne by the Company;
provided, however, that the Company shall not be required to pay stock transfer
taxes or underwriters' discounts or commissions relating to Registrable
Securities. Notwithstanding anything to the contrary above, the Company shall
not be required to pay for any expenses of any registration proceeding under
Section 1.2 if the registration request is subsequently withdrawn at the request
of the Holders. Notwithstanding the preceding sentence, however, if at the time
of the withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses.
1.4 Obligations of the Company. Whenever required under
this Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a
Registration Statement with respect to such Registrable Securities and use its
best efforts to cause such Registration Statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such Registration Statement effective for a period
of up to one hundred twenty (120) days or until the distribution contemplated in
the Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended to a total of not more than two-hundred seventy (270)
days, if necessary, to keep the Registration Statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the 1933 Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the 1933 Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (A) includes any prospectus required by Section
10(a)(3) of the 1933 Act or (B) reflects facts or events representing a material
or fundamental change in the information set forth in the Registration
Statement, the incorporation by reference of information required to be included
in (A) and (B) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 Act, as amended (the
"1934 Act"), in the Registration Statement.
(b) Prepare and file with the SEC such
amendments and supplements to such Registration Statement and the prospectus
used in connection with such Registration Statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such Registration Statement;
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<PAGE> 4
(c) Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(d) Use its commercially reasonable best
efforts to register and qualify the securities covered by such Registration
Statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions;
(e) Notify the Holders of Registrable
Securities covered by such Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act of the happening
of any event as a result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing; and
(f) Cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
1.5 Indemnification.
(a) The Company will, and does hereby
undertake to, indemnify and hold harmless the Holders of Registrable Securities,
each of the Holders' officers, directors and partners, and each person
controlling the Holders, together with the respective agents of such persons,
with respect to any registration, qualification, or compliance effected pursuant
to this Section 1, and each underwriter, if any, and each person who controls
any underwriter, of the Registrable Securities held by or issuable to the
Holders, against all claims, losses, damages, and liabilities (or actions in
respect thereto) to which they may become subject under the 1933 Act or the 1934
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular, or
other similar document (including any related Registration Statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any violation or alleged violation by the
Company of any federal, state or common law rule or regulation applicable to the
Company in connection with any such registration, qualification, or compliance,
and will reimburse, as incurred, the Holders, each such underwriter, and each
such director, officer, partner, agent and controlling person, for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action; provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense, arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
an instrument duly executed by the Holders or underwriter and stated to be
specifically for use therein.
(b) The Holders will, if Registrable
Securities held by or issuable to the Holders are included in such registration,
qualification, or compliance, severally and not jointly, indemnify the Company,
each of its directors, each officer, and each person controlling the Company,
each underwriter, if any, and, each person who controls any underwriter,
together with the respective agents of such persons, of the Company's securities
covered by such a Registration Statement, against all claims, losses, damages,
and liabilities (or actions in respect thereof) arising out of or based on any
untrue
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<PAGE> 5
statement (or alleged untrue statement) of a material fact contained in any such
Registration Statement, prospectus, offering circular, or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse, as incurred, the Company and each such underwriter, for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability, or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was made in such
Registration Statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by the Holders and stated to be
specifically for use therein; provided, however, that the liability of each
Holder hereunder shall be limited to the net proceeds received by such Holder
from the sale of securities under such Registration Statement. In no event will
any Holder be required to enter into any agreement or undertaking in connection
with any registration under this Section 1 providing for any indemnification or
contribution obligations on the part of such Holder greater than such Holder's
obligations under this Section 1.5.
(c) Each party entitled to indemnification
under this Section 1.5 (the "Indemnified Party") shall give notice to the party
required to provide such indemnification (the "Indemnifying Party") of any claim
as to which indemnification may be sought promptly after such Indemnified Party
has actual knowledge thereof, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be subject to approval by the Indemnified Party
(whose approval shall not be unreasonably withheld) and the Indemnified Party
may participate in such defense with its separate counsel at the Indemnifying
Party's expense if representation of such Indemnified Party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding; and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 1, except to the extent that such failure to give
notice shall materially adversely affect the Indemnifying Party in the defense
of any such claim or any such litigation. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff therein, to such Indemnified Party, of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in
this Section 1.5 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
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(f) The obligations of the Company and
Holders under this Section 1.5 shall survive the completion of any offering of
Registrable Securities in a Registration Statement under this Section 1, and
otherwise.
1.6 Information by the Holders. If the Holders of
Registrable Securities include Registrable Securities in any registration, the
Holders shall furnish to the Company such information regarding the Holders and
the distribution proposed by the Holders, as the Company may reasonably request
in writing and as shall be required in connection with any registration,
qualification, or compliance referred to in this Section 1.
1.7 Transfer of Registration Rights. Subject to such
other restrictions as may exist under any agreement between any Holder and the
Company, the rights of the Holders contained in Sections 1.2 and 1.8 hereof, to
cause the Company to register the Registrable Securities, may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder" for purposes of this Section 1; provided that
such transferee or assignee, (a)receives such securities as a partner in
connection with partnership distributions of the Holder, or (b) acquires 100% of
the Registrable Securities held by the Holder; provided further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee be restricted under the
1933 Act and that the Company is given written notice by the Holder at the time
of or within a reasonable time after said transfer stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned.
1.8 Form S-3. In the case the Company shall be eligible
to register securities on Form S-3 and shall receive from any Holder or Holders
of at least fifty percent (50%) of the Outstanding Registrable Securities a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders at any time on or after
September 30, 1998, the Company will:
(a) promptly give written notice of the
proposed registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 1.8: (i) if Form S-3 is not available for such offering by the Holders;
(ii) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$10,000,000; (iii) if the Company shall furnish to Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3 registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 Registration Statement for a period of not more than 120 days
after receipt of the request of the Holder or Holders under this Section 1.8;
(iv) if the Company has, within the twelve (12) month period preceding the date
of such request, already effected a registration on Form S-3 for the Holders
pursuant to this Section 1.8; or (v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
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<PAGE> 7
(c) Subject to the foregoing, the Company
shall file a Registration Statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders.
1.9 Delay of Registration. The Holders shall not have
any right to obtain or seek an injunction restraining or otherwise delaying any
such registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.
1.10 Limitations on Subsequent Registration Rights. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of a majority of the Holders, enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder to include any securities in any registration
filed under Section 1.2 hereof unless (i) under the terms of such agreement with
any person other than an institutional or venture capital investor, such holder
or prospective holder may include such securities in any such registration only
to the extent that the inclusion of such securities will not diminish the amount
of Registrable Securities which are included in such registration, and (ii)
under the terms of such agreement with an institutional or venture capital
investor, such holder or prospective holder may include such securities in any
such registration only on a pari passu basis with the Holders of Registrable
Securities. Any agreement for such registration rights will include the
equivalent of Section 1.14 as a term.
1.11 Rule 144 Reporting. With a view to making available
to the Holders the benefits of certain rules and regulations of the SEC which
may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information
available, as those terms are understood and defined in SEC Rule 144 or any
similar or analogous rule promulgated under the 1933 Act, at all times
commencing ninety (90) days after the effective date of the first registration
filed by the Company for an offering of its securities to the general public;
(b) File with the SEC, in a timely manner,
all reports and other documents required of the Company under the 1933 Act and
1934 Act; and
(c) So long as the Holders own any
Registrable Securities, furnish to any Holder forthwith upon request: a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 of the 1933 Act, and of the 1934 Act (at any time after it has
become subject to such reporting requirements); and such other reports and
documents as any Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
1.12 "Market Stand-Off" Agreement. The Holders hereby
agree that during the 180-day period following the effective date of a
Registration Statement of the Company filed under the 1933 Act, it shall not, to
the extent requested by the Company and any underwriter, sell or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any Common Stock of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that all officers
and directors of the Company enter into similar agreements. In order to enforce
the foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registrable Securities of the Holders until the end of such
period.
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<PAGE> 8
1.13 Amendment of Registration Rights. Any provision of
this Section 1 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Holders of not less than a
majority of the Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Section shall be binding upon the Holders, each
future holder of Registrable Securities and the Company.
1.14 Termination of Registration Rights. The Holders
shall not be entitled to exercise any right provided for in Sections 1.2 and 1.8
after the date that such Holder shall be free to transfer such shares without
restriction as to volume pursuant to Rule 144(k) under the 1933 Act.
2. COMPANY COVENANTS
The Company hereby covenants and agrees as follows:
2.1 Basic Financial Information.
(a) The Company hereby covenants and agrees
to furnish the following reports to the Holders until __________, 2001.
(i) As soon as practicable after
the end of each fiscal year, and in any event within 110 days thereafter,
audited consolidated balance sheets of the Company and its subsidiaries, if any,
as at the end of such fiscal year, and audited consolidated statements of income
and cash flows of the Company and its subsidiaries, if any, for such fiscal
year, prepared in accordance with generally accepted accounting principles and
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by a report and opinion
thereon, by independent public accountants of national reputation selected by
the Company's board of directors.
(ii) As soon as practicable
after the end of each of the first three (3) fiscal quarters of the fiscal year,
but in any event within fifty-five (55) days after the end of each such fiscal
quarter, the Company's unaudited consolidated balance sheet as of the end of
such quarter, and its unaudited consolidated statements of income and cash flows
for such quarter, all in reasonable detail and prepared in accordance with
generally accepted accounting principles and certified by the principal
financial or accounting officer of the Company.
(b) The rights granted pursuant to this
Section 2.1 may not be assigned or otherwise conveyed by the Holders or by any
subsequent transferee of any such rights without the written consent of the
Company, which consent shall not be unreasonably withheld; provided that the
Company may refuse such written consent if the proposed transferee is a
competitor of the Company; and provided further, that no such written consent
shall be required if the transfer is in connection with the transfer of the
Securities to any partner or retired partner of any Holder or to any such
partner's estate.
2.2 Reservation of Common Stock. At all times after
September 30, 1998, the Company will reserve and keep available solely for
issuance and delivery upon exercise of the Warrants, the number of shares of
Common Stock issuable upon such exercise.
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<PAGE> 9
2.3 Expiration of Covenants. The covenants set forth in
this Section 2 (other than those set forth in Section 2.1(a)) shall expire and
be of no further force or effect upon the consummation of a Qualified Public
Offering.
3. MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in
all respects by the law of the State of California, without giving effect to its
principles regarding conflicts of law.
3.2 Entire Agreement; Amendment. This Agreement
constitutes the full and entire understanding and agreement between the parties
with respect to the subject matter hereof. Except as otherwise provided in
Section 1.15 above, this Agreement may be amended, waived, discharged or
terminated only by written consent of the Company and the Holders of at least a
majority of the then outstanding Registrable Securities.
3.3 Notices. All notices and other communications
required or permitted hereunder shall be in writing and shall be delivered
personally, mailed by first class mail, postage prepaid, or delivered by Federal
Express overnight delivery, at the respective addresses of the parties as set
forth in the Subscription Agreement, or at such other address as the parties
shall have furnished to the other parties in writing. Notices that are mailed
shall be deemed received three (3) days after deposit in the United States mail
or one (1) day after deposit with Federal Express for overnight delivery.
3.4 Counterparts; Facsimile. This Agreement may be
executed in any number of counterparts and may be delivered by telecopy or
facsimile, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
3.5 Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not be any
way affected or impaired thereby.
3.6 Titles and Subtitles. The titles of the sections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the date first above written.
TECHNICLONE CORPORATION RUDOLPH AND SLETTEN, INC.
By: By:
Name: Name:
Title: Title:
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<PAGE> 10
ADDRESS TO WHICH NOTICES AND OTHER
COMMUNICATIONS ARE TO BE SENT:
TECHNICLONE RUDOLPH AND SLETTEN, INC.
14282 Franklin Avenue 989 East Hillside Blvd., Suite 100
Tustin, CA 92780-7017 Foster City, CA 94404
Attn: Elizabeth Gorbett-Frost Attn: Martin P. Eckert, Jr.
Corporate Secretary Chief Financial Officer
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<PAGE> 1
EXHIBIT 4.21
STOCK PURCHASE WARRANT TO
PURCHASE UP TO 500,000 SHARES OF COMMON STOCK
OF REGISTRANT ISSUED TO BIOTECHNOLOGY DEVELOPMENT, LTD.
<PAGE> 2
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE 500,000 SHARES OF COMMON STOCK
EXPIRATION: UNLESS EARLIER EXERCISED OR TERMINATED AS HEREIN
PROVIDED, THIS WARRANT SHALL EXPIRE AT 5:00 PM, PACIFIC TIME, ON
MARCH 31, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER.
TECHNICLONE CORPORATION
This certifies that Biotechnology Development, Ltd., the registered
holder hereof or assigns (the "Warrantholder") is entitled to purchase from
Techniclone Corporation, a Delaware corporation (the "Company"), at any time
before 5:00 pm Pacific Time on March 31, 2003 (the "Expiration Time") at the
purchase price of One Dollar ($1.00) per share (the "Warrant Price"), the number
of shares shown above.
SECTION 1. TRANSFERABILITY AND FORM OF WARRANT.
1.1 REGISTRATION. This Warrant shall be registered on the books of
the Company.
1.2 TRANSFERABILITY. The Warrant shall not be transferable or
assignable except to an Affiliate (as defined herein) of the Holder without the
prior written consent of the Company, which consent shall not be unreasonably
withheld. The Holder may transfer or assign the shares of Common Stock issuable
upon exercise of the Warrants; provided, however, that (i) a registration
statement with respect thereto has become effective under the Securities Act; or
(ii) in the opinion of counsel to the Holder such registration is not necessary;
or (iii) such transfer complies with the provisions of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act" or the "1933 Act"). The
legend imprinted on the certificates pursuant to Section 10 shall be removed,
and the Company shall issue a new certificate without such legend to the Holder
of such security if such security is registered under the Securities Act or, in
the opinion of counsel to the Holder such legend is no longer required under the
Securities Act or the conditions for a permissible sale or transfer under Rule
144(k) have been complied with. For purposes of this Warrant, "Affiliate" shall
mean any wholly-owned subsidiary or parent of, or any corporation, entity or
other person which is, within the meaning of the 1933 Act, controlling,
controlled by or under common control with, the Holder or the Company, as the
case may be.
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<PAGE> 3
1.3 FORM OF WARRANT. The Warrant shall be executed on behalf of the
Company by an authorized officer, and shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange,
substitution or transfer. A Warrant bearing the signature of an individual who
was at any time a proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant.
SECTION 2. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of shares to the Warrantholder; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any secondary transfer of the Warrant or the
shares.
SECTION 3. MUTILATED OR MISSING WARRANTS.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the lost, stolen or destroyed Warrant, a new
Warrant of like tenor, but only upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant. The applicant shall
also comply with such other reasonable regulations and pay such other reasonable
administrative charges as the Company may prescribe.
SECTION 4. RESERVATION OF SHARES.
There has been reserved, and the Company shall at all times keep
reserved so long as this Warrant remains outstanding, out of its authorized
shares of capital stock, such number and class of shares as shall be subject to
purchase under this Warrant and such reserved shares shall be used solely for
issuances upon exercise of this Warrant.
SECTION 5. EXERCISE OF WARRANT.
5.1 EXERCISE. Prior to the Expiration Time the Holder of this
Warrant shall have the right at any time and from time to time to exercise this
Warrant in full or in part by surrender of this Warrant to the Company
accompanied by payment to the Company in cash or by certified or cashier's check
or by wire transfer of funds of the aggregate Warrant Price for the number of
shares in respect of which this Warrant is then exercised. In addition, and
notwithstanding anything to the contrary contained in this Warrant, this Warrant
may be exercised by presentation and surrender of this Warrant to the Company
with a written notice of the Warrant Holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the Warrant
Price in cash, the Holder shall surrender this Warrant for, and the Company
shall issue in respect thereof, that number of shares of Common Stock determined
by multiplying the number of shares of Common Stock to which the Holder would
otherwise be entitled upon a cash exercise hereof by a fraction, the numerator
of which shall be the difference between the then Current Market Price (as
herein defined) and the Warrant Price, and the denominator of which shall be the
then Current Market Price.
5.2 DELIVERY OF CERTIFICATES. Upon exercise of this Warrant the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Warrantholder and
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<PAGE> 4
in such name or names as the Warrantholder may designate, a certificate or
certificates for the number of full shares issuable upon such exercise together
with cash, as provided in Section 7 hereof, in respect of any fractional shares.
The Company shall effect such issuance immediately and shall transmit the
certificates to reach the address designated by the Warrantholder within five
business days after receipt of the Warrant Price or, in the case of a Cashless
Exercise, after the receipt of the Warrant. Such certificate or certificates
shall be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such shares as of
the date of surrender of the Warrant and, to the extent applicable, payment of
the Warrant Price, as aforesaid, notwithstanding that the certificates
representing such shares shall not actually have been delivered or that the
stock transfer books of the Company shall then be closed. In the event of
partial exercise a new Warrant evidencing the remaining portion of this Warrant
will be issued by the Company.
SECTION 6. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
6.1 ADJUSTMENTS. The number and kind of securities purchasable upon
the exercise of the Warrants and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
6.1.1 In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its Common Stock other securities of the Company,
the number of shares purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
the kind and number of shares or other securities of the Company which it would
have owned or would have been entitled to receive after the happening of any of
the events described above, had the Warrants been exercised immediately prior to
the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this Section 6.1.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
6.1.2 In case the Company shall issue rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, entitling them to subscribe
for or to purchase shares of Common Stock at a price per share which is lower at
the record date mentioned below than the then Current Market Price (as defined
in Section 7), the number of shares thereafter purchasable upon the exercise of
the Warrants shall be determined by multiplying the number of shares theretofore
purchasable upon exercise of each Warrant by a fraction, of which the numerator
shall be (1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such rights, options or warrants plus (2) the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options or
warrants plus (y) the number of shares which the aggregate offering price of the
total number of shares offered would purchase at the Current Market Price. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately and retroactively after the record date
for the determination of shareholders entitled to receive such rights, options
or warrants.
6.1.3 In case the Company shall distribute to all or
substantially all holders of its shares of Common Stock evidences of its
indebtedness or assets (excluding non-extraordinary cash
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<PAGE> 5
dividends or distributions out of current earnings) or rights, options, warrants
or convertible securities containing the right to subscribe for or purchase
shares of Common Stock (excluding those referred to in paragraph (b) above),
then, in each case, the number of shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of shares
theretofore purchasable upon exercise of the Warrants by a fraction, of which
the numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market Price on
such date minus the then fair value of the portion of the assets or evidence of
indebtedness so distributed or of such subscription rights, options or warrants
applicable to one share. Such adjustment shall be made whenever any such
distribution is made and shall become effective on the date of distribution
retroactive to the record date for the determination of shareholders entitled to
receive such distribution.
6.1.4 If, at any time after the initial issuance of this
Warrant, any event occurs of the type contemplated by the adjustment provisions
of this Section 6.1 but not expressly provided for by such provisions, the
Company's Board of Directors will make an appropriate adjustment in the Warrant
Price and the number of shares of Common Stock acquirable upon exercise of this
Warrant so that the rights of the holder shall be neither enhanced nor
diminished by such event.
6.1.5 No adjustment in the number of shares purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of shares then purchasable
upon the exercise of a Warrant; provided, however, that any adjustments which by
reason of this Section 6.1.5 are not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
6.1.6 Whenever the number of shares purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price payable
upon exercise of a Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares purchasable upon the exercise of a Warrant immediately
prior to such adjustment, and of which the denominator shall be the number of
shares so purchasable immediately thereafter.
6.1.7 Whenever the number of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by the Board of
Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of shares purchasable upon the exercise of a
Warrant and the Warrant Price after such adjustment, together with a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
6.1.8 The term "Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section, the Warrantholder shall
become entitled to purchase any securities other than shares of Common Stock,
thereafter the number of such other securities so purchasable upon exercise of
the Warrant and the Warrant Price of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in this
Section.
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6.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Subsection
6.1, no adjustment in respect of any dividends shall be made during the term of
the Warrant or upon the exercise of the Warrant.
6.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any reclassification of the securities of the
Company or any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another corporation
of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall provide by agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such action to purchase upon exercise of the
Warrant the kind and amount of shares and other securities and property which he
would have owned or have been entitled to receive after the happening of such
reclassification, consolidation, merger, sale or conveyance had the Warrant been
exercised (without regard to any limitations on exercise contained herein or the
Securities Purchase Agreements) immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The provisions of
this subsection shall similarly apply to successive reclassifications,
consolidations, mergers, sales or conveyances.
6.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Warrant Price or the number of securities purchasable upon
the exercise of the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price and number of
securities as are stated in the similar Warrant certificates initially issuable
pursuant to this Agreement.
SECTION 7. FRACTIONAL INTERESTS; CURRENT MARKET PRICE; CLOSING BID
PRICE.
The Company shall not be required to issue fractional shares on the
exercise of the Warrant. If any fraction of a share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then Current Market Price multiplied by such fraction. The term "Current Market
Price" shall mean (i) if the Common Stock is traded in the over-the-counter
market or on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per share closing bid prices of the
Common Stock on the 5 consecutive trading days immediately preceding the date in
question, as reported by NASDAQ or an equivalent generally accepted reporting
service, or (ii) if the Common Stock is traded on a national securities
exchange, the average for the 5 consecutive trading days immediately preceding
the date in question of the daily per share closing prices of the Common Stock
on the principal stock exchange on which it is listed, as the case may be, or
(iii) if the Common Stock is not so listed or traded, the fair market value of
the Common Stock as reasonably determined in good faith by the board of
directors of the Company. The term "closing bid price" shall mean the last bid
price on the day in question as reported by NASDAQ or an equivalent generally
accepted reporting service or (as the case may be) as reported by the principal
stock exchange on which the Common Stock is listed, or if not so reported, as
reasonably determined in good faith by the Board of Directors of the Company.
SECTION 8. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to
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consent or to receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrant and prior to its
exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Sections 6.1 or 6.3 (excluding 6.1.1(i) and 6.1.1(ii)); or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property, assets
and business, as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books or other applicable date
with respect thereto. Such notice shall specify such record date or the date of
closing the transfer books or such other applicable date, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
SECTION 9. TERMINATION OF WARRANT.
9.1 If not theretofore exercised, this Warrant shall terminate at
5:00 p.m. Pacific time on March 31, 2003.
SECTION 10. Legends.
It is understood that the certificates evidencing the Common Stock
purchased upon exercise of this Warrant may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT
AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
SECTION 11. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholder shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 12. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 6.3 are complied with.
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<PAGE> 8
SECTION 13. APPLICABLE LAW, SPECIFIC PERFORMANCE AND CONSENT TO
JURISDICTION.
13.1 This Warrant shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the laws of said State.
13.2 The Company and the Warrantholder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Warrant or the other agreements, documents or instruments contemplated hereby
(collectively, the "Transaction Documents") were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of the Transaction Documents and to enforce
specifically the terms and provisions thereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity. No
provision of any Transaction Documents providing for any remedy to a
Warrantholder shall limit any remedy which would otherwise be available to such
Investor at law or in equity. Each of Warrantholder (with respect to compliance
by the Company with Section 4(2) of the Securities Act of 1933) and the Company
(each an "Indemnitor") shall indemnify and hold harmless the other for a breach
by the Indemnitor of its representations, warranties or obligations under any of
the Transaction Documents.
13.3 Each of the Company and the Warrantholder (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in Orange County, California for the
purposes of any suit, action or proceeding arising out of or relating to this
Warrant and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Warrantholder consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Warrant and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by a duly authorized officer of the Company.
TECHNICLONE CORPORATION
By: /s/ ELIZABETH GORBETT-FROST
-------------------------------
Elizabeth Gorbett-Frost,
Chief Financial Officer
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EXHIBIT 5
September 30, 1998
Techniclone Corporation
14282 Franklin Avenue
Tustin, California 92780-7017
Re: Registration Statement on Form S-3: Techniclone
Corporation Common Stock, par value $.001 per
share
Ladies and Gentlemen:
We are rendering this opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement"), filed by Techniclone
Corporation (the "Company") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, on September 30, 1998. The Registration
Statement relates to the resale of up to 3,405,053 shares of common stock, $.001
par value (the "Common Stock"), of the Company by the holders thereof named
therein (the "Shares"). Initially capitalized terms used herein and not
otherwise defined herein shall have the respective meanings assigned to such
terms in the Registration Statement.
In our capacity as your counsel in connection with this transaction, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the authorization and issuance of
the securities in the manner set forth in the Registration Statement. We have
examined such documents as we consider necessary to render this opinion. In such
examination, we have assumed the authenticity of all documents submitted to us
as originals, the conformity with originals of all documents submitted to us as
copies and the genuineness of all signatures. We have also assumed the legal
capacity of all natural persons and that, with respect to all parties to
agreements or instruments relevant hereto other than the Company, such parties
had the requisite power and authority to execute, deliver and perform such
agreements or instruments, that such agreements or instruments have been duly
authorized by all requisite action and have been executed and delivered by such
parties and that such agreements or instruments are valid, binding and
enforceable obligations of such parties.
Based upon the foregoing and the compliance with applicable state
securities laws and the additional proceedings to be taken by the Company as
referred to above, we are of the opinion that the Shares have been duly
authorized, the Shares other than Shares issuable upon exercise of the Warrants
have been validly issued, are fully paid and nonassessable and the Shares
issuable upon exercise of the Warrants, when issued by the Company upon receipt
of payment therefor (to the extent required by the terms of such Warrants), will
be validly issued, fully paid and nonassessable.
Our opinions herein are limited to the effect on the subject transaction
of United States Federal law and the General Corporation Law of the State of
Delaware. We assume no responsibility regarding the applicability thereto, or
the effect thereon, of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
caption "Legal Matters" in the prospectus which is a part of the Registration
Statement.
Sincerely,
/s/ Rutan & Tucker, LLP
RUTAN & TUCKER, LLP
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EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Techniclone Corporation on Form S-3 of our report dated June 15, 1998, except
for Note 12, as to which the date is July 17, 1998 (which expresses an
unqualified opinion and includes an explanatory paragraph regarding substantial
doubt about the Company's ability to continue as a going concern), appearing in
the Annual Report on Form 10-K of Techniclone Corporation for the year ended
April 30, 1998 and to the reference to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
September 29, 1998
