As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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VION PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 13-3671221
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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4 SCIENCE PARK, NEW HAVEN, CONNECTICUT 06511, (203) 498-4210
(Address, including zip code, and telephone number, including area code,
of principal executive offices)
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ALAN KESSMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
VION PHARMACEUTICALS, INC., 4 SCIENCE PARK, NEW HAVEN, CONNECTICUT 06511,
(203) 498-4210
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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Copies of all communications, including all communications sent to
the agent for service, should be sent to:
PAUL JACOBS, ESQ., FULBRIGHT & JAWORSKI L.L.P., NEW YORK, NEW YORK 10103
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box:[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ] ____________.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER SHARE (1) PRICE (1) REGISTRATION FEE
- --------------------------------------------------- ------------- ----------------------- -------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share............. 893,915 $5.71875 $5,112,077 $1,422
- --------------------------------------------------- ------------- ----------------------- -------------------- ----------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Such estimates have been calculated in accordance with Rule 457(c)
under the Securities Act of 1933 and are based upon the average of the
high and low prices per share of the Registrant's Common Stock on the
Nasdaq SmallCap Market on May 27, 1999.
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
THIS INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 4, 1999
PROSPECTUS
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893,915 SHARES
VION PHARMACEUTICALS, INC.
COMMON STOCK
Our stockholders listed in this prospectus are offering and selling
from time to time an aggregate of 893,915 shares of our common stock. The shares
may be offered from time to time by the selling stockholders through ordinary
brokerage transactions, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices.
OUR NASDAQ SMALLCAP MARKET SYMBOL -- VION
CLOSING PRICE (JUNE 3, 1999) -- $5.00
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SEE "RISK FACTORS," WHICH BEGINS ON PAGE 6 OF THIS PROSPECTUS, FOR
CERTAIN INFORMATION THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN THE SHARES
BEING OFFERED PURSUANT TO THIS PROSPECTUS.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999
<PAGE>
TABLE OF CONTENTS
PAGE
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About this Prospectus................................................ 2
Summary of Vion's Business........................................... 3
Recent Developments.................................................. 4
Risk Factors......................................................... 6
Use of Proceeds...................................................... 13
Selling Stockholders ................................................ 13
Plan of Distribution................................................. 15
Legal Matters........................................................ 15
Experts.............................................................. 16
Note Regarding Forward-Looking Statements............................ 16
Where You Can Find More Information.................................. 16
ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement on Form S-3 filed
by us with the Securities and Exchange Commission to register 893,915 shares of
our common stock on behalf of the selling stockholders. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. Accordingly, you should refer to the registration statement and its
exhibits for further information about us and our common stock. Copies of the
registration statement and its exhibits are on file with the SEC. Statements
contained in this prospectus concerning the documents we have filed with the SEC
are not intended to be comprehensive, and in each instance we refer you to the
copy of the actual document filed as an exhibit to the registration statement or
otherwise filed with the SEC. Each such statement is qualified in its entirety
by such reference.
You should rely only on the information provided or incorporated by
reference in this prospectus and the registration statement. We have not
authorized anyone to provide you with different information. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of common
stock.
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SUMMARY OF VION'S BUSINESS
We are a biopharmaceutical company engaged in research and development
of therapeutic products for the treatment of cancer. Pursuant to a license
agreement with Yale University, we have acquired the rights to anticancer and
antiviral patents and technologies which we believe provide a broad base for the
future development of therapeutic products.
Our product development strategy consists of two main approaches:
(1) In-house research and collaborations with academic
institutions; and
(2) Partnerships with other companies to develop and eventually
market our technologies.
Research and Development. Our core technologies which form the initial
focus of our research and development are:
o Tumor Amplified Protein Expression Therapy, or TAPET(R), an
anticancer therapy that utilizes genetically modified salmonella
bacteria as "missiles" to deliver multiple forms of treatment to solid
tumors;
o Promycin(R) (porfiromycin), an anticancer cell therapeutic which
targets oxygen-depleted cells that are otherwise resistant to radiation
therapy;
o Sulfonyl hydrazine prodrugs, which are designed to be activated in
cancer cells or the surrounding area and destroy cancer cells; A
prodrug is generally a non-toxic drug form which is converted into the
active drug once it is in the body, either metabolically or through
hydrolysis;
o Novel nucleoside analogs which inhibit the Hepatitis B virus;
o Ribonucleotide reductase inhibitors such as Triapine(TM), which block
the formation of DNA and thereby inhibit the replication of cancer
cells.
In addition to our core technologies, we have sponsored development and
obtained the rights to MELASYN(TM), a synthetic form of melanin. We intend to
target projects for all of the above agents based upon the likelihood that
commercial products can successfully be developed using technology which is
available to us without additional cost, the potential commercial market for the
product and the projected time needed to develop and market the product.
Strategic Partnerships. We have entered into, and will continue to
pursue, strategic partnerships with other companies. In November 1997, we
entered into an exclusive worldwide licensing agreement with Boehringer
Ingelheim International GmbH for the development and marketing of Promycin(R),
our lead anticancer agent. If our TAPET technology proves its ability to inhibit
the growth of tumors in humans, we intend to seek strategic partnerships with
other
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pharmaceutical companies to use TAPET to deliver new, proprietary anticancer
agents. Other technologies that are candidates for strategic partnerships
include Triapine(TM) and the sulfonyl hydrazine prodrugs.
We were incorporated in March 1992 as a Delaware corporation named
MelaRx Pharmaceuticals, Inc. In April 1995 we changed our name to OncoRx, Inc.
in connection with a merger, and in April 1996 we changed our name to Vion
Pharmaceuticals, Inc. Our executive offices are located at 4 Science Park, New
Haven, Connecticut 06511, and our telephone number is (203) 498-4210. The terms
"we," "us," "our" and "Vion" refer to Vion Pharmaceuticals, Inc.
RECENT DEVELOPMENTS
PRIVATE PLACEMENT
In April 1999, we completed a private placement of 893,915 shares of
our common stock to the selling stockholders at a price of approximately $4.47
per share, which was 90% of the average closing price of the common stock on the
Nasdaq SmallCap Market for the 10 consecutive trading days immediately prior to
April 8, 1999, for aggregate proceeds of $4,000,000. Shares were sold to the
selling stockholders on April 8, April 13 and April 19.
In connection with the private placement, we agreed with the selling
stockholders as follows:
o If we issue or agree to issue any common stock at a price less
than $4.47 per share during the 12 months following the
closing of the private placement, we must immediately issue
additional shares of common stock to the selling stockholders.
We will issue that number of additional shares of common stock
so that the selling stockholders will have obtained a total
number of shares equal to $4,000,000 divided by the lower
price per share. There are exceptions to this obligation for
shares issued by us upon the exercise of employee stock
options and upon the exercise or conversion of currently
outstanding options, warrants or preferred stock. Our
obligation will terminate after we complete a private
placement or public offering of our common stock at a price
per share greater than $4.47 where the gross proceeds to us
are at least $11,000,000.
o If any of the following events occurs, we must pay to the
selling stockholders 3% of the amount of their investment for
each 30-day period, or portion of a 30-day period, during
which the event continues:
o this registration statement has not been declared
effective within 120 days after the closing of the
private placement, unless at that time Vion is
actively engaged in completing an underwritten public
offering;
o the common stock issued in the private placement fails
to be listed on any principal securities exchange or
market on which our common stock is traded; or
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o the selling stockholders are unable to use this
registration statement in connection with the sale of
their shares for more than 90 days in any 12- month
period, unless the reason for the inability is because
of the need to update disclosures regarding regulatory
developments with respect to our products.
o If we fail or refuse to make any payment described above, at
the request of any selling stockholder we must purchase all or
a portion of the shares of common stock purchased in the
private placement by the selling stockholder at a purchase
price per share of $4.9222. The amount of default payments to
any selling stockholder for any one month may not exceed 3% of
the amount invested by the selling stockholder in the private
placement.
EPTTCO COLLABORATION
In April 1999, we entered into a collaboration with EPTTCO Limited, a
newly formed drug delivery company based in the United Kingdom. Through the
collaboration, we will seek to "arm" our TAPET(R) vectors with EPTTCO's prodrug
activation technology, which uses enzymes to convert inactive prodrugs into
cytotoxic anticancer agents, and to create new cancer treatments that may be
systematically delivered and may potentially be more effective against solid
tumors and less toxic to normal tissues than current anticancer drugs. EPTTCO's
technology is a drug activating system that selectively releases prodrugs within
tumors, resulting in local killing of tumor cells while sparing normal tissues
from toxic effects. Under the terms of the collaboration agreement, Vion and
EPTTCO will equally contribute technology and manpower to establish and test the
combined therapeutic system. If a specific combination of the two technologies
proves successful, Vion and EPTTCO will seek a corporate partner to clinically
develop and commercialize the combined system.
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RISK FACTORS
In addition to the other information in this prospectus, you should
carefully consider the following factors in evaluating us and our business
before purchasing the shares of common stock offered hereby. This prospectus
contains, in addition to historical information, forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as those discussed elsewhere in this
prospectus, including the documents incorporated by reference.
WE HAVE A LIMITED OPERATING HISTORY AND AN ACCUMULATED DEFICIT, AND WE
ANTICIPATE LOSSES FOR SEVERAL YEARS.
We are in the development stage and we have not generated any material
ongoing revenues. At December 31, 1998, we had an accumulated deficit of
approximately $50.6 million, and since then we have experienced significant
losses which we expect to continue for the foreseeable future. We cannot assure
you that our research and development activities will result in any commercial
products or that we will ever realize revenues from the sale of any of our
products. We have incurred a substantial portion of our losses in connection
with research we sponsored on several product candidates pursuant to an
agreement with Yale University. We continue to have substantial financial
commitments to Yale pursuant to the agreement with them. We will continue to
conduct significant research, development, testing and regulatory compliance
activities which, together with administrative expenses, are expected to result
in operating losses for at least the next several years.
OUR PRODUCTS ARE CURRENTLY UNDER DEVELOPMENT AND WE CANNOT ASSURE YOU
THAT ANY OF OUR PRODUCT CANDIDATES WILL BE SUCCESSFULLY DEVELOPED.
Our proposed products are still under development and require
significant further research, development and testing. We expect that our
products will not be commercially available for a significant period of time, if
ever. There has been only limited research on many of our technologies. Results
obtained in research and testing conducted to date are not conclusive as to
whether compounds we are investigating will be effective or safe for their
proposed uses. In some cases, we have not yet selected lead compounds for our
proposed products. Our successful development of any product is subject to the
risks of failure inherent in the development of products or therapeutic
procedures based on innovative technologies. These risks include the
possibilities that:
o any or all of these proposed products or procedures are found
to be ineffective or unsafe or otherwise fail to receive
necessary regulatory clearances or approvals;
o the proposed products or procedures are uneconomical to market
or do not achieve broad market acceptance;
o third parties hold proprietary rights that preclude us from
marketing proposed products; or
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o third parties market a superior or equivalent product.
THE EFFICACY AND SAFETY OF OUR TAPET TECHNOLOGY IS PARTICULARLY
UNCERTAIN.
TAPET uses genetically altered salmonella bacteria for delivery of
genes or enzymes to tumors. The use of bacteria in general, and salmonella in
particular, to deliver genes or gene products is a new technology, and existing
preclinical and clinical data on the safety and efficacy of this technology are
very limited. We cannot assure you that unacceptable side effects will not be
discovered during preclinical and clinical testing of our potential products
utilizing the TAPET technology. No products utilizing the TAPET technology are
in human clinical trials, and the results of preclinical studies do not predict
safety or efficacy in humans. Possible serious side effects of TAPET include
bacterial infections, particularly the risk of sepsis, a serious and often fatal
bacterial infection of the blood.
WE NEED SIGNIFICANT ADDITIONAL FUNDS TO CONTINUE OUR RESEARCH AND
PRODUCT DEVELOPMENT EFFORTS. FUNDS MAY NOT BE AVAILABLE ON ACCEPTABLE
TERMS OR AT ALL.
We will require substantial additional funds for our research and
product development programs, for operating expenses and to pursue regulatory
approvals. We also have significant financial commitments to academic
collaborators in connection with license and sponsored research agreements.
Adequate funds for these purposes, whether through financial markets or
collaborative or other arrangements with corporate partners or from other
sources, may not be available when needed. Insufficient funds may require us to
delay, scale back or eliminate our research and product development programs or
to license third parties to commercialize products or technologies that we would
otherwise seek to develop alone. If our funds are insufficient, we may be unable
to meet our obligations under license agreements, research agreements or other
collaborative agreements, make research payments or commercialize the
technologies licensed under those agreements. If we fail to make any payments
required to be made to academic collaborators or licensors, or if we are
otherwise in default under agreements with those parties, they will have the
right to terminate their research and license arrangements with us. Termination
of any of these arrangements would have a material adverse effect on our
business by rendering us unable to continue development of or to commercialize
all or a portion of our product candidates licensed under these agreements.
Our cash requirements may vary materially from those now planned
because of:
o unexpected positive or negative results of research and
development and product testing which require investment in
new or additional tests;
o positive or negative developments in relationships with
strategic partners or new relationships which require us to
provide more or less funding on our own;
o changes in the focus and direction of our research and
development programs which require unanticipated investment in
the development of new tests and procedures;
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o competitive and technological advances which would require us
to abandon, alter or speed-up our development activities or to
acquire or license new equipment and technologies; and
o developments in the regulatory process in the United States
and abroad which require unanticipated additional tests, new
tests or extensive changes to our products and procedures.
We received an opinion from our auditors, filed as part of Annual
Report for the fiscal year ended December 31, 1998, expressing substantial doubt
as to our ability to continue as a going concern because, at that time, our cash
was not sufficient to continue operations through the end of 1999.
WE DEPEND HEAVILY ON PATENTS AND TRADE SECRETS FOR PROTECTION OF OUR
TECHNOLOGIES FROM USE BY OTHERS. OUR PATENT POSITION AND THE
PROPRIETARY NATURE OF OUR TRADE SECRETS ARE UNCERTAIN.
Our success will depend on our ability, or the ability of our
licensors, to obtain and maintain patent protection on technologies and
products, to preserve trade secrets and to operate without infringing the
proprietary rights of others. We cannot assure you that patent applications
filed by us or on our behalf will result in patents being issued or that, if
issued, the patents will afford protection against competitors with similar
technology. Furthermore, we cannot assure you that others will not independently
develop similar technologies or duplicate any technology developed by us. It is
possible that before any of our potential products can be commercialized, any
related patent may expire, or remain in existence for only a short period
following commercialization, thus reducing any advantage of the patent.
Moreover, composition of matter patent protection, which gives patent protection
for the structure of a compound, may not be available for certain of our product
candidates. Specifically, we do not expect composition of matter patent
protection to be available for 3TC, a novel nucleoside analog that we license
from Yale, or for Promycin(R).
Our processes and potential products may conflict with patents that
have been or may be granted to competitors, universities or others. As the
biopharmaceutical industry expands and more patents are issued the risk
increases that our processes and potential products may give rise to claims that
they infringe the patents of others. These other persons could bring legal
actions against us claiming damages and seeking to enjoin clinical testing,
manufacturing and marketing of the affected product or process. If any of these
actions are successful, in addition to any potential liability for damages, we
could be required to obtain a license in order to continue to conduct clinical
tests, manufacture or market the affected product or use the affected process.
We cannot assure you that we would prevail in any action of this type or that
any license required would be made available on acceptable terms, if at all. If
we become involved in litigation, it could consume a substantial portion of our
resources.
We are aware that patent applications have been filed by and/or United
States patents have been issued to IAF BioChem International, Inc., Emory
University, Glaxo Group Limited,
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University of Georgia Research Foundation, Inc., and The Wellcome Foundation
Limited of Unicorn House that relate to the subject matter of patent
applications that we have licensed, namely applications relating to 3TC and/or
its use as an anti-hepatitis B virus agent. We are also aware that patent
applications have been filed by BioChem Pharma Inc. that relate to subject
matter that we license, namely b-L-FddC and its use as an anti-hepatitis B virus
agent.
We also rely on trade secrets that we may seek to protect through
confidentiality agreements with employees and other parties. We cannot assure
you that these agreements will not be breached, that we will have adequate
remedies for any breach or that our trade secrets will not otherwise become
known to or independently developed by competitors. To the extent that our
consultants, key employees or other third parties apply technological
information independently developed by them or by others to our proposed
projects, third parties may own all or part of the proprietary rights to such
information, and disputes may arise as to the ownership of the proprietary
rights to such information which may not be resolved in our favor.
WE HAVE PAID AND MUST CONTINUE TO PAY SIGNIFICANT AMOUNTS OF MONEY TO
YALE, BUT WE MAY NEVER REALIZE ANY BENEFITS FROM OUR AGREEMENTS WITH
YALE.
We have incurred significant financial commitments to academic
collaborators in connection with licenses and sponsored research agreements. In
particular, through December 31, 1998, we have paid to Yale approximately
$6,100,000, and we continue to have substantial funding commitments to Yale
whether or not the research results in suitable product candidates. Moreover, we
generally do not have the right to control the research that Yale is conducting
pursuant to sponsored research agreements, and we cannot assure you that the
funds will be used to conduct research relating to products that we wish to
pursue or will result in products that we will pursue. Additionally, if the
research being conducted by Yale results in technologies that Yale has not
already licensed or agreed to license to us, we may need to negotiate additional
license agreements or we may be unable to utilize those technologies.
WE DEPEND HEAVILY ON KEY PERSONNEL AS WELL AS COLLABORATORS AND
RESEARCH INSTITUTIONS.
Because of the specialized scientific nature of our business, we are
dependent upon our ability to attract and retain qualified management and
scientific and technical personnel. We are also dependent upon other key
employees, collaborators at other research institutions and our scientific
advisors. The loss of any individuals upon whom we are dependent would have a
material adverse effect on our business. Competition among biopharmaceutical and
biotechnology companies for qualified employees is intense. The loss of
qualified employees, or an inability to attract, retain and motivate any
additional highly skilled employees required for the expansion of our
activities, could adversely affect our business and prospects. We cannot assure
you that we will be able to retain and continue to attract qualified employees.
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WE DEPEND ON OTHER PARTIES FOR ASPECTS OF OUR PRODUCT DEVELOPMENT
EFFORTS, AND WE DO NOT HAVE MANUFACTURING, MARKETING OR REGULATORY
CAPABILITIES OF OUR OWN.
Our strategy for the research, development and commercialization of our
products entails entering into various arrangements with corporate partners,
licensors, licensees and others, and is dependent upon the subsequent success of
these outside parties in performing their responsibilities. We also rely on our
collaborative partners to conduct research efforts and clinical trials, to
obtain regulatory approvals and to manufacture and to market our products. In
particular, we have engaged a contract research organization to conduct the
Phase III clinical studies of porfiromycin. The amount and timing of resources
to be devoted to these activities by these other parties may not be within our
control. We cannot assure you that these parties will perform their obligations
as expected or that we will derive any revenue from these arrangements.
We have no experience in manufacturing or marketing any therapeutic
products. We currently do not have the resources to manufacture or market
independently on a commercial scale any products that we may develop. We
currently intend to outsource some or all manufacturing requirements we may
have. We cannot assure you that we will be able to enter into suitable
arrangements for manufacturing. If we decide to establish a manufacturing
facility, we will require substantial additional funds and will be required to
hire and retain significant additional personnel and comply with the extensive
FDA-mandated good manufacturing practices that would apply to such a facility.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.
The FDA and comparable foreign regulatory authorities require rigorous
pre-clinical testing, clinical trials and other approval procedures for human
pharmaceutical products. Numerous regulations also govern the manufacturing,
safety, labeling, storage, record keeping, reporting and marketing of
pharmaceutical products. Governmental regulation may significantly delay the
marketing of our products, prevent marketing of products altogether or impose
costly requirements on our activities. A delay in obtaining or failure to obtain
regulatory approvals for any of our drug candidates will have an adverse effect
on our business. We cannot predict the adverse effects that existing or future
government regulations may have on our business.
Government regulatory requirements vary widely from country to country,
and the time required to complete pre-clinical testing and clinical trials and
to obtain regulatory approvals is typically several years or more. We expect the
process of obtaining approvals and complying with appropriate government
regulations to be time consuming and expensive. Changes in regulatory policy or
additional regulations adopted during product development and regulatory review
of information we submit could also result in added cost, delays or rejections.
If we are unable to demonstrate the safety and effectiveness of our drug
candidates to the satisfaction of government authorities, our business will be
adversely affected.
We have obtained Orphan Drug status from the FDA, which gives us seven
year marketing exclusivity from the date the FDA gives marketing approval, for
Promycin(R), and we intend to seek Orphan Drug designation for products where
appropriate and where no patent
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protection is feasible. We cannot assure you that Orphan Drug status will be
obtained for any of our other proposed products.
Even if our products receive regulatory approval, we may still face
difficulties in marketing and manufacturing those products. The approval of any
of our drug candidates may limit the indicated uses of the drug candidate. A
marketed product, its manufacturer and the manufacturer's facilities are subject
to continual review and periodic inspections. The discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions on the product or manufacturer, including withdrawal of the product
from the market. The failure to comply with applicable regulatory requirements
can, among other things, result in:
o fines,
o suspended regulatory approvals,
o refusal to approve pending applications,
o refusal to permit exports from the United States,
o product recalls,
o seizure of products,
o injunctions,
o operating restrictions, and
o criminal prosecutions.
THERE IS UNCERTAINTY RELATED TO HEALTHCARE REIMBURSEMENT AND REFORM
MEASURES WHICH COULD AFFECT THE COMMERCIAL VIABILITY OF ANY PRODUCTS
DEVELOPED BY US.
Our success in generating revenue from sales of therapeutic products
may depend on the extent to which reimbursement for the cost of those products
will be available from government health administration authorities, private
health insurers and other organizations. Significant uncertainty exists as to
the reimbursement status of newly-approved healthcare products. If government
and third-party payors do not provide adequate coverage and reimbursement levels
for uses of our therapeutic products, the market acceptance of these products
could be adversely affected. Further, we cannot assure you that adequate
third-party insurance coverage will be available for us to establish and
maintain price levels sufficient for realization of an appropriate return on our
investment in developing new therapies or products.
Government and other third-party payors are increasingly attempting to
contain healthcare costs by limiting both coverage and the level of
reimbursement of new therapeutic products approved for marketing by the FDA and
by refusing, in some cases, to provide any coverage of uses of approved products
for disease indications other than those for which the FDA has granted marketing
approval. In addition, Congress regularly considers numerous proposals relating
to healthcare reform which, if adopted, could affect the amount paid for
pharmaceutical products and medical procedures. We are unable to predict which
proposals, if any, will be adopted, or the effect they may have on our
operations.
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WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY.
The market for cancer products is large and growing rapidly and will
attract new entrants. We are in competition with other pharmaceutical companies,
biotechnology companies and research and academic institutions. Many of these
companies have substantially greater financial and other resources and
development capabilities than us and have substantially greater experience in
undertaking pre-clinical and clinical testing of products, obtaining regulatory
approvals and manufacturing and marketing pharmaceutical products. Accordingly,
our competitors may succeed in obtaining approval for products more rapidly than
us and in developing and commercializing products that are safer and more
effective than those that we propose to develop.
In addition to competing with universities and other research
institutions in the development of products, technologies and processes, we may
compete with other companies in acquiring rights to products or technologies
from universities. We cannot assure you that we will develop products that are
more effective or achieve greater market acceptance than our competitors'
products, or that our competitors will not succeed in developing products and
technologies that are more effective than those that we are developing or that
would render our products and technologies less competitive or obsolete.
THE TESTING AND MARKETING OF OUR POTENTIAL PRODUCTS WILL PRESENT
LIABILITY RISKS.
Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of drug products. We do not
currently have any product liability insurance. When we seek to obtain product
liability insurance, we cannot assure you that we will be able to obtain or
maintain product liability insurance on acceptable terms, that insurance will
provide adequate coverage against potential liabilities or that a product
liability claim will not have a material adverse effect on our business.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SIGNIFICANT AMOUNT OF STOCK
OF VION AND EXERT CONSIDERABLE CONTROL OVER VION.
As of May 17, 1999, our directors and executive officers beneficially
owned approximately 10.9% of our outstanding common stock. As a result, these
stockholders are able to significantly influence all matters requiring
stockholder approval, including the election of directors and the approval of
significant corporate transactions. This concentration of ownership could also
delay or prevent a change in control that may be favored by other stockholders.
OUR BOARD OF DIRECTORS IS AUTHORIZED TO ISSUE PREFERRED STOCK WITHOUT
STOCKHOLDER AUTHORIZATION. PREFERRED STOCK COULD BE USED AS AN
ANTI-TAKEOVER DEVICE.
Our Board of Directors is also authorized to issue from time to time,
without stockholder authorization, shares of preferred stock. The issuance of
preferred stock could decrease the amount of earnings and assets available for
distribution to our other stockholders. Preferred stockholders could receive
voting rights and rights to payments on liquidation or of dividends or
-12-
<PAGE>
other rights which are greater than the rights of the holders of the common
stock. Moreover, the issuance of preferred stock may make it more difficult for
a third party to acquire, or may discourage a third party from acquiring, voting
control of our stock. This provision could also discourage, hinder or preclude
an unsolicited acquisition and could make it less likely that stockholders
receive a premium for their shares as a result of any such attempt.
OUR COMMON STOCK COULD BE DELISTED BY THE NASDAQ STOCK MARKET.
We cannot assure you that we will continue to meet the criteria for
continued listing of our common stock on the Nasdaq SmallCap Market. If we are
unable to satisfy Nasdaq's requirements, our common stock may be delisted from
Nasdaq. In such event, trading, if any, in the common stock would thereafter be
conducted in the over-the-counter market in the so-called "pink sheets" or the
NASD's "Electronic Bulletin Board." Consequently, the liquidity of our common
stock could be impaired, not only in the number of shares which could be bought
and sold, but also through delays in the timing of transactions, reduction in
security analysts' and the news media's coverage of Vion and lower prices for
our common stock than might otherwise be attained.
Continued inclusion on the Nasdaq SmallCap Market generally requires
that:
o we maintain at least $2,000,000 in net tangible assets, a
$35,000,000 market capitalization or net income of at least
$500,000 in two of the three prior years;
o we have at least 500,000 shares in the public float valued at
$1,000,000 or more;
o our common stock has a minimum bid price of $1.00;
o we have at least two active market makers; and
o we have at least 300 holders of our common stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling stockholders.
SELLING STOCKHOLDERS
The following table sets forth the common stock ownership of the
selling stockholders as of May 28, 1999, as adjusted to reflect the sale of the
common stock in this offering. Except as set forth below, none of the selling
stockholders has held any position or office or had any other material
relationship with us or any of our predecessors or affiliates within the past
three years.
-13-
<PAGE>
<TABLE>
<CAPTION>
SHARES OF SHARES OF PERCENTAGE OF
COMMON COMMON STOCK COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED PRIOR SHARES OWNED OWNED
TO OFFERING BEING SOLD AFTER OFFERING AFTER OFFERING
----------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Elliott Associates, L.P. (1)(2) 1,503,927 223,479 1,280,448 7.93%
Kleinwort Benson Limited -- 150,848 -- --*
United Equities Commodities Company -- 223,479 -- --*
Wechsler & Co., Inc. -- 55,870 -- --*
Westgate International, L.P. (2)(3) 1,506,352 223,478 1,282,874 7.95%
Winchester Capital Healthcare Partners, LLC -- 16,761 -- --*
- ------------------
</TABLE>
* Less than 1.0%
(1) The number of shares of common stock beneficially owned by Elliott
Associates, L.P. includes (a) 78,132 shares of common stock issuable upon the
exercise of Class A Warrants, (b) 78,132 shares of common stock issuable upon
the exercise of Class B Warrants and (c) 722,195 shares of common stock issuable
upon conversion of shares of 5% Convertible Preferred Stock Series 1998. The
shares beneficially owned by Elliott Associates, L.P. represent 9.32% of
outstanding shares of common stock prior to the offering. On August 27, 1998,
Elliott Associates, L.P., together with Westgate International, L.P., exercised
their rights as holders of the 5% Convertible Preferred Stock Series 1998, to
nominate a candidate for election to the company's board of directors. That
candidate, Alan Kessman, is now the President and Chief Executive Officer, as
well as a director, of the company. The foregoing information is compiled from a
Schedule 13D filed August 14, 1998, as amended by Amendment No. 1 and Amendment
No. 2, dated September 3, 1998 and April 16, 1999, respectively.
(2) The number of shares of common stock beneficially owned by Westgate
International, L.P. includes (a) 77,724 shares of common stock issuable upon the
exercise of Class A Warrants, (b) 77,724 shares of common stock issuable upon
the exercise of Class B Warrants and (c) 722,195 shares of common stock issuable
upon conversion of shares of 5% Convertible Preferred Stock Series 1998. The
shares beneficially owned by Westgate International, L.P. represent 9.33% of
outstanding shares of common stock prior to the offering. On August 27, 1998,
Westgate International, L.P., together with Elliott Associates, L.P., exercised
their rights as holders of the 5% Convertible Preferred Stock Series 1998, to
nominate a candidate for election to the company's board of directors. That
candidate, Alan Kessman, is now the President and Chief Executive Officer, as
well as a director, of the company. The foregoing information is compiled from a
Schedule 13D filed August 14, 1998, as amended by Amendment No. 1 and Amendment
No. 2, dated September 3, 1998 and April 16, 1999, respectively.
(3) Elliott Associates, L.P., Westgate International, L.P. and Martley
International, Inc. have acted as a group (within the meaning of Rule 13D-1
under the Federal securities laws) for the purpose of acquiring securities of
the company. Martley International, Inc. is the investment advisor for Westgate
International, L.P. and Martley expressly disclaims equitable ownership of and
pecuniary interest in any common stock.
-14-
<PAGE>
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholders. We are paying all costs, expenses and fees in connection with the
registration of the shares offered by this prospectus. Brokerage commissions, if
any, attributable to the sale of shares will be borne by the selling
stockholders.
Sales or dispositions of shares of common stock may be effected from
time to time in transactions permitted by the Securities Act of 1933, including
block transactions, on the Nasdaq SmallCap Market, in negotiated transactions,
or a combination of these methods, at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock. The selling
stockholders may effect transactions by selling common stock directly to
purchasers or to or through broker-dealers which may act as agents or
principals. Broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
of common stock for whom the broker-dealers may act as agents or to whom they
sell as principal, or both. The compensation paid to a particular broker-dealer
might be in excess of customary commissions.
The selling stockholders and any broker-dealers that act in connection
with the sale of the common stock might be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any commission
received by them and any profit on the resale of the shares of common stock as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against some liabilities, including liabilities arising under the
Securities Act of 1933. Liabilities under the federal securities laws cannot be
waived.
Because the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, the selling
stockholders will be subject to prospectus delivery requirements under the
Securities Act of 1933. Furthermore, in the event of a "distribution" of shares
by a selling stockholder, the selling stockholder, any selling broker or dealer
and any "affiliated purchasers" may be subject to Regulation M under the
Securities Exchange Act of 1934, which would generally prohibit these persons
from bidding for or purchasing any security that is the subject of the
distribution until his or her participation in that distribution is completed.
In addition, Regulation M generally prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of common stock in connection with this offering.
The selling stockholders may be entitled under agreements entered into
with us to indemnification against liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus
have been passed upon for us by Fulbright & Jaworski L.L.P., New York, New York.
-15-
<PAGE>
EXPERTS
Our financial statements as of December 31, 1998 and for the years
ended December 31, 1998 and 1997 and the period from May 1, 1994 (inception) to
December 31, 1998 incorporated by reference in this prospectus and registration
statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report dated February 12, 1999, and are incorporated by reference
in reliance upon that report given upon the authority of Ernst & Young LLP as
experts in accounting and auditing.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus (including the documents incorporated by reference in
this prospectus) contains forward-looking statements (as that term is defined in
the Private Securities Litigation Reform Act of 1995) and information about our
financial condition, results of operations and business that are based on our
current and future expectations. You can find many of these statements by
looking for words such as "estimate," "project," "believe," "anticipate,"
"intend," "expect" and similar expressions. These statements reflect our current
views with respect to future events and are subject to risks and uncertainties,
including those discussed under "Risk Factors," that could cause our actual
results to differ materially from those contemplated in the forward-looking
statements. We caution you that no forward-looking statement is a guarantee of
future performance. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. We do not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated events which may
cause our actual results to differ from those expressed or implied by the
forward-looking statements contained in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934. Therefore, we file reports, proxy statements and other
information with the SEC. You can read and copy all of our filings at the SEC's
public reference facilities in Washington, D.C., New York, New York and Chicago,
Illinois. You may obtain information on the operation of the SEC's public
reference facilities by calling the SEC at 1-800-SEC-0300. You can also read and
copy all of our filings at the offices of the Nasdaq Stock Market, 1735 K Street
N.W., Washington, D.C. 20006. You may also obtain our SEC filings from the SEC's
Web site on the Internet that is located at http://www.sec.gov.
The SEC allows us to "incorporate by reference" much of the information
we file with them (File No. 0-26534), which means that we can disclose important
information to you by referring you to those publicly available documents. The
information that we incorporate by reference is considered to be part of this
prospectus. Because we are incorporating by reference our future filings with
the SEC, this prospectus is continually updated and those future filings may
modify or supersede some or all of the information included or incorporated in
this prospectus. This means that you must look at all of the SEC filings that we
incorporate by reference to determine if any of the statements in this
prospectus or in any document previously incorporated by reference have been
modified or superseded. This prospectus incorporates by reference the documents
listed below and any future filings we will make with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the
selling stockholders sell all their shares of common stock:
-16-
<PAGE>
(a) Our Annual Report on Form 10-KSB/A Amendment No. 1 for the year
ended December 31, 1998;
(b) Our Current Report on Form 8-K filed April 28, 1999;
(c) The description of our common stock contained in Item 1 of our
Registration Statement on Form 8-A dated July 31, 1995; and
(d) Our Quarterly Report on Form 10-QSB for the three months ended
March 31, 1999.
The information about us contained in this prospectus should be read
together with the information in the documents incorporated by reference. You
may request a copy of any or all of these filings, at no cost, by writing or
telephoning us at Vion Pharmaceuticals, Inc., 4 Science Park, New Haven,
Connecticut 06511, Attention: Thomas E. Klein, Vice President -- Finance and
Chief Financial Officer, Telephone: (203) 498-4210.
-17-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the registrant in connection with the issuance
and distribution of the securities being registered hereby are as follows:
AMOUNT
SEC Registration Fee.................................. $ 1,422.00
Legal, Accounting and Printing Expenses............... $ 31,500.00*
Miscellaneous Expenses................................ $ 1,078.00*
--------------
Total................................................. $ 34,000.00*
- ---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the General Corporation Law of the State of Delaware ("DGCL"), a
corporation may include provisions in its certificate of incorporation that will
relieve its directors of monetary liability for breaches of their fiduciary duty
to the corporation, except under certain circumstances, including a breach of
the director's duty of loyalty, acts or omissions of the director not in good
faith or which involve intentional misconduct or a knowing violation of law, the
approval of an improper payment of a dividend or an improper purchase by the
corporation of stock or any transaction from which the director derived an
improper personal benefit. The registrant's Restated Certificate of
Incorporation, as amended, eliminates the personal liability of directors to the
registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director with certain limited exceptions set forth in the DGCL.
Section 145 of the DGCL grants to corporations the power to indemnify
each officer and director against liabilities and expenses incurred by reason of
the fact that he or she is or was an officer or director of the corporation if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful. The registrant's Restated Certificate of
Incorporation, as amended, and Bylaws provide for indemnification of each
officer and director of the registrant to the fullest extent permitted by the
DGCL. Section 145 of the DGCL also empowers corporations to purchase and
maintain insurance on behalf of any person who is or was an officer or director
of the corporation against liability asserted against or incurred by him in any
such capacity, whether or not the corporation would have the power to indemnify
such officer or director against such liability under the provisions of Section
145. The registrant has purchased and maintains a directors' and officers'
liability policy for such purposes.
II-1
<PAGE>
ITEM 16. EXHIBITS
4.1 -- Restated Certificate of Incorporation of the Registrant, as amended.(1)
4.2 -- By-Laws of the Registrant.(2)
4.3 -- Form of Common Stock Investment Agreement.
5.1 -- Opinion of Fulbright & Jaworski L.L.P.
23.1 -- Consent of Ernst & Young L.L.P.
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)
24.1 -- Power of Attorney (included on signature page)
99.1 -- Form of Registration Rights Agreement.
- ------------------
(1) Incorporated by reference to the registrant's Quarterly Report on Form
10-QSB for the quarter ended June 30, 1998.
(2) Incorporated by reference to the registrant's Registration Statement on
Form SB-2 (File No. 33-93468), effective August 14, 1995.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or together, represent a
fundamental change in the information in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to
II-2
<PAGE>
the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New Haven, State of Connecticut, on May 28, 1999.
VION PHARMACEUTICALS, INC.
(Registrant)
By: /s/ Alan Kessman
------------------------------------
Alan Kessman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Alan Kessman and Thomas E. Klein, jointly
and severally, his true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
registration statement, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ William R. Miller Chairman of the Board June 1, 1999
- ----------------------
William R. Miller
/s/ Alan Kessman President, Chief Executive June 1, 1999
- ---------------------- Officer and Director (Principal
Alan Kessman Executive Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Thomas E. Klein Vice President -- Finance June 1, 1999
- ---------------------- and Chief Financial Officer
Thomas E. Klein (Principal Financial and
Accounting Officer)
/s/ Michel C. Bergerac Director June 1, 1999
- ----------------------
Michel C. Bergerac
/s/ Frank T. Cary Director June 1, 1999
- ----------------------
Frank T. Cary
/s/ James Ferguson Director June 1, 1999
- ----------------------
James Ferguson
/s/ Michael C. Kent Director June 1, 1999
- ----------------------
Michael C. Kent
/s/ Alan C. Sartorelli Director June 1, 1999
- ----------------------
Alan C. Sartorelli
/s/ E. Donald Shapiro Director June 1, 1999
- ----------------------
E. Donald Shapiro
/s/ Walter B. Wriston Director June 1, 1999
- ----------------------
Walter B. Wriston
</TABLE>
II-5
EXHIBIT 4.3
COMMON STOCK INVESTMENT AGREEMENT
COMMON STOCK INVESTMENT AGREEMENT ("Agreement") dated as of
April ___, 1999 between Vion Pharmaceuticals, Inc., a Delaware corporation (the
"Company"); and _____________________________________ (each individually an
"Investor" and collectively the "Investors").
W I T N E S S E T H:
--------------------
WHEREAS, the Company desires to sell and issue to the
Investors, and the Investors wish to purchase from the Company, an aggregate of
__________ shares (the "Shares") of the Company's common stock, $.01 par value
("Common Stock"), on the terms and conditions set forth herein; and
WHEREAS, the Investors will have registration rights with
respect to the Shares pursuant to the terms of that certain Registration Rights
Agreement to be entered into between the Company and the Investors substantially
in the form of Exhibit 4.2(f) hereto ("Registration Rights Agreement"); and
NOW, THEREFORE, in consideration of the foregoing premises and
the covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
Section 1.1 Purchase and Sale of Shares. Upon the following terms and
conditions, the Company shall issue and sell to each Investor the number of
Shares set forth on Schedule 1.1 hereto, and each Investor severally shall
purchase from the Company such number of Shares.
Section 1.2 Purchase Price. The per Share purchase price for the Shares
(the "Purchase Price") shall be equal to $4.4747, [Agreement with Elliott
Associates, L.P. and Westgate International, L.P. only: being 90% of the average
closing price of the Common Stock on the Nasdaq Small-Cap Market for the ten
(10) consecutive trading days immediately prior to the Closing Date], and the
aggregate purchase price shall be $___________.
Section 1.3 The Closing. (a) The closing of the purchase and sale of
the Shares (the "Closing") shall take place at the offices of the Investors'
counsel (i) on the date hereof or (ii) at such other time and place and/or on
such other date as the Investors and the Company may agree. The date on which
the Closing occurs is referred to herein as the "Closing Date."
(b) On the Closing Date, the Company shall deliver to each Investor
certificates (with the number of and denomination of such certificates as
reasonably requested by such Investor) representing the Shares purchased
hereunder by such Investor registered in the
<PAGE>
name of such Investor or its nominee, or deposit such Shares into accounts
designated by such Investor, and such Investor shall deliver to the Company the
Purchase Price for the number of Shares purchased by such Investor hereunder by
wire transfer in immediately available funds to an account designated in writing
by the Company. The delivery of payment by each Investor of the Purchase Price
applicable to it as set forth in this paragraph shall constitute a payment
delivered to the Company in satisfaction of such Investor's obligation to pay
the Purchase Price hereunder. In addition, each party shall deliver all
documents, instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to each of the
Investors as of the date hereof and on the Closing Date:
(a) Organization and Qualification; Material Adverse Effect. The
Company is a corporation duly incorporated and existing in good standing under
the laws of the State of Delaware and has the requisite corporate power to own
its properties and to carry on its business as now being conducted. The Company
does not have any direct or indirect subsidiaries other than the MicroFab
Biosystems, Inc. (which is 90% owned by the Company). A "subsidiary" of the
Company is any company of which more than 50% of the voting shares are directly
or indirectly owned by the Company. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so to qualify
would not have a Material Adverse Effect. "Material Adverse Effect" means any
adverse effect on the business, operations, properties, prospects, or financial
condition of the entity with respect to which such term is used and which is
material to such entity and other entities controlling or controlled by such
entity taken as a whole, or any material adverse effect on the transactions
contemplated under this Agreement, the Registration Rights Agreement or any
other agreement or document contemplated hereby or thereby.
(b) Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement and to issue the Shares in accordance with the
terms hereof, (ii) the execution and delivery of this Agreement and the
Registration Rights Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including the issuance of the
Shares, have been duly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required, (iii) this Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Company, and (iv) this
Agreement and the Registration Rights Agreement constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of creditors' rights and
remedies or by other equitable principles of general application.
2
<PAGE>
(c) Capitalization. The capitalization of the Company is set forth on
Schedule 2.1(c). All of the outstanding shares of the Company's Common Stock
have been validly issued and are fully paid and nonassessable. There are
currently outstanding options for 2,804,499 shares of Common Stock and
outstanding Warrants for 5,125,761 shares of Common Stock. Except as described
herein as in Schedule 2.1(c), there are no other scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights exchangeable or convertible into, any shares of capital stock of the
Company, or contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to issue additional shares of capital stock of
the Company or options, warrants, scrip, rights to subscribe to, or commitments
to purchase or acquire, any shares, or securities or rights convertible into
shares, of capital stock of the Company, except as contemplated by this
Agreement. Attached hereto as Exhibit 2.1(c) are true and correct copies of the
Company's Certificate of Incorporation (the "Charter) and By-Laws (the
"By-Laws"), each as in effect on the date hereof.
(d) Issuance of Shares. Upon issuance to the Investors hereunder, the
Shares shall be validly issued, fully paid and non-assessable, free and clear of
any and all liens, claims and encumbrances, and entitled to be traded on the
Nasdaq Small-Cap Market, and the holders of the Shares shall be entitled to all
rights and preferences accorded to a holder of Common Stock. The outstanding
Common Stock is currently listed on the Nasdaq Small-Cap Market.
(e) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
will not (i) result in a violation of the Company's Charter or By-Laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, patent license or instrument to which the Company or its
subsidiary is a party, or result in a violation of any Federal, state, local or
foreign law, rule, regulation, order, judgment or decree (including Federal and
state securities laws and regulations) applicable to the Company or its
subsidiary or by which any property or asset of the Company or its subsidiary is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect; it being
understood that the issuance of Shares pursuant to this Agreement will trigger
antidilution provisions contained in outstanding warrants and outstanding shares
of the Company's Preferred Stock; and provided that, for purposes of such
representation as to Federal, state, local or foreign law, rule or regulation,
no representation is made herein with respect to any of the same applicable
solely to the Investors and not to the Company. The business of the Company and
its subsidiary is not being conducted in violation of any law, ordinance or
regulations of any governmental entity, except for violations which either
singly or in the aggregate do not and will not have a Material Adverse Effect.
The Company is not required under Federal, state, local or foreign law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement and the
Registration Rights Agreement or issue and sell the Shares in accordance with
the terms hereof, except for the registration provisions provided in the
Registration Rights Agreement, and applicable filings under federal and state
securities laws; provided that, for purposes of the
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representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investors
herein.
(f) SEC Documents; Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d), in addition to one or more registration statements and
amendments thereto heretofore filed by the Company with the SEC (all of the
foregoing including filings incorporated by reference therein being referred to
herein as the "SEC Documents"). The Company has delivered or made available to
the Investors true and complete copies of all SEC Documents (including, without
limitation, proxy information and solicitation materials and registration
statements) filed with the SEC since December 31, 1997. The Company has not
provided to the Investors any material non-public information or any information
which, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and other Federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The SEC Documents contain all material information concerning the
Company, and [Agreements with Wechsler & Co., Inc. and United Equities
Commodities Company only: except for the consummation on April 8, 1999 of the
First Companion Offering (as defined below)] [Agreement with Kleinwort Benson
Limited and Winchester Capital Healthcare Partners, LLC only: except for the
consummation on April 8, 1999 and April 13, 1999 of the Companion Offerings (as
defined below)] no event or circumstance has occurred which would require the
Company to disclose such event or circumstance in order to make the statements
in the SEC Documents not misleading on the date hereof or on the Closing Date
but which has not been so disclosed. The financial statements of the Company
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(g) Principal Exchange/Market. The principal market on which the Common
Shares are currently traded is the Nasdaq Small-Cap Market.
(h) No Material Adverse Change. Since September 30, 1998, no Material
Adverse Effect has occurred or exists with respect to the Company or its
subsidiary, except as
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otherwise disclosed or reflected in other SEC Documents prepared through or as
of a date subsequent to September 30, 1998.
(i) No Undisclosed Liabilities. The Company and its direct and indirect
subsidiaries have no material liabilities or obligations not disclosed in the
SEC Documents, other than those liabilities incurred in the ordinary course of
the Company's or the subsidiary's respective businesses since September 30,
1998, which liabilities, individually or in the aggregate, do not or would not
have a Material Adverse Effect on the Company or its subsidiaries. Each of the
Company and its subsidiary have paid all material taxes which are due (and filed
all material tax returns), except for taxes which it reasonably and actively
disputes.
(j) No General Solicitation. Neither the Company, nor any of its
affiliates, or, to its knowledge, any person acting on its or their behalf
(other than the Investors, as to whom the Company makes no representation) has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act of 1933, as amended (the
"Act")) in connection with the offer or sale of the Shares
(k) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor to its knowledge any person acting on its or their behalf (other
than the Investors, as to whom the Company makes no representation) has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Shares under the Act.
(l) Form S-3. The Company is eligible to file the Registration
Statement (as defined in the Registration Rights Agreement) on Form S-3 under
the Act and rules promulgated thereunder, and Form S-3 is permitted to be used
for the registration of the Shares under the Act and rules promulgated
thereunder.
(m) Intellectual Property. The Company (and/or its subsidiary) owns or
has licenses to use certain patents, copyrights and trademarks ("intellectual
property") associated with its business. The Company and its subsidiary have all
intellectual property rights which are needed to conduct the business of the
Company and its subsidiary as it is now being conducted as disclosed in the SEC
Documents. The Company and its subsidiary have no reason to believe that the
intellectual property rights which it owns are invalid or unenforceable or that
the use of such intellectual property by the Company or its subsidiary infringes
upon or conflicts with any right of any third party, and neither the Company nor
any of its subsidiaries has received notice of any such infringement or
conflict. Except as disclosed in the SEC Documents, the Company and its
subsidiary have no knowledge of any infringement of its intellectual property by
any third party.
(n) No Litigation. Except as set forth in the SEC Documents delivered
to the Investors prior to the date of this Agreement ("Pre-Agreement SEC
Documents") no litigation or claim (including those for unpaid taxes) against
the Company or any of its subsidiaries is pending or, to the Company's
knowledge, threatened, and no other event has occurred, which if determined
adversely would have a Material Adverse Effect on the Company or would
materially adversely effect the transactions contemplated hereby. The legal
proceedings described in the Pre-Agreement SEC Documents will not have an effect
on the transactions
5
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contemplated hereby.
(o) Compliance with Other Instruments. Each of the Company and its
subsidiary is not in violation or default of any provisions of its Charter or
Bylaws, or of any material provision of any material instrument or material
contract to which it is a party or by which it is bound or, to its knowledge, of
any provision of any Federal or state judgment, writ, decree, order, statute,
rule or governmental regulation applicable to it, which would have a Material
Adverse Effect, except as described in the SEC Documents.
(p) Key Employees. No Key Employee, to the best knowledge of the
Company and its subsidiary, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each Key Employee does not subject the Company or its subsidiary to any
liability with respect to any of the foregoing matters. No Key Employee has, to
the best knowledge of the Company, any intention to terminate his employment
with, or services to, the Company or its subsidiary. "Key Employee" means
[Agreement with Elliott Associates, L.P. and Westgate International, L.P. only:
each of John A. Spears and] Terence W. Doyle.
(q) Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by any Investor relating to this Agreement or the transactions
contemplated hereby. [Agreement with Elliott Associates, L.P. and Westgate
International, L.P. only: The Company may be required to pay a brokerage fee to
Swartz & Co. in connection herewith.]
Section 1.2 Representations and Warranties of the Investors. Each of
the Investors, severally and not jointly, hereby makes the following
representations and warranties to the Company as of the date hereof and on the
Closing Date:
(a) Authorization; Enforcement. (i) Such Investor has the requisite
power and authority to enter into and perform this Agreement and the
Registration Rights Agreement and to purchase the Shares being sold hereunder,
(ii) the execution and delivery of this Agreement and the Registration Rights
Agreement by such Investor and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate or partnership or other Investor action, and (iii) this Agreement and
the Registration Rights Agreement constitute valid and binding obligations of
such Investor enforceable against such Investor in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(b) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement and the consummation by such
Investor of the transactions contemplated hereby and thereby do not and will not
(i) result in a violation of such Investor's organizational documents, or (ii)
conflict with any agreement, indenture or instrument to which such Investor is a
party, or (iii) result in a violation of any law, rule, or regulation, or any
order, judgment or decree of any court or governmental agency applicable to such
Investor. Such Investor is not required to obtain any consent or authorization
of any governmental agency
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<PAGE>
in order for it to perform its obligations under this Agreement or the
Registration Rights Agreement.
(c) Investment Representation. Such Investor is purchasing the Shares
for its own account and not with a view to distribution in violation of any
securities laws. Such Investor has no present intention to sell the Shares and
such Investor has no present arrangement (whether or not legally binding) to
sell the Shares to or through any person or entity; provided, however, that by
making the representations herein, such Investor does not agree to hold the
Shares or for any minimum or other specific term and reserves the right to
dispose of the Shares at any time in accordance with Federal and state
securities laws applicable to such disposition.
(d) Accredited Investor. Such Investor is an "accredited investor" as
defined in Rule 501 promulgated under the Act. The Investor has such knowledge
and experience in financial and business matters in general and investments in
particular, so that such Investor is able to evaluate the merits and risks of an
investment in the Shares and to protect its own interests in connection with
such investment. In addition (but without limiting the effect of the Company's
representations and warranties contained herein), such Investor has received
such information as it considers necessary or appropriate for deciding whether
to purchase the Shares pursuant hereto.
(e) No Registration. Such Investor understands that the Shares must be
held indefinitely until registered under the Act or an exemption from
registration is available. Such Investor has been advised or is aware of the
provisions of Rule 144 promulgated under the Act.
(f) Brokers. Such Investor has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by the Company relating to this Agreement or the transactions
contemplated hereby.
(g) Reliance by the Company. Such Investor understands that the Shares
are being offered and sold in reliance on a transactional exemption from the
registration requirements of Federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Investor set
forth herein in order to determine the applicability of such exemptions and the
suitability of such Investor to acquire the Shares.
ARTICLE III
COVENANTS
---------
Section 3.1 Registration and Listing; Effective Registration. Until the
earlier of June 30, 2003 or the occurrence of a "Going Private Event" (as
defined below), the Company will cause the Common Stock to continue to be
registered under Section 12(g) of the Exchange Act, will comply in all respects
with its reporting and filing obligations under the Exchange Act, and will not
take any action or file any document (whether or not permitted by the Exchange
Act or the rules thereunder) to terminate or suspend such reporting and filing
obligations. Until the earlier of June 30, 2003 or the occurrence of a "Going
Private Event," the Company shall continue the listing or trading of the Common
Stock on the Nasdaq Small-Cap Market or Nasdaq NMS or any national securities
exchange and comply in all respects with the Company's
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reporting, filing and other obligations under the bylaws or rules of the Nasdaq
Small-Cap Market and any other exchange or market where the Common Stock is then
traded. As used herein, "Going Private Event" shall mean a merger, consolidation
or a self-tender or exchange offer after which the Company has fewer than the
number of shareholders requiring Exchange Act registration, in each case only if
the applicable transaction or series of transactions has been approved by the
holders of a majority of the Common Stock. Except as provided in the
Registration Rights Agreement, the Company shall cause the Shares to be listed
on the Nasdaq Small-Cap Market, Nasdaq NMS or such other national markets (i.e.,
the New York Stock Exchange or the American Stock Exchange) on which the Common
Stock is then trading prior to the earlier of (i) the registration of the Shares
under the Act or (ii) one hundred twenty (120) days after the Closing hereunder.
As used herein and in the Registration Rights Agreement, the term "Effective
Registration" shall mean that all registration obligations of the Company
pursuant to the Registration Rights Agreement have been satisfied, such
registration is not subject to any suspension or stop order, the prospectus for
the Shares is current and the Shares are listed for trading on the Nasdaq
Small-Cap Market, Nasdaq NMS or such other national markets (i.e., the New York
Stock Exchange or the American Stock Exchange) on which the Common Stock is then
trading, and such trading has not been suspended for any reason, and neither the
Company nor any direct or indirect subsidiary of the Company is subject to any
bankruptcy, insolvency or similar proceeding.
Section 3.2 Expenses. The Company shall pay, at the Closing (or upon
the termination of this Agreement if no Closing occurs) and promptly upon
receipt of any further invoices relating to same, all reasonable due diligence
fees and expenses and reasonable attorneys' fees and expenses of Kleinberg,
Kaplan, Wolff & Cohen, P.C., up to a maximum amount of $20,000 [Agreements with
Wechsler & Co., Inc. and United Equities Commodities Company only: (including
such amounts incurred by the Investor in the First Companion Offering and the
Other Companion Offerings, if any)] [Agreement with Kleinwort Benson Limited and
Winchester Capital Healthcare Partners, LLC only: (except such amounts incurred
by the investors in the Companion Offerings)], incurred by the Investors in
connection with the preparation, negotiation, execution and delivery of this
Agreement, the Registration Rights Agreement, and the related agreements and
documents and the transactions contemplated hereunder and thereunder.
Section 3.3 Securities Compliance. The Company shall notify the SEC and
the NASD, in accordance with their requirements, of the transactions
contemplated by this Agreement and the Registration Rights Agreement, and shall
take all other necessary action and proceedings as may be required and permitted
by applicable law, rule and regulation, for the legal and valid issuance of the
Shares hereunder.
Section 3.4 Use of Proceeds. The proceeds received by the Company from
the sale of the Shares hereunder shall be used for working capital purposes.
Section 3.5 Additional Shares. If at any time or times during the
twelve-month period following the Closing Date, the Company issues or agrees to
issue any Common Stock at a price per share which is less than the Purchase
Price hereunder, or if the Company issues or agrees to issue any rights,
options, warrants or other securities which are directly or indirectly
convertible into or exchangeable for Common Stock for a consideration per share
of Common Stock deliverable upon conversion or exchange of such rights, options,
warrants or other
8
<PAGE>
securities which is less than the Purchase Price (any such new issuance price
per share being referred to as the "New Issue Price"), then the Company shall
immediately thereafter issue to the Investors, on a pro rata basis, additional
registered, listed shares of Common Stock such that the total number of Shares
of Common Stock issued on the Closing Date and under this Section 3.5 shall
equal at least [Agreement with Elliott Associates, L.P. and Westgate
International, L.P. only: $2,000,000] [Agreement with Wechsler & Co., Inc. only:
$250,000] [Agreement with United Equities Commodities Company only: $1,000,000]
[Agreement with Kleinwort Benson Limited and Winchester Capital Healthcare
Partners, LLC only: $750,000] divided by the New Issue Price. The foregoing
provisions shall not apply to (i) issuances of shares of Common Stock pursuant
to the exercise or conversion of options, warrants or shares of preferred stock
which are outstanding as of the date hereof in accordance with such securities'
current exercise or conversion terms; (ii) the issuance of up to 1,543,063
employee stock options after the date hereof and any exercise thereof;
[Agreement with Elliott Associates, L.P. and Westgate International, L.P. only:
and (iii) issuances of additional Common Stock within ten (10) days from the
Closing Date on substantially the terms and conditions as are provided in this
Agreement for an aggregate purchase price not exceeding the excess of $4,000,000
over the aggregate Purchase Price hereunder (the "Companion Offering") and any
issuance of any additional shares of Common Stock pursuant to any provision of
the Companion Offering documents which is substantially identical to this
Section 3.5.] [Agreement with Wechsler & Co., Inc. only: (iii) any issuance of
any additional shares of Common Stock pursuant to Section 3.5 of the Common
Stock Investment Agreement dated April 8, 1999 pursuant to which the Company
issued on such date 446,957 shares of Common Stock (the "First Companion
Offering"); and (iv) any issuance of additional shares of Common Stock pursuant
to any provision substantially similar to this Section 3.5 of the offering
documents for one or more offerings of up to an aggregate of $1,750,000 of
Common Stock on the date hereof or hereafter but prior to April 23, 1999 (the
"Other Companion Offerings")] [Agreement with United Equities Commodities
Company only: (iii) any issuance of any additional shares of Common Stock
pursuant to Section 3.5 of the Common Stock Investment Agreement dated April 8,
1999 pursuant to which the Company issued on such date 446,957 shares of Common
Stock (the "First Companion Offering"); and (iv) any issuance of any additional
shares of Common Stock pursuant to any provision substantially similar to this
Section 3.5 of the offering documents for one or more offerings of up to an
aggregate of $1,000,000 of Common Stock on the date hereof or hereafter but
prior to April 23, 1999 (the "Other Companion Offerings")] [Agreement with
Kleinwort Benson Limited and Winchester Capital Healthcare Partners, LLC only:
and (iii) any issuance of any additional shares of Common Stock pursuant to
Section 3.5 of the three Common Stock Investment Agreements dated April 8, 1999
and April 13, 1999 pursuant to which the Company issued an aggregate of 726,306
shares of Common Stock (the "Companion Offerings")]. The foregoing provisions of
this Section 3.5 shall cease to be effective after the date, if any, upon which
the Company completes a private placement or public offering of Common Stock at
a price per share of Common Stock in excess of the Purchase Price and also
resulting in gross proceeds equal to or greater than $11,000,000.
ARTICLE IV
CONDITIONS
----------
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the
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Shares. The obligation hereunder of the Company to issue and/or sell the Shares
to the Investors is subject to the satisfaction, at or before the Closing, of
each of the conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Investors' Representations and Warranties. The
representations and warranties of each Investor shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Investors. Each Investor shall have performed
all agreements and satisfied all conditions required to be performed or
satisfied by such Investor at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement.
Section 1.2 Conditions Precedent to the Obligation of the Investors to
Purchase the Shares. The obligation hereunder of each Investor to acquire and
pay for the Shares is subject to the satisfaction, at or before the Closing, of
each of the conditions set forth below. These conditions are for the Investors'
sole benefit and may be waived by the Investors at any time in their sole
discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing.
(c) Nasdaq. From the date hereof to the Closing Date, trading in the
Company's Common Stock shall not have been suspended by the SEC or the Nasdaq
Small-Cap Market, and trading in securities generally as reported by the Nasdaq
Small-Cap Market shall not have been suspended or limited, and the Common Stock
shall not have been delisted from any exchange or market where it is currently
listed.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement.
(e) Opinion of Counsel. At the Closing the Investors shall have
received an opinion of counsel to the Company in the form attached hereto as
Exhibit 4.2(e) and such other opinions, certificates and documents as the
Investors or their counsel shall reasonably require
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incident to the Closing.
(f) Registration Rights Agreement. The Company and the Investors shall
have executed and delivered the Registration Rights Agreement in the form and
substance of Exhibit 4.2(f) attached hereto.
(g) Adverse Changes. Since December 31, 1998, no event which had or is
likely to have a Material Adverse Effect on the Company or any of its direct or
indirect subsidiaries shall have occurred.
(h) Officer's Certificate. The Company shall have delivered to the
Investors a certificate in form and substance reasonably satisfactory to the
Investors, executed by an officer of the Company, certifying as to satisfaction
of closing conditions, incumbency of signing officers, charter, by-laws, good
standing and authorizing resolutions of the Company.
ARTICLE V
LEGEND AND STOCK
----------------
Each certificate representing the Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR UPON DELIVERY
TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
The Company agrees to reissue certificates representing the Shares
without the legend set forth above at such time as (i) the holder thereof is
permitted to dispose of such Shares pursuant to Rule 144(k) under the Act, (ii)
such Shares are sold to a purchaser or purchasers who (in the opinion of counsel
to the seller or such purchaser(s), in form and substance reasonably
satisfactory to the Company and its counsel) are able to dispose of such shares
publicly without registration under the Act, or (iii) such Shares are registered
under the Act.
[Agreement with Kleinwort Benson Limited and Winchester Capital
Healthcare Partners, LLC only: It is expressly contemplated that Kleinwort
Benson Limited may assign a portion of the Shares purchased by it hereunder to
Merifin Capital N.V. within the next 14 days, which transfer shall be accepted
by the Company and a new stock certificate(s) issued to Merifin Capital N.V.
upon delivery of a document containing such representations, and a legal
opinion, as are reasonably satisfactory to the Company's counsel.]
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ARTICLE VI
MISCELLANEOUS
-------------
Section 6.1 Stamp Taxes; Agent Fees. The Company shall pay all stamp
and other taxes and duties levied in connection with the issuance of the Shares
pursuant hereto.
Section 6.2 Specific Enforcement; Consent to Jurisdiction.
(a) The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) The Company and each of the Investors (i) hereby irrevocably
submits to the exclusive jurisdiction of the United States District Court, the
New York State courts and other courts of the United States sitting in New York
County, New York for the purposes of any suit, action or proceeding arising out
of or relating to this Agreement and (ii) hereby waives, and agrees not to
assert in any such suit action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and each of the Investors consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
Section 1.3 Entire Agreement; Amendment. This Agreement, together with
the Registration Rights Agreement, and the agreements and documents executed in
connection herewith and therewith, contains the entire understanding of the
parties with respect to the matters covered hereby and thereby and, except as
specifically set forth herein or therein, neither the Company nor any Investor
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 6.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective upon
actual receipt of such notice. The addresses for such communications shall be:
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to the Company: Vion Pharmaceuticals, Inc.
4 Science Park
New Haven, Connecticut 06511
Fax: (203) 498-4211
Attn: Thomas Klein
with copies to: Fulbright & Jaworski
666 Fifth Avenue
New York, New York 10103
Fax: (212) 752-5958
Attn: Paul Jacobs, Esq.
if to the Investors, to their respective addresses set forth on the
signature pages hereof.
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
Section 6.5 Indemnity. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees but
excluding consequential damages) incurred as a result of such parties' breach of
any representation, warranty, covenant or agreement in this Agreement.
Section 6.6 Waivers. No waiver by any party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
Section 6.7 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 6.8 Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may amend
this Agreement without notice to or the consent of any third party. The Company
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of all Investors (which consent may be withheld for any
reason in their sole discretion). Any Investor may assign this Agreement (in
whole or in part) or any rights or obligations hereunder without the consent of
the Company in connection with any sale or transfer all or any portion of the
Shares held by such Investor, provided that no Investor may assign this
Agreement prior to the Closing Date without the Company's prior written consent
except to an affiliate or affiliates of such Investor.
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Section 6.9 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 6.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to such state's principles of conflict of laws.
Section 6.11 Survival. The representations and warranties and the
agreements and covenants of the Company and each Investor contained herein shall
survive the Closing for a period of two (2) years thereafter.
Section 6.12 Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
Section 6.13 Severability. The parties acknowledge and agree that the
Investors are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warrants, agreements, acts or omissions of
any other Investor, and that any rights granted to "Investors" hereunder shall
be enforceable by each Investor hereunder.
Section 6.14 Like Treatment of Holders. Neither the Company nor any of
its affiliates shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee, payment for the redemptions or
exchange of any Shares, or otherwise, to any holder of Shares, for or as an
inducement to, or in connection with the solicitation of, any consent, waiver or
amendment of any terms or provisions of this Agreement or the Registration
Rights Agreement, unless such consideration is required to be paid to all
holders of Shares bound by such consent, waiver or amendment whether or not such
holders so consent, waive or agree to amend and whether or not such holders
tender their Shares for redemption or exchange.
[Agreement with Elliott Associates, L.P. and Westgate International, L.P. only:
Section 6.15 Partial Waiver. Effective on the Closing Date, each of
Elliott Associates, L.P. and Westgate International, L.P. ("Westgate") hereby
partially waives the restriction contained in Section 13 of the Certificate of
Designation of 5% Convertible Preferred Stock Series 1998 so that the 9.9%
ownership limitation described therein shall be increased to 19.9%.]
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
VION PHARMACEUTICALS, INC.
By:
--------------------------------------
Name:
Title:
INVESTORS:
[ ]
By:
--------------------------------------
Addresses for Notices:
[ ]
By:
--------------------------------------
Addresses for Notices:
15
<PAGE>
EXHIBITS AND SCHEDULES
----------------------
Schedule 1.1 Shares Purchased
Schedule 2.1(c) Capitalization
Exhibit 2.1(c)-1 Certificate of Incorporation of the Company
Exhibit 2.1(c)-2 By-laws of the Company
Exhibit 4.2(e) Opinion of Counsel
Exhibit 4.2(f) Registration Rights Agreement
16
EXHIBIT 5.1
Fulbright & Jaworski L.L.P.
A Registered Limited Liability Partnership
666 Fifth Avenue
New York, New York 10103-3198
telephone:212/318/3000 houston
facsimile:212/752-5958 washington, d.c.
austin
san antonio
dallas
new york
los angeles
london
hong kong
June 1, 1999
The Board of Directors
Vion Pharmaceuticals, Inc.
Four Science Park
New Haven, Connecticut 06511
Dear Sirs:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement"), filed by Vion Pharmaceuticals, Inc. (the "Company") on behalf of
the selling stockholders (the "Selling Stockholders") with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
893,915 shares of the Company's common Stock, $.01 par value (the "Shares"), to
be sold by the Selling Shareholders named therein.
As counsel for the company, we have examined such corporate records,
documents and such questions of law as we have considered necessary or
appropriate for purposes of this opinion and, upon the basis of such
examination, advise you that in our opinion the Shares have been duly and
validly authorized and are legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the prospectus contained therein and elsewhere in the Registration
Statement and prospectus. This consent is not to be construed as an admission
that we are a party whose consent is required to be filed with the Registration
Statement under the provisions of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-00000) and related Prospectus of Vion
Pharmaceuticals, Inc. for the registration of 893,915 shares of its common stock
and to the incorporation by reference therein of our report dated February 12,
1999 with respect to the financial statements of Vion Pharmaceuticals, Inc.
included in its Annual Report (Form 10-KSB/A Amendment No. 1) for the year ended
December 31, 1998 filed with the Securities and Exchange Commission.
Ernst & Young LLP
Stamford, Connecticut
June 3, 1999
EXHIBIT 99.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
April __, 1999 between Vion Pharmaceuticals, Inc., a Delaware corporation with
offices at 4 Science Park, New Haven, Connecticut 06511 (the "Company"); and the
other parties hereto listed on the signature pages hereof (each an "Investor"
and collectively the "Investors").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to that certain Common Stock Investment Agreement by
and between the Company and the Investors (the "Investment Agreement"), the
Company has agreed to sell and issue to the Investors, and the Investors have
agreed to purchase from the Company, an aggregate of _______ shares, par value
$0.01, of the Company's Common Stock (the "Shares") on the terms and conditions
set forth therein; and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Investment Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Shares and certain other rights and remedies with respect to the Shares as
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Investment Agreement and this Agreement, the Company and the Investors agree as
follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Investment Agreement. As
used in this Agreement, the following terms shall have the following respective
meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Investment Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $.01 par value.
"Holder" and "Holders" shall include an Investor or the Investors,
respectively, and any transferee of the Shares or Registrable Securities which
have not been sold to the public to whom the registration rights conferred by
this Agreement have been transferred in compliance with this Agreement.
"Registrable Securities" shall mean: (i) the Shares issued to each
Holder or its permitted transferee or designee; and (ii) any other security
issued as (A) a dividend or other distribution with respect to, or (B) in
exchange for or in replacement of, Registrable Securities.
<PAGE>
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority-in-interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses."
2. Registration Requirements.
The Company shall use its best efforts to effect the registration for
resale of the Registrable Securities (including without limitation the execution
of an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as would
permit or facilitate the sale or distribution of all the Registrable Securities
in the manner (including manner of sale) and in all states reasonably requested
by the Holder. Such best efforts by the Company shall include the following:
(a) The Company shall, as expeditiously as reasonably possible after
the Closing Date:
(i) No later than sixty (60) days following the Closing Date,
prepare and file a registration statement with the Commission pursuant
to Rule 415 under the Securities Act on Form S-3 under the Securities
Act (or in the event that the Company is ineligible to use such form,
such other form as the Company is eligible to use under the Securities
Act) covering the resale of the Registrable Securities ("Registration
Statement"). Thereafter, the Company shall use its best efforts to
cause such Registration Statement and other filings to be declared
effective prior to the end of the period
2
<PAGE>
terminating one hundred twenty (120) days following the Closing Date
(as the same may be extended as provided in the next sentence, the
"Registration Deadline"). Notwithstanding the foregoing, if prior to
such 120th day the Company actively proceeds to effectuate a bona fide
underwritten offering of Common Stock with one or more reputable
underwriters (as evidenced by, inter alia, Board adoption and approval
of such process), the ----- ---- 120-day period may, at the Company's
option on written notice, be tolled in accordance with the following
terms:
(1) The Company shall use its best efforts
to have the Shares included in such underwritten
offering.
(2) Subject to the next sentence, the period
of tolling ("Tolling Period") shall not continue
beyond September 15, 1999 and shall also expire upon
the (A) the date the Company determines to abandon
the proposed offering; or (B) the date of
consummation of the proposed offering.
Notwithstanding the foregoing, the Tolling Period may
extend beyond the date of the consummation of the
offering and beyond September 15, 1999 as to those
Holders who have executed a lockup agreement ("Lockup
Agreement") with the underwriter(s), in which case
the Registration Deadline shall be, with respect to
such Holders, the day after the expiration of the
applicable lockup period. [Agreement with Elliott
Associates, L.P. and Westgate International, L.P.
only: If requested by the underwriter(s) and provided
that the directors and executive officers of the
Company also execute Lockup Agreements, each Holder
agrees to execute a Lockup Agreement pursuant to
which such Holder shall agree not to sell such
Holder's Registrable Securities for such period, and
subject to such other terms and conditions, which are
no more restrictive than the least restrictive Lockup
Agreement executed by a director or executive officer
in connection with such underwritten offering. No
such Lockup Agreement required to be executed by a
Holder shall contain terms and conditions which are
not reasonable.]
(3) After the expiration of the Tolling
Period, the 120-day period shall again start to run,
provided that in any case where the Holders did not
execute a Lockup Agreement and the Company did not
reasonably believe that the Shares would in fact be
included in the proposed underwritten offering, the
Company shall have only an additional fifteen (15)
calendar days to effect such registration following
the expiration of the Tolling Period.
(ii) The Company shall provide Holders a reasonable
opportunity to review any such Registration Statement or amendment or
supplement thereto prior to filing, and Holders shall use their best
efforts to complete such review in a timely fashion. The Registration
Statement may also include shares of Common Stock being offered by the
Company and also shares of Common Stock being offered by purchasers in
the [Agreements with Elliott Associates, L.P. and Westgage
International, L.P. and Kleinwort Benson Limited and Winchester Capital
Healthcare Partners, LLC only:
3
<PAGE>
Companion Offering] [Agreements with Wechsler & Co., Inc. and United
Equities Commodities Company only: First Companion Offering and any
Other Companion Offerings].
(iii) Prepare and file with the Commission such
amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may
be necessary to comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration
Statement and notify the Holders of the filing and effectiveness of
such Registration Statement and any amendments or supplements.
(iv) Furnish to each Holder such numbers of copies of
a current prospectus conforming with the requirements of the Act,
copies of the Registration Statement, any amendment or supplement
thereto and any documents incorporated by reference therein and such
other documents as such Holder may reasonably require in order to
facilitate the disposition of Registrable Securities owned by such
Holder.
(v) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other
securities or "Blue Sky" laws of such jurisdictions as shall be
reasonably requested by each Holder; provided that the Company shall
not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(vi) Notify each Holder immediately of the happening
of any event as a result of which the prospectus (including any
supplements thereto or thereof) included in such Registration
Statement, as then in effect, includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly
update and/or correct such prospectus.
(vii) Notify each Holder immediately of the issuance
by the Commission or any state securities commission or agency of any
stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose. The Company
shall use its best efforts to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(viii) Provide the Holders with prompt written notice
of the date that a Registration Statement is declared effective by the
Commission, and the date or dates when the Registration Statement is no
longer effective.
(ix) Permit a single firm of counsel, designated as
Holders' counsel by a majority of the Registrable Securities included
in the Registration Statement, to review the Registration Statement and
all amendments and supplements thereto within a reasonable period of
time prior to each filing, and shall not file any document in a form to
which such counsel reasonably objects.
4
<PAGE>
(x) Use its best efforts to list the Registrable
Securities covered by such Registration Statement with all securities
exchange(s) and/or markets on which the Common Stock is then listed and
prepare and file any required filings with the National Association of
Securities Dealers, Inc. or any exchange or market where the Shares are
traded.
(xi) Take all steps necessary to enable Holders to
avail themselves of the prospectus delivery mechanism set forth in Rule
153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that may arise
that the Investors consider will interfere with the full enjoyment of their
rights under this Agreement (the "Interfering Events"), and (II) the remedies
applicable in each of these events.
Clauses (i) through (iii) of this Section 2(b) describe the Interfering
Events and provide a remedy to the Holders if an Interfering Event occurs.
As used in clauses (i) through (iii) of this Section 2(b), "Liquidated
Damages" shall mean a sum equal to 3% of the amount of each Holder's investment
in the Shares for each 30-day period (or portion thereof) during which such
Interfering Event continues.
Paragraph (iv) provides, inter alia, that if cash payments required as
the remedy in the case of certain of the Interfering Events are not paid when
due, the Company may be required by the Investors to repurchase outstanding
Shares at a specified price.
(i) Delay in Effectiveness of Registration Statement.
The Company agrees that subject to Section 2(a)(i) it shall file the
Registration Statement complying with the requirements of this
Agreement promptly following the Closing Date and shall use its best
efforts to cause such Registration Statement to become effective not
later than the Registration Deadline. In the event that such
Registration Statement has not been declared effective by the
Registration Deadline, then the Company shall pay Liquidated Damages
("Liquidated Damages") to the Holders on a pro rata basis.
(ii) No Listing. In the event that the Company fails,
refuses or is unable to cause the Registrable Securities covered by the
Registration Statement to be listed with the Nasdaq Stock Market
("NASDAQ"), the New York Stock Exchange or the American Stock Exchange
and, in addition, such other principal securities exchange(s) and
markets on which the Common Stock is then traded at all times during
the period ("Listing Period") from and after the Registration Deadline,
the Company shall immediately notify each Holder of such event, and the
Company shall pay to the Holders on a pro rata basis the Liquidated
Damages.
(iii) Blackout Periods. In the event any Holder's
ability to sell Registrable Securities under the Registration Statement
is suspended for more than ninety (90) days in any twelve-month period,
including without limitation by reason of any suspension or stop order
with respect to the Registration Statement or the fact that an event
has occurred as a result of which the prospectus (including any
supplements
5
<PAGE>
thereto) included in such Registration Statement then in effect
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, the Company shall pay Liquidated Damages to the Holders on a
pro rata basis for the period during which such delay continues after
such ninetieth day; provided that such period may be extended for more
than ninety (90) days, but in no event beyond forty-five (45) days, and
no Liquidated Damages or Premium Redemption Price under Section (iv)(B)
below shall be due or payable if the suspension of a Holder's ability
to sell Registrable Securities under the Registration Statement is due
to the existence of facts relating to developments with respect to the
regulatory approval process for the Company's products, including the
FDA approval process, as a result of which the prospectus (including
any supplements thereto) included in such Registration Statement then
in effect includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing. Unless the Company has a valid business
purpose for preserving the confidentiality of material non-public
information for most or all of such 90-day period, the Company must
amend the Registration Statement so as to be current as soon as
practicable, and no such delay shall exceed ninety (90) days.
(iv) Premium Price Redemption for Defaults.
(A) The Company acknowledges that any failure,
refusal or inability by the Company described in the foregoing
clauses (i) through (iii) will cause the Holders to suffer damages
in an amount that will be difficult to ascertain, including without
limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in
holding the Registrable Securities, whether or not such Holders
ultimately achieve a positive return on investment. Accordingly,
the parties agree that it is appropriate to include in this
Agreement the foregoing provisions for default payments in order to
compensate the Holders for such damages. The parties acknowledge
and agree that the default payments set forth above represent the
parties' good faith effort to quantify such damages and, as such,
agree that the form and amount of such default payments are
reasonable and will not constitute a penalty. The default payments
provided for above (and redemption rights set forth above and
below) shall constitute the sole and exclusive damage remedy for
monetary losses incurred by the Holders as a result of the
applicable breach(es) by the Company, but only to the extent any
such breach is unintentional; otherwise such default payments shall
be in addition to and not in lieu or limitation of any other rights
the Holders may have at law, in equity or under the terms of the
Investment Agreement or this Agreement, including without
limitation the right to specific performance.
(B) Each Liquidated Damages or other default
payment provided for in the foregoing clauses (i) through (iii)
shall be in addition to each other default payment; provided,
however, that in no event shall the Company be obligated to pay to
any Holder default payments for any one month in an
6
<PAGE>
aggregate amount greater than three percent (3%) of the amount
invested by such Holder in Shares. All default payments required to
be made in connection with the above provisions shall be paid in
cash by the tenth (10th) day of each calendar month (which payments
shall be pro rated on a per diem basis for any period of less than
30 days). In the event that the Company fails or refuses to pay any
default payment when due, at any Holder's request and option the
Company shall purchase all or a portion of the Shares held by such
Holder (with any default payments accruing through the date of such
purchase), within five (5) days of such request, at a purchase
price per share equal to the Premium Redemption Price (as defined
below), provided that such Holder may revoke such request at any
time prior to receipt of such payment of such purchase price. The
Premium Redemption Price equals 1.1 times the original purchase
price of each Share. Default payments shall no longer accrue on
Shares after such Shares have been redeemed by the Company pursuant
to the foregoing provision. Notwithstanding the proviso contained
in the first sentence of this paragraph (B), during any period
after which the Company was obligated to redeem Shares but failed
to do so, the overdue Premium Redemption Price shall itself bear
interest payable in cash monthly at the rate of three (3%) per
month, and during such period the Holder shall be entitled to
specific performance at any time.
(c) If the Holder(s) intend to distribute the Registrable Securities by
means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by investment bankers reasonably
satisfactory to the Company. The Company shall only be obligated to permit one
underwritten offering, which offering shall be determined by a two-thirds (2/3)
majority-in-interest of the Holders, and the Company need not permit any such
underwritten offering while the resale of the Shares is otherwise subject to an
effective registration statement. In the event that there is a cutback in
connection with such an offering, such cutback shall be pro rata among the
Investors and any shareholders with registration rights arising prior to the
date of this Agreement.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form, substance
and scope as are customarily made by issuers to underwriters in
secondary offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters, if any,
opinions of independent counsel to the Company, on and dated as of the
effective day (or in the case of an underwritten offering, dated the
date of delivery of any Registrable Securities sold pursuant thereto)
of the Registration Statement, which counsel and opinions (in form,
scope and substance) shall be
7
<PAGE>
reasonably satisfactory to the Holders and the underwriter(s), if any,
and their counsel and covering, without limitation, such matters as the
due authorization and issuance of the securities being registered and
compliance with securities laws by the Company, in connection with the
authorization, issuance and registration thereof and other matters that
are customarily given to underwriters in underwritten offerings,
addressed to the Holders and each underwriter, if any.
(iii) in an underwritten offering only, and then only
if required by the underwriters, cause to be delivered, immediately
prior to the effectiveness of the Registration Statement and at the
time of delivery of any Registrable Securities sold pursuant thereto,
and at the beginning of each fiscal year following a year during which
the Company's independent certified public accountants shall have
reviewed any of the Company's books or records, a "comfort" letter from
the Company's independent certified public accountants addressed to the
Holders and each underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the Securities Act
and the applicable published rules and regulations thereunder, and
otherwise in customary form and covering such financial and accounting
matters as are customarily covered by letters of the independent
certified public accountants delivered in connection with secondary
offerings; such accountants shall have undertaken in each such letter
to update the same during each such fiscal year in which such books or
records are being reviewed so that each such letter shall remain
current, correct and complete throughout such fiscal year; and each
such letter and update thereof, if any, shall be reasonably
satisfactory to the Holders.
(iv) if an underwriting agreement is entered into,
the same shall include customary indemnification and contribution
provisions to and from the underwriters and procedures for secondary
underwritten offerings;
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable Securities being
sold or the managing underwriter or underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement, if any; and
(vi) deliver to the Holders on the effective day (or
in the case of an underwritten offering, dated the date of delivery of
any Registrable Securities sold pursuant thereto) of the Registration
Statement, and at the beginning of each fiscal quarter thereafter, a
certificate in form and substance as shall be reasonably satisfactory
to the Holders, executed by an executive officer of the Company and to
the effect that all the representations and warranties of the Company
contained in the Investment Agreement are still true and correct except
as disclosed in such certificate; the Company shall, as to each such
certificate delivered at the beginning of each fiscal quarter, update
or cause to be updated each such certificate during such quarter so
that it shall remain current, complete and correct throughout such
quarter; and such updates received by the Holders during such quarter,
if any, shall have been reasonably satisfactory to the Holders.
(e) The Company shall make available for inspection by any Holder or
group
8
<PAGE>
of Holders owning at least 25% of the Registrable Securities, any
representative(s) of such Holder(s) or all Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any such Holder(s) or underwriter, all
financial and other records customary for purposes of the Holders' due diligence
examination of the Company and review of any Registration Statement, all SEC
Documents (as defined in the Investment Agreement) filed subsequent to the
Closing, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such Registration Statement, provided that such
parties agree to keep such information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the use of
any prospectus used in connection with the Registration Statement only in the
event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission, provided that such suspension or
suspensions shall not exceed twenty (20) days in any calendar year. The Company
will use its best efforts to cause such suspension to terminate at the earliest
possible date.
(g) The Company shall file a Registration Statement with respect to any
newly authorized and/or reserved shares constituting Registrable Securities
within five (5) business days of any shareholders meeting authorizing same and
shall use its best efforts to cause such Registration Statement to become
effective within sixty (60) days of such shareholders meeting. If the Holders
become entitled, pursuant to an event described in clause (ii) of the definition
of Registrable Securities, to receive any securities in respect of Registrable
Securities that were already included in a Registration Statement, subsequent to
the date such Registration Statement is declared effective, and the Company is
unable under the securities laws to add such securities to the then effective
Registration Statement, the Company shall promptly file, in accordance with the
procedures set forth herein, an additional Registration Statement with respect
to such newly Registrable Securities. The Company shall use its best efforts to
(i) cause any such additional Registration Statement, when filed, to become
effective under the Securities Act, and (ii) keep such additional Registration
Statement effective during the period described in Section 5 below. All of the
registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including without limitation the provisions providing for default payments
contained herein.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best efforts to
qualify for registration on Form S-3 or any comparable or successor form or
forms, or in the event that the Company is ineligible to use such form, such
form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration
9
<PAGE>
effective until the earliest of (i) June 30, 2003; (ii) all of the Holders
having completed the sales or distribution described in the Registration
Statement relating thereto; or (iii) such Registrable Securities being able to
be sold under Rule 144(k) or any equivalent successor rule (provided that the
Company's transfer agent has accepted an instruction from the Company to such
effect).
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder, each of
its officers, directors, partners, agents, and employees and each person
controlling each Holder, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of its officers, directors, agents and
employees and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to a Holder to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Holder or the underwriter (if any) therefor and stated to be
specifically for use therein. The indemnity agreement contained in this Section
5(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, agents and employees, and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors, agents, employees and partners, and each person controlling such
other Holder(s) against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to
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make the statement therein not misleading, and will reimburse the Company and
such other Holder(s) and their directors, officers, partners, agents, employees,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein, and provided that the maximum amount for which such Holder shall be
liable under this indemnity shall not exceed the gross proceeds received by such
Holder from the sale of the Registrable Securities. The indemnity agreement
contained in this Section 5(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by
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<PAGE>
such Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 6 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the gross proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Investment Agreement
or any underwriting agreement, (ii) any investigation made by or on behalf of
any Indemnified Party or by or on behalf of the Company, and (iii) the
consummation of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the Company
such information regarding such Holder and the distribution and/or sale proposed
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. Subject to applicable law, the
intended method or methods of disposition and/or sale (Plan of Distribution) of
such securities as so provided by such Holder shall be included without
alteration in the Registration Statement covering the Registrable Securities and
shall not be changed without written consent of such Holder, which consent shall
not be unreasonably withheld.
10. Replacement Certificates. The certificate(s) representing the
Shares held by any Investor (or then Holder) may be exchanged by such Investor
(or such Holder) at any time and
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<PAGE>
from time to time for certificates with different denominations representing an
equal aggregate number of Shares, as reasonably requested by such Investor (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
11. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Shares, and all other rights granted to the Investors by the
Company hereunder may be transferred or assigned to any transferee or assignee
of any Shares; provided in each case that the Company must be given written
notice by such Investor or such Holder at the time of or within a reasonable
time after said transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned; and provided further that
the transferee or assignee of such rights agrees in writing to be bound by the
registration provisions of this Agreement.
12. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144; and
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Securities Exchange Act of 1934, as amended.
13. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) Jurisdiction. The Company and each of the Investors (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the New York State courts and other courts of the United States sitting
in New York County, New York for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is
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brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. The Company and each of the Investors consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
(c) Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be effective upon actual
receipt of such mailing. The addresses for such communications shall be:
to the Company: Vion Pharmaceuticals, Inc.
4 Science Park
New Haven, Connecticut 06511
Fax:(203) 498-4211
Attn: Thomas Klein
with copies to: Fulbright & Jaworski
666 Fifth Avenue
New York, New York 10103
Fax: (212) 752-5958
Attn: Paul Jacobs, Esq.
to the Investors:
with copies to: .
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
(d) Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
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Closing.
(f) Amendment and Waiver. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may be amended, and/or any of the
Company's obligations under this Agreement may be waived from time to time, in
whole or in part, by the affirmative vote of a two-thirds (2/3)
majority-in-interest of the Holders of either the Shares, or of both the Shares
and the other shares of Common Stock to be purchased in the [Agreements with
Elliott Associates, L.P. and Westgate International, L.P. and Kleinwort Benson
Limited and Winchester Capital Healthcare Partners, LLC only: Companion
Offerings] [Agreements with Wechsler & Co., Inc and United Equities Commodities
Company only: First Companion Offering and, if any, the Other Companion
Offerings] (voting or consenting as a single class), provided that any such
waiver or amendment approved by the larger class of Holders applies equally to
the Holders under this Agreement and the Holders under the Registration Rights
Agreement to be executed in connection with the [Agreements with Elliott
Associates, L.P. and Westgate International, L.P. and Kleinwort Benson Limited
and Winchester Capital Healthcare Partners, LLC only: Companion Offerings]
[Agreements with Wechsler & Co., Inc. and United Equities Commodities Company
only: First Companion Offering and the Other Companion Offerings, if any]. Any
holders of Shares who are not original purchasers and are affiliates of the
Company (and the Company itself) shall not participate in such vote and the
Shares of such holders shall be disregarded and deemed not to be outstanding.
(Any such amendment of this Agreement shall require the Company's written
consent.)
(g) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(h) Entire Agreement. This Agreement, together with the Investment
Agreement and the agreements and documents contemplated hereby and thereby,
contains the entire understanding and agreement of the parties.
(i) Governing Law. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed in accordance with the laws
of the State of New York, except to the extent that the law of Delaware
regulates the Company's issuance of securities.
[Agreements with Elliott Associates, L.P. and Westgate International,
L.P. and Kleinwort Benson Limited and Winchester Capital Healthcare Partners,
LLC only:
(j) Severability. The parties acknowledge and agree that the Investors
are not agents, affiliates or partners of each other, that all representations,
warranties, covenants and agreements of the Investors hereunder are several and
not joint, that no Investor shall have any responsibility or liability for the
representations, warrants, agreements, acts or omissions of any other Investor,
and that any rights granted to "Investors" hereunder shall be enforceable by
each Investor hereunder.]
(k) Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
VION PHARMACEUTICALS, INC.
By:
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Name:
Title:
INVESTORS:
[ ]
By:
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[ ]
By:
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