Document:

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                                                                  Exhibit 10.20

                    FORM OF RECOURSE SECURED PROMISSORY NOTE
                                ("RECOURSE NOTE")

$374,900                                                          June 26, 2001

            FOR VALUE RECEIVED, the undersigned (the "Stockholder") hereby
promises to pay to the order of FLCC Holdings, Inc., a Delaware corporation
(the "Company"), or to the legal holder of this Recourse Note at the time of
payment, on the Maturity Date (as hereinafter defined), the principal sum of
Three hundred seventy-four thousand nine-hundred ($374,900) in lawful money
of the United States of America, and to pay simple interest at a rate of 5.02
percent per annum (the "Interest Rate") (computed on the basis of a 365 or
366 day year, as the case may be) on the unpaid principal amount hereof from
and after the date of this Recourse Note until the entire principal amount
hereof has been paid in full. Accrued but unpaid interest shall be paid on
June 30 of each year and upon payment (including prepayment) of the principal
amount hereof. Notwithstanding the foregoing, the Stockholder shall have the
option on June 30 of each year to either pay the interest due on such date
(each, an "Interest Payment") or increase the principal amount due under this
Recourse Note by the amount of such Interest Payment. Immediately thereafter,
the principal amount of this Recourse Note shall be increased by such
Interest Payment and interest shall accrue on the principal amount of this
Recourse Note as so increased.

            The proceeds of the loan evidenced by this Recourse Note shall be
used as partial payment for the purchase by the Stockholder of shares (the
"Financed Stock") of Class B Common Stock (the "Class B Common Stock"), par
value $.01 per share, of the Company. In connection with the Stockholder's
purchase of shares of Class B Common Stock, the Stockholder and the Company are
entering into a Stockholder's Agreement, dated as of the date hereof, which sets
forth certain rights and restrictions pursuant to which the Stockholder holds
such shares (the "Stockholder's Agreement"). Payment of the principal of and
interest on this Recourse Note is secured pursuant to the terms of a Stock
Pledge Agreement, dated as of the date hereof, between the Stockholder and the
Company (the "Pledge Agreement"), reference to which is made for a description
of the collateral provided thereby and the rights of the Company and any other
holder of this Recourse Note in respect of such collateral.

            The "Maturity Date" shall mean the earliest of (i) the ninth
anniversary of the date hereof, (ii) the 181st day following the date (the
"Termination Date") on which the Stockholder's employment with the Company
terminates for any reason, if the Company has not delivered by such 181st day a
notice exercising its right to purchase, and the Stockholder has not delivered
by such 181st day a notice requiring the Company to purchase, as the case may
be, any of the Stockholder's Financed Stock pursuant to Section 3.2 of the
Stockholder's Agreement, and (iii) the date of the Closing (as defined in the
Stockholder's Agreement).

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            If the date set for payment of principal or interest hereunder is a
Saturday, Sunday or legal holiday, then such payment shall be made on the next
succeeding business day.

            This Recourse Note is subject to the following further terms and
conditions:

            1. MANDATORY PREPAYMENTS. If at any time the Stockholder receives
(a) any cash proceeds from the sale, transfer, redemption or other disposition
(individually and collectively, a "Sale") of any of the Stockholder's shares of
Class B Common Stock or from the Sale of any shares or other property received
in exchange for or otherwise in respect of any of the Stockholder's shares of
Class B Common Stock (in each case, whether or not constituting Financed Stock)
(individually and collectively, the "Sold Shares"), including, without
limitation, any Sale by the Stockholder of shares of Class B Common Stock to the
Company, or (b) any cash payments, cash dividends or other cash distributions in
respect of any of the Stockholder's shares of Class B Common Stock or in respect
of any shares or other property received in exchange for or otherwise in respect
of any of the Stockholder's shares of Class B Common Stock (in each case,
whether or not constituting Financed Stock) (collectively "Distributions"), the
Stockholder shall promptly apply the Net Proceeds (as hereinafter defined)
thereof to the prepayment of the outstanding principal amount of this Recourse
Note, together with accrued and unpaid interest on the principal amount being
prepaid.

            The term "Net Proceeds" shall mean the total cash proceeds received
from the Sale of the Sold Shares or the total amount of the Distribution, as
applicable (individually and collectively, a "Cash Payment"), less (except in
the case of a sale of shares of Class B Common Stock to the Company) an amount
equal to the sum of (i) the federal income tax liability that would be payable
in respect of the income or gain recognized upon such Sale or in respect of such
Distribution, as the case may be, after giving effect to a deduction for any
state income tax liability described in clause (ii) below, assuming a tax rate
equal to the maximum federal income tax rate on long term or short term, as
applicable, capital gains, or applicable to the Distribution, as the case may
be, in effect at the time, (ii) any state income tax liability that would be
payable in respect of such income or gain, as the case may be, assuming the
maximum state income tax rate applicable to such stockholder with respect to
such Sale or Distribution, as the case may be, in effect at the time and (iii)
the Stockholder's proportionate share of any "Expenses of Sale" (as defined in
the Stockholder's Agreement) related to such Sale.

            Concurrently with any prepayment (including by set-off as set forth
below) of any portion of the principal amount of this Recourse Note pursuant to
this Section 1 or Section 2 hereof, the Company (or other holder of this
Recourse Note) shall make a notation of such payment hereon. If full payment of
all unpaid principal of and accrued and unpaid interest on this Recourse Note is
made, this Recourse Note shall be canceled and delivered to the Stockholder.

                                      -2-
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            If at any time, or from time to time, after the date hereof, the
Stockholder shall become entitled to receive from the Company or any affiliate
of the Company (or other holder of this Recourse Note) any Cash Payment, then
and in each case the Company or such affiliate (or other holder of this Recourse
Note) shall only be obligated to pay to the Stockholder an amount equal to such
Cash Payment less the Net Proceeds thereof, and the Company (or other holder of
this Recourse Note) shall set off the amount of the Net Proceeds of such Cash
Payment against (and such set-off shall satisfy the Stockholder's obligations
hereunder to apply such amount to the prepayment of) the outstanding principal
amount of and/or accrued and unpaid interest on this Recourse Note, as
applicable.

            2. PAYMENT AND PREPAYMENT. All payments and prepayments of principal
of and interest on this Recourse Note shall be made to the Company or its order
(or to any other holder of this Recourse Note or such holder's order), in lawful
money of the United States of America at the principal offices of the Company
(or at such other place as the holder hereof shall notify the Stockholder in
writing). The Stockholder may, at the Stockholder's option, prepay this Recourse
Note in whole or in part at any time or from time to time without penalty or
premium. Any prepayments of any portion of the principal amount of this Recourse
Note shall be accompanied by payment of all interest accrued but unpaid on the
principal amount being prepaid.

            3. EVENTS OF DEFAULT. Upon the occurrence of any of the following
events ("Events of Default"):

                  (a) Failure to pay any principal of this Recourse Note
            (including as required under Section 1 hereof) when due; or

                  (b) Failure to pay any interest under this Recourse Note when
            due which shall remain unremedied for ten days following the date
            when such interest was due hereunder; or

                  (c) Failure to comply with any of the terms of the
            Stockholder's Agreement,

then, and in any such event, the holder of this Recourse Note may declare, by
notice of default given to the Stockholder, the entire principal amount of this
Recourse Note to be forthwith due and payable, whereupon the entire principal
amount of this Recourse Note outstanding and any accrued and unpaid interest
hereunder shall become due and payable without presentment, demand, protest,
notice of dishonor and all other demands and notices of any kind, all of which
are hereby expressly waived. Upon the occurrence of an Event of Default, the
accrued and unpaid interest hereunder shall thereafter bear the same rate of
interest as on the principal hereunder, but in no event shall such interest be
charged which would violate any applicable usury law. If an Event of Default
shall occur hereunder, the Stockholder shall pay costs of collection, including
reasonable attorneys' fees, incurred by the holder in the enforcement hereof.

                                      -3-
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            No delay or failure by the holder of this Recourse Note in the
exercise of any right or remedy shall constitute a waiver thereof, and no single
or partial exercise by the holder hereof of any right or remedy shall preclude
other or future exercise thereof or the exercise of any other right or remedy.

            4.    MISCELLANEOUS.

                  (a) The provisions of this Recourse Note shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of law rules thereof. The provisions of Section 6.14 of
the Stockholder's Agreement are incorporated by reference herein.

                  (b) All notices and other communications hereunder shall be in
writing and will be deemed to have been duly given if delivered or mailed in
accordance with the Stockholder's Agreement.

                  (c) The headings contained in this Recourse Note are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the provisions hereof.

                  (d) Neither this Recourse Note nor any of the rights,
interests or obligations hereunder shall be assigned by the Stockholder without
the prior written consent of the Company. The Company may assign this Recourse
Note or any of its rights, interests or obligations hereunder to any affiliate
thereof without the consent of any other party.

                                      -4-
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            IN WITNESS WHEREOF, this Recourse Note has been duly executed and
delivered by the Stockholder on the date first above written.

                                           /s/ Randy L. Taylor
                                          ----------------------------------
                                          Randy L. TaylorEXHIBIT 10.39

 

 

 

 

 

 

 

 

 

 

 

 

ONYX PHARMACEUTICALS, INC.

 

STOCK AND
WARRANT PURCHASE AGREEMENT

 

May 6, 2002

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  1. AUTHORIZATION OF SALE OF THE SECURITIES

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  2. AGREEMENT TO SELL AND PURCHASE THE SHARES

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. CLOSING AND
  DELIVERY

  	
  1

  
	
   

  	
  3.1

  	
  Closing

  	
  1

  
	
   

  	
  3.2

  	
  Delivery of the
  Shares and Warrants

  	
  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 Documents

  	
  2

  
	
   

  	
  4.3

  	
  No
  Conflicts

  	
  3

  
	
   

  	
  4.4

  	
  Governmental
  Consents

  	
  3

  
	
   

  	
  4.5

  	
  Issuance and
  Sale of the Shares

  	
  3

  
	
   

  	
  4.6

  	
  SEC
  Reports

  	
  3

  
	
   

  	
  4.7

  	
  No
  Material Change

  	
  4

  
	
   

  	
  4.8

  	
  Executive
  Officers

  	
  4

  
	
   

  	
  4.9

  	
  Capitalization

  	
  4

  
	
   

  	
  4.10

  	
  Nasdaq
  Compliance

  	
  4

  
	
   

  	
  4.11

  	
  Absence of Litigation

  	
  4

  
	
   

  	
  4.12

  	
  Intangible
  Rights

  	
  5

  
	
   

  	
  4.13

  	
  Legal
  Compliance

  	
  5

  
	
   

  	
  4.14

  	
  Securities Act Exemption

  	
  5

  
	
   

  	
  4.15

  	
  Brokers

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER

  	
  6

  
	
   

  	
  5.1

  	
  Authority,
  Approval and Enforceability

  	
  6

  
	
   

  	
  5.2

  	
  Investment Representations

  	
  6

  
	
   

  	
  5.3

  	
  Brokers

  	
  7

  
	
   

  	
  5.4

  	
  Pecuniary
  Interest

  	
  7

  
	
   

  	
  5.5

  	
  Acknowledgments
  Regarding Placement Agent

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
						

 

 

i

 

TABLE OF CONTENTS

(CONTINUED)

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  7. CONDITIONS TO COMPANY’S OBLIGATIONS AT THE CLOSING

  	
  8

  
	
   

  	
  7.1

  	
  Representations
  and Warranties Correct

  	
  8

  
	
   

  	
  7.2

  	
  Covenants
  Performed

  	
  8

  
	
   

  	
  7.3

  	
  Qualifications

  	
  8

  
	
   

  	
  7.4

  	
  Legal
  Investment

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  8. CONDITIONS TO PURCHASERS’ OBLIGATIONS AT THE CLOSING

  	
  9

  
	
   

  	
  8.1

  	
  Representations
  and Warranties Correct

  	
  9

  
	
   

  	
  8.2

  	
  Legal
  Opinion

  	
  9

  
	
   

  	
  8.3

  	
  Covenants
  Performed

  	
  9

  
	
   

  	
  8.4

  	
  Qualifications

  	
  9

  
	
   

  	
  8.5

  	
  Legal
  Investment

  	
  9

  
	
   

  	
  8.6

  	
  Compliance
  Certificate

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION
  9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT

  	
  9

  
	
   

  	
  9.1

  	
  Definitions

  	
  9

  
	
   

  	
  9.2

  	
  Registration
  Procedures and Expenses

  	
  10

  
	
   

  	
  9.3

  	
  Indemnification

  	
  11

  
	
   

  	
  9.4

  	
  Transfer
  of Shares After Registration; Notice

  	
  13

  
	
   

  	
  9.5

  	
  Reporting
  Requirements

  	
  13

  
	
   

  	
  9.6

  	
  Termination of
  Obligations

  	
  13

  
	
   

  	
  9.7

  	
  Assignability
  of Registration Rights

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10. NOTICES

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11. MISCELLANEOUS

  	
  14

  
	
   

  	
  11.1

  	
  Waivers and Amendments

  	
  14

  
	
   

  	
  11.2

  	
  Headings

  	
  14

  
	
   

  	
  11.3

  	
  Severability

  	
  14

  
	
   

  	
  11.4

  	
  Governing
  Law

  	
  14

  
						

 

 

ii

 

TABLE OF CONTENTS

(CONTINUED)

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  Counterparts

  	
  14

  
	
   

  	
  11.6

  	
  Successors and Assigns

  	
  15

  
	
   

  	
  11.7

  	
  Expenses

  	
  15

  
	
   

  	
  11.8

  	
  Entire
  Agreement

  	
  15

  
	
   

  	
  11.9

  	
  Publicity

  	
  15

  
	
   

  	
  11.10

  	
  Waiver
  of Conflicts

  	
  15

  
						

 

 

 

 

 

 

iii

 

 

ONYX PHARMACEUTICALS, INC.

STOCK AND WARRANT PURCHASE AGREEMENT, AS AMENDED

THIS AGREEMENT (“Agreement”) is made as of
the 6th day of May, 2002 (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
(i) 2,972,925 shares of the Company’s Common Stock, $0.001 par value (the
“Shares”) and (ii) warrants to purchase 743,229 shares of the Company’s Common
Stock, which is equal to twenty-five percent (25%) of the number of Shares
purchased hereunder, at an exercise price per share of nine dollars and
fifty-nine cents ($9.59), which is 125% of the average closing stock price of
the Company’s Common Stock on the Nasdaq National Market for the ten (10)
consecutive trading days ending on May 3, 2002.  Such warrants shall be issued in substantially the form attached
hereto as Exhibit B (each, a
“Warrant” and collectively, the “Warrants”). The shares of Common Stock
issuable upon the exercise of the Warrants are referred to herein as the
“Warrant Shares”.

SECTION
2.         AGREEMENT TO SELL AND PURCHASE THE SECURITIES.  At the
Closing (as defined in Section 3), the Company shall issue and sell to each
Purchaser, severally and not jointly, and each Purchaser shall purchase from
the Company, severally and not jointly, the number of Shares and a Warrant 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 six dollars
and seventy-five cents ($6.75) per Share (the “Purchase Price”) (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 and Warrants to be issued
pursuant to this Agreement (the “Closing”) shall be held at the offices of
Cooley Godward LLP, 3175 Hanover Street, Palo Alto, California, 94306  and shall be conducted in two tranches: the
first on May 7, 2002 (the “First Tranche”) and the second on May 8, 2002 (the
“Second Tranche”), or on such other date and place as may be agreed to by the
Company and the Purchasers.  The Closing
for all Purchasers other than Federated Kaufmann Fund shall occur in the First
Tranche.  The Closing for Federated
Kaufmann Fund, if any, shall occur in the Second Tranche.  All references herein to “Closing” shall
mean, in the case of all Purchasers other than Federated Kaufmann Fund, the
closing of the First Tranche, and in the case of Federated Kaufmann Fund, shall
mean the closing of the Second Tranche.

3.2          Delivery of
the Shares and Warrants. 
Promptly following the Closing, the Company shall deliver to each
Purchaser a certificate representing the number of shares to be 

 

-1-

 

purchased at the
Closing by such Purchaser and a Warrant, both 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.  The Company shall also deliver an executed
copy of this Agreement to each Purchaser.

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 (as defined below), the Company hereby represents and warrants
to, and covenants with, the Purchasers as of the Closing 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 and to own, lease and operate its
properties.  True and complete copies of
the Restated Certificate of Incorporation and the Bylaws of the Company, as
amended to and as in effect on the date hereof, have been delivered to the
Investors as certified by the Company’s Secretary.  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.  As used in this Agreement, a “Material
Adverse Effect” means (a) a material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of the
Company or, as the case may be, the Company and any of its subsidiaries, taken
as a whole or (b) the impairment of the ability of the Company to perform its
obligations under this Agreement, provided, however, that for purposes of
determining whether there shall have been any such “Material Adverse Effect”,
(i) any adverse change resulting from or relating to worldwide general business
or economic conditions shall be disregarded, (ii) any adverse change resulting
from or relating to conditions generally affecting the industry in which the
Company competes shall be disregarded, and (iii) any adverse change to the
stock price of the Company’s Common Stock, as quoted on any nationally
recognized stock quotation system, shall be disregarded.

4.2          Due
Execution, Delivery and Performance.  Assuming and relying on the
accuracy of the representation set forth in Section 5.4, the Company’s
execution, delivery and performance of this Agreement and the issuance and sale
of the Shares and Warrants 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 the 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.

 

-2-

 

4.3          No
Conflicts. 
The Company’s execution, delivery and performance of this Agreement and
the issuance of the Shares and Warrants 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 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. 
Except for applicable filings with The Nasdaq Stock Market, Inc. (the
“Nasdaq Market”), under the Securities Act of 1933, as amended (the “Securities
Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
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 and
Warrants 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.

4.5          Issuance
and Sale of the Securities. 
When issued and paid for in accordance with this Agreement, the Shares
and Warrants to be sold hereunder by the Company and, upon exercise of the
Warrants in accordance with their terms, the Warrant Shares (collectively, with
the Shares and Warrants, the “Securities”) will be validly issued and
outstanding, fully paid and non-assessable.

4.6          SEC Reports.

(a)           Since April 1, 2001, the Company has filed in a timely
manner 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 is in accordance with the
books and records of the Company and 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 is in
accordance with the books and records of the Company and 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:

 

-3-

 

(i)            the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 (without exhibits); and

(ii)           the Company’s Proxy Statement for the 2002 Annual
Meeting of Stockholders.

(c)           No event has occurred since January 1, 2002, 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 event or action that would have
a Material Adverse Effect since January 1, 2002, except that the Company
continues to incur losses as described in the SEC Reports.

4.8          Executive
Officers. 
As of the date hereof, and since the date of  the most recent SEC Report, there have been no resignations,
terminations or appointments with respect to (a) the Board of Directors of the
Company or (b) the executive officers of the Company.

4.9          Capitalization.  The authorized capital stock
of the Company consists of (i) 50,000,000 shares of Common Stock, $.001
par value, of which 18,591,421 such shares were issued and outstanding as of
April 30, 2002 and (ii) 5,000,000 shares of preferred stock, $.001 par value,
of which no shares are issued and outstanding on the date hereof.  As of the date hereof, the Company has no
intention, obligation or commitment, fixed or contingent, to issue any shares
of such Preferred Stock.  Except as
contemplated by this Agreement and except for shares reserved under the
Company’s 1996 Equity Incentive Plan, the 1996 Non-Employee Directors’ Stock
Option Plan and the 1996 Employee Stock Purchase Plan, 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.  There exist no statutory
preemptive, or other similar rights to purchase securities of the Company.

4.10        Nasdaq
Compliance. 
The Company’s Common Stock is
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and is listed on the Nasdaq National Market (the
“Nasdaq Stock Market”), and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market.

4.11        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 have, either individually or in the aggregate, a Material Adverse Effect
(including, without limitation, 

 

-4-

 

 

any such action,
suit, proceeding or investigation that questions the validity of this Agreement
or the issuance of the Shares and Warrants hereunder).

4.12        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 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, (iii) all copyrightable works, all
copyrights, all applications, registrations and renewals in connection therewith,
(iv) 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), (v) all gene sequences, cell lines, chemical
compounds, assays and biological materials, (vi) all other proprietary rights
and (vii) all copies and tangible embodiments of any of the foregoing (in
whatever form or medium).

4.13        Legal Compliance.  The Company is not in default or violation
of its Restated Certificate of Incorporation or Bylaws and has not violated any
applicable laws (including, without limitation, 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
default violation would (either individually or in the aggregate) have a
Material Adverse Effect.  To the
knowledge of the Company, there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute,
such a default or violation under any of the foregoing except where such a
default is not reasonably expected to have a Material Adverse Effect.

4.14        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 Securities is exempt from registration under the Securities
Act.

4.15        Brokers.  Except for the engagement of
U.S. Bancorp Piper Jaffray Inc. by the Company, neither the Company nor any of
the officers, directors or employees of the Company has employed any broker or
finder in connection with the transaction contemplated by this Agreement.  The Company shall indemnify each Purchaser
from and against any broker’s, finder’s or agent’s fees for which the Company
is responsible.

 

-5-

SECTION
5.         REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER

5.1          Authority,
Approval and Enforceability.

Each Purchaser, severally
and not jointly, represents and warrants to and covenants with the Company
that:

(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 has been duly authorized by all requisite action
by Purchaser.  Upon the execution and
delivery by Purchaser, and assuming the valid execution and delivery of this
Agreement by each of the other Purchasers 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. 
Each Purchaser understands that the Securities have not been registered
under the Securities Act. Each Purchaser also understands that the Securities
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.  Each 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 Securities 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 Securities 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 its risk with
respect to (collectively, “Transfer”) any of the Securities 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 

 

-6-

 

effective registration or other qualification under any applicable
state securities laws. The Purchaser understands that exemptions from such
registration requirements are limited. The Company is under no obligation to
register the Securities except as provided in Section 9.

(d)           The Purchaser acknowledges and agrees
that the Securities 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 Warrant 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 may not be offered, sold or otherwise transferred,
assigned, pledged or hypothecated unless and until registered under the Act or
unless the Company has received an opinion of counsel satisfactory to the
Company and its counsel that such registration is not required.”

(e)           Purchaser is acquiring the Securities for
Purchaser’s own account for investment only, and not with a view towards their
distribution.

(f)            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.

(g)           Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities
Act.

(h)           Purchaser has received the SEC Reports
listed in Section 4.6(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          Brokers.  Other than as disclosed to the Company,
neither the Purchasers nor any of their respective officers, directors or
employees has employed any broker or finder in connection with the transaction
contemplated by this Agreement.  Each
Purchaser shall jointly, and not severally, indemnify the Company and the other
Purchasers from and against any broker’s, finder’s or agent’s fees for which
such indemnifying Purchaser is responsible.

5.4          Pecuniary
Interest. 
Domain Partners V, L.P. and DP V Associates, L.P. (together “Domain”)
jointly and severally represent and warrant to the Company that Nicole Vitullo,
who is both Managing Director of Domain Associates, L.L.C. and a member of the
Board of Directors of the Company, will, immediately following the Closing,
have a pecuniary 

 

-7-

 

interest (direct or indirect) in the Securities purchased by Domain
pursuant to this Agreement of less than 25,000 shares.

5.5          Acknowledgments
Regarding Placement Agent. 
Each Purchaser acknowledges that the U.S. Bancorp Piper Jaffray Inc.
(the “Placement Agent”) has acted solely as placement agent for the Company in
connection with the offering of the Securities by the Company, that certain of
the information and data provided to such Purchaser in connection with the
transactions contemplated hereby have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material.  Each Purchaser further acknowledges that in
making its decision to enter into this Agreement and purchase Shares and a
Warrant it has relied on its own examination of the Company and the terms of,
and consequences, of holding the Securities. 
Each Purchaser further acknowledges that the provisions of this
Section 5.5 are also for the benefit of, and may also be enforced by, the
Placement Agent.

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 Securities 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 Securities at
Closing shall be subject to the following conditions to the extent not waived
by the Company:

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 in this Agreement 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.   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 Securities 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 Securities
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.

7.4          Legal
Investment. At the time of such Closing, the sale and
issuance of the Securities 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.

 

-8-

 

SECTION
8.         CONDITIONS TO PURCHASERS’ OBLIGATIONS AT THE CLOSING. Each Purchaser’s obligation to purchase the
Securities at the Closing thereby shall be subject to the following conditions
to the extent not waived by such 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 Cooley 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 C.

8.3          Covenants
Performed. 
All covenants, agreements and conditions contained herein to be
performed by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects.

8.4          Qualifications.  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 Securities 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.

8.5          Legal
Investment. 
At the time of the Closing, the sale and issuance of the Securities
shall be legally permitted by all laws and regulations to which the Purchaser
and the Company are subject.

8.6          Compliance
Certificate. 
The Company shall have delivered to Purchasers, a Compliance
Certificate, executed by the Chief Executive Officer of the Company, dated the
Closing Date, to the effect that the conditions, specified in Sections 8.1, 8.3
and 8.4 have been satisfied.

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 (i) the
Shares and Warrant Shares issued or issuable pursuant to this Agreement and
(ii) any other shares of Common Stock issued or issuable in respect to the
Shares and Warrant Shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events);

(b)           “Registration Statement” shall mean any
registration statement and shall include any preliminary prospectus, final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 9.2 and Section 9.3; and

 

-9-

 

(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 thirty (30) days
immediately following the Closing Date, such actual date being referred to as
the “Registration 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
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)           subject to receipt of necessary
information from the Purchasers, use its best efforts to cause such
Registration Statement to become effective within ninety (90) days immediately
following the Closing Date (the “Effective Date”) and take all other reasonable
actions necessary under any federal law or regulation to permit all Registrable
Shares to be sold or otherwise disposed of;

(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 9.6 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)            no later than the Registration Date, file
such documents as may be required of the Company for normal state 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 

 

-10-

 

paragraph (f) to qualify as a foreign corporation or execute a
general consent to service of process in any jurisdiction;

(g)           no later than the Registration Date, 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 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 and underwriter (and each person, if any, who controls
the Purchaser within the meaning of Section 15 of the Securities Act) from and
against any losses, claims, damages or liabilities to which such Purchaser (or
such underwriter 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 Untrue Statement contained in the Registration Statement on the Effective
Date thereof, 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 (or such underwriter or controlling person) for any
reasonable legal or other expenses reasonably 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 Section 9.4 hereof respecting the sale of
the Registrable 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 underwriter (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
underwriter, 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 Section 9.4 hereof respecting sale of the Registrable 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 underwriter, officer, director or controlling
person), as the 

 

-11-

 

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
Registrable Shares covered by such Registration Statement.

(c)           Promptly after receipt by any indemnified
person of a written 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 responsible for the fees and expenses of more than one separate
counsel for all indemnified parties; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

(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 an underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

 

-12-

 

9.4          Transfer of
Shares After Registration; Notice. Each Purchaser hereby covenants with the
Company not to make any sale of the Registrable Shares after registration
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied. Each 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. Each Purchaser hereby covenants that it will not sell any
Registrable Shares pursuant to said prospectus during the period commencing at
the time at which the Company gives the Purchaser written 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, provided,
however, that the Company shall not suspend the use of said
prospectus more than two times in any twelve month period and the duration of
any one such suspension shall not be more than thirty (30) days.  The foregoing provisions of this Section 9.4
shall in no manner diminish or otherwise impair the Company’s obligations under
Section 9.2 and Section 9.3 hereof.

9.5          Reporting
Requirements. 
The Company agrees to use its best efforts to:

(a)           make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act;

(b)           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

(c)           so long as any of the Purchasers own
Registrable Shares, 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, and whether it qualifies as a registrant whose securities may be
resold pursuant to SEC Form S-3, and (2) 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 Shares without
registration.

9.6          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) as to each Purchaser,
such time as all of the Registrable Shares held by such Purchaser may be sold
during any 90 day period pursuant to Rule 144, including Rule 144 (k), without
being restricted by the volume limitations of Rule 144(e).

9.7          Assignability
of Registration Rights. The registration rights set forth in
this Section 9 are not assignable other than to an affiliate of a Purchaser or,
if the Purchaser is a partnership or limited liability company, limited partner
or a member of a Purchaser; provided, however, that each Purchaser
shall only have the right to require the Company to amend the Registration
Statement twice for such assignments.

SECTION
10.       NOTICES. 
All notices, requests, consents and other communications hereunder shall
be in writing, shall be sent by confirmed facsimile or mailed by first-class 

 

-13-

 

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.

3031
Research Drive

Richmond,
California 94806

Fax
No.: (510) 222-6552

Attention: Hollings C.
Renton

with a copy to:

Cooley
Godward LLP

Five
Palo Alto Square

3000
El Camino Real

Palo
Alto, California 94306

Attention:  Robert L. Jones, Esq.

or to such other person at such other place as the Company shall
designate to the Purchasers in writing; and

(b)           if to a Purchaser, at the address as set
forth below such Purchaser’s name at the end of this Agreement, or at such
other address or addresses as may have been furnished to the Company in
writing.

SECTION 11.       MISCELLANEOUS

11.1        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 662/3%
of the Shares issued pursuant to this Agreement.

11.2        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.

11.3        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.

11.4        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.

11.5        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

 

-14-

 

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.

11.6        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.  The Company shall not,
directly or indirectly, enter into any merger, consolidation or reorganization
in which the Company shall not be the surviving corporation unless the proposed
surviving corporation shall, prior to such merger, consolidation or
reorganization, agree in writing to assume the obligations of the Company under
this Agreement; provided, however, that the provisions of this Section 11.6
shall not apply in the event of any merger, consolidation or reorganization in
which the Company is not the surviving corporation if all Purchasers are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, or (ii) securities of the acquiring corporation
which may be immediately sold to the public without registration under the
Securities Act.

11.7        Expenses. Each party shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement.  The Company shall, at the
Closing, reimburse the reasonable fees of and expenses of one special counsel
for Domain, the aggregate of which shall not exceed $30,000.  The Company will also, reimburse Domain for
the reasonable fees and expenses of any external consultants retained by Domain
as part of its due diligence process, the aggregate of which shall not exceed
$8,000.

11.8        Entire
Agreement. 
This Agreement, the Non-Disclosure Agreements entered into by certain of
the Purchasers in favor of U.S. Bancorp Piper Jaffray Inc. and the Company  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.

11.9        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.

11.10      Waiver of Conflicts.  Each
party to this Agreement acknowledges that legal counsel for the Company, Cooley
Godward LLP (“Cooley Godward”),
has in the past and may continue in the future to perform legal services for
one or more of the Purchasers or their affiliates in matters unrelated to the
transactions contemplated by this Agreement, including, but not limited to, the
representation of the Purchasers in matters of a similar nature to the
transactions contemplated herein.  Each
party to this Agreement hereby (a) acknowledges that they have had an
opportunity to ask for and have obtained information relevant to such
representation, including disclosure of the reasonably foreseeable adverse
consequences of such representation; (b) acknowledges that with respect to the
transactions contemplated herein, Cooley Godward has represented the Company
and not any individual Purchaser or any individual shareholder, director or
employee of the Company; and (c) gives its informed consent to Cooley Godward’s
representation of the Company in the transactions contemplated by this
Agreement and Cooley 

 

-15-

 

Godward’s representation of one or more of the Purchasers or their
affiliates in matters unrelated to such transactions.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-16-

 

 

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:

  	
   

  	
   

  	
   

  	
  PURCHASERS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ONYX
  PHARMACEUTICALS, INC.

  	
   

  	
  DOMAIN
  PARTNERS V, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Hollings C. Renton

  	
   

  	
  By:

  	
  One
  Palmer Square Associates V, L.L.C.

  Its General Partner

  
	
   

  	
  Hollings
  C. Renton

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Chairman, President, and
  CEO

  	
   

  	
  By:

  	
  /s/
  Arthur Klausner

  	
   

  
	
  Address:

  	
  3031
  Research Drive

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Richmond,
  CA 94806

  	
   

  	
  Print
  name:

  	
  Arthur
  J. Klausner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Managing
  Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  One
  Palmer Square

  Princeton,
  NJ  08542

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
											

 

	
   

  	
   

  	
   

  	
  DP V ASSOCIATES, L.P. 

  
	
   

  	
   

  	
   

  	
  By:

  	
  One
  Palmer Square Associates V, L.L.C.

  Its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   /s/ Arthur Klausner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Print name:

  	
  Arthur J. Klausner

  
	
   

  	
   

  	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  One Palmer Square

  Princeton, NJ  08542

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AIG DKR SOUNDSHORE HOLDINGS LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Anthony Giordano

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Print name:

  	
  Anthony Giordano

  
	
   

  	
   

  	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  29 Richmond Road

  Pembroke HM08 Bermuda

  
							

 

 

	
  AIG DKR
  SOUNDSHORE PRIVATE INVESTORS HOLDING FUND LTD.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Anthony Giordano

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name:

  	
  Anthony
  Giordano

  	
   

  
	
   

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  29
  Richmond Road

  	
   

  
	
   

  	
  Pembroke
  HM08 Bermuda

  	
   

  
	
   

  	
   

  	
   

  
	
  AIG DKR
  SOUNDSHORE STRATEGIC HOLDING FUND LTD.

  
	
   

  
	
  By:

  	
  /s/
  Anthony Giordano

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name:

  	
  Anthony
  Giordano

  	
   

  
	
   

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  29
  Richmond Road

  	
   

  
	
   

  	
  Pembroke
  HM08 Bermuda

  	
   

  
	
   

  	
   

  	
   

  
	
  CADUCEUS
  CAPITAL II L.P.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name:

  	
  Samuel
  D. Isaly

  	
   

  
	
   

  	
  Managing
  Partner of General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  c/o
  OrbiMed Advisors LLC

  	
   

  
	
   

  	
  767
  Third Avenue, 30th Floor

  	
   

  
	
   

  	
  New
  York, NY 10017

  	
   

  
	
   

  	
   

  	
   

  
	
  PW EUCALYPTUS
  FUND L.L.C.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name:

  	
  Samuel
  D. Isaly

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  c/o
  OrbiMed Advisors LLC

  	
   

  
	
   

  	
  767
  Third Avenue, 30th Floor

  	
   

  
	
   

  	
  New
  York, NY 10017

  	
   

  
						

 

 

	
  PW
  EUCALYPTUS FUND LTD.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name:

  	
  Samuel
  D. Isaly

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  c/o
  OrbiMed Advisors LLC

  	
   

  
	
   

  	
  767
  Third Avenue, 30th Floor

  	
   

  
	
   

  	
  New
  York, NY 10017

  	
   

  
	
   

  	
   

  	
   

  
	
  WINCHESTER
  GLOBAL TRUST COMPANY LIMITED

  
	
  AS
  TRUSTEE FOR CADUCEUS CAPITAL TRUST

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Samuel D. Isaly

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name: 

  	
  Samuel
  D. Isaly

  	
   

  
	
   

  	
  Managing
  Partner of Investment Advisor

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  c/o
  OrbiMed Advisors LLC

  	
   

  
	
   

  	
  767
  Third Avenue, 30th Floor

  	
   

  
	
   

  	
  New
  York, NY 10017

  	
   

  
	
   

  	
   

  	
   

  
	
  PERCEPTIVE
  LIFE SCIENCES MASTER FUND, LTD.

  
	
  By: Perceptive Capital, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Andrew C. Sankin

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name: 

  	
  Andrew
  C. Sankin

  	
   

  
	
   

  	
  Director/Chief
  Operating Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  5437
  Connecticut Avenue, Suite 100

  	
   

  
	
   

  	
  Washington,
  D.C.  20015

  	
   

  
	
   

  	
   

  	
   

  
	
  FEDERATED
  KAUFMANN FUND

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Lawrence Auriana

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name: 

  	
  Lawrence
  Auriana

  	
   

  
	
   

  	
  Portfolio
  Manager and Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  140E
  45th Street, 43rd Floor

  	
   

  
	
   

  	
  New
  York, NY 10017

  	
   

  
				

 

 

	
  EDWARD
  HURWITZ

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Edward Hurwitz

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name: 

  	
  Edward
  Hurwitz

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  3031
  Research Drive

  	
   

  
	
   

  	
  Richmond,
  CA  94806

  	
   

  
	
   

  	
   

  	
   

  
	
  QUOGUE
  CAPITAL, LLC

  
	
   

  
	
  By:

  	
  /s/
  Wayne Rothbaum

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  name: 

  	
  Wayne
  Rothbaum

  	
   

  
	
   

  	
  Principal

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  215
  West 95th Street, Suite PHD

  	
   

  
	
   

  	
  New
  York, NY 10025

  	
   

  
					

 

 

EXHIBIT A

SCHEDULE OF PURCHASERS

 

	
  NAME

  	
   

  	
  SHARES

  	
   

  	
  WARRANTS

  	
   

  	
  PURCHASE
  PRICE

  	
   

  
	
  AIG DKR Soundshore Holdings Ltd.

  	
   

  	
  37,037

  	
   

  	
  9,259

  	
   

  	
  $249,999.75

  	
   

  
	
  AIG DKR Soundshore Private Investors Holding Fund
  Ltd.

  	
   

  	
  74,074

  	
   

  	
  18,518

  	
   

  	
  $499,999.50

  	
   

  
	
  AIG DKR Soundshore Strategic Holding Fund Ltd.

  	
   

  	
  37,037

  	
   

  	
  9,259

  	
   

  	
  $249,999.75

  	
   

  
	
  Caduceus Capital II L.P.

  	
   

  	
  180,000

  	
   

  	
  45,000

  	
   

  	
  $1,215,000.00

  	
   

  
	
  Domain Partners V L.P.

  	
   

  	
  723,647

  	
   

  	
  180,911

  	
   

  	
  $4,884,617.25

  	
   

  
	
  DP V Associates, L.P.

  	
   

  	
  17,094

  	
   

  	
  4,273

  	
   

  	
  $115,384.50

  	
   

  
	
  Edward Hurwitz

  	
   

  	
  10,000

  	
   

  	
  2,500

  	
   

  	
  $67,500.00

  	
   

  
	
  Federated Kaufmann Fund

  	
   

  	
  148,148

  	
   

  	
  37,037

  	
   

  	
  $999,999.00

  	
   

  
	
  Perceptive Life Sciences Master Fund, Ltd.

  	
   

  	
  740,740

  	
   

  	
  185,185

  	
   

  	
  $4,999,995.00

  	
   

  
	
  PW Eucalyptus Fund L.L.C.

  	
   

  	
  420,000

  	
   

  	
  105,000

  	
   

  	
  $2,835,000.00

  	
   

  
	
  PW Eucalyptus Fund Ltd.

  	
   

  	
  52,000

  	
   

  	
  13,000

  	
   

  	
  $351,000.00

  	
   

  
	
  Quogue Capital, LLC

  	
   

  	
  148,148

  	
   

  	
  37,037

  	
   

  	
  $999,999.00

  	
   

  
	
  Winchester Global Trust Company Limited as Trustee
  For Caduceus Capital Trust

  	
   

  	
  385,000

  	
   

  	
  96,250

  	
   

  	
  $2,598,750.00

  	
   

  
	
  Total

  	
   

  	
  2,972,925

  	
   

  	
  743,229

  	
   

  	
  $20,067,243.75

  	
   

  

 

 

 

EXHIBIT B

FORM OF WARRANT

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.

 

ONYX
PHARMACEUTICALS, INC.

COMMON STOCK WARRANT

Warrant
No. [ ]                                                                                                                                       Dated:
__________, 2002

Onyx Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
hereby certifies that, for value received, [_________ ] or its registered
assigns (“Holder”), is entitled, subject to the terms set forth below,
to purchase from the Company up to a total of [   ](1) shares of common stock, $0.001 par value per share (the “Common
Stock”), of the Company (each such share, a “Warrant Share” and all
such shares, the “Warrant Shares”) at an exercise price per share equal
to nine dollars and fifty-nine cents ($9.59) (as such exercise price may be
adjusted from time to time as provided in Section 9, the “Exercise
Price”), at any time and from time to time from and after the date hereof
and through and including the Expiration Date. 
“Expiration Date” shall be the earlier of (i) the seventh year
anniversary of the date hereof or (ii) the date of termination of this Warrant
in accordance with Section 3(a).

This Warrant is being issued pursuant to the terms of that certain
Stock and Warrant Purchase Agreement, dated May 6, 2002, by and between the
Company and the Holder hereof (the “Purchase Agreement”).  All capitalized terms not otherwise defined
herein shall have the meaning given to them in the Purchase Agreement.  This Warrant is subject to the following
terms and conditions:

1.             Registration of
Warrant.  The Company shall register
this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from
time to time.  The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the Holder, and for
all other purposes, and the Company shall not be affected by notice to the
contrary.

 

2.             Registration of
Transfers and Exchanges.

(a)           The Company shall
register the transfer, subject to compliance with applicable federal and state
securities laws of any portion of this Warrant in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Warrant Agent (as defined in Section 13 hereof) or
to the Company at its address for notice set forth in Section 12.  Upon any such registration or transfer, a
new warrant to purchase Common Stock, in substantially the form of this Warrant
(any such new warrant, a “New Warrant”), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder.

 

(1) The number of Warrant Shares equals 25% of
the number of shares of Common  Stock
purchased by the Holder pursuant to the Purchase Agreement.

 

 

The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations
of a holder of a Warrant.

(b)           This Warrant is
exchangeable, upon the surrender hereof by the Holder to the office of the
Company at its address for notice set forth in Section 12 for one or more New
Warrants, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder.

3.             Duration and Exercise
of Warrants.

(a)           In case of any (i)
merger or consolidation of the Company with or into another entity, or (ii)
sale by the Company of all or substantially all of the assets of the Company
(on a book value basis) in one or a series of related transactions, the Company
shall provide to the Holder ten (10) days advance written notice of such
merger, consolidation or sale, and this Warrant shall be deemed exercised
pursuant to Section 10(b) hereof, unless exercised prior to the date such
merger, consolidation or sale occurs, and this Warrant shall be of no further
force and effect after such merger, consolidation or sale.

(b)           This Warrant shall
be exercisable by the registered Holder on any business day before 5:00 P.M.
(Pacific Time) at any time and from time to time on or after the date hereof to
and including the Expiration Date.  At
5:00 P.M. (Pacific Time) on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall expire and become void and of no value.  Prior to the Expiration Date, the Company
may not call or otherwise redeem this Warrant.

(c)           Subject to Section
10 hereof, upon delivery of an executed Form of Election to Purchase, together
with the grid attached hereto as Annex A duly completed and signed, to
the Company at its address for notice set forth in Section 12 and upon payment
of the Exercise Price multiplied by the number of Warrant Shares that the
Holder intends to purchase hereunder, in the manner provided hereunder, all as
specified by the Holder in the Form of Election to Purchase, the Company shall
promptly (but in no event later than 5 business days after the Date of Exercise
(as defined herein)) issue or cause to be issued and cause to be delivered to
or upon the written order of the Holder and in such name or names as the Holder
may designate, a certificate for the Warrant Shares issuable upon such
exercise, which may bear a restrictive legend as set forth in Section 7.  To effect an exercise hereunder, the Holder
shall not be required to physically surrender this Warrant to the Company
unless all the Warrant Shares have been exercised.  Exercises hereunder shall have the effect of lowering the number
of Warrant Shares in an amount equal to the applicable exercise, which shall be
evidenced by entries set forth on the attached Annex A.  The Holder and the Company shall maintain
records showing the number of Warrant Shares exercised and the date of such
exercises. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following exercise of a portion of this Warrant, the number of shares issuable
upon exercise of this Warrant may be less than the amount stated on the face
hereof.

                A “Date of
Exercise” means the date on which the Company shall have received the Form
of Election to Purchase completed and duly signed.

(d)           This Warrant shall
be exercisable, either in its entirety or, from time to time, for a portion of
the number of Warrant Shares.

4.             Payment of Taxes.  The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder.  The Holder shall be
responsible for all other tax liability that may arise as a result of holding
or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

5.             Replacement of
Warrant.  If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction and indemnity.

6.             Reservation of
Warrant Shares.  The Company
covenants that it will at all times reserve and keep available at all times out
of the aggregate of its authorized but unissued Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the

 

 

 

number of Warrant Shares which are then issuable and deliverable upon
the exercise of this entire Warrant, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9).  The Company covenants that all Warrant
Shares that shall be so issuable and deliverable shall, upon issuance and
receipt of the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.

7.             Acquisition
of Warrant for Personal Account. Holder understands that the Warrant has
not been registered under the Securities Act. 
Holder also understands that the Warrant is being offered and sold
pursuant to an exemption from registration contained in the Securities Act
based in part upon Holder’s representations contained herein and in the
Purchase Agreement.  Holder represents
and warrants as follows:

(a)           Holder 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.  Holder must bear the
economic risk of this investment indefinitely unless the Securities are
registered pursuant to the Securities Act, or an exemption from registration is
available.  Holder 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
Holder to transfer all or any portion of the Securities under the
circumstances, in the amounts or at the times Holder might propose.

(b)           Holder has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act, which
permits limited resale of securities purchased in a private placement subject
to the satisfaction of certain conditions.

(c)           The Holder agrees that it will not
sell, pledge, assign, transfer, otherwise dispose of or reduce its risk with
respect to (collectively, “Transfer”) the Warrant or the Warrant 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 Holder
understands that exemptions from such registration requirements are limited.
The Company is under no obligation to register the Warrant or Warrant Shares
except as provided in the Purchase Agreement.

(d)           The Holder acknowledges and agrees
that the Warrant and Warrant Shares are subject to certain restrictions as to
resale under the federal and state securities laws. The Holder agrees and
understands that stop transfer instructions will be given to the transfer agent
for the Warrant Shares, and each certificate delivered on transfer of or in
substitution for any such certificate, and each certificate representing the
Warrant Shares 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 MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.”

(e)           Holder
is acquiring the Warrant and Warrant Shares for Holder’s own account for
investment only, and not with a view towards their distribution.

 

 

(f)            Holder
represents that by reason of its, or of its management’s, business or financial
experience, Holder has the capacity to protect its own interests in connection
with the transactions contemplated herein. 
Further, Holder is aware of no publication of any advertisement in
connection with the transactions contemplated herein.

(g)           Holder
represents that it is an accredited investor within the meaning of Regulation D
under the Securities Act.

(h)           Holder
has received the SEC Reports described in the Purchase Agreement 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.  Holder 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.

                                8.             Obligation
to Register Securities.  The Company
is not obligated to register the Warrant Shares for resale under the Securities
Act, except as provided in the Purchase Agreement, and the Holder of this
Warrant (or any assignee hereof) is entitled to the registration rights in
respect of the Warrant Shares as only set forth in the Purchase Agreement.

 

9.             Certain
Adjustments.  The Exercise Price and
number of Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section 9.  Upon each such adjustment of the Exercise
Price pursuant to this Section 9, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.

(a)           If  the Company, at any time while this Warrant
is outstanding, (i) shall pay a stock dividend (except scheduled dividends paid
on outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions to all the
holders of Common Stock or on any other class of capital stock payable in
shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into
a larger number of shares or (iii) combine outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such event.  In such event, the number of Warrant shares
issuable under this Warrant shall be equitably adjusted to reflect such event
(i.e., in the event of 2:1 stock split of the Common Stock, the number of
Warrant shares shall be increased to twice the number available for purchase
prior to the record date for such stock split).  Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.

(b)           In case of any
reclassification of the Common Stock or any compulsory share exchange pursuant to
which the Common Stock is converted into other securities, cash or property,
then the Holder shall have the right thereafter to exercise this Warrant only
into the shares of stock and other securities and property receivable upon or
deemed to be held by holders of Common Stock following such reclassification or
share exchange, and the Holder shall be entitled upon such event to receive
such amount of securities or property equal to the amount of Warrant Shares
such Holder would have been entitled to had such Holder exercised this Warrant
immediately prior to such reclassification or share exchange.  The terms of any such reclassification or
share exchange shall include such terms so as to continue to give to the Holder
the right to receive the securities or property set forth in this Section 9(b)
upon any exercise following any such reclassification or share exchange.

(c)           For the purposes of
this Section 9, the following clauses shall also be applicable:

(i)  Record Date.  In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution

 

 

 

payable in Common Stock or in securities convertible or exchangeable
into shares of Common Stock, or (B) to subscribe for or purchase Common Stock
or securities convertible or exchangeable into shares of Common Stock, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.

(ii)  Treasury Shares.  The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

(d)           All calculations
under this Section 9 shall be made to the nearest cent or the nearest 1/100th
of a share, as the case may be.

(e)           If:

                                     (i)             the Company shall declare a
dividend (or any other distribution) on its Common Stock; or

                                  (ii)             the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or

                               (iii)             the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights; or

                              (iv)             the approval of any stockholders of
the Company shall be required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or
any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or

                                 (v)             the Company shall authorize the
voluntary dissolution, liquidation or winding up of the affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least ten calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up,
provided, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice.

10.           Payment of
Exercise Price.  The Holder shall
pay the Exercise Price in one of the following manners:

(a)           Cash Exercise.  The Holder may deliver, in cash or by
certified or official bank check payable to the order of the Company, or by
wire transfer of immediately available funds to an account to be designated by
the Company, the Exercise Price multiplied by the number of Warrant Shares to
be issued; or

(b)           Cashless Exercise.
The Holder may surrender this Warrant to the Company together with a notice of
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

X = Y [(A-B)/A]

where:

X = the number of Warrant Shares to be issued to the Holder.

 

 

 

Y = the number of Warrant Shares with respect to which this Warrant is
being exercised.

A = the average of the closing sale prices of the Common Stock as
reported on the Nasdaq National Market for the ten (10) trading days
immediately prior to (but not including) the Date of Exercise.

B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
been commenced on the date of this Warrant.

11.           Fractional Shares.  The Company shall not be required to issue
or cause to be issued fractional Warrant Shares on the exercise of this
Warrant.  The number of full Warrant
Shares which shall be issuable upon the exercise of this Warrant shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of this Warrant so presented. 
If any fraction of a Warrant Share would, except for the provisions of
this Section, be issuable on the exercise of this Warrant, the Company shall
pay an amount in cash equal to the Exercise Price multiplied by such fraction.

12.           Notices.  Any and all notices or other communications
or deliveries hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 5:00 p.m. (Pacific Time) on a business day,
(ii) the business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:00 p.m. (Pacific Time) on any date and
earlier than 11:59 p.m. (Pacific Time) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given.  The addresses for
such communications shall be:  (i) if to
the Company, to3031 Research Drive, Richmond, California 94806, facsimile (510)
222-6552, attention: Controller, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.

13.           Warrant Agent.  The Company shall serve as warrant agent
(the “Warrant Agent”) under this Warrant. 
Upon prior written notice to the Holder, the Company may appoint a new
Warrant Agent.  Any corporation into
which the Company or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Company or any new Warrant Agent
shall be a party or any corporation to which the Company or any new Warrant
Agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor Warrant Agent under this Warrant without
any further act.  Any such successor
Warrant Agent shall promptly cause notice of its succession as Warrant Agent to
be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.

14.           Miscellaneous.

(a)           This Warrant shall
be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns.  This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.

(b)           Subject to Section
14(a), above, nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Holder any legal or equitable
right, remedy or cause under this Warrant. 
This Warrant shall inure to the sole and exclusive benefit of the
Company and the Holder.

(c)           This Agreement shall
be governed by and construed under the laws of the State of California as
applied to agreements among California residents, made and to be performed
entirely within the State of California.  Each of the Company and the Holder hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by receiving a copy thereof sent to the Company
at the address in effect for notices to it under this instrument and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  Each party
irrevocably waives, to the fullest extent permitted by applicable law, any

 

 

 

and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. If
either party shall commence an action or proceeding to enforce any provisions
of this Warrant, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.

(d)           The headings herein
are for convenience only, do not constitute a part of this Warrant and shall
not be deemed to limit or affect any of the provisions hereof.

(e)           In case any one or
more of the provisions of this Warrant shall be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this Warrant.

                                                (f)            This Warrant is being issued
pursuant to the Purchase Agreement and any provisions hereof may be amended,
waived or modified in accordance with the amendment and modification provision
set forth in the Purchase Agreement.

                                                (g)           Receipt of this Warrant by the Holder
shall constitute acceptance of and agreement to all of the terms and conditions
contained herein.

16.           No Rights as a
Stockholder.  Holder shall not, by
virtue hereof, be entitled to any rights of stockholder of the Company, either
at law or equity, and the rights of Holder are limited to those expressed in
this Warrant.  Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote or to consent or to receive notice as a stockholder of the Company on any
matters or with respect to any rights whatsoever as a stockholder of the
Company.  No dividends or interest shall
be payable or accrued in respect of this Warrant or the interest represented hereby
of the Warrant Shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised in accordance with its terms.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

IN WITNESS WHEREOF, the Company has caused this COMMON STOCK WARRANT to be duly executed by its authorized
officer as of the date first indicated above.

 

	
   

  	
  ONYX PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Hollings C. Renton

  
	
   

  	
   

  	
  Chairman, President and
  Chief Executive Officer

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