1
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into this 29th day of
February, 1996, by and between TECHNICLONE INTERNATIONAL CORPORATION, a
California corporation ("Company"), and BIOTECHNOLOGY DEVELOPMENT, LTD., a
Nevada limited partnership ("Owner").
R E C I T A L S:
A. Company and Owner entered into a Distribution Agreement dated
February 29, 1996 ("Distribution Agreement") whereby Owner purchased the
distribution rights for the Product in the Territory (as those terms are
defined in the Distribution Agreement) (the "Distribution Rights").
B. Owner purchased the Distribution Rights for $3,000,000
together with an agreement to pay Company the greater of 23% of the Net Selling
Price of the Product or $900 per Dose (as those terms are defined in the
Distribution Agreement).
C. In the negotiations between the Company and Owner for the
Distribution Rights, Owner agreed that Company would have a thirty (30) month
option to purchase the Distribution Rights from Owner.
D. Owner is willing to grant Company this right as partial
consideration for the purchase of the Distribution Rights.
NOW, THEREFORE, in consideration of the foregoing premises, the
parties hereby represent, warrant, covenant and agree as follows:
ARTICLE 1
TERMS OF OPTION
1.1 Grant of Option. Owner hereby grants to Company and Company
hereby accepts an option to purchase the Distribution Rights granted under the
Distribution Agreement for a thirty (30) month period (913 days) under the
terms and conditions provided herein.
1.2 Term. The term of the option granted herein shall commence on
the execution date of this Agreement and, unless otherwise extended as provided
herein, shall expire at 5:00 p.m. on the 913th day (thirty (30) months)
thereafter (the "Option Term"). If such termination date should be a
non-business day (weekend or holiday), the Option Term shall automatically be
extended until 5:00 p.m. on the next business day.
1.3 Exercise of Option. If the Company elects to exercise the
option granted herein, then Company shall deliver to Owner a written notice of
such exercise on or before the ninetieth (90th) day preceding the expiration of
the Option Term ("Option Notice"). On the expiration date the Company shall
deliver a copy of the Option Notice accompanied by the consideration required
on
20 EXHIBIT 10.2
2
the date the Option is exercised, which consideration is set forth on Exhibit
A to this Agreement and by this reference incorporated herein.
1.4 Option Consideration. The consideration for the option
granted herein is the sale by Company to Owner of the Distribution Rights
granted under the Distribution Agreement.
1.5 Failure to Exercise Option. If the option granted in this
Agreement is not exercised by Company prior to the expiration of the Option
Term, then this option shall immediately terminate and Company shall have no
further right to purchase the Distribution Rights.
ARTICLE 2
GENERAL PROVISIONS
2.1 Paragraph Headings. The paragraph headings used in this
Agreement are for purposes of convenience only. They shall not be construed to
limit or extend the meaning of any part of this Agreement.
2.2 Notices. Any notice, demand, approval, consent, or other
communication required or desired to be given under this Agreement shall be in
writing and shall be either personally served or mailed in the United States
mails, certified, return receipt requested, postage prepaid, addressed to the
party to be served with the copies indicated below, at the last address given
by that party to the other under the provisions of this section. All such
communications shall be deemed delivered at the earlier of actual receipt or
five (5) business days following mailing as aforesaid.
Owner: Biotechnology Development, Ltd.
c/o Tom Hartley
222 South Rainbow, Suite 218
Las Vegas, Nevada 89128
Attention: Edward Legere
Techniclone: Techniclone International Corporation
14282 Franklin Avenue
Tustin, California 92680
Attention: Chairman and CEO
2.3 Binding Effect. All the terms, covenants and conditions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors.
2.4 Entire Agreement. This Agreement sets forth the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes and replaces any prior understanding, agreement
or statement, written or oral, with respect to the same. No provision of the
Agreement shall be construed to confer any rights or remedies on any person
other than parties hereto.
2.5 California Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California applicable
to agreements made and to be performed entirely within such state.
21
3
2.6 Time of the Essence. Time is of the essence in the
performance of each and every provision of this Agreement.
2.7 Attorneys' Fees. In the event of any controversy, claim or
dispute between the parties hereto arising out of or relating to this Agreement
or any of the documents provided for herein, or the breach thereof, the
prevailing party shall be entitled to recover from the losing party reasonable
attorneys' fees, expenses and costs.
2.8 Assignment: This Agreement shall not be assignable by either
party without the consent of the other.
2.9 Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
2.10 Modification. This Agreement shall not be modified except by
a writing signed on behalf of each of the parties hereto.
2.11 Severability. If any term, provision, covenant or condition
of this Agreement is found by a court of competent jurisdiction to be invalid,
void or unenforceable, then such term, provision, covenant or condition shall
be deemed to be stricken from this Agreement and the remainder of this
Agreement shall remain in full force and effect and shall in no way be
effected, impaired or invalidated thereby.
2.12 Counterparts. This Agreement may be executed in several
counterparts and such counterparts together shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, this Option Agreement is executed by the parties
hereto on the date first above written.
BIOTECHNOLOGY DEVELOPMENT, LTD.
By: Buen Hermanos, Inc., Its General Partner
By: /s/ EDWARD LEGERE
----------------------------------------
Edward Legere, President
TECHNICLONE INTERNATIONAL CORPORATION
By: /s/ LON H. STONE
----------------------------------------
Its: President
22
4
EXHIBIT A
TO OPTION AGREEMENT
The purchase price for the Distribution Rights shall depend on the
time frame during which such purchase right is exercised. The purchase price
shall be as follows:
0-12 Months
If Company purchases the Distribution Rights from Owner during the
period beginning with the execution date of this Agreement and ending ont he
last day of the twelfth (12th) month following the execution date, then it
shall pay Owner Four Million Dollars ($4,000,000) and give Owner a five (5)
year option to purchase one million (1,000,000)shares of the Company's common
stock at Five Dollars ($5.00) per share.
13-24 Months
If Company purchases the Distribution Rights during the period
beginning with the first day of the thirteenth (13th) month following the
execution of this Agreement and ending on the last day of the twenty-fourth
(24th) month following the execution of this Agreement then it will pay the
Owner Four Million Five Hundred Thousand Dollars ($4,500,000) and give Owner a
five (5) year option to purchase one million (1,0000,000) shares of the
Company's common stock at Five Dollars ($5.00) per share. In addition, Owner
will receive a two (2%) royalty on the gross revenue of the LYM-1 product in
the geographic areas covered by the Distribution Agreement.
25-30 Months
If Company purchases the Distribution Rights during the period
beginning with the first day of the twenty-fifth (25th) month following the
execution of this Agreement and ending on the last day of the thirtieth (30th)
month following the execution of this Agreement then it will pay the Owner Four
Million Five Hundred Thousand Dollars ($4,500,000) and give Owner a five (5)
year option to purchase one million (1,0000,000) shares of the Company's common
stock at Five Dollars ($5.00) per share. In addition, Owner will receive a
five (5%) royalty on the gross revenue of the LYM-1 product in the geographic
areas covered by the Distribution Agreement.
23