AMENDMENT AGREEMENT #1
This AMENDMENT AGREEMENT #1 ("Amendment") is made and dated as of June 14, 2000
(the "Effective Amendment Date") by and between Schering Aktiengesellschaft
("Schering") and Techniclone Corporation ("Techniclone").
WHEREAS, Schering and Techniclone entered into the License Agreement dated as of
March 8, 1999 relating to the grant by Techniclone to Schering of certain rights
in the area of radiolabeled antibodies for use in oncology, and the development
by the Parties of a Product (the "Agreement") ;
WHEREAS, the Agreement calls for Techniclone to bear a portion of certain
Clinical Development Expenses and all of certain CMC/Manufacturing Expenses; and
WHEREAS, Techniclone is desirous of having Schering take over the responsibility
for paying Techniclone's portion of Clinical Development Expenses in two stages
(described below) through Decision Point #2 (defined below), and Schering is
willing to assume such payment responsibilities (but not Techniclone's
obligations to perform and pay for CMC/Manufacturing) in exchange for the
consideration described in this Amendment;
NOW THEREFORE, intending to be legally bound and for good and sufficient
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows.
SECTION 1: DEFINITIONS. Capitalized terms used in this Amendment shall have the
meanings ascribed in the Agreement. The following additional terms shall be
added to "Article I: Definitions" of the Agreement:
"DECISION POINT #1" means the date on which the clinical study results
are finalized for the Phase I Maximum Tolerated Dose Trial.
"DECISION POINT #2" means the date on which the first twenty-eight (28)
fully evaluable patients have completed the protocol for the Phase II/III
Clinical Trial.
"PAYMENT SHARES" means the common equity shares of Techniclone that
Techniclone transfers to Schering to fulfill Techniclone's payment obligations
pursuant to Section 3.04(d). Such shares shall be registered with the United
States Securities and Exchange Commission, and shall be saleable by Schering in
the public market for securities in the United States through a broker-dealer
licensed by the United States Securities and Exchange Commission, upon an S-3
registration statement filed by Techniclone with the United States Securities
and Exchange Commission relating thereto becoming effective.
"PHASE I MAXIMUM TOLERATED DOSE TRIAL" means a clinical trial of
Product in humans to establish the maximum tolerated dose and to collect
dosimetry data.
"PHASE II/III CLINICAL TRIAL" means a clinical trial of Product in
humans designed to fulfill the FDA requirements of both a Phase II Clinical
Trial and a Phase III Clinical Trial, sufficient to avoid the necessity of
conducting a separate Phase II Clinical Trial and Phase III Clinical Trial,
while providing adequate data to support a grant of Regulatory Approval from
EMEA and FDA.
"PROCEEDS" means the cash amount that Schering receives as a result of
selling Payment Shares in the public market for securities in the United States,
net of commissions and other expenses of Schering related to the sale of the
Payment Shares .
SECTION 2: AMENDMENT OF SECTION 3.04(b). The Parties agree that Section 3.04 (b)
(ii) of the Agreement shall be deleted in its entirety and replaced with the
following language:
(ii) CLINICAL DEVELOPMENT EXPENSES.
(A) CLINICAL DEVELOPMENT EXPENSES FROM EFFECTIVE
AMENDMENT DATE THROUGH DECISION POINT #1. Schering
shall be responsible for one hundred percent (100%)
of all Clinical Development Expenses, subject to a
maximum of one million, three hundred thousand United
States dollars ($1,300,000), incurred from the
Effective Amendment Date through Decision Point #1
for Products in the Territory; provided however that
Techniclone shall be responsible for one hundred
percent (100%) of Clinical Development Expenses
relating to the manufacture, packaging and delivery
to clinical sites of Oncolym for use in Clinical
Development through Decision Point #1. In the event
that Clinical Development Expenses incurred from the
Effective Amendment Date through Decision Point #1
exceed one million three hundred thousand United
States dollars ($1,300,000), then Schering shall be
responsible for eighty percent (80%) of the excess
and Techniclone shall be responsible for twenty
percent (20%) of the excess. In the event that
Schering determines to continue Clinical Development
after Decision Point #1, then clause B below shall be
applicable.
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(B) CLINICAL DEVELOPMENT EXPENSES FROM DECISION POINT
#1 THROUGH DECISION POINT #2. In the event that
Schering determines to continue Clinical Development
following Decision Point #1, then Schering shall be
responsible for one hundred percent (100%) of all
Clinical Development Expenses, subject to a maximum
of one million, seven hundred thousand United States
dollars ($1,700,000), incurred from Decision Point #1
through Decision Point #2 for Products in the
Territory; provided however that Techniclone shall be
responsible for one hundred percent (100%) of
Clinical Development Expenses relating to the
manufacture, packaging and delivery to clinical sites
of Oncolym for use in Clinical Development from
Decision Point #1 through Decision Point #2. In the
event that Clinical Development Expenses incurred
from Decision Point #1 through Decision Point #2
exceed one million, seven hundred thousand United
States dollars ($1,700,000), then Schering shall be
responsible for eighty percent (80%) of the excess
and Techniclone shall be responsible for twenty
percent (20%) of the excess. In the event that
Schering determines to continue Clinical Development
after Decision Point #2, then Schering shall be
responsible for eighty percent (80%) of all Clinical
Development Expenses incurred after Decision Point #2
(including Clinical Development Expenses relating to
the manufacture, packaging and delivery to clinical
sites of Oncolym for use in Clinical Development) for
Products in the Territory, and Techniclone shall be
solely responsible for the remaining twenty percent
(20%) of such Clinical Development Expenses.
SECTION 3: ADDITION OF SECTION 3.04(d). The Parties agree to add the following
new Section 3.04(d) to the Agreement, as follows:
(d) PAYMENTS TO SCHERING BY TECHNICLONE.
(A) FROM EFFECTIVE AMENDMENT DATE THROUGH DECISION
POINT #1.
(i) In consideration of Schering's agreement
to undertake responsibility for payment of Clinical
Development Expenses as described above from the
Effective Amendment Date through Decision Point #1,
Techniclone agrees to transfer to Schering, within
three (3) days after the registration statement
described below in Section 3.04(d)(A)(iii) becomes
effective, Payment Shares equal to one million, three
hundred thousand United States dollars ($1,300,000)
determined by the average closing stock price for the
five trading days prior to the date the registration
statement becomes effective. In addition, in lieu of
transferring all or part of the Payment Shares to
Schering, Techniclone shall have the right to pay
Schering in cash at any time to satisfy the
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obligations of Techniclone hereunder, for either the
full amount due to Schering or any portion thereof,
at the sole discretion of Techniclone. The Parties
recognize that the public market for securities in
the United States is volatile, and that as a result
Schering may not realize Proceeds of one million,
three hundred thousand United States dollars
($1,300,000) (or such lower amount as may be
applicable if Techniclone has satisfied part of its
obligations hereunder in cash) when it sells the
Payment Shares. In the event that Schering realizes
Proceeds of less than one million, three hundred
thousand United States dollars ($1,300,000) (or such
lower amount as may be applicable if Techniclone has
satisfied part of its obligations hereunder in cash)
as a result of the sale of the Payment Shares,
Schering shall notify Techniclone of the shortfall.
Techniclone shall pay the amount of the shortfall to
Schering either by issuing additional Payment Shares
to Schering, by paying cash to Schering, or some
combination thereof in the sole discretion of
Techniclone, but in any event such payment shall be
made to Schering within ten trading days from the
date of written notification from Schering to
Techniclone of the shortfall. The Parties recognize
that if Techniclone makes up any shortfall through
the transfer of additional Payment Shares to
Schering, then the process described above may have
to be repeated more than once in order for Schering
to realize Proceeds equal to one million, three
hundred thousand United States dollars ($1,300,000).
Schering agrees to provide Techniclone with a copy of
the relevant broker/dealer trading record within a
reasonable time of receipt of a written request from
Techniclone. Schering's obligations under this
Amendment and the Agreement are conditioned upon
Schering realizing Proceeds equal to one million,
three hundred thousand United States dollars
($1,300,000) (with any shortfall to be made up in
Payment Shares, cash, or a combination thereof by
Techniclone as described above), and Schering shall
have no obligation to perform under this Amendment or
the Agreement until such time as such sum is realized
by Schering. In the event that Schering realizes more
that one million, three hundred thousand United
States dollars ($1,300,000), Schering shall refund
such excess to Techniclone.
(ii) Schering agrees not to sell more than
that number of Payment Shares on any trading day that
exceeds ten percent (10%) of the trading volume of
Techniclone shares on that day.
(iii) Techniclone agrees to use its best
efforts to file an S-3 registration statement with
the United States Securities and Exchange Commission
within seven (7) days of the Effective Amendment Date
providing for the registration of the Payment Shares,
and to have an effective registration statement
within forty-five (45) days of the Effective
Amendment Date.
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(B) FROM DECISION POINT #1 THROUGH DECISION POINT #2.
(i) In the event that Schering determines to
go forward with Clinical Development after Decision
Point #1 as provided herein, Schering shall so notify
Techniclone in writing. In consideration of
Schering's agreement to undertake responsibility for
payment of Clinical Development Expenses from
Decision Point #1 through Decision Point #2, as
described above, Techniclone agrees to transfer to
Schering, within three (3) days after the
registration statement described below in Section
3.04(d)(B)(iii) becomes effective, Payment Shares
equal to one million, seven hundred thousand United
States dollars ($1,700,000) determined by the average
closing stock price for the five trading days prior
to the date the registration statement becomes
effective. In addition, in lieu of transferring all
or part of the Payment Shares to Schering,
Techniclone shall have the right to pay Schering in
cash at any time to satisfy the obligations of
Techniclone hereunder, for either the full amount due
to Schering or any portion thereof, at the sole
discretion of Techniclone. The Parties recognize that
the public market for securities in the United States
is volatile, and that as a result Schering may not
realize Proceeds of one million, seven hundred
thousand United States dollars ($1,700,000) (or such
lower amount as may be applicable if Techniclone has
satisfied part of its obligations hereunder in cash)
when it sells the Payment Shares. In the event that
Schering realizes Proceeds of less than one million,
seven hundred thousand United States dollars
($1,700,000) (or such lower amount as may be
applicable if Techniclone has satisfied part of its
obligations hereunder in cash) as a result of the
sale of the Payment Shares, Schering shall notify
Techniclone of the shortfall. Techniclone shall pay
the amount of the shortfall to Schering either by
issuing additional Payment Shares to Schering, by
paying cash to Schering, or some combination thereof
in the sole discretion of Techniclone, but in any
event such payment shall be made to Schering within
ten trading days from the date of written
notification from Schering to Techniclone of the
shortfall. The Parties recognize that if Techniclone
makes up any shortfall through the transfer of
additional Payment Shares to Schering, then the
process described above may have to be repeated more
than once in order for Schering to realize Proceeds
equal to one million, seven hundred thousand United
States dollars ($1,700,000). Schering agrees to
provide Techniclone with a copy of the relevant
broker/dealer trading record within a reasonable time
of receipt of a written request from Techniclone.
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Schering's obligations under this Amendment and the
Agreement following Decision Point #1 are conditioned
upon Schering realizing Proceeds equal to one
million, seven hundred thousand United States dollars
($1,700,000) (with any shortfall to be made up in
Payment Shares, cash, or a combination thereof by
Techniclone as described above), and Schering shall
have no obligation to perform following Decision
Point #1 under this Amendment or the Agreement until
such time as such sum is realized by Schering. In the
event that Schering realizes more that one million
United States dollars ($1,700,000), Schering shall
refund such excess to Techniclone.
(ii) Schering agrees not to sell more than
that number of Payment Shares on any trading day that
exceeds ten percent (10%) of the trading volume of
Techniclone shares on that day.
(iii) Techniclone agrees to use its best
efforts to file an S-3 registration statement with
the United States Securities and Exchange Commission
within seven (7) days of receipt by Techniclone of
the written notice from Schering stating that
Schering has determined to go forward with Clinical
Development following Decision Point #1 providing for
the registration of the Payment Shares, and to have
an effective registration statement within forty-five
(45) days of such written notice from Schering.
(C) CREDIT FOR CLINICAL DEVELOPMENT EXPENSES
FOLLOWING DECISION POINT #2. In the event that
Schering determines to go forward with Clinical
Development after Decision Point #2, then eighty
percent (80%) of the Proceeds of the Payment Shares
actually spent by Schering on Clinical Development
Expenses from the Effective Amendment Date through
Decision Point #2 shall be credited toward
Techniclone's obligations under Section 3.04(b)
incurred after Decision Point #2.
SECTION 4: AMENDMENT OF SECTION 12.02(a); ADDITION OF SECTION 12.02(J). The
Parties agree to delete clauses (A), (B), (C) and (D) from Section 12.02(a)(ii),
to delete Section 12.02(a)(v) from the Agreement and to replace it with the
following new Section 12.02(a)(v), to add new Sections 12.02(a)(viii) and
12.02(a)(ix), and to add a new Section 12.02(j) to the Agreement, as follows:
(v) upon thirty days' written notice given
at any time subsequent to Decision Point #2 and prior
to Regulatory Approval for any reason;
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(viii) upon thirty days' written notice in
the event that Schering determines that it is not
commercially reasonable to continue Clinical
Development. Schering acknowledges that there are
several competitive products for Non-Hodgkins
Lymphoma currently under development. These products
include but are not limited to products under
development at Coulter, Idec, SmithKline Beecham,
Genentech, Immunomedics, and NeoRx. Schering agrees
that the public release of efficacy data after the
Effective Amendment Date for any other product for
Non-Hodgkins Lymphoma, or the regulatory approval in
any country for any such product shall not constitute
a reason for termination under this Subsection prior
to the Decision Point.
(ix) upon thirty days' written notice if, at
Decision Point #1, Schering determines that the
clinical efficacy of the Product does not warrant
further clinical development.
(j) REFUND OF CERTAIN SUMS TO TECHNICLONE. In the event that
this Agreement is terminated in its entirety by Schering under any provision of
Section 12.02, other than a termination by Schering on account of Techniclone's
failure to comply with one or more of Techniclone's material obligations
pursuant to Section 12.02 (b), then Schering shall refund to Techniclone any
Proceeds realized by Schering pursuant to Section 3.04(d) in excess of
Schering's actual Clinical Development Expenses incurred prior to the date of
termination. Schering shall have the right to deduct from the amount to be
refunded pursuant to this Section 12.02(j) any sums then owed to Schering by
Techniclone, whether or not such sums are related to Clinical Development
Expenses.
SECTION 5: PRESS RELEASE. Schering agrees that within ten (10) business days of
the commencement to the first clinical trial contemplated by this Amendment, it
will publish a press release reasonably satisfactory to both Schering and
Techniclone referring to such clinical trial, expressing in reasonable business
terms Schering's support of the Clinical Development of Oncolym and Schering's
desire to continue to work with Techniclone in such Clinical Development.
SECTION 6: EFFECT OF AMENDMENT. This Amendment is intended to supplement and
modify the terms of the Agreement, it being the intent of the Parties that this
Amendment shall control the construction, interpretation, and intent of the
Agreement. This Amendment shall be effective as of the Effective Amendment Date.
From and after the Effective Amendment Date all references in and to the
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Agreement shall be deemed to include this Amendment. This Amendment is limited
as specified, and shall not constitute an amendment, modification, or waiver of
any other provisions of the Agreement. This Amendment shall be subject to
Section 14.09 of the Agreement. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
SECTION 7: EXECUTION BY COUNTERPARTS; EXCHANGE BY FACSIMILE. This Amendment may
be executed by the Parties in one or more counterparts. Such counterparts may be
exchanged by facsimile (provided that each executed counterpart is transmitted
in one complete transmission). Where there is an exchange of executed
counterparts, each Party shall be bound by the Agreement as amended by this
Amendment notwithstanding that original copies of the Amendment may not be
exchanged immediately. The Parties shall cooperate after execution of the
Amendment and exchange by facsimile to ensure that each Party obtains an
original executed copy of this Amendment.
(Remainder of page intentionally left blank.)
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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the Effective
Amendment Date.
TECHNICLONE CORPORATION SCHERING AG
By: /S/ JOHN N. BONFIGLIO By: /S/ G. STOCK
------------------------- --------------------------------
John Bonfiglio, Ph. D., Prof. G. Stock,
President & CEO Member of Executive Board of
Directors
By: /S/ J.F. KAPP
--------------------------------
Dr. J.-F. Kapp,
Head of Strategic Business Unit,
Therapeutics
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