EXHIBIT 2
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
Amendment No. 1 to Rights Agreement (the "Amendment"), made as of August
16, 2004, by and among Vion Pharmaceuticals, Inc. a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company (the "Rights Agent").
Reference is made herein to that certain Rights Agreement, dated as of October
26, 1998, by and between the Company and the Rights Agent (the "Rights
Agreement"). Capitalized terms not herein defined shall have the meaning
ascribed thereto in the Rights Agreement.
WHEREAS, the Rights Agreement may be amended by the parties pursuant to
Section 27; and
WHEREAS, the Company and the Rights Agent wish to amend the Rights
Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereby agree as follows:
1. Amendment to Section 11(a)(iii). Section 11(a)(iii) of the Rights
Agreement is hereby amended and restated in its entirety to read as follows:
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company
shall: (A) determine the excess of (1) the value of the shares of Common
Stock issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to
each Right, make adequate provision to substitute for the shares of Common
Stock so issuable, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock) which the Board of Directors of the Company has deemed to
have the same economic value as shares of Common Stock (such shares of
preferred stock, "common stock equivalents"), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within 30 days following the later of (x) the first occurrence of an
event described in Section 11(a)(ii) and (y) the date on which the
Company's right of redemption pursuant to Section 23 expires, then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary,
cash, which in the aggregate are equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the 30 day period set forth
above may be extended to the extent necessary, but not more than 120 days
following the first occurrence of an event described in Section 11(a)(ii),
in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period as it may be extended,
the "Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (x) shall provide, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the current market price (as determined pursuant to Section 11(d))
per share of the Common Stock on the date of the first occurrence of an
event referred to in Section 11(a)(ii) and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock on
such date.
2. Rights Agreement Otherwise Unamended. The terms of the Rights Agreement
not amended hereby shall, except as the context unambiguously requires, remain
in full force and effect.
3. Entire Agreement. This Amendment, together with the provisions of the
Rights Agreement not amended hereby, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior agreements, whether written or oral, between the parties hereto.
4. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed in its respective corporate name by one of its duly authorized
officers, all as of the date first above written.
VION PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Financial Officer
AMERICAN STOCK TRANSFER
TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
