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Exhibit 2.1
STOCK EXCHANGE AGREEMENT
STOCKHOLDERS
THE STOCKHOLDERS NAMED HEREIN
TECHNICLONE
TECHNICLONE CORPORATION
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STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (the "Agreement") is made and entered
into as of January 15, 1997, among those stockholders of PEREGRINE
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), who have executed
this Agreement and TECHNICLONE CORPORATION, a California corporation to be
merged into TECHNICLONE CORPORATION, a Delaware corporation, or its designee
("Techniclone"). To the extent that XXXXXXXX X. XXXX ("Xxxx"), XXXXXX X. XXXXXX,
PH.D. ("Xxxxxx"), SANDERLING VENTURE PARTNERS III, L.P., SANDERLING III LIMITED
PARTNERSHIP, SANDERLING III BIOMEDICAL, L.P. and SANDERLING VENTURE MANAGEMENT
(collectively, "Sanderling"), S.K. PARTNERS, L.P. ("Xxxxxxxx"), CODAN TRUST
COMPANY LTD., as trustees of the Peregrine Medical Trust ("PMT"), and/or
BIOTECHNOLOGY FINANCIAL CORP. ("BFC") enter into this Agreement, they shall each
be referred to herein individually as a "Major Stockholder" and collectively as
the "Major Stockholders." Any other stockholder of the Company that enters into
this Agreement shall be referred to herein individually as a "Minor Stockholder"
and collectively as the "Minor Stockholders." The Major Stockholders and the
Minor Stockholders shall sometimes be referred to herein collectively or jointly
as the "Stockholders."
R E C I T A L S
A. The Company is engaged in the business of the research and
development of drug delivery technology based on monoclonal antibodies.
B. The Stockholders are the registered and beneficial owners of capital
stock of Company in the amounts reflected on Schedule 1.1 hereto. Such shares
are collectively referred to in this Agreement as the "Shares".
NOW, THEREFORE, in consideration of the terms, representations and
warranties, covenants, and conditions hereinafter set forth, the parties to this
Agreement, intending to be legally bound, hereby agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 EXCHANGE OF SHARES. Subject to the terms and conditions of this
Agreement, on the Closing Date (as hereinafter defined) each Stockholder shall
transfer, set over and deliver to Techniclone, free and clear of all liens,
claims, encumbrances, pledges, options, security interests and any other adverse
interests, and Techniclone shall accept and exchange the Techniclone Shares (as
defined below) for the Shares held by such Stockholder.
1.2 TECHNICLONE SHARES. In exchange for each Share transferred to
Techniclone, Techniclone shall transfer a number of shares of Techniclone's
Common Stock in an amount to be calculated as set forth below in this Section
(the "Techniclone Shares"). With respect to Lobo, the number of Shares
transferred to Techniclone by Lobo shall also be deemed to include 15,000 shares
which are due her by the Company upon her termination as CEO pursuant to the
terms of her employment agreement, to the extent the same shall not have been
issued as of the Closing Date (the
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"Additional Lobo Shares"). The number of Techniclone Shares to be exchanged for
each Share shall be calculated pursuant to the following formula:
Number of Techniclone Shares exchanged per Share = 5,000,000 - X
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Y
where X is equal to a fraction, (i) the numerator of which is
the total dollar amount of the aggregate liabilities of the Company, as of the
Closing Date, as reflected on Schedule 4.12 hereto, and (ii) the denominator of
which is the average over the ten (10) day period ending the date immediately
preceding the date that this transaction is publicly announced of the closing
sale price of the Techniclone Common Stock as reported by the NASDAQ Small Cap;
and
where Y is equal to the number of shares of Common Stock of
the Company, on a fully-diluted basis, including, without limitation, the
Additional Lobo Shares.
1.3 DELIVERY OF TECHNICLONE SHARES. At the Closing, Techniclone
shall deliver:
1.3.1 to the Stockholders, except as provided in Section 1.3.2
below, the number of Techniclone Shares which they are to receive hereunder in
an amount determined pursuant to Section 1.2 above, which will be issued in
stock certificates registered in the names of the Stockholders.
1.3.2 to the Major Stockholders, the number of Techniclone
Shares which they are to receive hereunder, in an amount determined pursuant to
Section 1.2, which will be issued in stock certificates registered in the names
of the Major Stockholders; provided, however, that a number of shares of
Techniclone's Common Stock equal to five percent (5%) of the Techniclone Shares
to be exchanged with the Major Stockholders shall be deducted from the total
amount of Techniclone Shares to be delivered to the Major Stockholders at the
Closing, on a pro rata basis determined in accordance with each Major
Stockholder's respective equity interest in the Company immediately prior to the
Closing, and shall be put in an escrow account as provided in Section 1.3.3
below.
1.3.3 to an escrow agent to be appointed prior to the Closing,
(the "Escrow Agent"), an aggregate of five percent (5%) of the Techniclone
Shares (the "Escrow Shares") to be exchanged with the Major Stockholders and
which shall be deducted from the Techniclone Shares to be delivered to the Major
Stockholders, as provided on Section 1.3.2 above, which shall be held by the
Escrow Agent pursuant to the terms of an Escrow Agreement attached hereto as
Exhibit A (the "Escrow Agreement"), for all or any part of any claims for
indemnity of the Major Stockholders pursuant to Article IX hereof. Until such
time as the Major Stockholders receive any such Escrow Shares pursuant to the
terms of the Escrow Agreement, the Major Stockholders shall have no rights in
and to the Escrow Shares and shall not be deemed to have received the Escrow
Shares.
1.4 THE TECHNICLONE SHARES. The Techniclone Shares issued to the
Stockholders hereunder, will be issued pursuant to an exemption from the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act") and a qualification, or exemption from qualification, under
applicable state securities laws, which shall permit such Techniclone Shares to
be traded by Stockholders in ordinary brokerage transactions on NASDAQ
commencing on the Closing Date, subject, however, to each Stockholder's
compliance with the provisions of Section 5.10 below.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Except as disclosed in the schedules and exhibits which shall be
delivered at least ten (10) business days prior to the Closing Date
(individually referred to as a "Schedule" and collectively as "Schedules") as
referenced in the specific Section or Sections hereof to which the disclosure
exhibit or schedule pertains, (i) the Major Stockholders severally, but not
jointly, represent and warrant to Techniclone all of this Section 2; and (ii)
the Minor Stockholders severally, but not jointly, represent and warrant to
Techniclone the matters set forth in Sections 2.1.1 and 2.5, as they relate to
the Minor Stockholders. The terms "material" and "materially," as used in this
Agreement, unless otherwise specifically defined, shall include any specified
item, event or matter which, in the aggregate, results in, or may have as a
result, an impact which exceeds or may exceed Twenty-Five Thousand Dollars
($25,000). As used herein, any reference to the Stockholder's knowledge shall
mean the actual knowledge of any of the Major Stockholders after reasonable
investigation.
2.1 AUTHORITY.
2.1.1 Each of the Stockholders has the full power and
authority to execute and deliver, and to perform such Stockholder's obligations
under this Agreement, the Escrow Agreement and such Stockholder's
Non-Competition Agreement (as hereafter defined), to the extent they are parties
thereto. Each of the Stockholders has taken all action required by law to
authorize this Agreement and the transactions contemplated hereby. Each
Stockholder has duly executed and delivered this Agreement on the date hereof
with the intent to be bound hereby and to perform his, her or its (as the case
may be) obligations hereunder and on the Closing Date. Each Major Stockholder,
to the extent that they are parties thereto, has duly executed and delivered the
Non-Competition Agreement, Non-Disclosure Agreement and the Escrow Agreement,
with the intent to be bound thereby and to perform and comply with his, her or
its obligations thereunder. No consents or approvals of any other persons are
necessary for each of the Stockholders to carry out the transactions
contemplated in this Agreement.
2.1.2 This Agreement constitutes the valid obligation of the
Stockholders and is legally binding on and enforceable against each of the
Stockholders in accordance with its terms, and the Non-Competition Agreements
and Escrow Agreement, when executed and delivered by the Stockholders, shall be
valid and legally binding obligations of each Major Stockholder enforceable
against each Major Stockholder in accordance with the terms thereof, except, in
each case, as such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights, and (ii) general
principles of equity relating to the availability of equitable remedies
(regardless of whether any such agreements are sought to be enforced in a
proceeding at law or in equity).
2.2 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is authorized to do business in each jurisdiction in which the
character of the properties owned by it or the nature of its business makes such
authorization necessary and where the failure to be so qualified would have a
material adverse effect on the Company or its business or operations. Set forth
on Schedule 2.2 are complete and correct copies of (i) the Company's Certificate
of Incorporation and all amendments thereto, certified by the Delaware Secretary
of State; (ii) the Company's Bylaws, as amended to date,
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certified by the Company's Secretary; (iii) the stock and minute books of the
Company; and (iv) all agreements, commitments or understandings, written or
oral, if any, restricting the transfer of or otherwise pertaining to the Shares.
The stock and minute books of the Company are complete and accurate and
up-to-date in all material respects.
2.3 LICENSES AND PERMITS. Except as set forth on Schedule 2.3, the
Company has obtained all necessary licenses, permits and other similar
regulatory approvals or authorizations, and has complied, and is currently in
compliance in all material respects, with all federal, state and local laws or
regulations and orders applicable to its business, except for those instances
where failure to obtain such licenses, permits, approvals or authorizations or
to comply with any law, regulation or order will not have a material adverse
effect upon its business. The Company has obtained all licenses, franchises,
permits, authorizations, concessions and other similar regulatory approvals or
authorizations necessary for the conduct of its business, and the Company has
substantially complied and is currently in substantial compliance with all
statutes, rules, regulations, ordinances, codes, orders, licenses, franchises,
permits, authorizations and concessions of any governmental agencies or
authorities, including without limitation any applicable federal, state or local
building, zoning, occupational safety, antipollution, environmental protection,
health or other law, ordinance or regulation that are currently in effect in
respect of any of the plants, warehouses, offices, structures or operations of
Company used in its business. The Company has not received any written
notification, nor any oral notification, alleging any violation of any of the
foregoing with respect to which adequate corrective action has not been taken.
2.4 CAPITALIZATION.
2.4.1 At the Closing, the Company's authorized capital stock
will consist of One Million Five Hundred Thousand (1,500,000) shares of common
stock, $.0001 par value per share, of which, on the Closing Date the number of
shares set forth on Schedule 2.4.1 shares, and no more, will be issued and
outstanding and Eight Hundred Fifty-Nine Thousand Two Hundred Sixty (859,260)
shares of preferred stock, $.0001 par value per share, of which, on the Closing
Date, Four Hundred Twenty-Nine Thousand Six Hundred Thirty (429,630) shares and
no more will be issued and outstanding. All of the Shares are validly issued,
fully paid and non-assessable. Except as set forth on Schedule 2.4.1, no shares
of capital stock of the Company are issued or reserved for issuance either upon
exercise of any warrants, options or other rights to purchase, or upon
conversion of any securities convertible into, shares of capital stock of the
Company. No other class of capital stock, or instrument that is convertible or
exercisable into or exchangeable for such stock, has been authorized or issued.
2.4.2 Schedule 2.4.2 contains a list of all of the
stockholders of record and their respective addresses, number of shares and
class held. No shares of capital stock of the Company issued in the past three
(3) years were issued in violation or contravention of any applicable federal or
state securities laws or regulations and no shares of the Company's capital
stock have been issued in violation of any preemptive rights of any stockholder
or any agreement to which the Company or any stockholder of the Company is or
was a party.
2.4.3 Except as set forth on Schedule 2.4.3, the Company has
not granted, sold or issued, nor is it a party to any agreement, commitment or
understanding providing for the grant, sale or issuance of, nor are there
outstanding, any subscriptions, options, warrants or other rights to purchase or
receive, and the Company is not obligated to issue, sell or otherwise transfer,
any shares of capital stock or other securities of the Company.
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2.4.4 Except as set forth on Schedule 2.4.4 hereto, the
Company has not redeemed or otherwise repurchased during the past three (3)
years, and between the date hereof and the Closing shall not redeem or purchase
or agree to redeem or purchase, (i) any shares of its capital stock or (ii) any
shares of stock or equity interest in any subsidiary of the Company, including
any partnership of which the Company is a partner or other business entity in
which it holds any equity interest.
2.5 TITLE TO SHARES. Each of the Stockholders, individually, for
himself, herself or itself (as the case may be) represents and warrants as to
his, hers or its Shares the following: (i) each Stockholder is, and at the
Closing will be, the sole owner, beneficially and of record, of the Shares, free
and clear of all claims, liens, encumbrances, security interests, pledges,
options, charges, restrictions and defects in title of any nature whatsoever,
other than restrictions imposed by federal and applicable state securities laws
which do not constitute an impediment to the transfer described in this
Agreement; (ii) as of the Closing, Stockholder shall not have, granted or sold,
nor is or will be, a party to any agreement, commitment or understanding,
written or oral, providing for the grant or sale of, rights to purchase or
restricting the transfer of the Shares; (iii) except as provided in the Amended
and Restated Stockholder Rights Agreement dated as of December 18, 1995, a copy
of which has been provided to Techniclone prior to the date hereof, Stockholder
is not, nor will be at the Closing, obligated to sell or otherwise transfer, any
of the Shares to any person or entity except to Techniclone; and (iv)
Stockholder will not be acquiring between the date hereof and the Closing, any
shares of capital stock of the Company or any equity interest in any subsidiary
of the Company from any other person or entity.
2.6 NO CONFLICTS. Except as disclosed on Schedule 2.6 hereto,
neither the execution and delivery nor the performance of this Agreement by the
Stockholders, or of any of the other agreements to be entered into by the
Stockholders pursuant to or in connection with the transactions contemplated by
this Agreement, will, to the knowledge of the Stockholders, result in any of the
following:
2.6.1 a default or an event that, with notice or lapse of
time, or both, would be a default, breach or violation of (i) the Certificate of
Incorporation or Bylaws of the Company, or (ii) any lease, license, promissory
note, conditional sales contract, indenture, mortgage, deed of trust, security
or pledge agreement, instrument or other agreement, written or oral, to which
the Company or any of the Stockholders is a party or is subject or by which any
of their respective assets are bound and which is material to the Company or any
of the Stockholders (a "Material Contract");
2.6.2 the termination of any Material Contract or the
acceleration of the maturity of any indebtedness or other material obligation of
the Company or any of the Stockholders;
2.6.3 the creation or imposition of any lien, charge or
encumbrance on any of the assets of the Company which are material,
individually, or in the aggregate, to the Company or its business, or any assets
of any of the Stockholders or upon any of the Shares;
2.6.4 a violation or breach of any writ, injunction or decree
of any court or governmental instrumentality to which the Company or any of the
Stockholders is a party or by which any of their respective properties are bound
or any laws or regulations applicable to the Company or its business, where such
violation would have a material adverse effect on the Company, its business,
financial condition, results of operations or assets; or
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2.6.5 the cessation or termination of any other business
relationship or arrangement between the Company and any third party that is
material to the Company or its business.
2.7 SUBSIDIARIES; INVESTMENTS. Except as otherwise set forth on
Schedule 2.7, the Company does not own, directly or indirectly, shares of
capital stock of any other corporation or any equity interest in any other
entity or business, nor does the Company control, directly or indirectly, any
other corporation, association or business organization.
2.8 FINANCIAL STATEMENTS. The Major Stockholders will cause the
Company to deliver to Techniclone on or before the Closing Date financial
statements of the Company consisting of audited balance sheets as of December
31, 1996 and December 31, 1995, and related statements of operations, and
statements of cash flows and stockholders' equity, as of and for the years ended
December 31, 1996, December 31, 1995 and December 31, 1994. On the Closing Date,
the Major Stockholders will deliver such financial statements together with an
unqualified audit report thereon of Deloitte & Touche LLP (collectively the
"Financial Statements"). True and correct copies of the statement of operations,
statement of cash flow and statement of stockholders' equity are attached as
Schedule 2.8 hereto. Except as otherwise set forth in the footnotes contained
therein, the Financial Statements will be prepared in accordance with GAAP,
consistently applied; are in accordance with the books and records of Company;
and set forth fairly the financial condition of the Company and the results of
its operations as of and at the relevant dates thereof and for the respective
periods covered thereby. Except as set forth in Schedule 2.8, the Company does
not have any debts, obligations, liabilities or commitments of any nature,
whether due or to become due, absolute, contingent or otherwise, that, in
accordance with GAAP, are required to be disclosed in a balance sheet or the
footnotes thereto, and are not shown on the December 31, 1996 Balance Sheet
delivered pursuant hereto, other than liabilities incurred after December 31,
1996 in the ordinary course of business and consistent with past practice. Such
post-December 31, 1996 liabilities are not material in amount and have not had
and are not expected to have, individually or in the aggregate, a material
adverse effect on the financial condition or results of operations or prospects
of the Company.
2.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
2.9 the Company has not since December 31, 1996:
2.9.1 made any change in or amendment to the Certificate of
Incorporation or Bylaws of the Company or any recapitalization or
reclassification of or other change in the Company's authorized or outstanding
capital stock;
2.9.2 made any sale or issuance of, or grant of options or
rights to acquire, any shares of Common Stock or other securities of the Company
or any declaration, setting aside, or payment of dividends in respect of, or any
direct or indirect redemption, purchase, or other acquisition of, any shares of
capital stock or other securities of the Company, or any agreement,
understandings or commitments to do the same;
2.9.3 made any transfer or other disposition or pledge of, or
the grant of options or rights to acquire, any of the Shares by any of the
Stockholders;
2.9.4 executed or commenced performance under any material
agreement contract or arrangement not in existence on December 31, 1996, or any
amendment, termination
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or revocation, or to the knowledge of any of the Stockholders been advised of
any threat of any termination, or revocation, of any material contract or
agreement or arrangement, to which the Company is, or at December 31, 1996 was,
a party;
2.9.5 made any sale, transfer, mortgage, pledge or subjection
to lien, charge or encumbrance of any kind, of, on or affecting any of the
assets of the Company with a book value at or above $5,000 individually or
$25,000 in the aggregate, except sales or utilization of inventory and obsolete
equipment in the ordinary course of business and consistent with past practices
of the Company;
2.9.6 increased the compensation paid or payable or increased
the fringe benefits provided to any employee of the Company, or adopted any
employee benefit plans not in existence on December 31, 1996;
2.9.7 had damage, destruction or loss, whether or not covered
by insurance, of any of the assets of the Company in an amount exceeding $5,000
or which adversely affects the Company's ability to continue to conduct its
business in all material respects as such business was conducted during the year
ended December 31, 1996;
2.9.8 incurred any indebtedness, either for borrowed money or
in connection with any purchase of assets, or otherwise, or the issuance of debt
securities that is not reflected in the December 31, 1996 balance sheet and
individually involves more than $5,000 or in the aggregate involves more than
$25,000;
2.9.9 purchased or leased, or committed to purchase or lease,
equipment, machinery, leasehold improvements or other capital items not
disclosed in the balance sheet for the year ended December 31, 1996 which
involves amounts exceeding $5,000 individually or $25,000 in the aggregate or
which is in excess of or represents a departure from the normal, ordinary and
usual requirements of the business of the Company;
2.9.10 entered into any transaction which would cause it to
make a material amendment or cause termination of any material contract or
commitment to which it is a party, other than in the ordinary course of
business;
2.9.11 except for legal fees, accounting fees and other costs
associated with this transaction, incurred any obligations or liabilities
(whether fixed, unliquidated, absolute, contingent or otherwise) except current
liabilities incurred, and obligations under contracts entered into, in the
ordinary course of business;
2.9.12 had any event or condition of any character, which,
individually or in the aggregate, materially and adversely affects the Company's
business, properties, financial condition or results of operations of its
business;
2.9.13 made any change in accounting methods (including,
without limitation, any change in depreciation, capitalization or amortization
policies or rates);
2.9.14 made any loan to any person or entity, or guaranteed
any loan;
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2.9.15 made any waiver or release of any material right or
claim except in the ordinary course of business; or
2.9.16 had any occurrence subsequent to December 31, 1996 of
any other event or circumstance which would have a material and adverse effect
on the Company.
2.10 FIXED ASSETS. Schedule 2.10 contains a list of all machinery,
equipment, computers, and substantially all of the furniture, fixtures and other
assets or tangible personal property, wherever located, that are leased, used or
owned by the Company (the "Fixed Assets"). The Fixed Assets which are reflected
on Schedule 2.10 constitute all of the Fixed Assets (exclusive of inventory)
necessary for the conduct by Company of its business as now being conducted.
Except as set forth on Schedule 2.10, the Fixed Assets, all are in good working
order and condition in all material respects.
2.11 INTANGIBLE PERSONAL PROPERTY.
2.11.1 Schedule 2.11.1 contains a true and correct list of all
patents, patent applications, trademarks, trademark applications, proprietary
information, know-how, research, development, processes, trade secrets,
inventions, engineering and other technical information used in the business and
all other intellectual property and intangible assets, owned by the Company or
in which the Company has rights or licenses, and which are material to the
business of the Company, including, without limitation, patents, copyrights,
trademarks, service marks, trade names and all applications therefor, processes,
trade secrets, research, development, inventions, software, and protected
formulae (collectively referred to as "Proprietary Rights").
2.11.2 Except as set forth on Schedule 2.11.2, to the best
knowledge of the Stockholders, the Company has not infringed, and is not now
infringing, any patent, trade name, trademark, service xxxx, copyright, trade
secret, technology, know-how or process belonging to any other person, firm or
corporation, which infringement would have an material adverse effect on the
Company. Neither the Company nor any Stockholder has received any written notice
or other indication of any such claim of infringement.
2.11.3 Except as set forth in Schedule 2.11.3, Company is not
a party to any license, agreement, or arrangement, whether as licensor, licensee
or otherwise, with respect to (i) any patents, trademarks, service marks, trade
names, or applications for any of the foregoing, or any copyrights; or (ii) any
technology, know-how, process, Proprietary Rights or other intangible assets.
The Company owns, or holds adequate licenses or other rights to use, all
patents, trademarks, service marks, trade names, copyrights, technology,
software, know-how and processes used in or necessary for the operation of the
Company's business as now conducted.
2.12 REAL PROPERTIES; LEASES.
2.12.1 Attached hereto as Schedule 2.12.1 is a list setting
forth the addresses and brief descriptions of each of the real properties that
are owned or leased by the Company, the improvements and structures thereon and
the uses being made thereof by the Company. Each such description indicates,
among other things, a summary of the terms of the lease or other agreement or
agreements with respect to each such real property.
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2.12.2 Schedule 2.12.2 contains a list of all leases under
which the Company possesses or uses real property (the "Real Property Leases")
and all leases under which the Company possesses or uses items of tangible
personal property (the "Personal Property Leases"). True, correct and complete
copies of the Real Property Leases and Personal Property Leases have been
delivered to Techniclone, together with the names and addresses of the lessors
thereunder. The Company is not, and as of the Closing Date will not be, in
default, and no facts or circumstances have occurred which through the passage
of time or the giving of notice, or both, would constitute a default, under any
of the Real Property Leases or the Personal Property Leases. In addition, the
Major Stockholders have caused the Company to deliver to Techniclone true,
correct and complete copies of all environmental studies and reports in the
possession of the Company or the Stockholders with respect to any of the real
properties described in Schedule 2.12.1 and Schedule 2.12.2. To the knowledge of
the Stockholders, all of the facilities on the real properties listed on
Schedule 2.12.1 and Schedule 2.12.2 are equipped in substantial conformity with
laws and governmental regulations applicable to the Company's business and the
zoning of each parcel of real property permits the presently existing
improvements and continuation of the business presently conducted thereon and no
changes therein are pending or are threatened, and no condemnation or similar
proceedings are pending threatened against any of the real properties set forth
on Schedule 2.12.1 and Schedule 2.12.2.
2.13 TITLE TO AND ADEQUACY OF ASSETS. Except as disclosed on
Schedule 2.13 hereto, the Company has good and marketable title to its assets,
intangible and tangible, including, without limitation, the Fixed Assets and
Proprietary Rights, free and clear of restrictions or conditions on transfer or
assignment, and free and clear of all mortgages, liens, security interests,
encumbrances, pledges, leases, equities, claims, charges, conditions, and
conditional sale contracts. Except as set forth on Schedule 2.13, all of the
assets of the Company, are in the exclusive possession and control of the
Company and the Company has the unencumbered right to use such assets without
interference from others.
2.14 CONTRACTS, AGREEMENTS AND COMMITMENTS. Except for any
collective bargaining, labor, employment agreements and employment policies and
benefit plans and programs that are otherwise disclosed on the Schedules hereto,
Schedule 2.14 hereto contains an accurate and complete list together with a
brief description of each of the contracts, agreements, licenses and instruments
to which the Company is a party or is subject, and which is material to the
Company or its business. Without limiting the generality of the foregoing, such
list includes any contract and agreement and any licenses or instrument which
(i) grants to the Company the right to use, make or develop Proprietary Rights
or grants any other person any rights to any Proprietary Rights; (ii) grants a
security interest or permits or provides for the imposition of any lien or
encumbrance on, or provides for the sale of, any shares of capital stock or
other equity securities of the Company, including the Shares, or any assets of
the Company (other than sales of Company assets in the ordinary course of
business and consistent with past practices); (iii) requires the consent of any
third party to, or would be violated by, the consummation by the Stockholders of
the transactions contemplated by this Agreement; (iv) involves the borrowing of
money, or provides for capital expenditures to be made in the future, in excess
of $5,000; (v) provides for an employment or consulting agreement which is not
terminable with no more than two weeks' notice or provides for earlier
termination with a payment in excess of $5,000; or (vi) involves the licensing,
by or to the Company, of patents, Proprietary Rights or other intangible assets
of any kind. True, correct and complete copies of all items so listed in
Schedule 2.14 have been furnished to Techniclone. Each of such contracts,
agreements, licenses and instruments so listed, or required to be so listed, is
a valid and binding obligation of the
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Company and is enforceable in accordance with its terms, except as may be
affected by bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity relating to the
availability of equitable remedies. Except as otherwise set forth in Schedule
2.14 hereto, there have not been any defaults by the Company or, to the
knowledge of the Stockholders, any defaults or claims of default or of
non-enforceability by the other party or parties to such contracts, agreements,
licenses and instruments which, individually or in the aggregate, would have a
material adverse effect on the Company and, to the knowledge of the
Stockholders, there are no facts or conditions that have occurred which, through
the passage of time or the giving of notice, or both, would constitute a default
by the Company or by the other party or parties under any of such contracts,
agreements, licenses and instruments, or would create a lien or encumbrance upon
any of such Shares, or any of the assets of the Company or would otherwise have
a material and adverse effect the Company or its business or prospects. Except
as set forth on Schedule 2.14, no consent or approval of any party (other than
the Company) to any of contracts, agreements, and commitments is necessary in
order to allow Techniclone to acquire the Shares, without violating any such
contracts, agreements or commitments.
2.15 COMPLIANCE WITH LAW/PERMITS. Except as set forth in Schedule
2.15 hereto, the Company is not in violation of any, law, ordinance, order,
decree, rule or regulation of any governmental agency or authority, the
violation of or non-compliance with which could have a material adverse effect
on the Company, its business, financial condition, results of operations or
prospects. Except as disclosed on Schedule 2.15 hereto, and except for the
permit by the California Commissioner of Corporations approving the transactions
contemplated by this Agreement after a fairness hearing, no consent, approval,
order or authorization of, or registration, declaration or filing with any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign or any other person is required by the
Company in connection with the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby. Schedule 2.15 contains a
true and correct list of all governmental or municipal licenses, permits,
authorizations, contracts, franchises or certificates held by the Company
(collectively, the licenses and permits ).
2.16 EMPLOYEES; LABOR AND EMPLOYMENT AGREEMENTS; BENEFIT PLANS.
2.16.1 Schedule 2.16.1 sets forth the name of each director,
officer and employee of the Company who receives compensation, together with a
description of all compensation and benefits that are payable to such
individuals as a result of their employment by or association with the Company.
The Major Stockholders have furnished to Techniclone a copy of the Company's
employee handbook and a description, in writing, of all employment or personnel
policies not set forth in such handbook.
2.16.2 Except as disclosed in Schedule 2.16.2, the Company is
not a party to or otherwise bound by or subject to any collective bargaining or
other labor, employment, deferred compensation, bonus, retainer, consulting, or
incentive agreement, plan or contract. The Company is in compliance, in all
material respects, with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and it is not
engaged in any unfair labor practice. There is no unfair labor practice
complaint pending or, to the best knowledge of the Stockholders, threatened
against the Company, nor, to the best knowledge of the Stockholders, is there
any factual basis for any such complaint.
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2.16.3 Except as set forth on Schedule 2.16.3, Company does
not and has not maintained, contributed to or provided benefits under any
"employee welfare benefit plan" ("Welfare Plan") or any "employee pension
benefit plan" ("Pension Plan") as defined in Section 3(1) and (2), respectively,
of the Employee Retirement Income Security Act of 1974 ("ERISA").
2.16.4 Neither Company nor any entity which is a member of a
"controlled group of corporations" with or under "common control" of Company as
defined in Section 414(b) or (c) of the Internal Revenue Code of 1986, as
amended (the "Code"), has contributed or been obligated to contribute to a
"multiemployer pension plan" as defined in Section 3(37) of ERISA.
2.16.5 Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument has received a favorable
determination letter with respect to such plan from the Internal Revenue
Service, and, to the best of the knowledge of Stockholders, no events have
occurred that would adversely affect the tax-qualified status of any plan.
2.16.6 To the best of the knowledge of Stockholders, no
"disqualified person" (within the meaning of Section 4975(e)(2) of the Code) has
engaged in any "prohibited transaction" with any Welfare Plan or Pension Plan,
as defined in Section 4975(c)(1) of the Code, for which no exemption exists
under Section 4975(c)(2) or 4975(d) of the Code.
2.16.7 The Company does not maintain any Welfare Plan that
provides medical benefits to former employees or retirees. For purposes of this
Section 2.16.7, any medical benefits provided to former employees or retirees
pursuant to the provisions of the continuation coverage rules of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") or pursuant to
a state law conversion right shall be disregarded.
2.17 LITIGATION AND PROCEEDINGS. Except as set forth on Schedule
2.17 hereto, there is no action, suit, proceeding or investigation, or any
counter or cross-claim in any action brought by or on behalf of the Company or
the Stockholders, whether at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, that is pending or, to the
knowledge of the Stockholders, threatened, against the Company or any of the
Stockholders, which (i) could reasonably be expected to adversely affect the
Company's or any Stockholder's ability to perform his, her or its obligations
under this Agreement or complete any of the transactions contemplated hereby, or
(ii) involves the reasonable possibility of any judgment or liability, or which
is reasonably likely to become a claim, against the Company, any of the
Stockholders, or Techniclone prior to or subsequent to the Closing. The
Stockholders don't know of any fact or circumstance which is reasonably likely
to be the basis for the assertion of any such or similar claims or causes of
action against the Company, the Stockholders or Techniclone. Neither the Company
nor any of the Stockholders is in default with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court, arbitrator or
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over the Company or any of its assets or operations.
2.18 ENVIRONMENTAL AND SAFETY MATTERS.
2.18.1 Except as set forth on Schedule 2.18.1, the Company
has complied, and the operation of its business is in compliance, in all
material respects, with all federal, state, local and regional statutes, laws,
ordinances, rules, regulations and orders relating to the protection of human
health and safety, natural resources or the environment, including, but not
limited to, air pollution,
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water pollution, noise control, on-site or off-site hazardous substance
discharge, disposal or recovery, toxic or hazardous substances, training,
information and warning provisions relating to toxic or hazardous substances,
and employee safety; and no notice of violation of any such statutes, laws,
ordinances, rules, regulations and orders with respect thereto or of any permit,
license or other authorization relating thereto has been received, nor is any
such notice pending or, to the best knowledge of the Stockholders, threatened.
2.18.2 Except as set forth on Schedule 2.18.2, there has been
no generation, use, treatment, storage, transfer, disposal, release or
threatened release of toxic or hazardous substances during the occupancy of
properties leased or owned by Company or, to the best knowledge of the
Stockholders, prior to such ownership or occupancy. Neither the Company nor the
Stockholders have received any notice or claim to the effect that the Company is
or may be liable to any governmental authority or private party as a result of
the release or threatened release of any toxic or hazardous substances and none
of the operations of the Company is the subject of any federal, state or local
investigation evaluating whether any remedial action is needed to respond to a
release or a threatened release of any toxic or hazardous substances at any of
the real properties leased, used, operated or owned by the Company or at any
other properties as a result of the business conducted by or other activities of
the Company. Neither the Company nor the Stockholders have disposed, or had
disposed of on the Company's behalf, toxic or hazardous substances at any site
other than a federal and state licensed hazardous waste treatment, storage and
disposal facility and, to the best knowledge of the Stockholders, after diligent
inquiry, each such facility is currently, and at the time of such disposal was,
licensed and operating in substantial compliance with all applicable laws, is
not currently listed, or threatened to be listed, on any state or federal
"superfund" list and there is no proceeding, inquiry or investigation, formal or
informal, with respect to any release or threatened release of any toxic or
hazardous substances at any such site. For the purposes of this Section 2.18,
"toxic or hazardous substances" shall include any material, substance or waste
that, because of its quantity, concentration or physical or chemical
characteristics, is deemed under any federal, state, local or regional statute,
law, ordinance, regulation or order, or by any governmental agency pursuant
thereto, to pose a present or potential hazard to human health or safety or the
environment, including, but not limited to, (i) any material, waste or substance
which is defined as a "hazardous substance" pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq.), as amended ("CERCLA"), and its related state and local
counterparts.
2.18.3 Except as set forth in Schedule 2.18.3, (i) no
underground tanks are now located or at any time in the past have been located
on any of the property owned, controlled or operated by Company and used in the
conduct of its business (all of the foregoing shall be referred to collectively
as "Property"), (ii) there are no other substances or conditions in, on or
emanating from the Property, including without limitation the surface waters and
subsurface waters thereof, which would result in liability under the current
version of the CERCLA, the Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance Account
Act, the Xxxxxx-Cologne Water Quality Control Act, or any other federal, state
or local environmental statutes, ordinances, regulations or guidelines, (iii)
there are no pending audits by any governmental entity or agency with respect to
groundwater, soil and air monitoring, the storage, burial, release,
transportation or disposal of hazardous substances or the use of underground
storage tanks by Company or relating to the facilities of Company, and (iv)
there are no agreements with any third parties or governmental entity or agency
relating to such environmental matters or the cleanup thereof.
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2.19 ILLEGAL OR IMPROPER PAYMENTS. To the best knowledge of each of
the Stockholders, during the past five (5) years neither the Company, any
subsidiary of the Company nor any of the Company's directors, officers or
employees have, in connection with the operation of the Company's business:
2.19.1 made any illegal political contribution from assets of
the Company;
2.19.2 been involved in the disbursement or receipt of
corporate funds outside normal internal control systems of accountability;
2.19.3 made or received payments, whether direct or indirect,
to or from government officials, employees or agents for purposes other than the
satisfaction of lawful obligations, or been involved in any transaction that has
or had as its intended effect the transfer of funds or assets of the Company
other than for the satisfaction of lawful obligations of the Company; or
2.19.4 been involved in the willfully inaccurate recording of
payments and receipts on the books of the Company or any other matter of a
similar nature involving disbursements of funds or assets, and they are not
aware of any material inaccurate recording of any payment or receipt on the
books of the Company.
2.20 CERTAIN TRANSACTIONS. Except as set forth in Schedule 2.20,
there are no existing or pending transactions, nor are there any agreements or
understandings, between the Company and any Stockholder or any of the officers,
directors, or employees of the Company, or any entity in which the Company has
an equity interest but is not wholly-owned by the Company (an affiliated entity
), or any person related to or affiliated with any of the Stockholders or any
officer, director, employee or affiliated entity, including, without limitation,
any transactions, arrangements or understandings relating to the purchase or
sale of goods or services or the sale, lease, licensing or use of any of the
assets of or by the Company, with or without adequate compensation, or to any
indebtedness owed to or by the Company, in any amount whatsoever. No existing or
former stockholder, director or executive officer of the Company has any claims
against or disputes with the Company which could result in the imposition of any
liability or judgment against the Company or require the Company to make any
payment or cease any activities or business in which it is engaged.
2.21 TAXES AND TAX RETURNS.
2.21.1 For purposes of this Agreement, the term "Tax" or
"Taxes" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not. For purposes of
this Agreement, the term "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
2.21.2 Except as set forth on Schedule 2.21.2: (i) the Company
has duly filed all Tax Returns which are required by law to be filed by it; (ii)
the Company has duly paid all Taxes due or claimed to be due from it (whether or
not shown on any Tax Return), and, to the best
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knowledge of the Stockholders, there are no assessments or claims for payment of
Taxes now pending or threatened, nor is any audit of the records of the Company
being made or threatened by any taxing authority; (iii) there are no facts or
circumstances which could reasonably be expected to constitute a basis for
assessments or claims for the payment of additional Taxes; (iv) each Tax Return
of the Company filed up to the Closing Date, is correct and complete in all
respects; and (v) the Company is not currently the beneficiary of any extension
of time within which to file any Tax Return. The amount set up as a provision
for Taxes, if any, on the December 31, 1996 balance sheet of the Company, is
sufficient for the payment of all unpaid Taxes of the Company for which the
Company is liable. The Company has properly accrued for payment or withheld and
paid when due all sales and use taxes, if any, to appropriate state and/or
federal authorities. The Company has properly accrued for payment or has
withheld and paid when due all amounts required to be withheld from payments
made to its employees, independent contractors, creditors, stockholders, or
other third parties.
2.21.3 The Company has not waived any statute of limitation in
respect of any taxes or assessments by any federal, state, county, local,
foreign or other taxing jurisdiction or agreed to any extension of time with
respect to an assessment or deficiency in any tax.
2.21.4 The Company has not made any payments, and is not
obligated to make any payments, nor is the Company a party to any agreement that
under any circumstances could obligate it to make any payments, that would not
be deductible under Section 280G of the Code. The Company has not been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. The Company is not a party to any tax allocation or tax sharing
agreement.
2.21.5 The Company (i) is not and never has been required to
file a consolidated or combined state or federal income Tax Return with any
other person or entity and (ii) is not liable for the Taxes of any person under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or otherwise.
2.22 INSURANCE. Schedule 2.22 contains an accurate description
(including liability limits, deductibles and coverage exclusions) of all
policies of fire, general liability, worker's compensation, errors and
omissions, and other forms of insurance maintained by or on behalf of the
Company to provide insurance protection for the assets and business of the
Company. Except as set forth in Schedule 2.22 hereto, all of such policies are
now in full force and effect and those policies or other policies covering the
same risks and in substantially the same amounts have been in full force and
effect continuously for the past three (3) years. Neither the Company nor any of
the Stockholders has received any notice of cancellation or material amendment
of any such policies; no coverage thereunder is being disputed; and all material
claims thereunder have been filed in a timely fashion.
2.23 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 2.23 sets forth a
true and complete list, as of the date hereof, of each bank or other institution
in which the Company has an account or safe deposit box, and the names of all
persons authorized to draw thereon or to have access thereto and the names of
all persons, if any, who hold any powers of attorney for or granted by the
Company.
2.24 OPERATIONAL RESTRICTIONS. The Company is not a party or
subject to any undisclosed agreement or instrument or subject to any undisclosed
charter or other corporate restriction or any undisclosed judgment, order, writ,
injunction, decree, or award, which materially adversely affects,
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or in the future could materially adversely affect, the Company or its business,
assets, financial condition, operating results, or prospects or the ability of
the Stockholders to consummate the transactions contemplated by this Agreement.
2.25 NO BROKER. Neither the Company nor any of the Stockholders has
retained an agent, finder or broker in connection with the transactions
contemplated by this Agreement. The Stockholders shall indemnify, hold harmless
and defend Techniclone for all commissions, finder's and other fees and expenses
of any such persons.
2.26 TECHNICLONE SHARES; SECURITIES LAW COMPLIANCE. Notwithstanding the
provisions of Section 5.10, each of the Stockholders who is an "Affiliate"
(within the meaning of Rule 145 under the Securities Act) agrees not to
transfer, except as may be specifically required by court order, sell, exchange,
pledge or otherwise dispose of or encumber the Techniclone Shares at any time
except in compliance with Rule 145 promulgated under the Securities Act.
2.27 DISCLOSURE. The representations and warranties of the Stockholders
contained herein and the materials contained in the Schedules attached hereto do
not contain any statement of a material fact that was untrue when made or omit
any material fact necessary to make the information contained therein not
misleading. Information in any one Schedule delivered pursuant hereto need not
be repeated in any other Schedule, provided that an appropriate specific
cross-reference is made in the other Schedule to such information contained
elsewhere in the Schedules.
ARTICLE III
REPRESENTATIONS AND COVENANTS OF TECHNICLONE
3.1 ORGANIZATION. Techniclone is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3.2 CORPORATE POWER. Techniclone possesses the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Non-Competition Agreements and the Escrow Agreement.
3.3 NECESSARY ACTIONS; BINDING EFFECT. Techniclone has taken, or prior
to the Closing Date will have taken, all corporate action necessary to authorize
the execution and delivery of, and the performance of its obligations under,
this Agreement, the Non-Competition Agreements and the Escrow Agreement. This
Agreement constitutes, and upon their execution and delivery the Non-Competition
Agreements and the Escrow Agreement will constitute, valid obligations of
Techniclone that are legally binding on and enforceable against Techniclone in
accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights and (ii) general principles of equity relating to
the availability of equitable remedies (regardless of whether such agreements
are sought to be enforced in a proceeding at law or in equity).
3.4 NO CONFLICTS. Except as set forth on Schedule 3.4, neither the
execution and delivery or the performance of this Agreement, the Non-Disclosure
Agreements, the Escrow Agreement or the Non-Competition Agreements by
Techniclone, will result in any of the following: (i) a default or
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an event that, with notice or lapse of time, or both, would constitute a
default, breach or violation of the Certificate of Incorporation or Bylaws of
Techniclone, or any contract, lease, license, franchise, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust,
security or pledge agreement, or other agreement, instrument or arrangement to
which Techniclone is a party and which is material to Techniclone ("Material
Contract"); (ii) the termination of any Material Contract or the acceleration of
the maturity of any indebtedness or other monetary obligation of Techniclone
that is material in amount when considered in relation to Techniclone; or (iii)
a violation or breach of any writ, injunction or decree of any court or
governmental instrumentality to which Techniclone is a party or by which any of
its properties are bound or any laws or regulations applicable to Techniclone,
where the violation would have a material adverse effect on Techniclone.
3.5 TECHNICLONE FINANCIAL STATEMENTS. Techniclone has furnished to the
Company and the Stockholders its Annual Report on Form 10-K including a balance
sheet of Techniclone as of April 30, 1996 and related statements of income and
cash flows for the year then ended, which have been audited by Deloitte & Touche
LLP, the Quarterly Report on Form 10-Q for the quarter ended July 31, 1996 and
the Quarterly Report on Form 10-Q for the quarter ended October 31, 1996 (the
"Techniclone Financial Statements"). Such reports, and except as otherwise set
forth in the footnotes contained therein, the Techniclone Financial Statements
fairly present the financial position of Techniclone as at the date thereof and
its results of operations for the periods covered thereby.
3.6 INVESTMENT INTENT. Techniclone is acquiring the Shares from the
Stockholders for investment and not with a view to the sale or distribution
thereof. Notwithstanding the foregoing, at any time following the Closing,
Techniclone may, if it acquires the requisite number of shares, effectuate a
short-form merger of the Company and Techniclone, or a subsidiary of
Techniclone, as Techniclone deems appropriate, with the Company or a subsidiary
of Techniclone as the surviving corporation in such merger.
3.7 REPRESENTATIONS AND WARRANTIES. Each representation, warranty or
statement made, or information provided, by Techniclone in this Agreement, or in
the Schedules hereto or in any certificates or documents to be delivered by
Techniclone at the Closing is, or when made shall be, true, complete and correct
in all material respects and do not omit any material fact necessary to make the
information contained therein not misleading.
3.8 BROKER. Techniclone has not retained any broker, agent or finder
in connection with the transactions contemplated by this Agreement, and
Techniclone shall hold harmless the Stockholders from any commission, fee or
expenses payable to any such broker, finder or agent by reason of his, her or
its retention by Techniclone.
3.9 EXPENSES. Techniclone shall pay all of the expenses incurred by it
in connection with the negotiation, preparation, execution, delivery and
performance of its obligations under this Agreement, the Escrow Agreement and
the Non-Competition Agreements.
3.10 TECHNICLONE COMMON STOCK. All of the Techniclone Shares issued in
exchange for the Shares shall be, at the time of issuance and delivery, duly
authorized, validly issued, fully paid and non-assessable and no person shall
have preemptive rights in connection with or as a result of the issuance of such
Techniclone Shares.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
Unless Techniclone gives its prior written consent, from the date of
this Agreement and until the Closing or termination of this Agreement, whichever
first occurs, the Stockholders shall use their reasonable best efforts to cause
the Company to conduct its operations as set forth below, it being understood
the business of the Company is subject to the control of the Company's Board of
Directors.
4.1 OPERATION OF BUSINESS. Company will operate and conduct its
business and operations diligently and only in the ordinary course of business
consistent with past practices. The Company shall not increase the amount due
and owing to any lender for borrowed money or increase the compensation or
benefits of any employee, independent contractor or agent or adopt or amend any
employee benefit plan or arrangement of any type which results or may result in
an increase in costs or liabilities thereunder of more than $5,000 per month, in
the aggregate, above those existing on the date hereof, or otherwise lend or
advance any sum or extend credit to any employee, director or stockholder or any
of their respective affiliates.
4.2 ORGANIZATION. The Company will use its reasonable best efforts to
preserve intact its organization and use its reasonable best efforts to retain
all employees of and the services of all vendors, suppliers, agents and
consultants to the Company, commensurate with the requirements of the Company's
business.
4.3 INSURANCE. The Company will maintain insurance, including liability
and errors and omissions insurance, consistent with past practices and, unless
comparable insurance is substituted therefor or is not generally available to
businesses of the type conducted by the Company, not take any action to
terminate or modify, nor permit the lapse or termination of, the present
insurance policies and coverage's of the Company as set forth in Schedule 2.22
hereto.
4.4 LAWSUITS, CLAIMS. The Company will promptly notify Techniclone of
all lawsuits, claims, proceedings or investigations that are, or which any
officers of the Company or any of the Stockholders, as a result of events or
circumstances actually known to them, has reason to believe may be, threatened,
brought, asserted or commenced against the Company or any of its officers or
directors, involving or affecting in any way the Company's business or
operations, or any of its assets, or the Shares or the transactions contemplated
hereby. The Company will not settle any action or proceeding which would
materially and adversely affect the Company, its business, financial condition
or operating results and, will not release, settle, compromise or relinquish any
claims, causes of action or rights.
4.5 CERTAIN CHANGES. Except as otherwise set forth in Schedule 4.5, the
Company will not sell or otherwise dispose, or enter into any agreement for the
sale, of any of its assets or properties, except for sales of inventory and
obsolete equipment in the ordinary course of business and consistent with past
practices, nor will it enter into any agreements providing for or permitting,
any of its assets or properties to be subjected to any mortgage, security
interest, pledge, option, lien, charge or encumbrance other than liens or
security interests in existence on the date hereof and statutory liens to secure
taxes that are not yet due and payable.
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4.6 CONDITION OF ASSETS. The Company will maintain in good working
order and condition, ordinary wear and tear excepted, and in compliance in all
material respects with all applicable laws and regulations, machinery,
equipment, computers, furniture, fixtures, tools, and other tangible assets,
wherever located, that are used, leased or owned by the Company.
4.7 AGREEMENTS AND COMMITMENTS. The Company will observe and perform
all terms, conditions, covenants and obligations contained in all existing
agreements between the Company and third parties the violation of which would
have, individually or in the aggregate, a material adverse effect on the Company
or its business, financial condition, operating results or future prospects;
and, except as required by any existing agreements, not enter into any new
agreements or transactions, or incur any expenditures, liabilities or
obligations, other than professional fees incurred in connection with this
transaction, involving more than $5,000 individually or $25,000 in the
aggregate, or renew, extend, amend or modify any existing agreement involving
any commitments, obligations, liabilities or requiring any expenditures that
would exceed $5,000 individually or $25,000 in the aggregate. The Company will
not take any action which would cause a breach or violation of or default under
any material agreement, lease, contract, or other written instrument, commitment
or arrangement, or under any permit, license, franchise, judgement, writ or
order, applicable to or affecting the Company or its business. The Company will
and promptly notify Techniclone in writing of the occurrence of any such breach
or default; and not enter into any transaction with any stockholder, director or
officer or any person or entity related to or affiliated with any such person.
4.8 CONSENTS; COMPLIANCE WITH LAWS. The Company will use its
reasonable best efforts to obtain and maintain all consents, assignments or
approvals of, and licenses, permits and franchises and rights to operate granted
by, governmental authorities and agencies and other third parties, in form and
substance reasonably satisfactory to Techniclone, the absence or loss of which
would have a material adverse effect on the operations, operating results,
financial condition or future prospects of the Company either prior to or
following the Closing.
4.9 TAXES. The Company will pay, when due, and prior to the imposition
or assessment of any interest, penalties or liens by reason of the non-payment
of, all Taxes (as defined in Section 2.21.1 hereof) assessed against the
Company, any of its assets or its operations.
4.10 DIVIDENDS, ETC. The Company will not: (i) declare or pay any
dividends or make any distributions with respect to or redeem any shares of the
Company's capital stock; (ii) accelerate the payment of or prepay any
indebtedness or other obligations of the Company; (iii) approve or effect any
reclassification or recapitalization of the Company or its authorized or
outstanding shares; (iv) merge or consolidate the Company with or sell any of
its assets to a third party other than sales of assets in the ordinary course of
business and consistent with past practices; (v) approve or commence any
proceedings for the liquidation of the Company; or (vi) enter into any agreement
to do any of the foregoing.
4.11 CORPORATE MATTERS. The Company will not: (i) amend its Certificate
of Incorporation or Bylaws; (ii) alter the composition or membership of the
Company's Board of Directors; (iii) authorize or issue any shares of capital
stock of any class or series; (iv) create or issue any warrants, obligations,
subscriptions, options, convertible securities or other commitments under which
any additional shares of the capital stock of any class or other equity
securities of the Company may be directly or indirectly authorized, issued or
transferred; or (v) agree to do any of the foregoing.
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4.12 LIABILITIES AND EXPENSES. The Company will not: have, create or
incur (whether as principal, surety or otherwise) any actual or contingent
liabilities or expenses other than liabilities and expenses set forth on
Schedule 4.12.
4.13 ACCESS. Subject to the provisions of Article XI below, the Company
shall give to Techniclone and its representatives, from and after the date of
execution of this Agreement, on prior request therefor from Techniclone or its
representatives, such reasonable access during normal business hours to the
premises, employees, agents and consultants of the Company, and such copies of
the Company's financial statements, books and records, and contracts and leases,
Proprietary Rights and other documentation, so as to enable Techniclone to
inspect and evaluate all aspects of the business and operations, assets,
operating results, condition (financial and other), future prospects,
capitalization, ownership, and legal and regulatory affairs of the Company and
to verify the accuracy of the information heretofore furnished to Techniclone,
and the representations and warranties made in this Agreement, by the
Stockholders with respect to the foregoing matters. The Stockholders agree that
the Company will furnish all information reasonably requested by Techniclone.
Techniclone agrees to conduct its review in a manner designed to minimize any
disruption of the Company's operations.
4.14 CERTAIN COVENANTS OF THE STOCKHOLDERS. Except for the sale of the
Shares to Techniclone, from and after the date hereof the Stockholders shall not
sell, transfer, pledge, hypothecate or otherwise dispose of any of the Shares or
grant any options or rights to purchase, or enter into any agreements which
would obligate any of the Stockholders to sell, or entitle any person or entity
to acquire, any of such Shares or any interest therein, whether absolute or
contingent. Unless and until this Agreement has been terminated in accordance
with and for any reason permitted by Article X below, the Stockholders will not,
nor will any of their respective representatives, agents, officers, directors,
or employees, solicit or accept offers from, provide information or assistance
to, or negotiate or enter into any agreement or understanding, oral or written,
with, any other person or entity regarding or relating to (i) the sale, merger,
or reorganization of the Company; (ii) the sale of any of the Company's assets
(other than sales of assets by the Company in the ordinary course of business
and consistent with past practices); (iii) the sale or other transfer of any of
the outstanding shares of the Company, capital stock or the issuance of any new
shares of capital stock or other securities of the Company; or (iv) any other
transaction which could cause or result in any change, other than of an
immaterial nature, in the Company's business, or which could interfere in any
manner with the consummation of the transactions contemplated in this Agreement.
Unless and until this Agreement has been terminated in accordance with and for
any reason permitted by Article X below, the Stockholders shall use their best
efforts to cause the Company, and its representatives, agents, officers,
directors, or employees, not to solicit or accept offers from, provide
information or assistance to, or negotiate or enter into any agreement or
understanding, oral or written, with, any other person or entity regarding or
relating to (i) the sale, merger, or reorganization of the Company; (ii) the
sale of any of the Company's assets (other than sales of assets by the Company
in the ordinary course of business and consistent with past practices); (iii)
the sale or other transfer of any of the outstanding shares of the Company,
capital stock or the issuance of any new shares of capital stock or other
securities of the Company; or (iv) any other transaction which could cause or
result in any change, other than of an immaterial nature, in the Company's
business, or which could interfere in any manner with the consummation of the
transactions contemplated in this Agreement.
4.15 FURNISHING OF CERTAIN INFORMATION. If requested by Techniclone,
the Stockholders (i) shall cause the Company to make, or cause to be made,
available to Techniclone true and correct
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copies of the Company's historical audited and interim financial statements for
any periods prior to the Closing Date and such other information concerning the
Company or its business as Techniclone may request, provided, however, that with
respect to financial or other information for any periods prior to January 1,
1993, such financial statements and other information need be furnished only to
the extent that the Company or the Stockholders can obtain such financial
statements or other information without unreasonable effort and expense; (ii)
shall permit Techniclone's independent public accountants to have access to the
books and records of the Company so that financial information of the Company
and its subsidiaries, if any, can be reviewed or audited; and (iii) shall permit
such financial statements and other information concerning the Company or its
business to be disclosed in any public filing by Techniclone under or pursuant
to the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended ("Securities Filings"). In addition, the Company and the
Stockholders shall use their best efforts to cause the Company's independent
public accountants to provide such information and assistance, including the
execution and delivery of opinions and consents with respect to the Company's
historical consolidated financial statements, as may be required by Techniclone
for inclusion in any such Securities Filings. Disclosure of such financial
statements and information furnished hereunder in any Securities Filing or
Filings shall not constitute a breach or violation of the confidentiality
provisions of Article XI of this Agreement.
ARTICLE V
OBLIGATIONS PENDING AND FOLLOWING THE CLOSING
5.1 TERMINATION OF SECURITY INTERESTS, LIABILITIES, LIENS AND OPTIONS.
Except for those obligations, options or liabilities set forth in Schedule 4.12
which obligations, options and liabilities shall be discharged by Techniclone in
accordance with the applicable payment terms (except as provided in Section
8.3.3 below), the Stockholders shall cause to be discharged, without cost,
liability, payment, obligation or diminution of assets of the Company, all of
the Company's obligations, options or liabilities. The Stockholders shall cause
to be removed, by the Closing Date, at no cost, liability, payment or
obligation, or diminution in assets of the Company or Techniclone, all security
interests, liens, claims, encumbrances and adverse interests on or attaching to
any of the Company's assets, that are set forth on Schedule 5.1
5.2 CONSENTS. Each party to this Agreement shall use its reasonable
best efforts to obtain or cause to be obtained at the earliest practicable date,
and prior to March 15, 1997, all consents, approvals and licenses, if any, which
such party requires to permit it to consummate the transactions contemplated
hereby without violating any material agreement, contract, instrument or
applicable law or regulation, license or permit, to which it is a party or to
which it or its assets are subject. The parties hereto shall cooperate with each
other in their efforts to obtain all such consents, approvals and licenses.
5.3 DISCLOSURE SCHEDULES. The Major Stockholders shall deliver or cause
the Company to deliver the Schedules to Techniclone at least ten (10) business
days prior to the Closing, and shall take all reasonable actions reasonably
requested by Techniclone to cause any items on such Schedules, which are
exceptions to the representations and warranties set forth in Article 2, to be
removed.
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5.4 PERMIT. As soon as practicable after the date hereof, Techniclone
shall prepare and file an application (the "Application") with the California
Department of Corporations (the "DOC") under Section 25121 of the California
Corporations Code for approval of the terms of this Agreement after a hearing.
Techniclone shall use its best efforts to cause the DOC to grant the Permit,
including appearing at any hearing required thereunder, in order that the
approval by the DOC would permit Techniclone to issue the Techniclone Shares
without registration under the Securities Act pursuant to an exemption provided
in Section 3(a)(10) thereof.
5.5 LISTING OF TECHNICLONE SHARES. Techniclone shall cause to be
prepared and submitted applications to NASDAQ covering the listing of the
Techniclone Shares on NASDAQ Small Cap and will use its best efforts to obtain
approval for the listing of the Techniclone Shares.
5.6 BLUE SKY APPROVALS. Techniclone shall obtain, prior to the Closing
all necessary state securities law permits and approvals required to issue the
Techniclone Shares to the Stockholders.
5.7 FURTHER ASSURANCES. Each party hereto shall execute and deliver,
both before and after the Closing, such instruments and take such other actions
as the other party or parties, as the case may be, may reasonably request in
order to carry out the intent of this Agreement or to better evidence or
effectuate the transactions contemplated herein.
5.8 NOTICE OF BREACH. Each party to this Agreement will immediately
give notice to the other parties of the occurrence of any event, or the failure
of any event to occur, that results in a breach by it of any representation or
warranty or a failure by it to comply with or fulfill any covenant, condition or
agreement contained herein.
5.9 STOCKHOLDER'S EXPENSES. Each Stockholder shall pay all costs and
expenses incurred or to be incurred by them, in their individual capacities, in
negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
5.10 RESTRICTION ON SALE OF TECHNICLONE SHARES. Except as provided
below in this Section or unless otherwise consented to in writing by
Techniclone, for a period of (i) 180 days following the closing date if the
Techniclone Shares become freely tradeable as a result of being issued under an
exemption from registration under the Securities Act, or (ii) if the Techniclone
Shares are not freely tradeable as a result of (i) above, then 120 days from the
date on which a registration statement covering the Techniclone Shares is filed
with the Securities and Exchange Commission, no Major Stockholder may sell any
Techniclone Shares without the prior written consent of Techniclone.
Notwithstanding the foregoing, each Major Stockholder may sell up to 10,000
Techniclone Shares per month during such 180 day period, provided that such
Major Stockholder does not sell more than an aggregate of 50,000 Techniclone
Shares during such 180 day period.
5.11 PEREGRINE CHARTER DOCUMENTS. Following the Closing, Techniclone
shall not take any action as a stockholder of the Company or otherwise, to amend
the provisions of the Company's Certificate of Incorporation or Bylaws which
relate to the indemnification of the Company's officers and directors, if such
amendment would further limit or reduce the scope of such indemnification.
5.12 AGREEMENT TO NOMINATE. Effective upon the Closing, Techniclone
will have agreed, at each meeting of Techniclone's stockholders at which
directors are to be elected, to nominate,
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recommend the election by Techniclone's stockholders and use its best efforts to
effect the election to the Board of Directors of Techniclone of one individual
designated by the Major Stockholders who have entered into this Agreement. This
right shall terminate on the date on which the Major Stockholders hold in the
aggregate less than 8% of the outstanding shares of Techniclone Common Stock.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TECHNICLONE
The obligations of Techniclone to consummate the acquisition of the
Shares and to perform its other obligations under this Agreement, shall be
subject to the fulfillment, or waiver by Techniclone, at or prior to the Closing
Date of each of the conditions set forth in this Article VI (provided that any
such waiver by Techniclone, to be effective, must be in writing and executed by
Techniclone).
6.1 COMPLETION OF DUE DILIGENCE REVIEW. Techniclone shall have
completed its due diligence review of the Company to Techniclone's satisfaction
including without limitation Techniclone's review of the Company's Proprietary
Rights, financial statements, corporate and stock records, facilities, equipment
and the Company's compliance with representations and warranties contained in
this Agreement.
6.2 RECEIPT AND COMPLETION OF DISCLOSURE SCHEDULE REVIEW. Techniclone
shall have received the Schedules at least ten (10) business days prior to the
Closing and completed its review of such Schedules to Techniclone's reasonable
satisfaction. In addition, the Stockholders shall take and shall use their best
efforts to cause the Company to take all reasonable actions reasonably requested
by Techniclone to cause any items on such Schedules, which are exceptions to the
representations and warranties set forth in Article 2, to be removed.
6.3 XXXXXX STOCK ISSUANCE. Prior to the Closing, the Company shall have
issued and sold to Xxxxxx that number of shares of the Company's Common Stock so
that, after such issuance, the aggregate number of shares of the Company's
Common Stock owned by Xxxxxx shall equal 10% of the outstanding Common Stock of
the Company on a fully-diluted basis.
6.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Stockholders in or pursuant to this Agreement or in the Schedules
hereto shall have been true and correct on the date hereof, and also at and as
of the Closing Date with the same force and effect as if made again at and as of
that time.
6.5 PAYMENT OF OBLIGATIONS, LIABILITIES AND TERMINATION OF SECURITY
INTERESTS. Receipt by Techniclone of (i) evidence that Stockholders have paid in
full or otherwise discharged the obligations set forth in Schedule 5.1 as
required by Section 5.1 hereto, (ii) evidence that Stockholders have paid in
full or otherwise discharged all liabilities of the Company, except those set
forth on Schedule 4.12, and (iii) UCC Termination Statements and such other
evidences of release and/or termination of the security interests, pledges,
liens and other encumbrances as Techniclone shall reasonably request,
terminating all security interests, pledges and liens and other encumbrances
listed on Schedule 5.1 hereto.
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6.6 ABSENCE OF LITIGATION. There shall be no litigation, whether
brought against the Company, Techniclone, or any of the Stockholders, seeking to
prevent the consummation of the transactions contemplated by this Agreement, and
no such litigation shall have been threatened nor shall there be in effect any
order restraining or prohibiting the consummation of the transactions
contemplated by this Agreement nor any proceedings pending with respect thereto.
6.7 PERFORMANCE OF OBLIGATIONS. The Stockholders shall have performed
and complied, in all material respects, with all covenants, conditions and
obligations required by this Agreement to have been performed by the
Stockholders at or prior to the Closing.
6.8 NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS. To the extent that
they are parties hereto, Lobo (individually and on behalf of BFC and PMT) and
Xxxxxx shall have entered into a Non-Competition Agreement in the form of
Exhibit B-1 attached hereto, with terms of two years and three years,
respectively, from the date that such Major Stockholders are no longer employees
or consultants of the Company. To the extent that they are parties hereto,
Xxxxxxxx and Sanderling shall have entered into a Non-Disclosure Agreement in
the form of Exhibit B-2 attached hereto. A portion of the Techniclone Shares
issued to such Major Stockholders constitutes the consideration for executing
such Non-Competition Agreement and Non-Disclosure Agreement, and for each Major
Stockholder his, her or its obligations thereunder.
6.9 NO ADVERSE CHANGES. Since December 31, 1996 there shall not have
been any material adverse change in (i) the condition or prospects, financial or
otherwise, and operating results of the Company, and (ii) the ability of the
Company to continue to conduct its business in the usual and ordinary course.
6.10 OTHER CONSENTS AND APPROVALS. Receipt of all consents and
approvals required for the consummation of the transactions contemplated by this
Agreement and to permit Techniclone to acquire all of the Shares of the Company
pursuant hereto, without thereby violating any laws, government regulations or
agreements to which Techniclone is subject or is a party, in form and substance
reasonably acceptable to Techniclone.
6.11 PERMIT. The DOC shall have issued the Permit as contemplated
herein, unless such condition has been waived by the Stockholders holding a
majority of the Shares on the Closing Date, as described in Section 7.3.
6.12 LISTING OF TECHNICLONE SHARES. NASDAQ shall have approved the
listing of the Techniclone Shares.
6.13 ACQUISITION OF REQUISITE PERCENTAGE OF SHARES. Stockholders of the
Company shall have agreed to exchange not less than fifty-one percent (51%) of
the shares of Common Stock of the Company on a fully-diluted basis and not less
than one hundred percent (100%) of the Series A Preferred Stock and Series B
Preferred Stock of the Company, pursuant to the terms of this Agreement.
6.14 CERTIFICATES. Receipt of a certificate or certificates executed by
the Major Stockholders, dated as of the Closing Date and reasonably satisfactory
in form and substance to Techniclone, certifying that (i) each of the
representations and warranties of the Major Stockholders contained herein was
true and correct when made and is true and correct in all material respects on
and as of the Closing Date with the same force and effect as if such
representations and warranties
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had been made on the Closing Date, and (ii) the Stockholders have performed and
complied in all material respects with all agreements, obligations, covenants
and conditions required to be performed or complied with by them pursuant hereto
on or prior to the Closing Date, except as may have been waived in writing by
Techniclone.
6.15 OPINION OF COUNSEL. Receipt of a favorable opinion dated the date
of Closing from Xxxxxx & Dodge LLP, counsel to the Stockholders, in form and
substance satisfactory to Techniclone, covering the matters set forth in Exhibit
C hereto.
6.16 NO DEFAULTS. There shall be no defaults under any of the
contracts, agreements and commitments set forth on the Schedules hereto that
would have a material adverse effect on the Company, its business, condition
(financial or other), results of operations or prospects.
6.17 ESCROW AGREEMENT. The Major Stockholders shall have executed and
delivered to Techniclone the Escrow Agreement in substantially in the form of
Exhibit A attached hereto.
6.18 DELIVERY OF SHARES TO ESCROW. The Escrow Shares shall have been
delivered to the Escrow Holder and held in escrow pursuant to the Escrow
Agreement.
6.19 TERMINATION OF LOBO. Lobo's employment with the Company shall have
been terminated by the Company prior to the Closing Date.
6.20 AGREEMENT AND WAIVER OF COMPANY. The Company shall have delivered
an enforceable, validly executed instrument to Techniclone, in which the Company
(i) waives the applicability of the right of first refusal provisions set forth
in Section 2.4 of the Amended and Restated Stockholder Rights Agreement (the
"Stockholder Rights Agreement") dated as of December 18, 1995 (the "Right of
First Refusal") as it applies to the transactions contemplated herein and to
each Stockholder who is a party hereto, (ii) consents to the transfer by each
Stockholder of their respective Shares to Techniclone, pursuant to Section 2.1
of the Stockholder Rights Agreement and (iii) agrees to comply with the
provisions of Section 4.13 of this Agreement.
6.21 ADDITIONAL INSTRUMENTS. The Stockholders shall have caused the
Company to deliver to Techniclone certified copies of resolutions duly adopted
by the Company's Board of Directors and, if required under applicable law, by
the stockholders of the Company, waiving the Right of First Refusal, consenting
to the transfer of each Stockholder's Shares to Techniclone and such other or
additional instruments, consents, endorsements and documents as Techniclone
reasonably deems to be necessary to enable the transactions contemplated by this
Agreement to be consummated as provided in this Agreement. All other proceedings
in connection with this Agreement and the transactions contemplated hereby, and
all documents and instruments incident to such transactions, shall be reasonably
satisfactory in form and substance to Techniclone and its counsel.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE STOCKHOLDERS
The obligations of the Stockholders to consummate the transfer of the
Shares to Techniclone and to perform their other obligations under this
Agreement shall be subject to the fulfillment, or
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the waiver by the Stockholders, at or prior to the Closing, of each of the
following conditions (provided that any such waiver, to be effective, must be in
writing and signed by the Stockholders holding a majority of the Shares):
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Techniclone in this Agreement shall have been true and correct at and as
of the date hereof, and they shall be true and correct at and as of the Closing
with the same force and effect as though made at and as of that time.
7.2 PERFORMANCE. Techniclone shall have performed and complied, in all
material respects, with all of its covenants, conditions and obligations
required by this Agreement to be performed or complied with by it at or prior to
the Closing.
7.3 PERMIT. The DOC shall have issued the Permit as contemplated
herein; provided however, that if the DOC shall have failed to issue the Permit,
and the Stockholders holding a majority of the Shares waive such failure,
Techniclone shall use its reasonable best efforts to file a registration
statement covering the Techniclone Shares under the Securities Act, within
ninety (90) days after the Closing Date, and shall cause such registration
statement to remain effective until such time as the Stockholders, who are not
deemed to be "Affiliates" of Techniclone (within the meaning of Rule 144(a)(1)
of the Securities Act), may sell their respective Techniclone Shares pursuant to
Rule 144(k) of the Securities Act.
7.4 LISTING OF TECHNICLONE SHARES. NASDAQ shall have approved the
listing of the Techniclone Shares.
7.5 CERTIFICATES. Receipt from Techniclone of a certificate, dated as
of the date of Closing and signed by the President or the Chief Financial
Officer of Techniclone, certifying that (i) each of its representations and
warranties contained herein was true and correct when made and is true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on the
Closing Date, and (ii) it has performed and complied in all material respects
with all agreements, obligations, covenants and conditions required to be
performed or complied with by it pursuant hereto on or prior to the Closing
Date, except as may be waived in writing by the Stockholders.
7.6 OPINION OF COUNSEL. Receipt of an opinion dated the date of Closing
from Stradling, Yocca, Xxxxxxx & Xxxxx, a Professional Corporation,
substantially in form of Exhibit D hereto.
7.7 ABSENCE OF LITIGATION. There shall be no litigation, whether
brought against the Company, Techniclone, or any of the Stockholders, seeking to
prevent the consummation of the transactions contemplated by this Agreement, and
no such litigation shall have been threatened nor shall there be in effect any
order restraining or prohibiting the consummation of the transactions
contemplated by this Agreement nor any proceedings pending with respect thereto.
7.8 NO ADVERSE CHANGES. Since the date of this Agreement there shall
not have been any material adverse change in (i) the condition or prospects,
financial or otherwise, and operating results of Techniclone, and (ii) the
ability of Techniclone to continue to conduct its business in the usual and
ordinary course.
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7.9 COMPLIANCE WITH STOCKHOLDERS AGREEMENT REGARDING TRANSFER. To
the extent required, Techniclone shall have delivered to each Stockholder an
instrument substantially in the form of Exhibit A to the amended and restated
Stockholder Rights Agreement, agreeing to be bound by the terms thereof
applicable to its transferor.
ARTICLE VIII
CLOSING
8.1 CLOSING DATE. Provided that all conditions precedent to the
consummation of the sale and purchase of the Shares set forth in Articles VI and
VII have been satisfied or waived on or prior to March 15, 1997, the
consummation of the transfer of the Shares (the "Closing") shall take place at
the offices of Techniclone's counsel, in Newport Beach, California, at 10:00
A.M. on the fifth (5th) business day immediately following the satisfaction or
waiver of all of the conditions precedent to the respective obligations of the
parties hereto, but in no event later than March 15, 1997, or such other date or
location as is mutually agreed upon by the parties hereto (the "Closing Date").
8.2 DELIVERIES AT THE CLOSING BY THE STOCKHOLDERS. The
Stockholders shall deliver to Techniclone the following:
8.2.1 The stock certificates evidencing all of the Shares,
accompanied by appropriate instruments of transfer duly executed by the
Stockholders;
8.2.2 The Non-Competition Agreements duly executed by the Lobo
(individually, and on behalf of BFC and PMT) and Xxxxxx, only to the extent they
are parties hereto;
8.2.3 The Non-Disclosure Agreements duly executed by Xxxxxxxx
and Sanderling, only to the extent that they are parties hereto;
8.2.4 The Escrow Agreement duly executed by the Major
Stockholders;
8.2.5 Evidence of the issuance of the permits, approvals and
consents required hereunder;
8.2.6 All documents and instruments and records pertaining to
bank accounts and safety deposit boxes of the Company, together with such
instruments as the depository institutions where such accounts and safety boxes
are maintained may require to change the signatories on such accounts and for
such safety deposit boxes; and
8.2.7 Each of the certificates, documents, instruments and
evidences required to be delivered to Techniclone pursuant to Section 6 above.
8.3 DELIVERIES AT THE CLOSING BY TECHNICLONE. Techniclone shall
deliver the following:
8.3.1 to the Stockholders, stock certificates evidencing the
Techniclone Shares, other than the Escrow Shares, to be issued in the names of
the Stockholders;
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8.3.2 to the Company, an instrument pursuant to which
Techniclone shall assume the liabilities of the Company reflected on Schedule
4.12 hereto; and
8.3.3 to Xxxxxx & Dodge LLP, the Company's corporate counsel,
accrued but unpaid legal fees of the Company as evidenced by invoices delivered
to Techniclone prior to the Closing Date, in an amount not to exceed $175,000.
ARTICLE IX
INDEMNIFICATION AND WAIVER OF CLAIMS
9.1 INDEMNITY AGAINST CLAIMS. The Major Stockholders shall
severally, but not jointly, indemnify and hold Techniclone and/or Company and
its successors-in-interest harmless from and against the following:
9.1.1 Any and all loss (including, without limitation,
diminution in value), cost, liability, damage, deficiency, claim, action, suit,
proceeding, demand, assessment or judgment ("Loss") that Techniclone or Company
may suffer, sustain, incur or become subject to or arising out of or due to any
inaccuracy or breach of any representation or warranty or non-fulfillment of any
covenant or agreement on the part of Stockholders, contained in this Agreement
or any certificate or schedule furnished or to be or being furnished to
Techniclone pursuant hereto.
9.1.2 Any and all costs and expenses, including interest,
penalties and reasonable attorneys' fees, reasonably incurred by Techniclone in
connection with investigating, prosecuting or defending any such liability,
loss, claim, action, suit, proceeding, demand, deficiency, assessment or
judgment arising from 9.1.1 herein.
9.1.3 No indemnification within the scope of Sections 9.1.1
and 9.1.2 shall be due hereunder unless and to the extent that such
indemnification shall individually or in the aggregate exceeds the sum of One
Hundred Thousand Dollars ($100,000). In no event, however, shall any Major
Stockholder be obligated to indemnify Techniclone for the amount of any Loss or
expense suffered or incurred by Techniclone, net of any reimbursements by
insurance (net of the premiums, if any, paid by Techniclone or Company
attributable to a period after the Closing for the insurance policy under which
the claim is paid), which exceed the lesser of (i) fair market value of the
Techniclone Shares issued to such Major Stockholder hereunder, at the time such
indemnification is sought; or (ii) the fair market value of the Techniclone
Shares issued to such Major Stockholder as determined by calculating the average
of the last reported sales price of the Techniclone Common Stock over the ten
(10) trading days immediately prior to that date that the transaction is
publicly announced.
9.1.4 Any and all tax deficiencies or assessments, including
interest and penalties, which exceed the reserve on the Closing Balance Sheet
for such deficiencies or assessments and which are for periods or fiscal years
which end on or prior to the Closing Date.
9.1.5 Any and all costs and expenses, including interest,
penalties and reasonable attorneys' fees, reasonably incurred by Techniclone in
connection with investigating, prosecuting or defending any such liability,
loss, claim, action, suit, proceeding, demand, deficiency, assessment or
judgment in connection with or arising from any indemnity claim in this Article
IX.
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9.2 NOTICE OF CLAIM, ASSUMPTION OF DEFENSE AND SETTLEMENT OF
CLAIM. With respect to any third party claim against Company and/or Techniclone
arising within the applicable periods specified in Section 9.4 and which claim
is within the scope of this Section 9, the following procedures shall be
observed:
9.2.1 Techniclone shall promptly give notice to the Major
Stockholders of the making of any claim or the commencement of any legal
proceedings against Company and/or Techniclone, and shall permit the Major
Stockholders to assume the defense of any such claim or any litigation resulting
from such claim with counsel reasonably satisfactory to Techniclone and/or
Company. Failure by the Major Stockholders to notify Techniclone and/or Company
of the election of the Major Stockholders to defend any such action within
thirty (30) days after notice thereof shall have been given shall be deemed a
waiver by the Major Stockholders of their right to defend such action. The Major
Stockholders shall not, in the defense of such claim or any litigation resulting
therefrom, consent to entry of any judgment (except with the written consent of
Techniclone and/or Company), or enter into any settlement (except with the
written consent of Techniclone and/or Company), which does not include as an
unconditional term thereof, the giving by the claimant or the plaintiff to
Company and/or Techniclone, of a release from all liability in respect of such
claim or litigation. If the Major Stockholders elect to assume hereunder the
defense of any claim or litigation resulting from a claim, Techniclone will, and
agrees to cause Company to, cooperate with the Major Stockholders in such
defense. The Major Stockholders shall bear all costs and expenses which they
incurred in defending such action and shall pay any and all damages assessed in
such action; provided, however, that if a Major Stockholder assumes the defense
of any such action, then Stockholders shall have no obligation to indemnify
Techniclone for any costs or expenses within the scope of Section 9.1.2 hereof
incurred by Techniclone in connection with such action.
9.2.2 If the Major Stockholders do not assume the defense of
any such third party claim or litigation resulting therefrom, Company and/or
Techniclone, at their own expense, may defend against such claim or litigation
and may make such settlements in such manner and amounts as they may reasonably
deem appropriate.
9.3 SECURITY FOR INDEMNIFICATION. The Major Stockholders hereby
authorize Techniclone at the Closing to deposit with the Escrow Holder (as that
term is defined in the Escrow Agreement) the Escrow Shares constituting five
percent (5%) of the Techniclone Shares which would otherwise be exchanged for
the Shares held by the Major Stockholders. The Techniclone Shares shall not be
delivered or transferred to the Major Stockholders at the Closing, but will be
held in escrow and disbursed to the Major Stockholders pursuant to the Escrow
Agreement. The Major Stockholders shall authorize the Escrow Holder to release
such amounts of the Escrow Shares as are, from time to time, necessary to
fulfill Stockholders' obligations under Section 9.1 hereof to indemnify
Techniclone and/or the Company. The establishment of the escrow is for the
purpose of partially securing the rights of Techniclone and/or the Company
pursuant to this Article IX and Techniclone is not precluded from asserting any
other rights or securing any other remedies against Stockholders directly for
payment of the obligations of the Major Stockholders under Section 9.1 hereof.
All claims for indemnification shall be made against the Escrow Shares until
depleted, and thereafter against the Major Stockholders directly, on a pro rata
basis, in proportion to their respective equity interest in the Company
immediately prior to the Closing, subject to the provisions of Section 9.5
below.
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9.4 TIME LIMITATIONS ON ASSERTION OF CLAIMS. Techniclone shall
give notice to the Major Stockholders of any claim for indemnification pursuant
to Section 9.1 within twenty-four (24) months after the Closing Date, except
that notices of claims (i) relating to tax deficiencies pursuant to Section
9.1.4 may be given within the applicable periods of the statutes of limitations
for the assertion of such claims against Company or Techniclone, (ii) relating
to Sections 2.1, 2.4, 2.5 and 2.8 may be given at any time, (iii) relating to
Section 2.11, any time within the ten (10) year period commencing on the Closing
Date and (iv) relating to Sections 2.16 and 2.18, may be given as long as the
applicable statute of limitations for the assertion of such claims against
Company or Techniclone.
9.5 INDEMNITY PAYMENTS. Any liability of the Major Stockholders
which has been finally determined under the indemnification provision herein set
forth shall be settled within ten (10) days of such final determination in
accordance with the provisions of the Escrow Agreement. The amount of any
liability of the Major Stockholders which (i) has been determined after, or
results in, the depletion of the Escrow Shares or (ii) has been determined after
the termination of the Escrow Agreement, shall be paid by the Major Stockholders
first by the delivery of shares of Techniclone Common Stock having the value
equal to the amount of such liability not recovered pursuant to the Escrow
Agreement. The value of Techniclone Common Stock shall be for the purposes of
this Section 9.5 the greater of (i) the fair market value of the Techniclone
Shares issued to such Major Stockholder hereunder, at the time such
indemnification is sought; or (ii) the fair market value of the Techniclone
Shares issued to such Major Stockholder as determined by calculating the average
of the last reported sales price of the Techniclone Common Stock over the ten
(10) trading days immediately prior to that date that the transaction is
publicly announced.
ARTICLE X
TERMINATION
10.1 METHODS OF TERMINATION. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time prior to the
Closing, without liability to the terminating party:
10.1.1 By mutual written consent of Techniclone and the
Stockholders, or
10.1.2 By either the Stockholders or Techniclone if all
conditions precedent to such terminating party's obligation to close have not
been satisfied or waived by the date fixed herein for the Closing or if the
Closing has not theretofore taken place no later than May 1, 1997, provided
that, in each of the foregoing cases the party so terminating is not in breach
of any of its material obligations under this Agreement.
10.2 PROCEDURE UPON TERMINATION. In the event of termination of
this Agreement by Techniclone or the Stockholders or by both Techniclone and the
Stockholders pursuant to Section 10.1 hereof, written notice thereof shall
forthwith be given to the other party or parties hereto and the transactions
contemplated herein shall be abandoned without further action by Techniclone or
the Stockholders, if this Agreement is terminated as provided herein:
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10.3 ACTIONS FOLLOWING TERMINATION. Following termination of this
Agreement, the parties covenant to perform as set forth in this Section 10.3.
10.3.1 Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same.
10.3.2 All information of a confidential nature received by
any party hereto with respect to the business of any other party (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall not at any time be
disclosed to third parties by such party to the detriment of the party who
furnished such information.
10.3.3 Except as hereinabove provided in this Section 10, the
respective obligations of the parties hereto under this Agreement shall
terminate, provided that if any party hereto has breached any of its material
obligations or representations or warranties under this Agreement prior to the
termination of this Agreement, termination of this Agreement shall not release
such party from liability therefor to the other party.
ARTICLE XI
CONFIDENTIALITY
Each party acknowledges that it may have access to various items of
proprietary and confidential information of the other in the course of
investigations and negotiations prior to Closing. Except as otherwise provided
in Sections 4.15 and in connection with the Application referenced in Section
5.4 above, each party agrees that any such confidential information received
from the other party shall be kept confidential and shall not be used for any
purpose other than to facilitate the completion of the transactions contemplated
herein. The disclosure of such financial or other information by Techniclone as
provided in Section 4.15 above, and the release of information to Techniclone's
insurers for risk assessment purposes, shall not constitute a breach of this
Article XI. Confidential information shall include any business or other
information which is delivered by one party to the other, unless such
information (i) is already public knowledge or (ii) becomes public knowledge
through no fault, action or inaction of the receiving party, or (iii) was known
by the receiving party, or any of its directors, officers, employees,
representatives, agents or advisors prior to the disclosure of such information
by the disclosing party to the receiving party. No party hereto, nor its
respective officers, directors, employees, accountants, attorneys, or agents
shall intentionally disclose the existence or nature of, or any of the terms and
conditions relating to, the transaction referred to herein, to any third person,
specifically including, but not limited to, the employees of the Company and
other parties with whom the Company may contract in the course of operating its
business; provided, however, that such information may be disclosed in
applications or requests required to be made to obtain licenses, permits,
approvals or consents needed to consummate the transactions contemplated herein
or in filings under the Securities Acts as provided in Section 4.15 above.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 NOTICES. All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
duly given, if delivered in person or mailed, certified, return-receipt
requested, postage prepaid:
(a) If to any or all of the Stockholders, to the address
provided to Techniclone by each Stockholder.
If to Lobo, with copies to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq. and
Xxxxxxx Xxxxxx, Esq.
If to Xxxxxx, with copies to:
Xxxxxxx Xxxxxxxxx, Esq.
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
(b) If to Techniclone, addressed to:
Techniclone Corporation
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxx X. Xxxxx
With copies to:
Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000-0000 Attn:
X.X.Xxxxxxx, Esq.
Any party hereto may from time to time, by written notice to the other parties,
designate a different address, which shall be substituted for the one specified
above for such party. If any notice or other document is sent by certified or
registered mail, return receipt requested, postage prepaid, properly addressed
as aforementioned, the same shall be deemed served or delivered seventy-two (72)
hours after mailing thereof. If any notice is sent by facsimile machine ("fax")
to a party, it will be deemed to have been delivered on the date the fax thereof
is actually received, provided the original thereof is sent by mail, in the
manner set forth above, within twenty-four (24) hours after the fax is sent.
12.2 ASSIGNMENT. No Stockholder may assign this Agreement, or
assign their respective rights or delegate their respective duties hereunder,
without the prior written consent of Techniclone.
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Prior to the Closing, Techniclone may not assign this Agreement, or assign its
rights or delegate its duties hereunder, without the prior written consent of
Stockholders holding a majority of the Shares, except to a wholly-owned
subsidiary of Techniclone.
12.3 SEVERABILITY. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
12.4 JOINT PRESS RELEASE. The parties agree to consult with each other
and to cooperate prior to issuing any press release or other public announcement
with respect to the transactions contemplated by this Agreement. No such press
release shall be issued by any party without the prior written consent of the
other party; provided, however, that a party may proceed with publication of
such a release or other public disclosure even if another party hereto has
refused to give its consent thereto, if the release or public disclosure is, in
the reasonable judgment of the releasing party, required for it to meet, on a
timely basis, its obligations under laws or regulations applicable to it,
including under the Federal Securities Laws.
12.5 GOVERNING LAW. This Agreement is deemed to have been made in the
State of California, and its interpretation, its construction and the remedies
for its enforcement or breach are to be applied pursuant to, and in accordance
with, the laws of California.
12.6 INCORPORATION AND AMENDMENT. This Agreement, the Schedules and
Exhibits hereto and each additional agreement and document referred to herein
constitute the entire Agreement of the parties, superseding and extinguishing
all prior agreements and understandings, representations and warranties,
relating to the subject matter hereof. This Agreement may not be modified,
amended or terminated except by written agreement specifically referring to this
Agreement signed by the parties hereto.
12.7 WAIVER. No waiver of a breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
12.8 HEADINGS. The section and paragraph headings contained herein are
for the purpose of convenience only and are not intended to define or limit the
contents of such sections.
12.9 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 ARBITRATION. All disputes between the parties hereto shall be
determined solely and exclusively by arbitration under the Federal Arbitration
Act, as amended, and in accordance with the rules then in effect of the American
Arbitration Association, or any successors hereto, in Orange County, California,
unless the parties otherwise agree in writing. The parties shall jointly select
an arbitrator. In the event the parties fail to agree upon an arbitrator within
ten (10) days, then each party shall select an arbitrator and such arbitrators
shall then select a third arbitrator to serve as the sole arbitrator, provided
that if either party, in such event, fails to select an arbitrator within seven
(7) days, such arbitrator shall be selected by the American Arbitration
Association, or any successor thereto, upon application of either party.
Judgment upon the award of the agreed upon arbitrator or
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the so chosen third arbitrator, as the case may be, shall be binding and shall
be entered into by a court of competent jurisdiction.
IN WITNESS WHEREOF, the undersigned corporations have caused this Stock
Exchange Agreement to be executed by officers thereunto duly authorized, and the
individuals have executed this Stock Exchange Agreement, on the date first above
stated.
TECHNICLONE CORPORATION
------------------------------------------
Xxxxxxxx X. Xxxx
By: ------------------------------- ------------------------------------------
Xxx X. Xxxxx, Chairman and CEO Xxxxxx X. Xxxxxx, Ph.D.
SANDERLING VENTURES
MANAGEMENT
By:
--------------------------------------
Its:
--------------------------------------
SANDERLING VENTURE
PARTNERS III, L.P.
By:
--------------------------------------
Its:
--------------------------------------
SANDERLING III LIMITED
PARTNERSHIP
By:
--------------------------------------
Its:
--------------------------------------
SANDERLING III BIOMEDICAL, L.P.
By:
--------------------------------------
Its:
--------------------------------------
CODAN TRUST COMPANY LTD.,
as Trustees of the Peregrine Medical Trust
By:
--------------------------------------
Xxxxxxxx X. Xxxx
Its:
--------------------------------------
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BIOTECHNOLOGY FINANCIAL CORP.
PROFIT SHARING PLAN
By:
--------------------------------------
Xxxxxxxx X. Xxxx
Its:
--------------------------------------
S.K. PARTNERS, L.P.
By:
--------------------------------------
Its:
--------------------------------------
-----------------------------------------
Xxxx X. Xxxxxxx, M.D.
-----------------------------------------
Xxxxxxx Xxxx
-----------------------------------------
Xxxxxx Xxxxxx, Ph.D.
-----------------------------------------
Xxxxxx X. Xxxxxxxx, M.D.
-----------------------------------------
Xxxxxx Xxxxxxxxx, M.D.
-----------------------------------------
Xxxxxx X. Xxxxxx, M.D.
-----------------------------------------
Xxxxxx X. Xxxx, Ph.D.
-----------------------------------------
Xxxxxxx Xxxxxxxxx, Ph.D.
-----------------------------------------
Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------
Xxxxxx Xxxx
XXXX ISRAEL HOSPITAL
By:
--------------------------------------
Its:
--------------------------------------
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