ONYX PHARMACEUTICALS, INC.
STOCK PURCHASE AGREEMENT
JANUARY 12, 1998
TABLE OF CONTENTS
PAGE
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES . . . . . . . . . . . . . . . . . 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES . . . . . . . . . . . . . . . . 1
2.1 Sale of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. CLOSING AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.2 Delivery of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. . . . . . . . . 2
4.1 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . 2
4.2 Due Execution, Delivery and Performance of the Agreements . . . . . . . . 2
4.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.4 Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.5 Issuance and Sale of the Shares . . . . . . . . . . . . . . . . . . . . . 3
4.6 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.7 No Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.8 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.9 Nasdaq National Market . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.10 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.11 Intangible Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.12 Legal Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.13 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.14 Regulations S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.15 Securities Act Exemption . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER . . . . . . . 6
5.1 Authority, Approval and Enforceability . . . . . . . . . . . . . . . . . 7
5.2 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Standstill Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS . . . . . . . . . 9
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING . . . . . . . . . . . 9
7.1 Representations and Warranties Correct . . . . . . . . . . . . . . . . . 10
7.2 Covenants Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Qualifications, Legal Investment . . . . . . . . . . . . . . . . . . . . 10
SECTION 8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. . . . . . . . . . . 10
8.1 Representations and Warranties Correct. . . . . . . . . . . . . . . . . . 10
8.2 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Covenants Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
8.4 Qualifications, Legal Investment . . . . . . . . . . . . . . . . . . . . 10
8.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT . . . . . 11
9.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Registration Procedures and Expenses . . . . . . . . . . . . . . . . . . 11
9.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4 Transfer of Shares After Registration; Notice . . . . . . . . . . . . . . 14
9.5 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.6 Market Stand-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.7 Termination of Obligations . . . . . . . . . . . . . . . . . . . . . . . 15
9.8 Assignability of Registration Rights. . . . . . . . . . . . . . . . . . . 15
SECTION 10. BROKER'S FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.1 Waivers and Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.2 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.3 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.6 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ii.
ONYX PHARMACEUTICALS, INC.
STOCK PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 12th day of January, 1998
(the "Effective Date"), by and among ONYX PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), and each of those persons and entities, severally
and not jointly, set forth on the Schedule of Purchasers attached as EXHIBIT A
hereto (which persons and entities are hereinafter collectively referred to
herein as "Purchasers" and each individually as a "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and each Purchaser (severally and not jointly)
hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES. Subject to the
terms and conditions of this Agreement, the Company has or before the Closing
(as defined below) will have authorized the sale and issuance of up to
1,403,508 shares of the Company's Common Stock, $0.001 par value (the
"Shares").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the
Company agrees to issue and sell to each Purchaser, severally and not jointly,
and each Purchaser agrees to purchase from the Company, severally and not
jointly, the number of Shares set forth next to such Purchaser's name on the
Schedule of Purchasers attached hereto as EXHIBIT A (the "Schedule of
Purchasers") at a purchase price of $7.125 per share (subject to proportionate
adjustment upon the occurrence of any stock split, stock dividend, reverse stock
split or like event that is consummated or becomes effective during the period
commencing on the date hereof and ending immediately prior to the Closing).
SECTION 3. CLOSING AND DELIVERY
3.1 CLOSING. The closing of the purchase and sale of the Shares to be
issued pursuant to this Agreement (the "Closing") shall be held at the offices
of ▇▇▇▇▇▇ Godward LLP, Five Palo Alto Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, on January 12, 1998 or on such other date and place as may be agreed
to by the Company and the Purchasers.
3.2 DELIVERY OF THE SHARES. Promptly following the Closing, but in no
event later than three days following the Closing, the Company shall deliver to
each Purchaser certificates representing the number of shares to be purchased at
the Closing by each Purchaser registered in the name of such Purchaser, or in
such nominee name(s) as designated by such Purchaser against payment of the
purchase price therefore by wire transfer.
1.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Subject to and except as set forth on the Schedule of Exceptions which
is arranged in Sections corresponding to the sub-section numbered provisions
contained below in this Section and except as described in the SEC Reports, the
Company hereby represents and warrants to, and covenants with, the Purchasers as
follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority and all licenses,
permits and authorizations to conduct its business as it is currently being
conducted and as it is presently proposed to be conducted. The Company is duly
qualified and is authorized to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business, assets, liabilities,
operations, financial condition or prospects.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized by all requisite corporate and stockholder action by the Company and
its stockholders, respectively. Upon the execution and delivery by the Company,
and assuming the valid execution and delivery of this Agreement by each of the
Purchasers, this Agreement will constitute a valid and binding obligation of the
Company, enforceable 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), including specific performance, and except as the
indemnification provisions contained in Section 9.3 hereof may be legally
unenforceable.
4.3 NO CONFLICTS. The Company's execution, delivery and performance of
this Agreement will not violate, conflict with, result in a breach of or
constitute (upon notice or lapse of time or both) a default under, or result in
the creation or imposition of any lien, security interest, mortgage, pledge,
charge or other encumbrance, of any material nature, upon any properties or
assets of the Company under any (a) law, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, court or arbitrator to which the Company is subject, (b)
the Company's Amended and Restated Certificate of Incorporation or Bylaws of the
Company or (c) any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof.
4.4 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state, or federal
governmental authority is required on the part of the Company in connection
with the Company's valid execution, delivery, or performance of this
Agreement, or the offer, sale or issuance of the Shares by the Company, other
than any post-closing filings as may be required under applicable federal or
state securities laws, which will be timely filed within the applicable
periods therefor.
2.
4.5 ISSUANCE AND SALE OF THE SHARES. When issued and paid for in
accordance with this Agreement, the Shares to be sold hereunder by the Company
will be validly issued and outstanding, fully paid and non-assessable.
4.6 SEC REPORTS.
(a) Since January 1, 1997, the Company has filed with the
Securities and Exchange Commission (the "SEC") all reports ("SEC Reports")
required to be filed by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). All of the SEC Reports filed by the Company comply in all
material respects with the requirements of the Exchange Act. None of the SEC
Reports contains, as of the respective dates thereof, any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) The Company has delivered to the Purchasers the following
SEC Reports:
(i) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (without exhibits);
(ii) the Company's Quarterly Reports on Form 10-Q as
filed with the SEC for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997 (without exhibits);
(iii) the Company's Proxy Statement for the 1997 Annual
Meeting of Stockholders.
(c) No event has occurred since January 1, 1997, requiring the
filing of an SEC Report that has not heretofore been filed and furnished to the
Purchasers (including, without limitation, any amendment to any such SEC
Report).
4.7 NO MATERIAL CHANGE. As of the date hereof, there has been no
material adverse change in the business, assets, liabilities, financial
condition, operations or prospects of the Company since September 30, 1997,
except that the Company continues to incur losses as described in the SEC
Reports.
4.8 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, $.001 par value, of which
9,854,018 such shares were issued and outstanding as of January 9, 1998 and (ii)
5,000,000 shares of preferred stock, $.001
3.
par value, of which no shares are issued and outstanding on the date hereof.
As of the date hereof, the Company has no intention to issue any shares of
such Preferred Stock. Except as contemplated by this Agreement, there are no
existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character obligating the Company to issue, transfer or sell, or cause to be
issued, transferred or sold, any shares of capital stock of the Company or
other equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests, and
there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire, or prepare and file with the SEC any
registration statement to register under the Securities Act of 1933, as
amended (the "Securities Act") with respect to, any such shares of capital
stock or other equity interests.
4.9 NASDAQ NATIONAL MARKET. The Company's Common Stock is listed on
the Nasdaq National Market, and there are no proceedings to revoke or suspend
such listing.
4.10 ABSENCE OF LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's best knowledge, that has been filed,
commenced or threatened, by or before any governmental agency, court or
arbitrator against the Company which might result either individually or in the
aggregate, in any material adverse change in the business, assets, liabilities,
financial condition, operations or prospects of the Company (including, without
limitation, any such action, suit, proceeding or investigation that questions
the validity of this Agreement or the issuance of the Shares thereunder).
4.11 INTANGIBLE RIGHTS. To the Company's best knowledge, the Company
owns or has the right to use pursuant to valid and enforceable licenses,
sublicenses, agreements or permissions, all Intangible Rights (as defined below)
that are necessary or desirable for the conduct of the business of the Company
as it is currently being conducted and as it is presently proposed to be
conducted, and no claims adverse to the interests of the Company are pending or,
to the best knowledge of the Company, have been threatened or otherwise asserted
with respect to the Company's ownership or use of any such Intangible Rights. To
the Company's best knowledge, the Company is not infringing any Intangible Right
owned or used by any third party nor, to the Company's best knowledge, is any
third party infringing any Intangible Right owned or used by the Company. For
purposes of this Agreement, the term "Intangible Rights" means (i) all
inventions (whether patentable or unpatentable, and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (ii)
all trademarks, service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights, all applications, registrations and renewals in connection
therewith, (iii) all trade secrets and confidential business information
(including, without limitation, ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, supplier lists, and business
and marketing plans and proposals), (iv) all computer software (including, data
and related documentation), (v) all other proprietary rights
4.
and (vi) all copies and tangible embodiments of any of the foregoing (in
whatever form or medium).
4.12 LEGAL COMPLIANCE. The Company has not violated any applicable laws
(including, without limitation, all rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof) in
respect of the conduct of its business or the ownership of its properties which
violation would (either individually or in the aggregate) materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company.
4.13 CERTAIN AGREEMENTS. All of the collaborative agreements, research
and development agreements, licensing agreements and other agreements with
corporate partners and governmental or educational entities that have been
previously disclosed by the Company in the SEC Reports referred to in paragraph
(b) of Section 4.5 hereof are valid and enforceable obligations of the Company
and, to the Company's best knowledge, the other parties thereto. Except for
breaches and defaults that would not, singly or in the aggregate, have a
material adverse effect on the Company or its assets, liabilities, operations,
financial condition, business or prospects, the Company is not in breach or
default under any such contracts or agreements nor has any event occurred which,
with the giving of notice or the passage of time or both, would constitute a
breach or default on the Company's part thereunder. To the Company's best
knowledge, none of the other parties to such contracts or agreements is in
breach or default thereunder nor has any event occurred which, with the giving
of notice or the passage of time or both, would constitute a breach or default
on such other parties' part.
4.14 REGULATIONS S. Assuming and relying in part on the truth and
accuracy of the representations and warranties of IBT and Lombard Odier & Cie,
the sale and issuance of the shares to each of them will be made in accordance
with Regulation S promulgated under the Securities Act, as such Regulation may
be amended and in effect from time to time ("Regulation S"). Assuming and
relying in part on the truth and accuracy of the representations of NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC, neither Company, any person affiliated with the
Company nor any person acting on behalf of the Company or any such affiliate has
engaged in any Directed Selling Efforts (as defined in Regulation S).
4.15 SECURITIES ACT EXEMPTION. Assuming and relying in part on the
truth and accuracy of Purchasers' representations and warranties in Section 5 of
this Agreement, the offer, sale and issuance of the Common Stock is exempt from
Registration under the Securities Act.
4.16 ELECTION OF IBT NOMINEE TO BOARD OF DIRECTORS. At the February
meeting of the Company's Board of Directors, the Company shall take all steps as
are necessary and appropriate and otherwise use its best efforts to cause an
individual designated by International Biotechnology Trust plc ("IBT") (such
individual so initially designated by IBT, and each other individual from time
to time designated by IBT in the event any individual theretofore designated is
unable or unwilling to serve as a member of the Board of Directors of the
Company, being hereinafter called the "IBT Nominee") to be duly and properly
elected to a seat on the Board of
5.
Directors of the Company. Thereafter, until the Nomination Termination Date
(as defined below), at each annual or special meeting of the stockholders of
the Company, or in connection with any written consent solicited from any or
all of the stockholders of the Company, at or with respect to which a vote is
taken to elect a director to fill the seat occupied by the IBT Nominee
theretofore serving as a member of the Board of Directors of the Company
(whether upon the expiration or such IBT Nominee's then current term as a
member of the Board of Directors of the Company or otherwise), the Company
shall nominate the IBT Nominee for election to the Board of Directors of the
Company.
Until the Nomination Termination Date, in the event that individual at
any time serving on the Board of Directors of the Company as the IBT Nominee
shall, for any reason, cease or be unable so to serve, the Company shall take
all steps as are necessary or appropriate to cause the vacancy on the Board of
Directors of the Company thereby created to be filled promptly by the election
to the Board of Directors of the Company of another IBT Nominee. The Company
shall advance and bear any and all costs and expenses incurred by the individual
then serving on the Board of Directors of the Company as the IBT Nominee in
connection with his or her travel to and attendance at meetings of the Board of
Directors of the Company and any committees thereof on which such individual
shall serve, such arrangements to be made in accordance with the Company's
travel policy for all directors. The individual serving on the Board of
Directors as the IBT Nominee shall also be entitled to the reimbursement of all
other costs and expenses associated with such individual's so serving on terms
and conditions no less favorable than those available to other members of the
Board of Directors of the Company. Further, such individual shall be entitled to
directors' insurance at the Company's cost and expense and indemnification
coverage by the Company on terms and conditions no less favorable than those
available to other members of the Board of Directors of the Company.
The IBT Nominee shall be an individual reasonably acceptable to the
Company, it being agreed that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is an acceptable nominee. Without
limiting the foregoing, without the prior written consent of the Company, IBT
shall not designate any individual as the IBT Nominee if such individual is then
an officer, director, employee, consultant or stockholder (then holding more
than 1% percent of any company's issued and outstanding capital stock or other
equity interests) of any business that is a competitor of the Company.
For purposes of this Section 4.16, the term "Nomination Termination
Date" means the date on which IBT or any of its affiliates ceases to own at
least sixty-six and two-thirds percent (66-2/3%) of the number of Shares
purchased by IBT hereunder at the Closing (subject to proportionate adjustment
upon any stock split, stock dividend, reverse stock split or like event).
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
Each Purchaser, severally and not jointly, represents and warrants to
and covenants with the Company that:
6.
5.1 AUTHORITY, APPROVAL AND ENFORCEABILITY
(a) Purchaser has full power and authority to execute, deliver
and perform its obligations under this Agreement and all agreements, instruments
and documents contemplated hereby, and all action of Purchaser necessary for
such execution, delivery and performance has been duly taken.
(b) Purchaser's execution, delivery and performance of this
Agreement have been duly authorized by all requisite action by Purchaser,
respectively. Upon the execution and delivery by Purchaser, and assuming the
valid execution and delivery of this Agreement by each of the Purchaser and the
Company, this Agreement will constitute a valid and binding obligation of
Purchaser, enforceable 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), including specific performance, and except to the extent that
the enforceability of the indemnification provisions of Section 9.3 may be
legally unenforceable.
5.2 INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares
have not been registered under the Securities Act. Purchaser also understands
that the Shares are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Purchaser's
representations contained in the Agreement. Purchaser hereby represents and
warrants as follows:
(a) Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
Purchaser must bear the economic risk of this investment indefinitely unless the
Shares are registered pursuant to the Securities Act, or an exemption from
registration is available. Purchaser understands that there is no assurance that
any exemption from registration under the Securities Act will be available and
that, even if available, such exemption may not allow Purchaser to transfer all
or any portion of the Shares under the circumstances, in the amounts or at the
times Purchaser might propose.
(b) Purchaser has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions.
(c) The Purchaser agrees that it will not sell, pledge, assign,
transfer, otherwise dispose of or reduce their risk with respect to
(collectively, "Transfer") any of the Shares unless the Transfer will be made
pursuant to an exemption from the registration requirements of the Securities
Act or pursuant to an effective registration statement under the Securities Act
and pursuant to an exemption from any applicable state securities laws or an
effective registration or other qualification under any applicable state
securities laws. The
7.
Purchaser understands that exemptions from such registration requirements are
limited. The Company is under no obligation to register the Shares except as
provided in Section 9.
(d) The Purchaser acknowledges and agrees that the Shares are
subject to certain restrictions as to resale under the federal and state
securities laws. The Purchaser agrees and understands that stop transfer
instructions will be given to the transfer agent for the Shares and each share
certificate, and each certificate delivered on transfer of or in substitution
for any such certificate, shall have affixed a legend in substantially the
following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and have been sold in reliance on the exemption from
registration provided by Regulation S under the Act ("Regulation
S"). During the period prior to April 13, 1998 (the "Restricted
period"), in the absence of registration under the Securities
Act, the shares represented by this certificate may not be sold,
directly or indirectly, within the United States (as defined in
Regulation S), to a U.S. Person (as defined in Regulation S) or
for the account of a U.S. Person.
Also notwithstanding anything to the contrary expressed or implied herein, (i)
each Purchaser agrees, with respect to the Shares purchased by it, that it will
not Transfer the Shares purchased by it until the expiration of the period from
the Closing Date until April 13, 1998 (the "Restricted Period"), unless such
Transfer will be made pursuant to Regulation S or pursuant to an effective
registration statement under the Securities Act, (ii) the Company agrees that,
upon the expiration of the Restricted Period, stop transfer instructions to the
Company's transfer agent shall no longer apply to Shares, and (iii) Purchaser
agrees that the foregoing legend may not be removed prior to expiration of the
Restricted Period.
Purchaser further acknowledges that securities acquired overseas, whether or not
pursuant to Regulation S, may be resold in the United States only if they are
registered under the Securities Act or an exemption from registration is
available, and in compliance with applicable state securities laws.
(e) Each Purchaser hereby represents and warrants that it is
not a "U.S. Person," is not a "Distributor," and is purchasing the Shares in
an "Offshore Transaction." as defined in Rule 902 of Regulation S.
(f) Purchaser is acquiring the Shares for Purchaser's own
account for investment only, and not with a view towards their distribution.
(g) Purchaser represents that by reason of its, or of its
management's, business or financial experience, Purchaser has the capacity to
protect its own interests in connection with the transactions contemplated in
this Agreement. Further, Purchaser is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement.
8.
(h) Purchaser represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.
(i) Purchaser has received and read the SEC Reports listed in
Section 4.5(b) and has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company's operations and
facilities. Purchaser has also had the opportunity to ask questions of and
receive answers from, the Company and its management regarding the terms and
conditions of this investment.
5.3 STANDSTILL COVENANT. Purchaser agrees that, during the period
commencing on the date hereof and ending on the fifth anniversary of the date
hereof, neither Purchaser nor any of its affiliates will in any manner, directly
or indirectly (i) effect, seek, offer or propose to effect any acquisition of
any securities or assets of the Company, any tender or exchange offer, merger,
business combination, recapitalization or other extraordinary transaction
involving the Company or any solicitation of proxies or consents to vote any
voting securities of the Company, (ii) form, join or in any way participate in a
"group" (as defined in the Exchange Act) with respect to any voting securities
of the Company, (iii) solicit or participate in any solicitation of proxies
relating to the election of directors of the Company or (iv) enter into any
agreement with any other person with respect to the foregoing, or assist any
other person to do any of the foregoing; PROVIDED that (A) Purchaser may
purchase additional securities in an amount sufficient to allow Purchaser to
continue to own 14.9% of the outstanding shares of Common Stock of the Company;
and (B) the restrictions contained in this sentence shall terminate
automatically upon the acquisition by any person or group (as defined in the
Exchange Act), other than Purchaser and its affiliates, of more than 20% of the
outstanding voting securities of the Company or upon the commencement (as
provided in Rule 14d-2) of a tender offer other than by or on behalf of
Purchaser or its affiliates (with securities or cash) which has not been
approved by a majority of the Company's Board of Directors for the Company's
voting securities and (C) this sentence shall not prohibit the acquisition or
disposition of shares for investment purposes only in the open market in the
ordinary course by any pension fund or trust for the benefit of employees of the
Purchaser or its affiliates.
SECTION 6. 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 Purchaser herein shall survive the execution of this Agreement and the
issuance and sale to the Purchasers of the Shares and shall terminate upon the
subsequent transfer of the Shares pursuant to Sections 5 or 9.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares at Closing
shall be subject to the following conditions to the extent not waived by the
Company:
9.
7.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by each Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.2 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Purchasers on or prior to the Closing
Date shall have been performed or complied with in all material respects.
7.3 QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are binding upon any of the
Purchasers and that are required in connection with the lawful sale and
issuance of the Shares at such Closing pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the date of such
Closing. No stop order or other order enjoining the sale of the Shares shall
have been issued and no proceedings for such purpose shall be pending or, to
the knowledge of the Company, threatened by the SEC or any commissioner of
corporations or similar officer of any state having jurisdiction over this
transaction. At the time of such Closing, the sale and issuance of the Shares
to be purchased and sold at such Closing shall be legally permitted by all
laws and regulations to which the Purchaser and the Company are subject.
SECTION 8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligation to purchase the Shares at the Closing thereby shall be
subject to the following conditions to the extent not waived by the Purchasers:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
8.2 LEGAL OPINION. Purchasers shall have received from ▇▇▇▇▇▇ Godward
LLP, counsel to the Company, an opinion letter addressed to the Purchasers,
dated as of the Closing Date, in the form attached hereto as EXHIBIT B.
8.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
8.4 QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are binding upon the Company
and that are required in connection with the lawful sale and issuance of the
Shares at such Closing pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing Date. No stop order
or other order enjoining the sale of the Shares shall have been issued and no
proceedings for such purpose shall be pending or, to the knowledge of the
Company, threatened by the SEC, or any commissioner of corporations or
similar officer of any state having jurisdiction over this transaction. At
the time
10.
of the Closing, the sale and issuance of the Shares shall be legally
permitted by all laws and regulations to which the Purchaser and the Company
are subject.
8.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, assets, liabilities, operations or financial
condition of the Company since the date of this Agreement.
8.6 NO LITIGATION. Since the date of this Agreement, no proceeding
challenging this Agreement or the transactions contemplated hereby, or seeking
to prohibit, alter, prevent or materially delay the Closing or the performance
by the Company of any of its obligations hereunder, shall have been instituted
before any governmental agency, court or arbitrator and shall be pending.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
9.1 DEFINITIONS. As used in this Section 9 the following terms shall
have the following respective meanings:
(a) "Registrable Shares" shall mean the Shares issued
pursuant to this Agreement;
(b) "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 9.2; and
(c) "Untrue Statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
9.2 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to
do the following:
The Company shall, within 90 days following the Closing Date:
(a) prepare and file with the SEC a registration statement on
Form S-3 in order to register with the SEC under the Securities Act a sale by
the Purchasers on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act any or all of the Registrable Shares through the automated
quotation system of the Nasdaq National Market System or the facilities of any
national securities exchange on which the Company's Common Stock is then traded,
or in privately-negotiated transactions (a "Registration Statement")
(notwithstanding anything to the contrary expressed or implied herein, if a
registration statement on Form S-3, or any substitute form, is not then
available for registration of the Registrable Shares, the Company shall be
obligated instead to prepare and file with the SEC a registration statement on
11.
Form S-1 in order to register the Registrable Shares under the Securities Act
and such registration statement will be a "Registration Statement" for the
purposes of this Agreement);
(b) use its best efforts, subject to receipt of necessary
information from the Purchasers, to cause such Registration Statement to become
effective as promptly after filing as practicable;
(c) promptly notify each Purchaser, at any time when a
prospectus relating to such Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in or relating to such Registration
Statement contains an untrue statement of a material fact or omits to state
any fact necessary to make the statements therein not misleading;
(d) promptly prepare and file with the SEC, and deliver to each
Purchaser, such amendments and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective until termination of such obligation as
provided in Section 9.7 below;
(e) furnish to each Purchaser such number of copies of
prospectuses in conformity with the requirements of the Securities Act, in order
to facilitate the public sale or other disposition of all or any of the
Registrable Shares by the Purchasers;
(f) file such documents as may be required of the Company for
normal securities law clearance for the resale of the Registrable Shares in
which states of the United States as may be reasonably requested by each
Purchaser provided, however, that the Company shall not be required in
connection with this paragraph (e) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction;
(g) use its best efforts to cause all Registrable Shares to be
listed on each securities exchange, if any, on which equity securities by the
Company are then listed; and
(h) bear all expenses in connection with the procedures in
paragraphs (a) through (f) of this Section 9.2, other than (i) fees and
expenses, if any, of counsel or other advisers to the Purchasers, and (ii) any
expenses relating to the sale of the Registrable Shares by the Purchasers,
including broker's commission, discounts or fees and transfer taxes.
9.3 INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each
Purchaser from and against any losses, claims, damages or liabilities to which
such Purchaser may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement on the effective date of the Registration Statement, or arise out of
any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will reimburse such Purchaser for any
reasonable legal or other expenses reasonably
12.
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; PROVIDED, HOWEVER, that the Company shall not be liable
in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an Untrue Statement made in such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, or the
failure of such Purchaser to comply with the covenants and agreements
contained in Sections 5.3 or 9.4 hereof respecting the sale of the Shares or
any statement or omission in any prospectus that is corrected in any
subsequent prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
(b) Each Purchaser, severally and not jointly, 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,
each officer of the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or
otherwise), insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon,
any failure to comply with the covenants and agreements contained in Sections
5.3 or 9.4 hereof respecting sale of the Shares, or any Untrue Statement
contained in the Registration Statement on the effective date thereof if such
Untrue Statement was made in reliance upon and in conformity with written
information furnished by or on behalf of such Purchaser specifically for use
in preparation of the Registration Statement, and such Purchaser will
reimburse the Company (or such officer, director or controlling person), as
the case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding
or claim; PROVIDED that in no event shall any indemnity by a Purchaser under
this Section 9.3 exceed the net proceeds received by such Purchaser from the
sale of the Shares covered by such Registration Statement.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to this
Section 9.3, such indemnified person shall notify the indemnifying person in
writing of such claim or of the commencement of such action, and, subject to
the provisions hereinafter stated, in case any such action shall be brought
against an indemnified person and such indemnifying person shall have been
notified thereof, such indemnifying person shall be entitled to participate
therein, and, to the extent it shall wish, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; PROVIDED, HOWEVER,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the
same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying
person; PROVIDED, HOWEVER, that no indemnifying person shall be
13.
responsible for the fees and expenses of more than one separate counsel for
all indemnified parties.
(d) If the indemnification provided for in this Section 9.3 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or the omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission; PROVIDED, that in no event shall any contribution by a Purchaser
hereunder exceed the net proceeds received by such Purchaser from the sale of
the Shares covered by the Registration Statement.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
9.4 TRANSFER OF SHARES AFTER REGISTRATION; NOTICE. The Purchaser
hereby covenants with the Company not to make any sale of the Shares after
registration without effectively causing the prospectus delivery requirement
under the Securities Act to be satisfied. The Purchaser acknowledges that
there may be times when the Company must suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment
to the Registration Statement has been filed by the Company and declared
effective by the SEC, or until such time as the Company has filed an
appropriate report with the SEC pursuant to the Exchange Act. The Purchaser
hereby covenants that it will not sell any Shares pursuant to said prospectus
or pursuant to Regulation S during the period commencing at the time at which
the Company gives the Purchaser notice of the suspension of the use of said
prospectus and ending at the time the Company gives the Purchaser notice that
the Purchaser may thereafter effect sales pursuant to said prospectus. The
foregoing provisions of this Section 9.4 shall in no manner diminish or
otherwise impair the Company's obligations under Section 9.2 hereof. The
Purchaser further covenants that it will provide the Company three business
days' notice of a proposed sale of one hundred thousand (100,000) or more
Shares.
9.5 REPORTING REQUIREMENTS.
(a) The Company agrees to use its best efforts to:
14.
(i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and
the Securities Exchange Act of 1934; and
(iii) so long as any of the Purchasers own Registrable
Securities, to furnish to the Purchasers forthwith upon request (1) a
written statement by the Company as to whether it complies with the reporting
requirements of said Rule 144, the Securities Act and Securities Exchange Act
of 1934, or whether it qualifies as a registrant whose securities may be
resold pursuant to SEC Form S-3, (2) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company, and (3) such other information as may be reasonably requested
in availing the Purchasers of any rule or regulation of the SEC that would
permit the selling of the Registrable Securities without registration.
9.6 MARKET STAND-OFF. If requested by the underwriters, the Purchasers
or any assignees thereof, will not Transfer any of the Securities for up to 90
days following a public offering by the Company of its capital stock.
9.7 TERMINATION OF OBLIGATIONS. The obligations of the Company
pursuant to Sections 9.2 through 9.5 hereof shall cease and terminate upon
the earlier to occur of (i) such time as all of the Registrable Shares have
been resold, or (ii) such time as all of the Registrable Shares may be sold
during any 90 day period pursuant to Rule 144.
9.8 ASSIGNABILITY OF REGISTRATION RIGHTS. The registration rights set
forth in this Section 9 are not assignable other than to an affiliate of a
Purchaser.
SECTION 10. BROKER'S FEE. The Company and each Purchaser
(severally and not jointly) shall indemnify each other for any
broker's, finder's or agent's fees for which they are responsible.
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent and addressed as follows:
(a) if to the Company, to:
ONYX Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Hollings C. Renton
15.
with a copy mailed to:
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other person at such other place as the Company shall
designate to the Purchasers in writing; and
(b) if to the Purchasers, at the address as set forth at the
end of this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing with a copy, in the case of IBT, to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least 66 2/3%
of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
12.3 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.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware as applied to contracts
entered into and performed entirely in Delaware by Delaware residents, without
regard to conflicts of law principles.
12.5 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.
16.
12.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
12.8 PUBLICITY. No party shall issue any press releases or otherwise
make any public statement with respect to the transactions contemplated by this
Agreement without the prior written consent of the other parties, except as may
be required by applicable law or regulations, in which case such party shall
provide the other parties with reasonable notice of such publicity and/or
opportunity to review such disclosure.
17.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
ONYX PHARMACEUTICALS, INC.
By:/s/Hollings C. Renton
-------------------------------
Title:President & CEO
----------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER:
INTERNATIONAL BIOTECHNOLOGY TRUST PLC
By:/s/▇▇▇▇▇▇ Curnook ▇▇▇▇▇
----------------------------------
Title:Director
-------------------------------
Address: Five ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ 8 NR
England
PURCHASER:
LOMBARD ODIER & CIE
By:/s/▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Title:Vice President/Ass. Vice President
----------------------------------
Address: 11, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
EXHIBIT A
Purchaser Shares
International Biotechnology Trust plc 1,122,807
Lombard Odier & Cie 280,701
---------
1,403,508
EXHIBIT B
[LETTERHEAD]
January 12, 1998
International Biotechnology Trust plc
Lombard Odier & Cie
RE: ONYX PHARMACEUTICALS, INC.
To Whom It May Concern:
We have acted as counsel for Onyx Pharmaceuticals, Inc, a Delaware corporation
(the "Company"), in connection with the issuance and sale of 1,403,508 shares of
the Company's Common Stock ("Shares"), to the Purchasers under the Stock
Purchase Agreement dated as of January 12, 1998 (the "Agreement"). We are
rendering this opinion pursuant to Section 8.2 of the Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement) where authorization, execution and delivery are
prerequisites to the effectiveness of such documents. We have also assumed:
that all individuals executing and delivering documents had the legal capacity
to so execute and deliver; that you have received all documents you were to
receive under the Agreement; that the Agreement is an obligation binding upon
you; that you have filed any required California franchise or income tax returns
Page Two
and have paid any required California franchise or income taxes; and that there
are no extrinsic agreements or understandings among the parties to the Agreement
that would modify or interpret the terms of the Agreement or the respective
rights or obligations of the parties thereunder.
Our opinion is expressed only with respect to the federal laws of the United
States of America and the laws of the State of California and the General
Corporation Law of the State of Delaware. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable to
the subject matter hereof. We are not rendering any opinion as to compliance
with any antifraud law, rule or regulation relating to securities, or to the
sale or issuance thereof.
With regard to our opinion in paragraph 4 below, we have examined and relied
upon a certificate of the Company's transfer agent, as to the number of shares
of Common Stock and Preferred Stock outstanding.
With regard to our opinion in paragraph 5 below with respect to material
defaults under any agreement known to us, we have relied solely upon
(i) inquiries of officers of the Company, (ii) the agreements to which the
Company is a party, or by which it is bound, which have been filed with the
Securities and Exchange Commission and (iii) an examination of the
aforementioned items; we have made no further investigation.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware.
2. The Company has the requisite corporate power to own its property and
assets, to conduct its business as it is currently being conducted, to execute,
deliver and perform the Agreement and to issue, sell and deliver the Shares and
is qualified as a foreign corporation to do business and is in good standing in
California and, to the best of our knowledge, is qualified as a foreign
corporation to do business and is in good standing in each other jurisdiction in
the United States in which the ownership of its property or the conduct of its
business requires such qualification and where any statutory fines or penalties
or any corporate disability imposed for the failure to qualify would materially
and adversely affect the Company, its assets, financial condition or operations.
3. The Agreement and the issuance, sale and delivery of the Shares
thereunder, have been duly and validly authorized and the Agreement has been
duly executed and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as rights to indemnity under section 9.3 of the Agreement may be
limited by applicable laws and except as enforcement may be limited by
Page Three
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
4. The Company's authorized capital stock consists of (a) twenty-five
million (25,000,000) shares of Common Stock, $.001 par value, of which
(excluding the Shares) nine million eight hundred fifty-four thousand eighteen
(9,854,018) shares are issued and outstanding as of January 9, 1998, and (b)
five million (5,000,000) shares of Preferred Stock, $.001 par value, none of
which are issued and outstanding. The Shares have been duly authorized, and
upon issuance and delivery against payment therefor in accordance with the terms
of the Agreement, the Shares will be validly issued, outstanding, fully paid and
nonassessable. To the best of our knowledge, (i) there are no options,
warrants, conversion privileges, preemptive rights or other rights presently
outstanding to purchase any of the authorized but unissued capital stock of the
Company, other than rights created in connection with the transactions
contemplated by the Agreement and except as set forth in the Company's SEC
Reports; (ii) the Company is not a party to any agreement to issue any shares of
capital stock of the Company or other equity interests in the Company or any
securities convertible into or exchangeable for such shares of capital stock or
other equity interests and (iii) the Company is not party to any agreement to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any distribution in respect
thereof.
5. The execution and delivery of the Agreement by the Company and the
issuance of the Shares pursuant thereto do not violate any provision of the
Company's Articles of Incorporation or Bylaws, and do not constitute a material
default under the provisions of any agreement known to us to which the Company
is a party or by which it is bound, and do not violate or contravene (a) any
governmental statute, rule or regulation applicable to the Company or (b) any
order, writ, judgment, injunction, decree, determination or award which has been
entered against the Company and of which we are aware, the violation or
contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations.
6. Except as set forth in the Schedule of Exceptions, to the best of our
knowledge, there is no action, proceeding or investigation pending or overtly
threatened against the Company before any court, arbitrator or administrative
agency that questions the validity of the Agreement or the issuance, sale and
delivery of the Shares thereunder or might result, either individually or in the
aggregate, in any material adverse change in the assets, financial condition, or
operations of the Company.
7. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any regulatory authority or governmental
body in the United States required for the consummation by the Company at the
Closing of the transactions contemplated by the Agreement have been obtained.
Page Four
8. The offer and sale of the Shares is exempt from the registration
requirements of the Securities Act of 1933, as amended.
This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without our prior
written consent.
Very truly yours,
▇▇▇▇▇▇ Godward LLP
By:
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