<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Vion Pharmaceuticals, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
VION PHARMACEUTICALS, INC.
4 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
(203) 498-4210
March 7, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 1:30 p.m., on Wednesday, April 16, 1997, at the New
Haven Hotel, 229 George Street, New Haven, Connecticut.
This year, in addition to the election of ten directors to the Company's
Board of Directors, you are being asked to approve: (i) an amendment to the
Amended and Restated 1993 Stock Option Plan increasing the number of shares
authorized to be granted under the Plan, and (ii) the selection of the Company's
independent auditors. At the meeting, I will be pleased to report on the affairs
of the Company and a discussion period will be provided for questions and
comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
JOHN A. SPEARS
President and Chief Executive Officer
<PAGE>
VION PHARMACEUTICALS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
New Haven, Connecticut
March 7, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Vion
Pharmaceuticals, Inc. will be held on Wednesday, April 16, 1997 at 1:30 p.m., at
the New Haven Hotel, 229 George Street, New Haven, Connecticut, for the
following purposes:
(1) To elect ten directors to serve for the ensuing year;
(2) To consider and vote on the approval of an amendment to the
Amended and Restated 1993 Stock Option Plan to increase the number of
shares which may be issued thereunder;
(3) To consider and vote on the approval of Ernst & Young LLP as the
Company's independent auditors for the year ending December 31, 1997; and
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record of the Company's Common Stock and the Company's
Class A Convertible Preferred Stock at the close of business on February 19,
1997 will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. All stockholders are cordially invited to attend the
Annual Meeting in person. Stockholders who are unable to attend the Annual
Meeting in person are requested to complete and date the enclosed form of proxy
and return it promptly in the envelope provided. No postage is required if
mailed in the United States. Stockholders who attend the Annual Meeting may
revoke their proxy and vote their shares in person.
THOMAS MIZELLE
Secretary
<PAGE>
VION PHARMACEUTICALS, INC.
4 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
-------------------------
PROXY STATEMENT
-------------------------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share (the 'Common Stock') and Class A Convertible Preferred Stock, par
value $.01 per share (the 'Class A Preferred Stock'), of Vion Pharmaceuticals,
Inc. (the 'Company') in connection with the solicitation by the Board of
Directors of the Company of proxies for use at the Annual Meeting of
Stockholders to be held on Wednesday, April 16, 1997, or at any adjournments
thereof, pursuant to the accompanying Notice of Special Meeting of Stockholders.
The purpose of the meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Stockholders.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about
March 10, 1997 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile, or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing with
the Secretary of the Company a written notice of revocation or a duly executed
proxy bearing a later date, or by voting in person at the meeting. Shares of the
Company's Common Stock and Class A Preferred Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby to approve Proposals No. 1, 2 and 3 as set forth
in the accompanying Notice of Annual Meeting of Stockholders and in accordance
with their best judgment on any other matters which may properly come before the
meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on February 19, 1997
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. On February 19, 1997 there were 8,233,222 shares of Common Stock
outstanding and 1,035,655 shares of Class A Preferred Stock outstanding; each
share of Common Stock is entitled to one vote and each share of Class A
Preferred Stock is entitled to 2.777777 votes on the matters to be presented at
the Annual Meeting. The total number of votes entitled to be cast at the Annual
Meeting is 11,110,041. The holders of a voting majority of the outstanding
shares which may be voted at the meeting, present in person or by proxy, will
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes will
be counted for purposes of determining the presence or absence of a quorum.
'Broker non-votes' are shares held by brokers or nominees which are present in
person or represented by proxy, but which are not voted on a particular matter
because instructions have not been received from the beneficial owner. Under
applicable Delaware law, the effect of broker non-votes on a particular matter
depends on whether the matter is one as to which the broker or nominee has
discretionary voting authority. The effect of broker non-votes on the specific
items to be brought before the Annual Meeting of Stockholders is discussed under
each item.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of February 19, 1997 (except
as otherwise noted in the footnotes) regarding the beneficial ownership (as
defined by the Securities and Exchange Commission (the 'SEC')) of the Company's
Common Stock and Class A Preferred Stock of: (i) each person known by the
Company to own beneficially more than five percent of the Company's outstanding
Common Stock or Class A Preferred Stock; (ii) each director of the Company;
(iii) the Company's Chief Executive Officer and each other officer who received
over $100,000 in compensation from the Company during the 1996 fiscal year; and
(iv) all directors and executive officers of the Company as a group. Except as
otherwise specified, the named beneficial owner has the sole voting and
investment power over the shares listed and the address of each beneficial owner
is c/o Vion Pharmaceuticals, Inc., 4 Science Park, New Haven, Connecticut 06511.
<TABLE>
<CAPTION>
PERCENTAGE
TOTAL NUMBER PERCENTAGE OF OF CLASS A
OF SHARES OF COMMON PREFERRED
CLASS A COMMON STOCK STOCK STOCK
PREFERRED BENEFICIALLY BENEFICIALLY BENEFICIALLY
DIRECTORS AND EXECUTIVE OFFICERS COMMON STOCK STOCK OWNED(1) OWNED OWNED
- --------------------------------------- ------------ --------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Michael C. Kent...................... 515,769(2) 0 515,769 6.2% --
Alan C. Sartorelli, Ph.D............. 439,008(3) 0 439,008 5.3% --
John A. Spears....................... 414,412(4) 0 414,412 4.8% --
Michel C. Bergerac................... 27,500(5) 0 27,500 * --
Frank T. Cary........................ 48,968(6) 0 48,968 * --
A. E. Cohen.......................... 27,500(5) 0 27,500 * --
James L. Ferguson.................... 5,000(5) 0 5,000 * --
William R. Miller.................... 150,656(7) 0 150,656 1.8% --
E. Donald Shapiro.................... 72,200(8) 0 72,200 * --
Walter Wriston....................... 48,968(9) 0 48,968 * --
Terrence W. Doyle, Ph.D.............. 271,724(10) 0 271,724 3.3% --
Thomas E. Klein...................... 71,510(11) 0 71,510 * --
Thomas Mizelle....................... 66,833(12) 0 66,833 * --
All directors and executive officers
as a group (13 persons).............. 2,160,048(13) 0 2,160,048 24.2% --
OTHER BENEFICIAL OWNERS
Phoenix Partners L.P.
Morgens Waterfall Vintiadis
Investments N.V.
Betje Partners
c/o Morgens Waterfall Vintiadis
Investments & Co., Inc.
10 East 50th Street
New York, NY 10022................. 0 279,963(14) 777,675 8.6% 27.0%
Kingdon Capital Management Corp.
152 West 57th Street, 50th Floor
New York, NY 10019................. 0 203,590(15) 565,528 6.4% 19.7%
Ardsley Partners Fund I, L.P.
Ardsley Partners Fund II, L.P.
646 Steamboat Road
Greenwich, CT 06830................ 0 190,865(16) 530,181 6.1% 18.4%
GFL Performance Fund Ltd.
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands Antilles...... 60,000 131,092 424,145 4.9% 12.6%
</TABLE>
(Footnotes on next page)
2
<PAGE>
(Footnotes from previous page)
- ------------------
* Less than one percent
(1) The Class A Preferred Stock is convertible into Common Stock by dividing
(i) the sum of the $10.00 per share stated value by (ii) $3.60 per share
(as adjusted from time to time for certain events of dilution). As of
February 19, 1997, each share of Class A Preferred Stock was convertible
into 2.777777 shares of Common Stock.
(2) Includes 8,550 shares of Common Stock and warrants to purchase 28,215
shares of Common Stock exercisable within 60 days beneficially owned by Mr.
Kent's wife, as to which Mr. Kent disclaims beneficial ownership.
(3) Includes (i) 190,874 shares beneficially owned by Dr. Sartorelli's wife and
(ii) 57,260 shares held in trust for Dr. Sartorelli's grandchildren, for
which Dr. Sartorelli's wife serves as trustee, as to which Dr. Sartorelli
disclaims beneficial ownership. Does not include 57,260 shares beneficially
owned by other family members of Dr. Sartorelli, which were received as
gifts from Dr. Sartorelli.
(4) Includes 23,100 shares issuable upon exercise of warrants and 376,312
shares issuable upon exercise of options exercisable within 60 days.
Pursuant to an agreement, a portion of the shares issuable upon exercise of
such options are subject to repurchase by the Company at the exercise
price.
(5) Represents shares issuable upon exercise of options exercisable within 60
days.
(6) Includes 1,250 shares issuable upon exercise of options exercisable within
60 days.
(7) Includes 7,500 shares issuable upon exercise of options exercisable within
60 days.
(8) Includes 27,500 shares issuable upon exercise of options exercisable within
60 days and includes 40,700 shares issuable upon exercise of warrants.
(9) Includes 1,250 shares issuable upon exercise of options exercisable within
60 days.
(10) Includes 86,600 shares held by Dr. Doyle's wife and children, as to which
Dr. Doyle disclaims beneficial ownership. Pursuant to a four-year vesting
schedule, 133,612 of these shares are subject to repurchase by the Company.
(11) Includes 25,000 shares issuable upon exercise of options and 32,790 shares
issuable upon exercise of warrants, exercisable within 60 days. Also
includes 400 shares of common stock and 3,520 shares issuable upon exercise
of warrants exercisable within 60 days, held by Mr. Klein's wife and
children.
(12) Includes 50,000 shares issuable upon exercise of options and 12,210 shares
issuable upon exercise of warrants, exercisable within 60 days. Also
includes 284 shares of common stock and 939 shares issuable upon exercise
of warrants exercisable within 60 days held by Mr. Mizelle's children.
(13) Includes 548,812 shares issuable upon exercise of options and 141,474
shares issuable upon exercise of warrants, which are exercisable within 60
days.
(14) Consists of 139,968 shares held by Phoenix Partners L.P., 93,312 shares
held by Morgens Waterfall Vintiadis Investments N.V. and 46,656 shares held
by Betje Partners. Edwin Morgens is the Managing Member of the general
partner of Phoenix Partners L.P. and is the Chairman of the investment
advisors to Morgens Waterfall Vintiadis Investments N.V. and Betje
Partners. Mr. Morgens disclaims beneficial ownership of all indicated
shares.
(15) Consists of 122,154 shares held by M. Kingdon Offshore N.V., 40,718 shares
held by Kingdon Partners, L.P. and 40,718 shares held by Kingdon
Associates, L.P. Kingdon Capital Management Corp.
("KCMC") is a general partner of Kingdon Partners,
L.P. and Kingdon Associates, L.P. and is the investment
advisor to M. Kingdon Offshore N.V. KCMC disclaims beneficial
ownership of all indicated shares.
(16) Consists of 96,705 shares held by Ardsley Partners Fund I, L.P. and 94,160
shares held by Ardsley Partners Fund II, L.P. Kevin M. McCormack is the
general partner of both limited partnerships and disclaims beneficial
ownership of the indicated shares.
3
<PAGE>
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Ten directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. Each person named below is now a director of the Company. In the event
any of these nominees shall be unable to serve as a director, the shares
represented by the proxy will be voted for the person, if any, who is designated
by the Board of Directors to replace the nominee. All nominees have consented to
be named and have indicated their intent to serve if elected. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve or that any vacancy on the Board of Directors will occur.
The nominees, their ages, the year in which each first became a director of
the Company and their principal occupations or employment during the past five
years are:
<TABLE>
<CAPTION>
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
- ------- --- ---------- --------------------------
<S> <C> <C> <C>
William R. Miller................ 68 1995 Chairman of the Board of the Company since April 1995; from
February 1995 until April 1995, Chairman of the Board of
OncoRx Inc. ('Old OncoRx'), which was merged into a subsidiary
of the Company (then known as MelaRx Pharmaceuticals, Inc.) in
April 1995; currently Chairman of the Board of SIBIA
Neurosciences, Inc., and a director of ImClone Systems, Inc.,
Isis Pharmaceuticals, Inc., St. Jude Medical, Inc.,
Transkaryotic Therapies, Inc., Westvaco Corporation and Xomed
Surgical Products; from 1964 until his retirement in 1990,
various positions with Bristol-Myers Squibb Company, including
Vice Chairman of the Board commencing in 1985.
John A. Spears................... 46 1993 President and Chief Executive Officer of the Company from
April 1993 until January 1995 and since April 1995; President
and Chief Executive Officer of Old OncoRx from January 1995 to
April 1995; from March 1989 to April 1993, Vice President and
Senior Vice President of Immunex Corporation.
Alan C. Sartorelli, Ph.D......... 65 1995 Professor of Pharmacology at Yale University School of
Medicine since 1967; Chairman of the Company's Scientific
Advisory Board since April 1995; Chairman of the Old OncoRx
Scientific Advisory Board from May 1993 to April 1995;
Director of Yale Comprehensive Cancer Center from 1984 to
1993.
Michel C. Bergerac............... 65 1992 Chairman of M.C. Bergerac & Co., Inc., an investment advisory
firm, since 1985; currently a director of Chemical Bank; from
1974 to 1985, Chairman of the Board, President and Chief
Executive Officer of Revlon, Inc.
Frank T. Cary.................... 76 1995 Director of Celgene Corporation, Cygnus Therapeutic Systems,
ICOS Corporation, Lincare, Inc. and SPS Transaction Services,
Inc.; from 1973 to 1981, Chairman of the Board and Chief
Executive Officer of IBM.(1)(2)
A.E. Cohen....................... 60 1992 Private Consultant in the pharmaceutical industry since 1991;
from 1982 to 1991, Senior Vice President of Merck & Company,
Inc.; currently a director of Akzo Nobel N.V., Agouron
Pharmaceuticals, Inc., Vasomedical, Inc., Immunomedics, Inc.,
Teva Pharmaceutical Industries, Ltd. and Neurobiological
Technologies Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
- ------- --- ---------- --------------------------
<S> <C> <C> <C>
James L. Ferguson................ 70 1995 Director of ICOS Corporation; Chairman of the Board of General
Foods Corporation from 1974 until 1989 and President from 1973
to 1977.
Michael C. Kent.................. 56 1995 Founded Old OncoRx in May 1993 and served as a director until
April 1995; since 1983, President and Chief Executive Officer
of Kent, Reynolds, and Stuart a consulting firm; involved in
the creation of a number of biotechnology companies, including
Nova Pharmaceutical Corporation, Celgene Corporation, Neurogen
Corporation, Biopure Corporation, Pathogenesis Corporation,
Texas Biotechnology Corporation and ICOS Corporation.(1)
E. Donald Shapiro................ 65 1992 Since 1983, the Joseph Solomon Distinguished Professor of Law
at New York Law School and prior thereto, Dean and Professor
of Law at New York Law School; since 1985, Supernumerary
fellow of St. Cross College at Oxford University; currently a
director of Loral Corporation, Bank Leumi Trust Co., United
Industrial Corporation, Vasomedical, Inc., Kranzco Realty
Trust, Eyecare Products PLC, Telepad Corporation, Premier
Laser Systems and Cafe USA.(2)
Walter Wriston................... 77 1995 Director of Tandem Computers Inc., United Meridian
Corporation, ICOS Corporation, York International Corporation
and Cygnus, Inc.; retired as Chairman and Chief Executive
Officer of Citicorp and its principal subsidiary, Citibank,
N.A., in 1984 after having served as Chief Executive Officer
for 17 years.(2)
</TABLE>
- ------------------
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
During the fiscal year ended December 31, 1996, the Board of Directors held
six meetings and acted once by unanimous written consent. Each director attended
at least 75% of the meetings of the Board of Directors held and of all
committees of the Board of Directors on which he served while he was director of
the Company, except for Mr. Bergerac, who attended four of the six meetings, and
Mr. Ferguson, who attended three of the six meetings.
In April 1995, the Board established an Audit Committee to review the
internal accounting procedures of the Company and to consult with and review the
audit scope and results of the audit with the Company's independent auditors
and the services provided by such auditors. Messrs. Wriston, Cary and Shapiro
are the members of the Audit Committee. The Audit Committee met once in 1996.
In April 1995, the Board formed the Compensation Committee to administer
the Company's stock option plans and the Company's executive compensation
policies. Messrs. Cary and Kent are the members of this committee. Mr. Cary
replaced Dr. Sartorelli, who was a member of the Compensation Committee until
October 1996, in order to ensure compliance with Section 16b-3 of the Exchange
Act, which was revised in 1996. The Compensation Committee held four meetings in
1996.
5
<PAGE>
VOTE REQUIRED
The ten nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them,
a quorum being present, shall be elected as directors. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS DEEMS 'PROPOSAL NO. 1-ELECTION OF DIRECTORS' TO BE
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
'FOR' APPROVAL THEREOF.
MANAGEMENT
Executive Officers
The following table sets forth the names and positions of the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
John A. Spears..................................... President, Chief Executive Officer and Director
Terrence W. Doyle, Ph.D............................ Vice President--Research & Development
Thomas E. Klein.................................... Vice President--Finance and Chief Financial Officer
Thomas Mizelle..................................... Vice President--Operations and Secretary
</TABLE>
John A. Spears, age 46, has been the Company's President and Chief
Executive Officer and a director since the merger with Old OncoRx in April 1995
and from April 1993 until January 1995 and served in the same capacities for Old
OncoRx from January 1, 1995 until the merger in April 1995. From March 1989 to
April 1993, Mr. Spears was a Senior Vice President and a Vice President at
Immunex Corporation.
Terrence W. Doyle, Ph.D., age 54, has been the Company's Vice President of
Research and Development since the merger with Old OncoRx and served in the same
capacity for Old OncoRx from January 1994 until the merger. Dr. Doyle was an
employee of the Bristol-Myers Squibb Company ('Bristol-Myers') from 1967 to
1993. From 1990 to 1993, Dr. Doyle was an Executive Director with Bristol-Myers.
Dr. Doyle is the original holder of 41 U.S. patents for anti-infective,
anti-inflammatory and anti-tumor agents and the author of over 100 published
research articles and abstracts on cancer chemotherapy.
Thomas E. Klein, age 47, has been the Company's Vice President--Finance and
Chief Financial Officer since October 1995. From 1988 to 1994, Mr. Klein was
Director of Finance and Treasurer of Novo Nordisk of North America, Inc.
Thomas Mizelle, age 45, has been the Company's Vice President of Operations
since the merger with Old OncoRx and has been the Company's Secretary since
October 1995. Prior to the merger, Mr. Mizelle was Vice President of Business
Development since August 1994. From May 1990 to June 1994, Mr. Mizelle served as
Senior Vice President, Vice President of Sales and Marketing and Director of
Sales of Immunex Corporation.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Company's chief executive
officer and each of the other executive officers who earned over $100,000 and
were serving at the end of 1996, for services in all capacities to the Company,
its subsidiaries and predecessors.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION AWARDS
------------ OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) COMPENSATION($)
- --------------------------- ---- ------------ -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
John A. Spears--President
and Chief Executive Officer(1)............... 1996 $189,167 $ 70,500 15,000 $ --
1995 $180,000 $ -- 286,312 $ --
1994 $175,000 $ -- -- $ --
Terrence W. Doyle--Vice President--
Research and Development..................... 1996 $154,167 $ 42,000 12,000 $ --
1995 $144,227 $ -- -- $ 5,773(2)
1994 $150,000(3) $ -- -- $ --
Thomas E. Klein--Vice President
Finance and Chief Financial Officer(4)....... 1996 $129,167 $ 36,000 37,000 $ --
1995 $ 31,250 $ -- 75,000 $ --
1994 $ -- $ -- -- $ --
Thomas Mizelle--Vice President--
Operations and Secretary..................... 1996 $154,167 $ 42,000 62,000 $ --
1995 $158,000 $ -- 50,000 $ --
1994 $ 37,500 $ -- 37,500 $ --
</TABLE>
- ------------------
(1) The Company is a party to an employment agreement with Mr. Spears. See
'--Employment Agreements.'
(2) Represents 1994 taxes paid in 1995 on the amount accrued in note 3, below.
(3) Includes $93,467 accrued during fiscal 1994 and paid in April 1995.
(4) Mr. Klein joined the Company in October 1995.
The following table sets forth the grant of stock options made during the
year ended December 31, 1996 to the persons named in the Summary Compensation
Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL OPTIONS
NUMBER OF GRANTED TO
SECURITIES UNDERLYING EMPLOYEES IN
NAME OPTIONS GRANTED FISCAL PERIOD(1) EXERCISE PRICE EXPIRATION DATE
- ---- --------------------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C>
John A. Spears.......................... 15,000 5.6% $ 4.1875 10/14/2006
Terrence W. Doyle....................... 12,000 4.4% $ 4.1875 10/14/2006
Thomas E. Klein......................... 25,000 9.3% $ 3.625 01/31/2006
12,000 4.4% $ 4.1875 10/14/2006
Thomas Mizelle.......................... 50,000 18.5% $ 3.625 01/31/2006
12,000 4.4% $ 4.1875 10/14/2006
</TABLE>
- ------------------
(1) Computed based on an aggregate of 270,000 shares issuable upon exercise of
options granted to employees during the year ended December 31, 1996.
7
<PAGE>
The following table sets forth information with respect to unexercised
stock options held by the persons named in the Summary Compensation Table at
December 31, 1996. No stock options were exercised in 1996 by such persons.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
# FISCAL YEAR-END($) (1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John A. Spears............................................. 376,312 15,000 $ 919,199 $ 0
Terrence W. Doyle.......................................... 0 12,000 $ -- $ 0
Thomas E. Klein............................................ 18,750 93,250 $ 0 $ 0
Thomas Mizelle............................................. 37,500 112,000 $ 22,187 $11,095
</TABLE>
- ------------------
(1) Computed based upon the difference between the closing price of the
Company's Common Stock on December 31, 1996 ($3.0625) and the exercise
price.
EMPLOYMENT AGREEMENTS
In January 1995, Old OncoRx entered into an Employment Agreement with John
A. Spears, then its President and Chief Executive Officer. The employment
agreement was assumed by the Company after the merger of Old OncoRx into a
subsidiary of the Company. The agreement is for a term of three years. Prior to
his employment with Old OncoRx, Mr. Spears was employed under a similar
agreement with MelaRx, which agreement has been terminated. Mr. Spears receives
an annual base salary of $180,000 increased annually by an amount no less than
an annual cost of living adjustment. Pursuant to the Employment Agreement, Old
OncoRx granted to Mr. Spears an option, which was assumed by the Company
pursuant to the merger with Old OncoRx, to purchase 286,312 shares of Common
Stock of the Company at a purchase price equal to $0.131 per share. The shares
issuable upon exercise of the options are subject to a right in favor of the
Company to repurchase such shares at their cost (i.e., the exercise price) in
the event Mr. Spears' employment with the Company is terminated. Such right will
expire as to 25% of such shares on each of the first four annual anniversaries
of the date of the option grant. The Company also has the right, at any time
after January 1996, to terminate the employment agreement without cause upon 10
days notice to Mr. Spears and upon payment by the Company to Mr. Spears, in a
single lump sum on the termination date, of an amount equal to one year's base
salary.
COMPENSATION OF DIRECTORS
Directors are reimbursed for expenses actually incurred in connection with
each meeting of the Board of Directors or any Committee thereof attended. The
Company also pays the Chairman of the Board $2,000 per meeting of the Board
attended and each other non-employee director $1,000 for each such meeting
attended. Certain directors are also entitled to automatic grants of options
under the Company's Amended and Restated 1993 Stock Option Plan (the 'Plan').
See '--Directors' Options.'
On August 16, 1995, the Company entered into a consulting agreement with
Kent, Reynolds and Stuart ('KR&S'), pursuant to which KR&S was to assist the
Company in hiring a Chief Financial Officer and filling another senior
management position. In addition, KR&S is obligated to assist the Company in
joint ventures and other business relationships. Michael Kent, a director of the
Company, is a principal of KR&S. In 1996, the Company paid KR&S an aggregate of
$120,000 under its consulting agreement, which terminated on December 31, 1996.
On September 29, 1995, the Company entered into a consulting agreement with
Dr. Alan Sartorelli, who is also a director of the Company. The agreement has an
initial term of five years and will be renewed for an additional year unless one
the parties notifies the other in writing to the contrary. Dr. Sartorelli is
obligated to provide advisory services in the areas of oncology and pharmacology
relating to evaluation, development and commercialization of technologies, the
acquisition of proprietary rights and obtaining government approvals. The
agreement provides for an annual fee of $48,000 to be paid to Dr. Sartorelli and
contains certain confidentiality restrictions. In 1996, Dr. Sartorelli received
an aggregate of $48,000 under his consulting agreement.
8
<PAGE>
DIRECTORS' OPTIONS
The provisions of the Company's Amended and Restated 1993 Stock Option Plan
(the 'Plan') provide for the automatic grant of non-qualified stock options to
purchase shares of Common Stock ('Director Options') to directors of the Company
who are not employees or principal stockholders of the Company ('Eligible
Directors'). Eligible Directors of the Company elected after August 1995 will be
granted a Director Option to purchase 20,000 shares of Common Stock on the date
such person is first elected or appointed a director (an 'Initial Director
Option'). Further, commencing on the day immediately following the date of the
annual meeting of stockholders during the Company's fiscal year ending December
31, 1996, each Eligible Director, other than directors who received an Initial
Director Option since the last annual meeting, will be granted a Director Option
to purchase 5,000 shares of Common Stock ('Automatic Grant') on the day
immediately following the date of each annual meeting of stockholders, as long
as such director is a member of the Board of Directors. The exercise price for
each share subject to a Director Option shall be equal to the fair market value
of the Common Stock on the date of grant. Director Options will expire the
earlier of 10 years after the date of grant or 90 days after the termination of
the director's service on the Board of Directors.
During the fiscal year ended December 31, 1996, Messrs. Miller, Bergerac,
Cary, Cohen, Shapiro and Wriston were each granted ten year options under the
Plan to purchase 5,000 shares of Common Stock, respectively, each at an exercise
price of $4.625 per share. John A. Spears, a director who also serves as the
Company's President and Chief Executive Officer was granted a ten year option
under the Plan to purchase 15,000 shares of Common Stock at an exercise price of
$4.1875 per share.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the SEC and The NASDAQ Stock Market.
Executive officers, directors and greater than ten percent beneficial owners are
required by the SEC to furnish the Company with copies of all Section 16(a)
forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1996 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.
PROPOSAL NO. 2--AMENDMENT OF AMENDED AND RESTATED 1993 STOCK OPTION PLAN
On January 29, 1997, the Board of Directors adopted, subject to stockholder
approval, an amendment to the Company's Amended and Restated 1993 Stock Option
Plan (the 'Plan') increasing the number of shares which may be issued under the
Plan from 1,000,000 to 1,500,000. As the directors are potential recipients of
option grants under the Plan, they may be viewed to have a conflict of interest.
However, the Board of Directors believes that approval of the amendment to
increase the aggregate number of shares which may be granted under the Plan will
serve the best interests of the Company and its stockholders by permitting the
Company to utilize stock options as a means to attract and retain key employees,
directors and consultants who are in a position to contribute materially to the
successful conduct of the business and affairs of the Company and, in addition,
stimulate in such individuals an increased desire to render greater service to
the Company. The Board believes that it requires additional shares for future
grants under the Plan to meet the Company's needs, particularly in light of the
Company's current efforts to recruit additional personnel in order to complete
its expansion plan. Through December 31, 1996, options to purchase an aggregate
of 884,750 shares have been granted under the Plan. The closing price for a
share of Common Stock on the NASDAQ SmallCap Market on March 6, 1997
was $5.625.
The full text of the Plan is set forth in Appendix A to the Proxy
Statement, and the following summary is qualified in its entirety by reference
thereto.
9
<PAGE>
DESCRIPTION OF THE PLAN
In July 1995, the Board of Directors adopted the Plan covering 534,750
shares of the Company's Common Stock pursuant to which employees, officers and
directors of, and consultants or advisers to, the Company and any subsidiary
corporations are eligible to receive incentive stock options ('incentive
options') within the meaning of Section 422 of the Internal Revenue Code (the
'Code') and/or options that do not qualify as incentive options ('non-qualified
options'). Certain technical amendments to the Plan were approved by the Board
in October 1995 and the number of shares issuable pursuant to the Plan was
increased to 1,000,000 in April 1996. The Plan, originally adopted by the Board
in April 1993, expires in April 2003. The Plan is administered by the
Compensation Committee of the Board of Directors. The purposes of the Plan are
to ensure the retention of existing executive personnel, key employees,
directors, consultants and advisors and to provide additional incentive by
permitting such individuals to participate in the ownership of the Company, and
the criteria to be utilized by the Board of Directors or the Compensation
Committee in granting options pursuant to the Plan will be consistent with these
purposes. The Plan provides for automatic grants of options to certain
directors. See 'Executive Compensation--Directors' Options.' There are currently
29 employees, 10 directors and 11 consultants eligible to receive grants under
the Plan.
Options granted under the Plan may be either incentive options or
non-qualified options. Incentive options granted under the Plan are exercisable
for a period of up to 10 years from date of grant at an exercise price which is
not less than the fair market value of the Common Stock on the date of the
grant, except that the term of an incentive option granted under the Plan to a
stockholder owning more that 10% of the outstanding voting power may not exceed
five years and its exercise price may not be less than 110% of the fair market
value of the Common Stock on the date of the grant. To the extent that the
aggregate fair market value, as of the date of grant, of the shares for which
incentive options become exercisable for the first time by an optionee during
the calendar year exceeds $100,000, the portion of such option which is in
excess of the $100,000 limitation will be treated as a non-qualified option.
Additionally, the aggregate number of shares of Common Stock that may be subject
to options granted to any person in a calendar year shall not exceed 25% of the
maximum number of shares of Common Stock which may be issued from time to time
under the Plan. Options granted under the Plan to officers, directors or
employees of the Company may be exercised only while the optionee is employed or
retained by the Company or within 90 days of the date of termination of the
employment relationship or directorship. However, options which are exercisable
at the time of termination by reason of death or permanent disability of the
optionee may be exercised within 12 months of the date of termination of the
employment relationship or directorship. Upon the exercise of an option, payment
may be made by cash or by any other means that the Board of Directors or the
committee determines. No option may be granted under the Plan after April 14,
2003.
Options may be granted only to such employees, officers and directors of,
and consultants and advisors to, the Company or any subsidiary of the Company as
the Board of Directors or the Compensation Committee shall select from time to
time in its sole discretion, provided that only employees of the Company or a
subsidiary of the Company shall be eligible to receive incentive options. An
optionee may be granted more than one option under the Plan. The Board of
Directors or the Compensation Committee will, in its discretion, determine
(subject to the terms of the Plan) who will be granted options, the time or
times at which options shall be granted, the number of shares subject to each
option and whether the options are incentive options or non-qualified options.
In making such determination, consideration may be given to the value of the
services rendered by the respective individuals, their present and potential
contributions to the success of the Company and its subsidiaries and such other
factors deemed relevant in accomplishing the purpose of the Plan. The Plan, as
amended, requires that all options granted thereunder will become exercisable in
no less than four equal annual installments commencing not earlier than the
first anniversary of the date of grant.
Under the Plan, the optionee has none of the rights of a stockholder with
respect to the shares issuable upon the exercise of the option until such shares
shall be issued upon exercise of the option. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date of exercise, except as provided in the Plan. During the lifetime of the
optionee, an option shall be exercisable only by the optionee. No option may be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of decent and distribution.
10
<PAGE>
The Board of Directors may amend or terminate the Plan except that
stockholder approval is required to effect a change so as to increase the
aggregate number of shares that may be issued under the Plan (unless adjusted to
reflect such changes as a result of a stock dividend, stock split,
recapitalization, merger or consolidation of the Company), to modify the
requirements as to eligibility to receive options, to increase materially the
benefits accruing to participants or as otherwise may be required by Rule 16b-3
of the Securities Exchange Act of 1934, as amended, (the 'Exchange Act') or
Section 422 of the Code. No action taken by the Board may materially and
adversely affect any outstanding option grant without the consent of the
optionee.
FEDERAL INCOME TAX CONSEQUENCES
Under current tax law, there are no Federal income tax consequences to
either the employee or the Company on the grant of non-qualified options if
granted under the terms set forth in the Plan. Upon exercise of a non-qualified
option, the excess of the fair market value of the shares subject to the option
over the option price (the 'Spread') at the date of exercise is taxable as
ordinary income to the optionee in the year it is exercised and is deductible by
the Company as compensation for Federal income tax purposes, if Federal income
tax is withheld on the Spread. However, if the shares are subject to vesting
restrictions conditioned on future employment or the holder is subject to the
short-swing profits liability restrictions of Section 16(b) of the Exchange Act
(i.e., is an executive officer, director or 10% stockholder of the Company),
then taxation and measurement of the Spread is deferred until such restrictions
lapse, unless a special election is made under Section 83(b) of the Code to
report such income currently without regard to such restrictions. The optionee's
basis in the shares will be equal to the fair market value on the date taxation
is imposed and the holding period commences on such date.
Incentive option holders incur no regular Federal income tax liability at
the time of grant or upon exercise of such option, assuming that the optionee
was an employee of the Company from the date the option was granted until 90
days before such exercise. However, upon exercise, the Spread must be added to
regular Federal taxable income in computing the optionee's 'alternative minimum
tax' liability. An optionee's basis in the shares received on exercise of an
incentive stock option will be the option price of such shares for regular
income tax purposes. No deduction is allowable to the Company for Federal income
tax purposes in connection with the grant or exercise of such option.
If the holder of shares acquired through exercise of an incentive option
sells such shares within two years of the date of grant of such option or within
one year from the date of exercise of such option (a 'Disqualifying
Disposition'), the optionee will realize income taxable at ordinary rates.
Ordinary income is reportable during the year of such sale equal to the
difference between the option price and the fair market value of the shares at
the date the option is exercised, but the amount includable as ordinary income
shall not exceed the excess, if any, of the proceeds of such sale over the
option price. In addition to ordinary income, a Disqualifying Disposition may
result in taxable income subject to capital gains treatment if the sales
proceeds exceed the optionee's basis in the shares (i.e., the option price plus
the amount includable as ordinary income). The amount of the optionee's taxable
ordinary income will be deductible by the Company in the year of the
Disqualifying Disposition.
At the time of sale of shares received upon exercise of an option (other
than a Disqualifying Disposition of shares received upon the exercise of an
incentive option), any gain or loss is long-term or short-term capital gain or
loss, depending upon the holding period. The holding period for long-term
capital gain or loss treatment is more than one year.
The foregoing is not intended to be an exhaustive analysis of the tax
consequences relating to stock options issued under the Plan. For instance, the
treatment of options under state and local tax laws, which is not described
above, may differ from the treatment for Federal income tax purposes.
VOTE REQUIRED
The affirmative vote of holders of a majority of the aggregate voting power
of Common Stock and Class A Preferred Stock issued, outstanding and entitled to
vote, present or represented at the meeting, a quorum being present, is required
for the adoption of this proposal. Broker non- votes with respect to this matter
will be treated as neither a vote 'for' nor a vote 'against' the matter,
although they will be counted in determining if a quorum is present. However,
abstentions will be considered in determining the number of votes required to
attain a majority of the shares present or represented at the meeting and
entitled to vote. Accordingly, an abstention from voting by a
11
<PAGE>
stockholder present in person or by proxy at the meeting has the same legal
effect as a vote 'against' the matter because it represents a share present or
represented at the meeting and entitled to vote, thereby increasing the number
of affirmative votes required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS 'PROPOSAL NO. 2--AMENDMENT OF AMENDED AND
RESTATED 1993 STOCK OPTION PLAN' TO BE IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS A VOTE 'FOR' APPROVAL THEREOF.
NEW PLAN BENEFITS
The following table sets forth information regarding the benefits which
will be received pursuant to the increase in the number of shares which may be
issued pursuant to the Amended and Restated 1993 Stock Option Plan by: (i) each
executive officer named in the Summary Compensation Table (see 'Executive
Compensation'); (ii) all current executive officers as a group; (iii) all
current directors who are not executive officers as a group; and (iv) all
employees, including all current officers who are not executive officers, as a
group. No such options have been granted to date.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
- -------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
John A. Spears--President and Chief Executive
Officer....................................................................... $ 0 0
Terrence W. Doyle--Vice President-Research and Development...................... $ 0 0
Thomas E. Klein--Vice President Finance and Chief Financial Officer............. $ 0 0
Thomas Mizelle--Vice President-Operations and Secretary......................... $ 0 0
All current executive officers as a group....................................... $ 0 0
All current directors who are not executive officers as a group................. $ 0 0
All employees, including current officers who are not executive officers, as a
group......................................................................... $ 0 0
</TABLE>
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<PAGE>
PROPOSAL NO. 3--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 1997, and has further
directed that management submit the selection of independent auditors for
ratification by stockholders at the Annual Meeting. Ernst & Young LLP has
audited the Company's financial statements since 1995. A representative of Ernst
& Young LLP is expected to be present at the Annual Meeting and will have an
opportunity to make a statement if he or she desires and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Board will reconsider whether
or not to retain that firm. Even if the selection were ratified, the Board in
its discretion may direct the appointment of a different independent accounting
firm at any time during the year if the Board determines that such a change
would be in the best interests of the Company and its stockholders.
CHANGE IN ACCOUNTANTS DURING 1995
On November 27, 1995 the Company, with the approval and recommendation of
its Board of Directors, announced that it had determined, effective immediately,
to replace its independent accountants, Richard A. Eisner & Company, LLP
('RAE'), with Ernst & Young LLP. The opinion of RAE with regard to the Company's
financial statements for each of the prior two years contained no adverse
opinion or disclaimer of opinion and was not modified as to uncertainty, audit
scope, or accounting principles. There were no disagreements between the Company
and RAE on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to RAE's
satisfaction, would have caused it to make reference to the subject matter of
any disagreement in connection with its report.
The Company did not consult with Ernst & Young LLP regarding the
application of accounting principles to any specific completed or contemplated
transaction or the type of audit opinion that might be rendered on the Company's
financial statements and no oral or written advice was provided that was an
important factor considered by the Company in reaching a decision as to the
replacement of its auditors.
VOTE REQUIRED
The affirmative vote of holders of a majority of the aggregate voting power
of Common Stock and Class A Preferred Stock issued, outstanding and entitled to
vote, present or represented at the meeting, a quorum being present, is required
for the adoption of this proposal. Broker non-votes with respect to this matter
will be treated as neither a vote 'for' nor a vote 'against' the matter,
although they will be counted in determining if a quorum is present. However,
abstentions will be considered in determining the number of votes required to
attain a majority of the shares present or represented at the meeting and
entitled to vote. Accordingly, an abstention from voting by a stockholder
present in person or by proxy at the meeting has the same legal effect as a vote
'against' the matter because it represents a share present or represented at the
meeting and entitled to vote, thereby increasing the number of affirmative votes
required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS 'PROPOSAL NO. 3--RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS' TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE 'FOR' APPROVAL THEREOF.
CERTAIN TRANSACTIONS
In January 1995, Old OncoRx entered into an Employment Agreement with John
A. Spears, then its President and Chief Executive Officer. The employment
agreement was assumed by the Company after the merger of Old OncoRx into a
subsidiary of the Company. The agreement is for a term of three years. Prior to
his employment with Old OncoRx, Mr. Spears was employed under a similar
agreement with MelaRx, which agreement has been terminated. Mr. Spears receives
an annual base salary of $180,000, increased annually by an amount no less than
an annual cost-of-living adjustment. Pursuant to the Employment Agreement, Old
OncoRx
13
<PAGE>
granted to Mr. Spears an option, which was assumed by the Company pursuant to
the Merger, to purchase 286,312 shares of Common Stock of the Company at a
purchase price equal to $0.131 per share. The shares issuable upon exercise of
the options are subject to a right in favor of the Company to repurchase such
shares at their cost (i.e., the exercise price) in the event Mr. Spears'
employment with the Company is terminated. Such right will expire as to 25% of
such shares on each of the first four annual anniversaries of the date of the
option grant. The Company also has the right, at any time after January 1996, to
terminate the employment agreement without cause upon 10 days notice to Mr.
Spears and upon payment by the Company to Mr. Spears, in a single lump sum on
the termination date, of an amount equal to one year's base salary.
The Company is a party to consulting agreements with KR&S, an entity of
which Mr. Kent is a principal, and with Dr. Sartorelli, each of whom are members
of its Board of Directors. During the fiscal year ended December 31, 1995, KR&S
and Dr. Sartorelli received payments of $60,000 and $12,000, respectively, and
during the fiscal year ended December 31, 1996, KR&S and Dr. Sartorelli received
payments of $120,000 and $48,000, respectively, under their consulting
agreements. For a description of the terms of these agreements, see 'Executive
Compensation--Compensation of Directors.'
D.H. Blair Investment Banking Corp. (the 'Underwriter') and certain
officers and entities associated with the Underwriter and Blair & Co.
beneficially own an aggregate of 7.7% of the Common Stock of the Company,
including (i) 337,618 shares of Common Stock issued to Britshire, Ltd. in June
1992; (ii) 112,500 shares of Common Stock issued to the Underwriter in August
1992 in partial satisfaction of a promissory note evidencing indebtedness of
approximately $462,000 of the Company to the Underwriter and (iii) 202,486
shares of Common Stock issuable upon exercise of warrants held by the
Underwriter and designees of the Underwriter which were issued to the
Underwriter in partial consideration for serving as placement agent in
connection with private placements of Common Stock of the Company. Martin Bell,
Senior Vice President and General Counsel of the Underwriter, was a director of
the Company until April 1995. Britshire Ltd. was, prior to its liquidation,
owned principally by the sons-in-law of J. Morton Davis, including Kalman Renov,
formerly Chairman of the Board of the Company, and officers of Blair & Co. Blair
& Co. is substantially owned by family members of J. Morton Davis. Mr. Davis is
the sole stockholder of an entity which is the parent and sole stockholder of
the Underwriter. The Underwriter acted as placement agent for (i) the bridge
financing in April 1995 for which it received a placement agent fee of $200,000
and a non-accountable expense allowance of $60,000; and (ii) a private offering
of 76,349 shares of Common Stock of Old OncoRx shortly before the closing of the
merger of Old OncoRx into a subsidiary of the Company, for which it received a
placement fee of $13,750. The Underwriter also acted as placement agent for two
private financings of Common Stock and warrants of the Company in August through
November 1992 and July 1993, respectively, and received placement fees of
$272,500 and $283,625, respectively, and nonaccountable expense allowances of
$81,750 and $85,087, respectively. In addition, the Underwriter was issued
warrants to purchase 68,122 and 140,060 shares, respectively, of Common Stock of
the Company in connection therewith. An entity affiliated with a relative of Mr.
Davis loaned approximately $80,000 to the Company prior to the closing of a
bridge financing to enable it to make certain research payments to Yale
University, which loan was repaid, together with interest thereon at a rate of
10% per annum, out of the proceeds of the April 1995 bridge financing. In
addition, the Company has entered into an agreement with the Underwriter whereby
the Underwriter will be compensated if it originates certain transactions
involving the Company.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 1997
Annual Meeting of Stockholders of the Company must be received by the Company no
later than November 10, 1997 for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
14
<PAGE>
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope
By Order of the Board of Directors
THOMAS MIZELLE
Secretary
Dated: March 7, 1997
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<PAGE>
APPENDIX A
VION PHARMACEUTICALS, INC.
AMENDED AND RESTATED
1993 STOCK OPTION PLAN
1. PURPOSE
The purpose of this plan (the 'Plan') is to secure for Vion
Pharmaceuticals, Inc. (the 'Corporation') and its stockholders the benefits
arising from capital stock ownership by employees, officers and directors of,
and consultants or advisors to, the Corporation and its subsidiary corporations
who are expected to contribute to the Corporation's future growth and success.
Except where the context otherwise requires, the term 'Corporation' shall
include all present and future subsidiaries of the Corporation as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or
replaced from time to time (the 'Code'). Those provisions of the Plan which make
express reference to Section 422 shall apply only to Incentive Stock Options (as
that term is defined in the Plan).
2. TYPE OF OPTIONS AND ADMINISTRATION
(a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Corporation (or a
Committee designated by the Board of Directors) and may be either incentive
stock options ('Incentive Stock Options') meeting the requirements of Section
422 of the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board of
Directors of the Corporation, whose construction and interpretation of the terms
and provisions of the Plan shall be final and conclusive. The Board of Directors
may in its sole discretion grant options to purchase shares of the Corporation's
Common Stock, $.01 par value per share ('Common Stock') and issue shares upon
exercise of such options as provided in the Plan. The Board shall have
authority, subject to the express provisions of the Plan, to construe the
respective option agreements and the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
the respective option agreements, which need not be identical, and to make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any option agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect and it shall be the sole and final judge of such
expediency. No director or person acting pursuant to authority delegated by the
Board of Directors shall be liable for any action or determination under the
Plan made in good faith. The Board of Directors may, to the full extent
permitted by or consistent with applicable laws or regulations (including,
without limitation, applicable state law and Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the 'Exchange Act'), or any successor rule
('Rule 16b-3')), delegate any or all of its powers under the Plan to a committee
(the 'Committee') appointed by the Board of Directors, and if the Committee is
so appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee with respect to the powers so delegated.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply to the Corporation only at such time
as the Corporation's Common Stock is registered under the Exchange Act, subject
to the last sentence of Section 3(b), and then only to such persons as are
required to file reports under Section 16(a) of the Exchange Act (a 'Reporting
Person').
3. ELIGIBILITY
(a) General. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Corporation; provided, that Incentive Stock Options may only be granted to
individuals who are employees of the Corporation (within the meaning of Section
3401(c) of the Code). A person who has been granted an option may, if he or she
is otherwise eligible, be granted additional options if the Board of Directors
shall so determine.
(b) Grant of Options to Reporting Persons. From and after the registration
of the Common Stock of the Corporation under the Exchange Act, the selection of
a director or an officer who is a Reporting Person (as the
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<PAGE>
terms 'director' and 'officer' are defined for purposes of Rule 16b-3) as a
recipient of an option, the timing of the option grant, the exercise price of
the option and the number of shares subject to the option shall be determined
either (i) by the Board of Directors, of which all members shall be
'disinterested persons' (as hereinafter defined), or (ii) by a committee
consisting of two or more directors having full authority to act in the matter,
each of whom shall be a 'disinterested person.' For the purposes of the Plan, a
director shall be deemed to be a 'disinterested person' only if such person
qualifies as a 'disinterested person' within the meaning of Rule 16b-3, as such
term is interpreted from time to time. If at least two of the members of the
Board of Directors do not qualify as a 'disinterested person' within the meaning
of Rule 16b-3, as such term is interpreted from time to time, then the granting
of options to officers and directors who are Reporting Persons under the Plan
shall not be determined in accordance with this Section 3(b) but shall be
determined in accordance with the other provisions of the Plan.
(c) Directors' Options. Directors of the Company who are not employees or
beneficial owners of 5% or more of the outstanding Common Stock of the Company
('Eligible Directors') and who are elected to the Board of Directors subsequent
to the date hereof will be granted an option ('Director Option') to purchase
20,000 shares of Common Stock on the date that such person is first elected or
appointed a director (an 'Initial Director Option'). Each Eligible Director will
receive an automatic grant of a Director Option to purchase 5,000 shares of
Common Stock on the day immediately following the date of each annual meeting of
stockholders held subsequent to December 31, 1995, as long as such director is a
member of the Board of Directors, and provided that such director did not
receive an Initial Director Option since the previous annual meeting of
stockholders. The exercise price for each share subject to a Director Option
shall be equal to the fair market value of the Common Stock on the date of
grant. Director Options shall become exercisable in four equal annual
installments commencing one year from the date the option is granted and will
expire the earlier of 10 years after the date of grant or 90 days after the
termination of the director's service on the Board. This Section 3(c) shall not
be amended more than once every six months, other than to comport with changes
in the Internal Revenue Code, the Employee Retirement Income Security Act, or
the rules thereunder.
4. STOCK SUBJECT TO PLAN
The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Corporation which may be issued and sold under the Plan is 1,500,000 shares.
If an option granted under the Plan shall expire, terminate or is cancelled for
any reason without having been exercised in full, the unpurchased shares subject
to such option shall again be available for subsequent option grants under the
Plan.
5. FORMS OF OPTION AGREEMENTS
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.
6. PURCHASE PRICE
(a) General. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Board of Directors at the time
of grant of such option; provided, however, that in the case of an Incentive
Stock Option, the exercise price shall not be less than 100% of the Fair Market
Value (as hereinafter defined) of such stock, at the time of grant of such
option, or less than 110% of such Fair Market Value in the case of options
described in Section 11(b). 'Fair Market Value' of a share of Common Stock of
the Corporation as of a specified date for the purposes of the Plan shall mean
the closing price of a share of the Common Stock on the principal securities
exchange on which such shares are traded on the day immediately preceding the
date as of which Fair Market Value is being determined, or on the next preceding
date on which such shares are traded if no shares were traded on such
immediately preceding day, or if the shares are not traded on a securities
exchange, Fair Market Value shall be deemed to be the average of the high bid
and low asked prices of the shares in the
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over-the-counter market on the day immediately preceding the date as of which
Fair Market Value is being determined or on the next preceding date on which
such high bid and low asked prices were recorded. If the shares are not publicly
traded, Fair Market Value of a share of Common Stock (including in the case of
any repurchase of shares, any distributions with respect thereto which would be
repurchased with the shares) shall be determined in good faith by the Board of
Directors. In no case shall Fair Market Value be determined with regard to
restrictions other than restrictions which, by their terms, will never lapse.
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Corporation in an amount equal to the exercise price of such
options, or, to the extent provided in the applicable option agreement, (i) by
delivery to the Corporation of shares of Common Stock of the Corporation having
a Fair Market Value on the date of exercise equal in amount to the exercise
price of the options being exercised, (ii) by any other means (including,
without limitation, by delivery of a promissory note of the optionee payable on
such terms as are specified by the Board of Directors) which the Board of
Directors determines are consistent with the purpose of the Plan and with
applicable laws and regulations (including, without limitation, the provisions
of Rule 16b-3 and Regulation T promulgated by the Federal Reserve Board) or
(iii) by any combination of such methods of payment.
7. OPTION PERIOD
Subject to earlier termination as provided in the Plan, each option and all
rights thereunder shall expire on such date as determined by the Board of
Directors and set forth in the applicable option agreement, provided, that such
date shall not be later than (10) ten years after the date on which the option
is granted.
8. EXERCISE OF OPTIONS
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. No option granted to a Reporting Person for purposes of the
Exchange Act, however, shall be exercisable during the first six months after
the date of grant. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable, the
Board of Directors may (i) in the agreement evidencing such option, provide for
the acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.
All options granted under the Plan will become exercisable in no fewer than four
equal annual installments commencing not earlier than the first anniversary of
the date of grant.
9. NONTRANSFERABILITY OF OPTIONS
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. An option may be exercised during the lifetime of the optionee only
by the optionee. In the event an optionee dies during his employment by the
corporation or any of its subsidiaries, or during the three-month period
following the date of termination of such employment, his option shall
thereafter be exercisable, during the period specified to the full extent to
which such option was exercisable by the optionee at the time of his death
during the periods set forth in Section 10 or 11(d).
10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
Except as provided in Section 11(d) with respect to Incentive Stock
Options, and subject to the provisions of the Plan, an optionee may exercise an
option at any time within three (3) months following the termination of the
optionee's employment or other relationship with the Corporation or within one
(1) year if such termination was due to the death or disability of the optionee,
but, except in the case of the optionee's death, in no event later than the
expiration date of the Option. If the termination of the optionee's employment
is for cause or is otherwise attributable to a breach by the optionee of an
employment or confidentiality or non-disclosure agreement, the option shall
expire immediately upon such termination. The Board of Directors shall have the
power to determine
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what constitutes a termination for cause or a breach of an employment or
confidentiality or non-disclosure agreement, whether an optionee has been
terminated for cause or has breached such an agreement, and the date upon which
such termination for cause or breach occurs. Any such determinations shall be
final and conclusive and binding upon the optionee.
11. INCENTIVE STOCK OPTIONS
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% Stockholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then the
following special provisions shall be applicable to the Incentive Stock Option
granted to such individual:
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market Value
of one share of Common Stock at the time of grant; and
(ii) the option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Corporation) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Corporation, except that:
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an employee of the
Corporation (or within such lesser period as may be specified in the
applicable option agreement), provided, that the agreement with respect to
such option may designate a longer exercise period and that the exercise
after such three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Corporation, or
within three months after the optionee ceases to be such an employee, the
Incentive Stock Option may be exercised by the person to whom it is
transferred by will or the laws of descent and distribution within the
period of one year after the date of death (or within such lesser period as
may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provisions thereto) while in the
employ of the Corporation, the Incentive Stock Option may be exercised
within the period of one year after the date the optionee ceases to be such
an employee because of such disability (or within such lesser period as may
be specified in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, 'employment'
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Incoming Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions to Incentive Stock Option may be exercised after its
expiration date.
12. ADDITIONAL PROVISIONS
(a) Additional Option Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in option agreements covering options
granted under the Plan, including without limitation restrictions on transfer,
repurchase rights, rights of first refusal, commitments to pay cash bonuses, to
make, arrange for or
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guaranty loans or to transfer other property to optionees upon exercise of
options, or such other provisions as shall be determined by the Board of
Directors; provided, that such additional provisions shall not be inconsistent
with any other term or condition of the Plan and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be permitted if it would cause the Plan to fail to comply with Section
422 of the Code or with Rule 16b-3 (if applicable).
13. GENERAL RESTRICTIONS
(a) Investment Representations. The Corporation may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Corporation to the
effect that such person is acquiring the Common Stock subject to the option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Corporation deems necessary or appropriate in order to comply with federal and
applicable state securities laws, or with covenants or representations made by
the Corporation in connection with any public offering of its Common Stock.
(b) Compliance with Securities Law. Each option shall be subject to the
requirement that if, at any time, counsel to the Corporation shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with the issuance or purchase
of shares thereunder, such option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval, or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board of Directors. Nothing herein shall be deemed
to require the Corporation to apply for or to obtain such listing, registration
or qualification, or to satisfy such condition.
14. RIGHTS AS A STOCKHOLDER
The holder of an option shall have no rights as a stockholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATION, REORGANIZATIONS AND RELATED
TRANSACTIONS
(a) Recapitalization and Related Transactions. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, (i) the outstanding shares of Common
Stock are increased, decreased or exchanged for a different number or kind of
shares or other securities of the Corporation, or (ii) additional shares or new
or different shares or other non-cash assets are distributed with respect to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under the Plan, (y) the number and kind of shares
or other securities subject to any then outstanding options under the Plan, and
(z) the price for each share subject to any then outstanding options under the
Plan, without changing the aggregate purchase price as to which such options
remain exercisable. Notwithstanding the foregoing, no adjustment shall be made
pursuant to this Section 15 if such adjustment (i) would cause the Plan to fail
to comply with Section 422 of the Code or with Rule 16b-3 or (ii) would be
considered as the adoption of a new plan requiring stockholder approval.
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(b) Reorganization, Merger and Related Transactions. If the Corporation
shall be the surviving corporation in any reorganization, merger or
consolidation of the Corporation with one or more other corporations, any then
outstanding option granted pursuant to the Plan shall pertain to and apply to
the securities to which a holder of the number of shares of Common Stock subject
to such options would have been entitled immediately following such
reorganization, merger, or consolidation, with a corresponding proportionate
adjustment of the purchase price as to which such options may be exercised so
that the aggregate purchase price as to which such options may be exercised
shall be the same as the aggregate purchase price as to which such options may
be exercised for the shares remaining subject to the options immediately prior
to such reorganization, merger, or consolidation.
(c) Board Authority to Make Adjustments. Any adjustments made under this
Section 15 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
16. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.
(a) General. In the event of a consolidation or merger in which the
Corporation is not the surviving corporation, or sale of all or substantially
all of the assets of the Corporation in which outstanding shares of Common Stock
are exchanged for securities, cash or other property of any other corporation or
business entity or in the event of a liquidation of the Corporation
(collectively, a 'Corporate Transaction'), the Board of Directors of the
Corporation, or the board of directors of any corporation assuming the
obligations of the Corporation, may, in its discretion, take any one or more of
the following actions, as to outstanding options: (i) provide that such options
shall be assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any such
options substituted for Incentive Stock Options shall meet the requirements of
Section 424(a) of the Code, (ii) upon written notice to the optionees, provide
that all unexercised options will terminate immediately prior to the
consummation of such transaction unless exercised by the optionee within a
specified period following the date of such notice, (iii) in the event of a
Corporate Transaction under the terms of which holders of the Common Stock of
the Corporation will receive upon consummation thereof a cash payment for each
share surrendered in the Corporate Transaction (the 'Transaction Price'), make
or provide for a cash payment to the optionees equal to the difference between
(A) the Transaction Price times the number of shares of Common Stock subject to
such outstanding options (to the extent then exercisable at prices not in excess
of the Transaction Price) and (B) the aggregate exercise price of all such
outstanding options in exchange for the termination of such options, and (iv)
provide that all or any outstanding options shall become exercisable in full
immediately prior to such event.
(b) Substitute Options. The Corporation may grant options under the Plan
in substitution for options held by employees of another corporation who become
employees of the Corporation, or a subsidiary of the Corporation, as the result
of a merger or consolidation of the employing corporation with the Corporation
or a subsidiary of the Corporation, or as a result of the acquisition by the
Corporation, or one of its subsidiaries, of property or stock of the employing
corporation. The Corporation may direct that substitute options be granted on
such terms and conditions as the Board of Directors considers appropriate in the
circumstances.
17. NO SPECIAL EMPLOYMENT RIGHTS
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Corporation or interfere in any way with the right of the Corporation at any
time to terminate such employment or to increase or decrease the compensation of
the optionee.
18. OTHER EMPLOYEE BENEFITS
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-
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sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Board of Directors.
19. AMENDMENT OF THE PLAN
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
stockholders of the Corporation is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options, or under Rule
16b-3, the Board of Directors may not effect such modification or amendment
without such approval.
(b) The termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify (i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent necessary to
qualify any or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
20. WITHHOLDING
(a) The Corporation shall have the right to deduct from payments of any
kind otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Corporation,
which may be withheld by the Corporation in its sole discretion, the optionee
may elect to satisfy such obligations, in whole or in part, (i) by causing the
Corporation to withhold shares of Common Stock otherwise issuable pursuant to
the exercise of an option or (ii) by delivering to the Corporation shares of
Common Stock already owned by the optionee. The shares so delivered or withheld
shall have a Fair Market Value equal to such withholding obligation as of the
date that the amount of tax to be withheld is to be determined. An optionee who
has made an election pursuant to this Section 20(a) may only satisfy his or her
withholding obligation with shares of Common Stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i) to notify the
Corporation if any or all of such shares are disposed of by the optionee within
two years from the date the option was granted or within one year from the date
the shares were transferred to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Corporation, at the time of
and in the case of any such disposition, an amount sufficient to satisfy the
Corporation's federal, state and local withholding tax obligations with respect
to such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Corporation at the time of such disposition.
(c) Notwithstanding the foregoing, in the case of a Reporting Person whose
options have been granted in accordance with the provisions of Section 3(b)
herein, no election to use shares for the payment of withholding taxes shall be
effective unless made in compliance with any applicable requirements of Rule
16b-3.
21. CANCELLATION AND NEW GRANT OF OPTIONS, ETC.
The Board of Directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
cancelled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the then current exercise price per share of such
outstanding options.
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22. EFFECTIVE DATE AND DURATION OF THE PLAN
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Corporation's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of the Plan, no
options previously granted under the Plan shall be deemed to be Incentive Stock
Options and no Incentive Stock Options shall be granted thereafter. Amendments
to the Plan not requiring stockholder approval shall become effective when
adopted by the Board of Directors; amendments requiring stockholder approval (as
provided in Section 19) shall become effective when adopted by the Board of
Directors, but no Incentive Stock Option granted after the date of such
amendment shall become exercisable (to the extent that such amendment to the
Plan was required to enable the Corporation to grant such Incentive Stock Option
to a particular optionee) unless and until such amendment shall have been
approved by the Corporation's stockholders. If such stockholder approval is not
obtained within twelve (12) months of the Board's adoption of such amendment,
any Incentive Stock Options granted on or after the date of such amendment shall
terminate to the extent that such amendment to the Plan was required to enable
the Corporation to grant such option to a particular optionee. Subject to this
limitation, options may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 16,
the Plan shall terminate upon the earlier of (i) the close of business on the
day next preceding the tenth anniversary of the date of is adoption by the Board
of Directors, or (ii) the date on which all shares available for issuance under
the Plan shall have been issued pursuant to the exercise or cancellation of
options granted under the Plan. If the date of termination is determined under
(i) above, then options outstanding on such date shall continue to have force
and effect in accordance with the provisions of the instruments evidencing such
options.
23. PROVISION FOR FOREIGN PARTICIPANTS
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
24. GOVERNING LAW
The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of New York without regard to the principles of
conflicts of laws.
Originally Adopted by the Board of
Directors on April 15, 1993
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VION PHARMACEUTICALS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 16, 1997
John A. Spears and Thomas Mizelle, and each of them, as the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock or Class A Convertible Preferred Stock of Vion Pharmaceuticals,
Inc. held of record by the undersigned on February 19, 1997, at the Annual
Meeting of Stockholders to be held at 1:30 p.m. on Wednesday, April 16, 1997, at
the New Haven Hotel, 229 George Street, New Haven, Connecticut, and at any
adjournments thereof. Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY
THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE
VOTED FOR PROPOSALS NO. 1, 2 AND 3.
1. Proposal No. 1--Election of Directors--Nominees are: William R. Miller, John
A. Spears, Alan C. Sartorelli, Ph.D., Michel C. Bergerac, Frank T. Cary, A.E.
Cohen, James L. Ferguson, Michael C. Kent, E. Donald Shapiro, and Walter
Wriston.
/ / FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) appear(s) below):
/ / WITHHOLD AUTHORITY to vote for the listed nominees.
2. Proposal No. 2--Approval of Amendment of the Company's Amended and Restated
1993 Stock Option Plan:
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal No. 3--Approval of Appointment of Ernst & Young LLP as the Company's
Independent Auditors:
/ / FOR / / AGAINST / / ABSTAIN
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
Discretionary authority is hereby granted with respect to such other matters
as may properly come before the meeting.
IMPORTANT: PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHOULD
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC. SHOULD GIVE FULL TITLE AS SUCH.
IF SIGNOR IS A CORPORATION, PLEASE GIVE FULL CORPORATE NAME BY DULY AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated ___________________________, 1997
_______________________________________
Signature
_______________________________________
Signature if held jointly
THE ABOVE-SIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND THE PROXY STATEMENT FURNISHED THEREWITH.
