<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1999
REGISTRATION NO. 333-83837
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VION PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 2836 13-3671221
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NUMBER)
</TABLE>
4 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
(203) 498-4210
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
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)
------------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
<TABLE>
<S> <C>
PAUL JACOBS, ESQ. MICHAEL HIRSCHBERG, ESQ.
LAWRENCE A. SPECTOR, ESQ. PIPER & MARBURY L.L.P.
FULBRIGHT & JAWORSKI L.L.P. 1251 AVENUE OF THE AMERICAS
666 FIFTH AVENUE NEW YORK, NEW YORK 10020
NEW YORK, NEW YORK 10103 (212) 835-6000
(212) 318-3000 (212) 835-6001 (FAX)
(212) 752-5958 (FAX)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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,
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
------------------------
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 SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates (other than the
Securities and Exchange Commission registration fee, the NASD filing fee and the
Nasdaq SmallCap Market additional shares listing fee) of the expenses to be
incurred in connection with the issuance and distribution of the shares of
Common Stock being registered, other than underwriting discounts and
commissions:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee...... $ 6,186.19
NASD filing fee.......................................... $ 2,726.00
Nasdaq SmallCap Market additional shares listing fee..... $ 17,500.00*
Printing and engraving expenses.......................... $150,000.00*
Legal fees and expenses.................................. $150,000.00*
Blue Sky fees............................................ $ 25,000.00*
Accounting fees and expenses............................. $ 40,000.00*
Transfer agent and registrar fees........................ $ 3,500.00*
Miscellaneous expenses................................... $ 30,087.81*
Total............................................... $425,000.00
</TABLE>
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* estimated
ITEM 14. 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 15. RECENT SALES OF UNREGISTERED SECURITIES
Private Placement of Class A Convertible Preferred Stock.
On May 22, 1996, the Company completed a private placement of 1,250,000
shares of Class A Convertible Preferred Stock, at $10.00 per share, resulting in
net proceeds to the Company of $11,531,052. Each share of Class A Preferred
Stock is immediately convertible into 2.777777 shares of the Company's common
stock and is entitled to vote on all matters on an 'as if converted' basis. In
connection with the foregoing transaction, the Company also issued warrants to
the placement agent, exercisable over a five year period, to purchase an
aggregate of 546,875 shares of the Company's common stock at prices ranging from
$3.96 to $12.00. The shares of Class A Preferred Stock pay semi-annual dividends
of 5% per annum, payable in additional shares of Class A Preferred Stock, which
are immediately convertible into common stock of the Company. In the event that
the closing bid price of the Company's common stock exceeds $10.3125 for 20
trading days in any 30 trading day period, the Company can redeem the Class A
Preferred Stock at the issue price plus all declared and unpaid dividends
thereon. If all of the 493,902 outstanding shares their redemption value would
be $4,939,020. The issuance of antidilution adjustment provisions of the
Company's outstanding warrants, resulting in the issuance of additional
warrants. the consent of a majority of holders of the Class A Preferred Stock.
Private Placement of Class B Convertible Preferred Stock:
On August 20, 1997, the Company completed a private placement of 4,850
shares of non-voting Class B Convertible Preferred Stock at $1,000 per share,
resulting in net proceeds to the Company of $4,481,450. Shares of Class B
Preferred Stock were convertible into shares of common stock including an
accretion of 8% per annum. For the three-month period ended March 31, 1998 the
Class B accretion totaled $121,164. Shares of the Class B Preferred Stock were
also eligible, under certain circumstances, to receive dividends paid in Class C
Preferred Stock.
Private Placement of 5% Redeemable Convertible Preferred Stock Series 1998
On June 30, 1998, the Company completed a private placement of 5,000 shares
of non-voting 5% Redeemable Convertible Preferred Stock Series 1998 ('Series
1998 Preferred Stock'). The Series 1998 Preferred Stock was issued at $1,000 per
share, resulting in net proceeds to the Company of $4,703,386. The shares of
Series 1998 Preferred Stock accrue dividends of 5% per annum. Each share of
Series 1998 Preferred Stock is convertible into Common Stock based on the
formula of issued price plus accrued dividends divided by $3.60.
Private Placement of Common Stock in 1999
In April 1999, the Company consummated a private placement of the Company's
Common Stock. Pursuant to the private placement, the Company issued 893,915
shares of Common Stock at a price of approximately $4.47 per share, for
aggregate proceeds of $4,000,000.
No underwriters were engaged in connection with the foregoing sales of
securities. Such sales of common stock and preferred stock were made in reliance
upon the exemption from registration set forth in Section 4(2) of the Securities
Act of 1933 and Rule 506 of Regulation D promulgated thereunder for transactions
not involving a public offering, and all purchasers were accredited investors as
such term is defined Rule 501(a) of Regulation D.
II-2
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 -- Revised form of Underwriting Agreement
2.1 -- Agreement and Plan of Merger among MelaRx
Pharmaceuticals, Inc., OncoRx Research Corp. and OncoRx,
Inc. dated as of April 19, 1995(1)
2.2 -- Certificate of Merger, dated April 20, 1995(1)
3.1 -- Restated Certificate of Incorporation, as amended(2)
3.2 -- By-laws(1)
4.1 -- Form of Underwriter's Unit Purchase Option(1)
4.2 -- Form of Warrant Agreement for Class A and Class B
Warrants(1)
4.3 -- Rights Agreement dated as of October 26, 1998 between
Vion Pharmaceuticals, Inc. and American Stock Transfer &
Trust Company (includes form of Right Certificate attached
as Exhibit A and a Summary of Rights to Purchase Common
Shares attached as Exhibit B thereto)(3)
4.4 -- Revised form of Warrant Agreement by and between Vion
Pharmaceuticals, Inc. and Brean Murray & Co., Inc.
4.5 -- Form of Underwriter's Warrant (included as Exhibit A to
Exhibit 4.4 above)
5.1 -- Opinion of Fulbright & Jaworski L.L.P.*
10.1 -- License Agreement between Yale University and OncoRx,
Inc. dated as of August 31, 1994(1)
10.2 -- Letter Agreement between Yale University and OncoRx, Inc.
dated August 19, 1994(1)
10.3 -- Extension Agreement between Yale University and MelaRx
Pharmaceuticals, Inc., dated as of July 1, 1992(1)
10.4 -- Form of License Agreement between Yale University and
MelaRx Pharmaceuticals, Inc. (1)
10.5 -- Letter Agreement between Yale University and MelaRx
Pharmaceuticals, Inc., dated as of February 2, 1995(1)
10.6 -- Employment Agreement between the Registrant and John A.
Spears, dated as of January 16, 1995(1)
10.7 -- Stock Option Agreement between OncoRx, Inc. and John A.
Spears, dated February 2, 1995(1)
10.8 -- Employment Letter from MelaRx Pharmaceuticals, Inc. to
Thomas Mizelle, dated as of July 29, 1994(1)
10.9 -- Marketing Services Agreement between MelaRx
Pharmaceuticals, Inc. and Creative Polymers, Inc. dated as
of March 21, 1994(1)
10.10 -- Amended and Restated 1993 Stock Option Plan of the
Registrant(4)
10.11 -- Lease Agreement between Science Park Development
Corporation and Vion Pharmaceuticals, Inc., dated as of
February 1, 1996(5)
10.12 -- Option Agreement between the Registrant and PMP, Inc.,
dated April 27, 1995(1)
10.13 -- Agreement between MelaRx Pharmaceuticals, Inc. and
certain shareholders, dated February 17, 1995(1)
10.14 -- Consulting and Finder's Agreement between MelaRx
Pharmaceuticals, Inc. and Jacob A. Melnick, dated June 4,
1992, as amended by Agreement dated February 17, 1995(1)
10.15 -- Form of Indemnification Agreement(1)
10.16 -- Letter Agreement between Yale University and OncoRx, Inc.
(formerly MelaRx Pharmaceuticals, Inc.), dated July 5,
1995(1)
10.17 -- Lease between Science Park Development Corporation and
OncoRx, Inc. dated August 10, 1995(6)
10.18 -- Master Lease Agreement between Citicorp Leasing, Inc. and
OncoRx, Inc. dated September 27, 1995(6)
10.19 -- Sale and Leaseback Agreement and Master Equipment Lease
Agreement between FINOVA Technology Finance, Inc. and Vion
Pharmaceuticals, Inc. dated as of October 17, 1996(7)
10.20 -- Clinical Development Agreement between Vion
Pharmaceuticals, Inc., Covance Clinical Research Unit Ltd.
and Covance Inc. (Confidential treatment has been granted
with regard to certain provisions of this exhibit)(8)
10.21 -- Amendment No. 1 to License Agreement between Yale
University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx,
Inc.) dated as of June 12, 1997(8)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
10.22 -- Amendment No. 2 to License Agreement between Yale
University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx,
Inc.) dated as of June 12, 1997(8)
10.23 -- Collaborative Development and Distribution Agreement
between Boehringer Ingelheim International GmbH and Vion
Pharmaceuticals, Inc. dated November 24, 1997
(Confidential treatment has been requested with regard to
certain provisions of this exhibit)(5)
10.24 -- Sale and Leaseback Agreement between FINOVA Technology
Finance, Inc. and Vion Pharmaceuticals, Inc. dated as of
December 10, 1997(5)
10.25 -- Employment Agreement dated January 16, 1998 between Vion
Pharmaceuticals, Inc. and John A. Spears(2)
10.26 -- License Agreement dated February 9, 1998 between Vion
Pharmaceuticals, Inc. and San Mar Laboratories Inc.(9)
10.27 -- Amendment No. 3 to a License Agreement between Yale
University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx,
Inc.) dated as of September 25, 1998.(9)
10.28 -- Form of Severance Agreement between the Company and
Terrence W. Doyle, Thomas E. Klein and Thomas Mizelle.(10)
10.29 -- Form of Employment Agreement between the Company and Alan
Kessman.*
10.30 -- Senior Executive Stock Option Plan.(10)
10.31 -- Separation and Release Agreement between the Company and
John Spears, dated April 7, 1999.*
21.1 -- Subsidiaries of the Registrant(9)
23.1 -- Consent of Ernst & Young L.L.P.*
23.2 -- Consent of Fulbright & Jaworksi L.L.P (contained in the
opinion filed as Exhibit 5.1)*
24.1 -- Power of Attorney*
</TABLE>
- ------------
* Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (File No. 33-93468), effective August 14, 1995.
(2) Incorporated by reference to the Company's Quarterly Report on form 10-QSB
for the quarterly period ended June 30, 1998.
(3) Incorporated by reference to the Company's Current Report on Form 8-K filed
on October 26, 1998.
(4) Incorporated by reference to the Company's Registration Statement on Form
S-8 (File No. 333-39407), effective November 4, 1997.
(5) Incorporated by reference to the Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997.
(6) Incorporated by reference to the Quarterly Report on form 10-QSB for the
quarter ended September 30, 1995.
(7) Incorporated by reference to the Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996.
(8) Incorporated by reference to the Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1997.
(9) Incorporated by reference to the Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998.
(10) Incorporated by reference to the Quarterly Report on form 10-QSB for the
quarter ended March 31, 1999.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Act') may be permitted to directors, officers, and
controlling persons of the Registrant
II-4
<PAGE>
pursuant to the foregoing provisions, 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 of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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.
II-5
<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-1 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 October 20, 1999.
VION PHARMACEUTICALS, INC.
By: /s/ ALAN KESSMAN
.................................
ALAN KESSMAN,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
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>
*
.......................................... Chairman of the Board October 20, 1999
WILLIAM R. MILLER
/s/ ALAN KESSMAN
......................................... President, Chief Executive Officer October 20, 1999
ALAN KESSMAN and Director (Principal Executive
Officer)
/s/ THOMAS E. KLEIN
......................................... Vice President -- Finance and Chief October 20, 1999
THOMAS E. KLEIN Financial Officer (Principal
Financial and Accounting Officer)
*
......................................... Director October 20, 1999
MICHEL C. BERGERAC
*
......................................... Director October 20, 1999
FRANK T. CARY
*
......................................... Director October 20, 1999
JAMES FERGUSON
*
......................................... Director October 20, 1999
ALAN C. SARTORELLI
*
......................................... Director October 20, 1999
WALTER B. WRISTON
*By: /s/ THOMAS E. KLEIN
.........................................
THOMAS E. KLEIN,
AS ATTORNEY-IN-FACT
</TABLE>
II-6
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as....................................'SS'
<PAGE>
VION PHARMACEUTICALS, INC.
2,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
_____ __, 1999
BREAN MURRAY & CO., INC.
As Representative of the Underwriters
570 Lexington Avenue
New York, New York 10022-6822
Ladies and Gentlemen:
VION PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
proposes to sell an aggregate of 2,000,000 shares (the "Firm Shares") of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, to you and
the other underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as representative (the
"Representative"). The Company also has agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 300,000
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section l(b) hereto. The Firm Shares and the Option Shares are
hereinafter collectively referred to as the "Shares." The words "you" and "your"
refer to the Underwriter.
The Company hereby confirms as follows its agreement with the
Representative and the other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter and
each Underwriter, severally and not jointly, agrees to purchase from the Company
at a purchase price of $ ______ per share, the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule I, plus such additional number
of Option Shares which such Underwriter may become obligated to purchase
pursuant to Section 1(b) hereof.
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the Underwriters to purchase, severally and not
jointly, the
<PAGE>
Option Shares at the same price per share as the Underwriters shall pay for the
Firm Shares. The Option may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time and from time to time on or before the 30th day after the date
of this Agreement (or on the next business day if the 30th day is not a business
day), upon notice (the "Option Shares Notice") in writing or by telephone
(confirmed in writing) by the Representative to the Company no later than 5:00
p.m., New York City time, at least two and no more than five business days
before the closing date specified in the Option Shares Notice (the "Option
Closing Date") setting forth the aggregate number of Option Shares to be
purchased on the Option Closing Date. (As used herein, "business day" means a
day on which the New York Stock Exchange is open for trading and on which banks
in New York are open for business and not permitted by law or executive order to
be closed.) On the Option Closing Date, the Company will sell to the
Underwriters the number of Option Shares set forth in the Option Shares Notice.
2. Delivery and Payment.
(a) Delivery of the Firm Shares shall be made to the
Representative for tha accounts of the Underwriters at the office of the
Representative, 570 Lexington Avenue, New York, New York 10022-6822, and in
consideration therefor payment of the purchase price shall be made to the
Company by wire transfer of immediately available funds to the Company's account
at State Street Bank, 225 Franklin Street, Boston, MA 02110, ABA No. 011000028,
DDA No. 17039843, Account No. DE0200 (the "Closing"). Such delivery and payment
shall be made on or before 10:00 a.m., New York time, on the third business day
following the date of this Agreement, or at such other time and date as may be
agreed upon by the Company and the Representative (such date is hereinafter
referred to as the "Closing Date"). Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder.
(b) To the extent the Option is exercised, delivery of the
Option Shares against payment by the Underwriters (in the manner specified
above) will take place at the offices specified above for the Closing at the
time and date (which may be the Closing Date) specified in the Option Shares
Notice.
(c) Certificates evidencing the Shares shall be in definitive
form and shall be registered in such names and in such denominations as the
Representative shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
(d) The cost of original issue tax stamps, if any, in
connection with the issuance, sale and delivery of the Shares by the Company to
the Underwriters shall
-2-
<PAGE>
be borne by the Company. The Company will pay and render each Underwriter and
any subsequent holder of the Shares harmless from any and all liabilities with
respect to or resulting from any failure or delay in paying federal or state
stamp and other transfer taxes, if any, that may be payable in connection with
the issuance, sale or delivery to such Underwriter of the Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement on Form S-1 (Registration No.
333-83837) relating to the Shares, including a preliminary prospectus relating
to the Shares and any amendments to such registration statement as may have been
required prior to the date of this Agreement, has been prepared by the Company
under the provisions of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations (collectively referred to as the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
promulgated thereunder and has been filed with the Commission. The Commission
has not issued any order preventing or suspending the use of the Prospectus (as
defined below) or any Preliminary Prospectus (as defined below) or instituted
or, to the knowledge of the Company, threatened any proceeding for that purpose.
The term "Preliminary Prospectus" as used herein means a preliminary prospectus
relating to the Shares that is included as part of the foregoing registration
statement or any amendment thereto before the Effective Date (as defined below)
and any prospectus filed with the Commission by the Company pursuant to Rule
424(a) of the Rules and Regulations. Copies of such registration statement and
amendments and of each related Preliminary Prospectus have been delivered to the
Representative. If such registration statement has not become effective, a
further amendment to such registration statement, including a form of final
Preliminary Prospectus, necessary to permit such registration statement to
become effective will be filed promptly by the Company with the Commission. If
such registration statement has become effective, a final prospectus relating to
the Shares containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will be filed by the
Company with the Commission in accordance with Rule 424(b) of the Rules and
Regulations promptly after execution and delivery of this Agreement. The term
"Registration Statement" means the registration statement at the time such
registration statement becomes or became effective (the "Effective Date"),
together with any registration statement filed by the Company pursuant to Rule
462(b) of the Rules and Regulations, including all financial statements and
schedules and all exhibits, documents incorporated therein by reference and all
information contained in any final prospectus filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations or in a term sheet described in Rule
434 of the Rules and Regulations in accordance with Section 5 hereof and deemed
to be included therein as of the Effective Date by Rule 430A of the Rules and
Regulations. The term "Prospectus" means the prospectus relating to the Shares
as first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus
relating to the Shares included in the Registration Statement at the Effective
Date. References herein to any document or other information incorporated by
reference in the Registration Statement shall include documents or other
information incorporated by reference in the Prospectus (or if the Prospectus is
not in existence,
-3-
<PAGE>
in the most recent Preliminary Prospectus). References herein to any Preliminary
Prospectus or the Prospectus shall be deemed to include all documents and
information incorporated by reference therein and shall be deemed to refer to
and include any documents and information filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, and so incorporated by
reference, under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) On the date that any Preliminary Prospectus was filed with
the Commission, the date the Prospectus is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations (if required), at all times
subsequent thereto up to and including the Closing Date and, if later, the
Option Closing Date and when any post-effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, the Registration Statement, each Preliminary
Prospectus and the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment or supplement thereto),
including the financial statements included in the Prospectus, did or will
comply in all material respects with all applicable provisions of the Act and
the Rules and Regulations and did or will contain all material statements
required to be stated therein in accordance with the Act and the Rules and
Regulations. On the Effective Date and when any post-effective amendment to the
Registration Statement becomes effective, neither the Registration Statement nor
any such amendment did or will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the Effective Date, the
date the Prospectus or any amendment or supplement to the Prospectus is filed
with the Commission and at the Closing Date and, if later, the Option Closing
Date, the Prospectus did not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties in this Section 3(b) do
not apply to any statements or omissions made in reliance on and in conformity
with information furnished in writing to the Company by the Underwriters
specifically for inclusion in the Registration Statement or Prospectus or any
amendment or supplement thereto. There are no contracts or other documents
required by the Act or the Rules and Regulations to be filed as exhibits to the
Registration Statement that have not been so filed.
(c) The Company has no subsidiaries. Except as disclosed in
the Registration Statement and the Prospectus, the Company does not own and, at
the Closing Date and the Option Closing Date, if any, will not own, an interest
in any corporation, joint venture, trust, partnership or other business entity.
The Company has been and, at the Closing Date and Option Closing Date, if any,
will be, duly incorporated and validly existing as a corporation under the laws
of the State of Delaware and is, and at the Closing Date and the Option Closing
Date, if any, will be, in good standing under the laws of the State of Delaware.
The Company has all corporate power and authority necessary to own its
properties and conduct its business as currently being carried on and as
described in the Registration Statement and Prospectus. The Company is, and at
the Closing Date and the Option Closing Date, if any, will be, duly licensed or
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its
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business or use of its property and assets makes such licensing or qualification
necessary. Complete and correct copies of the Company's Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and By-laws have
been delivered to the Representative or its counsel, and no changes therein will
be made subsequent to the date hereof and prior to the Closing Date or, if
later, the Option Closing Date.
(d) The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights, and the
holders thereof are not subject to personal liability by reason of being such
holders. The Firm Shares and the Option Shares, in the event the Option is
exercised, sold to the Underwriters or certain permitted designees and the
warrants (the "Warrants") sold to the Representative or certain permitted
designees to purchase up to 200,000 shares of Common Stock on the terms and
conditions set forth in a Warrant Agreement (the "Warrant Agreement") between
the Company and the Representative, and the shares of Common Stock issuable upon
exercise of the Warrants (the "Warrant Shares"), will be duly authorized and,
when issued and delivered (i) to each Underwriter against payment therefor as
provided by this Agreement (in the case of the Shares) or (ii) to the
Representative or such designees against payment therefor as provided by the
Warrants and the Warrant Agreement (in the case of the Warrant Shares), will be
validly issued, fully paid and nonassessable and will not be subject to any
preemptive or similar rights, and the holders thereof will not be subject to
personal liability by reason of being such holders. The Company has, and, upon
the closing date, will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus
under the captions "Description of Capital Stock" and "Capitalization" (or, if
the Prospectus is not in existence, in the most recent Preliminary Prospectus).
The description of the securities of the Company in the Registration Statement
and the Prospectus under the caption "Description of Capital Stock" (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus) is,
and at the Closing Date and, if later, the Option Closing Date, will be,
complete and accurate in all material respects. Except as set forth or
contemplated in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus), the
Company does not have outstanding and, at the Closing Date and, if later, the
Option Closing Date, will not have outstanding, any options to purchase, or any
rights or warrants to subscribe for, or any securities or obligations
exchangeable or convertible into, or any contracts or commitments to issue or
sell, any shares of its capital stock or any such options, rights, warrants,
obligations, contracts or commitments. Neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights for or relating to the registration of any
shares of Common Stock or other securities of the Company, except such rights as
have been disclosed in the Registration Statement or as have been satisfied,
waived or terminated.
(e) The financial statements and the related notes of the
Company included in the Registration Statement and in the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus)
comply in all material respects with the requirements of the Act and the Rules
and Regulations, present fairly the financial condition, results of operations,
stockholders' equity and cash flows of the Company at the dates and for the
periods covered
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<PAGE>
thereby and have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved (except as otherwise stated therein), subject to
year-end adjustments with respect to interim information consistent with past
practice. Ernst & Young L.L.P. (the "Accountants"), who have reported on those
of such financial statements and related notes which are audited, are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations. The selected financial information and statistical
data set forth under the captions "Prospectus Summary -- Summary Financial Data"
and "Selected Financial Data" in the Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus) have been prepared on a
basis consistent with the financial statements of the Company.
(f) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(g) Except as set forth or contemplated in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus), subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date and, if later, the Option Closing Date, (i) there has not
been, and will not have been, any material adverse change in the business,
properties, key personnel, condition (financial or otherwise), net worth or
results of operations of the Company, (ii) the Company has not, and will not
have, incurred any material liabilities or obligations, direct or contingent,
or, entered into any material transactions not in the ordinary course of
business other than pursuant to this Agreement, (iii) the Company has not, and
will not have, paid or declared any dividends or other distributions of any kind
on any class of its capital stock, except the Series A Preferred Stock as
required thereby and described in the Registration Statement and the Prospectus,
and (iv) there has not been, and will not have been, any change in the capital
stock, or a material change in the short-term or long-term debt, or any issuance
of options, warrants, convertible securities or other rights to purchase capital
stock of the Company, other than changes in capital stock and issuances of
rights, options and shares pursuant to the Company's 1993 Amended and Restated
Stock Option Plan and the Senior Executive Stock Option Plan ( the "Option
Plans") or this Agreement.
(h) The Company has good and marketable title to all
properties and assets described in the Registration Statement and Prospectus
(or, if the Prospectus is not in existence, in the most recent Preliminary
Prospectus), as owned by it, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
or referred to in the Registration Statement and Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus). The
Company has valid, subsisting and enforceable leases for
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<PAGE>
the properties and assets described in the Registration Statement and Prospectus
(or, if the Prospectus is not in existence, in the most recent Preliminary
Prospectus) as leased by it, free and clear of all Encumbrances, other than
those described or referred to in the Registration Statement and Prospectus (or,
if the Prospectus is not in existence, in the most recent Preliminary
Prospectus). The Company has no notice of any claim which has been asserted by
anyone adverse to the Company's rights as lessee or sublessee under the
respective lease or sublease, or affecting or questioning the Company's right to
the continued possession of the leased or subleased premises.
(i) Except as described or referred to in the Registration
Statement or Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus), the Company owns or possesses all patents,
patent applications, trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights, licenses, inventions,
trade secrets and other intellectual property rights necessary for the conduct
of the business of the Company as currently carried on and as described in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus), and except as stated or
referred to in the Registration Statement or Prospectus (or, if the Prospectus
is not in existence, in the most recent Preliminary Prospectus), no name that
the Company uses and no other aspect of the business of the Company involves or
gives rise to any infringement of or license or similar fees for, any patents,
trademarks, service marks, tradenames, trademark registrations, service mark
registrations, U.S. registered copyrights, licenses, trade secrets or other
similar rights of others material to the business of the Company, and the
Company has not received any notice alleging any such infringement or fee.
(j) Except as set forth or referred to in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus), there are no actions, suits, arbitrations,
claims, governmental or other proceedings (formal or informal), or
investigations pending or, to the knowledge of the Company, threatened against
or, to the knowledge of the Company, affecting the Company, any of the Company's
officers or directors, in its capacity as such, or any of the properties or
assets owned or leased by the Company, before or by any federal, state,
municipal or foreign court, commission, regulatory body, administrative agency
or other governmental body, domestic or foreign (collectively, a "Governmental
Body"), including, without limitation, the United States Food and Drug
Administration (the "FDA"), that might result in any material adverse change in
the business, properties, condition (financial or otherwise), net worth or
results of operations of the Company. Except as set forth in the Registration
and the Prospectus, there are no actions, proceedings or investigations pending
or, to the knowledge of the Company, threatened by the FDA or any other
Governmental Body relating to the safety, efficacy or recall of any product
developed or sold by the Company. The Company is not in violation of, or in
default with respect to, any law, rule or regulation, or any order, judgment or
decree, except as described or referred to in the Prospectus (or if the
Prospectus is not in existence, in the most recent Preliminary Prospectus) or
such as in the aggregate do not now have and can reasonably be expected in the
future not to have a material adverse effect upon the business, properties,
condition (financial or otherwise), net worth or results of operations of the
Company; nor is the Company presently required to take any action under any such
order, judgment or decree in order to avoid any such violation or default.
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<PAGE>
(k) The Company has, and at the Closing Date and, if later,
the Option Closing Date will have, all governmental licenses, permits, consents,
orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") and has made all requisite declarations,
notifications and filings with all Government Bodies, in each case as are
necessary to carry on its business as then currently conducted and own or lease
its properties as contemplated in the Registration Statement and Prospectus (or,
if the Prospectus is not in existence, in the most recent Preliminary
Prospectus), and all such Licenses are, and at the Closing Date and, if later,
the Option Closing Date will be, in full force and effect. The Company has, and
at the Closing Date and, if later, the Option Closing Date will have, complied
in all material respects with all laws, regulations and orders applicable to it
or its business, assets and properties. The Company is not, nor at the Closing
Date and, if later, the Option Closing Date will it be, in violation of its
Certificate of Incorporation or By-laws, or in default (nor has any event
occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its properties
are bound, the violation of which would individually or in the aggregate have a
material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company.
There are no governmental proceedings or actions pending or, to the Company's
knowledge, threatened for the purpose of suspending, modifying or revoking any
License held by the Company and, to the knowledge of the Company, no event has
occurred that allows, or with notice or lapse of time or both would allow, any
such suspension, modification or revocation or any material impairment of the
Company's rights thereunder. There has been, however, and may continue to be, an
informal Nasdaq inquiry with respect to the Company's going concern opinion.
(l) No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the execution,
delivery or performance of this Agreement, the Warrants or the Warrant Agreement
(collectively, the "Transaction Documents") or for the consummation of the
transactions contemplated hereby and thereby or in connection with the sale of
the Shares, the Warrants and the Warrant Shares by the Company, except such as
have been obtained and are in full force and effect and such as may be required
under the Act, the Rules and Regulations, any state securities or Blue Sky laws
or the bylaws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares to be sold hereby, the purchase of the Warrants by
the Representative or its permitted designees and the purchase by the
Representative or such permitted designees of the Warrant Shares upon exercise
of the Warrants.
(m) The Company has full power (corporate and other) and
authority to enter into each of the Transaction Documents and to carry out all
the terms and provisions hereof to be carried out by it. Each of the Transaction
Documents has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, and is enforceable
against the Company in accordance with its terms, except as rights to indemnity
and
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<PAGE>
contribution may be limited by federal or state securities laws or the public
policy underlying such laws. Except as disclosed in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus), the execution and delivery of the Transaction
Documents and the performance and consummation of the transactions contemplated
thereby will not result in the creation or imposition of any Encumbrance upon
any of the properties or assets of the Company pursuant to the terms or
provisions of, or result in a breach or violation of or conflict with any of the
terms or provisions of, or constitute a default under, or give any other party a
right to terminate any of its obligations under, or result in the acceleration
of any obligation under, (i) the Certificate of Incorporation or By-laws of the
Company, or (ii) any contract or other agreement to which the Company is a party
or by which it or any of its assets or properties are bound, or (iii) any
judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the Company or its business or properties,
assuming compliance with applicable state securities and Blue Sky laws.
(n) Each certificate signed by an officer of the Company and
delivered to the Representative or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(o) Neither the Company nor any of its directors, officers or
affiliates (within the meaning of the Rules and Regulations) has taken, nor will
he, she or it take, directly or indirectly, any action designed, or which might
reasonably be expected in the future, to cause or result in, under the Act or
otherwise, or which has constituted, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares or
otherwise.
(p) The Company is not involved in any material labor dispute
with its employees nor is any such dispute threatened or imminent.
(q) Neither the Company nor, to the Company's knowledge, any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds of the Company in violation of any law, rule or
regulation or of a character required to be disclosed in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus).
(r) The business, operations and facilities of the Company
have been and are being conducted in compliance in all material respects with
all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational safety
and health, or pollution, or protection of health or the environment (including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency
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<PAGE>
or instrumentality of the United States or any state or political subdivision
thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto; and the Company has not received any notice from any
Governmental Body or any third party alleging any violation thereof or material
liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances and/or
damages to natural resources). The intended use and occupancy of each of the
facilities owned or operated by the Company complies in all material respects
with all applicable codes and zoning laws and regulations, and there is no
pending or, to the Company's knowledge, threatened condemnation, zoning change,
environmental or other proceeding or action that will in any material respect
adversely affect the size of, use of, improvements on, construction on or access
to such facilities.
(s) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof and is not in default in any taxes which were payable pursuant to said
returns.
(t) Neither the Company nor any of its directors, officers or
employees in such capacity is subject to any order or directive of, or party to
any agreement with, any regulatory agency having jurisdiction with respect to
its business or operations except as disclosed in the Prospectus (or if the
Prospectus is not in existence, in the most recent Preliminary Prospectus).
(u) The Company and each officer and director of the Company
and John Spears have delivered to the Representative agreements (the "Lockup
Agreements") to the effect that he or it will not, for a period of 180 days
after the date hereof, without the prior written consent of the Representative,
directly or indirectly, offer, sell or otherwise dispose (or announce any offer,
sale, grant of any option to purchase or other disposition) of any shares of
Common Stock or securities convertible into, or exercisable or exchangeable for,
shares of Common Stock, except pursuant to this Agreement and except for (i)
exercises of options and warrants to acquire shares of Common Stock, (ii)
transfers to the holder's spouse or lineal descendants or ancestors, natural or
adopted (collectively, "Relatives"), or to an inter vivos trust for the benefit
of such holder's Relatives, (iii) transfers upon the death of such holder
pursuant to the laws of descent and distribution or pursuant to wills, or (iv)
gifts, provided that, in the case of the foregoing clauses (i) through (iv), the
transferee agrees in writing to be bound by the terms of these restrictions.
Elliott Associates L.P. and Westgate International L.P. have delivered to the
Representative a Lockup Agreement (the "Elliott Lockup") to the effect the each
entity will not, without the prior written consent of the Representative,
directly or indirectly, offer, sell or otherwise dispose (or announce any offer,
sale, grant of any option to purchase or other disposition) of any shares of
Common Stock or securities convertible into, or exercisable or exchangeable for,
shares of Common Stock, commencing on the effective date of the Registration
Statement and continuing until the earlier to occur of (i) the expiration of one
hundred and eighty days (180) days or (ii) the date that the Fair Market Value
(as defined in the Lockup Agreement) of the Common Stock is at least fifteen
dollars ($15.00) per share (subject to appropriate adjustments) provided that
the Registration Statement is declared effective by the
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<PAGE>
Commission on or before November 1, 1999. The Elliott Lockup also acknowledges
the entities' prior pledges of Common Stock and securities convertible into, or
exercisable or exchangeable for, shares of Common Stock and permits each entity
to pledge additional shares. Elliott and Westgate have each agreed that it will
use its best efforts to prevent a default under or breach of any and all
agreements in connection with which it has pledged the Common Stock and
securities convertible into or exercisable for Common Stock.
(v) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering and
sale of the Shares other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Act or the Rules and Regulations to be
distributed by the Company.
(w) The Common Stock of the Company is quoted on The Nasdaq
National Market.
(x) The Company is not required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(y) The Company has furnished the Representative with true and
complete copies of its Current Reports on Form 8-K filed on July 15, 1999 and
April 28, 1998, its report on Form 10-KSB for the fiscal year ended December 31,
1998 and all amendments thereto, its Quarterly Report on Form 10-QSB for the
fiscal quarter ended March 31, 1999, its Proxy Statement for use in connection
with its 1999 Annual Meeting of Stockholders and its 1998 Annual Report to
Stockholders and (the "Current Reports"). In addition, the Company has furnished
the Representative with true and complete copies of its Amended Quarterly
reports filed on May 17, 1999, February 5, 1999 and January 8, 1999, which
relate to quarterly periods prior to December 31, 1998 (the "Amended Reports").
The Current Reports and the Amended Reports constitute the only documents that
the Company was required to file with the Commission since December 31, 1998.
The Company has also filed all other reports required to be filed with the
Commission prior to March 31, 1999 (such reports, together with the Current
Reports are collectively referred to as the "Commission Reports"). As of their
respective filing dates, the Commission Reports and all other filings made by
the Company under the Act or Exchange Act complied in all material respects with
the requirements of the Act or the Exchange Act, as the case may be, and none of
such filings contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(z) Since its inception, the Company has not incurred any
material liability resulting from a violation of the provisions of the Act or
any state securities or Blue Sky laws.
(aa) The Company has made available to the Representative a
copy of all filings submitted to and letters received from the FDA and all
related documents and information.
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<PAGE>
(bb) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate in accordance with customary
industry standards for the conduct of its business and the value of its
properties.
(cc) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any material liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
4. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the Underwriters propose to
offer the Firm Shares for sale to the public upon the terms set forth in the
Prospectus. The Representative represents and warrants to the Company that,
assuming compliance by the Company with all relevant provisions of the Act in
connection with the Registration Statement, the Representative will conduct all
offers and sales of the Shares in compliance with the relevant provisions of the
Act and the Rules and Regulations, all applicable state securities laws and
regulations and the bylaws and rules of the NASD. The Representative represents
and warrants to the Company that the Representative is authorized to enter into
this Agreement and to act in the manner provided in this Agreement.
5. Agreements of the Company. The Company covenants and agrees with
each of the Underwriters as follows:
(a) The Company will not, either prior to the Effective Date
or thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by the Underwriter or a dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representative and the Representative shall have consented thereto, which
consent shall not be unreasonably withheld.
(b) If the Registration Statement is not yet effective, the
Company will use its best efforts to cause the Registration Statement to become
effective not later than the time indicated in Section 7(a) hereof. The Company
will notify the Representative promptly, and will confirm such advice in
writing, (i) when the Registration Statement has become effective (if later than
the date hereof) and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any
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<PAGE>
post-effective amendment thereto or any order suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
or the initiation of any proceedings for any such purpose or the threat thereof,
(iv) of the happening of any event during the period mentioned in the first
sentence of Section 5(f) that in the reasonable judgment of the Company makes
any statement of a material fact made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements of material fact
therein, in light of the circumstances in which they are made, not misleading
and (v) of receipt by the Company or any representative or attorney of the
Company during the period mentioned in the first sentence of Section 5(f) of any
other communication from the Commission relating to the Company, the
Registration Statement, any Preliminary Prospectus or the Prospectus. The
Company will use its best efforts to prevent the issuance of any order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or any order suspending the use of any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, and, if any such order
is issued, the Company will use its best efforts to obtain the withdrawal of
such order at the earliest possible moment. The Company will prepare the
Prospectus in a form approved by the Representative and will file such
Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than
the Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) of the Rules and Regulations. If the Company
has omitted any information from the Registration Statement pursuant to Rule
430A of the Rules and Regulations, the Company will use its best efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A of the Rules and Regulations and to notify the
Representative promptly of all such filings.
(c) If, at any time when a Prospectus relating to the Shares
is required to be delivered under the Act, any event has occurred as a result of
which the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or the Registration Statement, as then amended
or supplemented, would include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary at any such time to amend
or supplement the Prospectus or the Registration Statement to comply with the
Act or the Rules and Regulations, the Company will promptly notify the
Representative thereof and, in accordance with Section 5(a) hereof, will prepare
and file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(d) The Company will furnish to the Representative, without
charge, three signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto, other than exhibits incorporated by reference, and
will furnish to the other Underwriters, without charge, copies of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
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(e) The Company will comply with all the provisions of all
undertakings contained in the Registration Statement.
(f) On the Effective Date, and thereafter from time to time
for such period as the Prospectus is required by the Act to be delivered, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representative
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Underwriters and by all dealers to whom
the Shares may be sold, both in connection with the offering or sale of the
Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement of a material fact therein, in the light of the circumstances under
which it was made, not misleading, or in the Registration Statement in order to
make any statement of a material fact therein not misleading, or if it is
necessary to supplement or amend the Prospectus or the Registration Statement to
comply with law, the Company will, in accordance with Section 5(a) hereof,
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto and will deliver to each of the Underwriters, without charge,
such number of copies thereof as the Representative may reasonably request.
(g) The Company will (i) take or cause to be taken all such
actions and furnish all such information as the Representative may reasonably
request in order to qualify the Shares for offer and sale under the state
securities or Blue Sky laws of such jurisdictions as the Representative may
designate, (ii) continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Shares but not to exceed one year
from the date of this Agreement and (iii) make such applications, file such
documents and furnish such information as may be required for the purposes set
forth in the foregoing clauses (i) and (ii); provided, that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not now so
subject.
(h) For a period of five years commencing on the Effective
Date, the Company will furnish to the Representative upon request copies of such
financial statements and other periodic and special reports as the Company may,
from time to time, distribute generally to the holders of any class of its
capital stock and will furnish to the Representative upon request a copy of each
annual or other report it shall be required to file with the Commission.
(i) The Company will make generally available to holders of
its securities, as soon as may be practicable, but in no event later than the
last day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement (which need not be audited
but shall be in reasonable detail) for a period of 12 months
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commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).
(j) The Company will not for a period of 180 days after the
date hereof, without the prior written consent of the Representative, directly
or indirectly, offer, sell or otherwise dispose (or announce any offer, sale,
grant of any option to purchase or other disposition) of any shares of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
shares of Common Stock, except pursuant to Section 1 hereof and except that the
Company may grant options, and issue shares pursuant to the options granted,
under the Option Plans and the Company may issue shares pursuant to warrants,
options and shares of convertible preferred stock outstanding as of the date of
this Agreement and warrants issued to the Representative or permitted designees.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or that might reasonably be expected, to cause or
result in, or that will constitute, stabilization of the price of the Common
Stock to facilitate the sale or resale of any of the Shares.
(l) The Company shall apply the net proceeds of the sale of
the Shares as set forth in the Prospectus.
(m) The Company shall not invest, or otherwise use, the
proceeds received by the Company from the sale of the Shares to the Underwriters
in such a manner as would require the Company to register as an investment
company under the Investment Company Act.
(n) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company or if required
by The Nasdaq Stock Market, Inc., a registrar for its Common Stock.
(o) The Company will timely file all such reports, forms or
other documents as may be required from time to time under the Act, the Rules
and Regulations, the Exchange Act, and the rules and regulations promulgated
thereunder, and all such reports, forms and documents filed will comply in all
material respects as to form and substance with the applicable requirements of
the Act, the Rules and Regulations, the Exchange Act, and the rules and
regulations promulgated thereunder.
6. Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company will
pay, or reimburse if paid by the Representative, all costs and expenses incident
to the performance of its obligations under this Agreement and the transactions
contemplated by this Agreement, including, but not limited to, costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits thereto, each Preliminary Prospectus, the
Prospectus, any amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Warrant Agreement, any Dealer
Agreements and any Underwriters' Questionnaire, (iv) furnishing (including costs
of shipping and
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mailing) such copies of the Registration Statement, the Prospectus and any
Preliminary Prospectus, and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold, (v) the quotation of the
Shares on The Nasdaq Stock Market, (vi) any filings required to be made by the
Underwriters with the NASD, (vii) the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 5(g) hereof, including the
reasonable fees, disbursements and other charges of counsel to the Underwriters
in connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (viii) counsel and accountants to the
Company and (ix) the transfer agent, and any registrar, for the Shares. Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will reimburse the Representative for all
of its accountable out-of-pocket fees and expenses, including legal fees,
incurred by it in connection herewith, up to an aggregate amount of $125,000.
7. Conditions to the Obligations of the Underwriters. The obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representative not later than 4:00 p.m., New
York time, on the date immediately preceding the date of this Agreement or at
such later date and time as shall be consented to in writing by the
Representative and all filings required prior to such effectiveness by Rule 424
and Rule 430A of the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representative and the Representative consented thereto, such
consent not to be unreasonably withheld, and the Representative shall have
received certificates, dated the Closing Date and the Option Closing Date, if
any, and signed on behalf of the Company by the Chief Executive Officer of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of the foregoing clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the general affairs, business, business
prospects, properties, management, condition (financial or otherwise), or
results of operations of the Company, whether or not arising from
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transactions in the ordinary course of business, and (ii) the Company shall not
have sustained any material loss or interference with its business, assets or
properties from fire, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the Registration
Statement and the Prospectus.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers, directors or stockholders in their capacities as such, or any of its
assets or properties, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the general affairs, business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the date
hereof, at the Closing Date and, with respect to the Option Shares, if any, at
the Option Closing Date, as if made on such date, and all covenants and
agreements contained herein to be performed on the part of the Company and all
conditions contained herein to be fulfilled or complied with by the Company at
or prior to the Closing Date and, with respect to the Option Shares, if any, at
or prior to the Option Closing Date, shall have been fully performed, fulfilled
or complied with in all material respects.
(f) The Representative shall have received an opinion, dated
the Closing Date and the Option Closing Date, as applicable, from Fulbright &
Jaworski, L.L.P., New York, New York, counsel for the Company, to the following
effect:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of Delaware;
(ii) The Company is duly licensed or qualified and in
good standing as a foreign corporation in each state in which it owns or leases
property.
(iii) The authorized capital stock of the Company
conforms in all material respects as to legal matters to the description
contained in the Prospectus. The authorized capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization". All of the
issued and outstanding shares of Common Stock have been, and the Shares, the
Warrants and the Warrant Shares, when issued, delivered and paid for (A) by the
Underwriters in accordance with the terms of this Agreement (in the case of the
Shares) or (B) by the Representative or its permitted designees in accordance
with the terms of the Warrants and the Warrant Agreement (in the case of the
Warrants and the Warrant Shares), will be, duly authorized, validly issued,
fully paid and nonassessable and will not be subject to any preemptive or
similar right arising under the Delaware General Corporation Law, as amended,
the Company's Certificate of Incorporation or By-laws, or any agreement listed
as an Exhibit to the Registration Statement (the "Exhibits"). To such counsel's
actual knowledge, neither the filing of the Registration Statement nor the
offering or sale of the Shares pursuant to this Agreement gives rise to any
rights for the registration of any shares of Common
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<PAGE>
Stock or other securities of the Company pursuant to any of the Exhibits, except
as disclosed in the Registration Statement, or such rights as have been
satisfied, waived or terminated;
(iv) Based on such counsel's review of the minutes of
the meetings of the Company's stockholders and board of directors and committees
of the board of directors and a certificate of officers of the Company (the
"Certificate"), except as described in the Registration Statement and the
Prospectus, there are no options, warrants, agreements, contracts or other
rights in existence to purchase or acquire from the Company any shares of
capital stock of the Company;
(v) The Registration Statement has become effective
under the Act, and, to such counsel's actual knowledge, (A) no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto has been issued under the Act, and (B) no proceedings for that purpose
have been instituted, are pending or are threatened by the Commission under the
Act;
(vi) The Registration Statement and, if any, each
amendment thereto and the Prospectus and, if any, each amendment and supplement
thereto (except the financial statements, schedules and other financial data
contained therein, as to which such counsel need not express any opinion),
complies as to form in all material respects with the requirements of the Act
and Rules and Regulations;
(vii) The descriptions of statutes, litigation,
contracts and other documents, insofar as such descriptions relate to matters of
law, contained in the Registration Statement and in the Prospectus under the
captions "Risk Factors Effect of anti-takeover provisions could inhibit the
acquisition of Vion," "Business -- Research and Development," "Management - Our
Executive Officers and Directors," "-- Executive Compensation," and "--
Indemnification of Directors and Officers," "Related Party Transactions," and
"Description of Capital Stock" fairly present in all material respects summaries
of the information required to be shown;
(viii) To such counsel's actual knowledge, there are
no contracts or documents which are required by the Act to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not so described or filed;
(ix) Based solely on the Certificate and the results
of an inquiry of the partners of such counsel's firm (the "Inquiry"), to such
counsel's actual knowledge, there is not pending or threatened against the
Company any action, suit, arbitration, claim, governmental or other proceeding
(informal or formal) or investigation before or by any Governmental Body which
is required to be disclosed in the Registration Statement or the Prospectus
which is not so disclosed therein;
(x) The Company has the corporate power and authority
to execute, deliver and comply with its obligations under each of the
Transaction Documents and to consummate the transactions provided for therein;
and the execution and delivery by the
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Company of, and the performance by the Company under, each of the Transaction
Documents have been duly authorized by all requisite corporate action on behalf
of the Company, and such counsel shall confirm to you that each of the
Transaction Documents has been executed and delivered on behalf of the Company
by a duly authorized officer of the Company.
(xi) The execution and delivery of the Transaction
Documents by the Company, and the Company's compliance with the terms of the
Transaction Documents (A) do not result in the creation or imposition of any
Encumbrance upon any property or assets of the Company pursuant to the terms or
provisions of, or constitute a breach of, or default under, any material
contract or other material agreement included as an Exhibit to the Registration
Statement, and (B) do not violate (x) the Certificate of Incorporation or
By-laws of the Company, (y) any laws which are known to such counsel to be
applicable to the Company where such violation would reasonably be expected to
have a material adverse effect on the validity, performance or enforceability of
any of the terms of this Agreement applicable to the Company or relating to the
rights and remedies of the Underwriters under the Transaction Documents or (z)
based solely on the Certificate and the Inquiry, any of the Company's existing
obligations under any judgment, decree or order of any arbitrator or
Governmental Body naming the Company; no consent, approval, authorization or
order of, or filing with, any Governmental Body is legally required for the
execution, delivery and performance of any Transaction Document by the Company,
other than for the registration of shares issuable upon the Warrants the terms
of which are set forth in the Warrant Agreement, except such as may be required
under the Act and the Rules and Regulations, such as may be required by the
bylaws and rules of the NASD in connection with the purchase and distribution by
the Underwriters of the Shares, the purchase by the Representative or its
permitted designees of the Warrants or the purchase of the Warrant Shares upon
exercise of the Warrants and such as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution by the
Underwriters of the Sharess, the purchase by the Representative or such
designees of the Warrants or the purchase of the Warrant Shares upon exercise of
the Warrants;
(xii) To such counsel's actual knowledge, the Company
is not an "investment company" as such term is defined in the Investment Company
Act.
In addition, such counsel shall state that in the course of
the preparation of the Registration Statement and the Prospectus, such counsel
has participated in conferences with officers and other representatives of the
Company, representatives of the independent accountants of the Company,
representatives of the Representative and representatives of counsel for the
Underwriters, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and at which such counsel inquired
of the representatives of the Company as to the materiality of the facts
disclosed
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to such counsel and, although such counsel does not pass upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of any
statement contained in the Registration Statement or the Prospectus and such
counsel has made no independent check or verification thereof, based, in part,
upon the foregoing (relying as to materiality to a large extent upon the
officers and representatives of the Company), no facts have come to such
counsel's attention that have led such counsel to believe that the Registration
Statement (except as to the financial statements and notes thereto and other
financial data included therein or excluded therefrom as to which such counsel
need not express any opinion or belief), as of the date of effectiveness
contained an untrue statement of material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or that the Prospectus (except as to the financial
statements and the notes thereto and other financial data included therein or
excluded therefrom as to which such counsel need not express any opinion or
belief), as of its date or as of the date of such opinion, contained or contains
an untrue statement of material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may (i) state that
such counsel expresses no opinion as to the laws of any jurisdiction other than
the laws of the State of New York, the Delaware General Corporation Law and the
federal laws of the United States and expresses no opinion concerning the FD&C
Act (as defined below) or related rules and regulations or any intellectual
property law and (ii) may rely, as to matters of fact on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (f) shall include any amendment or supplement thereto at the date
of such opinion.
(g) The Representative shall have received an opinion, dated
the Closing Date and the Option Closing Date, as applicable, from Pennie &
Edmonds LLP, New York, New York, patent counsel for the Company, to the
following effect:
(i) The statements set forth in the Registration
Statement and the Prospectus relating to U.S. patent matters, under the captions
"Risk Factors - We depend heavily on patents and trade secrets which may not
adequately protect our technologies from use by others" and "Business - Patents,
Licenses and Trade Secrets" (the "Intellectual Property Portion"), insofar as
such statements constitute matters of law, legal conclusions or summaries of
legal matters or proceedings relating to the Company's U.S. patents and U.S.
patent applications are complete and accurate in all material respects and
present fairly the information purported to be shown;
(ii) To such counsel's best knowledge, (A) the
Company is or will be the assignee of record for each
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provisional patent applications listed on Schedule C to such opinion, (B)
Yale University and the Company are, or will be, assignees of record for each
of the patent applications listed on Schedule D to such opinion, (C) the
Company and Memorial Sloan Kettering Cancer Institute will be assignees of
record for the patent application listed on Schedule E of such opinion and (D)
the Company is not the assignee of any of the patents or patent applications
listed on Schedules A, B and F of such opinion;
(iii) To such counsel's best knowledge, except as
described in the Schedules to such opinion and except for any rights reserved to
the U.S. government, no third party has any ownership rights to any of the U.S..
patents listed in Schedules C, D, E, F and G of such opinion;
(iv) While there can be no guarantee that any
particular patent application will issue as a patent, each of the U.S. patent
applications listed on Scheduled C, D, E and F was properly filed and, if
appropriate, is being diligently prosecuted in the USPTO;
(v) To such counsel's best knowledge, except as set
forth in Appendix I to such opinion, the Company has not received any
communication or notice, written or oral, relating to the potential infringement
of, or conflict with, any patents, trademarks, copyrights, trade secrets, or
proprietary rights, of others;
(vi) To such counsel's best knowledge, without any
searches having been conducted for the purpose of rendering such counsel's
opinion, no third party is infringing any of the U.S. patents listed on
Schedules A and B of such opinion;
(vii) To such counsel's best knowledge, each of the
U.S. patent applications listed on Schedules C, D, E, F, and G recited
patentable subject matter; and
(viii) To such counsel's best knowledge, for each
U.S. patent application listed on Schedules C, D, E, F and G, all information
known, to date, to be "material to patentability," as defined in 37 C.F.R. 'SS'
1.56, has been disclosed, or will be disclosed, if required, pursuant to 37
C.F.R. 'SS' 1.97, to the USPTO.
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In rendering any such opinion, such counsel may (i) state that
such counsel expresses no opinion as to the laws of any jurisdiction other than
the federal laws of the United States and (ii) may rely, as to matters of fact
on certificates of responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (g) shall include any amendment or supplement thereto at the date
of such opinion.
(h) The Underwriter shall have received an opinion, dated the
Closing Date and the Option Closing Date, as applicable, from Piper & Marbury
L.L.P., counsel to the Underwriter, which opinion shall be satisfactory in all
respects to the Underwriter.
(i) Concurrently with the execution and delivery of this
Agreement, or, if the Company elects to rely on Rule 430A of the Rules and
Regulations, on the date of the Prospectus, the Accountants shall have furnished
to the Representative a letter, dated the date of its delivery (the "Original
Letter"), addressed to the Representative and in form and substance satisfactory
to the Representative, to the effect that:
(i) They are independent certified public accountants
with respect to the Company within the meaning of the Act, the Rules and
Regulations, the Exchange Act and the rules and regulations thereunder;
(ii) In their opinion, the audited financial
statements and schedules examined by them and included in the Registration
Statement, or incorporated therein by reference, and in the Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Act, the Rules and Regulations, the Exchange Act and the rules and
regulations promulgated thereunder;
(iii) On the basis of a reading of the latest
available interim unaudited financial statements of the Company, carrying out
certain specified procedures (which do not constitute an audit made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the comments set
forth in this paragraph (iii), a reading of the minute books of the
stockholders, the board of directors and any committees thereof of the Company
and inquiries of certain officials of the Company who have responsibility for
financial and accounting matters, nothing came to their attention that caused
them to believe that at a specific date not more than five business days prior
to the date of such letter, there were any changes in the shares of capital
stock or long-term indebtedness of the Company, in each case compared with
amounts shown on the March 31, 1999 balance sheet included in the Registration
Statement and the Prospectus, or for the period from April 1, 1999 to such
specified date there were any decreases, as compared with the corresponding
period of the preceding fiscal year, in net revenues, except in all instances
for changes, decreases or increases set forth in such letter or as set forth in
or contemplated in the Prospectus; and
(iv) They have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the general
accounting records of the Company and are included in its Annual Report on
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Form 10-KSB for the fiscal year ended December 31, 1998 and have compared such
amounts, percentages and financial information with such records of the Company
and with information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation.
In the event that the letter referred to above sets forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall, if requested by the
Representative, be accompanied by a written explanation of the Company as to the
significance thereof and (B) such changes, decreases or increases do not, in the
sole judgment of the Representative, make it impractical or inadvisable to
proceed with the purchase and delivery of the Shares as contemplated by the
Registration Statement, as amended as of the date hereof.
At the Closing Date and, as to the Option Shares, if any, the
Option Closing Date, the Accountants shall have furnished to the Representative
a letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Letter, that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in such
letter) not more than five days prior to the Closing Date or the Option Closing
Date, as the case may be, that would require any change in the Original Letter
if it were required to be dated and delivered at the Closing Date or the Option
Closing Date, as the case may be.
(j) At the Closing Date and, as to the Option Shares, if any,
the Option Closing Date, there shall be furnished to the Representative an
accurate certificate, dated the date of its delivery, signed on behalf of the
Company by each of the Chief Executive Officer and the Chief Financial Officer
of the Company, in form and substance satisfactory to the Representative, to the
effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of the date of
such certificate, (x) neither the Registration Statement, nor any amendment or
supplement thereto, if any, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and (y) neither the
Prospectus, nor any amendment or supplement thereto, if any, contains any untrue
statement of a material fact or omits 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, and (B) since the
Effective Date, no event has occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect;
(ii) Each of the representations and warranties of
the Company contained in the Transaction Documents were, when originally made,
and are, at the time such certificate is delivered, true and correct in all
material respects; each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been duly, timely and
fully performed in all material respects and each condition herein required to
be
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complied with by the Company on or prior to the delivery of such certificate has
been duly, timely and fully complied with in all material respects.
(iii) The Registration Statement has become effective
and no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement or any amendment thereto
or the Prospectus has been issued, and no proceedings for that purpose have been
instituted or, to the Company's knowledge, are threatened or contemplated by the
Commission.
(k) The Shares shall have been qualified for sale in such
states as the Representative may reasonably designate and each such
qualification shall be in full force and effect and not subject to any stop
order or other proceeding on the Closing Date and the Option Closing Date, if
any.
(l) The Representative shall have received at or prior to the
Closing Date from Piper & Marbury L.L.P. a memorandum or summary, in form and
substance satisfactory to the Representative, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the state
securities or Blue Sky laws of such jurisdictions as the Representative may
reasonably have designated to the Company.
(m) The Company shall (i) have received approval to list its
Common Stock on the Nasdaq National Market, including the Firm Shares and Option
Shares, or (ii) have received written consent from the Representative agreeing
to the delay of such approval by the Nasdaq National Market or (iii) have
received written consent from the Representative that such approval is not
required and (iv) not have received any notice of delisting of any shares of
Common Stock.
(n) The Lockup Agreements and the Warrant Agreement shall be
in full force and effect, and the Company shall have duly issued, sold and
delivered the Warrants to the Representative or its permitted designees.
(o) The Company shall have furnished to the Representative
such certificates, letters and other documents, in addition to those
specifically mentioned herein, as the Representative may have reasonably
requested as to the accuracy and completeness at the Closing Date and the Option
Closing Date, if any, of any statement in the Registration Statement or the
Prospectus, as to the accuracy at the Closing Date and the Option Closing Date,
if any, of the representations and warranties of the Company, as to the
performance by the Company of its obligations under the Transaction Documents or
as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Underwriters.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you.
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The Company will furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably request.
If any of the conditions hereinabove provided for in this
Section 7 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representative by notifying the Company of such termination in writing at
or prior to the Closing Date or the Option Closing Date, as the case may be.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which they, or any of them, may become subject under the
Act or other federal or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any misrepresentation or breach of
warranty made by the Company in Section 3 of this Agreement, (ii) any untrue
statement or alleged untrue statement of any material fact contained in (A) any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or (B)
any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares
under the securities or Blue Sky laws thereof or filed with the Commission, the
NASD or any securities association or securities exchange (each, an
"Application"), or (iii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or any
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse, as incurred, each
Underwriter and each such other person for any legal or other expenses
reasonably incurred by such Underwriter or such other person in connection with
investigating, defending or appearing as a third-party witness in connection
with any such loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of an untrue statement or omission
or alleged untrue statement or omission in any of such documents made or omitted
to be made in reliance upon and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representative expressly
for inclusion therein; provided, further, that such indemnity with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter (or
any such other person) from whom the person asserting any such loss, claim,
damage, liability or action purchased Shares which are the subject thereof to
the extent that any such loss, claim, damage or liability (i) results from the
fact that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act and (ii)
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arises out of or is based upon an untrue statement or omission of a material
fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 5(f) hereof. This indemnity agreement
will be in addition to any liability that the Company might otherwise have. The
Company will not, without the prior written consent of the Representative,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Underwriter or any person who
controls such Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to each claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of each Underwriter and each such other person from all liability arising out of
such claim, action, suit or proceeding.
(b) Each Underwriter will indemnify and hold harmless the
Company, the directors, officers, employees and agents of the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several (and actions in respect thereof), to
which they, or any of them, may become subject under the Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or any Application, or (ii) the omission or the
alleged omission to state in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus, or any Application, a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made or omitted to
be made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representative expressly for use
therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, the Company and each such other person for
any legal or other expenses reasonably incurred by the Company and each such
other person in connection with investigating, defending or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or any action in respect thereof. The Company acknowledges that, for all
purposes under this Agreement, the statements set forth under the heading
"Underwriting" and the information set forth in the last paragraph on the front
cover page (insofar as such information relates to any Underwriter) and the last
two paragraphs on the inside front cover of any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing to the Company
by the Representative expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that each Underwriter might otherwise have. No
Underwriter will, without the prior written consent of the Company, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification is
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sought hereunder (whether or not the Company or any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to each claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Company and each such other person from all liability arising out of such claim,
action, suit or proceeding.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
or parties under this Section 8, notify such indemnifying party or parties of
the commencement thereof; but the omission so to notify the indemnifying party
or parties will not relieve it or them from any liability which it or they may
have to any indemnified party under the foregoing provisions of this Section 8
or otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party or parties and the indemnified party shall have
reasonably concluded that there may be one or more legal defenses available to
it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party or parties, the indemnifying party or
parties shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or parties shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party or parties. After notice from the indemnifying party or
parties to such indemnified party of its or their election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party or parties will not be liable to such
indemnified party under this Section 8 for any legal or other expenses other
than reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that in connection with such
action the indemnifying party or parties shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction arising
out of the same general allegations or circumstances, designated by the
Representative in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions), or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party or parties. After such notice from the indemnifying party or
parties to such indemnified party, the indemnifying party or parties will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party or parties.
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
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<PAGE>
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party or parties, on the one hand, and the indemnified party, on the other, from
the offering of the Shares or (ii) if, but only if, the allocation provided by
the foregoing clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand, and the indemnified party, on the other, in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total proceeds from
the offering of the Shares (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. Relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Representative on behalf of the Underwriters, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 8(d) were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities (or actions in respect thereof) referred to above
in this Section 8(d) shall be deemed to include 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 8(d), the aggregate amount that each Underwriter shall be required to
contribute for all claims in respect of this Section 8 shall be limited to the
amount of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter. Notwithstanding the provisions of this Section
8(d), the Company shall not be required to contribute any amount in excess of
the amount by which the total proceeds received by it from the sale of the
Shares under this Agreement, before deducting expenses, exceeds the aggregate
amount of any damages that the Company has otherwise been required to pay in
respect of the same or any substantially similar claim. No person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 8(d), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act will have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, will have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 8(d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any
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<PAGE>
action, suit or proceeding against such party in respect of which a claim for
contribution may be made under this Section 8(d), notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation(s) it or they may have hereunder or otherwise than under this
Section 8(d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
9. Termination. The obligations of the Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, if any, on or prior to the Option Closing Date),
by notice to the Company from the Representative, without liability on the part
of any Underwriter to the Company, if, prior to delivery and payment for the
Firm Shares (or the Option Shares, if any, as the case may be), (i) the Company
shall have failed, refused or been unable, at or prior to such Closing Date, to
perform all obligations on its part to be performed under the Transaction
Documents, (ii) any of the representations or warranties of the Company are not
accurate in any respect, (iii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have occurred any material adverse change in the general affairs,
business, properties, management, condition (financial or otherwise), net worth
or results of operation, whether or not arising in the ordinary course of
business, (iv) trading in the shares of Common Stock or securities generally
shall have been suspended by the Commission or by The Nasdaq Stock Market, (v)
minimum or maximum prices shall have been established for the shares of Common
Stock or securities generally on either The Nasdaq Stock Market or the New York
Stock Exchange, or additional material governmental restrictions, not in force
on the date of this Agreement, shall have been imposed upon trading in
securities generally by any such market or exchange or by order of the
Commission or any court or other governmental authority, (vi) a general banking
moratorium shall have been declared by the United States or New York State
authorities, (vii) there shall have been enacted, published, decreed or
otherwise promulgated any statute, regulation, rule or order of any court or
other Governmental Body which in the opinion of the Representative materially
and adversely affects or may materially and adversely affect the business or
operations of the Company or (viii) any material adverse change in the financial
or securities markets in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred, the effect of
any of which is such as to make it, in the sole judgment of the Representative,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus. This Agreement may also be terminated as
provided in Section 7 of this Agreement. Any termination pursuant to this
Section 9 shall be without liability of any party to any other party except as
provided in Sections 6 and 8 hereof.
10. [Intentionally Omitted]
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11. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the Underwriters
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Company, any of its officers
or directors, any Underwriter or any controlling person referred to in Section 8
hereof and (ii) delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections 6
and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
12. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 4 Science
Park, New Haven, Connecticut 06511, Attention: Chief Executive Officer,
Telephone: (203) 498-4210 and Facsimile: (203) 498-4211, with a copy to
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103,
Attention: Paul Jacobs, Esq. and Lawrence A. Spector, Esq., Telephone: (212)
318-3000 and Facsimile: (212) 752-5958 or (b) if to the Underwriters, to the
Representative at the offices of Brean Murray & Co., Inc., 570 Lexington Avenue,
New York, New York 10022-6822 Attention: Mr. A. Brean Murray and Mr. Harrison
Bubrosky, Telephone: (212) 702-6500 and Facsimile: (212) 702-6649, with a copy
to Piper & Marbury L.L.P., 1251 Avenue of the Americas, New York, New York
10020-1104, Attention: Michael Hirschberg, Esq., Telephone: (212) 835-6270 and
Facsimile: (212) 835-6001. Any such notice shall be effective only upon receipt.
Any notice under Section 8 or 9 hereof may be made by telephone or facsimile but
if so made shall be subsequently confirmed in writing.
13. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the Underwriters, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 8 of this Agreement shall also be for the
benefit of any person or persons who control any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Underwriters contained in Section 8 of this Agreement shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act. No purchaser of Shares from any Underwriter shall be deemed a
successor because of such purchase. This Agreement shall not be assignable by
any party hereto without the prior written consent of the other parties.
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS
OF LAWS.
15. Submission to Jurisdiction. The Company hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of the Supreme Court of the State of New York sitting
in New York County (including its Appellate Division), and of any other
appellate court in the State of New York, for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company irrevocably waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Underwriters.
Very truly yours,
VION PHARMACEUTICALS, INC.
By:
----------------------------------
Alan Kessman
President and Chief Executive Officer
Confirmed as of the date first
above mentioned:
BREAN MURRAY & CO., INC.
By:
----------------------------------
Harrison Bubrosky
Executive Vice President and Senior Managing Director
Acting on behalf of the Underwriters
Named in Schedule I hereto.
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Exhibit 4.4
WARRANT AGREEMENT
By and Between
VION PHARMACEUTICALS, INC.
and
BREAN MURRAY & CO., INC.
Dated as of ____ __, 1999
<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of ____ __, 1999 by and between VION
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and BREAN MURRAY
& CO., INC. (the "Underwriter") (the Company and the Underwriter are referred to
collectively herein as the "Parties").
The Company proposes to issue to the Underwriter warrants as hereinafter
described (the "Warrants") to purchase up to an aggregate of 200,000 shares of
the Company's Common Stock, $0.01 par value per share (the "Common Stock"),
subject to adjustment as provided in Section 8 hereof (such 200,000 shares, as
adjusted, being hereinafter referred to as the "Shares"). Each warrant entitles
the holder ("Holder") thereof to purchase one share of Common Stock. All
capitalized terms used herein and not otherwise defined herein shall have the
same meanings as in that certain underwriting agreement, of even date herewith,
by and between the Company and the Underwriter (the "Underwriting Agreement").
NOW, THEREFORE, in consideration of the following promises and mutual
agreements and for other good and valuable consideration, the Parties agree as
follows:
1. Issuance of Warrants; Form of Warrant. On the Closing Date the Company
will issue, sell and deliver the Warrants to the Underwriter or its bona fide
officers for an aggregate price of $100. The Warrants shall be issued to the
Underwriter or such designees in the amounts set forth on Schedule I attached
hereto. The form of the Warrant and the Form of Election to Purchase attached
thereto shall be substantially as set forth on Exhibit A attached hereto. The
Warrants shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future President or any Vice President of the
Company, under its corporate seal, affixed or in facsimile, and attested by the
manual or facsimile signature of the present or any future Secretary or
Assistant Secretary of the Company. The Underwriter and each other Holder,
severally and not jointly, represents and warrants to the Company that (i) such
Holder is acquiring the Warrants, and any Shares acquired upon exercise of any
Warrants, for such Holder's own account and not with a view to, or for sale in
connection with, any distribution of the Warrants or any shares of Common Stock,
unless such distribution is registered or exempt from registration under the
Securities Act of 1933, as amended (the "Act"), and any applicable state and
foreign securities or blue sky laws and (ii) such Holder is aware that the
Warrants and the Shares have not been registered under the Act or the securities
or blue sky laws of any state or other jurisdiction, and that the Warrants may
not be exercised and the Warrants and the Shares may not be resold (and the
Holder covenants not to resell them) unless they are registered under applicable
federal and state securities laws or unless exemptions from all such applicable
registration requirements are available, and that the Warrants and the Shares
will be legended to indicate the foregoing restrictions.
2. Registration. The Warrants shall be numbered and shall be registered in
a Warrant register (the "Warrant Register"). The Company shall be entitled to
treat the registered holder of any Warrant on the Warrant Register as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such
<PAGE>
Warrant on the part of any other person, and shall not be liable for any
registration or transfer of Warrants that are registered or are to be registered
in the name of a fiduciary or the nominee of a fiduciary. The Warrants shall be
registered initially in the name of the Underwriter in such denominations as the
Underwriter may request in writing from the Company; provided, however, that the
Underwriter may designate that all or a portion of the Warrants be issued in
varying amounts directly to its bona fide officers and not to the Underwriter.
Such designation will only be made by the Underwriter if it determines that such
issuances would not violate the interpretation of the Board of Governors of the
National Association of Securities Dealers, Inc. (the "NASD") relating to the
review of corporate financing arrangements.
3. Transfer of Warrants. The Warrants will not be sold, transferred,
assigned or hypothecated, in whole or in part, prior to the first anniversary of
the effective date of the Registration Statement (the "Effective Date"), and
thereafter only to bona fide officers, directors, stockholders, employees or
registered representatives of the Underwriter upon written request to the
Company (including a certificate of the Holder that the transferee is a
permitted transferee under this Section 3) delivered in accordance with Section
12 hereof and upon delivery of the Warrant Certificate to the Company with the
form of assignment at the end thereof duly endorsed by the Holder or by its duly
authorized attorney or representative. In all cases of transfer by an attorney,
the original power of attorney, duly approved, or an official copy thereof, duly
certified, shall be deposited with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced and may be required
to be deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the persons
entitled thereto. Upon surrender of the Warrants to the Company or its duly
authorized agent, any of the Warrants may be exchanged at the option of its
Holder for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock. The Company may require payment of a sum sufficient to cover all
taxes and other governmental charges that may be imposed in connection with any
transfer, exchange or other disposition of the Warrants or Shares. However, the
Company shall have no obligation to cause Warrants or Shares to be transferred
on its books to any person, if such transfer would violate the Act, the rules
and regulations promulgated thereunder (the "Rules and Regulations") or
applicable state securities laws, rules and regulations.
4. Term of Warrants; Exercise of Warrants.
(a) Term of Warrants. Each Warrant entitles the registered owner
thereof to purchase one fully paid and nonassessable Share at a purchase price
of $____ per Share (as adjusted from time to time pursuant to the provisions
hereof, the "Exercise Price") at any time from the first anniversary of the
Effective Date until 5:00 p.m., New York City time, on ____ __, 2004 (the
"Warrant Expiration Date").
(b) Exercise of Warrants. The Exercise Price and the Shares issuable
upon exercise of Warrants are subject to adjustment upon the occurrence of
certain events, pursuant
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to the provisions of Section 8 of this Agreement. Subject to the provisions of
this Agreement, and in addition to the right to surrender Warrants without any
cash payment as set forth in subsection (c) below, each Holder shall have the
right to purchase from the Company the number of fully-paid and nonassessable
Shares specified in such Warrants, upon (i) surrender to the Company, or its
duly authorized agent, of such Warrants, with the Form of Election to Purchase
attached thereto duly completed and signed, with signatures guaranteed by a
member firm of a national securities exchange, a commercial bank (not a savings
bank or savings and loan association) or trust company located in the United
States or a member of the NASD, (ii) payment to the Company of the Exercise
Price, as adjusted in accordance with the provisions of Section 8 of this
Agreement, for the number of Shares in respect of which such Warrants are then
exercised and (iii) compliance with the requirements of the Act, the Rules and
Regulations and applicable state securities laws, rules and regulations (clauses
(i), (ii) and (iii) above are hereinafter collectively referred to as the
"Exercise Requirements"). No adjustment shall be made for any cash dividends
paid to stockholders of record before the date on which the Warrants are
exercised. Upon completion of the Exercise Requirements, the Company shall issue
and cause to be delivered, no later than three (3) trading days following such
surrender, to the Holders or (subject to Section 3) to such person or persons
and in such name or names as such Holder may designate, a certificate or
certificates for the number of full Shares so purchased upon the exercise of
such Warrants, together with cash, in respect of any fractional Shares otherwise
issuable upon such surrender, as provided in Section 9 of this Agreement. Such
certificate or certificates shall be deemed to have been issued and any person
so named therein shall be deemed to have become a holder of record of such
Shares as of the date of the completion of the Exercise Requirements; provided,
however, that if, at the date of surrender of such Warrants, the transfer books
for the shares of Common Stock or other class of securities issuable upon the
exercise of such Warrants shall be closed, the certificates for the Shares shall
be issuable as of the date such books shall next be opened (whether before, on
or after the Warrant Expiration Date) and until such date the Company shall be
under no duty to deliver any certificate for such Shares; provided further,
however, that the transfer books of record, unless otherwise required by law,
shall not be closed at any one time for a period longer than twenty (20) days.
The rights of purchase represented by the Warrants shall be exercisable, at the
election of the Holder(s) thereof, either in full or, from time to time, in part
and, if any Warrant is exercised in respect of less than all of the Shares
issuable upon such exercise at any time prior to the Warrant Expiration Date, a
new Warrant or Warrants will be issued for the remaining number of Shares
specified in the Warrant so surrendered.
(c) Payment of Exercise Price. Payment of the Exercise Price may be
made in cash, by wire transfer of immediately available funds or by certified or
official bank check payable to the order of the Company. In addition and in lieu
of any cash payment, the Holder of the Warrants shall have the right at any
time, and from time to time, to exercise the Warrants in full or in part by
surrendering the Warrants in exchange for the number of Shares equal to the
product of (x) the number of shares as to which the Warrants are being exercised
multiplied by (y) a fraction, the numerator of which is the Market Price (as
defined in Section 8(d) below) of the Shares less the Exercise Price and the
denominator of which is such Market Price.
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5. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Shares upon the exercise of Warrants;
provided, however, that the Company shall not be required to pay any taxes
payable in connection with the transfer of any certificates for Shares in a name
other than that of the Holder of Warrants in respect of which such Shares are
issued, which taxes shall be paid by the Holder.
6. Mutilated or Missing Warrants. In the event any of the Warrants are
mutilated, lost, stolen or destroyed, the Company shall issue and deliver (i) in
exchange for and upon cancellation of the mutilated Warrant, or (ii) in lieu of
and substitution for the lost, stolen or destroyed Warrant, a new Warrant of
like tenor representing an equivalent right or interest; provided, however, that
the Company shall not be required to issue such substitute Warrant unless it
receives evidence reasonably satisfactory to the Company of ownership of such
Warrant and of such mutilation, loss, theft or destruction of such Warrant and
indemnity and affidavit of loss, if requested, reasonably satisfactory to the
Company. An applicant for such substitute Warrant shall also comply with such
other reasonable regulations and pay such other reasonable charges and expenses
as the Company may prescribe.
7. Reservation of Shares, etc. The Company has reserved, and shall at all
times keep reserved, out of the authorized and unissued shares of Common Stock,
a number of shares of Common Stock sufficient to provide for the exercise of the
Warrants. [Name of Transfer Agent], transfer agent for the Common Stock, and any
subsequent transfer agent for the Company's securities issuable upon the
exercise of the Warrants (the "Transfer Agent") will be irrevocably authorized
and directed at all times until the Warrant Expiration Date to reserve such
number of authorized and unissued shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent.
The Company will supply the Transfer Agent with duly executed certificates for
such purpose and will itself provide or make available any cash distributable as
provided in Section 9 of this Agreement. All Warrants surrendered upon exercise
in compliance with this Agreement shall be canceled, and such canceled Warrants
shall constitute sufficient evidence of the number of Shares that are issuable
upon the exercise of such Warrants. No shares of Common Stock shall be subject
to reservation in respect of unexercised Warrants after the Warrant Expiration
Date.
8. Adjustments of Exercise Price and Number of Shares. The Exercise Price
and the number and kind of securities issuable upon exercise of each Warrant
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(a) If the Company (i) declares a dividend on its Common Stock in
shares of Common Stock or makes a distribution to all holders of its Common
Stock in shares of Common Stock without charge to such holders, (ii) subdivides
its outstanding shares of Common Stock, (iii) combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issues by
reclassification of its Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger in which
the Company is the surviving entity, but excluding those referred to in
paragraph (b) below), the number and kind of Common Stock purchasable upon
exercise of each Warrant immediately prior thereto shall be adjusted so that the
Holder of each
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Warrant shall be entitled to receive the kind and number of shares of Common
Stock or other securities of the Company which such Holder would have owned or
have been entitled to receive after the happening of any of the events described
above, had such Warrant been exercised immediately prior to such event or any
record date with respect thereto. Any adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to immediately after the record date, if any, for such event.
(b) If the Company issues rights, options or warrants to all holders
of its Common Stock, without any charge to such holders, entitling them to
subscribe for or to purchase shares of Common Stock at a price per share lower
than the then current Market Price per share of Common Stock (as defined in
paragraph (d) below) at the record date mentioned below, the Holders of
unexercised Warrants as of such record date, upon exercise of such Warrants,
shall receive the same rights, options or warrants that such Holder would have
received or have been entitled to receive after such issuance, had such Warrants
been exercised immediately prior to such issuance or any record date with
respect thereto. Such adjustment shall be made whenever rights, options or
warrants are issued as described above and shall become effective retroactively
to immediately after the record date for the determination of stockholders
entitled to receive such rights, options or warrants.
(c) If the Company distributes to all holders of its Common Stock,
without any charge to such holders, shares of its stock other than shares of
Common Stock or evidences of its indebtedness or assets (excluding cash
dividends and dividends or distributions referred to in paragraph (a) or (b)
above) or rights, options or warrants or other securities convertible into or
exchangeable for shares of Common Stock (excluding those referred to in
paragraph (a) or (b) above), then in each case the Holders of unexercised
Warrants as of the record date mentioned below, upon exercise of such Warrants,
shall receive the same distribution that such Holder would have received or have
been entitled to receive after the distribution, had such Warrants been
exercised immediately prior to the distribution or any record date with respect
thereto. Such adjustment shall be made whenever any such distribution is made as
described above and shall become effective on the date of distribution
retroactive to immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(d) For the purpose of any computation under paragraph (b) of this
Section 8, the current "Market Price" per share of Common Stock at any date
shall be the average of the daily closing prices for fifteen (15) consecutive
trading days commencing twenty (20) trading days before the date of such
computation. The closing price for each day shall be the last reported sale
price regular way or, if no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such day, in either
case on the principal national securities exchange on which the shares are
listed or admitted to trading, or if they are not listed or admitted to trading
on any national securities exchange, but are traded in the over-the-counter
market, the closing sale price of the Common Stock or, if no sale is publicly
reported, the average of the representative closing bid and asked quotations for
the Common Stock on The Nasdaq National or SmallCap Market or any comparable
system, or if
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the Common Stock is not listed on The Nasdaq Stock Market or a comparable
system, the closing sale price of the Common Stock or, if no sale is publicly
reported, the average of the closing bid and asked prices as furnished by two
members of the NASD selected from time to time by the Company for that purpose.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would result in an increase or decrease of at
least one percent (1%) in the number of Shares purchasable upon the exercise of
each Warrant; provided, however, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment but not later than three (3) years
after the happening of the specified event or events. All calculations shall be
made to the nearest one thousandth of a share.
(f) Whenever the number of Shares purchasable upon exercise of each
Warrant is adjusted, as herein provided, the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such adjustment by
a fraction, of which (i) the numerator shall be the number of Shares purchasable
upon the exercise of each Warrant immediately prior to such adjustment and (ii)
the denominator shall be the number of shares so purchasable immediately
thereafter.
(g) For the purpose of this Section 8, the term "Common Stock" shall
mean (i) the class of stock designated as the Common Stock of the Company at the
date of this Agreement or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
changes in par value, or from no par value to par value or from par value to no
par value. If at any time, as a result of an adjustment made pursuant to
paragraph (a) above, the Holders become entitled to purchase any shares of
capital stock of the Company other than shares of Common Stock, thereafter the
number of such other shares so purchasable upon exercise of each Warrant and the
Exercise Price of such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Shares contained in paragraphs (a) through (f), inclusive,
and paragraphs (h) through (m), inclusive, of this Section 8, and the provisions
of Sections 4, 5, 7 and 10 hereof, with respect to the Shares, shall apply on
like terms to any such other shares.
(h) Upon the expiration of any rights, options, warrants or conversion
rights or exchange privileges that caused adjustments under this Section 8, such
adjustments with respect to any unexercised Warrants shall, upon such
expiration, be readjusted and shall thereafter be as they would have been had
such rights, options, warrants or conversion rights or exchange privileges never
existed.
(i) The Company may, at its option at any time during the term of the
Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of each
Warrant or the Exercise Price of such Shares is adjusted, as herein provided,
the Company
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shall promptly mail by first class-mail, postage prepaid, to each Holder notice
of such adjustment or adjustments. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity thereof except as to
the Holder to whom the Company failed to mail such notice or whose notice was
defective. A certificate of an officer of the Company, on behalf of the Company,
that such notice has been mailed shall be prima facie evidence of the facts
stated therein. After any such adjustment, the Company shall prepare a
certificate setting forth the number of Shares issuable upon the exercise of
each Warrant and the Exercise Price of such Warrant after such adjustment,
setting forth a brief statement of the facts requiring such adjustment. Such
certificate shall, except as provided below, be conclusive as to the correctness
of such adjustment, and each Holder shall have the right to inspect such
certificate during reasonable business hours. Any determination as to whether an
adjustment is required pursuant to this Section 8, or as to the amount of any
such adjustment, shall be initially made in good faith by the Board of Directors
of the Company. If the Holders of a majority of the then outstanding Warrants
shall, in the exercise of their discretion, object to such determination, the
amount of such adjustment shall be made by an independent accounting or
investment banking firm selected by the Holders of a majority of the then
outstanding Warrants and reasonably acceptable to the Company.
(k) Except as provided in this Section 8, no adjustment in respect of
any dividends shall be made during the term of a Warrant or upon the exercise of
a Warrant.
(l) If the Company consolidates with or merges into another
corporation or if the Company sells or conveys all or substantially all its
property to another corporation, or if the Company enters into a statutory share
exchange with another Company pursuant to which its Common Stock is exchanged
for, or changed into, securities or property of another Company, the Company or
such successor or purchasing corporation (or an affiliate of such successor or
purchasing corporation), as the case may be, agrees that each Holder shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities and property (including cash) that such
Holder would have owned or been entitled to receive after the happening of the
consolidation, merger, sale, conveyance or share exchange had such Warrant been
exercised immediately prior to such action. The provisions of this paragraph (l)
shall apply to successive consolidations, mergers, sales, conveyances or share
exchanges.
(m) Notwithstanding any adjustment in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants pursuant to this
Agreement, certificates for Warrants issued prior or subsequent to such
adjustment may continue to express the same price and number and kind of shares
as are initially issuable pursuant to this Agreement.
9. Fractional Interests. The Company shall not be required to issue
fractions of Shares on the exercise of Warrants. If more than one Warrant is
presented for exercise in full at the same time by the same Holder, the number
of Shares issuable upon the exercise thereof shall be computed on the basis of
the aggregate number of Shares issuable on exercise of the Warrants so
presented. If any fraction of a Share would, except for the provisions of this
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Section 9, be issuable on the exercise of any Warrants (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the current Market Price per share of Common Stock
(determined as provided in Section 8(d) of this Agreement) on the date of
exercise.
10. Registration Rights.
(a) Demand Registration Rights.
(i) The Company covenants and agrees with the Underwriter and any
other or subsequent Holders of the Registrable Securities (as defined in
paragraph (f) of this Section 10) that, upon the written request of the then
Holder(s) of Warrants, Registrable Securities or both, representing at least a
majority of the shares of Common Stock underlying the Warrants originally issued
to the Underwriter or its designees, made at any time within the period
commencing one (1) year and ending five (5) years after the Effective Date, the
Company will file as promptly as practicable and, in any event, within sixty
(60) days after receipt of such written request, at its expense (other than (x)
all underwriters', broker-dealers', placement agents' and similar selling
discounts, commissions and fees relating to the sale of the Holder's Registrable
Securities, (y) any costs and expenses of counsel, accountants or other advisors
retained by the Holder and (z) all transfer, franchise, capital stock and other
taxes, if any, applicable to the Holder's Registrable Securities (collectively,
"Holders' Expenses"), all of which shall be paid by the Holder), no more than
once (except as otherwise provided below), a post-effective amendment (the
"Amendment") to the Company's Registration Statement on Form S-1, Registration
No. 333-_____ as filed with the Securities and Exchange Commission on _____ __,
1999, or a new registration statement on an appropriate form under the Act,
registering or qualifying the Registrable Securities for sale in accordance with
the intended method of sale or other disposition described in such request.
Within fifteen (15) days after receiving any such notice, the Company shall give
notice to the other Holders of the outstanding Warrants or Registrable
Securities advising that the Company is proceeding with such Amendment or
registration statement and offering to include the Registrable Securities of
such Holders. The Company shall not be obligated to any other such Holder unless
that other Holder accepts such offer by notice in writing to the Company within
twenty (20) days thereafter. The Company will use its best efforts, through its
officers, directors, auditors and counsel in all matters necessary or advisable,
to file and cause such Amendment or registration statement to become effective
as promptly as practicable (but in any event within ninety (90) days of the
initial filing of such Amendment or registration statement) and for a period of
twelve (12) months thereafter to reflect in the Amendment or registration
statement financial statements prepared in accordance with Section 10(a)(3) of
the Act and any facts or events arising that, individually, or in the aggregate,
represent a fundamental or material change in the information set forth in the
Amendment or registration statement to enable Holders of the Registrable
Securities registered to sell such Registrable Securities. The Holders may
register the Registrable Securities for sale pursuant to the Amendment or
registration statement without exercising the Warrants. If any registration
pursuant to this paragraph (a) is an underwritten offering, the Holders of a
majority of the
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Registrable Securities to be included in such registration shall be entitled to
select the underwriter or managing underwriter (in the case of a syndicated
offering) of such offering.
(ii) Anything in this Section 10(a) to the contrary
notwithstanding, if the Company's securities proposed to be registered for sale
are to be distributed in an underwritten offering and the managing underwriter
shall advise the Company in writing that, in its opinion, the amount of
securities to be offered should be limited in order to assure a successful
offering, the amount of Registrable Securities to be included in such Amendment
or registration statement shall be so limited and shall be allocated among the
persons selling such securities in the following order of priority: (x) first,
securities subject to any demand or piggyback registration rights granted by the
Company before the Effective Date, (y) next, Registrable Securities in
proportion, as nearly as practicable, to the number of Registrable Securities
desired and eligible to be sold by each Holder of such Registrable Securities
and (z) next, any other shares of Common Stock subject to similar demand or
piggyback registration rights granted by the Company in proportion, as nearly as
practicable, to the number of shares of Common Stock desired and eligible to be
sold by each holder of such Common Stock. In the event that, (x) pursuant to the
preceding sentence, the managing underwriter limits the number of Registrable
Securities that the Holders desire to have registered and (y) the Company does
not thereafter effect a registration to include the Registrable Securities that
the Holders were not then permitted to sell within one hundred eighty (180) days
after the effective date of the Amendment or registration statement from which
the Holders have been excluded, then, at any time after such one hundred eighty
(180) day period until the period ending five (5) years after the Effective
Date, the Holders of a majority of such Registrable Securities not so included
may make a request to the Company for registration under the Act of all or part
of such Registrable Securities not so included in accordance with Section
10(a)(ii).
(iii) Notwithstanding anything in this Section 10(a) to the
contrary, the Company will not be required to file an Amendment or registration
statement (i) at a time when the audited financial statements required to be
included therein are not available, which time shall be limited to the period
commencing one hundred thirty five (135) days after the end of the Company's
third quarter and ending ninety (90) days after the end of such fiscal year,
(ii) for the period beginning with the filing of a registration statement under
the Act with respect to a public offering by the Company of its securities and
ending one hundred eighty (180) days after the closing of such public offering
or (iii) if in the reasonable opinion of the Company it would adversely impact
the Company in its capital raising plans or otherwise (in which latter case
filing may be delayed for up to one hundred thirty five (135) days).
(b) Piggyback Registration Rights. The Company covenants and agrees
with the Underwriter and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing one (1)
year and ending five (5) years after the Effective Date, it proposes to file a
new registration statement with respect to the public sale of Common Stock for
cash (other than in connection with an offering to the Company's employees, an
acquisition, merger or similar transaction, an employee benefit plan, an
exchange offer or a dividend reinvestment plan) under the Act in a primary
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registration on behalf of the Company and/or in a secondary registration on
behalf of holders of such securities and the registration form to be used may be
used for registration of the Registrable Securities, the Company will give
written notice at least thirty (30) days prior to such filing to the Holders of
Warrants or Registrable Securities (regardless whether some of the Holders have
theretofore availed themselves of the right provided in Section 10(a) of this
Agreement) at the addresses appearing on the records of the Company of its
intention to file a registration statement and will use its best efforts to
include in such registration statement any of the Registrable Securities,
subject to clauses (i) and (ii) of this paragraph (b), such number of
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within twenty (20) days after notice by the
Company. All registrations requested pursuant to this paragraph (b) are referred
to herein as "Piggyback Registrations." All Piggyback Registrations pursuant to
this paragraph (b) will be made solely at the Company's expense, except for the
Holders' Expenses, which respective portion shall be paid by each Holder. If the
securities or blue sky laws of any jurisdiction in which the securities are
proposed to be offered would require the Holder's payment of greater
registration expenses than those otherwise required by this Section 10 and if
the Company shall determine, in good faith, that the offering of such securities
in such jurisdiction is necessary for the successful consummation of the
registered offering, then the Holder shall either agree to pay such Holder's
portion of the registration expenses required by the securities or blue sky laws
of such jurisdiction or withdraw his request for inclusion of his Registrable
Securities in such registration.
(i) Priority on Primary Registrations. If a Piggyback
Registration is part of an underwritten primary registration for the Company and
the managing underwriter(s) for such offering advise(s) the Company in writing
that, in its opinion, the amount of securities to be offered should be limited
in order to assure a successful offering, the amount of Registrable Securities
to be included in such registration statement shall be so limited and shall be
allocated among the persons selling such securities in the following order of
priority: (w) first, securities the Company proposes to sell, (x) next,
securities subject to any demand or other piggyback registration rights granted
by the Company before the Effective Date, (y) next, Registrable Securities in
proportion, as nearly as practicable, to the number of Registrable Securities
desired and eligible to be sold by each Holder of such Registrable Securities
and (z) next, any other shares of Common Stock subject to similar demand or
piggyback registration rights granted by the Company in proportion, as nearly as
practicable, to the number of shares of Common Stock desired and eligible to be
sold by each holder of such Common Stock.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration is part of an underwritten secondary registration for holders of
securities of the Company (other than pursuant to Section 10(a)) and not a
primary registration for the Company and the managing underwriter(s) for such
offering advise(s) the Company in writing that, in its opinion, the amount of
securities to be offered should be limited in order to assure a successful
offering, the amount of Registrable Securities to be included in such
registration statement shall be so limited and shall be allocated among the
persons selling such securities in the following order of priority: (x) first,
securities subject to any demand or other piggyback
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registration rights granted by the Company before the Effective Date, (y) next,
Registrable Securities in proportion, as nearly as practicable, to the number of
Registrable Securities desired and eligible to be sold by each Holder of such
Registrable Securities and (z) next, any other shares of Common Stock subject to
similar demand or piggyback registration rights granted by the Company in
proportion, as nearly as practicable, to the number of shares of Common Stock
desired and eligible to be sold by each holder of such Common Stock.
Notwithstanding the provisions of this Section 10(b), the Company shall
have the right at any time and for any reason or for no reason after having
given written notice pursuant to this Section 10(b) (irrespective of whether a
written request for inclusion of any such securities has been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but before the effective date thereof and, thereupon, shall be
relieved from its obligation to proceed with such registration. If any
registration pursuant to this paragraph (b) is an underwritten offering, the
Company shall be entitled to select the underwriter or managing underwriter(s)
(in the case of a syndicated offering) of such offering.
(c) Other Registration Rights. In addition to the rights above
provided, during the period commencing one (1) year and ending five (5) years
after the Effective Date, the Company will cooperate with the then Holders of
the Registrable Securities in preparing and signing one (but not more than one)
registration statement, in addition to the registration statements discussed
above, required in order to sell or transfer the Registrable Securities and will
supply all information required therefor, but the then Holders shall pay the
costs and expenses of such additional registration (including all of the
Company's reasonable out-of-pocket costs and expenses); provided, however, that
if the Company elects to register or qualify additional shares of Common Stock,
the cost and expense of such registration statement will be pro rated between
the Company and the Holders of the Registrable Securities according to the
aggregate sales price of the securities being issued. However, the Company will
not be required to file a registration statement pursuant to this paragraph (c)
(i) at a time when the audited financial statements required to be included
therein are not available, which time shall be limited to the period commencing
one hundred thirty five (135) days after the end of the Company's third quarter
and ending ninety (90) days after the end of such fiscal year, (ii) for the
period beginning with the filing of a registration statement under the Act with
respect to a public offering by the Company of its securities and ending one
hundred eighty (180) days after the closing of such public offering or (iii) if
in the reasonable opinion of the Company it would adversely impact the Company
in its capital raising plans or otherwise (in which latter case filing may be
delayed for up to one hundred thirty five (135) days).
(d) Action to be Taken by the Company. In connection with the
registration of Registrable Securities in accordance with paragraphs (a), (b) or
(c) of this Section 10, the Company agrees to:
(i) bear the expenses of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited
to, legal, accounting and printing fees; provided, however, that in no
event shall the Company be obligated to pay any of the Holders'
Expenses, which shall be paid by the Holders; and
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(ii) use its reasonable efforts to register or qualify the
Registrable Securities included in an Amendment or registration
statement for offer or sale under state securities or blue sky laws of
such jurisdictions in which the Underwriter or such Holders shall
reasonably request and do all other acts or things necessary or
advisable to effect the registration or qualification of the
Registrable Securities covered by such Amendment or registration
statement in the various states; provided, however, that no
registration or qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service of
general process, taxation as a foreign corporation doing business in
such jurisdiction, any requirement that it qualify generally to do
business as a foreign corporation in such jurisdiction or any
requirement that it agree to restrictions on future actions by the
Company to which it is not then subject.
(e) Action to be Taken by the Holders. Any written request to exercise
registration rights pursuant to paragraphs (a) or (b) of this Section 10 shall
contain, as applicable, (i) a description of the proposed plan of distribution
of the Registrable Securities, including the name of any underwriters, the
amounts underwritten and any material relationship between any proposed
underwriter and the Company, (ii) the full name of the Holder, the number of
Warrants, Registrable Securities and other securities of the Company owned by
such Holder and the number proposed to be registered and (iii) a description of
any position, office or other material relationship which the Holder has had
within the past three (3) years with the Company or any of its predecessors or
affiliates.
In addition, in connection with the registration of Registrable Securities
in accordance with paragraphs (a), (b) or (c) of this Section 10, the Company's
obligation shall be conditioned as to each such public offering upon a timely
receipt by the Company in writing of:
(i) information as to participating Holders (to the extent
required by the Rules and Regulations) and the terms of such public
offering furnished by or on behalf of each Holder intending to make a
public offering of such Holder's Registrable Securities;
(ii) such other information as the Company may reasonably require
from such Holders, or any underwriter for any of them, for inclusion
in such Registration Statement; and
(iii) all documents reasonably requested by any underwriter in
connection with the offering and any other documents customary in
similar offerings, signed and delivered by such Holder, including,
without limitation, underwriting agreements, custody agreements,
powers of attorney, indemnification agreements, and agreements
restricting other sales of securities.
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(f) For purposes of this Section 10, (i) the term "Holder" shall
include holders of Registrable Securities received upon exercise of Warrants,
and (ii) the term "Registrable Securities" shall mean the Shares, if issued,
until five (5) years after the Effective Date.
(g) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any of the following: (i) the issuance by the
Securities and Exchange Commission of any stop order denying or suspending the
effectiveness of any Amendment or registration statement covering Registrable
Securities or the initiation or threatening of any proceeding for that purpose,
(ii) the Company's receipt of any stop order denying registration or suspending
the qualification of the Registrable Securities for sale or the initiation or
threatening of any proceeding for such purpose or (iii) the happening of any
event that makes any statement made in such Amendment or registration statement,
the related prospectus or any document incorporated by reference therein untrue
or that requires any change in such Amendment or registration statement,
prospectus or document incorporated by reference therein to make the statements
not include an untrue statement of material fact or not omit any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, each Holder shall
discontinue the disposition of Registrable Securities until such Holder receives
a supplemental or amended prospectus from the Company or until the Company
advises such Holder in writing that the Holder may resume the use of such
prospectus and have received copies of any additional or supplemental filings
which are incorporated by reference in the prospectus. If the Company so
directs, such Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in the Holder's possession, of the
prospectus covering the Registrable Securities at the time the Holder received
the notice. Upon the occurrence of such event, the Company shall immediately
take such action as may be necessary to resume sale of the Registrable
Securities and the use of such prospectus, by amendment or otherwise.
11. Notices to Holders.
(a) Nothing in this Agreement or in any Warrants shall be construed as
conferring upon the Holders the right to vote or to receive dividends or to
consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of directors of the Company or any other matter or
any rights whatsoever as stockholders of the Company prior to the exercise of
Warrants and such Holder becoming a holder of record of Shares; provided,
however, that in the event that any meeting of stockholders shall be called, the
Company shall cause a notice thereof to be sent by first-class mail, postage
prepaid, at least twenty (20) days prior to the date fixed as a record date or
the date of closing the transfer books in relation to such meeting, to each
registered Holder of Warrants at such Holder's address appearing on the Warrant
Register.
(b) If the Company intends to make any distribution on its Common
Stock (or other securities that may be issuable in lieu thereof upon the
exercise of Warrants), including, without limitation, any such distribution to
be made in connection with a consolidation or merger in which the Company is the
surviving entity or to issue subscription rights or warrants to holders of its
Common Stock, the Company shall cause a notice of its intention to make such
distribution to be sent by first-class mail, postage prepaid, at least
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<PAGE>
twenty (20) days prior to the date fixed as a record date or the date of closing
the transfer books in relation to such distribution, to each registered Holder
of Warrants at such Holder's address appearing on the Warrant Register, but
failure to mail or to receive such notice or any defect therein or in the
mailing thereof shall not affect the validity of any action taken in connection
with such distribution.
12. Notices. Any notice pursuant to this Agreement to be given by the
Holder of any Warrant or the holder of any Share to the Company shall be
sufficiently given or made three business days after sent by first-class mail,
postage prepaid, addressed as follows or to such other address as the Company
may designate by notice given in accordance with this Section 12, to the Holders
of Warrants or the holders of Shares:
Vion Pharmaceuticals, Inc.
4 Science Park
New Haven, CT 06511
Attn.: President
Notices or demands authorized by this Agreement to be given or made by the
Company to or on the Holder of any Warrant or the holder of any Share shall be
sufficiently given or made (except as otherwise provided in this Agreement) if
sent by first-class mail, postage prepaid, addressed to such Holder or such
holder of Shares at the address of such Holder or such holder of Shares as shown
on the Warrant Register or the books of the Company, as the case may be.
13. Governing Law. This Agreement and each Warrant issued hereunder shall
be governed by and construed in accordance with the substantive laws of the
State of New York, without giving effect to the principles of conflicts of law.
The Company hereby agrees to accept service of process by notice given to it
pursuant to the provisions of Section 12 hereof.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
such counterparts together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day, month and year first above written.
VION PHARMACEUTICALS, INC.
By: Alan Kessman
----------------------------------
Its: President and Chief Executive
Officer
------------------------------
BREAN MURRAY & CO., INC.
By: Harrison Bubrosky
---------------------------------
Its: Executive Vice President and
Senior Managing Director
-----------------------------
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Name of Number of
Initial Holder Warrants
-------------- ----------
<S> <C>
Brean Murray & Co., Inc. 200,000
Total 200,000
</TABLE>
<PAGE>
Exhibit A
No. _______ Warrant to Purchase
**200,000**
Shares of Common Stock
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OR OTHER
JURISDICTION. THIS WARRANT MAY NOT BE EXERCISED, AND THIS WARRANT AND THE SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE RESOLD OR
OTHERWISE TRANSFERRED, UNLESS THEY ARE REGISTERED UNDER APPLICABLE STATE AND
FEDERAL SECURITIES LAWS OR UNLESS EXEMPTIONS FROM ALL SUCH REGISTRATION
REQUIREMENTS ARE AVAILABLE.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME
ON _____ __, 2004
VION PHARMACEUTICALS, INC.
Warrant Certificate
THIS CERTIFIES THAT, for value received, Brean Murray & Co., Inc., or
its registered assigns, is the owner of the number of warrants set forth above
(the "Warrants"), each of which entitles the owner thereof to purchase at any
time from ____ __, 2000, until 5:00 p.m., New York City time on ____ __, 2004
(the "Warrant Expiration Date"), one fully paid and nonassessable share of
Common Stock, $0.01 par value per share (the "Common Stock"), of VION
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), at the purchase
price of $_____ per Share (as adjusted from time to pursuant to the Warrant
Agreement referenced below, the "Exercise Price") upon presentation and
surrender of this Warrant Certificate with the Form of Election to Purchase duly
executed. The number of Warrants (and the number of shares of Common Stock that
may be purchased upon exercise hereof) set forth above and the Exercise Price
per share of Common Stock set forth above are the number and Exercise Price as
of the date of original issuance of the Warrants, based on the Common Stock of
the Company at such date. As provided in the Warrant Agreement referenced below,
the Exercise Price and the number or kind of shares that may be purchased upon
the exercise of the Warrants are, upon the happening of certain events, subject
to modification and adjustment. The shares of Common Stock, as so modified and
adjusted, are herein referred to as the "Shares".
<PAGE>
This Warrant Certificate is subject to, and entitled to the benefits
of, all of the terms, provisions and conditions of an agreement dated as of
_____ __, 1999 (the "Warrant Agreement") between the Company and Brean Murray &
Co., Inc., which Warrant Agreement is hereby incorporated herein by reference
and made a part hereof. Reference is made to the Warrant Agreement for a full
description of the rights, limitations of rights, duties and immunities
hereunder of the Company and the holders of the Warrant Certificates. Copies of
the Warrant Agreement are on file at the principal office of the Company.
Upon surrender at the principal office of the Company, this Warrant
Certificate, with or without other Warrant Certificates, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing warrants entitling the holder to purchase the aggregate number of
shares of Common Stock as the Warrants evidenced by the Warrant Certificate or
Warrant Certificates surrendered entitled such holder to purchase. If this
Warrant Certificate shall be exercised in part, the holder hereof shall be
entitled to receive, upon surrender hereof, another Warrant Certificate or
Warrant Certificates for the number of whole Warrants not exercised.
No fractional shares of Common Stock will be issued upon the exercise
of any Warrants evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Warrant Agreement.
No holder of this Warrant Certificate will be entitled to vote,
receive dividends or subscription rights or be deemed the holder of the Shares
that may at any time be issuable on the exercise hereof for any purpose, nor
shall anything contained in the Warrant Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance, or otherwise) or, except as
provided in the Warrant Agreement, to receive notice of meetings, until the
Warrants evidenced by this Warrant Certificate shall have been exercised and
such holder shall have become a holder of record of the Shares as provided in
the Warrant Agreement.
If this Warrant shall be surrendered for exercise during any period in
which the transfer books for the Shares are closed for any purpose, the Company
shall not be required to make delivery of certificates for Shares purchasable
upon such exercise until the date of the reopening of said transfer books,
provided, however, that such books shall not be closed for longer than a twenty
(20) day period.
-2-
<PAGE>
IN WITNESS WHEREOF, VION PHARMACEUTICALS, INC. has caused the
signature (or facsimile signature) of its President and its Secretary to be
printed hereon.
Dated _____ __, 1999
VION PHARMACEUTICALS, INC.
By:_____________________________
Alan Kessman
President
Attest:
_____________________________
Thomas E. Mizelle
Secretary
-3-
<PAGE>
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED ________________________________ hereby sells,
assigns and transfers unto ________________________________ this Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint __________________________ to transfer
the Warrant Certificate on the books of Vion Pharmaceuticals, Inc., with full
power of substitution.
Dated: _________________________
__________________________________
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of the Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
-4-
<PAGE>
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrants)
TO: VION PHARMACEUTICALS, INC.
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate to purchase __________ shares of Common
Stock issuable upon the exercise of such Warrants and requests that certificates
for such shares of Common Stock be issued in the name of:
____________________________________
Please insert social security, tax identification or other identifying number
___________________________
___________________________
___________________________
If such number of Warrants is not all the Warrants evidenced by this Warrant
Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security, tax identification or other identifying number
___________________________
___________________________
___________________________
(Please print name and address)
Dated:________________________
__________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
Signature Guaranteed:
-5-
