1
EXHIBIT 2.1
FIRST AMENDMENT TO
STOCK EXCHANGE AGREEMENT
This FIRST AMENDMENT TO STOCK EXCHANGE AGREEMENT (the "Amendment"), is
made as of the _______ day of April, 1997, by and among PEREGRINE
PHARMACEUTICALS, INC., a Delaware corporation (The "Company"), those
Stockholders of the Company who have executed that certain Stock Exchange
Agreement dated January 15, 1997 (the "Agreement") and this Amendment,
TECHNICLONE CORPORATION, a Delaware corporation ("Techniclone") the successor in
interest to TECHNICLONE INTERNATIONAL CORPORATION, a California corporation
which was merged into and with Techniclone on March __, 1997, PHILIP E. THORPE,
Ph.D. ("Thorpe"), 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. ("Saunders"), JENNIFER H. LOBO
("Jennifer") and BIOTECHNOLOGY FINANCIAL CORP. PROFIT SHARING PLAN ("BFC").
Jennifer and BFC are collectively referred to in this Amendment as "Lobo" and
Lobo, Thorpe, Sanderling and Saunders are sometimes collectively referred to
herein as the "Major Stockholders." Any other Stockholder of the Company that
entered into the Agreement and enters into this Amendment 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." Except as
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Agreement.
R E C I T A L S
A. Pursuant to the terms of the Agreement, Techniclone has agreed to
issue shares of its Common Stock (the "Techniclone Shares") to the Stockholders
in exchange for shares of capital stock of the Company held by the Stockholders.
B. Subsequent to the date of the Agreement, disputes have arisen among
Techniclone, certain of the Major Stockholders and the Company, which disputes
relate to the interpretation of the terms of the Agreement by such parties.
C. The parties hereto desire to resolve their disputes and to amend
certain of the terms of the Agreement as such provisions apply to them and to
the other Stockholders.
D. The Company's Board of Directors agreed to permit the conversion of
the Seven Hundred Fifty Thousand Dollar ($750,000) Note at Five Dollars Forty
Cents ($5.40) per share and the Stockholders by executing this Amendment will
approve such conversion
25
2
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual promises of the parties
contained herein, and with the intent to be legally bound hereby, the parties
hereto agree as follows:
1. CONVERSION OF NOTE. The Stockholders agree that the Seven
Hundred Fifty Thousand Dollar ($750,000) Note shall be converted into One
Hundred Thirty Eight Thousand Eight Hundred Eighty-Nine (138,889) shares of the
Company's Common Stock.
2. AMENDMENT OF AGREEMENT. The parties hereto agree that Section
1.2 of the Agreement is hereby amended to provide that, in connection with the
consummation of the transactions contemplated in the Agreement, Techniclone
shall increase the aggregate number of Techniclone Shares that it will issue to
the Stockholders, in the amounts and to the Stockholders set forth on EXHIBIT A
hereto. Except as expressly set forth herein and on EXHIBIT A hereto, the
Agreement shall continue to be in full force and effect as otherwise existing.
3. LIMITATION ON SANDERLING LIABILITY. Sanderling makes no
representation or warranty as to the following:
1. "Section 2.3 Licenses and Permits." to the extent that such
section can be read to imply that Peregrine has received any
governmental approvals to develop, market or commercialize its
products, such as any required approvals from the United States Federal
Food and Drug Administration;
2. "Section 2.11 Intangible Personal Property." and Section 2.13
Title to and Adequacy of Assets." to the extent that such sections
involve any representation that the Peregrine technology may be
commercialized by Techniclone without infringement or license of patent
rights held by or obtained by third parties;
3. "Section 2.27 Disclosure." to the extent that the Schedules
attached to the Agreement 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.
4. Restriction on Sale. Section 5.10 of the Agreement shall be
amended to read as follows:
5.10 Restriction on Sale of Techniclone Shares. Except as provided
below in this Section, for a period of (i) one year following the
closing date if the Techniclone Shares become freely tradable as a
result of being issued under an exemption from registration under
the Securities Act, or (ii) if the Techniclone Shares are not
freely tradable 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.
26
3
4. INDEMNIFICATION.
4.1 Limitation. Techniclone hereby confirms that Section 9.1.3
is in full force and effect that no indemnification within the scope of Sections
9.1.1 and 9.1.2 in the Agreement shall be due unless and to the extent that such
indemnification shall individually or in the aggregate exceed the sum of
$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. The Major Stockholders
shall be entitled, at their option, to satisfy any claim through the delivery of
the Techniclone Shares valued at their applicable fair market value at any time
that such shares can not be readily sold by the Major Stockholders in the public
market.
4.2 Pro Rata Claims. Techniclone agrees that to the extent it
asserts any claim for indemnification under the Agreement that it will assert
and diligently pursue against all of the Major Shareholders its claim for
indemnification. For purposes of this amendment the pro rata portion of any
Major Stockholder indemnification shall be calculated as follows:
the amount to be indemnified shall be the product of the total
amount to be indemnified multiplied by a fraction, the numerator
of which that number of Techniclone Shares delivered to such
indemnifying Stockholder pursuant to the Exchange Agreement and
denominator of which is the total number of all Techniclone Shares
delivered to all Peregrine Stockholders pursuant to the Exchange
Agreement.
4.3 Time Limitation. Section 9.4 of the Agreement shall be
amended to read as follows:
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 twelve (12) 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 statues 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.
27
4
5. UNPROVEN TECHNOLOGY. Techniclone acknowledges that the
Peregrine technology is as yet unproven and recognizes that the Major
Stockholders make no representations that such technology can be developed,
marketed or commercialized by Techniclone in a timely or cost-effective matter
or at all. Techniclone acknowledges that it has conducted substantial due
diligence into Peregrine's product development and had been afforded an
opportunity to review the status of Peregrine's technology. Techniclone assumes
the risks of further technology development.
6. LOCK-UP PROVISIONS. The Major Stockholders agree they will not
offer, sell, contract to sell, grant any option to purchase, make any short sale
or otherwise dispose of or make a distribution of any Common Stock of the
Company (including, without limitation, Common Stock of the Company which may be
deemed to be beneficially owned by the undersigned in accordance with the rules
and regulations of the Securities and Exchange Commission) for a period of one
year after the Closing Date of the transactions contemplated by the Agreement
(the "Lock-Up Period"). Notwithstanding anything to the contrary in the
foregoing, during the Lock-Up Period each of the Major Stockholders may sell or
otherwise transfer that number of Shares of the Company's Common Stock which is
set forth next to their name below:
NUMBER OF SHARES WHICH
----------------------
MAY BE SOLD DURING THE
----------------------
MAJOR STOCKHOLDER LOCK-UP PERIOD
----------------- --------------
Sanderling 275,000
Saunders 275,000
Lobo 90,000
Thorpe 50,000
The Major Stockholders agree that this provision is irrevocable and
shall be binding upon each of them and their heirs, legal representatives,
successors and assigns. The Major Stockholders agree and consent to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of securities held by the Major Stockholders, except in compliance with
this Amendment.
7. MUTUAL RELEASE. In consideration for Techniclone agreeing to
increase the number of Techniclone Shares to be issued to the Stockholders, as
provided in Section 2 above, each of the Stockholders and Company agree to, and
do hereby, waive, release and discharge each of the other Stockholders, the
officers, directors and agents of the Company, and the Company, as well as their
respective officers, directors, shareholders and agents, from any and all claims
including, without limitation, any claims to additional shares of Company or
Techniclone Stock by reason of exercise of warrants, conversion of notes or
otherwise, demands, costs, contracts, liabilities, objections, rights, damages,
expenses, compensation and actions and causes of action of every nature, whether
in law or in equity, known or unknown, or suspected or unsuspected, which such
Stockholders ever had or now have against each other, the Company, or the
Company's Officers, Directors or Agents, which relate to (i) their positions or
actions at the Company, (ii) the negotiation, execution and performance of the
terms of the Agreement, this Amendment or (iii) their investment in the Company.
28
5
8. WAIVER OF CIVIL CODE SECTION 1542. The Major Stockholders
hereto each expressly waive and relinquish any and all rights that they may have
under the provisions of Section 1542 of the California Civil Code, which
reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
9. SALE OF ADDITIONAL SHARES TO SANDERLING. Techniclone agrees to
sell to Sanderling $550,000 of its Common Stock on the Closing Date of the
transactions contemplated by the Agreement (the "Closing Date") at a purchase
price equal to eighty percent (80%) of the average of the Closing Price, as that
term is defined below, of Techniclone's Common Stock for the five (5) trading
days immediately preceding the Closing Date. For purposes hereof the "Closing
Price" shall be the Closing Price on the NASDAQ Small Cap Market or if the
Company's Common Stock is then traded on a national securities exchange or
NASDAQ National Market System the Closing Price shall be the Closing Price of
the Company's Common Stock on the principal national securities exchange.
Sanderling (i) agrees to enter into a Purchaser Representation and Subscription
Agreement with respect to the purchase of the shares of Common Stock pursuant to
this Section 9 and (ii) understands and agrees that the shares of Common Stock
to be issued pursuant to this Section 9 will be "restricted shares" as that term
is defined in Rule 144 promulgated under the Securities Act of 1933.
10. EFFECTIVE DATE. The parties to this Amendment agree that this
Amendment and the release contained herein shall only be effective upon the
closing of the Agreement.
11. COMPREHENSION OF DOCUMENTS. In entering into this Amendment,
the parties represent that they relied upon the legal advice of their respective
attorneys, who are the attorneys of their own choice, and that the terms of this
Amendment are fully understood and voluntarily accepted by the parties without
duress or coercion, economic or otherwise.
12. MUTUAL DRAFTING. Each party hereto has cooperated in the
negotiation, drafting and preparation of this Amendment. Therefore, this
Amendment shall not be construed against any party, but shall be construed to
have been drafted jointly by each of the parties.
13. AUTHORITY TO EXECUTE AMENDMENT. Each party or responsible
officer thereof has read this Amendment and understands the contents hereof.
Each party or responsible officer thereof executing this Amendment is empowered
to do so and thereby binds himself, herself or the party for whom he or she
signs.
14. COUNTERPART EXECUTION. This Amendment may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
original.
29
6
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
TECHNICLONE CORPORATION PEREGRINE PHARMACEUTICALS, INC.
By: _________________________________ By: _____________________________
Lon H. Stone, Chairman and Jennifer H. Lobo, President
CEO
__________________________________
Jennifer H. Lobo
__________________________________
Philip E. Thorpe, Ph.D.
SANDERLING VENTURES
MANAGEMENT
By: _____________________________
Its: _____________________________
30
7
SANDERLING VENTURE
PARTNERS III, L.P.
By: _____________________________
Its: _____________________________
SANDERLING III LIMITED
PARTNERSHIP
By: _____________________________
Its: _____________________________
SANDERLING III BIOMEDICAL,
L.P.
By: _____________________________
Its: _____________________________
BIOTECHNOLOGY FINANCIAL
CORP. PROFIT SHARING PLAN
By: _____________________________
Jennifer Lobo
Its: _____________________________
S.K. PARTNERS, L.P.
By: _____________________________
Its: _____________________________
__________________________________
Marc E. Lippman, M.D.
__________________________________
Phyllis Rand
__________________________________
Thomas Maciag, Ph.D.
__________________________________
Stuart A. Aaronson, M.D.
31
8
__________________________________
Merton Bernfield, M.D.
__________________________________
Harold F. Dvorak, M.D.
__________________________________
Rakesh K. Jain, Ph.D.
__________________________________
Michael Klagsbrun, Ph.D.
__________________________________
Christina L. Schumacher
__________________________________
Steven King
BETH ISRAEL HOSPITAL
By: _____________________________
Its: _____________________________
32
9
AMENDED TERMS FOR THE
ISSUANCE OF TECHNICLONE SHARES
SANDERLING SAUNDERS/ THORPE LOBO OTHERS TOTAL
KARP
---------- -------- ------ ---- ------ -----
Existing Stock 279,630 350,000 80,000 270,000 96,332 1,075,962
Add: Conversion
of $550,000 Note 16,215 16,215 16,215 12,466 61,111
at $9.00 per
share
Conversion of
$326,700 Note at 12,100 12,100 12,100 36,300
$9.00 per share
Conversion of
$750,000 Note at 92,592 37,037 9,260 138,889
$5.40 per share
Thorpe
Adjustment 56,918 52,885
400,537 415,352 136,918 307,575 108,798 1,369,180
Conversion Factor 3.6518207 3.6518207 3.6518207 3.6518207 3.6518207 3.6518207
Techniclone 1,462,689 1,516,791 500,000 1,123,209 397,311 5,000,000
Shares
Techniclone 50,000 13,000 17,000 80,000
Contribution
1,512,689
Total Shares 1,512,689(A) 1,516,791 500,000 1,136,209 414,311 5,080,000
Conversion Factor:
5,000,000 = 3.6518207
---------
1,369,180
(A) Techniclone will enter into a side agreement to sell, and will sell to,
Sanderling $550,000 of Techniclone Common Stock at 80% of the average of the
Closing Price of the Techniclone Common Stock on the NASDAQ Small Cap Market
for the fine trading days preceding the Closing Date of the Agreement per
share at the closing.