Document:

exv10w1

Exhibit 10.1

June 23, 2008

VIA HAND DELIVERY

Mr. Gregory Schafer

Onyx Pharmaceuticals, Inc.

2100 Powell Street

Emeryville, CA 94608

Re:     Separation and Consulting Agreement

Dear Greg:

This letter sets forth the terms of the separation agreement (the “Agreement”) that Onyx
Pharmaceuticals, Inc. (the “Company”) is offering to you to facilitate your separation from the
Company:

     1. Separation Date. Unless you and the Company mutually agree in writing, your last
day of work with the Company and your employment termination date will be the earliest to
occur of the following two dates: (i) the date upon which a new Chief Financial Officer
begins his or her employment with the Company; or (ii) December 15, 2008 (the “Separation
Date”). The Company will immediately initiate a search for a new Chief Financial Officer
and will publicly announce this search. Until the Separation Date, you shall continue to use
your best efforts to perform your assigned duties and responsibilities. During your
continued employment through the Separation Date, you will receive your regular base salary
payments and continued benefits coverage in which you are currently enrolled. Of course, you
must continue to comply with all of the Company’s policies and procedures during your
continued employment and the Company retains the discretion to accelerate the Separation Date
if you breach any Company policies or procedures, or any of your other obligations to the
Company.

     2. Accrued Salary and Vacation. On the Separation Date, the Company will pay you all
accrued salary, and all accrued and unused vacation earned through the Separation Date,
subject to standard payroll deductions and withholdings. You are entitled to these payments
by law.

     3. Separation Benefits. If you: (a) timely sign, and date this Agreement, and allow it
to become effective; and (b) sign and date the Separation Date Release attached hereto as
Exhibit A on or within 21 days after the Separation Date, and allow the Separation Date
Release to become effective; then the Company will provide you with the following separation
benefits (the “Separation Benefits”):

            (a) Separation Payment. The Company will make a single lump-sum payment to you equal to
twelve (12) months of your current base salary, less required payroll deductions and withholdings.
This payment will be made on the Company’s first ordinary

 

 

Mr. Gregory Schafer

June 23, 2008

Page 2

payroll date following the Effective Date of the Separation Date Release (as defined in Exhibit A).

            (b) Health Insurance. As provided by the federal COBRA law and comparable state insurance
laws (collectively, “COBRA”), and by the Company’s current group health insurance policies, you
will be eligible to continue your current group health insurance benefits at your own expense for a
period of time following the Separation Date and, later, to convert to an individual policy if you
wish. You will be provided with a separate notice of your COBRA rights and obligations on or after
the Separation Date. If you timely elect continued coverage under COBRA, as part of this
Agreement, the Company will reimburse your COBRA premiums (including the cost of dependent
coverage, if applicable) sufficient to continue your current level of health insurance coverage for
a period of twelve (12) months from the Separation Date provided that you remain eligible for COBRA
coverage.

            (c) Outplacement Assistance. The company will reimburse you for reasonable outplacement
assistance expenses incurred by you during the six months after the Separation Date, up to a
maximum reimbursement amount of $15,000.00.

     4. Consulting Agreement. You will serve as a consultant to the Company under the terms
specified below. The consulting relationship commences on the Separation Date and continues
through the earlier of the following (the “Consulting Period”): (a) six (6) months after the
Separation Date; or (b) the date that the Company terminates the Consulting Period due to
your material breach of this Agreement or the Proprietary Information Agreement (as defined
in Section 4(d)).

            (a) Consulting Services. You agree to provide consulting services to the Company in any area
of your expertise upon request by the Company. During the Consulting Period, you will report
directly to the Chief Financial Officer or as otherwise specified by the Chief Financial Officer.
You agree to exercise the highest degree of professionalism and utilize your expertise and creative
talents in performing these services. You shall perform the following duties during the Consulting
Period: special assigned projects in the finance area including without limitation to responding to
questions or providing clarification to historical practices and transition of responsibilities
that support the successful on boarding of the new Chief Financial Officer.

            (b) Consulting Fees and Benefits.

               (i) Consulting Fees. During the Consulting Period, you will be paid consulting fees of
$250.00 per hour for each hour or portion thereof that you actually provide consulting services to
the Company (“Consulting Fees”).

               (ii) Independent Contractor Relationship. During the Consulting Period, your consulting
relationship with the Company will be that of an independent contractor, and nothing in this
Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or
employment relationship. As an independent contractor, during the

 

 

Mr. Gregory Schafer

June 23, 2008

Page 3

Consulting Period you will not
be entitled to, and will not receive, any of the benefits which the Company may make available to
its employees, including, but not limited to, group health or life insurance, profit-sharing,
401(k) Plan matching contributions, or separation benefits, other than any rights you may otherwise
have with respect to such benefits due to your status as a former employee including your rights to
continued group health insurance coverage pursuant to COBRA.

               (iii) Taxes and Withholding. You are solely responsible for, and will file, on a timely basis,
all tax returns and payments required to be filed with, or made to, any federal, state or local tax
authority with respect to the performance of consulting services and receipt of Consulting Fees
under this Agreement. You are solely responsible for, and must maintain adequate records of,
expenses incurred in the course of performing services under this Agreement. The Company will not
withhold from the Consulting Fees any amount for taxes, social security or other payroll
deductions. The Company will regularly report the Consulting Fees paid to you by filing Form
1099-MISC with the Internal Revenue Service as required by law. You hereby acknowledge that you
will be entirely responsible for payment of any such taxes, and you hereby indemnify and hold
harmless the Company from any liability for any taxes, penalties or interest that may be assessed
by any taxing authority with respect to all Consulting Fees you receive under this Agreement, with
the exception of the employer’s share of social security, if any.

               (iv) Stock Options and Restricted Stock. Your outstanding stock options and restricted stock
previously granted to you (the “Equity Awards”) will continue to vest during the Consulting Period
and will continue to be governed by the terms of the applicable stock option agreements, stock
option plans, and restricted stock purchase agreements. Pursuant to these documents, you will have
three (3) months to exercise any vested but unexercised stock options following the end of the
Consulting Period. At the end of the Consulting Period all of your unvested stock options will
terminate immediately and all of your unvested restricted stock awards will automatically be
re-acquired by the Company.

          (c) Limitations on Authority. You will have no responsibilities or authority as a consultant
to the Company other than as provided above. As a consultant, you agree not to represent or
purport to represent the Company in any manner whatsoever to any third party unless expressly
authorized by the CEO or Board, in writing, to do so.

          (d) Proprietary
Information and Inventions. You agree that Sections 1, 2, 3, 4
and 7 of the Employee Confidential Information and Inventions
Assignment
Agreement between you and the Company (the “Proprietary Information Agreement” a copy of which is
attached hereto as Exhibit B) shall govern any Company information to which you have access or
which you develop, or inventions made by you, while performing consulting services during the
Consulting Period.

          (e) Other Work Activities. Throughout the Consulting Period, you retain the right to engage
in employment, consulting, or other work relationships in addition to your work for the Company,
provided that such other employment, consulting, or work relationships do not interfere with your
continuing obligations to the Company or otherwise create a conflict of

 

 

Mr. Gregory Schafer

June 23, 2008

Page 4

interest with the Company.
The Company will make reasonable arrangements to enable you to perform your work for the Company at
such times and in such a manner so that it will not interfere with other activities in which you
may engage. In order to protect the trade secrets and confidential and proprietary information of
the Company, you agree that, during the Consulting Period, you will notify the Company, in writing,
before you obtain competitive employment, perform competitive work for any business entity, or
engage in any other work activity that is competitive with the Company, and you will obtain the
Company’s written consent before engaging in any such competitive activity. If you engage in such
competitive activity without the Company’s express written consent, or otherwise materially breach
this Agreement or the Proprietary Information Agreement, then, in addition to any other remedies,
the Company’s obligation to pay you Consulting Fees will cease immediately and the Company will
have the right to terminate the Consulting Period as provided in Section 4 of this Agreement.

     5. Other Compensation or Benefits.

            (a) General Compensation or Benefits. You acknowledge that, except as expressly provided in
this Agreement, you have not earned and will not receive from the Company any additional
compensation, including but not limited to salary or bonuses, severance or employee benefits during
your continued employment or after the Separation Date. By way of example, but not limitation, you
acknowledge and agree that you are not eligible for any bonus compensation for 2008; provided,
however, that if your Separation Date is after December 31, 2008, you will be eligible for
consideration of a bonus for 2008 pursuant to the terms of the Annual Incentive Bonus Program
(including the term that any such bonus be approved by the Company’s Board Compensation Committee).

            (b) Change in Control Compensation or Benefits.

               (i) No Current Entitlement to Change in Control Benefits. You acknowledge and agree that you
are not currently entitled to receive any Change in Control severance benefits (including without
limitation any such benefits under your Executive Change in Control Severance Benefits Agreement or
any accelerated vesting of your stock options or restricted stock provided for in your stock option
agreements, the Company’s stock option plan, or your restricted stock purchase agreements).

               (ii) Change in Control Benefits Prior to the Separation Date. From the date of this Agreement
up until and including your Separation Date (the “Continued Employment Period”), you shall be
entitled to receive any Change in Control benefits to which you become entitled during the
Continued Employment Period pursuant to the terms of your Executive Change in Control Severance
Benefit Agreement and any applicable stock option agreement, stock option plan, or restricted stock
purchase agreement; provided, however, that if any such compensation or benefits are provided to
you, they shall be in lieu of the separation
benefits and consulting agreement set forth in Sections 3 and 4 herein and you shall not be
entitled to receive any of the compensation or benefits set forth in Sections 3 and 4 herein.

               (iii) Change in Control Benefits After the Separation Date. After the Separation Date, you
shall not be entitled to receive any Change in Control severance

 

 

Mr. Gregory Schafer

June 23, 2008

Page 5

benefits, regardless of whether
the Company is subject to a Change in Control after the Separation Date (including any Change in
Control that occurs during the Consulting Period). Any such change in control provisions in any
agreements (including without limitation your Executive Change in Control Severance Benefits
Agreement, stock option agreements, stock option plan, or restricted stock purchase agreement
providing for accelerated vesting of any equity interest in the event of a change in control) are
hereby superseded and shall have no further force or effect. You expressly agree that your
Executive Change in Control Severance Benefits Agreement shall have no further force or effect
after the Separation Date and you hereby waive any right to any compensation or benefits under that
Agreement after the Separation Date.

            (c) Equity Awards Vesting During Consulting Period. Notwithstanding Section 5(b)(iii)
herein, if the Company consummates a Change in Control (as defined in the Executive Change in
Control Severance Benefits Agreement) during the Consulting Period, and if the acquiring entity
does not assume and continue the vesting of the Equity Awards that would vest during the Consulting
Period as set forth in Section 4(b)(iv) herein, then you shall be entitled upon consummation of the
Change in Control to accelerated vesting of any such Equity Awards such that you will be deemed
vested in any Equity Awards that would have vested during the Consulting Period.

     6. Proprietary Information Obligations. You acknowledge and reaffirm your obligations
under your Proprietary Information Agreement which continue during your continued employment,
and both during and after the Consulting Period.

     7. Return of Company Property. You agree to return to the Company, on the Separation
Date or earlier if requested by the Company, all Company documents (and all copies thereof)
and other property of the Company in your possession or control. You agree that you will
make a diligent and timely search to locate any such documents, property and information. In
addition, if you have used any personally owned computer, server, or e-mail system to
receive, store, review, prepare or transmit any Company confidential or proprietary data,
materials or information, then you agree to provide the Company, no later than the Separation
Date, with a computer-useable copy of all such information and then permanently delete and
expunge such Company confidential or proprietary information from those systems without
retaining any reproductions (in whole or in part); and you agree to provide the Company
access to your system as requested to verify that the necessary copying and/or deletion is
done. Your timely compliance with this Section 7 is a precondition to your eligibility for
the Separation Benefits. Notwithstanding the foregoing, you will not be required to return,
on the Separation Date, any documents or other property that the Company authorizes in
writing for you to retain for your use in connection with your consulting relationship with
the Company, provided
that, any such retained documents and property must be immediately returned upon
termination of the Consulting Period or the Company’s earlier request.

     8. Nonsolicitation. You agree that during your continued employment and the Consulting
Period, and for one year following the termination of the Consulting Period, you will not,
either directly or through others, solicit or attempt to solicit any

 

 

Mr. Gregory Schafer

June 23, 2008

Page 6

employee, consultant, or
independent contractor of the Company to terminate his or her relationship with the Company
in order to become an employee, consultant or independent contractor to or for any other
person or entity.

     9. Nondisparagement. You agree not to disparage the Company or the Company’s officers,
directors, employees, shareholders, parents, subsidiaries, affiliates, and agents, in any
manner likely to be harmful to them or their business, business reputation or personal
reputation, and the Company (through its officers and directors) agrees not to disparage you
in any manner likely to be harmful to your business, business reputation or personal
reputation; provided that the parties may respond accurately and fully to any question,
inquiry or request for information when required by legal process.

     10. Dispute Resolution. To aid in the rapid and economical resolution of any disputes
which may arise under this Agreement, you and the Company agree that any and all claims,
disputes or controversies of any nature whatsoever arising from or regarding the
interpretation, performance, negotiation, execution, enforcement or breach of this Agreement,
your employment, or the termination of your employment, including but not limited to any
statutory claims, shall be resolved by confidential, final and binding arbitration conducted
before a single arbitrator with JAMS, Inc. (“JAMS”) in San Francisco, California, in
accordance with JAMS’ then-applicable arbitration rules. The parties acknowledge that by
agreeing to this arbitration procedure, they waive the right to resolve any such dispute
through a trial by jury, judge or administrative proceeding. You will have the right to be
represented by legal counsel at any arbitration proceeding. The arbitrator shall: (a) have
the authority to compel adequate discovery for the resolution of the dispute and to award
such relief as would otherwise be available under applicable law in a court proceeding; and
(b) issue a written statement signed by the arbitrator regarding the disposition of each
claim and the relief, if any, awarded as to each claim, the reasons for the award, and the
arbitrator’s essential findings and conclusions on which the award is based. The Company
shall bear JAMS’ arbitration fees and administrative costs. Nothing in this Agreement shall
prevent either you or the Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration. Any awards or orders in
such arbitrations may be entered and enforced as judgments in the federal and state courts of
any competent jurisdiction. The arbitrator, and not a court, shall be authorized to
determine whether the provisions of this paragraph apply to a dispute, controversy or claim
sought to be resolved in accordance with these arbitration procedures.

     11. Release.

            (a) General Release. In exchange for the consideration provided to you by this Agreement that
you are not otherwise entitled to receive, you hereby generally and completely release, acquit and
forever discharge the Company, and its parent, subsidiary, and affiliated entities, along with its
and their predecessors and successors and their respective directors, officers, employees,
shareholders, stockholders, partners, agents, attorneys, insurers, affiliates and assigns
(collectively, the “Released Parties”), of and from any and all claims, liabilities and
obligations, both known and unknown, that arise from or are in any way related to

 

 

Mr. Gregory Schafer

June 23, 2008

Page 7

events, acts,
conduct, or omissions occurring at any time prior to and including the date that you sign this
Agreement (collectively, the “Released Claims”).

            (b) Scope of Release. The Released Claims include, but are not limited to: (a) all claims
arising out of or in any way related to your employment with the Company, or the termination of
that employment; (b) all claims related to your compensation or benefits from the Company,
including salary, bonuses, commissions, other incentive compensation, vacation pay and the
redemption thereof, expense reimbursements, severance payments, fringe benefits, stock, stock
options, or any other ownership or equity interests in the Company; (c) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing;
(d) all tort claims, including but not limited to claims for fraud, defamation, emotional distress,
and discharge in violation of public policy; and (e) all federal, state, and local statutory
claims, including but not limited to claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment
Act of 1967 (as amended) (the “ADEA”), and the California Fair Employment and Housing Act (as
amended).

            (c) Exceptions. Notwithstanding the foregoing, the following are not included in the Released
Claims (the “Excluded Claims”): (a) any rights or claims for indemnification you may have pursuant
to any written indemnification agreement with the Company to which you are a party, the charter,
bylaws, or operating agreements of the Company, or under applicable law; (b) any rights which are
not waivable as a matter of law; or (c) any claims arising from the breach of this Agreement. In
addition, nothing in this Agreement prevents you from filing, cooperating with, or participating in
any investigation or proceeding before the Equal Employment Opportunity Commission, the Department
of Labor, the California Department of Fair Employment and Housing, or any other government agency,
except that you hereby waive your right to any monetary benefits in connection with any such claim,
charge, investigation or proceeding. You hereby represent and warrant that, other than the
Excluded Claims, you are not aware of any claims you have or might have against any of the Released
Parties that are not included in the Released Claims.

     12. ADEA Waiver. You hereby acknowledge that you are knowingly and voluntarily waiving
and releasing any rights you may have under the ADEA, and that the consideration given for
the waiver and release you have given in this Agreement is in addition to anything of value
to which you were already entitled. You further acknowledge that: (a) your waiver and
release do not apply to any rights or claims that
may arise after the date you sign this Agreement; (b) you should consult with an
attorney prior to signing this Agreement (although you may voluntarily decide not to do so);
(c) you have twenty-one (21) days to consider this Agreement (although you may choose
voluntarily to sign this Agreement sooner); (d) you have seven (7) days following the date
you sign this Agreement to revoke this Agreement (in a written revocation sent to and
received by the Company’s Chief Executive Officer); and (e) this Agreement will not be
effective until the date upon which the revocation period has expired, which will be the

 

 

Mr. Gregory Schafer

June 23, 2008

Page 8

eighth day after you sign this Agreement, provided that you do not revoke it (the
“Effective Date”).

     13. Section 1542 Waiver. In giving the release herein, which includes claims which may
be unknown to you at present, you acknowledge that you have read and understand Section 1542
of the California Civil Code, which reads as follows:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor. (California Civil Code section 1542)

You hereby expressly waive and relinquish all rights and benefits under that section and any law or
legal principle of similar effect in any jurisdiction with respect to your release of claims in
this Agreement, including your release of unknown and unsuspected claims.

     14. Entire Agreement. This Agreement, including all exhibits, constitutes the complete,
final and exclusive embodiment of the entire agreement between you and the Company with
regard to the subject matter hereof. It supersedes any and all other agreements entered into
by and between you and the Company on its subject matter. It is entered into without
reliance on any promise or representation, written or oral, other than those expressly
contained herein. It may not be modified except in a written agreement approved by the Board
and signed by you and a duly authorized officer of the Company. Each party has carefully
read this Agreement, has been afforded the opportunity to be advised of its meaning and
consequences by his or its respective attorneys, and signed the same of his or its own free
will. Any ambiguity in this Agreement shall not be construed against either party as the
drafter.

     15. Attorneys’ Fees. If either you or the Company brings any action to enforce rights
under this Agreement, the party successful in enforcing this Agreement shall be entitled to
recover reasonable attorneys’ fees and costs incurred by that party in connection with such
action.

     16. Successors and Assigns. This Agreement will bind the heirs, personal
representatives, successors, assigns, executors and administrators of each party, and will
inure to the benefit of each party, its heirs, successors and assigns.

     17. Applicable Law. This Agreement will be deemed to have been entered into and will be
construed and enforced in accordance with the laws of the State of California without regard
to conflict of laws principles.

     18. Application of Section 409A. The Separation Benefits paid pursuant to Section 3(a)
shall be paid no later than March 15th following the date of this Agreement. It is the
intention of the preceding sentence to apply the “short-term deferral rule” set forth in
Treasury Regulation Section 1.409A-1(b)(4) to such payments. The Separation Benefits paid
pursuant to Section 3(b) are intended to be paid pursuant to the exception provided by

 

 

Mr. Gregory Schafer

June 23, 2008

Page 9

Treasury Regulation Section 1.409A-1(b)(9)(v)(B). The Separation Benefits paid pursuant
to Section 3(c) are intended to be paid pursuant to the exception provided by Treasury
Regulation Section 1.409A-1(b)(9)(v)(A).

     19. Severability; Waiver of Breach. If any provision of this Agreement is determined to
be invalid or unenforceable, in whole or in part, this determination will not affect any
other provision of this Agreement and the provision in question shall be deemed modified so
as to be rendered enforceable in a manner consistent with the intent of the parties, insofar
as possible under applicable law. Any waiver of a breach of this Agreement, or rights
hereunder, shall be in writing and shall not be deemed to be a waiver of any successive
breach or rights hereunder.

     20. Indemnification Agreement. Nothing in this Agreement shall affect the terms of the
Indemnity Agreement you entered into with the Company on April 13, 2006, which shall continue
in full force and effect.

     21. Counterparts. This Agreement may be executed in two counterparts, each of which
will be deemed an original, all of which together constitutes one and the same instrument.
Facsimile signatures are as effective as original signatures.

If this Agreement is acceptable to you, please sign below within twenty-one (21) days of your
receipt of this Agreement, and return the fully signed original to me. If you do not sign this
Agreement within the aforementioned timeframe and promptly return it to me, then the Company’s
offer of Separation Benefits contained herein will expire.

 

 

Mr. Gregory Schafer

June 23, 2008

Page 10

We wish you the best and look forward to continuing to work with you prior to and during the
Consulting Period.

Sincerely,

Onyx Pharmaceuticals, Inc.

	 	 	 	 	 
	By:
	 	 /s/ N. Anthony Coles	 	 
	 

	 	 

N. Anthony Coles
	 	 
	 

	 	President & Chief Executive Officer	 	 

Exhibit A — Separation Date Release

Exhibit B — Proprietary Information, Agreement

Understood and Agreed:

	 	 	 	 	 

    	 /s/ Gregory Schafer	 	 
	 

Gregory Schafer

	 	 

Date:
June 23, 2008

 

 

Exhibit A

SEPARATION DATE RELEASE

(To be signed on or within 21 days after the Separation Date)

     Pursuant to the terms of the Separation Agreement (the “Agreement”) between Onyx
Pharmaceuticals, Inc. (the “Company”) and me dated
June 23, 2008, and as a condition of the
Separation Benefits to be provided to me under the Agreement, I hereby provide the following
Separation Date Release (the “Release”). I understand that I am not entitled to the Separation
Benefits unless I timely sign this Release and allow it to become effective.

     1. Release.

          (a) General Release. In exchange for the Separation Benefits to be provided to me that I am
not otherwise entitled to receive, I hereby generally and completely release, acquit and forever
discharge the Company and its parent, subsidiary, and affiliated entities, along with its and their
predecessors and successors and their respective directors, officers, employees, shareholders,
stockholders, partners, agents, attorneys, insurers, affiliates and assigns (collectively, the
"Released Parties”), of and from any and all claims, liabilities and obligations, both known and
unknown, that arise from or are in any way related to events, acts, conduct, or omissions occurring
at any time prior to and including the date that I sign this Release (collectively, the “Released
Claims”).

          (b) Scope of Release. The Released Claims include, but are not limited to: (a) all claims
arising out of or in any way related to my employment with the Company, or the termination of that
employment; (b) all claims related to my compensation or benefits from the Company, including
salary, bonuses, commissions, other incentive compensation, vacation pay and the redemption
thereof, expense reimbursements, severance payments, fringe benefits, stock, stock options, or any
other ownership or equity interests in the Company; (c) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing (including but not
limited to claims based on or arising from the Agreement); (d) all tort claims, including but not
limited to claims for fraud, defamation, emotional distress, and discharge in violation of public
policy; and (e) all federal, state, and local statutory claims, including but not limited to claims
for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990
(as amended), the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”),
and the California Fair Employment and Housing Act (as amended).

          (c) Exceptions. Notwithstanding the foregoing, the following are not included in the Released
Claims (the “Excluded Claims”): (a) any rights or claims for indemnification I may have pursuant to
any written indemnification agreement with the Company to which I am a party, the charter, bylaws,
or operating agreements of the Company, or under applicable law; (b) any rights which are not
waivable as a matter of law; or (c) any claims

A-1

 

for breach of the Agreement arising after the date that I sign the Release. In addition,
nothing in this Release prevents me from filing, cooperating with, or participating in any
investigation or proceeding before the Equal Employment Opportunity Commission, the Department of
Labor, the California Department of Fair Employment and Housing, or any other government agency,
except that I hereby waive my right to any monetary benefits in connection with any such claim,
charge, investigation or proceeding. I hereby represent and warrant that, other than the Excluded
Claims, I am not aware of any claims I have or might have against any of the Released Parties that
are not included in the Released Claims.

     2. ADEA Waiver. I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA, that the consideration given for the Release is in addition to
anything of value to which I was already entitled, and that I have been advised by this writing, as
required by the ADEA, that: (a) my release of claims does not apply to any rights or claims that
arise after the date I sign this Release; (b) I should consult with an attorney prior to signing
this Release (although I may choose voluntarily not to do so); (c) I have twenty-one (21) days to
consider this Release (although I may choose voluntarily to sign it sooner); (d) I have seven (7)
days following the date I sign this Release to revoke it by providing written notice of my
revocation to the Company’s Board of Directors; and (e) this Release will not be effective until
the date upon which the revocation period has expired unexercised, which will be the eighth day
after I sign this Release (“Effective Date”).

     3. Section 1542 Waiver. In giving the general release herein, which includes claims which may
be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code, which reads as follows: “A general release does not extend to claims which
the creditor does not know or suspect to exist in his or her favor at the time of executing the
release, which if known by him or her must have materially affected his or her settlement with the
debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and
any law of any other jurisdiction of similar effect with respect to my release of claims, including
but not limited to any unknown or unsuspected claims herein.

     4. Representations. I hereby represent that I have been paid all compensation owed and for
all hours worked, have received all the leave and leave benefits and protections for which I am
eligible, pursuant to the Family and Medical Leave Act or otherwise, and have not suffered any
on-the-job injury for which I have not already filed a workers’ compensation claim.

Understood and Agreed:

	 	 	 
	 

Gregory Schafer

	 	 

	 	 	 	 	 
	Date:
	 	June 23, 2008	 	 
	 

	 	 

	 	 

A-2

 

Exhibit B

PROPRIETARY
INFORMATION, AGREEMENT

EMPLOYEE CONFIDENTIAL INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT

     In consideration of my employment or continued employment by Onyx Pharmaceuticals, Inc or its
subsidiaries or affiliates (the “Company”), and the compensation paid to me now and during my
employment with the Company, I agree to the terms of this Agreement as follows:

1. Confidential Information Protections.

     1.1 Nondisclosure; Recognition of Company’s Rights. At all times during and after my
employment, I will hold in confidence and will not disclose, use, lecture upon, or publish any of
Company’s Confidential Information (defined below), except as may be required in connection with my
work for Company, or as expressly authorized in writing by an officer of Company. I will obtain
such officer’s written approval before publishing or submitting for publication any material
(written, oral, or otherwise) that relates to my work at Company and/or incorporates any
Confidential Information. I hereby assign to Company any rights I have or may acquire in any and
all Confidential Information and recognize that all Confidential Information shall be the sole and
exclusive property of Company and its assigns.

     1.2 Confidential Information. The term “Confidential Information” shall mean any and all
confidential knowledge, data or information related to Company’s business or its actual or
demonstrably anticipated research or development, including without limitation (a) trade secrets,
inventions, ideas, processes, computer source and object code, data, formulae, programs, other
works of authorship, know-how, improvements, discoveries, developments, designs, techniques,
methodologies, techniques, processes, assay systems, procedures, tests, formulations, gene
sequences and loci, compounds, micro-organisms or other cell types, proteins, peptides, genetic and
other biological material, computer programs, algorithms, software, reports, documentation,
equipment, and devices; (b) information regarding products, services, plans for research and
development, unpublished test results, clinical trials, marketing and business plans, budgets,
financial statements, contracts, prices, suppliers, and customers; (c) information regarding the
skills and compensation of Company’s employees, contractors, and any other service providers of
Company; and (d) the existence of any business discussions, negotiations, or agreements between
Company and any third party.

     1.3 Third Party Information. I understand that Company has received and in the future will
receive from third parties confidential or proprietary information (“Third Party Information")
subject to a duty on Company’s part to maintain the confidentiality of such information and to use
it only for certain limited purposes. During and after the term of my employment, I will hold
Third Party Information in strict confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for Company) or use,
Third Party Information, except in connection with my work for Company or unless expressly
authorized by an officer of Company in writing.

     1.4 No Improper Use of Information of Prior Employers and Others. I represent that my
employment by Company does not and will not breach any agreement with any former employer,
including any noncompete agreement or any agreement to keep in confidence or refrain from using
information acquired by me in confidence or trust prior to my employment by Company. I further
represent that I have not entered into, and will not enter into, any agreement, either written or
oral, in conflict with my obligations under this Agreement. During my employment by Company, I
will not improperly use or disclose any confidential information or trade secrets of any former
employer or other third party, nor will I bring onto the premises of Company or use any unpublished
documents or any property belonging to any former employer or other third party, in violation of
any lawful agreements with that former employer or third party. I will use in the performance of
my duties only information that is generally known and used by persons with training and experience
comparable to my own, is common knowledge in the industry or otherwise legally in the public
domain, or is otherwise provided or developed by Company.

2. Inventions.

     2.1 Inventions and Intellectual Property Rights. As used in this Agreement, the term
“Invention” means any ideas, concepts, information, materials, processes, methods, data, programs,
know-how, improvements, discoveries, developments, designs, artwork, formulae, other patentable or
copyrightable works, and techniques and all Intellectual Property Rights in any of the items listed
above. The term “Intellectual Property Rights” means all trade secrets, copyrights, trademarks,
mask work rights, patents and other intellectual property rights recognized by the laws of any
jurisdiction or country.

     2.2 Prior Inventions. I have disclosed on Exhibit A a complete list of all Inventions that
(a) I have, or I have caused to be, alone or jointly with others, conceived, developed, or reduced
to practice prior to the commencement of my employment by Company; (b) in which I have an ownership
interest or which I have a license to use; and (c) I wish to have excluded from the scope of this
Agreement (collectively referred to as “Prior Inventions”). If no Prior Inventions are listed in
Exhibit A, I warrant that there are no Prior Inventions. I agree that I will not incorporate, or
permit to be incorporated, Prior Inventions in any Company Inventions (defined below) without
Company’s prior written consent. If, in the course of my employment with Company, I incorporate a
Prior Invention into a Company process, machine or other work, I hereby grant Company a
non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide license, with
rights to sublicense through multiple levels of

B-1

 

sublicensees, to reproduce, make derivative works of, distribute, publicly perform, and
publicly display in any form or medium, whether now known or later developed, make, have made, use,
sell, import, offer for sale, and exercise any and all present or future rights in, such Prior
Invention.

     2.3 Assignment of Company Inventions. Inventions assigned to the Company or to a third party
as directed by the Company pursuant to the section titled “Government or Third Party” are referred
to in this Agreement as “Company Inventions.” Subject to the section titled “Government or Third
Party” and except for Inventions that I can prove qualify fully under the provisions of California
Labor Code section 2870 and that I have set forth in Exhibit A, I hereby assign and agree to assign
in the future (when any such Inventions or Intellectual Property Rights are first reduced to
practice or first fixed in a tangible medium, as applicable) to Company all my right, title, and
interest in and to any and all Inventions (and all Intellectual Property Rights with respect
thereto) made, conceived, reduced to practice, or learned by me, either alone or with others,
during the period of my employment by Company.

     2.4 Obligation to Keep Company Informed. During the period of my employment and for one (1)
year after my employment ends, I will promptly and fully disclose to Company in writing (a) all
Inventions authored, conceived, or reduced to practice by me, either alone or with others,
including any that might be covered under California Labor Code section 2870, and (b) all patent
applications filed by me or in which I am named as an inventor or co-inventor.

     2.5 Government or Third Party. I agree that, as directed by the Company, I will assign to a
third party, including without limitation the United States, all my right, title, and interest in
and to any particular Company Invention.

     2.6 Enforcement of Intellectual Property Rights and Assistance. During and after the period
of my employment, I will assist Company in every proper way to obtain and enforce United States and
foreign Intellectual Property Rights relating to Company Inventions in all countries. If the
Company is unable to secure my signature on any document needed in connection with such purposes, I
hereby irrevocably designate and appoint Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to act on my behalf to
execute and file any such documents and to do all other lawfully permitted acts to further such
purposes with the same legal force and effect as if executed by me.

     2.7 Incorporation of Software Code. I agree that I will not incorporate into any Company
software or otherwise deliver to Company any software code licensed under the GNU General Public
License or Lesser General Public License or any other license that, by its terms, requires or
conditions the use or distribution of such code on the disclosure, licensing, or distribution of
any source code owned or licensed by Company.

3. Records. I agree to keep and maintain adequate and current records (in the form of
notes, sketches, drawings and in any other form that is required by the Company) of all Inventions
made by me during the period of my employment by the Company, which records shall be available to,
and remain the sole property of, the Company at all times.

4. Additional Activities. I agree that (a) during the term of my employment by Company, I
will not, without Company’s express written consent, engage in any employment or business activity
directly related to or competitive with the business in which the Company is now or becomes
involved, or would otherwise conflict with my obligations to the Company. To protect the Company’s
Intellectual Property Rights, and because of the position in the Company that I hold, I agree that
during my employment with the Company whether full-time or part-time and for a period of one year
after my last day of employment with the Company, I will not (a) directly or indirectly, solicit,
induce or encourage, or attempt to solicit, induce, or encourage or otherwise cause any employee,
consultant or independent contractor of the Company to terminate his or her relationship with the
Company in order to become an employee, independent contractor, or consultant to or for any other
person or entity (or any such employee, consultant or independent contractor who has terminated
their relationship with the Company within the six months prior to the date of the action
prohibited hereunder), or (b) directly or indirectly solicit the business of any client or customer
of the Company (other than on behalf of the Company) if such solicitation would involve the
unauthorized use or disclosure of the Company’s Confidential Information.

5. Return Of Company Property.  Upon termination of my employment or upon Company’s
request at any other time, I will deliver to Company all of Company’s property, equipment, and
documents, together with all copies thereof, and any other material containing or disclosing any
Inventions, Third Party Information or Confidential Information and certify in writing that I have
fully complied with the foregoing obligation. I agree that I will not copy, delete, or alter any
information contained upon my Company computer or Company equipment before I return it to Company.
In addition, if I have used any personal computer, server, or e-mail system to receive, store,
review, prepare or transmit any Company information, including but not limited to, Confidential
Information, I agree to provide the Company with a computer-useable copy of all such Confidential
Information and then permanently delete and expunge such Confidential Information from those
systems; and I agree to provide the Company access to my system as reasonably requested to verify
that the necessary copying and/or deletion is completed. I further agree that any property
situated on Company’s premises and owned by Company is subject to inspection by Company’s personnel
at any time with or without further notice. Prior to the termination of my employment or promptly
after termination of my employment, I will cooperate with Company in attending an exit interview
and certify in writing that I have complied with the requirements of this section.

B-2

 

6. Notification Of New Employer. In the event that I leave the employ of Company, I
hereby consent to the notification of my new employer of my rights and obligations under this
Agreement, by Company providing a copy of this Agreement or otherwise.

7. General Provisions.

     7.1 Governing Law and Venue. This Agreement and any action related thereto will be governed,
controlled, interpreted and defined by and under the laws of the State of California, without
giving effect to any conflicts of laws principles that require the application of the law of a
different state. I hereby expressly consent to the personal jurisdiction and venue in the state
and federal courts for the county in which Company’s principal place of business is located for any
lawsuit filed there against me by Company arising from or related to this Agreement.

     7.2 Severability. If any provision of this Agreement is, for any reason, held to be invalid
or unenforceable, the other provisions of this Agreement will be unimpaired and the invalid or
unenforceable provision will be deemed modified so that it is valid and enforceable to the maximum
extent permitted by law.

     7.3 Survival. This Agreement shall survive the termination of my employment and the
assignment of this Agreement by Company to any successor-in-interest or other assignee and be
binding upon my heirs and legal representatives.

     7.4 Employment. I agree and understand that nothing in this Agreement shall give me any right
to continued employment by Company, and it will not interfere in any way with my right or Company’s
right to terminate my employment at any time, with or without cause and with or without advance
notice.

     7.5 Notices. Each party must deliver all notices or other communications required or
permitted under this Agreement in writing to the other party at the address listed on the signature
page, by courier, by certified or registered mail (postage prepaid and return receipt requested),
or by a nationally-recognized express mail service. Notice will be effective upon receipt or
refusal of delivery. If delivered by certified or registered mail, notice will be considered to
have been given five (5) business days after it was mailed, as evidenced by the postmark. If
delivered by courier or express mail service, notice will be considered to have been given on the
delivery date reflected by the courier or express mail service receipt. Each party may change its
address for receipt of notice by giving notice of such change to the other party.

     7.6 Injunctive Relief. I acknowledge that, because my services are personal and unique and
because I will have access to the Confidential Information of Company, any breach of this Agreement
by me would cause irreparable injury to Company for which monetary damages would not be an adequate
remedy and, therefore, will entitle Company to injunctive relief (including specific performance).
The rights and remedies provided to each party in this Agreement are cumulative and in addition to
any other rights and remedies available to such party at law or in equity.

     7.7 Waiver. Any waiver or failure to enforce any provision of this Agreement on one occasion
will not be deemed a waiver of any other provision or of such provision on any other occasion.

     7.8 Export. I agree not to export, directly or indirectly, any U.S. technical data acquired
from Company or any products utilizing such data, to countries outside the United States, because
such export could be in violation of the United States export laws or regulations.

     7.9 Entire Agreement. The obligations pursuant to sections of this Agreement titled
“Confidential Information Protections” and “Inventions” shall apply at any time during which I was
previously employed, or am in the future employed by Company or, to the fullest extent permitted by
law, to any time during which I was previously engaged, or am in the future engaged, by Company as
an independent contractor, if no other agreement governs nondisclosure and assignment of inventions
during such period. This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes and merges all prior communications
between us with respect to such matters. No modification of or amendment to this Agreement, or any
waiver of any rights under this Agreement, will be effective unless in writing and signed by me and
an officer of the Company. Any subsequent change or changes in my duties, salary or compensation
will not affect the validity or scope of this Agreement.

B-3

 

     This Agreement shall be effective as of the first day of my employment with Company.

	 	 	 	 	 	 	 	 	 
	EMPLOYEE:	 	 	 	ONYX PHARMACEUTICALS, INC.:
	 
	 	 	 	 	 	 	 	 
	I have read, understand, and accept this agreement

and have been given the opportunity to discuss it

with independent legal counsel.	 	 	 	Accepted and agreed:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	(Signature)
	 	 	 	(Signature)

	 
	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	By: LEONIE MCCONVILLE
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:	 	 	 	 	 	Title: SR. DIRECTOR, HR & FACILITIES
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address:	 	 	 	 	 	Address: 2100 POWELL ST, EMERYVILLE, CA 94608
	 

	 	 	 	 	 	 	 	 

B-4

 

EXHIBIT A

INVENTIONS

1. Prior Inventions Disclosure. The following is a complete list of all Prior Inventions (as
provided in Section 2.2 of the attached Employee Confidential Information and Inventions Assignment
Agreement, defined herein as the “Agreement”):

	 	o	 	None
	 
	 	o	 	See immediately below:
	 
	 	 

	 
	 	 

	 
	 	o	 	Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above
with respect to inventions or improvements generally listed below and the proprietary rights and
obligations with respect to which I owe to the following party(ies):

	 	 	 	 	 	 	 
	 

	 	Invention or Improvement
	 	Party(ies)
	 	Relationship
	 
	 	 	 	 	 	 
	   1.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	   2.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	   3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

	 	o	 	Additional sheets attached.

3. Limited Exclusion Notification.

     This is to notify you in accordance with Section 2872 of the California Labor Code
that the foregoing Agreement between you and Company does not require you to assign or offer to
assign to Company any Invention that you develop entirely on your own time without using Company’s
equipment, supplies, facilities or trade secret information, except for those Inventions that
either:

     a. Relate at the time of conception or reduction to practice to Company’s business, or actual
or demonstrably anticipated research or development; or

     b. Result from any work performed by you for Company.

     To the extent a provision in the foregoing Agreement purports to require you to assign an
Invention otherwise excluded from the preceding paragraph, the provision is against the public
policy of this state and is unenforceable.

     This limited exclusion does not apply to any patent or Invention covered by a contract between
Company and the United States or any of its agencies requiring full title to such patent or
Invention to be in the United States.

B-5EX-10.1

Exhibit 10.1

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL
FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.

 

JOHN D. OIL AND GAS COMPANY

COMMON STOCK PURCHASE WARRANT

 

     This certifies that, for good and valuable consideration, John D. Oil and Gas Company, a
Maryland corporation (the “Company”), grants to Richard M. Osborne (the “Warrantholder”), the right
to purchase from the Company Fifty Thousand (50,000) validly issued, fully paid and nonassessable
shares (the “Warrant Shares”) of the Company’s common stock (as hereinafter defined), at the
purchase price per share of one dollar ($1.00) (the “Exercise Price”), at any time prior to 5:00
p.m., Cleveland time, on the Expiration Date, all subject to the terms, conditions and adjustments
herein set forth.

1. Duration and Exercise of Warrant.

     1.1 Subject to the terms and conditions set forth herein, this Warrant may be
exercised, in whole or in part, by the Warrantholder by:

     (a) the surrender of this Warrant to the Company, with a duly executed Exercise Form
specifying the number of Warrant Shares to be purchased, during
normal business hours on any Business Day (i) beginning on June 20, 2008 and (ii) prior to the
Expiration Date; and

     (b) the delivery of payment to the Company, for the account of the Company, by cash,
wire transfer, certified or official bank check or any other means approved by the Company,
of the Exercise Price for the number of Warrant Shares specified in the Exercise Form in
lawful money of the United States of America.

Notwithstanding the foregoing, the Warrantholder may, without the payment of cash or other
consideration (other than the surrender of the right to purchase certain Warrant Shares implicit in

 

 

the following formula), exercise this Warrant for “Net Warrant Shares.” The Warrantholder shall
provide written notice to the Company specifying the gross number of Warrant Shares as to which
this Warrant is then exercised. The number of Net Warrant Shares deliverable upon such exercise
will be determined by the following formula: Net Warrant Shares =
[WS x (CP - EP)]/CP, where “WS”
is the gross number of Warrant Shares as to which this Warrant is to be exercised; “CP” is the
Current Market Price of the Common Stock on the last trading day preceding the date of the request
to exercise this Warrant; and “EP” shall mean the then applicable Exercise Price.

The Company agrees that such Warrant Shares shall be deemed to be issued to the Warrantholder as
the record holder of such Warrant Shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment has been made for the Warrant Shares.
Notwithstanding the foregoing, no such surrender shall be effective to constitute the Person
entitled to receive such shares as the record holder thereof while the transfer books of the
Company for the Common Stock are closed for any purpose (but not for any period in excess of five
days), but any such surrender of this Warrant for exercise during any period while such books are
so closed shall become effective for exercise immediately upon the reopening of such books, as if
the exercise had been made on the date this Warrant was surrendered and for the number of shares of
Common Stock and at the Exercise Price in effect at the date of such surrender.

     1.2 Warrant Shares Certificate. A stock certificate or certificates for the Warrant
Shares specified in the Exercise Form (or in the alternative, electronic delivery of the Warrant
Shares in a manner reasonably satisfactory to the Warrantholder) shall be delivered to the
Warrantholder within three Business Days after receipt of the Exercise Form by the Company and
payment of the purchase price. No fractional shares shall be issued upon the exercise of this
Warrant, provided that the Warrantholder shall receive, in lieu of any fractional shares, cash in
an amount equal to the product of the fraction multiplied by the Current Market Price per share of
Common Stock. If this Warrant shall been exercised only in part, the Company shall, at the time of
delivery of the stock certificate or certificates, deliver to the Warrantholder a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all
other respects be identical with this Warrant.

     2. Restrictions on Transfer; Restrictive Legends.

          2.1 This Warrant may not be offered, sold, transferred, pledged or otherwise disposed of in
whole or in part, to any person; provided that the Warrantholder may offer, sell or transfer this
Warrant to any Affiliate of the Warrantholder.

          2.2 Except as otherwise permitted by this Section 2, each stock certificate for Warrant Shares
issued upon the exercise of any Warrant and each stock certificate issued upon the direct or
indirect transfer of any such Warrant Shares shall be stamped or otherwise imprinted with a legend
in substantially the following form:

2

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST HEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE HOLDER,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.

     Notwithstanding the foregoing, the Warrantholder may require the Company to issue a Warrant or
a stock certificate for Warrant Shares, in each case without a legend, if either (i) such Warrant
or such Warrant Shares, as the case may be, have been registered for resale under the Securities
Act, (ii) the Warrantholder has delivered to the Company an opinion of legal counsel (from a firm
reasonably satisfactory to the Company) which opinion shall be addressed to the Company and be
reasonably satisfactory in form and substance to the Company’s counsel, to the effect that such
registration is not required with respect to such Warrant or such Warrant Shares, as the case may
be, or (iii) such Warrant or Warrant Shares are sold in compliance with Rule 144 (or any successor
provision then in effect) under the Securities Act, the Company receives customary representations
to such effect and the Company receives an opinion of counsel to the Company in customary form that
such legend may be removed.

3. Reservation and Resignation of Shares.

     The Company covenants and agrees as follows:

     (a) All Warrant Shares that are issued upon the exercise of this Warrant shall, upon
issuance, be validly issued, fully paid and nonassessable, not subject to any preemptive
rights, and free from all taxes, liens, security interests, charges, and other encumbrances
with respect to the issuance thereof.

     (b) During the period within which this Warrant may be exercised, the Company shall at
all times have authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant.

4. Loss or Destruction of Warrant.

     Subject to the terms and conditions hereof, upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, or destruction or mutilation of this Warrant and, in the
case of loss, theft or destruction, of such bond or indemnification as the Company may reasonably
require, and, in the case of such mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver a new Warrant of like tenor.

3

 

5. Ownership of Warrant.

     The Company may deem and treat the person in whose name this Warrant is registered as the
holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer.

6. Certain Adjustments.

     6.1 The number of Warrant Shares purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment as follows:

     (a) Stock Dividends, Splits, Combinations. If at any time after the date of
the issuance of this Warrant the Company (i) declares a dividend or other distribution
payable in Common Stock or subdivides its outstanding shares of Common Stock into a larger
number or (ii) combines its outstanding shares of Common Stock into a smaller number, then
(x) the number of Warrant Shares to be delivered upon exercise of this Warrant will, upon
the occurrence of an event set forth in clause (i) above, be increased and, upon the
occurrence of an event set forth in clause (ii) above, be decreased so that such
Warrantholder will be entitled to receive the number of shares of Common Stock that such
Warrantholder would have owned immediately following such action had this Warrant been
exercised immediately prior thereto and (y) the Exercise Price in effect immediately prior
to such dividend, other distribution, subdivision or combination, as the case may be, shall
be adjusted proportionately by multiplying such Exercise Price by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior to such adjustment and of which the denominator shall be the number of
Warrant Shares purchasable immediately thereafter.

     (b) Distribution of Stock, Other Securities, Evidence of Indebtedness. In case
the Company shall distribute to the holders of Common Stock, shares of its capital stock
(other than Common Stock for which adjustment is made under Section 6.1(a)), stock or other
securities of the Company or any other Person, evidences of indebtedness issued by the
Company or any other Person, assets (excluding cash dividends) or options, warrants or
rights to subscribe for or purchase the foregoing, then, and in each such case, immediately
following the record date fixed for the determination of the holders of Common Stock
entitled to receive such distribution, (A) the Exercise Price then in effect shall be
adjusted by multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be such Current Market Price of
the Common Stock on such record date (i.e. prior to such shares trading “ex-”) less the
then Fair Market Value (as determined by the Board of Directors or a duly appointed
committee thereof, each acting in good faith) of the portion of the stock, other securities,
evidences of indebtedness so distributed or of such options, warrants or rights applicable
to one share of Common Stock (but such numerator shall not be less than 0.10) and (ii) the
denominator of which shall be the Current Market Price of one share of Common Stock on such
record date (i.e. prior to such shares trading “ex-”) and (B) the number of Warrant Shares
shall be adjusted to equal (i) the number of Warrant Shares for which this

4

 

Warrant is exercisable immediately prior to such adjustment multiplied by the Exercise Price then in
effect, divided by (ii) the Exercise Price as adjusted pursuant to clause (A) above. Such
adjustment shall become effective at the opening of business on the Business Day following
the record date for the determination of stockholders entitled to such distribution.

     (c) Reorganization, Merger, Sale of Assets. In case of any capital
reorganization or reclassification or other change of outstanding shares of Common Stock
(other than a change in par value), any consolidation or merger of the Company with or into
another Person (other than a consolidation or merger of the Company in which the Company is
the resulting or surviving Person and which does not result in any reclassification or
change of outstanding shares of Common Stock) or the sale of all or substantially all of the
assets of the Company to another Person, upon exercise of this Warrant the Warrantholder
shall have the right to receive the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the Company
deliverable upon exercise of this Warrant would have been entitled upon such reorganization,
reclassification, consolidation, merger or sale had this Warrant been exercised immediately
prior to such event; and, in such case, appropriate adjustment (as determined in good faith
by the Board of Directors or a duly appointed committee thereof) shall be made in the
application of the provisions of this Section 6 with respect to the rights and interest
thereafter of the Warrantholder, to the end that the provisions set forth in this Section 6
(including provisions with respect to changes in and other adjustments of the Exercise Price
and number of Warrant Shares) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable upon
exercise of this Warrant.

     (d) Carryover. Notwithstanding any other provision of this Section 6.1, no
adjustment shall be made to the number of shares of Common Stock to be delivered to the
Warrantholder (or to the Exercise Price) if such adjustment represents less than 1% of the
number of shares to be so delivered, but any lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment that together
with any adjustments so carried forward shall amount to 1% or more of the number of shares
to be so delivered, provided however, that, upon exercise of this warrant pursuant
to Section 1 hereof, any adjustment called for by Sections 6. 1 (a), (b) or (c) which has
not been made as a result of this Section 6. 1(d) shall be made.

     6.2 No Adjustment for Dividends. Except as provided in Section 6.1, no adjustment in
respect of any dividends shall be made during the term of this Warrant or upon the exercise
of this Warrant. Notwithstanding any other provision hereof, no adjustments shall be made on
Warrant Shares issuable on the exercise of this Warrant for any cash dividends paid or payable to
holders of record of Common Stock prior to the date as of which the Warrantholder shall be deemed
to be the record holder of such Warrant Shares.

     6.3. Notice of Adjustment. Whenever the number of Warrant Shares or the Exercise
Price of such Warrant Shares shall be adjusted, as provided in Section 6.1, the Company shall
forthwith file, at the principal office of the Company (or at such other place as may be

5

 

designated by the Company), a statement, certified by the chief financial officer of the Company, showing in
detail the facts requiring such adjustment, the computation by which such adjustment was made and
the Exercise Price that shall be in effect after such adjustment. The Company shall also cause a
copy of such statement to be sent by first class mail postage prepaid, to the Warrantholder, at
such Warrantholder’s address as shown in the records of the Company.

     7. Amendments.

     Any provision of this Warrant may be amended and the observance thereof waived only with the
written consent of the Company and the Warrantholder.

     8. Notices of Corporate Action.

     So long as this Warrant has not been exercised in full, in the event of

     (a) any taking by the Company of a record of all holders of Common Stock for the
purpose of determining the holders thereof who are entitled to receive any dividend (other
than cash dividends or distributions paid from the retained earnings of the Company) or
other distribution, or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to receive any other right;

     (b) any capital reorganization of the Company, any reclassification (other than a
change in par value of the Common Stock) or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other Person; or

     (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

the Company will mail to the Warrantholder a notice specifying (i) the date or expected date on
which any such record is to be taken for the purpose of such dividend, distribution or right and
the amount and character of any such dividend, distribution or right or (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time, if any such time is
to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their
Common Stock for the securities or other property, if any, deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be delivered at least 5 days prior to the date therein specified, in
the case of any date referred to in the foregoing subdivisions (i) and (ii).

     9. Definitions.

     As used herein, unless the context otherwise requires, the following terms have the following
respective meanings;

6

 

     “Affiliate” means any Person who is an “affiliate” as defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.

     “Business Day” means any day other than a Saturday, Sunday or a day on which national
banks are authorized by law to close in the State of Ohio.

     “Common Stock” means the shares of common stock, $0.001 par value per share, of the
Company and any capital stock into which such common stock may be changed.

     “Company” has the meaning specified on the cover of this Warrant.

     “Current Market Price” of a share of Common Stock as of a particular date (the
“Determination Date”) shall mean:

     (i) If the Common Stock is listed or admitted for trading on a national securities
exchange (including the NASDAQ Stock Market), then the Current Market Price shall be the
average of the last 10 closing sale prices of the Common Stock on the principal national
securities exchange on which the Common Stock is listed or admitted for trading on the last
10 trading days prior to the Determination Date (even if no sale takes place on 6 of such
days), or if not listed or traded on any such exchange, then the Current Market Price shall
be the average of the last 10 closing sale prices of the Common Stock on the
over-the-counter market on the last 10 trading days prior to the Determination Date (even if
no sale takes place on 6 of such days) (A) as reported by the National Association of
Securities Dealers Automated Quotation System or the National Quotation System Bureau
Incorporated or (B) if neither such firm is engaged in the business of reporting such
prices, as reported by a similarly generally accepted reporting service; or

     (ii) If the Common Stock is not so listed or admitted to unlisted trading privileges or
if no such sale is made on at least 7 of such days, then the Current Market Price shall be
reasonably determined in good faith by the Company’s Board of Directors or a duly appointed
committee of the Board of Directors (which determination shall be reasonably described in
the written notice delivered to the Warrantholder together with the Common Stock
certificates).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended (or any successor
statute thereto), and the rules and regulations of the Commission promulgated thereunder.

     “Exercise Form” means an Exercise Form in the form annexed hereto as Exhibit A.

     “Exercise Price” has the meaning specified on the cover of this Warrant.

     “Expiration Date” means June 20, 2013.

7

 

     “Fair Market Value” means the amount which a willing buyer would pay a willing seller
in an arm’s-length transaction.

     “Person” means any individual, firm, corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint stock company,
governmental authority or other entity of any kind, and shall include any successor (by merger or
otherwise) of such entity.

     “Securities Act” has the meaning specified on the cover of this Warrant, or any
similar Federal statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. Reference to a particular section of the Securities Act, shall
include a reference to the comparable section, if any, of any such similar Federal statute.

     “Warrantholder” has the meaning specified on the cover of this Warrant.

     “Warrant Shares” has the meaning specified on the cover of this Warrant.

     10. Miscellaneous.

          10.1 Entire Agreement. This Warrant constitutes the entire agreement between the
Company and the Warrantholder with respect to this Warrant.

          10.2 Binding Effect; Benefit. This Warrant shall inure to the benefit of and shall be
binding upon the Company and the Warrantholder and their respective successors and assigns. Nothing
in this Warrant, expressed or implied, is intended to or shall confer on any person other than the
Company and the Warrantholder, or their respective successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Warrant.

          10.3 Section and Other Headings. The section and other headings contained in this
Warrant are for reference purposes only and shall not be deemed to be a part of this Warrant or to
affect the meaning or interpretation of this Warrant.

          10.4 Notices. All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified first-class mail, return
receipt requested, telecopier, courier service, overnight mail or personal delivery:

	 	(a)	 	if to Warrantholder:
	 
	 	 	 	Richard M. Osborne

8500 Station Street, Suite 113

Mentor, Ohio 44060

Fax: (440) 255-8645
	 
	 	(b)	 	if to the Company:
	 
	 	 	 	John D. Oil and Gas Company

8

 

	 	 	 	8500 Station Street, Suite 345

Mentor, Ohio 44060

Fax: (440) 205-8680

Attention: Chief Financial Officer

     All such notices and communications shall be deemed to have been duly given when delivered by
hand, if personally delivered; when delivered by courier or overnight mail, if delivered by
commercial courier service or overnight mail; five (5) Business Days after being deposited in the
mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if faxed. Any
party may by notice given in accordance with this Section 11.4 designate another address or Person
for receipt of notices hereunder.

     10.5 Severability. Any term or provision of this Warrant which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the terms and
provisions of this Warrant or affecting the validity or enforceability of any of the terms or
provisions of this Warrant in any other jurisdiction.

     10.6 Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OHIO, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

     10.7 No Rights or Liabilities as Stockholder. Nothing containing in this Warrant
shall be determined as conferring upon the Warrantholder any rights as a stockholder of the Company
or as imposing any liabilities on the Warrantholder to purchase any securities whether such
liabilities are asserted by the Company or by creditors or stockholders of the Company or
otherwise.

9

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized
officer.

	 	 	 	 	 
	 	JOHN D. OIL AND GAS COMPANY

 	 
	 	/s/ Gregory J. Osborne
 	 
	 	By:       Gregory J. Osborne 	 
	 	Its:       President and Chief Operating Officer 	 
	 

Dated: June 20, 2008

10

 

EXHIBIT A

EXERCISE OF WARRANT

The undersigned,                                                         
             
           , pursuant to the
provisions of the within Warrant,
hereby elects to purchase           
              
                
shares of Common Stock of John D. Oil and Gas Company,
covered by the within Warrant, and tenders herewith payment of the Exercise Price in full in the
form of certified or bank cashier’s check or wire transfer.

Please issue a certificate or certificates for such shares of Common Stock in the following name or
names and denominations:

If said number of shares are not all the shares of Common Stock issuable upon exercise of the
attached Warrant, a new Warrant is to be issued in the name of the undersigned for the balance
remaining of such shares less any faction of a share paid in cash.

[This form shall be modified by the Warrantholder and the Company as appropriate in the event
Warrantholder exercises the Warrant, in whole or in part, in accordance with the penultimate
paragraph of Section 1.1 of the Warrant.]

	 	 	 	 	 	 	 
	 

	 	Signature	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Note: The above
signature should correspond exactly with the name on the face of the within Warrant.	 	 

Dated:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]