<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TECHNICLONE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TECHNICLONE CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2)
of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.*
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOTES:
<PAGE> 2
TECHNICLONE CORPORATION
14282 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92780-7017
(714) 838-0500
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
APRIL 23, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of
TECHNICLONE CORPORATION, a Delaware corporation (the "Company"), will be held at
The Embassy Suites Hotel, 3100 E. Frontera Street, Anaheim, California 92806, on
April 23, 1998, at 9:00 A.M., Pacific Time, for the following purpose, as more
fully described in the accompanying Proxy Statement:
(1) To approve an amendment to the Company's Certificate of Incorporation
which will increase the number of shares of Common Stock which the
Company has authority to issue from 60,000,000 shares to 120,000,000
shares (See Proposal One, Amendment of Certificate of Incorporation);
Only stockholders of record at the close of business on March 16, 1998 will
be entitled to vote at the meeting or any adjournment or postponement thereof.
By Order of the Board of Directors
[William V. Moding Signature]
William V. Moding,
Secretary
March , 1998
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY.
Any stockholder present at the meeting may withdraw his or her proxy and vote
personally on each matter brought before the meeting. Stockholders attending the
meeting whose shares are held in the name of a broker or other nominee who
desire to vote their shares at the meeting should bring with them an original
proxy or letter from that firm confirming their ownership of shares and to
provide evidence of whether such stockholders have voted previously at the
meeting.
<PAGE> 3
TECHNICLONE CORPORATION
14282 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92780-7017
------------------------
PROXY STATEMENT
------------------------
SPECIAL MEETING OF STOCKHOLDERS
APRIL 23, 1998
------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of TECHNICLONE CORPORATION, a Delaware
corporation ("Techniclone" or the "Company"), for use at a Special Meeting of
Stockholders to be held on Thursday, April 23, 1998, at 9:00 A.M. at The Embassy
Suites Hotel, 3100 E. Fontera Street, Anaheim, California 92806. The Company has
retained the services of Corporate Investor Communications, Inc. ("CIC") to
assist in soliciting proxies from brokers and nominees for the Special Meeting.
The estimated cost for these services is approximately $10,000 and will be borne
by the Company. It is contemplated that this solicitation of proxies will be
made exclusively by mail; however, if it should appear desirable to do so in
order to ensure adequate representation at the meeting, CIC, directors, officers
and employees of the Company may communicate with stockholders, brokerage houses
and others by telephone, telegraph or in person to request that proxies be
furnished and may reimburse banks, brokerage houses, custodians, nominees and
fiduciaries for their reasonable expenses in forwarding proxy materials to the
beneficial owners of the shares held by them. All expenses incurred in
connection with this solicitation shall be borne by the Company.
Holders of shares of Common Stock of the Company ("stockholders") who
execute proxies retain the right to revoke them at any time before they are
voted. Any proxy given by a stockholder may be revoked or superseded by
executing a later dated proxy, by giving notice of revocation to the Secretary
of the Company, 14282 Franklin Avenue, Tustin, California 92780-7017, in writing
prior to or at the meeting or by attending the meeting and voting in person. A
proxy, when executed and not so revoked, will be voted in accordance with the
instructions given in the proxy. If a choice is not specified in the proxy, the
proxy will be voted "FOR" the increase in the authorized number of shares of
Common Stock of the Company and the amendment of the Certificate of
Incorporation. This Proxy Statement is first being mailed to stockholders on or
about March 20, 1998.
VOTING SECURITIES
The Company has two classes of securities outstanding, common stock and
preferred stock, however only the common stock (the "Common Stock") is entitled
to vote at the meeting. Holders of Common Stock of the Company of record as of
the close of business on March 16, 1998 (the "Record Date"), will be entitled to
vote at the meeting or any adjournment or postponement thereof. As of the Record
Date, there were shares of Common Stock outstanding and entitled to
vote. Each holder of shares of Common Stock is entitled to one vote for each
share of Common Stock held as of the Record Date. Abstentions and broker
non-votes are each included in the determination of the number of shares present
and voting for the purpose of determining whether a quorum is present. Under the
General Corporation Law of the State of Delaware, for votes cast on matters
other than the election of directors that require the affirmative vote of a
majority of the shares present and voting at the annual meeting, or the
affirmative vote of a majority of the outstanding shares, abstentions and broker
non-votes will have the same effect as votes against a proposal.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Set forth below is certain information as of March 2, 1998 regarding the
beneficial ownership of the Company's Common Stock by (i) any person who was
known by the Company to own more than five percent (5%) of the voting securities
of the Company, (ii) all directors, (iii) the executive officers , and (iv) all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
-------------
NAME AND ADDRESS TITLE NUMBER OF PERCENT
OF BENEFICIAL OWNER OF CLASS SHARES(A) OF CLASS(B)
------------------- ------------- --------- -----------
<S> <C> <C> <C>
Legere Enterprises, Ltd. Common Stock 3,123,333 7.41%
222 South Rainbow, Suite 218
Las Vegas, Nevada 89128
Lon H. Stone, Director Common Stock 1,386,578(C) 3.29%
14282 Franklin Avenue
Tustin, California 92780
William V. Moding Common Stock 416,100(D) .99%
Chief Finance Officer and Secretary
14282 Franklin Avenue
Tustin, California 92780
Clive R. Taylor, M.D., Ph.D., Director Common Stock 845,000(E) 2.00%
14282 Franklin Avenue
Tustin, California 92780
Edward Joseph Legere II, Director Common Stock 3,131,853(F) 7.43%
222 South Rainbow, Suite 218
Las Vegas, Nevada 89128
Carmelo J. Santoro, Director Common Stock 135,000(G) 3.20%
14282 Franklin Avenue
Tustin, California 92780
Rockell Hankin, Director Common Stock 25,000(H) .06%
14282 Franklin Avenue
Tustin, California 92780
All Directors and Executive Officers Common Stock 5,939,531(I) 14.08%
as a Group (6 total)
</TABLE>
- ---------------
(A) Except as otherwise noted below, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable.
(B) Percentages for the Common Stock computed on the basis of 40,428,555 shares
outstanding at March 2, 1998, plus an additional 1,734,520 shares that
could be acquired by principal stockholders, directors and executive
officers through exercise of stock options and warrants during the 60 day
period ending April 30, 1998.
(C) Includes 505,135 shares owned by members of Mr. Stone's family as to which
he may be deemed to be the beneficial owner. Also includes 739,000 shares
of Common Stock subject to outstanding stock options exercisable during the
60 day period ending April 30, 1998.
(D) Includes 20,000 shares owned by members of Mr. Moding's family as to which
he may be deemed to be the beneficial owner. Also includes 160,000 shares
of Common Stock subject to outstanding stock options exercisable during the
60 day period ending April 30, 1998.
(E) Includes 42,000 shares owned by members of Dr. Taylor's family as to which
he may be deemed to be the beneficial owner. Also includes 677,000 shares
of Common Stock subject to outstanding stock options exercisable during the
60 day period ending April 30, 1998.
(F) Includes the 3,123,333 shares owned by Legere Enterprises, Ltd., a Nevada
limited partnership owned by Mr. Legere and members of his family and 8,520
shares of Common Stock subject to outstanding stock options exercisable
during the 60 day period ending April 30, 1998.
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<PAGE> 5
(G) Includes 125,000 shares of Common Stock subject to outstanding stock
options exercisable during the 60 day period ending April 30, 1998.
(H) Includes 25,000 shares of Common Stock subject to outstanding stock options
exercisable during the 60 day period ending April 30, 1998.
(I) Includes the securities described in notes (C), (D), (E), (F), (G) and (H).
4
<PAGE> 6
PROPOSAL ONE
AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF THE COMPANY TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has directed that there be submitted to the
stockholders of the Company at the special meeting a proposed amendment to the
Company's Certificate of Incorporation to increase the authorized number of
shares of Common Stock from 60,000,000 to 120,000,000. In the last fiscal year
the Company issued 12,000 shares of 5% Adjustable Convertible Class C Preferred
Stock (the "Class C Preferred Stock") which shares are convertible into an
indeterminate number of shares of Common Stock. In connection with its agreement
with the purchasers of the Class C Preferred Stock, the Company agreed to submit
to its stockholders for approval a charter amendment increasing the authorized
number of shares of Common Stock of the Company to an amount deemed reasonable
by the Company and the placement agent.
Commencing on October 1, 1997, the Company agreed that if the number of
shares of Common Stock reserved for issuance upon the conversion of the Class C
Preferred Stock (Reserved Amount) for any three (3) consecutive trading days
(the last of such three (3) trading days being the "Authorization Trigger Date")
is less than 150% of the number of shares of Common Stock issuable upon
conversion of all shares of Class C Preferred Stock (including shares of Class C
Preferred Stock which are issued as dividends on shares of Class C Preferred
Stock and shares of Class C Preferred Stock issuable with respect to then
accrued and unpaid dividends) and the exercise of all warrants (including
warrants to be issuable upon conversion of the Class C Preferred Stock) on such
trading days, that the Company would immediately notify the holders of the Class
C Preferred Stock and the warrants of such occurrence and take immediate action
(including seeking stockholder approval to authorize the issuance of additional
shares of Common Stock) to increase the Reserved Amount to 150% of such number
of shares of Common Stock. This is not an option, it is a requirement of the
Class C Preferred Stock Agreement.
In the event Company fails to so increase the Reserved Amount within ninety
(90) days after an Authorization Trigger Date, each holder of Class C Preferred
Stock shall thereafter have the option, exercisable in whole or in part at any
time to deliver a redemption notice to the Company. If a holder of the Class C
Preferred Stock delivers a redemption notice to the Company, the Company is
required to purchase for cash, a portion of the holder's Class C Preferred Stock
so that, after giving effect to such purchase, the holder's allocated portion of
the Reserved Amount will equal or exceed 150% of such total number of shares of
Common Stock allocable to such holder. If the Company fails to redeem any of
such shares of Class C Preferred Stock within five (5) business days after its
receipt of a redemption notice such an event is then a redemption default.
Upon the occurrence of a Redemption Event, the Company may elect to convert
each share of Class C Preferred Stock into that number of Common Shares equal to
the amount of principal and interest then outstanding divided by the lowest
conversion price. Prior to March 24, 1998, the lowest conversion price is the
average of the low trading price of the Common Stock for the five consecutive
trading days prior to the conversion date discounted by 27%. After March 24,
1998, the lowest conversion price is (i) the lower of the average of the closing
prices of the Common Stock for the 30 trading days, including and immediately
preceding March 24, 1998 or (ii) the average of the low trading price of the
Common Stock for the five consecutive trading days prior to the conversion date
discounted by 27%. The effect of a Redemption Event could cause the issuance of
additional shares of Common Stock to the Holders of the Class C Preferred Stock.
In October of 1997 at the 1997 Annual Meeting, the Company's stockholders
approved an Amendment to the Certificate of Incorporation of the Company
increasing the authorized shares of Common Stock from 50,000,000 to 60,000,000
to provide for amount of shares that the Company believed necessary for the
Reserved amount. As a result of a decline in the Company's Common Stock from in
excess of $3.00 to approximately .50 cents, on March 2, 1998 the remaining
outstanding Class C Preferred Stock was convertible into approximately
15,500,000 shares of Common Stock. When combined with the approximately
5
<PAGE> 7
40,429,000 shares outstanding on that date plus approximately 13,584,000 shares
reserved for outstanding stock purchase option and warrants, as well as warrants
that would be issued to Class C Preferred Stockholders upon future conversions,
it is apparent that the Company did not have sufficient authorized and unissued
shares to reserve 150% of the number of shares of Common Stock which will be
issuable, on the conversion of the Class C Preferred Stock and the exercise of
the warrants related thereto. If the Company does not authorize the additional
shares requested on or before April 26, 1998, in order for the Company to be
able to reserve additional shares such failure will be a Redemption Event.
If the stockholders fail to authorize additional shares, the Company will
not be able to raise additional money through the sale of equity nor take any
other actions requiring the issuance of Common Stock unless the authorized
number of shares of Common Stock is increased. If the Company does not increase
its shares of Common Stock, it is possible that it will not have sufficient
shares to affect conversion of all the Class C Preferred Stock and as a result,
it may, in addition to the above-described Redemption Event, be forced to make
conversion default payments to all Holders of the Class C Preferred Stock who
submit a conversion notice during the period of such a conversion default. For
the first ten days of a conversion default the amount that must be paid to all
holders of Class C Preferred Stock who have requested conversion is $1,000 per
day. If the conversion default continues for a period longer than ten days, then
the Company is required to pay 1% per day of the liquidation preference on the
shares submitted for a conversion or 30% per month.
As can be seen from the above paragraphs, the failure to approve this
amendment to the Company's Certificate of Incorporation may result in the
Company being required to immediately hold another stockholder meeting to
attempt to increase the authorized shares to prevent a Redemption Event or a
conversion default from occurring. In addition, the Company will be prevented
from doing any further equity financing until the availability of authorized,
but unissued, shares of stock can be increased.
In addition, a notice of required conversion may not be given to the
holders of the Class C Preferred Stock unless the Company has reserved for
issuance to holders of the Class C Preferred Stock, Common Stock which is equal
to 150% of the number of shares of Common Stock issuable upon conversion of the
Class C Preferred Stock.
The Board of Directors believes that it is in the best interests of the
Stockholders to increase the availability of authorized but unissued Common
Stock. The Amendment to the Certificate of Incorporation will be effected by
filing a Certificate of Amendment of Certificate of Incorporation, in
substantially the form attached hereto as Exhibit A (the "Certificate of
Amendment") with the Delaware Secretary of State. The Company intends to make
this filing as soon as possible after the approval of the Certificate of
Amendment by the stockholders of the Corporation.
The stockholders approval of Proposal One will constitute their approval of
the increase in the authorized number of shares of Common Stock from 60,000,000
to 120,000,000 pursuant to the Certificate of Amendment.
VOTE REQUIRED FOR THE AMENDMENT OF CERTIFICATE OF INCORPORATION PROPOSAL
The affirmative vote of the holders of a majority of the outstanding shares
of Techniclone's Common Stock entitled to vote will be required for approval of
the Amendment to the Certificate of Incorporation Proposal. The approval will
increase the authorized number of shares of Common Stock from 60,000,000 to
120,000,000 pursuant to the Certificate of Amendment of the Certificate of
Incorporation. Accordingly, abstentions and broker non-votes will have the same
effect as votes against the proposal. Proxies solicited by management will be
voted FOR approval of the Amendment to the Certificate of Incorporation
Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT OF
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
6
<PAGE> 8
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement are brought before the
meeting, the persons named in the enclosed form of proxy will have discretionary
authority to vote on such matters in accordance with their judgment.
By Order of the Board of Directors
WILLIAM V. MODING SIGNATURE
William V. Moding
Secretary
MARCH , 1998
7
<PAGE> 9
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TECHNICLONE CORPORATION,
A DELAWARE CORPORATION
TECHNICLONE CORPORATION, a Delaware corporation organized and existing
under and by virtue of the Delaware General Corporation Law (hereinafter
referred to as the "Corporation"), hereby certifies as follows:
1. That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Corporation, declaring said amendment
to be advisable and directing said amendment to be submitted to the
stockholders of the Corporation at a special meeting. The resolution
setting forth the proposed amendment is as follows:
"RESOLVED, that the Certificate of Incorporation be amended by
changing the first sentence of ARTICLE 4 so that it shall read as
follows:
"The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 125,000,000, of which (i)
120,000,000 shares shall be designated "Common Stock" and shall have a
par value of $0.001 per share; and (ii) 5,000,000 shares shall be
designated "Preferred Stock" and shall have a par value of $0.001 per
share."
2. That thereafter, pursuant to resolution of the Board of Directors,
a Special Meeting of the stockholders of the Corporation was duly called
and held, upon notice in accordance with Section 222 of the Delaware
General Corporation Law, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
3. That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by Lon H. Stone, Chairman of the Board of Directors,
and attested to by William V. Moding, its Secretary, this day of April,
1998.
TECHNICLONE CORPORATION,
a Delaware corporation
By:
--------------------------------------
Lon H. Stone, Chairman
ATTEST:
- ---------------------------------------------------------
William V. Moding, Secretary
A-1
<PAGE> 10
TECHNICLONE CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1997
The undersigned hereby appoints Lon H. Stone and William V. Moding, and
each of them, individually, the attorney, agent and proxy of the undersigned,
each with the power to appoint his substitute, to represent and vote, as
designated below, all shares of Common Stock of Techniclone Corporation held of
record by the undersigned on March 16, 1998, at the Special Meeting of
Stockholders to be held at The Embassy Suites Hotel, 3100 E. Fontera Street,
Anaheim, California 92806, on April 23, 1998, at 9:00 a.m., and at any and all
adjournments thereof.
1. Approval of the amendment to the Company's Certificate of
Incorporation to increase the authorized shares of Common Stock
to 120,000,000, as set forth in the Company's Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment thereof.
<PAGE> 11
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR Proposal 1.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
Dated:..................., 1998
Name:
------------------------------- -------------------------------
Signature
Common Shares:
----------------------
-------------------------------
Signature if held jointly
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
