EXECUTION COPY
10,000,000 Shares
VION PHARMACEUTICALS, INC.
Common Stock
PLACEMENT AGENCY AGREEMENT
--------------------------
January 25, 2005
CIBC World Markets Corp.
Leerink Xxxxx & Company
as placement agents
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained herein, to issue and
sell 10 million shares (the "Shares") of common stock, $0.01 par value per share
(the "Common Stock"), directly to certain investors (collectively, the
"Investors"). The Company desires to engage you as its placement agents (the
"Placement Agents") in connection with such issuance and sale. The Shares are
more fully described in the Registration Statement (as hereinafter defined).
The Company has prepared and filed in conformity with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as hereinafter
defined) on Form S-3, as amended (No. 333-121251), including a base prospectus
relating to the Shares (the "Base Prospectus") and such amendments thereof as
may have been required to the date of this Agreement. Copies of such
Registration Statement (including all amendments thereof) and of the related
Base Prospectus (as hereinafter defined) have heretofore been delivered by the
Company to you. The term "Registration Statement" as used in this Agreement
means the initial registration statement (including all exhibits, financial
schedules and all documents and information deemed to be a part of the
Registration Statement through incorporation by reference or otherwise)), as
amended, at the time and on the date it becomes effective (the "Effective
Date"), including the
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information (if any) contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and deemed to be part thereof at
the time of effectiveness pursuant to Rule 430A of the Rules. If the Company has
filed an abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Rules (the "462(b) Registration Statement"),
then any reference herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The prospectus supplement relating
to the Shares as filed with the Commission pursuant to and in accordance with
Rule 424(b) under the Securities Act is hereinafter referred to as the
"Prospectus Supplement." The term "Prospectus" as used in this Agreement means
the Base Prospectus together with the Prospectus Supplement. As used herein, the
terms "Base Prospectus," "Prospectus," "Registration Statement," "Rule 462
Registration Statement," and "Prospectus Supplement" shall include any documents
incorporated by reference therein and any reference to any amendment or
supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any document filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the date of the Base Prospectus by
the Company with the Commission, that are deemed to be incorporated by reference
in the Prospectus.
The Company hereby confirms that the Placement Agents, in connection with
their duties in such capacity, are authorized to distribute or cause to be
distributed the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the Placement Agents).
1. Agreement to Act as Placement Agent, Delivery and Payment. On the basis
of the representations, warranties and agreements contained in, and subject to
the terms and conditions of, this Agreement:
(a) The Placement Agents agree to act as the Company's exclusive
placement agents in connection with the issuance and sale, on a reasonable
efforts basis, by the Company of the Shares to the Investors. The Company
acknowledges and agrees that the Placement Agents' engagement hereunder is
not an agreement by the Placement Agents or any of their affiliates to
underwrite or purchase any securities or otherwise provide any financing.
As compensation for their services hereunder, the Company agrees to pay on
the Closing Date (as defined below) the Placement Agents by wire transfer
of immediately available funds $1,478,750 pursuant to this Agreement and
the letter between CIBC and the Company, dated the date hereof.
(b) Payment of the purchase price for, and delivery of the Shares
shall be made at a closing (the "Closing") at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, at 9:00 a.m., New York time, on the Closing Date
to take place on the third or fourth business day (as permitted under Rule
15c6-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) after the determination of the sales price of the Shares (such time
and date of payment and delivery being herein called the "Closing Date").
All actions taken at the Closing shall be deemed to have occurred
simultaneously.
(c) Payment of the purchase price for the Shares shall be made by the
Investors directly to or upon the order of the JPMorgan Chase Bank, as
escrow agent (the "Escrow Agent") by wire transfer in immediately available
funds to the Escrow Agent, upon delivery of the Shares through the
facilities of The Depository Trust Company, to the
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Investors, and shall be registered in such name or names and shall be in
such denominations, as the Investors may request at least one business day
before the Closing Date.
(d) The several purchases of the Shares by the Investors shall be
evidenced by the execution of one or more purchase agreements each
substantially in the form attached hereto as Exhibit A (the "Purchase
Agreement").
(e) Prior to the earlier of (i) the date on which this Agreement is
terminated and (ii) the Closing Date, the Company shall not, without the
prior consent of the Placement Agents, solicit or accept offers to purchase
Shares (other than pursuant to the exercise of options or warrants to
purchase shares of Common Stock that are outstanding at the date hereof)
otherwise than through the Placement Agents.
2. Representations and Warranties of the Company. The Company represents
and warrants to each Placement Agent as of the date hereof, and as of the
Closing Date, as follows:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act. On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and the Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the requirements of the Securities Act and the Rules and the Exchange Act
and the rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and on the Effective Date and the Closing Date
neither the Registration Statement nor the Prospectus, nor any amendment
thereof or supplement thereto, will contain any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. If applicable, when any related preliminary prospectus was
first filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules)
and when any amendment thereof or supplement thereto was first filed with
the Commission, such preliminary prospectus as amended or supplemented
complied in all material respects with the applicable provisions of the
Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The Prospectus delivered to the Placement Agents for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different," as such term is used in Rule 434, from
the Prospectus included in the Registration Statement at the time it became
effective. Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(a) shall
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apply to statements in, or omissions from, the Registration Statement or
the Prospectus made in reliance upon, and in conformity with, information
herein or otherwise furnished in writing by the Placement Agents for use in
the Registration Statement or the Prospectus.
(b) The Registration Statement is effective under the Securities Act,
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and no proceedings for that
purpose have been instituted or, to the Company's knowledge, are threatened
against the Company under the Securities Act. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of the Rules
has been or will be made in the manner and within the time period required
by such Rule 424(b).
(c) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they became effective or were
filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder,
and at the time they became effective or were filed with the Commission, as
the case may be, none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and any
further documents so filed and incorporated by reference in the
Registration Statement and the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) The financial statements of the Company (including all notes and
schedules thereto) included or incorporated by reference in the
Registration Statement and Prospectus present fairly the financial position
of the Company and its consolidated subsidiaries at the dates indicated and
the statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified; and
such financial statements and related schedules and notes thereto, and the
unaudited financial information filed with the Commission as part of the
Registration Statement, have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved. The selected financial data included in the Prospectus present
fairly the information shown therein as at the respective dates and for the
respective periods specified and have been presented on a basis consistent
with the consolidated financial statements set forth in the Prospectus and
other financial information.
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(e) Ernst & Young LLP, whose reports are filed with the Commission as
a part of the Registration Statement, are and, during the periods covered
by their reports, were independent public accountants as required by the
Securities Act and the Rules.
(f) The Company, each of its subsidiaries, and each entity
(corporation, partnership, joint venture, association or other business
organization) controlled directly or indirectly by the Company, is duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization. The Company and
its subsidiaries each is duly qualified to do business and is in good
standing as a foreign entity in each jurisdiction in which the nature of
the business conducted by it or location of the assets or properties owned,
leased or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the
aggregate would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and its
subsidiaries considered as a whole (a "Material Adverse Effect"); and to
the Company's knowledge, no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification. Except as set forth
in the Prospectus or the Registration Statement, the Company does not own,
lease or license any asset or property or conduct any business outside the
United States of America.
(g) Except as set forth in the Prospectus, the Company and its
subsidiaries each has all requisite corporate power and authority, and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory bodies
or any other person or entity (collectively, the "Permits"), to own, lease
and license its assets and properties and conduct its business as currently
conducted, all of which are valid and in full force and effect, except
where the lack of such Permits, individually or in the aggregate, would not
have a Material Adverse Effect. The Company and its subsidiaries each has
fulfilled and performed in all material respects all of its material
obligations with respect to such Permits and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the Company thereunder; and all of the descriptions in the
Prospectus of the Company's and its subsidiaries' legal and governmental
proceedings and procedures before the United States Food and Drug
Administration (the "FDA"), or any other national, departmental, state or
local governmental body exercising comparable authority do not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Except required notices of the issuances of the Shares to
Nasdaq and as may be required under the Securities Act, state and foreign
securities or Blue Sky laws, no other Permits are required to enter into,
deliver and perform this Agreement and each Purchase Agreement and to issue
and sell the Shares.
(h) Since the respective dates as of which information is given in the
Prospectus, the studies, tests and preclinical and clinical trials
conducted by or on behalf of the Company and its subsidiaries that are
described in the Prospectus were and, if still pending, are being conducted
in accordance with experimental protocols, procedures and
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controls pursuant to, where applicable, accepted professional scientific
standards; the descriptions of the results of such studies, tests and
trials contained in the Prospectus are true and correct in all material
respects; and, except as disclosed in the Prospectus, the Company and its
subsidiaries each have not received any notices or correspondence from the
FDA, or any national, state or local governmental body exercising
comparable authority requiring the termination or suspension of any
studies, tests or preclinical or clinical trials conducted by or on behalf
of the Company.
(i) Except as set forth in the Prospectus and except as could not
reasonably be expected to have a Material Effect, the Company and its
subsidiaries each own or possesses adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names
or other intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them as described in the
Prospectus. Except as disclosed in the Prospectus, there is no litigation
or other proceeding pending or, to the Company's knowledge, threatened and
no claims are presently being asserted by any third party challenging or
questioning the ownership, validity, enforceability of the Company's or its
subsidiaries right to use or own any Intellectual Property or asserting
that the use of any Intellectual Property by the Company or its
subsidiaries or the operation of the business of the Company or its
subsidiaries infringes upon or misappropriates the Intellectual Property of
any third party, other than infringements which would not be reasonably
likely to have a Material Adverse Effect, and the Company is not otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any of the Company's Intellectual Property or of any facts
or circumstances which would render any of the Company's Intellectual
Property invalid or inadequate to protect the interest of the Company or
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(j) The Company and its subsidiaries each have good and marketable
title in fee simple to all real property, and good and marketable title to
all other property owned by it, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, except such as do not
materially affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company and its subsidiaries. All property held under lease by the Company
and its subsidiaries is held by them under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except such as are not material and do not
materially interfere with the use made or proposed to be made of such
property by the Company and its subsidiaries. Subsequent to the respective
dates as of which information is given in the Registration Statement and
the Prospectus, (i) there has not been any change in the Company's business
that has resulted in any Material Adverse Effect on the assets, properties,
condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company and its subsidiaries
considered as a whole; (ii) neither the Company nor any of its subsidiaries
has sustained any loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake,
flood or other calamity, whether or not covered
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by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree which would have a Material
Adverse Effect; and (iii) since the date of the latest balance sheet
included or incorporated by reference in the Registration Statement and the
Prospectus, neither the Company nor its subsidiaries has (A) issued any
securities or incurred any liability or obligation, direct or contingent,
for borrowed money, except such liabilities or except issuance of options
and stock upon the exercise of options and warrants obligations incurred in
the ordinary course of business and purchases under the Company's stock
purchase plan, (B) entered into any transaction not in the ordinary course
of business or (C) declared or paid any dividend or made any distribution
on any shares of its stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its capital
stock.
(k) There is no document, contract or other agreement required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required by the Securities Act or Rules. Each description of a contract,
document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all material respects the terms of the
underlying contract, document or other agreement. Neither the Company nor
any of its subsidiaries nor, to the Company's knowledge, any other party is
in default in the observance or performance of any material term or
obligation to be performed by it under any such agreement, and no event has
occurred which with notice or lapse of time or both would constitute such a
default, in any such case which default or event, individually or in the
aggregate, would have a Material Adverse Effect.
(l) The statistical and market related data included in the Prospectus
are based on or derived from sources that the Company believes to be
reliable and accurate.
(m) Neither the Company nor any of its subsidiaries is in violation of
any term or provision of its charter, by-laws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where the
consequences of such violation, individually or in the aggregate, would
have a Material Adverse Effect.
(n) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or its subsidiaries pursuant to the terms of, any material
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which either
the Company, its subsidiaries or any of their properties or businesses is
bound, or any franchise, license, permit, judgment, decree, order, statute,
rule or regulation applicable to the Company or any of its subsidiaries, or
violate any provision of the charter or by-laws of the Company or any of
its subsidiaries except for such consents or waivers which have already
been obtained and are in full force and effect and
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except such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares and
required notices of the issuances or the Shares to the Nasdaq SmallCap
Market.
(o) The Company is authorized to issue a total of 155,000,000 shares
of capital stock consisting of 150,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. After giving effect to the
transactions contemplated by the Purchase Agreement, on the date hereof,
(i) no shares of Preferred Stock will be issued and outstanding, (ii)
65,863,725 shares of Common Stock will be issued and outstanding, and (iii)
5,955,785 shares of common stock will be reserved for issuance under the
Company's stock option plans, of which 5,173,878 shares were subject to
outstanding options as of January 25, 2005. The certificates evidencing the
Shares are in due and proper legal form and have been duly authorized for
issuance by the Company. All of the issued and outstanding shares of Common
Stock have been duly and validly issued and are fully paid and
nonassessable. There are no statutory preemptive or other similar rights to
subscribe for or to purchase or acquire any shares of Common Stock of the
Company or any of its subsidiaries or any such rights pursuant to its
Certificate of Incorporation or by-laws or any agreement or instrument to
or by which the Company or any of its subsidiaries is a party or bound. The
Shares, when delivered by the Company pursuant to this Agreement and the
Purchase Agreements, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment, plan
or arrangement to issue, any share of stock of the Company or any of its
subsidiaries or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in
all material respects to all statements in relation thereto contained in
the Registration Statement and the Prospectus. All outstanding shares of
capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued, and are fully paid and nonassessable and are
owned directly by the Company free and clear of any security interests,
liens, encumbrances, equities or claims, other than those described in the
Prospectus.
(p) No holder of any security of the Company has any right, which has
not been waived, to have any security owned by such holder included in the
Registration Statement or to demand registration of any security owned by
such holder for a period of 90 days after the date of this Agreement. Each
director and officer of the Company listed on Schedule I hereto has
delivered to the Placement Agents his enforceable written lock-up agreement
in the form attached to this Agreement as Exhibit B hereto ("Lock-Up
Agreement").
(q) All necessary corporate action has been duly and validly taken by
the Company and to authorize the execution, delivery and performance of
this Agreement and each Purchase Agreement and the issuance and sale of the
Shares by the Company. This Agreement and each Purchase Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitute and will constitute legal, valid and binding obligations of the
Company enforceable against the Company in accordance with
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their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(r) Neither the Company nor any of its subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a Material Adverse Effect. The Company
is not aware of any existing or imminent labor disturbance by the employees
of any of its principal suppliers or contractors which would have a
Material Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or any of its subsidiaries and any
of its executive officers which, if adversely determined, could have a
Material Adverse Effect and has no reason to believe that such officers
will not remain in the employment of the Company.
(s) No transaction has occurred between or among the Company and any
of its officers or directors, shareholders or any affiliate or affiliates
of any such officer or director or shareholder that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(t) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
the Common Stock or any security of the Company to facilitate the sale or
resale of any of the Shares.
(u) The Company and its subsidiaries each have filed all Federal,
state, local and foreign tax returns which are required to be filed through
the date hereof, which returns are true and correct in all material
respects or has received timely extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the extent that
the same are material and have become due. There are no tax audits or
investigations pending, which if adversely determined would have a Material
Adverse Effect; nor are there any material proposed additional tax
assessments against the Company or any of its subsidiaries.
(v) The Shares have been duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") SmallCap
Market System, subject to official notice of issuance.
(w) The Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq SmallCap
Market, nor has the Company received any notification that the Commission
or the Nasdaq SmallCap Market is contemplating terminating such
registration or quotation.
(x) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The
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Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability, (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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; the chief
executive officer and the chief financial officer of the Company have made
all certifications required by the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act") and any related rules and regulations promulgated by
the Commission, and the statements contained in any such certification are
complete and correct; the Company is otherwise in compliance in all
material respects with all applicable effective provisions of the
Xxxxxxxx-Xxxxx Act and is actively taking steps to ensure that it will be
in compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act
upon the effectiveness of such provisions.
(y) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act).
Based on the evaluation of its disclosure controls and procedures, the
Company is not aware of (i) any significant deficiency in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal controls. Since the date of the
most recent evaluation of such disclosure controls and procedures, there
have been no changes that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(z) There are no material off-balance sheet arrangements (as defined
in Item 303 of Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company's financial condition,
revenues or expenses, changes in financial condition, results of
operations, liquidity, capital expenditures or capital resources.
(aa) Prior to the death of Xxxxxx X. Xxxxxxx on January 19, 2005, the
Company's Board of Directors had a validly appointed audit committee whose
composition satisfied the requirements of Rule 4350(d)(2) of the Rules of
the NASD. The Board of Directors and/or the audit committee has adopted a
charter that satisfies the requirements of Rule 4350(d)(1) of the NASD
Rules and the audit committee has reviewed the adequacy of its charter
within the past twelve months.
(bb) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or proposes to engage after giving effect to the transactions described in
the Prospectus; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its subsidiaries or the Company's or its
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subsidiaries' respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and its subsidiaries
are each in compliance with the terms of such policies and instruments in
all material respects; and neither the Company nor any subsidiary of the
Company has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that is not materially greater than the current cost.
Neither the Company nor any of its subsidiaries has been denied any
insurance coverage which it has sought or for which it has applied.
(cc) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be necessary to qualify
the Shares under the state securities or Blue Sky laws and except for
required notices of issuances of the Shares to the Nasdaq SmallCap Market)
has been obtained or made and is in full force and effect.
(dd) There are no affiliations with the National Association of
Securities Dealers, Inc. (the "NASD") among the Company's officers,
directors or, to the knowledge of the Company, any five percent or greater
stockholder of the Company, except as set forth in the Registration
Statement or otherwise disclosed in writing to the Placement Agents.
(ee) (i) Each of the Company and its subsidiaries is in compliance in
all material respects with all rules, laws and regulation relating to the
use, treatment, storage and disposal of toxic substances and protection of
health or the environment ("Environmental Law") which are applicable to its
business; (ii) neither the Company nor its subsidiaries has received any
notice from any governmental authority or third party of an asserted claim
under Environmental Laws; (iii) the Company and each of its subsidiaries
have received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in compliance
with all terms and conditions of any such permit, license or approval
except where such failure to receive required permits, licenses or
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, individually or in the aggregate,
have a Material Adverse Effect; (iv) to the Company's knowledge, no facts
currently exist that will require the Company or any of its subsidiaries to
make future material capital expenditures to comply with Environmental
Laws; and (v) to the Company's knowledge no property which is or has been
owned, leased or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.
Section 9601, et. seq.) ("CER, CLA 1980") or otherwise designated as a
contaminated site under applicable state or local law. Neither the Company
nor any of its subsidiaries has been named as a "potentially responsible
party" under the CER, CLA 1980.
11
(ff) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded
that such associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.
(gg) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in
the Prospectus, will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(hh) Neither the Company nor any person associated with or acting on
behalf of the Company including, without limitation, any director, officer,
agent or employee of the Company or its subsidiaries, has, directly or
indirectly, while acting on behalf of the Company or its subsidiaries (i)
used any corporate funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns from corporate
funds; (iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iv) made any other unlawful payment.
(ii) The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance with applicable financial record
keeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency (collectively, the "Money Laundering Laws") and
no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Money Laundering Laws is pending, or
to the best knowledge of the Company, threatened.
(jj) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department ("OFAC"); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(kk) Except as described in the Prospectus or in the documents
incorporated by reference into the Prospectus, the Company has not sold or
issued any shares of Common
12
Stock during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock options plans or other employee compensation plans
or pursuant to outstanding options, rights or warrants.
(ll) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in
Section 3(3) of ERISA and such regulations and published interpretations in
which its employees are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. No
"Reportable Event" (as defined in 12 ERISA) has occurred with respect to
any "Pension Plan" (as defined in ERISA) for which the Company could have
any material liability.
(mm) None of the Company or its directors and officers has distributed
and none of them will distribute prior to the later of (i) the Closing
Date, and (ii) completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
(nn) Except for this Agreement, the Company is not a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or Placement Agents for a brokerage
commission, finder's fee or like payment in connection with the offering
and sale of the Shares.
3. [RESERVED].
4. Conditions of the Placement Agents' Obligations. The obligations of the
Placement Agents under this Agreement are several and not joint. The respective
obligations of the Placement Agents are subject to each of the following terms
and conditions:
(a) No order preventing or suspending the use of the Prospectus shall
have been or shall be in effect and no order suspending the effectiveness
of the Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the Commission, and
any requests for additional information on the part of the Commission (to
be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of the Commission and the
Placement Agents. If the Company has elected to rely upon Rule 430A, Rule
430A information previously omitted from the effective Registration
Statement pursuant to Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed time
period and the Company shall have provided evidence satisfactory to the
Placement Agents of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A. If the Company
has elected to rely upon
13
Rule 434, a term sheet shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) within the prescribed time period.
(b) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to this Section 4
shall be true and correct when made and on and as of the Closing Date as if
made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before the Closing Date.
(c) The Placement Agents shall have received on the Closing Date a
certificate, addressed to the Placement Agents and dated the Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that: (i)
the representations, warranties and agreements of the Company in this
Agreement were true and correct when made and are true and correct as of
the Closing Date; (ii) the Company has performed all covenants and
agreements and satisfied all conditions contained herein; (iii) they have
carefully examined the Registration Statement and the Prospectus and, in
their opinion (A) as of the Effective Date, the Registration Statement and
Prospectus did not include any untrue statement of a material fact and did
not omit to state a 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, and (B) since the Effective
Date no event has occurred which should have been set forth in a supplement
or otherwise required an amendment to the Registration Statement or the
Prospectus; and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to their knowledge, no
proceedings for that purpose have been instituted or are pending under the
Securities Act.
(d) The Placement Agents shall have received, at the time this
Agreement is executed and on the Closing Date a signed letter from Ernst &
Young LLP addressed to the Placement Agents and dated, respectively, the
date of this Agreement and the Closing Date, in form and substance
reasonably satisfactory to the Placement Agents containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus.
(e) The Placement Agents shall have received on the Closing Date from
Fulbright & Xxxxxxxx L.L.P., counsel for the Company, an opinion, addressed
to the Placement Agents and dated the Closing Date, in form and substance
satisfactory to the Placement Agents.
(f) The Placement Agents shall have received on the Closing Date from
each of Xxxxxxx Xxxxx Xxxxxx, P.C. and Xxxxxx Xxx-Xxx Xxxx, LLC,
intellectual property counsel for the Company, an opinion,
addressed to the Placement Agents and dated the Closing Date, in form and
substance satisfactory to the Placement Agents.
(g) The Placement Agents shall have received on the Closing Date from
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, counsel for the Placement
Agents, an opinion,
14
addressed to the Placement Agents and dated the Closing Date, in form and
substance satisfactory to the Placement Agents.
(h) On the date hereof, prior to the execution of this Agreement the
Chief Financial Officer or other senior financial officer of the Company
shall have furnished to the Placement Agents a certificate in form and
substance satisfactory to the Placement Agents as to the accuracy of
certain numbers contained in the Prospectus, which numbers shall be set
forth in a schedule attached to such certificate.
(i) The Placement Agents shall have received copies of the Lock-up
Agreements executed by each entity or person listed on Schedule I hereto.
(j) The Shares shall have been approved for quotation on the Nasdaq
SmallCap Market, subject only to official notice of issuance.
(k) The Company shall have furnished or caused to be furnished to the
Placement Agents such further certificates or documents as the Placement
Agents shall have reasonably requested.
5. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus in a form approved
by the Placement Agents and file such Prospectus pursuant to Rule
424(b) under the Securities Act 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 the Rules.
(ii) The Company shall promptly advise the Placement Agents in
writing (A) when any post-effective amendment to the Registration
Statement shall have become effective or any supplement to the
Prospectus shall have been filed, (B) of any request by the Commission
for any amendment of the Registration Statement or the Prospectus or
for any additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose and (D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus or any document
incorporated by reference in the Registration Statement unless the
Company has furnished the Placement Agents a copy for its review prior
to filing and shall not file any such proposed amendment or supplement
to which the Placement Agents reasonably object. The Company shall use
its best efforts to prevent the issuance of any such stop order and,
if issued, to obtain as soon as possible the withdrawal thereof.
15
(iii) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any
event occurs 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 any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (ii) of this Section 5(a), an amendment
or supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iv) The Company shall make generally available to its security
holders and to the Placement Agents as soon as practicable, an earning
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Placement Agents and counsel
for the Placement Agents, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and, so long as delivery of a prospectus by a Placement Agent
or dealer may be required by the Securities Act or the Rules, as many
copies of the Prospectus and any amendments thereof and supplements
thereto as the Placement Agents may reasonably request. If applicable,
the copies of the Registration Statement and Prospectus and each
amendment and supplement thereto furnished to the Placement Agents
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(vi) The Company shall cooperate with the Placement Agents and
their counsel in endeavoring to qualify the Shares for offer and sale
in connection with the offering under the laws of such jurisdictions
as the Placement Agents may designate and shall maintain such
qualifications in effect so long as required for the distribution of
the Shares; provided, however, that the Company shall not be required
in connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act and the Rules or the
Exchange Act, will file all reports and other documents required to be
filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and
the regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC World Markets
Corp., for a period of 90 days after the date of this Agreement, the
Company and
16
each of its individual directors and executive officers of the Company
shall not issue, sell or register with the Commission (other than on
Form S-8 or on any successor form), or otherwise dispose of, directly
or indirectly, any equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company), except for (i) the issuance of the Shares
pursuant to the Registration Statement and the issuance of shares
pursuant to the Company's existing stock option plan or bonus plan as
described in the Registration Statement and the Prospectus and the
issuance of shares upon exercise of outstanding warrants; and (ii) in
connection with the Company's 401(k) plan. In the event that during
this period, (A) any shares are issued pursuant to the Company's
existing stock option plan or bonus plan that are exercisable during
such 90 day period or (B) any registration is effected on Form S-8 or
on any successor form relating to shares that are exercisable during
such 90 day period, the Company shall obtain the written agreement of
such grantee or purchaser or holder of such registered securities
that, for a period of 90 days after the date of this Agreement, such
person will not, without the prior written consent of CIBC World
Markets Corp., offer for sale, sell, distribute, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, or
exercise any registration rights with respect to, any shares of Common
Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by such person.
Notwithstanding the foregoing, if (x) during the last 17 days of such
90 day period the Company issues an earnings release or material news
or a material event relating to the Company occurs; or (y) prior to
the expiration of the Lock-Up Period, the Company announces that it
will release earnings results during the 16 day period beginning on
the last day of the 90 day period; the restrictions imposed in this
Letter Agreement shall continue to apply until the expiration of the
18 day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event; provided, however,
that this sentence shall not apply if the research published or
distributed on the Company is compliant under Rule 139 of the
Securities Act and the Company's securities are actively traded as
defined in Rule 101(c)(1) of Regulation M of the Exchange Act.
(ix) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the
Nasdaq SmallCap Market (including any required registration under the
Exchange Act).
(x) Prior to the Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no
press conference with respect to the Company, the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of any of them, or the offering of the Shares without the prior
written consent of the Placement Agents, which consent shall not be
unreasonably withheld, unless in the judgment of the Company and its
counsel, and after notification to the Placement Agents, such press
release or communication is required by law.
17
(xi) The Company will apply the net proceeds from the offering of
the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(xii) The Company's Board of Directors will as soon as
practicable satisfy the requirements of Rule 4350(d)(2) of the Rules
of the NASD.
(b) The Company agrees to pay, or reimburse if paid by the Placement
Agents, whether or not the transactions contemplated hereby are consummated
or this Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement
including those relating to: (i) the preparation, printing, filing and
distribution of the Registration Statement including all exhibits thereto,
the Prospectus, all amendments and supplements to the Registration
Statement and the Prospectus and any document incorporated by reference
therein, and the printing, filing and distribution of this Agreement; (ii)
the preparation and delivery of certificates for the Shares; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in
Section 5(a)(vi), including the reasonable fees and disbursements of
counsel for the Placement Agents in connection with such registration and
qualification and the preparation, printing, distribution and shipment of
preliminary and supplementary Blue Sky memoranda; (iv) the furnishing
(including costs of shipping and mailing) to the Placement Agents of copies
of the Prospectus and all amendments or supplements to the Prospectus, and
of the several documents required by this Section to be so furnished, as
may be reasonably requested for use in connection with the offering and
sale of the Shares; (v) the filing fees of the NASD in connection with its
review of the terms of the offering and reasonable fees and disbursements
of counsel for the Placement Agents in connection with such review; (vi)
inclusion of the Shares for quotation on the Nasdaq SmallCap Market; (vii)
the costs and expenses of the Company relating to investor presentations in
connection with the marketing of the offering of the Shares, including,
without limitation, expenses associated with the production of slides and
graphics, fees and expenses of any consultants engaged in connection with
the presentations, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Placement Agents; and (viii) all of reasonable out-of-pocket
expenses of the Placement Agents (including reasonable fees and expenses of
one legal counsel) in connection with the performance of the services
hereunder. Subject to the provisions of Section 8, the Placement Agents
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Placement Agents
under this Agreement not payable by the Company pursuant to the preceding
sentence.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Placement
Agent and each person, if any, who controls any Placement Agent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid
18
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Securities Act,
the Exchange Act or other Federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or in any Blue
Sky application or other information or other documents executed by the
Company filed in any state or other jurisdiction to qualify any or all of
the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of any Placement Agent
(or any person controlling such Placement Agent) on account of any losses,
claims, damages or liabilities arising from the sale of the Shares if such
untrue statement or omission or alleged untrue statement or omission was
made in the Registration Statement or the Prospectus, or such amendment or
supplement thereto, or in any Blue Sky Application in reliance upon and in
conformity with information furnished in writing to the Company by the
Placement Agents on behalf of any Placement Agent specifically for use
therein.
(b) Each Placement Agent agrees to indemnify and hold harmless the
Company, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, each director of the Company, and each officer of the Company who
signs the Registration Statement, against any losses, claims, damages or
liabilities (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted) to which such party
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein 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 in the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Placement Agent
expressly for use therein; provided, however, that the obligation of each
Placement Agent to indemnify the Company (including any controlling person,
director or officer thereof) shall be limited to the amount of placement
agent fees actually received by such Placement Agent pursuant to this
Agreement.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers
19
served. No indemnification provided for in Section 6(a) or 6(b) shall be
available to any party who shall fail to give notice as provided in this
Section 6(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by
the failure to give such notice. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party
shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to
employ its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in
writing by the indemnifying parties, (ii) the indemnified party shall have
been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available
to the indemnifying party (in which case the indemnifying parties shall not
have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which cases the
fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of
any action, suit, and proceeding or claim effected without its written
consent, which consent shall not be unreasonably withheld or delayed.
7. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(a) or 6(b)
is due in accordance with its terms but for any reason is unavailable to or
insufficient to hold harmless an indemnified party in respect to any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate losses, liabilities,
claims, damages and expenses (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Placement Agents on the other hand from the offering of the Shares pursuant to
this Agreement or, if such allocation is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company on the one hand and
the Placement Agents on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The Company
and the Placement Agents agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Placement Agents were treated as one entity for such purpose) or by
any other method of allocation which does not
20
take account of the equitable considerations referred to above. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 7,
no Placement Agent shall be required to contribute any amount in excess of the
amount of placement agent fees actually received by such Placement Agent
pursuant to this Agreement. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls a Placement Agent within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Placement Agent, 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 the Section 15 of the Securities Act
or Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve the party or parties from
whom contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 7. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Placement Agents' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective amounts
of placement agent fees each has actually received pursuant to this Agreement
and not joint.
8. Termination.
(a) This Agreement may be terminated at any time prior to the Closing
Date by the Placement Agents by notifying the Company at any time at or
before the Closing Date in the absolute discretion of the Placement Agents
if: (i) there has occurred any material adverse change in the securities
markets or any event, act or occurrence that has materially disrupted, or
in the opinion of the Placement Agents, will in the future materially
disrupt, the securities markets or there shall be such a material adverse
change in general financial, political or economic conditions or the effect
of international conditions on the financial markets in the United States
is such as to make it, in the judgment of the Placement Agents, inadvisable
or impracticable to market the Shares or enforce contracts for the sale of
the Shares; (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
judgment of the Placement Agents, inadvisable or impracticable to market
the Shares or enforce contracts for the sale of the Shares; (iii) trading
in the Shares or any securities of the Company has been suspended or
materially limited by the Commission or trading generally on the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. or the Nasdaq
SmallCap Market has been suspended or materially limited, or minimum or
maximum ranges for
21
prices for securities shall have been fixed, or maximum ranges for prices
for securities have been required, by any of said exchanges or by such
system or by order of the Commission, the National Association of
Securities Dealers, Inc., or any other governmental or regulatory
authority; or (iv) a banking moratorium has been declared by any state or
Federal authority; or (v) in the judgment of the Placement Agents, there
has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or business
prospects of the Company and its subsidiaries considered as a whole,
whether or not arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its provisions,
the Company shall not be under any liability to any Placement Agent, and no
Placement Agent shall be under any liability to the Company, except that if
this Agreement is terminated by the Placement Agents or the Placement
Agents because of any failure, refusal or inability on the part of the
Company to comply with the terms or to fulfill any of the conditions of
this Agreement, the Company will reimburse the Placement Agents for all
out-of-pocket expenses (including the reasonable fees and disbursements of
their counsel) incurred by them in connection with this Agreement and the
proposed sale of the Shares or in contemplation of performing their
obligations hereunder.
9. [RESERVED].
10. Miscellaneous. The respective agreements, representations, warranties,
indemnities and other statements of the Company, and the Placement Agents, as
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Placement Agent or the Company or any of their respective officers,
directors or controlling persons referred to in Sections 6 and 7 hereof, and
shall survive delivery of and payment for the Shares. In addition, the
provisions of Sections 5(b), 6, 7 and 8 shall survive the termination or
cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Placement
Agents, the Company and their respective successors and assigns, and, to the
extent expressed herein, for the benefit of persons controlling any of the
Placement Agents, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any Investor merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Placement Agents, c/o CIBC World Markets Corp., 000 Xxxxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxx Xxxxxxxxx, with a
copy to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxx Xxxxxxxxxxx, Esq. and (b) if to the Company, to
its agent for service as such agent's address appears on the cover page of the
Registration Statement with a copy to Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx, Esq.
22
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
23
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
VION PHARMACEUTICALS, INC.
By /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Financial Officer
Confirmed:
CIBC WORLD MARKETS CORP.
LEERINK XXXXX & Company
By CIBC WORLD MARKETS CORP.
By /s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Managing Director
24
SCHEDULE I
Lock-up Signatories
Xxxx Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxx Xxxx
Xxxxx Xxxxx
Xxxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxxxxx X. XxxXxxxxx
Xxxx X. Xxxxxxxxxx
Xxx Xxx Xxxxxx
Xxxxx Xxxxxxxxx
Exhibit A
FORM OF PURCHASE AGREEMENT
Vion Pharmaceuticals, Inc.
0 Xxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned entities set forth on Schedule I hereto (each an
"Investor"), hereby confirm and agree with you as follows:
1. This Purchase Agreement (the "Agreement") is made as of January 25, 2005
between Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and
each Investor.
2. The Company has authorized the sale and issuance of up to 11,167,158
shares (the "Shares") of common stock of the Company, par value $0.01 per share
(the "Common Stock"), subject to adjustment by the Company's Board of Directors,
to certain investors (the "Offering"). The Offering has been registered under
the Securities Act of 1933, as amended, pursuant to the Company's Registration
Statement on Form S-3 (No. 333-121251) as amended (the "Registration
Statement").
3. The Company and each Investor agree that each Investor will purchase
from the Company and the Company will issue and sell to each Investor the number
of Shares, set forth opposite such Investor's name on Schedule I hereto, at a
purchase price of $3.25 per share, pursuant to the Terms and Conditions for
Purchase of Shares attached hereto as Annex I and incorporated herein by
reference as if fully set forth herein. Each Investor acknowledges that the
offering is not being underwritten by the placement agents (the "Placement
Agents") named in the Prospectus (as hereinafter defined) and that there is no
minimum offering amount. Certificates representing the Shares purchased by each
Investor will not be issued to such Investor; instead, such Shares will be
credited to each Investor using customary book-entry procedures.
4. Each Investor represents that (a) it has had no position, office or
other material relationship within the past three years with the Company or
persons known to it to be affiliates of the Company, (b) neither it, nor any
group of which it is a member or to which it is related, beneficially owns
(including the right to acquire or vote) any securities of the Company, (c) it
is not a, and it has no direct or indirect affiliation or association with any,
NASD member as of the date hereof and (d) after giving effect to the Offering,
neither the undersigned Investor nor any group of Investors (as identified in a
public filing made with the Commission) of which the undersigned Investor is a
part, in connection with the offering of the Shares will acquire, or obtain the
right to acquire, 20% or more of the Common Stock (or securities convertible or
exercisable for Common Stock) or the voting power of the Company.
A-1
5. Each Investor hereby confirms receipt of the Prospectus Supplement,
dated January 25, 2005 and the Base Prospectus, dated January 10, 2005
(collectively, the "Prospectus") filed by the Company with the Securities and
Exchange Commission on January 7, 2005. Each Investor confirms that it had full
access to the Prospectus and the information incorporated by reference therein,
and was fully able to read and review such materials.
A-2
Please confirm that the foregoing correctly sets forth the
agreement between us by signing in the space provided below for that purpose.
AGREED AND ACCEPTED: Name of Investor:___________________________
Name:
Title:
Name of Investor:___________________________
Name:
Title:
Name of Investor:___________________________
Name:
Title:
Name of Investor:___________________________
Name:
Title:
Name of Investor:___________________________
Name:
Title:
VION PHARMACEUTICALS, INC.
A DELAWARE CORPORATION
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
A-3
SCHEDULE I
SCHEDULE OF INVESTORS
------------------------------------------------------------------------------------------------------------------------------------
NAME IN WHICH
BOOK-ENTRY INVESTOR ADDRESS, AGGREGATE
INVESTOR SHOULD BE MADE TELEPHONE AND CONTACT NUMBER OF PURCHASE TAX ID NAME OF BROKER BROKER DTC NO.
(IF DIFFERENT): PERSON SHARES PRICE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
1.
------------------------------------------------------------------------------------------------------------------------------------
2.
------------------------------------------------------------------------------------------------------------------------------------
3.
------------------------------------------------------------------------------------------------------------------------------------
4.
------------------------------------------------------------------------------------------------------------------------------------
A-1
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. Authorization and Sale of Shares. The Company has authorized the sale of
up to 11,167,158 Shares. The Company reserves the right to increase or decrease
this number.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1 Upon the terms and subject to the conditions hereinafter set forth, at
the Closing (as defined in Section 3), the Company will sell to each Investor,
and each Investor will purchase from the Company, the number of Shares set forth
on Schedule I of this Agreement at the purchase price set forth on therein.
2.2 The Company may enter into agreements similar to this Agreement with
certain other investors (the "Other Investors") and expects to complete sales of
Shares to them. (Each Investor and the Other Investors are hereinafter
collectively referred to as the "Investors," and this Agreement and the purchase
agreements executed by the Other Investors are hereinafter collectively referred
to as the "Agreements.") The Company may accept or reject any one or more
Agreements in its sole discretion.
3. Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the "Closing") shall occur on January 28, 2005 (the "Closing
Date"), at the offices of the Placement Agent's counsel. At the Closing, the
Company shall deliver to each Investor, using customary book-entry procedures,
the number of Shares set forth on Schedule I to this Agreement, and each
Investor shall deliver to the Company or as otherwise directed by the Placement
Agents a certified or official bank check or wire transfer of funds in the full
amount of the purchase price for the Shares being purchased hereunder, as set
forth opposite such Investor's name on Schedule I hereto, to a trust account
with JPMorgan Chase Bank, as escrow agent (the "Escrow Agent").
The Company's obligation to issue and sell the Shares to each Investor
shall be subject to the following conditions, any one or more of which may be
waived by the Company: (a) receipt by the Escrow Agent of a certified or
official bank check or wire transfer of funds in the full amount of the purchase
price for the Shares being purchased; (b) completion of the purchases and sales
of Shares under the Agreements that may be executed with the Other Investors;
and (c) the accuracy of the representations and warranties made by each Investor
and the fulfillment of those undertakings of each Investor to be fulfilled prior
to the Closing.
Each Investor's obligation to purchase the Shares shall be subject to the
condition that the Placement Agents shall not have (a) terminated the Placement
Agency Agreement dated January 25, 2005, between the Company and the Placement
Agents (the "Placement Agency Agreement") pursuant to the terms thereof or (b)
determined that the conditions to closing in the Placement Agency Agreement have
not been satisfied.
4. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, each Investor, as
follows:
A-1
4.1 The Company has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement.
4.2 This Agreement constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5. Representations, Warranties and Covenants of each Investor.
5.1 Each Investor represents and warrants that it has received the
Company's Prospectus.
5.2 Each Investor, if outside the United States, will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.
5.3 Each Investor further represents and warrants to, and covenants with,
the Company that (i) such Investor has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, and (ii) this Agreement constitutes a valid
and binding obligation of such Investor enforceable against such Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.4 Each Investor understands that nothing in the Prospectus, this
Agreement or any other materials presented to such Investor in connection with
the purchase and sale of the Shares constitutes legal, tax or investment advice.
Such Investor has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of Shares.
5.5 From and after obtaining the knowledge of the sale of the Shares
contemplated hereby, such Investor has not taken, and prior to the public
announcement of the transaction such Investor shall not take, any action that
has caused or will cause such Investor to have, directly or indirectly, sold or
agreed to sell any shares of Common Stock, effected any short sale, whether or
not against the box, established any "put equivalent position" (as defined in
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended) with
respect to the Common Stock, granted any other right (including, without
limitation, any put or call option) with respect to the Common Stock or with
respect to any security that includes, relates to or
A-2
derived any significant part of its value from the Common Stock, whether or not,
directly or indirectly, in order to hedge its position in the Shares.
6. Escrow Agent.
6.1 The Company and each Investor hereby appoint JPMorgan Chase Bank as the
"Escrow Agent" under this Agreement to serve from the date hereof until the
Closing.
6.2 Powers and Duties of Escrow Agent, Indemnity.
(a) Each Investor and the Company hereby irrevocably
authorizes the Escrow Agent to take all actions,
to make all decisions and to exercise all powers and remedies on its behalf
under the provisions of this Agreement, including without limitation all such
actions, decisions and powers as are reasonably incidental thereto. The Escrow
Agent may execute any of its duties hereunder by or through agents, designees or
employees.
(b) Neither the Escrow Agent nor any of its partners,
directors, members, officers, agents, designees
or employees (collectively, "Escrow Agent Indemnified Persons") shall be liable
or responsible to any Investor, the Company or any third party for any action
taken or omitted to be taken by the Escrow Agent or any other such Escrow Agent
Indemnified Persons in accordance with this Agreement or under any related
agreement, instrument or document.
7. Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and each Investor
herein shall survive the execution of this Agreement, the delivery to such
Investor of the Shares being purchased and the payment therefor.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by a nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt
and shall be delivered as addressed as follows:
(i) if to the Company, to:
Vion Pharmaceuticals, Inc.
0 Xxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: 000-000-0000
A-3
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telecopy No.: 212-318-3000
(ii) if to an Investor, at its address on Schedule I
hereto, or at such other address or addresses as may have been furnished to the
Company in writing.
9. Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and each Investor.
10. Headings. The headings of the various sections of this Agreement have
been inserted for convenience or reference only and shall not be deemed to be
part of this Agreement.
11. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.
A-4
INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Purchase Agreement)
A. Please complete the following:
1. Provide the information regarding the Investor requested on Schedule I to the
Purchase Agreement. The Purchase Agreement must be executed by an individual
authorized to bind the Investor.
2. BY 9:00 A.M. NEW YORK TIME ON WEDNESDAY, JANUARY 26, 2005, return VIA
FACSIMILE signed copies of the enclosed Purchase Agreement to EACH OF the
following persons:
CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
Fulbright & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxx, Esq.
Phone: (000) 000-0000
Telecopy: (000) 000-0000
Please complete all of the information on the signature page of the Purchase
Agreement to facilitate the Closing and the electronic delivery of the Shares.
Please also deliver the ORIGINALLY SIGNED DOCUMENTS TO FULBRIGHT & XXXXXXXX LLP
AT THE ADDRESS ABOVE VIA OVERNIGHT DELIVERY.
A copy of the Purchase Agreement signed by the Company will be delivered to the
Investor at a later date.
3. BY 1:00 P.M. NEW YORK TIME ON FRIDAY, JANUARY 28, 2005, the Investor shall
wire the purchase price for the Shares to the trust account of JPMorgan Chase
Bank, as Escrow Agent, pursuant to the enclosed Wire Instructions.
A-1
Wire Instructions
-----------------
JPMORGAN CHASE BANK
0 Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA # 021 000 021
Account Name: Escrow Incoming Wire Account
ACCOUNT NO.: 507 953 312
FFC: 10220769 Vion/CIBC Markets
IMPORTANT: Please clearly indicate on the wire (i) the name of the originator
(i.e., the Investor) and (ii) the beneficiary, Vion Pharmaceuticals, Inc. Please
also coordinate with your financial institution to ensure that transaction fees
are NOT INADVERTENTLY DEDUCTED from the wired funds prior to their receipt by
JPMorgan Chase Bank.
PLEASE NOTE: If you will be initiating a wire transfer from overseas, please
call Xxxxxx Xxxxx, to obtain the Swift code number. Funds may be wired in U.S.
dollars only.
CONTACT:
Attention: Xxxxxx Xxxxx
Tel No.: 000.000.0000
A-1
Exhibit B
FORM OF LOCK-UP AGREEMENT
January [ ], 2005
CIBC World Markets Corp.
Leerink Xxxxx & Company
As Placement Agents
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Vion Pharmaceuticals, Inc.
Ladies and Gentlemen:
The undersigned, a holder of common stock, par value $0.01 ("Common
Stock"), or rights to acquire Common Stock, of Vion Pharmaceuticals, Inc. (the
"Company") understands that you, as Placement Agents, propose to enter into a
Placement Agency Agreement (the " Placement Agency Agreement") with the Company,
providing for the public offering (the "Public Offering") by the several
Placement Agents named in Schedule I to the Placement Agency Agreement (the
"Placement Agents"), of shares of Common Stock of the Company (the
"Securities"). Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Placement Agency Agreement.
In consideration of the Placement Agents' agreement to enter into the
Placement Agency Agreement and to proceed with the Public Offering of the
Securities, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees for the benefit of the
Company, you and the other Placement Agents that, without the prior written
consent of CIBC World Markets Corp. on behalf of the Placement Agents, the
undersigned will not, during the period ending 90 days (the "Lock-Up Period")
after the date of the prospectus relating to the Public Offering (the
"Prospectus"), directly or indirectly (1) offer, pledge, assign, encumber,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, any shares of
Common Stock, $0.01 per share par value, of the Company (the "Common Stock") or
any securities convertible into or exercisable or exchangeable for Common Stock
owned either of record or beneficially (as defined in the Securities Exchange
Act of 1934, as amended) by the undersigned on the date hereof or hereafter
acquired or (2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise, or publicly announce an intention to do any of the foregoing;
provided that this Letter Agreement shall not restrict the exercise or cashless
exercise of options
B-1
or warrants by the undersigned and provided further the shares of common stock
received by the undersigned in connection with such exercise of options or
warrants shall be subject to this Letter Agreement. In addition, the undersigned
agrees that, without the prior written consent of CIBC World Markets Corp. on
behalf of the Placement Agents, it will not, during the period ending 90 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. The foregoing
shall not apply to (x) Common Stock to be transferred as a gift or gifts
(provided that any donee thereof agrees in writing to be bound by the terms
hereof), (y) the sale of the Securities to be sold pursuant to the Prospectus
and (y) sales under any 10b-5 plan.
Notwithstanding the foregoing, if (x) during the last 17 days of the
Lock-Up Period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (y) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the 90-day period; the
restrictions imposed in this Letter Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event; provided,
however, that this sentence shall not apply if the research published or
distributed on the Company is compliant under Rule 139 of the Securities Act and
the Company's securities are actively traded as defined in Rule 101(c)(1) of
Regulation M of the Exchange Act.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Placement Agency Agreement does
not become effective, or if the Placement Agency Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released form all obligations under this Letter Agreement.
The undersigned, whether or not participating in the Offering, understands
that the Placement Agents are entering into the Placement Agency Agreement and
proceeding with the Public Offering in reliance upon this Letter Agreement.
B-2
This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
[STOCKHOLDER]
By: _______________________
Name:
Title:
B-3
