SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

 

Under the Securities Exchange Act of 1934
(Amendment No. 3)

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

                +Represents the number of shares of common stock, par value $0.001 (the “Common Stock”), of the Company  into which the shares of the Company’s Series A-1 Convertible Preferred Stock (“Series A-1 Preferred”), the Company’s Series A-2 Convertible Preferred Stock (the “Series A-2 Preferred”) and the Series A-3 Convertible Preferred Stock (the “Series A-3 Preferred”) beneficially owned by the Reporting Person are convertible as of January 9, 2012. Giving effect to accretion in the stated value of Series A-1 Preferred, each share of Series A-1 Preferred is convertible into approximately 153 shares of Common Stock, which is determined by dividing (x) the sum of (i) the stated value of $100 per share plus (ii) the accretion thereon by (y) an effective conversion price of $0.736 per share. Each share of Series A-2 Preferred is convertible into approximately 333 shares of Common Stock, which is determined by dividing the stated value of $100 per share by an effective conversion price of $0.30 per share. Each share of Series A-3 Preferred, which is subject to certain limitations on the number of shares of Common Stock into which such shares of Series A-3 Preferred can convert prior to the amendment of the Company’s certificate of incorporation described in this Amendment No. 3, is convertible into approximately 175 shares of Common Stock, which is determined by dividing the stated value of $100 per share by a conversion price of $0.35 per share for the Series A-3 Preferred after applying such limitations.

 

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+See note on page 2.

 

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+See note on page 2.

 

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+See note on page 2.

 

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+See note on page 2.

 

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+See note on page 2.

 

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+See note on page 2.

 

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+See note on page 2.

 

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+See note on page 2.

 

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Pursuant to Rule 13d-2 promulgated under the Act, this Schedule 13D/A (this “Amendment No. 3”) amends the Schedule 13D filed on June 16, 2010 (the “Original Schedule 13D”) and amended on September 14, 2010 (“Amendment No. 1”) and February 3, 2011 (“Amendment No. 2” and, together with the Original Schedule 13D, Amendment No. 1 and this Amendment No. 3, the “Schedule 13D”), and is being filed on behalf of Warburg Pincus Private Equity X, L.P., a Delaware limited partnership (“WP X”), Warburg Pincus X Partners, L.P., a Delaware limited partnership (“WPP X”, and together with WP X, the “WP X Funds”), Warburg Pincus X, L.P., a Delaware limited partnership (“WP X LP”) and the sole general partner of each of the WP X Funds, Warburg Pincus X LLC, a Delaware limited liability company (“WP X LLC”) and the sole general partner of WP X LP, Warburg Pincus Partners LLC, a New York limited liability company (“WPP LLC”) and the sole member of WP X LLC, Warburg Pincus & Co., a New York general partnership (“WP”) and the managing member of WPP LLC, Warburg Pincus LLC, a New York limited liability company (“WP LLC”) that manages each of the WP X Funds, and Messrs. Charles R. Kaye and Joseph P. Landy, each a Managing General Partner of WP and a Co-President and Managing Member of WP LLC who may be deemed to control the WP X Funds, WP X LP, WP X LLC, WPP LLC, WP and WP LLC (Mr. Kaye, Mr. Landy, WP X, WPP X, WP X LP, WP X LLC, WPP LLC, WP and WP LLC, each a “Reporting Person” and collectively being referred to as the “Reporting Persons”).  This Amendment No. 3 relates to the Common Stock of Talon Therapeutics, Inc., a Delaware corporation (the “Company”).
All capitalized terms used herein which are not otherwise defined herein have the same meanings given to such terms in the Original Schedule 13D, as amended.
Item 3.	Source and Amount of Funds or Other Consideration
Item 3 of the Schedule 13D is hereby amended to include the following:   The amount of funds used by the WP X Funds to purchase the shares of Series A-2 Preferred as described in this Amendment No. 3 was furnished from the working capital of such WP X Funds. The total amount of funds paid by the WP X Funds to purchase the securities of the Company purchased on January 9, 2012 as described in this Amendment No. 3 was $9,900,000.
Item 4.	Purpose of the Transaction
Item 4 of the Schedule 13D is hereby amended to include the following:   2012 Investment Agreement   On January 9, 2012, the WP X Funds entered into an Investment Agreement (the “2012 Investment Agreement”) with the Company, Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Special Situations Fund, L.P. and Deerfield Special Situations Fund International Limited (collectively, the “Deerfield Purchasers” and, together with the WP X Funds, the “Purchasers”), a copy of which is attached hereto as Exhibit 99.7. Pursuant to the terms of the 2012 Investment Agreement, on January 9, 2012 (i) WP X purchased 95,931 shares of the Company’s Series A-2 Convertible Preferred Stock (the “Series A-2 Preferred”), for an aggregate purchase price of $9,593,100 and (ii) WPP X purchased 3,069 shares of Series A-2 Preferred for an aggregate purchase price of $306,900. The stated value of each share of Series A-2 Preferred is $100.  The terms of the Series A-2 Preferred are set forth in the Certificate of Amendment of Corrected Certificate of Designation of Series A-2 Convertible Preferred Stock of the Company, setting forth the designations, preferences, limitations and relative rights of the Series A-2 Preferred (as amended, the “Series A-2 Certificate”), a copy of which is attached hereto as Exhibit 99.8.    In addition to the purchase and sale of the Series A-2 Preferred as described above, the 2012 Investment Agreement provides that prior to one year following the receipt of notice from the Company that the Company has received written marketing approval in the United States (which for the purposes of clarity shall include “accelerated approval”) from the U.S. Food and Drug Administration for a New Drug Application submitted for certain of the Company’s products (the “Marketing Approval Date”), the WP X Funds shall have the right to purchase up to 600,000 shares of the Company’s Series A-3 Convertible Preferred Stock (the “Series A-3 Preferred”, and together with the Series A-1 Convertible Preferred Stock, as defined in the Investment Agreement dated June 7, 2010 among the Purchasers (the “Series A-1 Preferred”), and the Series A-2 Preferred, the “Series A Preferred”) (subject to reduction for the Deerfield Purchasers’ participation, as described below)  in one or more separate transactions at a price per share of $100. The stated value of each share of Series A-3 Preferred is $100. The Series A-3 Preferred has designations, preferences, limitations and relative rights substantially similar to the Series A-2 Preferred, except that each share of Series A-3 Preferred is convertible into such number of shares of Common Stock of the Company as is equal to the accreted value of such share of Series A-3 Preferred divided by a conversion price of $0.35 (subject to adjustment pursuant to the terms of the Certificate of Designation of Series A-3 Convertible Preferred Stock of the Company, setting forth the designations, preferences, limitations and relative rights of the Series A-3 Preferred (the “Series A-3 Certificate”), a copy of which is attached hereto as Exhibit 99.9).  Pursuant to the terms of the Series A-3 Certificate, prior to the approval by the stockholders of the Company of an amendment to the amended and restated certificate of incorporation of the Company to increase the authorized numbers of shares of Common Stock (the “Stockholder Approval”), the number of shares of Common Stock issuable upon conversion of the Series A-3 Preferred is subject to the limit set forth in the Series A-3 Certificate.

 

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Pursuant to the terms of the 2012 Investment Agreement, the WP X Funds agreed upon the earlier to occur of (i) the receipt of Stockholder Approval or (ii) a withdrawal or modification of the Company’s board of directors’ recommendation with respect to the Stockholder Approval, to vote all of its shares of the Company’s capital stock (a) in favor of the Stockholder Approval and the transactions contemplated by the 2012 Investment Agreement and any other matter that is required to facilitate the transactions contemplated by the 2012 Investment Agreement, and (ii) against any action or agreement that would impair the ability of the Company to obtain the Stockholder Approval or be inconsistent with, prevent, impede or delay the consummation of the transactions contemplated by the 2012 Investment Agreement. In addition, to the extent that any such actions are taken by the written consent of stockholders, each WP X Fund agreed to provide consent or withhold consent, as the case may be, in a manner consistent with the aforementioned provisions.   The 2012 Investment Agreement also provides that, subject to certain terms and conditions, if the WP X Funds elect to purchase any shares of Series A-3 Preferred described above, the Deerfield Purchasers will have the right to purchase ten percent (10%) of such shares which shall reduce the number of shares acquirable by the WP X Funds to the extent that the Deerfield Purchasers exercise this right.   Amendment No. 1 to Investment Agreement   On January 9, 2012, in connection with the entry into the 2012 Investment Agreements, the WP X Funds and the Deerfield Purchasers entered into an agreement with the Company (“Amendment No. 1 to Investment Agreement”), a copy of which is attached hereto as Exhibit 11, amending the terms of the Investment Agreement to, among other things, acknowledge that no further shares of Series A Preferred shall be issuable thereunder.   Additional Disclosure   The Reporting Persons intend to review their investment in the Company on a continuing basis and will routinely monitor a wide variety of investment considerations, including, without limitation, current and anticipated future trading prices for the Common Stock and other securities of the Company, if any, the Company’s financial position, operations, assets, prospects, strategic direction and business and other developments affecting the Company and its subsidiaries, the Company’s management, the Company’s board of directors, Company-related competitive and strategic matters, conditions in the securities and financial markets, tax considerations, general market, economic and industry conditions, other investment and business opportunities available to the Reporting Persons and other factors considered relevant. The Reporting Persons may from time to time take such actions with respect to their investment in the Company as they deem appropriate, including, without limitation, (i) acquiring additional shares or disposing of some or all of their shares of Series A-1 Preferred, Series A-2 Preferred, Series A-3 Preferred or Common Stock (or other securities of the Company) or engaging in discussions with the Company and its subsidiaries concerning future transactions with the Company and its subsidiaries, including, without limitation, extraordinary corporate transactions and acquisitions or dispositions of shares of capital stock or other securities of the Company or any subsidiary thereof, (ii) changing their current intentions with respect to any or all matters referred to in this Item 4 and (iii) engaging in hedging, derivative or similar transactions with respect to any securities of the Company. Any acquisition or disposition of the Company’s securities may be made by means of open-market purchases or dispositions, privately negotiated transactions, direct acquisitions from or dispositions to the Company or a subsidiary thereof or otherwise, in each case subject to certain provisions of the Investment Agreement and the 2012 Investment Agreement.   Voting Agreement   On January 9, 2012, in connection with the consummation of the transactions contemplated under the 2012 Investment Agreement, WP X and the Deerfield Purchasers entered into a Voting Agreement (the “Voting Agreement”), a copy of which is attached hereto as Exhibit 99.10. The Voting Agreement provides that each Deerfield Purchaser shall vote (or cause to be voted), for so long as the Voting Agreement remains in effect, all shares of Common Stock (subject to certain exceptions) and Series A-1 Preferred beneficially owned (as defined in Rule 13d-3 under the Exchange Act) by such Deerfield Purchaser (together with such additional shares as become beneficially owned by such Deerfield Purchaser, whether upon the exercise of options, warrants, conversion of convertible securities or otherwise, and any other voting securities of the Company (whether acquired theretofore or thereafter)) (i) in favor of (a) the Stockholder Approval and the transactions contemplated by the 2012 Investment Agreement and (b) any other matters submitted to the stockholders of the Company in furtherance of the transactions contemplated by the 2012 Investment Agreement, and (ii) against any action or agreement that would impair the ability of the Company to obtain the Stockholder Approval or otherwise issue certain securities as contemplated by, and pursuant to, the 2012 Investment Agreement, or that would otherwise be inconsistent with, prevent, impede or delay the consummation of the transactions contemplated by the 2012 Investment Agreement. In addition, to the extent that any such actions are taken by the written consent of stockholders, each Deerfield Purchaser agreed to provide consent or withhold consent, as the case may be, in a manner consistent with the aforementioned provisions. The Voting Agreement shall terminate upon the earlier to occur of (i) the receipt of Stockholder Approval or (ii) July 9, 2012.   Pursuant to the terms of the Voting Agreement, the Deerfield Purchasers also agreed not to transfer or sell any shares of Series A Preferred or Common Stock (subject to certain exceptions) for so long as the Voting Agreement is in effect, and that each Deerfield Purchaser is to promptly notify WP X of any new shares of capital stock or voting securities of the Company acquired by such Deerfield Purchaser, if any, after the date of the Voting Agreement. Upon acquisition, any such shares and voting securities shall become subject to the terms of the Voting Agreement as though owned by such Deerfield Purchaser on the date of the Voting Agreement.

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The summary contained herein of the 2012 Investment Agreement, Series A-2 Certificate, Series A-3 Certificate, Voting Agreement and Amendment No.1 to Investment Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of such agreements and certificates, copies of which are filed as Exhibits 99.7, 99.8, 99.9, 99.10 and 99.11 hereto, respectively, and which are incorporated herein by reference.
Item 5.	Interest in Securities of the Issuer
Item 5 of the Schedule 13D is hereby amended and restated in its entirety as follows:   All of the computations and share amounts used herein do not give effect to any accretion on the shares of Series A-1 Preferred after January 9, 2012. The percentages used herein are calculated based upon the 21,778,812 shares of Common Stock outstanding as of November 11, 2011 as reported in the Company’s Quarterly Report for the quarterly period ended September 30, 2011 filed by the Company with the Securities and Exchange Commission (the “SEC”) on November 14, 2011. The number of shares of Common Stock that may be deemed to be beneficially owned by the Reporting Persons, and the percentage of the outstanding shares represented thereby, in each case as reported in this Schedule 13D, are based on the number of shares of Common Stock issuable to the Reporting Persons upon conversion of the shares of Series A-1 Preferred and Series A-2 Preferred owned by the Reporting Persons on January 9, 2012 and the number of shares of Common Stock issuable to the Reporting Persons, after applying the limitations set forth in the Series A-3 Certificate, upon conversion of the 600,000 shares of Series A-3 Preferred which the WP X Funds have the right to acquire pursuant to the 2012 Investment Agreement (without giving effect to the right of the Deerfield Purchasers to purchase ten percent (10%) of such shares of Series A-3 Preferred, which exercise would reduce the number of shares acquirable by the WP X Fund).   (a)   WP X is the direct beneficial owner of 359,797 shares of Series A-1 Preferred, 95,931 shares of Series A-2 Preferred and 101,745,000 shares of Series A-3 Preferred. As of January 9, 2012, such shares are, in the aggregate, convertible into 188,744,345 shares of Common Stock, representing approximately 87.15% of the outstanding shares of Common Stock.           WPP X is the direct beneficial owner of 11,510 shares of Series A-1 Preferred, 3,069 shares of Series A-2 Preferred and 3,255,000 shares of Series A-3 Preferred. As of January 9, 2012, such shares are, in the aggregate, convertible into 6,039,220 shares of Common Stock, representing approximately 2.78% of the outstanding shares of Common Stock.           Due to their respective relationships with the WP X Funds and each other, as of January 9, 2012, each of the Reporting Persons may be deemed to beneficially own shares of Common Stock by virtue of their beneficial ownership of shares of Series A-1 Preferred, Series A-2 Preferred and Series A-3 Preferred. Assuming the full conversion of the Series A-1 Preferred in accordance with the terms of the Series A-1 Certificate, the full conversion of the Series A-2 Preferred in accordance with the terms of the Series A-2 Certificate, and the full conversion (subject to the limitations on the number of shares of Common Stock issuable upon conversion set forth in the Series

 

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A-3 Certificate) of the Series A-3 Preferred in accordance with the terms of the Series A-3 Certificate, the Reporting Persons may be deemed to beneficially own 194,813,754 shares of Common Stock, representing approximately 89.9% of the outstanding class of Common Stock, based on a total of 216,592,566 shares of Common Stock, which is comprised of: (i) the 21,778,812 shares of Common Stock outstanding referenced above, (ii) the 56,813,754 shares of Common Stock issuable to WP X and WPP X upon the conversion of shares of Series A-1 Preferred described above, (iii) the 33,000,000 shares of Common Stock issuable to WP X and WPP X upon the conversion of shares of Series A-2 Preferred described above and (iv) 105,000,000 shares of Common Stock issuable to WP X and WPP X upon the conversion of shares of Series A-3 Preferred (subject to the limitations on the number of shares of Common Stock issuable upon conversion set forth in the Series A-3 Certificate) which the WP X Funds have the right to acquire pursuant to the 2012 Investment Agreement (without giving effect to the right of the Deerfield Purchasers to purchase ten percent (10%) of such shares of Series A-3 Preferred, which exercise would reduce the number of shares acquirable by the WP X Fund).   (b)   Each of WP X, WPP X, WP X LP, WP X LLC, WPP LLC, WP LLC and WP may be deemed to share with the WP X Funds the power to (i) dispose or to direct the disposition and (ii) vote or direct the vote of the 194,813,754 shares of Common Stock the WP X Funds may be deemed to beneficially own (and convert into) as of January 9, 2012.           Charles R. Kaye and Joseph P. Landy are Managing General Partners of WP and Managing Members and Co–Presidents of WP LLC and may be deemed to control the other Reporting Persons. Messrs. Kaye and Landy disclaim beneficial ownership of all shares held by the WP X Funds. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that any Reporting Person or any of its affiliates is the beneficial owner of any shares of Common Stock for purposes of Section 13(d) of the Exchange Act, as amended, or for any other purpose.   (c)   Other than as set forth in this Amendment No. 3, during the last sixty (60) days there were no transactions in the Common Stock effected by the Reporting Persons, nor, to the best of their knowledge, by any of their directors, executive officers, general partners or members.   (d)   Not applicable.   (e)   Not applicable.
Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of Issuer
Item 6 of the Schedule 13D is hereby amended to include the following:   The responses set forth in Item 4 of this Amendment No. 3 are hereby incorporated by reference.
Item 7.	Material to be Filed as Exhibits
Item 7 of the Schedule 13D is hereby amended to include the following:

 

Exhibit 99.7		Investment Agreement, dated as of January 9, 2012, by and among Talon Therapeutics, Inc., Warburg Pincus Private Equity X, L.P., Warburg Pincus X Partners, L.P., Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Special Situations Fund, L.P., and Deerfield Special Situations Fund International Limited (incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Talon Therapeutics, Inc. on January 9, 2012).
Exhibit 99.8		Certificate of Amendment of Corrected Certificate of Designation of Series A-2 Convertible Preferred Stock of Talon Therapeutics, Inc., dated as of January 9, 2012 (incorporated herein by reference to Exhibit 3.2 of the Current Report on Form 8-K filed by Talon Therapeutics, Inc. on January 9, 2012).
Exhibit 99.9		Certificate of Designation of Series A-3 Convertible Preferred Stock of Talon Therapeutics, Inc., dated as of January 9, 2012 (incorporated herein by reference to Exhibit 3.3 of the Current Report on Form 8-K

 

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		filed by Talon Therapeutics, Inc. on January 9, 2012).
Exhibit 99.10		Voting Agreement, dated as of June 7, 2010, by and among Warburg Pincus Private Equity X, L.P., Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Special Situations Fund, L.P., and Deerfield Special Situations Fund International Limited.
Exhibit 99.11		Amendment No. 1 to the Investment Agreement, dated as of January 9, 2012, by and among Warburg Pincus Private Equity X, L.P., Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Special Situation Fund, L.P., and Deerfield Special Situations Fund International Limited amending that certain Investment Agreement, dated as of June 7, 2010, by and among Talon Therapeutics, Inc., Warburg Pincus Private Equity X, L.P., Warburg Pincus X Partners, L.P., Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Special Situations Fund, L.P., and Deerfield Special Situations Fund International Limited (incorporated herein by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by Talon Therapeutics, Inc. on January 9, 2012).

 

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SIGNATURES

 

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

 

Dated: January 10, 2012		WARBURG PINCUS PRIVATE EQUITY X, L.P.
		By:	Warburg Pincus X, L.P., its general partner
		By:	Warburg Pincus X LLC, its general partner
		By:	Warburg Pincus Partners LLC, its sole member
		By:	Warburg Pincus & Co., its managing member
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Partner
Dated: January 10, 2012		WARBURG PINCUS X PARTNERS, L.P.
		By:	Warburg Pincus X, L.P., its general partner
		By:	Warburg Pincus X LLC, its general partner
		By:	Warburg Pincus Partners LLC, its sole member
		By:	Warburg Pincus & Co., its managing member
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Partner
Dated: January 10, 2012		WARBURG PINCUS X, L.P.
		By:	Warburg Pincus X LLC, its general partner
		By:	Warburg Pincus Partners LLC, its sole member
		By:	Warburg Pincus & Co., its managing member
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Partner
Dated: January 10, 2012		WARBURG PINCUS X LLC
		By:	Warburg Pincus Partners LLC, its sole member
		By:	Warburg Pincus & Co., its managing member
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Partner

 

 

Dated: January 10, 2012		WARBURG PINCUS PARTNERS LLC
		By:	Warburg Pincus & Co., its managing member
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Partner
Dated: January 10, 2012		WARBURG PINCUS & CO.
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Partner
Dated: January 10, 2012		WARBURG PINCUS LLC
		By:	/s/ Scott A. Arenare
			Name: Scott A. Arenare
			Title: Managing Director
Dated: January 10, 2012		CHARLES R. KAYE
		By:	/s/ Scott A. Arenare
			Scott A. Arenare, Attorney-in-fact*
Dated: January 10, 2012		JOSEPH P. LANDY
		By:	/s/ Scott A. Arenare
			Scott A. Arenare, Attorney-in-fact**

 

*      Power of Attorney given by Mr. Kaye was previously filed with the U.S. Securities & Exchange Commission (“SEC”) on March 2, 2006, as an exhibit to a Schedule 13D filed by Building Products, LLC with respect to Builders FirstSource, Inc.

 

**   Power of Attorney given by Mr. Landy was previously filed with the SEC on March 2, 2006, as an exhibit to a Schedule 13D filed by Building Products, LLC with respect to Builders FirstSource, Inc.

 

 

Exhibit 99.10

 

EXECUTION VERSION

 

VOTING AGREEMENT

 

This Voting Agreement (this “Agreement”) is dated as of January 9, 2012, among Warburg Pincus Private Equity X, L.P., a Delaware limited partnership (“Warburg Pincus”), Deerfield Private Design Fund, L.P., a Delaware limited partnership (“Deerfield Private Design”), Deerfield Private Design International, L.P., a British Virgin Islands limited partnership (“Deerfield Private Design International”), Deerfield Special Situations Fund, L.P., a Delaware limited partnership (“Deerfield Special Situations”), and Deerfield Special Situations Fund International Limited, a British Virgin Islands exempt company (“Deerfield Special Situations International”, and together with Deerfield Private Design, Deerfield Private Design International and Deerfield Special Situations, each a “Stockholder” and collectively the “Stockholders”).

 

W I T N E S S E T H:

 

WHEREAS, concurrently with the execution of this Agreement, Talon Therapeutics, Inc., a Delaware corporation (the “Company”) has entered into an Investment Agreement, dated as of the date hereof (the “Investment Agreement”), with the Purchasers which provides, among other things, for the issuance of Securities to the Purchasers, upon the terms and subject to the conditions set forth therein (capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Investment Agreement); and

 

WHEREAS, as of the date hereof, each Stockholder is the record and beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of the number of shares of Company Common Stock, Series A-1 Convertible Preferred Stock and warrants to purchase shares of Company Common Stock (the “Company Warrants”) set forth, and in the manner reflected, on Attachment A hereto (together with such additional shares as become beneficially owned by the Stockholders, whether upon the exercise of options, warrants, conversion of convertible securities or otherwise, and any other voting securities of the Company (whether acquired heretofore or hereafter) but not including up to 2,723,091 shares of Company Common Stock that are subject to a trading plan established pursuant to Rule 10b5-1 under the Exchange Act prior to the date hereof, the “Owned Shares”); and

 

WHEREAS, as a condition to Warburg Pincus’ willingness to enter into the Investment Agreement, Warburg Pincus has required that each Stockholder agree, and each Stockholder has agreed, (i) to vote all of such Stockholder’s Owned Shares in favor of (a) the Stockholder Proposal and the transactions contemplated by the Investment Agreement and (b) any other matters submitted to the stockholders of the Company in furtherance of the transactions contemplated by the Investment Agreement and (ii) to take the other actions described herein; and

 

WHEREAS, each Stockholder desires to express its support for the Stockholder Proposal and the transactions contemplated by the Investment Agreement.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration given to each party hereto, the receipt of which is hereby acknowledged, the parties agree as follows:

 

 

1.                                       Agreement to Vote.

 

1.1                                 Agreement to Vote.  Each Stockholder hereby agrees that, during the time this Agreement is in effect, at any meeting of the stockholders of the Company, however called, or any adjournment or postponement thereof, such Stockholder shall be present (in person or by proxy) and vote (or cause to be voted) all of its Owned Shares (a) in favor of approval of (1) the Stockholder Proposal and the transactions contemplated by the Investment Agreement, and (2) any other matter that is required to facilitate the transactions contemplated by the Investment Agreement; and (b) against any action or agreement that would impair the ability of the Company to obtain the Stockholder Approval or otherwise issue the Securities pursuant to the Investment Agreement, or that would otherwise be inconsistent with, prevent, impede or delay the consummation of the transactions contemplated by the Investment Agreement.  In addition, to the extent that any such actions are taken by the written consent of stockholders, the Stockholder shall provide consent or withhold consent, as the case may be, in a manner consistent with this Section 1.1.

 

1.2                                 No Exercise of Company Warrants.  Notwithstanding the foregoing, nothing in this Agreement shall require a Stockholder to exercise any Company Warrant or authorize Warburg Pincus to exercise any Company Warrant beneficially owned by a Stockholder.

 

2.                                       Representations and Warranties of Stockholders.  Each Stockholder hereby represents and warrants to Warburg Pincus as follows:

 

2.1                                 Due Organization.  Such Stockholder, if a corporation or other entity, has been duly organized, is validly existing and is in good standing under the laws of the state of its formation or organization.

 

2.2                                 Power; Due Authorization; Binding Agreement.  Such Stockholder has full legal capacity, power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation by such Stockholder of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of such Stockholder, and no other proceedings on the part of such Stockholder are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against Stockholder in accordance with its terms.

 

2.3                                 Ownership of Shares.  On the date hereof, the Owned Shares set forth opposite such Stockholder’s name on Attachment A hereto are owned beneficially by such Stockholder in the manner reflected thereon and include all of the shares of capital stock of the Company owned beneficially by such Stockholder, free and clear of any claims, liens, encumbrances and security interests.  As of the date hereof such Stockholder has, and at any stockholder meeting of the Company in connection with the Stockholder Proposal, such Stockholder will have (except as otherwise permitted by this Agreement), sole voting power (to the extent such securities have voting power) and sole dispositive power with respect to all of the Owned Shares.

 

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2.4                                 No Conflicts. The execution and delivery of this Agreement by such Stockholder does not, and the performance of the terms of this Agreement by such Stockholder will not, (a) require Stockholder to obtain the consent or approval of, or make any filing with or notification to, any governmental or regulatory authority, domestic or foreign (other than filings required under Sections 13(d) and 16 of the Exchange Act), (b) require the consent or approval of any other person pursuant to any agreement, obligation or instrument binding on Stockholder or its properties and assets, (c) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to Stockholder or pursuant to which any of its properties or assets are bound or (d) violate any other agreement to which Stockholder is a party including, without limitation, any voting agreement, stockholders agreement, irrevocable proxy or voting trust. The Owned Shares are not, with respect to the voting or transfer thereof, subject to any other agreement, including any voting agreement, stockholders agreement, irrevocable proxy or voting trust.

 

2.5                                 Acknowledgment.  Such Stockholder understands and acknowledges that Warburg Pincus is entering into the Investment Agreement in reliance upon such Stockholder’s execution, delivery and performance of this Agreement.

 

3.                                       Representations and Warranties of Warburg Pincus.  Warburg Pincus hereby represents and warrants to the Stockholders as follows:

 

3.1                                 Due Organization.  Warburg Pincus is a limited partnership, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

 

3.2                                 Power; Due Authorization; Binding Agreement.  Warburg Pincus has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation by Warburg Pincus of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of Warburg Pincus, and no other proceedings on the part of Warburg Pincus are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by Warburg Pincus and constitutes a valid and binding agreement of Warburg Pincus.

 

3.3                                 No Conflicts.  The execution and delivery of this Agreement by Warburg Pincus does not, and the performance of the terms of this Agreement by Warburg Pincus will not, (a) require Warburg Pincus to obtain the consent or approval of, or make any filing with or notification to, any governmental or regulatory authority, domestic or foreign (other than filings required under Sections 13(d) and 16 of the Exchange Act), (b) require the consent or approval of any other person pursuant to any agreement, obligation or instrument binding on Warburg Pincus or its properties and assets, (c) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to Warburg Pincus or pursuant to which any of its assets are bound or (d) violate any other material agreement to which Warburg Pincus is a party.

 

4.                                       Certain Covenants of the Stockholders.  Each Stockholder hereby covenants and agrees with Warburg Pincus as follows:

 

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4.1                                 Restriction on Transfer, Proxies and Non-Interference.  Each Stockholder hereby agrees, while this Agreement is in effect, at any time prior to the date of termination of this Agreement, not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, pledge, encumbrance, assignment or other disposition of, or limitation on the voting rights of, any of the Owned Shares (any such action, a “Transfer”), (b) grant any proxies or powers of attorney, deposit any Owned Shares into a voting trust or enter into a voting agreement with respect to any Owned Shares, (c) take any action that would cause any representation or warranty of such Stockholder contained herein to become untrue or incorrect or have the effect of preventing or disabling Stockholder from performing its obligations under this Agreement, or (d) commit or agree to take any of the foregoing actions.  Any action taken in violation of the foregoing sentence shall be null and void and each Stockholder agrees that any such prohibited action may and should be enjoined.  If any involuntary Transfer of any of the Owned Shares shall occur (including, but not limited to, a sale by a Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Owned Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until valid termination of this Agreement.

 

4.2                                 Additional Shares.  Each Stockholder hereby agrees, while this Agreement is in effect, to promptly notify Warburg Pincus of any new shares of capital stock or voting securities of the Company acquired by Stockholder, if any, after the date hereof.  Any such shares and voting securities shall be subject to the terms of this Agreement as though owned by such Stockholder on the date hereof.

 

4.3                                 No Limitations on Actions.  Each Stockholder signs this Agreement solely in its capacity as the beneficial owner of the Owned Shares and this Agreement shall not limit or otherwise affect the actions of the Stockholder or any affiliate, employee or designee of the Stockholder or any of its affiliates in its capacity, if applicable, as an officer or director of the Company.

 

4.4                                 Further Assurances.  From time to time, at the request of Warburg Pincus and without further consideration, each Stockholder shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective the transactions contemplated by this Agreement.

 

5.                                       Stop Transfer Order.  In furtherance of this Agreement, and concurrently herewith, each Stockholder shall and hereby does authorize the Company or the Company’s counsel to notify the Company’s transfer agent that there is a stop transfer order with respect to all of the Owned Shares.  At the request of Warburg Pincus, each Stockholder shall cause to be provided to Warburg Pincus evidence of such stop transfer order.

 

6.                                       Miscellaneous.

 

6.1                                 Termination of this Agreement.  This Agreement shall terminate upon the earlier to occur of (i) receipt by the Company of the Stockholder Approval or (ii) the Stockholder Approval Outside Date.

 

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6.2                                 Effect of Termination.  In the event of termination of this Agreement pursuant to Section 6.1, this Agreement shall become void and of no effect with no liability on the part of any party hereto; provided, however, no such termination shall relieve any party hereto from any liability for any breach of this Agreement occurring prior to such termination.

 

6.3                                 Non-Survival.  The representations and warranties made herein shall not survive the termination of this Agreement.

 

6.4                                 Entire Agreement; Assignment.  This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.  This Agreement shall not be assigned by operation of law or otherwise and shall be binding upon and inure solely to the benefit of each party hereto.

 

6.5                                 Amendments.  This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by each of the parties hereto.

 

6.6                                 Notices.  All notices and other communications hereunder shall be in writing and shall be deemed duly delivered (i) four Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service, or (iii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date of such receipt is not a Business Day) of transmission by facsimile, in each case to the intended recipient as set forth below:

 

If to the Stockholders:

 

Deerfield Management Company, L.P. Series C

780 Third Avenue, 37th Floor

New York, NY 10017

Attn.:  James E. Flynn

Facsimile: (212) 599-3075

 

with a copy to (which shall not constitute notice):

 

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022-2585

Attn.: Robert I. Fisher

Facsimile: (212) 894-5827

 

If to Warburg Pincus:

 

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c/o Warburg Pincus LLC

450 Lexington Avenue

New York, New York 10017

Attn.:  Jonathan Leff

Facsimile:  (212) 878-9361

 

with a copy to (which shall not constitute notice):

 

Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Attn.:  Steven J. Gartner, Esq./Robert T. Langdon, Esq.
Facsimile:  (212) 728-8111

 

Any party to this Agreement may give any notice or other communication hereunder using any other means (including personal delivery, messenger service, telex, ordinary mail or electronic mail), but no such notice or other communication shall be deemed to have been duly given unless and until it actually is received by the party for whom it is intended.  Any party to this Agreement may change the address to which notices and other communications hereunder are to be delivered by giving the other parties to this Agreement notice in the manner herein set forth.

 

6.7                                 Governing Law; Venue.

 

(a)                                  This Agreement shall be governed by and construed in accordance with the internal Laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of Laws of any jurisdictions other than those of the State of Delaware.

 

(b)                                 Each of the parties to this Agreement (a) consents to submit itself to the personal jurisdiction of any state or federal court sitting in Wilmington, Delaware in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any other court.  Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.  Any party hereto may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 6.6.

 

(c)                                  EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE

 

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ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

 

6.8                                 Specific Performance.  Each Stockholder acknowledges and agrees that irreparable damage would occur to Warburg Pincus in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached by such Stockholder, for which money damages would not provide an adequate remedy.  Therefore, each Stockholder agrees that, in the event of any breach or threatened breach by such Stockholder of any covenant or obligation contained in this Agreement, Warburg Pincus shall be entitled (in addition to any other remedy that may be available to it, including monetary damages) to seek and obtain (a) a decree or order of specific performance to enforce the observance and performance of such covenant or obligation, (b) an injunction restraining such breach or threatened breach, and (c) other equitable relief to enforce each and every provision hereof.  Each Stockholder further agrees that neither Warburg Pincus nor any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 6.8, and each Stockholder irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

6.9                                 Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  This Agreement may be executed and delivered by facsimile transmission.

 

6.10                           Descriptive Headings.  The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

6.11                           Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.  In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

 

6.12                           Disclosure.  Each Stockholder hereby authorizes (A) the Company to publish and disclose in the Proxy Statement (including all documents and schedules filed with

 

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the SEC) and in any press release, its identity and ownership of the Owned Shares and the nature of its commitments, arrangements and understandings under this Agreement and (B) Warburg Pincus to publish and disclose in its filings required under Sections 13(d) and 16 of the Exchange Act, its identity and ownership of the Owned Shares and the nature of its commitments, arrangements and understandings under this Agreement.

 

6.13                           Effectiveness of Agreement.  The obligations of the Stockholders in this Agreement shall not be effective or binding upon the Stockholders until after such time as the Investment Agreement is executed and delivered by Warburg Pincus.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Voting Agreement to be duly executed as of the day and year first above written.

 

 

	WARBURG PINCUS PRIVATE EQUITY X, L.P.
	By:  Warburg Pincus X L.P., its General Partner
	By:  Warburg Pincus X LLC, its General Partner
	By:   Warburg Pincus Partners LLC, its Sole Member
	By:   Warburg Pincus & Co., its Managing Member
	By:	/s/ Jonathan Leff
		Name:	Jonathan Leff
		Title:	Partner

 

[Signature Page to Voting Agreement]

 

 

	STOCKHOLDERS
	DEERFIELD PRIVATE DESIGN FUND, L.P.
	By: Deerfield Capital, L.P., its General Partner
			By: J.E. Flynn Capital, LLC, its General Partner
	By:	/s/ Jeffrey Kaplan
	Name:				Jeffrey Kaplan
	Title:				Authorized Signatory
	DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.
	By: Deerfield Capital, L.P., its General Partner
			By: J.E. Flynn Capital, LLC, its General Partner
	By:	/s/ Jeffrey Kaplan
	Name:			Jeffrey Kaplan
	Title:			Authorized Signatory
	DEERFIELD SPECIAL SITUATIONS FUND, L.P.
	By: Deerfield Capital, L.P., its General Partner
			By: J.E. Flynn Capital, LLC, its General Partner
	By:	/s/ Jeffrey Kaplan
	Name:			Jeffrey Kaplan
	Title:			Authorized Signatory
	DEERFIELD SPECIAL SITUATIONS FUND INTERNATIONAL LIMITED
	By:	/s/ Jeffrey Kaplan
	Name:			Jeffrey Kaplan
	Title:			Authorized Signatory

 

[Signature Page to Voting Agreement]

 

 

ATTACHMENT A

 

Details of Ownership

 

Stockholder		Number of Shares of Company Common Stock		Numbers of Shares of Company Common Stock Subject to Company Warrants		Series A-1 Convertible Preferred Stock
Deerfield Private Design Fund, L.P.		62,398		116,172		14,796
Deerfield Private Design International, L.P.		100,519		187,149		23,836
Deerfield Special Situations Fund, L.P.		15,103		21,414		2,726
Deerfield Special Situations Fund International Limited		50,041		39,249		4,998