<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
TECHNICLONE CORPORATION
................................................................................
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
...............................................................
2) Aggregate number of securities to which transaction applies:
...............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11.*
...............................................................
4) Proposed maximum aggregate value of transaction:
...............................................................
*Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Fee previously paid by written 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:
...............................................................
2) Form, Schedule or Registration Statement No.:
...............................................................
3) Filing Party:
...............................................................
4) Date Filed:
...............................................................
<PAGE>
TECHNICLONE CORPORATION
14282 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92780-7017
(714) 508-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
TECHNICLONE CORPORATION, a Delaware corporation (the "Company"), will be held at
the Irvine Marriott, 18000 Von Karman Avenue, Irvine California 92612 on October
24, 2000, at 10:00 A.M., Pacific Time, for the following purposes, as more fully
described in the accompanying Proxy Statement:
(1) To elect the following four (4) nominees to serve as Directors
until the next annual meeting of stockholders or until their
successors are elected and have qualified:
Carlton M. Johnson
Edward J. Legere
Eric S. Swartz
Clive R. Taylor, M.D., Ph.D.
(2) To amend the Company's Certificate of Incorporation to reflect
a change in the Company's name to Peregrine Pharmaceuticals,
Inc.
(3) To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending April 30,
2001; and
(4) To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on August 25,
2000, will be entitled to vote at the meeting or any adjournment or postponement
thereof.
By Order of the Board of Directors
/S/ Paul J. Lytle
-----------------
Paul J. Lytle,
Vice President, Finance & Accounting
Corporate Secretary
September 8, 2000
PROXY ATTACHED. YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU
PLAN TO ATTEND THE 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 broker or other nominee
confirming their ownership of shares and to provide evidence of whether such
stockholders have voted previously at this meeting.
<PAGE>
TECHNICLONE CORPORATION
14282 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92780-7017
_____________________
PROXY STATEMENT
_____________________
THIS PROXY MATERIAL IS FIRST BEING MAILED TO STOCKHOLDERS
ON SEPTEMBER 11, 2000
_____________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 2000
_____________________
GENERAL INFORMATION
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 its 2000
Annual Meeting of Stockholders to be held on October 24, 2000, at 10:00 A.M.,
Pacific Time, at the Irvine Marriott, 18000 Von Karman Avenue, Irvine,
California 92612.
REVOCABILITY OF PROXIES
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 at 14282 Franklin Avenue, Tustin, California 92780-7017, in
writing prior to or at the meeting or by attending the meeting and voting in
person. Any Stockholder, who holds stock in the name of a broker or other
nominee, who desires to revoke a previously executed proxy or vote in person at
the meeting must furnish or bring with them an original proxy, if such person
has not yet voted at this meeting, or a copy of any proxy previously voted. 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 nominees for election of Directors named in this
Proxy Statement and "FOR" the amendment to the Company's Certificate of
Incorporation to reflect the change in the Company's name to Peregrine
Pharmaceuticals, Inc., and "FOR" the ratification of the appointment of Ernst &
Young LLP as the independent auditors of the Company for the fiscal year ending
April 30, 2001.
VOTING SECURITIES, RECORD DATE, AND QUORUM
The Company has one class of voting securities outstanding, common
stock, par value $0.001, (the "Common Stock"). Stockholders of record as of the
close of business on August 25, 2000 (the "Record Date"), will be entitled to
vote at the meeting or any adjournment or postponement thereof. As of August 25,
2000, there were 95,230,511 shares of Common Stock outstanding and entitled to
vote. Each Stockholder 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 Delaware law, the four (4)
nominees receiving the highest number of votes will be elected as Directors at
the Annual Meeting. As a result, proxies voted to "Withhold Authority," which
will be counted, and broker non-votes, which will not be counted, will have no
practical effect. Under the General Corporation Law of the State of Delaware,
with respect to 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. Stockholders are not entitled to cumulate their votes in the
election of Directors.
-2-
<PAGE>
SOLICITATION AND VOTING PROCEDURES
This Proxy Statement and the accompanying PROXY CARD are being mailed
to stockholders on or about September 11, 2000. The Company has retained the
services of Corporate Investor Communications, Inc. ("CIC") to assist in the
mailing and tabulation of proxies from brokers and nominees for the Annual
Meeting. The estimated costs for these services is approximately $5,000 and will
be borne by the Company, excluding postage. These costs exclude salary and other
incidental costs normally expended for solicitation of this proxy by officers
and employees. 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, fax, e-mail, 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.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors are elected at each annual Stockholders' meeting to serve
until the next annual meeting or until their successors are elected. On August
17, 2000, the Board of Directors unanimously consented to reduce the authorized
number of Directors from five to four. Accordingly, the Board of Directors
proposes the election of four (4) Directors at the Meeting. Unless authority to
vote for Directors has been withheld in the proxy, the persons named in the
enclosed proxy intend to vote at the Meeting "FOR" the election of the nominees
presented below. Under Delaware law, the four (4) nominees receiving the highest
number of votes will be elected as Directors at the Meeting. As a result,
proxies voted to "Withhold Authority," which will be counted, and broker
non-votes, which will not be counted, will have no practical effect.
Each of the nominees is an incumbent Director. Each of the nominees has
consented to serve as a Director for the ensuing year. If any nominee becomes
unavailable for any reason before the election, then the enclosed proxy will be
voted for the election of such substitute nominees, if any, as shall be
designated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will become unavailable to serve.
The names and certain information concerning the persons to be
nominated for election as Directors are set forth below.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
EACH OF THE NOMINEES NAMED BELOW.
CARLTON M. JOHNSON was appointed a Director on November 3, 1999. Mr.
Johnson is in-house legal counsel for Swartz Investments, LLC. Mr. Johnson has
practiced law in Alabama since 1986, Florida since 1988, and Georgia since 1997.
He has been a shareholder in the Pensacola, Florida AV rated law firm of Smith,
Sauer, DeMaria & Johnson and as President-Elect of the 500 member Escambia-Santa
Rosa Bar Association. He also served on the Florida Bar Young Lawyers Division
Board of Governors. Mr. Johnson earned a degree in History/Political Science at
Auburn University and Juris Doctor at Samford University - Cumberland School of
Law.
-3-
<PAGE>
EDWARD J. LEGERE was re-appointed as a Director on December 29, 1999.
Mr. Legere served as a Director from October 28, 1992 until September 8, 1998
when he resigned from his position for personal reasons. Mr. Legere has been
President of Unified Management Corp., a business management, trade and
consulting company, since September of 1992. Mr. Legere has been general partner
of Legere Enterprises, Ltd., a biotechnology investment company located in Las
Vegas, Nevada and an affiliate of Techniclone (by stock ownership) since
December of 1991 and is also the general partner of Biotechnology Development,
Ltd., a biotechnology development and marketing company located in Las Vegas,
Nevada. Mr. Legere holds a B.S. degree in international business from Florida
Atlantic University in Boca Raton, Florida and a M.B.A. from the University of
Chicago, Chicago, Illinois.
ERIC S. SWARTZ was appointed a Director on November 3, 1999. Mr. Swartz
is the founder and President of Swartz Investments, LLC, which he started in
1993. Mr. Swartz was previously a Vice President at Bear Stearns & Co.
specializing in foreign institutional equity investments in U.S. securities.
Prior to that, Mr. Swartz was a Vice President with Oppenheimer & Co., involved
in overseas placements of equity and debt for institutions in Germany, Austria,
Switzerland, France, Australia, and New Zealand. Mr. Swartz has approximately 17
years of experience in the securities business.
CLIVE R. TAYLOR, M.D., PH.D. has served as a Director of the Company
since November 2, 1988. He is professor of pathology at the University of
Southern California, Chairman of the Department of Pathology and Dean of
Educational Affairs. Currently, Dr. Taylor serves as a Director of Laboratories
for the Los Angeles County Medical Center and is on the attending staff of the
Kenneth Norris, Jr. Cancer Hospital and Research Institute. Dr. Taylor also
serves as director on three privately held companies. He received his M.D.
degree from Cambridge University and his Ph.D. from Oxford University and is
board certified by the American Board of Pathology in Anatomic and Clinical
Pathology.
DIRECTORS COMPENSATION
Directors who also are Company employees receive no compensation for
serving as Directors. No compensation is paid for attending meetings of
Committees of the Board of Directors on which Directors serve. Pursuant to the
Company's 1993 Employee Stock Option Plan ("1993 Plan"), each non-employee
Director receives on an annual basis an option to purchase 2,000 shares of
Common Stock at an exercise price that is equal to the fair market value of the
shares on the date of grant. These options vest twenty percent (20%) on the
first anniversary of the date of grant and 1/60 of the remaining amount each
month thereafter. Pursuant to the Company's 1996 Stock Incentive Plan ("1996
Plan"), each new Director of the Company who is neither an employee nor an
executive officer of the Company is automatically granted a Nonqualified Stock
Option to purchase 10,000 shares of Common Stock upon commencement of service as
a non-employee Director and a Nonqualified Option to purchase 5,000 shares of
Common Stock at the end of each fiscal year during which such non-employee
Director has served at least six months. Each of the incumbent Directors has
waived their participation in the 1993 and 1996 Plans as a non-employee
Director.
Under a separate option agreement, during December 1999, the Company
granted Mr. Carlton M. Johnson, as compensation for his services as a member of
the Board of Directors, a nonqualified option to purchase up to 250,000 shares
of Common Stock at $0.34 per share, which was the fair market value on the date
of grant. The option vested immediately. In addition, during April 2000, Mr.
Johnson was granted an option to purchase up to 100,000 shares of Common Stock
at an exercise price of $3.69 per share, which was the fair market value on the
date of grant. This option vests on April 13, 2002 with respect to 33,333
shares, on April 13, 2003 with respect to 33,333 shares and on April 13, 2004
with respect to 33,334 shares. Mr. Johnson has assisted the Company with various
legal matters in addition to his normal duties as a Director.
Under a separate option agreement, during July 1999, the Company
granted Clive R. Taylor, M.D., Ph.D., as compensation for his services as a
member of the Board of Directors and as a consultant to the Company, a
nonqualified option to purchase up to 40,000 shares of the Common Stock at
$1.1875 per share, which was the fair market value at the date of grant. The
option vested on the date on grant. In addition, during December 1999, when the
Company had significant payables to vendors and patent attorneys and the Company
-4-
<PAGE>
was near a time of being delisted from The NASDAQ Stock Market and the Company
was aware of numerous employees who had job opportunities with companies who had
stronger financial resources, the Board of Directors felt it was imperative for
the Company to maintain certain key employees and directors who were familiar
with the Company's technologies, clinical trials and business activities. As a
result, the Company granted Dr. Taylor, a nonqualified option to purchase up to
500,000 shares of the Common Stock at $0.34 per share, which was the fair market
value at the date of grant. This option will vest one-third annually beginning
December 22, 2001. In addition, Dr. Taylor received $24,000 during fiscal year
2000 for scientific professional fees.
Mr. Legere and Mr. Swartz did not receive any compensation for their
services as members of the Board of Directors and waived their participation in
the 1993 and 1996 Plans as non-employee Directors.
Under the Equity Line of Credit, the Company issued 882,911 shares of
Common Stock and warrants to purchase 88,267 shares of Common Stock and paid
cash commissions of $668,100 during fiscal year 2000 as placement agent fees to
Dunwoody Brokerage Services, Inc. Mr. Swartz has a contractual right to 50% of
the placement fees paid to Dunwoody Brokerage Services, Inc.
Other transactions with directors are more fully disclosed in the
Company's Annual Report on Form 10-K for the year ended April 30, 2000 as filed
with the Securities & Exchange Commission on July 31, 2000.
RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS
There are no family relationships among any of the directors or
executive officers of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held 18 meetings during the
fiscal year ended April 30, 2000. Each incumbent Director attended at least
seventy-five percent (75%) of the aggregate number of meetings of the Board of
which he was a member in the fiscal year ended April 30, 2000.
The Organization and Compensation Committee reviews employee and
incentive compensation plans, the Company's Stock Option and Purchase Plans, and
reviews and makes recommendations to the Board of Directors with respect to base
salary adjustments and bonuses for all officers and other key personnel of the
Company. The Organization and Compensation Committee held 5 meetings during the
fiscal year ended April 30, 2000. In addition, the Committee reviews the
effectiveness of the overall Company organization and the Board of Directors,
including nominating individuals to serve as members of the Board of Directors.
The Committee's members are Mr. Eric S. Swartz and Dr. Clive R. Taylor.
The Audit Committee is responsible for recommending to the Board of
Directors the appointment of the Company's outside auditors, examining the
results of audits and quarterly reviews, and reviewing internal accounting
controls. The Audit Committee held one meeting during the fiscal year ended
April 30, 2000. On June 2, 2000, the Board of Directors adopted a new Audit
Committee Charter that complies with the new standards set forth in Securities
and Exchange Commission regulations and Nasdaq's independent director and audit
committee listing standards. These changes require, in part, that all companies
listed on Nasdaq or that had applied for listing on Nasdaq prior to December 14,
1999, certify by June 14, 2000 that they have adopted a formal written Audit
Committee Charter and that they will review and assess the adequacy of the
charter on an annual basis. In addition, all of such companies must also certify
that they comply, and will continue to comply, with the new Audit Committee
structure and membership requirements set forth in such regulations and listing
standards by June 14, 2001. The Company's new Audit Committee Charter is
attached to this Proxy Statement as Appendix A. The current Audit Committee
members are Mr. Carlton M. Johnson, Mr. Edward J. Legere and Mr. Eric S. Swartz.
-5-
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME TO PEREGRINE PHARMACEUTICALS, INC.
The Board recommends that the Company's name be changed from
TECHNICLONE CORPORATION to PEREGRINE PHARMACEUTICALS, INC. The Board may, in its
sole discretion, determine if and when the name change will be effected. The
Board believes the new name reflects the Company's new strategic business plan
to develop monoclonal antibodies for the diagnosis and treatment of cancer and
also reflects the Company's new start. The name Peregrine was derived from the
patron saint of cancer, Saint Peregrine. Peregrine is also the current name of
the Company's wholly owned subsidiary, which name will be changed at a later
date. The approval of the name change will not affect in any way the validity of
currently outstanding stock certificates and will not require the Company's
stockholders to surrender or exchange any stock certificates that they currently
hold.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO APPROVE
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S NAME
TO PEREGRINE PHARMACEUTICALS, INC.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ended April 30, 2000 and the fiscal year ending April 30, 2001, and
recommends that Stockholders vote for ratification of such appointment. In the
event of a negative vote on such ratification, the Board of Directors will
reconsider its selection.
On April 15, 1999, the Board of Directors of the Company approved the
engagement of Ernst & Young LLP as the Company's principal independent public
accountants, effective as of such date. Prior to the appointment of Ernst &
Young LLP, the Company had not consulted with Ernst & Young LLP regarding the
application of accounting principles to a specified transaction or the type of
audit opinion that might be rendered on the Company's financial statements.
Representatives of Ernst & Young LLP are expected to be present at the meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions. The Company's
prior principal independent public accountants, Deloitte & Touche LLP had been
dismissed by the Company on March 11, 1999. There were no disagreements between
management and Deloitte & Touche LLP on any matter of accounting principals or
practices, financial statement disclosure or auditing, scope or procedure.
During fiscal years ended April 30, 2000 and April 30, 1999, there were
no disagreements between the Company and Ernst & Young LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure. In the Company's fiscal year ended April 30, 1998, there
were no disagreements between the Company and Deloitte & Touche LLP (the
Company's previous auditors) on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.
The audit reports of Ernst & Young LLP on the Company's consolidated
financial statements for the fiscal years ended April 30, 2000 and April 30,
1999 contained no adverse opinion, disclaimer of opinion or modification or
qualification as to uncertainty, audit scope or accounting principles. The audit
report of Deloitte & Touche LLP on the Company's consolidated financial
statements for the fiscal year ended April 30, 1998 contained no adverse
opinion, disclaimer of opinion or modification as to uncertainty, audit scope or
accounting principles.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO APPROVE
THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
-6-
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the executive
officers and directors of the Company as of April 30, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------- -------- ---------------------------------------------------
<S> <C> <C>
John N. Bonfiglio, Ph.D. 45 President & Chief Executive Officer
Terrence G. Chew, M.D. 53 Vice President, Regulatory & Clinical Affairs
Steven W. King 36 Vice President, Technology & Product Development
Paul J. Lytle 32 Vice President, Finance & Accounting and
Corporate Secretary
Carlton M. Johnson (1) 40 Director
Edward J. Legere (1) 37 Director
Eric S. Swartz (1)(2) 44 Director
Clive R. Taylor, M.D., Ph.D. (2) 56 Director
</TABLE>
--------------------
(1) Member of the Audit Committee
(2) Member of the Organization and Compensation Committee
JOHN N. BONFIGLIO, PH.D., was appointed President and Chief Executive
Officer on May 24, 2000. He previously served as interim President, Vice
President of Technology and Business Development and interim Vice President of
Regulatory and Clinical Affairs. He began employment with Techniclone on July
14, 1997. From January 1997 through June 1997, he was the Director of Strategic
Business for Baxter Cardiovascular group where his responsibilities included
strategic planning, business development and technology assessment. From July
1994 until January 1997, he was the Director of Business Development at Baxter
Immunotherapy Group with responsibilities for licensing, strategic planning and
technology assessment. From July 1983 until July 1994, Dr. Bonfiglio was
employed by Allergan Inc. He held a variety of roles including senior scientist,
project director, director of business planning and director of strategic
marketing. Dr. Bonfiglio holds a Ph.D. in organic chemistry from The University
of California at San Diego and a M.B.A. from Pepperdine University.
TERRENCE G. CHEW, M.D., started with Techniclone on August 30, 1999 as
the Vice President of Regulatory and Clinical Affairs. Dr. Chew comes to the
Company from SkyePharma Inc. a publicly traded pharmaceutical company, where he
guided the clinical development and regulatory program for a drug that resulted
in FDA approval. Prior to SkyePharma Inc., he was Medical Research Director at
Agouron Pharmaceuticals from 1996 to 1998 where he was involved in all phases of
clinical development of several oncology compounds. Previous to this, Dr. Chew
held clinical research and medical positions with Johnson & Johnson Company and
Rhone-Poulenc Rorer Corporation (now Aventis). In addition to his academic
experience that includes positions as Medical Director at Saint Francis Memorial
Hospital, and Assistant Clinical Professor (Oncology) at University of
California, Davis, Dr. Chew also spent 14 years in the private practice of
oncology and hematology. He holds a Bachelors Degree in Biochemistry from the
University of California, Berkeley, and received his M.D. from the University of
California, Los Angeles.
-7-
<PAGE>
STEVEN W. KING was appointed the Vice President of Technology and
Product Development during February 2000. Mr. King joined Techniclone in 1997 in
the capacity of Director of Research and Development. Mr. King was previously
employed at Peregrine Pharmaceuticals (the Vascular Targeting Agent (VTA)
company which Techniclone acquired in 1997). In 1998, he was promoted to Senior
Director of Research and Development and has been responsible for all new
product development and radiolabeling programs. Mr. King previously worked with
Dr. Phillip Thorpe, inventor of the VTA Technology, at the University of Texas
Southwestern Medical Center at Dallas and is a co-inventor on over 25 U.S. and
foreign patent applications in the VTA area.
PAUL J. LYTLE was appointed Vice President of Finance and Accounting on
February 15, 2000 and later appointed Corporate Secretary on June 19, 2000. Mr.
Lytle started with the Company in March 1997 as the Company's Corporate
Controller, when he implemented a new interfaced accounting system for the
Company. Mr. Lytle currently oversees Finance & Accounting, SEC Reporting, Human
Resources and Information Technology. Prior to joining Techniclone, Mr. Lytle
worked for Deloitte & Touche LLP, a Big 5 Accounting Firm, from 1992 to 1997,
where he coordinated, planned, supervised, and consulted on financial audits for
clients in various industries, including biotechnology, healthcare,
manufacturing and service related entities. Prior to Deloitte & Touche LLP, Mr.
Lytle worked in the retail branch division for two separate banking
institutions. Mr. Lytle holds a Bachelor of Science in Business Administration
from the California State University at Long Beach and is a certified public
accountant in the State of California.
A detail discussion of directors can be found under Proposal No. 1.,
Election of Directors.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Set forth below is certain information as of August 25, 2000, regarding
the beneficial ownership of the Common Stock by, (i) all Directors and Director
nominees, (ii) each of the Named Executive Officers identified in the Summary
Compensation Table, (iii) all Directors and executive officers as a group and
(iv) each person known by the Company to own more than five percent (5%) of the
voting securities of the Company.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-----------------------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER NUMBER OF SHARES (A) PERCENT (B)
-------------------------------------------------------------- --------------------- ---------------
<S> <C> <C>
Carlton M. Johnson
14282 Franklin Avenue, Tustin, California 92780 250,000 (C) *
Edward J. Legere
14282 Franklin Avenue, Tustin, California 92780 12,247,142 (D) 12.05%
Eric S. Swartz
14282 Franklin Avenue, Tustin, California 92780 2,301,250 (E) 2.39%
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-----------------------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER NUMBER OF SHARES (A) PERCENT (B)
-------------------------------------------------------------- --------------------- ---------------
<S> <C> <C>
Clive R. Taylor, M.D., Ph.D.
14282 Franklin Avenue, Tustin, California 92780 950,500 (F) *
John N. Bonfiglio
14282 Franklin Avenue, Tustin, California 92780 333,667 (G) *
Terrence G. Chew, M.D.
14282 Franklin Avenue, Tustin, California 92780 169,167 (H) *
Steven W. King
14282 Franklin Avenue, Tustin, California 92780 78,667 (I) *
Paul J. Lytle
14282 Franklin Avenue, Tustin, California 92780 74,000 (I) *
Larry O. Bymaster
14282 Franklin Avenue, Tustin, California 92780 -0- -0-
All Directors and Executive Officers as a Group (9 in number) 16,404,393 (J) 15.72%
</TABLE>
----------------------------
* Represents less than 1% of the outstanding shares of Common Stock of
the Company.
(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 95,230,511
shares outstanding at August 25, 2000, plus shares that could be
acquired by each Director, nominee for Director or Named Executive
Officer individually through the exercise of stock options and warrants
during the 60-day period ending October 24, 2000.
(C) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options exercisable during the 60-day period ending
October 24, 2000.
(D) Includes 3,123,333 shares of Common Stock owned by Legere Enterprises,
Ltd., a Nevada limited partnership owned by Mr. Legere and members of
his family. Also includes 2,723,809 shares of Common Stock owned by
Biotechnology Development, Ltd. and an aggregate of 6,400,000 shares of
Common Stock issuable upon exercise of warrants owned by Biotechnology
Development, Ltd. Biotechnology Development, Ltd. is a Nevada limited
partnership controlled by Mr. Legere.
(E) Includes 144,195 shares of Common Stock issuable upon the exercise of
warrants owned by Eric S. Swartz and; 480,000 shares of Common Stock
owned by Swartz Investments, LLC and 480,000 shares of Common Stock
issuable upon the exercise of warrants owned by Swartz Investments, LLC
and; 449,020 shares of Common Stock owned by Dunwoody Brokerage
Services, Inc. and 53,806 shares of Common Stock issuable upon the
exercise of warrants owned by Dunwoody Brokerage Services, Inc. and;
375,000 shares of Common Stock issuable upon the exercise of warrants
owned by Swartz Private Equity, LLC. Mr. Swartz maintains an equity
ownership of 60% in Swartz Investments, LLC and 50% in Swartz Private
Equity, LLC. Mr. Swartz has a contractual right to 50% of the shares
and warrants held in the name of Dunwoody Brokerage Services, Inc.
-9-
<PAGE>
(F) 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
889,500 shares of Common Stock issuable upon the exercise of
outstanding stock options during the 60-day period ending October 24,
2000.
(G) Includes 331,667 shares of Common Stock issuable upon the exercise of
outstanding stock options exercisable during the 60-day period ending
October 24, 2000.
(H) Includes 112,500 shares of Common Stock issuable upon the exercise of
outstanding stock options exercisable during the 60-day period ending
October 24, 2000.
(I) Includes 55,000 shares of Common Stock issuable upon the exercise of
outstanding stock options exercisable during the 60-day period ending
October 24, 2000.
(J) Includes the securities described in (C), (D), (E), (F), (G), (H), and
(I).
EXECUTIVE COMPENSATION AND RELATED MATTERS
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the current
President and Chief Executive Officer, the former Chief Executive Officer, and
three current officers of the Company whose compensation exceeded $100,000 for
fiscal year 2000, for services rendered in all capacities to the Company for
each of the last three fiscal years. All the individuals named in the table will
hereinafter be referred to as the "Named Executive Officers".
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARD
------------------------------------ ------------------
FISCAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS UNDERLYING OPTIONS OTHER COMPENSATION
--------------------------- ---- ---------- ----- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
John N. Bonfiglio, Ph.D. 2000 $ 201,811 $ 70,875 1,066,666 - (3)
President and Chief Executive 1999 $ 140,769 $ 63,000 120,000 - (3)
Officer (4) 1998 $ 108,224 $ - 80,000 - (3)
Larry O. Bymaster 2000 $ 147,115 $ - 950,000 $ 22,395 (2)
former President and 1999 $ 240,385 $ 125,000 1,250,000 $ 25,671 (2)
Chief Executive Officer (5) 1998 $ - $ - - -
Terrence Chew, M.D. 2000 $ 134,615 $ - 650,000 - (3)
Vice President, Regulatory and 1999 $ - $ - - -
Clinical Affairs (6) 1998 $ - $ - - -
Steven King
Vice President, 2000 $ 131,692 $ 17,500 480,000 - (3)
Technology & 1999 $ 86,596 $ - 30,000 - (3)
Product Development 1998 $ 54,462 $ - 60,000 - (3)
Paul J. Lytle,
Vice President, 2000 $ 113,253 $ 17,500 330,000 - (3)
Finance and Accounting, 1999 $ 82,212 $ - 30,000 - (3)
Corporate Secretary 1998 $ 74,300 $ - 60,000 - (3)
</TABLE>
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<PAGE>
-----------------------------
(1) Salary information is reported as of the last payroll paid prior to or
immediately after April 30th of each year and includes amounts deferred
under the Company's 401-K Plan.
(2) Primarily includes $19,901 paid as reimbursement for life insurance
premiums.
(3) Amounts were not significant enough to meet the disclosure
requirements.
(4) Dr. Bonfiglio entered into an Employment Agreement with the Company
effective May 24, 2000 for the position of President and Chief
Executive Officer. He was previously employed by the Company as its
interim President, Vice President of Technology and Business
Development and interim Vice President of Clinical and Regulatory
Affairs. The Employment Agreement provides for Dr. Bonfiglio to be
employed for twelve (12) months at a base salary of $235,000. If Dr.
Bonfiglio's employment is terminated by the Company without cause or
within ninety (90) days following a change in control of the Company,
he will receive an amount equal to six (6) months pay at his base rate.
(5) Mr. Bymaster resigned from such position on November 3, 1999.
(6) Dr. Chew commenced employment with the Company on August 30, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in the fiscal
year ended April 30, 2000 to the Named Executive Officers.
<TABLE>
<CAPTION>
PERCENT
TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO GRANT
UNDERLYING ALL EMPLOYEES IN EXERCISE EXPIRATION DATE
NAMED OFFICER GRANT DATE OPTIONS GRANTED FISCAL YEAR (1) PRICE ($/SHARE) DATE VALUE (3)
-------------------- ---------- --------------- --------------- --------------- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
John N. Bonfiglio 05/03/99 466,666 (4) 5.6% $ 1.0625 (2) 05/03/09 $ 325,925
12/22/99 375,000 (5) 4.5% $ 0.3400 (2) 12/22/09 $ 99,607
12/22/99 75,000 (6) 0.9% $ 10.0000 (6) 12/22/09 $ 14,499
12/22/99 75,000 (7) 0.9% $ 20.0000 (7) 12/22/09 $ 12,289
12/22/99 75,000 (8) 0.9% $ 30.0000 (8) 12/22/09 $ 10,995
Larry O. Bymaster 05/03/99 950,000 (4) 11.4% $ 1.0625 (2) 05/03/09 $ 663,488
Terrence G. Chew 08/30/99 450,000 (4) 5.4% $ 1.0000 (2) 08/30/09 $ 295,796
12/22/99 200,000 (5) 2.4% $ 0.3400 (2) 12/22/09 $ 53,124
Steven W. King 05/03/99 130,000 (4) 1.6% $ 1.0625 (2) 05/03/09 $ 90,793
12/22/99 350,000 (9) 4.2% $ 0.3400 (2) 12/22/09 $ 73,045
Paul J. Lytle 05/03/99 130,000 (4) 1.6% $ 1.0625 (2) 05/03/09 $ 90,793
12/22/99 200,000 (5) 2.4% $ 0.3400 (2) 12/22/09 $ 53,124
</TABLE>
-----------------------------
(1) Options to purchase an aggregate of 8,326,603 shares were granted to
all employees, Directors and consultants in the fiscal year ended April
30, 2000, including the Named Executive Officers under the Company's
1996 Stock Incentive Plan.
(2) The exercise price may be paid in cash or shares of the Common Stock
valued at fair market value on the date of exercise. All options were
issued for an exercise price at least equal to fair market value on the
date of grant. Fair market value is the closing price of the Common
Stock on the date of grant.
(3) The grant date value was estimated at the date of grant using the
Black-Scholes option pricing model, assuming an average expected life
of approximately four years, a risk-free interest rate of 6.39% and a
volatility factor ranging from 86% to 135%. The Black-Scholes option
valuation model was developed for use in estimating the fair value of
traded options that have no vesting restrictions and are fully
transferable. Option valuation models require the input of highly
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<PAGE>
subjective assumptions, including the expected stock volatility.
Because the Company's options have characteristics significantly
different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair values
estimated, in the opinion of management, the existing models do not
necessarily provide a reliable measure of the fair value of its
options.
(4) Option will vest equally over four years commencing on the first
anniversary date from the date of grant.
(5) Of the total option grant, one-third of the options vested on the date
of grant, one-third of the options will vest on December 22, 2001 and
one-third of the options will vest on December 22, 2002. Up to 20% of
the total option grant may vest sooner upon the achievement of
predetermined milestones as established by the Board of Directors.
(6) Option will vest upon the Company's average closing stock price
reaching $10.00 per share for 60 consecutive trading days.
(7) Option will vest upon the Company's average closing stock price
reaching $20.00 per share for 60 consecutive trading days.
(8) Option will vest upon the Company's average closing stock price
reaching $30.00 per share for 60 consecutive trading days.
(9) Of the total options granted, 75,000 options will vest on December 22,
2001. Of the remaining 275,000 options, one-third of the options vested
on the date of grant, one-third of the options will vest on December
22, 2001 and one-third of the options will vest on December 22, 2002.
Up to 20% of the 275,000 options granted may vest sooner upon the
achievement of predetermined milestones as established by the Board of
Directors.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information on option exercises in the
fiscal year ended April 30, 2000, by the Named Executive Officers and the value
of unexercised options held by the Named Executive Officers as of April 30,
2000.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT APRIL 30, 2000 APRIL 30, 2000 (2)
ACQUIRED ON VALUE ----------------- ------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John N. Bonfiglio 30,000 $ 112,920 165,000 1,071,666 $ 594,738 $ 2,797,481
Larry O. Bymaster 500,000 $ 792,766 - - $ - $ -
Terrence G. Chew 66,667 $ 684,981 (3) - 583,333 $ - $ 1,947,374
Steven W. King 114,167 $ 461,464 (4) - 440,833 $ - $ 1,566,255
Paul J. Lytle 104,167 $ 405,213 (5) - 315,833 $ - $ 1,085,317
</TABLE>
-----------------------------
(1) The value realized upon the exercise of stock options represents the
positive spread between the exercise price of the stock option and the
market value of the shares subject to such options on the date of exercise.
(2) The value of "in-the-money" stock options represents the positive spread
between the exercise price of the option and the market value of the
underlying shares based on the closing stock price on April 28, 2000, which
was $4.1875 per share.
(3) Includes 56,667 shares of Common Stock being held by Dr. Chew with a
realized value of $657,224 as calculated on the date of exercise.
-12-
<PAGE>
(4) Includes 21,667 shares of Common Stock being held by Mr. King with a
realized value of $229,627 as calculated on the date of exercise.
(5) Includes 19,000 shares of Common Stock being held by Mr. Lytle with a
realized value of $228,665 as calculated on the date of exercise.
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
The following report is submitted by the members of the Organization
and Compensation Committee with respect to the executive compensation policies
established by the Organization and Compensation Committee and compensation paid
or awarded to executive officers for the fiscal year ended April 30, 2000.
COMPENSATION POLICIES AND OBJECTIVES. The administration of the
Company's compensation program is designed to attract, motivate and retain the
executive talent needed to optimize stockholder value in a highly competitive
and uncertain environment. The Organization and Compensation Committee
determines the Chief Executive Officer's compensation and the compensation of
all executive officers by taking into consideration (i) what other chief
executive officers and executive officers in the industry receive as
compensation, (ii) what the Company can afford to pay, (iii) available
alternative sources of compensation such as incentive stock options, (iv) annual
incentive compensation that varies in a consistent manner with achievement of
individual objectives and financial performance objectives of the Company, and
(v) long-term incentive compensation that focuses executive efforts on building
stockholder value through meeting longer-term financial and strategic goals. In
designing and administering its executive compensation program, the Company
attempts to strike an appropriate balance among these various elements. As the
Company has a history of operating losses, no specific relationship of the
Company's financial performance was used in determining executive officer
compensation.
The Organization and Compensation Committee took into consideration the
compensation of executive officers of similar companies within the industry for
consideration of executive officer salaries. In addition, the Board utilized a
comprehensive report issued by Frederick W. Cook and Co., Inc. in making its
decision with respect to the compensation paid to the executive officers of the
Company. While the Organization and Compensation Committee considers the salary
of other executive officers in the industry important in the consideration of
its decision with respect to the executive officers' compensation, in light of
the recent turnover in the Company's executive ranks, the controlling factors
were the compensation requirements necessary to retain the remaining current
executive officers. Accordingly, the Organization and Compensation Committee
based its determination of executive compensation primarily by way of comparison
to the total compensation package of executive officers at comparable companies,
consisting of bonus compensation and option grants in addition to an annual
salary and benefits, while taking into consideration the financial condition of
the Company.
CEO COMPENSATION.
LONG-TERM INCENTIVE COMPENSATION - STOCK OPTIONS. Options provide
executives with the opportunity to buy and maintain an equity interest in the
Company and to share in the appreciation of the value of the Common Stock. Stock
options only have value if the stock price appreciates in value from the date
the options are granted. The number of options granted to each employee was
based primarily on the employee's ability to influence the Company's long-term
growth and profitability. If a participant were to leave prior to vesting in
these options, a significant number of the options would be forfeited. This
makes it more difficult for competitors to recruit key employees away from the
Company during this critical time for clinical trials. In addition, these grants
bring the percentage of fully diluted shares outstanding held by Techniclone's
executive officers and employees more in line with peer organizations. The
Organization and Compensation Committee believes that option grants afford a
desirable long-term compensation method because they closely align the interests
of management and other employees of the Company with stockholder value and
motivate the Company's officers to improve long-term stock market performance.
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<PAGE>
BENEFITS. Benefits offered to employees serve a different purpose than
do the other elements of total compensation. In general, they are designed to
provide a safety net of protection against the adverse financial effects that
can result from illness, disability or death and to provide a reasonable level
of insurance coverage for any medical, dental and vision problems that may be
experienced by the Company's employees, as well as preventative care, at a
reduced expense to the Company's employees. Benefits offered to executive
officers are largely the same as those that are offered to the general employee
population.
Respectfully submitted,
THE ORGANIZATION AND COMPENSATION COMMITTEE
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent (10%) Stockholders
are required by regulations promulgated by the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) reports they
file. Based solely on the review of copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that during the fiscal year ended April 30, 2000, the Company's
officers, Directors and all persons who own more than ten percent (10%) of a
registered class of the Company's equity securities complied with all Section
16(a) filing requirements except for one late filing by Mr. Legere with respect
to Schedule 13G, which was filed on August 17, 2000.
ORGANIZATION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER TRADING
The following non-employee Directors serve on the Organization and
Compensation Committee of the Board of Directors: Eric S. Swartz and Clive R.
Taylor, M.D., Ph.D. There are no interlocks of executive officers or Directors
of the Company serving on the compensation committee or equivalent committee of
another entity which has any director or executive officer serving on the
Organization and Compensation Committee, other committees or the Board of
Directors of the Company.
-14-
<PAGE>
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for
the Company, Nasdaq Market Index and Nasdaq Peer group for the period that
commenced on April 30, 1995 and ended April 30, 2000.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE PERFORMANCE GRAPH BELOW
AND THE UNDERLYING DATA, SHALL NOT BE INCORPORATED BY REFERENCE IN ANY SUCH
FILINGS.
COMPARISON OF CUMULATIVE TOTAL RETURNS
[COMPARISON OF CUMULATIVE TOTAL RETURNS GRAPH HERE]
<TABLE>
The underlying data for the above graph is as follows:
<CAPTION>
April 30, April 30, April 30, April 30, April 30, April 30,
1995 1996 1997 1998 1999 2000
----------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Techniclone Corporation $ 100 $ 501 $ 378 $ 57 $ 77 $ 342
Nasdaq Pharmaceutical Index $ 100 $ 180 $ 148 $ 183 $ 219 $ 432
Nasdaq Market Index $ 100 $ 143 $ 151 $ 226 $ 309 $ 471
</TABLE>
The total cumulative returns on investment shown for the Company, the
Nasdaq Market Index and the Nasdaq Pharmaceutical Index are based on the
assumptions that on May 1, 1995, $100 was invested in the Common Stock and in
each Index and that all dividends were reinvested. The Nasdaq Market Index and
the Nasdaq Pharmaceutical Index were prepared by The Center for Research in
Security Prices.
-15-
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the fiscal year
ended April 30, 2000, including audited consolidated financial statements, has
been mailed to the Stockholders concurrently herewith, but such report is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy
solicitation material.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (exclusive of Exhibits), will be furnished by
first class mail, within one business day of receipt of request, without charge
to any person from whom the accompanying proxy is solicited upon written request
to Techniclone Corporation, Attention: Investor Relations, 14282 Franklin
Avenue, Tustin, California 92780-7017. If Exhibit copies are requested, a
copying charge of $.20 per page will be made. In addition, all of the Company's
public filings, including the Annual Report on Form 10-K, can be found on the
world wide web at www.sec.gov.
STOCKHOLDER PROPOSALS
Pursuant to Regulation 14a-8 of the Securities and Exchange Commission,
proposals by Stockholders which are intended for inclusion in the Company's
proxy statement and proxy to be presented at the Company's next annual meeting
must be received by the Company by May 16, 2001, in order to be considered for
inclusion in the Company's proxy materials. Such proposals shall be addressed to
the Company's Secretary and may be included in next year's proxy materials if
they comply with certain rules and regulations of the Securities and Exchange
Commission governing stockholder proposals. For all other proposals by
Stockholders to be timely, a Stockholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the Company no later
than August 1, 2001. If a Stockholder fails to so notify the Company of any such
proposal prior to such date, management of the Company will be allowed to use
their discretionary voting authority with respect to proxies held by management
when the proposal is raised at the annual meeting (without any discussion of the
matter in the Company's proxy statement).
OTHER MATTERS
Management of the Company does not know of any other matters which are
to be presented for action at the Meeting. Should any other matters come before
the Meeting or any adjournment thereof, the persons named in the enclosed proxy
will have the discretionary authority to vote all proxies received with respect
to such matters in accordance with their judgment.
By Order of the Board of Directors
/s/ Paul J. Lytle
-----------------
Paul J. Lytle,
Vice President, Finance & Accounting
Corporate Secretary
September 8, 2000
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<PAGE>
APPENDIX A
AUDIT COMMITTEE CHARTER
OF
TECHNICLONE CORPORATION
The Audit Committee is appointed by the Company's Board of Directors
(the "Board") to assist the Board in monitoring (1) the integrity of the
financial statements of the Company, (2) the compliance by the Company with
legal and regulatory requirements, and (3) the independence and performance of
the Company's internal financial and accounting department and its independent
accountants. The Board has adopted and approved this charter which will govern
the activities of the Audit Committee.
The Audit Committee shall meet the independence and experience
requirements of the Nasdaq Stock Market, Inc. ("Nasdaq") rules on audit
committees. The Audit Committee shall have at least three members, all of whom
are directors and all of whom have no relationship with the Company that may
interfere with the exercise of their independent judgment from management and
the Company. Each member shall be financially literate or must so become within
a reasonable time after appointment to the Audit Committee. At least one member
shall have accounting or related financial expertise.
The Audit Committee shall have the authority to request any officer or
employee of the Company or the Company's outside counsel or independent
accountants to attend a meeting of the Committee or to meet with any members of,
or consultants to, the Committee. Under special circumstances that may arise,
the Committee may request authority to retain special legal counsel, accountants
or other consultants to advise the Committee.
As a matter of practice, the Company schedules its regular quarterly
Board meetings at intervals that allow for the review of the Company's quarterly
and year-to-date financial statements prior to filing the periodic reports with
the Securities and Exchange Commission (the "SEC") and making any public
announcement of financial results. Since the Audit Committee members are also
Directors, the Audit Committee review of such financial reports will be
conducted as a part of the Board's review at each quarterly meeting.
Many of the responsibilities of the Audit Committee under the Charter
will be met by conducting its periodic reviews at the quarterly Board meetings.
In addition to these quarterly reviews conducted at the Board meetings, the
Audit Committee shall meet separately at least three times each year and shall
make regular reports of such meetings to the Board.
The Audit Committee shall have the following responsibilities:
GENERAL
-------
1. Review and reassess the adequacy of the Charter annually and
recommend any proposed changes to the Board for approval.
2. Recommend to the Board the appointment of the independent
accountants, which firm is ultimately accountable to the Audit
Committee and the Board, approve the fees to be paid to such
accountants, and meet at least annually with such accountants.
3. Review the appointment and replacement of senior internal
financial and accounting executives, and meet at least
annually with such executives.
4. Review suggestions for improvements and changes to the
Company's auditing and accounting principles and practices
provided by the independent accountants, internal accountants
or management.
A-1
<PAGE>
5. Obtain reports from management, the Company's senior internal
accounting executive and the independent accountants regarding
the compliance of the Company, its subsidiaries and affiliated
entities with applicable legal requirements and the Company's
operating policies.
6. Ensure that the quarterly unaudited financial statements are
submitted to the independent accountants for review; and that
the independent accountants have issued their opinion on the
annual audited financial statements.
7. Review with the Company's legal counsel (i) legal matters that
may have a material impact on the financial statements, (ii)
the Company's compliance policies, (iii) any material reports
or inquiries received from regulators or governmental
agencies, and (iv) any significant irregularities or illegal
acts that have come to their attention and management's
follow-up of such activities.
8. Ensure that the Company makes its required disclosures
regarding the independence of the Audit Committee.
Board of Directors and Management - Related Responsibilities
------------------------------------------------------------
1. Evaluate together with the Board the performance of the
independent accountants on at least an annual basis, and, if
so determined by the Audit Committee, recommend that the Board
replace the independent accountants.
2. Review with management the annual audited financial statements
and the results of the audit, including major issues regarding
accounting and auditing principles and practices as well as
the adequacy of internal controls that could significantly
affect the Company's financial statements, and consider
whether or not to recommend to the Board the inclusion of such
statements in the Annual Report on Form 10K to be filed with
the SEC.
3. Subsequent to the review by the independent accountants and
prior to the filing or release of the quarterly financial
statements, review such statements with management at each
quarterly Board meeting, and review the process management
uses to develop and summarize quarterly financial information.
4. Review with management the Company's major financial risk
exposures and the steps management has taken to monitor and
control such exposures.
5. Review the significant reports to management prepared by the
internal financial and accounting department and management's
responses.
6. Advise the Board regarding the Company's compliance with
applicable laws and regulations and with the Company's
operating policies.
Audit Committee
---------------
1. Meet with the independent accountants prior to the audit of
the annual financial statements to review the planning and
staffing of the audit.
2. Meet with the independent accountants to review the annual
audited financial statements and the results of the audit
prior to its release, including major issues regarding
accounting and auditing principles and practices as well as
the adequacy of internal controls that could significantly
affect the Company's financial statements, and discuss the
matters required to be discussed by Statement on Auditing
Standards No. 61 relating to the conduct of the audit.
A-2
<PAGE>
3. Meet with the independent accountants after completion of the
Audit, review with the independent accountants any problems or
difficulties the accountants may have encountered and any
management letter provided by the accountants and the
Company's response to that letter. Such review should include:
(1) Any difficulties encountered in the course of the
audit work, including any restrictions on the scope
of activities or access to required information;
(2) Any changes required in the planned scope of the
internal audit; and
(3) The internal audit department responsibilities,
budget and staffing.
4. Review analyses prepared by management and the independent
accountants of significant financial reporting issues and
judgments made in connection with the preparation of the
Company's financial statements.
5. Obtain from the independent accountants' assurance that
Section 10A of the Private Securities Litigation Reform Act of
1995 has not been invoked with respect to the accountant's
detection or awareness of possible illegal acts.
6. Receive reports and letters from the independent accountants
regarding the accountants independence, at least annually, as
required by Independence Standards Board Standard No. 1,
discuss such reports and letters, including any disclosed
relationships or services that may affect the auditors'
independence, with the accountants, and if so determined by
the Audit Committee, recommend that the Board take appropriate
action to satisfy itself of the independence of the
accountants.
7. Provide annual confirmation to the Nasdaq regarding compliance
with Nasdaq requirements.
Reports
-------
1. Prepare the report required by the SEC rules to be included in
the Company's annual proxy statement.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete,
accurate and in accordance with generally accepted accounting principles. That
is the responsibility of management and the independent accountants. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent accountants or to
assure compliance with applicable laws and regulations.
A-3
<PAGE>
TECHNICLONE CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 2000
The undersigned hereby appoints John N. Bonfiglio and Paul J. Lytle,
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 August 25, 2000, at the Annual Meeting of
Stockholders to be held at Marriott Hotel, 18000 Von Karman Avenue, Irvine,
California 92612 on October 24, 2000, at 10:00 A.M., Pacific Time, and at any
and all adjournments thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR [ ] WITHHOLD AUTHORITY
approval of the election of all nominees listed below (except
as marked to the contrary below):
Carlton M. Johnson
Edward J. Legere
Eric S. Swartz
Clive R. Taylor, M.D., Ph.D.
2. NAME CHANGE OF THE CORPORATION TO PEREGRINE PHARMACEUTICAL, INC.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPOINTMENT OF INDEPENDENT AUDITORS. Ratification of the appointment
of Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending April 30, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR Proposals 1, 2 and 3.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
Dated: _____________________, 2000
Name:_____________________________
Common Shares:____________________
__________________________________
Signature
__________________________________
Signature (if jointly held)
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.
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