EXHIBIT NO. 10.46
OPTION AGREEMENT
THIS OPTION AGREEMENT ("AGREEMENT") is entered into this 23 day of
October, 1998, by and between TECHNICLONE CORPORATION, a Delaware corporation
("COMPANY"), and BIOTECHNOLOGY DEVELOPMENT, LTD., a Nevada limited partnership
("OWNER").
R E C I T A L S
- - - - - - - -
A. Company and Owner entered into a Distribution Agreement dated
February 29, 1996 ("DISTRIBUTION AGREEMENT") whereby Owner purchased the
distribution rights for the Product in the Territory (as those terms are defined
in the Distribution Agreement) the ("DISTRIBUTION RIGHTS").
B. Owner purchased the Distribution Rights for $3,000,000 together with
an agreement to pay Company the greater of 23% of the Net Selling Price of the
Product or $900 per Dose (as those terms are defined in the Distribution
Agreement).
C. In the negotiations between the Company and Owner for the
Distribution Rights, Owner agreed that the Company would have a thirty (30)
month option to purchase the Distribution Rights from Owner (the "ORIGINAL
OPTION").
D. Owner is willing to grant Company an extension and modification of
such Original Option rights for the consideration set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereby represent, warrant, covenant and agree as follows:
ARTICLE 1
TERMS OF OPTION
---------------
1.1 GRANT OF OPTION. Owner hereby grants to Company and Company hereby
accepts an option (the "OPTION") to purchase the Distribution Rights granted
under the Distribution Agreement for the Option Term as set forth in SECTION 1.2
under the terms and conditions provided herein.
1.2 TERM. The term of the option granted herein shall commence on the
execution date of this Agreement and below, shall expire at 5:00 p.m. on
December 1, 1998 (the "OPTION TERM"). The Option may be extended at the sole
election of the Company for up to three (3) additional periods as set forth in
SECTION 1.4 (each deemed an extension of the "OPTION TERM") upon the timely
payment to Company of the amounts required pursuant to SECTION 1.4. If the last
day of any Option Term should be a non-business day (weekend or holiday), the
Option Term shall automatically be extended until 5:00 p.m. on the next business
day.
1.3 EXERCISE OF OPTION. If the Company elects to exercise the Option
granted herein, the Company shall deliver to Owner (a) a written notice of such
exercise on or before the tenth (10th) day preceding the expiration of the
Option Term ("OPTION NOTICE"), and (b) on or before the expiration of the Option
Term, the exercise price set forth on EXHIBIT A to this Agreement and by this
reference incorporated herein.
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1.4 OPTION CONSIDERATION.
(a) As consideration for the grant of the Option and any
extension of the Option Term, the Company shall pay Owner the
following:
(i) on the execution date of this Agreement, $93,750
as consideration for the Option with an Option Term running
until December 1, 1998;
(ii) on or before December 1, 1998, $112,500 as
consideration to extend the Option Term from December 1, 1998
until March 1, 1999;
(iii) on or before March 1, 1999, $112,500 as
consideration to extend the Option Term from March 1, 1999
until June 1, 1999; and
(iv) on or before June 1, 1999, $112,500 as
consideration to extend the Option Term from June 1, 1999
until August 30, 1999.
(b) In the event that the Company shall elect not to pay any
amount due under this SECTION 1.4 on or before its due date, the Option
provided herein shall terminate as of 5:00 p.m. Pacific Time on the
tenth day following written notice received by the Company from Owner
of Company's failure to make such payment by its due date, provided
that such payment shall remain unpaid at the end of such ten day
period, and the Company shall have no further right to purchase the
Distribution Rights hereunder.
(c) Upon execution of this Agreement, Company shall grant to
Owner a three year option to purchase up to 125,000 shares of Company's
common stock at an exercise price of $3 per share under the terms of
that certain Stock Option Agreement attached hereto as EXHIBIT B.
1.5 FAILURE TO EXERCISE OPTION. If this Option is not exercised by
Company prior to the expiration of the Option Term (as may be extended from time
to time pursuant to Section 1.4), then:
(a) this Option shall terminate and Company shall have no
further right to purchase the Distribution Rights;
(b) Owner may elect to market and distribute the Product in
the Territory; and
(c) If Owner requests access to Company's U.S. clinical data,
then Owner shall pay to Company a five percent (5%) royalty on all
future Product gross sales in the Territory and a nonrefundable cash
payment on One Million Dollars ($1,000,000) on the date such clinical
trial data is provided to Owner. Owner shall have the right to audit
the Company's U.S. clinical data to which it seeks access, under a
covenant of confidentiality, prior to such clinical data being provided
to Owner. If Owner enters into a Subdistribution arrangement (as
described in Section 3.4 of the Distribution Agreement, then Company
agrees that its fifty percent (50%) share of any Subdistribution fees
will be reduced by $1,000,000 if Owner has requested access to the
Company's U.S. clinical data and previously paid the $1,000,000 to
Company as set forth in this SECTION 1.5(c).
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ARTICLE 2
GENERAL PROVISIONS
------------------
2.1 PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
are for purposes of convenience only. They shall not be construed to limit or
extend the meaning of any part of this Agreement.
2.2 NOTICES. Any notice, demand, approval, consent or other
communication required or desires to be given under this Agreement shall be in
writing and shall be either personally served or mailed in the United States
mail, certified, return receipt requested, potage prepaid, addressed to the
party to be served with the copies indicated below, as the last address given by
that party to the other under the provisions of this section. All such
communications shall be deemed delivered at the earlier of actual receipt or
five (5) business days following mailing as aforesaid.
Owner: Biotechnology Development, Ltd.
c/o Xxx Xxxxxxx
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxx
Techniclone: Techniclone Corporation
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
2.3 BINDING EFFECT. All the terms, covenants and conditions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors.
2.4 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes and replaces any prior understanding, agreement or
statement, written or oral, with respect to the same. No provision of the
Agreement shall be construed to confer any rights or remedies on any person
other than parties hereto.
2.5 CALIFORNIA LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such state.
2.6 TIME OF THE ESSENCE. Time is of the essence in the performance of
each and every provision of this Agreement.
2.7 ATTORNEYS' FEES. In the event of any controversy, claim or dispute
between the parties hereto arising out of or relating to this Agreement or any
of the documents provided for herein, or the breach thereof, the prevailing
party shall be entitled to recover from the losing party reasonable attorneys'
fees, expenses and costs.
2.8 ASSIGNMENT. This Agreement shall not be assignable by either party
without the consent of the other.
2.9 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
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2.10 MODIFICATION. This Agreement shall not be modified except by a
writing signed on behalf of each of the parties hereto.
2.11 SEVERABILITY. If any term, provision, covenant or condition of
this Agreement is found by a court of competent jurisdiction to be invalid, void
or unenforceable, then such term, provision, covenant or condition shall be
deemed to be stricken from this Agreement and the remainder of this Agreement
shall remain in full force and effect and shall in no way be effected, impaired
or invalidated thereby.
2.12 COUNTERPARTS. This Agreement may be executed in several
counterparts and such counterparts together shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, this Option Agreement is executed by the parties
hereto on the date first above written.
BIOTECHNOLOGY DEVELOPMENT, LTD.
By: BUEN HERMANOS, INC.,
its General Partner
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Xxxxxx Xxxxxx, President
TECHNICLONE CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxxx, Chief Executive Officer
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EXHIBIT A
TO
OPTION AGREEMENT
If Company exercises its Option to purchase the Distribution Rights
from Owner it shall: (i) pay Owner Four Million Five Hundred Thousand Dollars
($4,500,000); (ii) grant to Owner a five year option to purchase up to 1,000,000
shares of Company's common stock at an exercise price of $5 per share pursuant
to the terms of that certain Stock Option Agreement attached hereto as EXHIBIT
C; and (iii) pay to Owner a five percent (5%) royalty on the gross revenue of
LYM-1 product in the Territory.
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EXHIBIT B
TO
OPTION AGREEMENT
NEITHER THIS OPTION NOR THE UNDERLYING SHARES OF COMMON STOCK (THE "UNDERLYING
STOCK") HAVE BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW. NEITHER THIS OPTION NOR THE UNDERLYING STOCK, NOR
ANY PORTION THEREOF OR INTEREST THEREIN, MAY BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE SAME IS REGISTERED AND QUALIFIED IN ACCORDANCE WITH SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AS TO FORM AND SUBSTANCE, SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
Number: BTD-02 Option to Purchase 125,000 shares of Common Stock
OPTION TO PURCHASE COMMON STOCK
OF
TECHNICLONE CORPORATION,
A DELAWARE CORPORATION
VOID AFTER OCTOBER 22, 2001
This certifies that Biotechnology Development, Ltd., a Nevada limited
partnership, or registered assigns ("HOLDER"), is entitled, subject to the terms
set forth below, to purchase from Techniclone Corporation, a Delaware
corporation (the "COMPANY"), One Hundred Twenty Five Thousand (125,000) (the
"OPTION NUMBER"), fully paid and nonassessable shares of the Company's Common
Stock as constituted on October 23, 1998 (the "ISSUE DATE") at Three Dollars
($3.00) per share (the "EXERCISE PRICE"). The Exercise Price and number and
character of such shares of Common Stock are subject to adjustment as provided
below. The term "COMMON STOCK" shall mean, unless the context otherwise
requires, the Company's Common Stock. The term "OPTIONS" as used herein shall
include this Option and any Options delivered in substitution or exchange
therefor as provided herein.
1. EXERCISE.
Holder may exercise this Option in whole at any time or in part from
time to time, on any business day, prior to the time this Option terminates as
provided in SECTION 4 below, by delivery at the principal office of the Company,
00000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, of the following:
(a) this Option,
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(b) the Subscription Form attached to this Option duly executed and
specifying the number of share of Common Stock to be purchased hereunder, and
(c) payment of the sum (the "PURCHASE PRICE") obtained by multiplying (i)
the number of shares of Common Stock to be purchased by (ii) the Exercise Price.
The Purchase Price shall be paid in cash or by certified or official bank
check, payable to the order of the Company.
This Option may be exercised for less than the full number of shares of
Common Stock at the time called for hereby. Upon such partial exercise, this
Option shall be surrendered, and a new Option of the same tenor and for purchase
of the number of shares not purchased upon such exercise shall be issued by the
Company to Holder.
A Option shall be deemed to have been exercised immediately prior to the
close of business on the date of its surrender for exercise as provided above,
and the person entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As soon as practicable on or
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Common Stock issuable upon such exercise, together with cash, in
lieu of any fraction of a share, equal to such fraction of the current market
value of one full share.
2. ADJUSTMENTS.
(a) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company at any
time or from time to time after the Issue Date effects a subdivision of the
outstanding Common Stock pursuant to a stock split or similar event, the
Exercise Price of this Option shall be proportionately decreased, and
conversely, if the Company at any time or from time to time after the Issue Date
combines the outstanding shares of Common Stock into a smaller number of shares
in a reverse stock split or similar event, the Exercise Price of this Option
shall be proportionately increased. Upon the adjustment of the Exercise Price
pursuant to the foregoing provisions, the number of shares of Common Stock
issuable upon the exercise of this Option shall be adjusted to the nearest full
share by multiplying the number of shares of Common Stock issuable upon exercise
of this Option by a fraction, the numerator of which is the Exercise Price
immediately prior to such adjustment and the denominator of which is the
Exercise Price immediately after such adjustment. Any adjustment under this
subsection (a) shall be effective at the close of business on the date the
subdivision or combination becomes effective.
(b) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Company at
any time or from time to time after the Issue Date makes, or fixes a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock, then and in
each such event the number of shares of Common Stock subject to this Option
shall be increased and the Exercise Price then in effect shall be decreased as
of the date of such issuance or, in the event such record date is fixed, as of
the close of business on such record date, by:
(i) multiplying the Exercise Price then in effect by a fraction
(1) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (2) the
denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number
of shares of Common Stock issuable in payment of such dividend or
distribution; and
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(ii) multiplying the number of shares of Common Stock subject to
this Option by a fraction (1) the numerator of which is the total
number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in
payment of such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the
close of business on such record date.
If, however, such record date is fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor, the
number of shares of Common Stock subject to this Option and the Exercise Price
thereof shall be recomputed accordingly as of the close of business on such
record date and thereafter shall be adjusted pursuant to this subsection (b) as
of the time of actual payment of such dividends or distributions.
(c) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. In the
event that at any time or from time to time after the Issue Date any Common
Stock is changed into the same or a different number of shares of any class or
classes of stock, whether by recapitalization, reclassification or otherwise
(other than a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this SECTION 2), then and in any such event each Holder shall thereafter have
the right to receive upon exercise hereof the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change, by holders of the maximum number of shares of Common Stock
which Holder could have received upon the exercise of this Option immediately
prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein.
(d) REORGANIZATION, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at any
time or from time to time after the Issue Date there is a capital reorganization
of the Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this SECTION 2)
or merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person, then Holder shall be entitled to receive upon the exercise of
the Option, in lieu of the Common Stock, the number of shares of stock or other
securities or property of the Company, or of the successor corporation,
resulting from such merger or consolidation or sale, to which a holder of the
number of shares of Common Stock deliverable upon exercise would have been
entitled on such capital reorganization, merger, consolidation or sale, provided
that this Option is exercised simultaneously with the capital reorganization of
the Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this SECTION 2)
or a merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person.
(e) NOTICE OF RECORD DATE. In case:
(i) the Company shall make a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the
exercise of the Options) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive
any other right, or
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(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of the
Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Option at the time outstanding a notice specifying, as the case
may be, (a) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
Holder of this Option (or such stock or securities at the time receivable upon
the exercise of the Options) shall be entitled to exchange this Option for
shares of Common Stock (or such other stock or securities at the time receivable
upon the exercise of the Options).
3. LOSS OR MUTILATION.
Upon receipt by the Company of evidence satisfactory to it (in the
exercise of reasonable discretion) of the ownership of this Option by Holder and
of the loss, theft, destruction or mutilation of any Option and, in the case of
loss, theft, or destruction, of indemnity satisfactory to it (in the exercise of
reasonable discretion), and, in the case of mutilation, upon surrender and
cancellation thereof, the Company will execute and deliver in lieu thereof a new
Option of like tenor.
4. TERM OF OPTION.
The Option shall terminate on October 22, 2001 at 11:59 p.m. California
time.
5. RESERVATION OF COMMON STOCK.
The Company shall at all times reserve and keep available for issuance
upon the exercise of Options such number of its authorized but unissued shares
of Common Stock as will be sufficient to permit the exercise in full of all
outstanding Options.
6. RESTRICTION ON TRANSFER.
This Option shall be immediately transferable to Crescent Mortgage
Corporation, located at 000 Xxxx Xxx Xxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000.
Except as otherwise provided herein, any attempted alienation, assignment,
pledge, hypothecation, attachment, execution or similar process, whether
voluntary or involuntary, with respect to all or any part of the Option or any
right thereunder, shall be null and void and, at the Company's option, shall
cause all of Holder's rights under this Agreement to terminate.
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7. SECURITIES LAWS REPRESENTATIONS.
In accepting this Option, Holder hereby represents and warrants to the
Company that it is acquiring the Options for investment purposes only, for its
own account, and not as nominee or agent for any other person and not with the
view to, or for resale in connection with, any distribution thereof or the
underlying Common Stock within the meaning of the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Holder further represents that (i) it has a
preexisting personal or business relationship with the Company and/or its
officers and directors and that (ii) Holder is an "accredited investor" as that
term is defined in the regulations promulgated under the Securities Act.
8. NOTICES.
All notices and other communications from the Company to Holder shall be
mailed by first class registered or certified mail, postage prepaid, to the
address furnished to the Company in writing by the last Holder of this Option
who shall have furnished an address to the Company in writing.
9. CHANGE; WAIVER.
Neither this Option nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, which, in the case of the Company, shall be the President
or other executive officer duly authorized to execute such change, waiver,
discharge, or termination.
10. HEADINGS.
The headings in this Option are for purposes of convenience of reference
only, and shall not be deemed to constitute a part hereof.
11. LAW GOVERNING AND VENUE.
This Option is delivered in California and shall be construed and
enforced in accordance with and governed by the laws of such State, without
giving effect to principles of conflict of laws and that any dispute concerning
any matter contained herein or relating hereto shall be heard in the Federal and
State of California courts located in Orange County, California.
12. ATTORNEYS' FEES.
In the event of any dispute, claim or controversy concerning this Option,
the prevailing party shall be entitled to recover all costs and expenses,
including without limitation, all attorneys' fees and costs, from the
nonprevailing party hereto.
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Dated: October 23, 1998
Company:
TECHNICLONE CORPORATION
By:/s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Title: President & Chief Executive Officer
Holder: BIOTECHNOLOGY DEVELOPMENT, LTD.
By:_____________________________
Title:__________________________
Address:
________________________________
________________________________
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EXHIBIT C
TO
OPTION AGREEMENT
(1,000,000 Share Stock Option Agreement - to be agreed upon and attached hereto)
55
