<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ONCOR, INC.
(Exact name of Registrant as specified in its charter)
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MARYLAND 52-1310084
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
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209 PERRY PARKWAY, GAITHERSBURG, MARYLAND 20877
(301) 963-3500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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CECIL KOST
PRESIDENT AND CHIEF OPERATING OFFICER
ONCOR, INC.
209 PERRY PARKWAY
GAITHERSBURG, MARYLAND 20877
(301) 963-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
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COPIES TO:
RICHARD R. PLUMRIDGE, ESQ.
BRIAN B. MARGOLIS, ESQ.
BROBECK, PHLEGER & HARRISON LLP
1633 BROADWAY, 47TH FLOOR
NEW YORK, NEW YORK 10019
(212) 581-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable on or after this Registration Statement is declared
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF SHARES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED AGGREGATE PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock,
$.01 par value 1,650,013 Shares $0.40625 $670,317.78 $198.00
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(1) Based upon the average of the high and low prices of the Common Stock,
as reported on the American Stock Exchange, on August 27, 1998.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
1,650,013 SHARES
ONCOR, INC.
COMMON STOCK
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This Prospectus relates to the offer and sale, which is not being
underwritten, by certain persons listed herein under "Selling Stockholders"
(collectively, the "Selling Stockholders"), of up to 1,650,013 shares (the
"Shares") of Common Stock, par value $.01 per share, of Oncor, Inc. ("Oncor" or
the "Company").
The Shares may be offered by the Selling Stockholders from time to time
in transactions on the American Stock Exchange, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). In order to comply with the securities
laws of certain states, if applicable, the Shares will be sold in such
jurisdictions only through registered or licensed brokers or dealers. The
Selling Stockholders may transfer the Shares under certain circumstances to
other persons who may, in turn, resell the Shares in the manner described
above. In addition, the Selling Stockholders may pledge or make gifts of their
Shares and such Shares may also be sold by the pledgees or transferees. To the
extent required, the specific Shares to be sold, the names of the Selling
Stockholders, the public offering price, the names of any such agent, dealer or
underwriter, and any applicable commission or discount with respect to any
particular offer will be set forth in an accompanying Prospectus Supplement.
See "Selling Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares will be received by
the Company. The Company has agreed to bear certain expenses (other than
underwriting discounts and selling commissions and fees and disbursements of
counsel and other advisors to the Selling Stockholders) in connection with the
registration of the Shares. The Company has agreed to indemnify the Selling
Stockholders and their affiliates against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The Company and the Selling Stockholders have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act
under certain circumstances.
The Common Stock of the Company is traded on the American Stock
Exchange under the symbol "ONC." The last reported sales price of the Company's
Common Stock on the American Stock Exchange on August 27, 1998 was $0.375 per
share.
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AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and any profit on the resale of the Shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act. See
"Plan of Distribution" herein for a description of indemnification
arrangements.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS SEPTEMBER 2, 1998
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDER OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES
TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
TABLE OF CONTENTS
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PAGE
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Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuance of the Shares and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and the schedules thereto. For further information with respect to
the Company and such Common Stock, reference is made to the Registration
Statement and exhibits and schedules thereto. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete, and, with respect to any contract or other document
filed as an exhibit to the Registration Statement, each such statement is
qualified in all respects by reference to such exhibit. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained upon payment of the prescribed fee or may be
examined without charge at the public reference facilities of the Commission
described below.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected, and copies of such material may be obtained upon
payment of the prescribed fees, at the Commission's Public Reference Section,
Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, as well as at the
Commission's Regional Offices at Seven World Trade Center, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, or may be obtained from the Commission's Internet site on
the world wide web at http://www.sec.gov. Copies of such material can be
obtained in person from the Public Reference Section of the Commission at its
principal office located at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of the prescribed fees.
The Common Stock of the Company is traded on the American Stock
Exchange, and in accordance therewith, annual and quarterly reports, proxy
statements and other information concerning the Company may be inspected at the
American Stock Exchange's offices located in New York.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are hereby
incorporated by reference in this Prospectus: (1) the Annual Report of the
Company on Form 10-K for the fiscal year ended December 31, 1997 (the "1997 Form
10-K"), as amended by Amendment No. 1 to the 1997 Form 10-K; (2) the Quarterly
Report of the Company on Form 10-Q for the three months ended March 31, 1998
(the "First Quarter Form 10-Q"), as amended by Amendment No. 1 to the First
Quarter Form 10-Q; (3) the Quarterly Report of the Company on Form 10-Q for the
three months ended June 30, 1998; (4) the Proxy Statement of the Company in
connection with the Annual Meeting of the Stockholders held on June 25, 1998;
(5) the Current Report of the Company on Form 8-K, dated January 16, 1998; and
(6) the Current Report of the Company on Form 8-K, dated July 7, 1998.
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of this Offering shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. Any statement incorporated
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Mr. John L. Coker, Vice President, Oncor,
Inc., 209 Perry Parkway, Gaithersburg, Maryland 20877.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS OR INCORPORATED
HEREIN BY REFERENCE REGARDING THE COMPANY'S FINANCIAL POSITION AND BUSINESS
STRATEGY MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION, IN CONJUNCTION WITH
THE FORWARD-LOOKING STATEMENTS UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN
AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS
ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS
THE COMPANY
The Company was incorporated in Maryland in July 1983. The Company's
principal offices are located at 209 Perry Parkway, Gaithersburg, Maryland
20877, and its telephone number is (301) 963-3500.
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RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a
high degree of risk and should not be made by any investor who cannot afford
the loss of his entire investment. Accordingly, prospective investors should
carefully consider the following factors, in addition to all of the other
information presented in this Prospectus, before purchasing any of the shares
of Common Stock offered hereby.
HISTORY OF OPERATING LOSSES
Oncor has not been profitable since its inception in July 1983. For
the quarter ended June 30, 1998, the Company incurred net losses of
approximately $2.4 million and as of that date, the accumulated deficit of the
Company was $148 million. The Company expects to incur additional losses in
future periods. The Company believes it will become profitable sometime in 1999
but cannot provide assurance as to when, if ever, it will achieve
profitability.
ADDITIONAL FINANCING REQUIREMENTS AND ACCESS TO CAPITAL FUNDING
The Company expects that its current liquid resources will not be
sufficient to fund operations after the end of September 1998. Funds, if any,
raised from most of the possible sources during the intervening period may
first be utilized to repay, in whole or in part, the Company's bank debt of
$4.0 million in accordance with the terms of the underlying line of credit and
related guarantees. The line of credit, which expires on October 31, 1998, is
guaranteed by certain shareholders whose guarantees are secured by
substantially all of the assets of the Company.
The Company is considering additional alternative forms of financing,
including among other things, equity or debt financing, sale of publicly-traded
Oncormed common stock, recovery of Oncor advances to Codon, sale of Appligene
stock and other alternatives.
There can be no assurance that any of the alternatives discussed
above, or any other such forms of financing, can be completed by the Company in
sufficient amounts, in timely fashion, on acceptable terms, or at all, which
would have a material adverse effect on the Company. Even if completed, each of
such financing alternatives may have certain terms, conditions or ramifications
which may have a material adverse effect on the Company's business, financial
condition and results of operations. For instance, any such equity financings
likely will be dilutive to stock holders, the terms of any debt financing, as
does the existing line of credit, may require substantially all of the assets
of the Company to be pledged as collateral, may involve warrant or equity
dilution and/or may contain restrictive covenants which limit the Company's
ability to pursue certain courses of action, and the sale of assets will
decrease the revenue base of the Company.
While the Company is using its best efforts to consummate one or more
of these potential sources of funding, it is possible that the success, if any,
of these efforts will not be sufficient to fund the Company for the foreseeable
future. The Company has taken, and is continuing to take, substantial cost-
cutting actions, including significant reductions in its number of employees.
In the event that the Company is unable to raise additional capital by the end
of September 1998, the Company may promptly cease significant portions of its
programs, projects and business operations. If the pursuit of these potential
funding sources proves largely unsuccessful, the Company may be forced into the
complete termination of its business operations.
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NO ASSURANCE OF CONTINUED LISTING OF COMMON STOCK
Due to its history of losses and other related factors, the Company
continues to be below certain guidelines for continuing listing of its common
stock on its principal exchange, the American Stock Exchange (the "Exchange").
The Exchange has the authority to invoke or waive the guidelines at its sole
discretion. In July 1998, the Exchange requested, and the Company agreed that it
will provide the Exchange with, certain financial information and projections in
support of continued listing. There can be no assurance that this information
will be satisfactory to the Exchange and that the Company's stock will continue
to be listed on the Exchange. If the Company's stock were delisted from the
Exchange, any alternative public markets or exchanges that may be available to
the Company likely would provide substantially less liquidity and market support
for the shareholders of the Company and materially and adversely affect the
ability, if any, of the Company to raise additional equity capital in the
future.
REQUESTED REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK
On August 7, 1998 and August 11, 1998, the Company received requests
from the holders of its Series A Convertible Preferred Stock (the "Preferred
Stock"), which had an aggregate original issuance amount equal to $5.0 million,
to have their shares of Preferred Stock redeemed. As of August 13, 1998, none of
the holders of Preferred Stock had completed all of the steps necessary for
redemption. In any event, the Company believes that the holders of the Preferred
Stock have not tendered a valid redemption request and, therefore, at this time,
the Company does not believe it is required to comply with the requested
redemption. There can be no assurance that such redemption request will
ultimately be found to be invalid. In the event that such redemption request is
ultimately held to be valid, and the Company is unable to obtain the funds
necessary to redeem the Preferred Stock, the non-payment of such redemption
amounts would have a material and adverse effect on the Company's business,
results of operations and financial condition.
RECENT DISPOSITION OF NON-STRATEGIC ASSETS
The Company has recently completed the sale or other conveyance of
its two non-strategic asset groups: the research products assets and the
non-oncology genetic probe systems assets. As a result, the scope of the
Company's business (including its revenue base) and its number of products
has been reduced significantly. The Company's few remaining products presently
marketed to North America are cancer-related genetic probe tests, including the
INFORM(TM) HER-2/neu diagnostic test, which currently is sold to a limited
number of customers. The disposal of each of these asset groups has resulted in
a significant decrease in the number of employees in the Company and in the
number of patents and trademarks owned by the Company. There can be no
assurance that the disposition of these two business units will not have a
material adverse effect on the business, financial condition and results of
operations of the Company. See "Business -- Recent Developments."
RISK ASSOCIATED WITH THE INFORM(TM) HER-2/NEU GENE-BASED TEST
SYSTEM
Although the PMA for the Oncor INFORM(TM) HER-2/neu Gene Detection
System was approved for marketing by the U.S. Food and Drug Administration (the
"FDA") in December 1997, there can be no assurance that the Company will be
capable of manufacturing the test system in commercial quantities at reasonable
costs or marketing the product successfully, that the test system will be
accepted by the medical diagnostic community, or that the market demand for the
test system will be sufficient to allow profitable sales. In addition, product
approvals may be withdrawn if compliance with regulatory standards is not
maintained or if substantial problems occur after the product reaches the
market.
NO ASSURANCE OF REGULATORY APPROVALS; GOVERNMENT REGULATION
The Company expects to pursue FDA approval or clearance of certain
existing products and products under development. There can be no assurance that
the Company will receive regulatory approval or clearance for any of its
products currently under development or, even if it does receive regulatory
approval or clearance for a particular product, that the Company will ever
recover its costs in connection with obtaining such approval or clearance. The
timing of regulatory decisions is not within the control of the Company. The
failure of the Company to receive requisite approval or clearance, or
significant delays in obtaining such approval or clearance, could have a
material and adverse effect on the business, financial condition and results of
operations of the Company.
Approval or clearance by the FDA require lengthy, detailed and
costly laboratory procedures, clinical testing procedures and application
preparation and defense efforts to demonstrate a product's efficacy and safety
(or equivalence to a marketed product in the case of a 510(k) submission) before
a product can be sold for diagnostic use. Even if such regulatory approval or
clearance is obtained for a product, its manufacturer and its manufacturing
facilities are subject to continual review and periodic inspections by the FDA
and other regulatory agencies. The regulatory standards for manufacturing are
applied stringently by the FDA. Discovery of previously unknown problems with a
product, manufacturer or facility may result
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<PAGE> 7
in restrictions on such product or manufacturer, including costly recalls or
even withdrawal of the product from the market. Furthermore, approval may entail
ongoing requirements for postmarketing studies. Failure to maintain requisite
manufacturing standards or discovery of previously unknown problems could have a
material and adverse effect on the Company's business, financial condition or
results of operations.
PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend in large part on its, and its
licensors', ability to obtain patents, defend their patents, maintain trade
secrets and operate without infringing upon the proprietary rights of others,
both in the United States and in foreign countries. The patent position of firms
relying upon biotechnology is highly uncertain in general and involves complex
legal and factual questions. To date there has emerged no consistent policy
from the courts regarding the breadth of claims allowed in biotechnology patents
or the degree of protection afforded under such patents. The Company relies on
certain patents and pending U.S. and foreign patent applications relating to
various aspects of its products. These patents and patent applications are
either owned by the Company or rights under them are licensed to the Company.
There can be no assurance that patents will issue as a result of any such
pending applications or that, if issued, such patents will be sufficiently broad
to afford protection against competitors with similar technology. In addition,
there can be no assurance that any patents issued to the Company, or for which
the Company has license rights, will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company.
The University of California and its licensee, Vysis, Inc.
("Vysis"), filed suit against Oncor on September 5, 1995 for infringement of
U.S. Patent No. 5,447,841 entitled Methods and Compositions for Chromosome
Specific Staining which issued on that same date. The patent relates to a method
of performing in situ hybridization using a blocking nucleic acid that is
complementary to repetitive sequences. On April 9, 1998, the Company, Vysis and
the University of California entered into a definitive agreement to settle the
litigation. In connection with the settlement, the Company obtained certain
non-exclusive royalty bearing licenses,
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<PAGE> 8
made an initial payment of $0.5 million to Vysis, and an additional payment
of $1.5 million will be due on April 10, 2000 in order to extend the licenses
beyond that date.
The commercial success of the Company will also depend upon avoiding
the infringement of patents issued to competitors and upon maintaining the
technology licenses upon which certain of the Company's current products are, or
any future products under development might be, based. Litigation, which could
result in substantial cost to the Company, may be necessary to enforce the
Company's patent and license rights or to determine the scope and validity of
others' proprietary rights. If competitors of the Company prepare and file
patent applications in the United States that claim technology also claimed by
the Company, the Company may have to participate in interference proceedings
declared by the Patent and Trademark Office (the "PTO") to determine the
priority of invention, which could result in substantial cost to the Company,
even if the outcome is favorable to the Company. An adverse outcome could
subject the Company to significant liabilities to third parties and require the
Company to license disputed rights from third parties or cease using the
technology. A U.S. patent application is maintained under conditions of
confidentiality while the application is pending in the PTO, so that the Company
cannot determine the inventions being claimed in pending patent applications
filed by its competitors in the PTO. Further, U.S. patents do not provide any
remedies for infringement that occurred before the patent is granted.
On April 27, 1998, the Company received a summons and complaint in
connection with a lawsuit entitled Key Technology, Inc. v. Oncor, Inc. in the
Superior Court of the State of Washington for the County of Walla Walla. The
complaint alleges breach of contract and fraud in connection with a June 1996
asset purchase agreement between Key Technology and the Company relating to the
sale of the Company's I300 video inspection system to Key Technology, and seeks
damages against the Company of $1.5 million. A failure to successfully defend
against or settle that suit would likely result in damages being assessed
against the Company and could have a material adverse effect on the Company's
financial condition or results of operations.
On May 29, 1998, a complaint was filed against the Company in the
U.S. District Court for the Eastern District of New York by Paul Diamond,
alleging that the Company is infringing his U.S. Patent No. 5,597,697 by
making, using and selling its SUNRISE(TM) DNA amplification detection system.
While the Company believes that the action, which was filed pro se (without the
assistance of counsel), is without merit, patent litigation is generally costly
and the disposition or outcome of this case cannot be predicted with certainty.
The Company currently has certain licenses from third parties and in
the future may require additional licenses from other parties to develop,
manufacture and market commercially viable products effectively. There can be no
assurance that such licenses will be obtainable on commercially reasonable
terms, if at all, that the patents underlying such licenses will be valid and
enforceable or that the proprietary nature of the patented technology underlying
such licenses will remain proprietary.
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<PAGE> 9
The Company relies substantially on certain technologies that are
not patentable or proprietary and are therefore available to the Company's
competitors. The Company also relies on certain proprietary trade secrets and
know-how that are not patentable. Although the Company has taken steps to
protect its unpatented trade secrets and know-how, in part through the use of
confidentiality agreements with its employees, consultants and certain of its
contractors, there can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
developed or discovered by competitors.
UNCERTAINTIES RELATING TO PRODUCT DEVELOPMENT
The Company's actively marketed products other than the INFORM(TM)
HER-2/neu Gene Detection System have not been approved by the FDA and may be
sold only for research purposes in the United States and certain other
countries. The Company has undertaken to seek FDA approval for certain of these
products, and may in the future undertake to seek such approval or clearance for
other products, and substantial additional investment, laboratory development,
clinical testing, controlled manufacturing and FDA approval or clearance will be
required prior to the commercialization of such products for diagnostic
purposes. There can be no assurance that the Company will be successful in
developing such existing or future products, that such products will prove to be
efficacious in clinical trials, that required regulatory approvals or clearances
can be obtained for such products, that such products, if developed and
approved, will be capable of being manufactured in commercial quantities at
reasonable costs, will be marketed successfully or will be accepted by the
medical diagnostic community, or that market demand for such products will be
sufficient to allow profitable operations.
INTERNATIONAL SALES AND FOREIGN EXCHANGE RISK
The Company anticipates that a significant amount of its sales will
take place in European countries and Japan and likely will be denominated in
currencies other than the U.S. dollar. These sales may be adversely affected by
changing economic conditions in foreign countries and by fluctuations in
currency exchange rates. Any significant decline in the applicable rates of
exchange could have a material adverse effect on the Company's business,
financial condition and results of operations. Additional risks inherent in the
Company's international business activities generally include unexpected changes
in regulatory requirements, tariffs and other trade barriers, lack of acceptance
of products in foreign markets, longer accounts receivable payment cycles,
difficulties in managing international operations, potentially adverse tax
consequences, restrictions on repatriation of earnings and the burdens of
complying with a wide variety of foreign laws. There can be no assurance that
such factors will not have a material adverse effect on the Company's future
international revenues and, consequently, on the Company's business, financial
condition and results of operations.
- 8 -
<PAGE> 10
LIMITED MANUFACTURING EXPERIENCE
The Company's ability to conduct clinical trials on a timely basis,
to obtain regulatory approvals or clearances and to commercialize its products
will depend in part upon its ability to develop and maintain facilities to
manufacture its products, either directly or through third parties, at a
competitive cost in accordance with the FDA's prescribed current GMP and other
regulatory requirements. Any failure to maintain manufacturing facilities in
accordance with the FDA's GMP requirements could result in the inability of the
Company to manufacture its products and may limit the Company's ability to
deliver its products to its customers, which would have a material and adverse
effect on the Company's business, financial condition and results of operations.
No assurance can be given that the Company will be able to develop and maintain
GMP facilities or engage third parties to do so at a cost acceptable to the
Company.
The Company has only limited experience in manufacturing products on
a commercial basis. The Company believes that its existing manufacturing
facilities, along with available contiguous space currently under option to the
Company, will enable it to produce commercial quantities of its products
through at least 1998. No assurance can be given, however, that manufacturing or
quality control problems will not arise if the Company increases production of
its products, or if additional facilities are required in the future.
LIMITED MARKETING AND DISTRIBUTION EXPERIENCE
The Company markets and sells its products for research purposes
and, once approved or cleared by the appropriate regulatory authority, for
diagnostic use, through its direct sales forces in both Europe and the United
States and indirectly through third parties in the Pacific Rim and other areas.
The Company only has limited experience in sales, marketing, training and
distribution. In order to market its products directly, the Company must
maintain a sales force with technical expertise and an understanding of the
Company's products. There can be no assurance that the Company will be able to
maintain such a sales force or that the Company's direct sales and marketing
efforts will be successful. In addition, the Company's products compete with the
products of many other companies that currently have extensive and well-funded
marketing and sales operations. There can be no assurance that the Company's
training, marketing and sales efforts will compete successfully against such
other companies. To the extent the Company enters arrangements with third
parties, any revenues received by the Company will be dependent on the efforts
of such third parties, and there can be no assurance that such efforts will be
successful.
COMPETITION AND TECHNOLOGICAL CHANGE
The diagnostic and biotechnology industries are subject to intense
competition and rapid and significant technological change. Competitors of the
Company in the United States and in foreign countries are numerous and include,
among others, diagnostic, health care, pharmaceutical, biotechnology and
chemical companies, academic institutions, government agencies and other public
and private research organizations. Many of these competitors have substantially
greater financial and technical resources and production and marketing
capabilities than the Company. There can be no assurance that these competitors
will not succeed in
- 9 -
<PAGE> 11
developing technologies and products that are more effective, easier to use or
less expensive than those that have been or are being developed by the Company
or that would render the Company's technology and products obsolete and
noncompetitive. The Company also competes with various companies in acquiring
technology from academic institutions, government agencies and research
organizations. In addition, many of the Company's competitors have significantly
greater experience than the Company in conducting clinical trials of new
diagnostic products and in obtaining FDA and other regulatory approvals of
products for use in health care. Accordingly, the Company's competitors may
succeed in obtaining regulatory approval for products more rapidly than the
Company.
INVESTMENT IN ONCORMED, APPLIGENE, AND CODON
The Company owns approximately 23% and 80% of the common stock of
its publicly-traded affiliates, Oncormed and Appligene, respectively, and 100%
of the outstanding capital stock securities of its privately held subsidiary,
Codon. The shares of common stock of Oncormed, Appligene, and Codon held by the
Company are not currently freely tradeable and no public market exists for the
common stock of Codon. Therefore, there can be no assurance that the Company
will be able to realize the economic benefit of its investment or predict the
timing of such realization. The value of the Company's investment in Oncormed
and Appligene represents a significant portion of the total assets of the
Company and such value fluctuates with the market price of those companies'
common stock. Therefore, any event that has a material and adverse effect on the
market price of the common stock of Oncormed and Appligene will have a material
and adverse effect on the value of the Company's investment in those companies.
The Company does not control the day-to-day operations and management of those
companies and, therefore, has a varying but limited direct control over their
operations and financial results.
As described above, Oncormed announced in July 1998 that it had
reached a definitive agreement to merge with Gene Logic which, if consummated,
will result in Oncor's shares of Oncormed not subject to outstanding options
being converted into shares of Gene Logic. However, there can be no assurance
that the merger between Oncormed and Gene Logic will, in fact, be consummated
and in the event such merger is not consummated, the shares of Oncormed owned by
Oncor that are not subject to outstanding options can be sold in the public
markets only pursuant to restrictions on the sale of unregistered stock by an
affiliate pursuant to Rule 144 of the Securities Act of 1933 such that the
complete liquidation of Oncor's position in Oncormed likely would take a year or
more.
- 10 -
<PAGE> 12
RESTRICTED USE OF THE COMPANY'S PRODUCTS
The sale, distribution and use of the Company's FDA approved breast
cancer product in the United States is restricted to prescription use in that
the users of the product must be trained and demonstrated proficient in the use
of the product and the results of the proficiency testing provided as part of
the Company's training program must be provided in the Company's Annual Reports
to the FDA. The Company's products sold in the United States for research
purposes, only, must be labeled accordingly. The FDA imposes distribution
requirements and procedures on companies selling products for research purposes
only, including the requirement that the seller receive specified certifications
from its customer as to the customer's intended use of the product. As a result
of these requirements, the Company's research products can only be sold in the
United States to a limited number of customers for limited use and can only be
sold for broader commercial use with FDA approval or clearance or pursuant to
recent Analyte Specific Reagent regulations for which no clinical claims can be
made. No assurance can be given that the Company will receive FDA approval or
clearance for its research products or that it will be able to sell its approved
products in larger quantities.
ATTRACTION AND RETENTION OF KEY PERSONNEL
The Company's ability to successfully develop marketable products
and to maintain a competitive position will depend in large part on its ability
to attract and retain highly qualified scientific and management personnel. The
Company is highly dependent upon the principal members of its management,
scientific staff, and Medical and Science Advisory Boards. Competition for such
personnel and advisors is intense, and the Company's ability to attract and
retain such personnel is adversely affected by the current financial condition
of the Company; therefore, there can be no assurance that the Company will be
able to continue to attract and retain such personnel.
UNCERTAINTY RELATED TO HEALTH CARE REFORM
MEASURES AND THIRD-PARTY REIMBURSEMENT
Political, economic and regulatory influences are likely to lead to
fundamental change in the health care industry in the United States. In the past
year, the U.S. FDA Modernization Act ("FDAMA") was approved, bringing many
changes to FDA regulations and codifying some current practices. In addition,
numerous proposals for comprehensive reform of the nation's health care system
have been introduced in Congress over the past year. In addition, certain states
are considering various health care reform proposals. The Company anticipates
that Congress and state legislatures will continue to review and assess
alternative health care delivery systems and payment methodologies, and that
public debate of these issues will likely continue in the future. Due to
uncertainties regarding the ultimate features of reform initiatives and their
enactment and implementation, the Company cannot predict which, if any, reforms
will be adopted, when they may be adopted, or what impact they may have on the
Company. The Company's ability to earn sufficient returns on its products may
also depend in part on the extent to which reimbursement for the costs of such
products will be available from government health administration authorities,
private health insurers and other organizations. Third-party payors
- 11 -
<PAGE> 13
are increasingly challenging the price and cost effectiveness of medical
products and services. Significant uncertainty exists as to the reimbursement
status of newly approved health care products, and there can be no assurance
that adequate reimbursement will be available or sufficient to allow the Company
to sell its products on a competitive basis.
PRODUCT LIABILITY
The testing, marketing and sale of health care products could expose
the Company to the risk of product liability claims. A product liability claim
could have a material and adverse effect on the business, results of operations
or financial condition of the Company. The Company currently maintains product
liability insurance coverage of $5.0 million per occurrence. There can be no
assurance, however, that the insurance policy will respond to any specific
claim, that this coverage will be adequate to protect the Company against future
product liability claims or that product liability insurance will be available
to the Company in the future on acceptable terms, if at all.
ENVIRONMENTAL RISKS
The manufacturing and research and development processes of the
Company involve the controlled use of hazardous materials. The Company is
subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of such materials and certain waste
products. Although the Company believes that its activities currently comply
with the standards prescribed by such laws and regulations, the risk of
accidental contamination or injury from these materials cannot be eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result and any such liability could exceed the resources of the Company. In
addition, there can be no assurance that the Company will not be required to
incur significant costs to comply with environmental laws and regulations in the
future.
POSSIBLE VOLATILITY OF STOCK PRICE
The market prices for securities of life sciences companies,
including the market prices of the Company's Common Stock, have been highly
volatile and the market has experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Announcements of technological innovations or new commercial
products by the Company or its competitors, developments concerning proprietary
rights, including patents and litigation matters, publicity regarding actual or
potential clinical trial results with respect to products under development by
the Company or others, decisions regarding regulatory approvals of the products
of the Company or others, regulatory developments in both the United States and
foreign countries, public concern as to the efficacy of new technologies,
general market conditions, as well as quarterly fluctuations in the Company's
revenues and financial results and other factors, may have a significant impact
on the market price of the common stock. In particular, the realization of any
of the risks described in these "Risk Factors" could have a dramatic and
adverse impact on such market price.
- 12 -
<PAGE> 14
LARGE NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE; EFFECT ON ABILITY TO RAISE
CAPITAL
Sales of substantial amounts of Common Stock in the public market
following this Offering could adversely affect the prevailing market price of
the Company's Common Stock and may have a material and adverse effect on the
Company's ability to raise the capital necessary to fund its future operations.
In addition to the Shares registered hereunder, the Company has filed a
registration statement with the Commission to register 5,587,965 shares of its
Common Stock under the Securities Act (the "Registrable Shares"). As of July
31, 1998, without taking into account shares of Common Stock issued upon
exercise of stock options, warrants or other rights to acquire Common Stock
after July 31, 1998, the Company had outstanding 31,377,080 shares of Common
Stock. The Shares, the Registrable Shares (upon effectiveness of the
registration statement relating thereto) and substantially all of the shares of
Common Stock already outstanding, will be freely tradeable in the public market
without restriction under the Securities Act, except that any shares held by
"affiliates" of the Company, as such term is defined in Rule 144(a) under the
Securities Act ("Affiliates"), may generally only be sold in compliance with the
applicable provisions of Rule 144 of the Securities Act. In general, under Rule
144 an Affiliate is entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding shares of
the Company's Common Stock (approximately 313,770 shares) or the average weekly
trading volume in the Company's Common Stock on the American Stock Exchange
during the four calendar weeks preceding the date on which notice of such sale
was filed under Rule 144. Sales under Rule 144 are also subject to certain
provisions relating to the manner and notice of sale and the availability of
current public information about the Company. Additional shares of Common
Stock, including shares issuable upon exercise of options, warrants and other
rights to acquire Common Stock, will also become eligible for sale in the public
market from time to time in the future. Furthermore, certain holders of Common
Stock have the right to cause the Company to register their shares under the
Securities Act in the future. The Company is required to bear the expenses of
all such required registrations (except underwriting discounts and commissions).
The Company is required to use its best efforts to effect such registrations,
subject to certain conditions and limitations.
NO DIVIDENDS
The Company has never paid any cash dividends on its Common Stock and
does not anticipate paying any cash dividends in the foreseeable future.
- 13 -
<PAGE> 15
BUSINESS
RECENT DEVELOPMENTS
On April 9, 1998, the Company entered into a definitive agreement with
Vysis, Inc. and the University of California to settle a lawsuit which had been
filed by the University of California and Vysis against the Company. As part of
the agreement, the Company, Vysis and the Regents of the University of
California stipulated to a final judgment order which was approved and issued
by the U.S. District Court for the Northern District of California. Under the
terms of the definitive agreement, the Company obtained a world-wide
nonexclusive royalty-bearing license to U.S. Patent No. 5,447,841 and any
divisionals, continuations, continuations-in-part, reissues, extensions,
reexaminations, substitutions, renewals and foreign counterparts thereof
throughout the world for use in the fields of human oncology for both clinical
and research applications. The Company also obtained a nonexclusive
royalty-bearing license to certain direct labeling technology rights owned by
Vysis in U.S. Patent 5,491,224 and any divisionals, continuations,
continuations-in-art, reissues, extensions, reexaminations, substitutions,
renewals and foreign counterparts thereof throughout the world. In return, the
Company has agreed to convey to Vysis its fluorescence in situ hybridization
(FISH) genetic probe business, retaining full rights to the field of human
oncology for research and clinical applications, including the Company's
recently FDA approved INFORM HER-2/neu breast cancer test. Sales of the
conveyed FISH products represented less than $3.0 million of the Company's 1997
gross revenues. The Company also made initial cash payments to Vysis of $0.5
million, and an additional payment of $1.5 million will be due on April 10,
2000 in order to extend the licenses beyond that date.
On June 30, 1998, the Company completed the sale of its Research
Products Division to Intergen Company, L.P. for an aggregate consideration of
$3.2 million, of which $200,000 is payable in scheduled payments over the next
two years. In connection with this transaction, the Company (i) assigned its
apoptosis and telemerase license agreements and (ii) licensed its sunrise and
methylation technologies to Intergen for exclusive use in the research products
field, while retaining exclusive rights to such licenses and technologies for
the field of therapeutic and diagnostic products. In addition, Oncor and
Intergen agreed to co-exclusive licenses to such licenses and technologies for a
field that includes clinical research, and development activities and sales of
products for clinical research and development activities. Sales to
non-affiliated companies generated by the Research Products Division in 1997
were approximately $3.0 million. Of the approximately $3.0 million in cash that
Oncor received upon the consummation of this transaction, approximately $2.5
million was used to increase the Company's net working capital and the
remaining $400,000 was used to repay certain outstanding bank debt. The Company
recorded a gain of approximately $1.8 million upon the closing of this
transaction.
On August 14, 1998, Oncor signed a non-binding Letter of Intent for the
sale of the assets of Codon, its wholly-owned subsidiary, to Codon Acquisition
Holdings, LLC, a company organized by Perseus Capital, LC, a Washington,
D.C.-based banking venture. Codon is a developer of gene recognition and repair
technology for the correction, alteration and therapeutic regulation of genes
for the treatment of disease. The transaction is expected to close during
September 1998. However, there can be no assurance that this transaction will,
in fact, be consummated.
LEGAL PROCEEDINGS
From time to time, the Company may be involved in litigation relating
to claims arising out of its operations in the normal course of business, in
addition to the pending and threatened legal proceedings discussed in "Risk
Factors" above, or receive notification from third parties threatening to
commence such litigation. See "Risk Factors -- Patents and Proprietary
Rights." The Company is not currently a party to any such legal proceedings
relating to claims arising out of its operations in the normal course of
business, the adverse outcome of which, individually or in the aggregate, would
have a material and adverse effect on the Company's business, financial
condition or results of operations.
- 14 -
<PAGE> 16
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders as of June 30, 1998.
Except for Mr. Derace L. Schaffer, a director of the Company, none of the
Selling Stockholders has had a material relationship with the Company within the
past three years other than as a result of the ownership of the Shares or other
securities of the Company. The Shares offered by this Prospectus may be offered
from time to time by the Selling Stockholders. See "Plan of Distribution."
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
NUMBER OF SHARES NUMBER OF AFTER OFFERING(1)(2)
BENEFICIALLY OWNED SHARES ----------------------
PRIOR TO REGISTERED FOR NUMBER
NAME OF SELLING STOCKHOLDER OFFERING(1) SALE HEREBY OF SHARES PERCENT
--------------------------- -------------------- -------------- --------- -------
<S> <C> <C> <C> <C>
Borgman, Robert . . . . . . . . . . . . 82,049
Brown, Greg . . . . . . . . . . . . . . 1,368
Capital Resource Company of Connecticut 13,675
Chandler, Carol . . . . . . . . . . . . 24,615
Chase 1991 Revocable Trust DTD 4/2/91
Andrew & Laura Chase, TTEES. . . . . . 6,838
Davidowitz, William . . . . . . . . . . 13,675
Edgewater Private Equity Fund, L.P. . . 438,961
Egan, Jane. . . . . . . . . . . . . . . 1,368
Fabiani, Joseph . . . . . . . . . . . . 13,128
Mutual Ventures of South Dakota . . . . 191,448
Feltman, Philip D.. . . . . . . . . . . 4,103
Fierberg, Martin . . . . . . . . . . . 4,103
Flynn, Kelly . . . . . . . . . . . . . 2,735
Hoegh Invest A/S. . . . . . . . . . . . 84,784
IASD Health Services Corp. . . . . . . 136,748
JIBS Equities . . . . . . . . . . . . . 17,778
Kenneth John Pies, IRA Oppenheimer as
Custodian . . . . . . . . . . . . . . 8,205
Konover, Simon . . . . . . . . . . . . 8,205
Kumar, Rajan & Manju, JTWROS. . . . . . 8,205
Lieber, Irwin . . . . . . . . . . . . . 21,880
Den Norske Krigsforsikring for Skib . . 28,718
O'Brien, James . . . . . . . . . . . . 2,735
Oldfield Company . . . . . . . . . . . 6,838
Pappajohn, Ann, Intervivos Trust
1989 . . . . . . . . . . . . . . . . . 13,675
Pappajohn, John . . . . . . . . . . . . 184,611
Penn Footwear Co. . . . . . . . . . . . 13,675
Penn Footwear Retirement Trust . . . . 16,410
Presutti, John . . . . . . . . . . . . 8,205
Schaffer, Derace . . . . . . . . . . . 2,735
Tang, Cyrus . . . . . . . . . . . . . . 164,098
Thebes, Ltd.. . . . . . . . . . . . . . 13,675
Viking Medical Ventures Limited . . . . 83,417
West Bank Custodian FBO James S. Cownie
IRA. . . . . . . . . . . . . . . . . . 27,350
--------- --------- --------- ---------
TOTAL . . . . . . . . . . . . 1,650,013
========= ========= ========= =========
</TABLE>
- --------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules and
regulations promulgated under the Securities Act and generally
includes voting or investment power with respect to securities.
(2) The number of shares of Common Stock and the percentage of
shares of Common Stock beneficially owned by each Selling
Stockholder are based on the assumption that each Selling
Stockholder will sell all of the shares of Common Stock
registered for sale hereby.
- 15 -
<PAGE> 17
The Shares are being registered as a result of the contractual
arrangement with the Selling Stockholders. The Company has agreed to bear
certain expenses (other than underwriting discounts and selling commissions and
fees and disbursements of counsel and other advisors to the Selling
Stockholders) in connection with the registration of the Shares.
The Company has agreed to prepare and file such amendments and
supplements to the Registration Statement as may be necessary to keep this
Registration Statement effective until the earlier of the date on which the
Selling Stockholders shall have sold all of the securities registered hereby or
the date on which the Shares are saleable pursuant to Rule 144(k) promulgated
under the Securities Act.
- 16 -
<PAGE> 18
PLAN OF DISTRIBUTION
The sale of the Shares offered hereby may be effected by the Selling
Stockholders from time to time in transactions on the American Stock Exchange,
in negotiated transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale,
at prices related to prevailing market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). In
order to comply with the securities laws of certain states, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. The Selling Stockholders may transfer their Shares under
certain circumstances to other persons who may, in turn, resell Shares in the
manner described above. In addition, the Selling Stockholders may pledge or
make gifts of their Shares and such Shares may also be sold by the pledgees or
transferees.
In the event that a Selling Stockholder transfers his shares, pledges
his shares or makes a gift of his shares, the Company will amend this
Registration Statement or file a Prospectus Supplement, as appropriate,
identifying the transferee(s) as Selling Stockholder(s).
From time to time, one or more Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be Selling Stockholders hereunder. In addition, a Selling Stockholder may,
from time to time, sell short the Common Stock of the Company, and in such
instances, this Prospectus may be delivered in connection with such short sales
and the Shares offered hereby may be used to cover such short sales.
At the time a particular offer of Shares is made, to the extent
required, a Prospectus Supplement will be distributed which will set forth the
number of Shares being offered and the terms of the offering including the name
or names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from Selling Stockholders, any discounts,
commissions and other items constituting compensation from the Selling
Stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by the Company and the Selling
Stockholders.
The Selling Stockholders may also transfer their Shares pursuant to
Rule 144, whether or not the Registration Statement, of which this Prospectus
forms a part, is effective at the time of any such transfer.
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of the Shares may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions received by them and any
profit on the resale of the Selling Stockholder Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
The Company has agreed to indemnify the Selling Stockholders and their
affiliates against certain liabilities, including liabilities under the
Securities Act. The Selling Stockholders have agreed to indemnify the Company
and its affiliates against certain liabilities, including liabilities under the
Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Common Stock of the Company for
a period of two business days prior to the commencement of such distribution.
In addition and without limiting the foregoing, each Selling Stockholder will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
- 17 -
<PAGE> 19
The Company has agreed to bear certain expenses (other than
underwriting discounts and selling commissions and fees and disbursements of
counsel and other advisors to the Selling Stockholders) in connection with the
registration of the Shares.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, New York, New York.
EXPERTS
The financial statements and schedules of the Company incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
- 18 -
<PAGE> 20
1,650,013
ONCOR, INC.
COMMON STOCK
PROSPECTUS
SEPTEMBER 2, 1998
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be
incurred by the Company in connection with the issuance and distribution of the
securities being registered:
<TABLE>
<CAPTION>
Amount to
Be Paid
-----------
<S> <C>
Registration Fee - SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 198
AMEX Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,802
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 11 of the Registrant's Articles of Incorporation, as amended,
and Section 5-01 of the Registrant's By-Laws, as amended, provide that the
Registrant shall, to the full extent permitted by law, indemnify all directors,
officers, employees or agents of the Registrant. Section 2-418 of the Maryland
General Corporation Law permits indemnification of directors, officers,
employees, and agents of a corporation under certain conditions and subject to
certain limitations. The Section provides generally that such persons may be
indemnified unless they engage in a material act or omission in bad faith or
that is the result of active and deliberate dishonesty, they actually receive
an improper personal benefit in money, property or services, or, in the case of
a criminal proceeding, they have reasonable cause to believe that the act or
omission is unlawful. Provision is made for reimbursement of reasonable
expenses so long as it is finally determined that the standards of conduct have
been met. The Selling Stockholders have agreed to indemnify officers,
directors and controlling persons of the Registrant against certain
liabilities, including liabilities under the Securities Act under certain
circumstances.
The Company and its directors and officers have liability insurance.
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
3.1 The Articles of Incorporation, as amended, of the Registrant,
incorporated herein by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
3.2 The By-Laws of the Registrant, incorporated herein by reference to
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990.
4.1 Specimen certificate for shares of the Registrant's Common Stock,
incorporated herein by reference to Exhibit 4.1 to Registration
Statement No. 33-44520.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
II-1
<PAGE> 22
10.1 Stock Exchange Agreement dated as of February 24, 1998 by and
among the Registrant and the persons listed on Schedule A thereto.
23.1 Consent of Arthur Andersen LLP, independent public accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1).
24. Powers of Attorney (included with signature page).
II-2
<PAGE> 23
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gaithersburg, State of
Maryland, on August 25, 1998.
ONCOR, INC.
By:/s/ John L. Coker
------------------------------------------
John L. Coker
Vice President -- Finance and Administration,
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person or entity whose
signature appears below constitutes and appoints Jose J. Coronas, R. James
Danehy and John L. Coker, and each of them, its true and lawful attorney-in-fact
and agents, with full power of substitution and resubstitution, for it and in
its name, place and stead, in any and all capacities, to sign any and all
amendments, including any post-effective amendments, to this Registration
Statement on Form S-3, or any registration statement relating to the offering to
be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as it might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on August 25, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Jose J. Coronas Chairman of the Board of Directors
- ----------------------------------
Jose J. Coronas
/s/ R. James Danehy Vice-Chairman of the Board of Directors
- ----------------------------------
R. James Danehy
/s/ Cecil Kost President, Chief Operating Officer and Director (principal executive officer)
- ----------------------------------
Cecil Kost
/s/ John L. Coker Vice President, Secretary and Treasurer
- ---------------------------------- (principal financial and accounting officer)
John L. Coker
/s/ Derace L. Schaffer, M.D. Director
- ----------------------------------
Derace L. Schaffer, M.D.
/s/ William H. Taylor II, Ph.D. Director
- ----------------------------------
William H. Taylor II, Ph.D.
/s/ Timothy J. Triche, M.D., Ph.D. Director
- ----------------------------------
Timothy J. Triche, M.D., Ph.D.
/s/ Stephen Turner Director
- ----------------------------------
Stephen Turner
/s/ Jeffrey S. Ross, M.D. Director
- ----------------------------------
Jeffrey S. Ross, M.D.
</TABLE>
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
<S> <C>
3.1 The Articles of Incorporation, as amended,of the Registrant, incorporated herein by
reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2 The By-Laws of the Registrant, incorporated herein by reference to
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1 Specimen certificate for shares of the Registrant's Common Stock, incorporated herein
by reference to Exhibit 4.1 to Registration Statement No. 33-44520 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1 Opinion of Brobeck, Phleger & Harrison LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.1 Stock Exchange Agreement dated as of February 24, 1998 by and among
the Registrant and the persons listed on Schedule A thereto. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.1 Consent of Arthur Andersen LLP, independent public accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion filed as Exhibit 5.1) . . . . . . . . . . . . . . . .
24. Powers of Attorney (included with signature page) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 1
September 2, 1998
Oncor, Inc.
209 Perry Parkway
Gaithersburg, Maryland 20877
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3, (the "Registration
Statement") transmitted for filing by you with the Securities and Exchange
Commission as of the date hereof, in connection with the registration under the
Securities Act of 1933, as amended, of 1,650,013 shares of your Common Stock,
$.01 par value (the "Shares").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinion set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that the
Shares, when sold in the manner described in the Registration Statement, will
be validly issued, fully paid and nonassessable.
We hereby consent to the use of our name under the caption "Legal Matters"
in the Registration Statement, including the prospectus constituting a part
thereof, and any amendment to the Registration Statement, and consent to the
filing of this opinion as an exhibit thereto.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 10.1
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is made as of the
24th day of February, 1998, by and among Oncor, Inc., a Maryland corporation
("Oncor"), and the persons listed on Schedule A hereto (collectively, the
"Holders").
WHEREAS, each of the Holders is the record and beneficial owner of
such number of shares of capital stock of Codon Pharmaceuticals, Inc. ("Codon")
set forth opposite the name of such Holder on Schedule A hereto (the "Codon
Shares"); and
WHEREAS, the Holders wish to sell, and Oncor wishes to purchase from
the Holders, the Codon Shares on the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1.1 Purchase and Sale of the Codon Shares. Subject to the terms and
conditions of this Agreement, Oncor agrees to purchase at the Closing and each
Holder agrees to sell to Oncor at the Closing, that number of Codon Shares set
forth opposite each Holder's name on Schedule A hereto.
1.2 Purchase Price. Subject to the terms and conditions of this Agreement,
in consideration and as payment for the Codon Shares, Oncor shall deliver to
each Holder such number of shares of Common Stock, $.01 par value per share, of
Oncor (the "Oncor Shares"), as set forth opposite the name of each such Holder
on Schedule A hereto.
1.3 Closing. The purchase and sale of the Codon Shares shall take place at
the offices of Brobeck, Phleger & Harrison LLP, 1633 Broadway, New York, NY, at
10:00 A.M., on February 24, 1998, or at such other time and place as Oncor and
holders of a majority of the Codon Shares mutually agree upon orally or in
writing (which time and place are designated as the "Closing"). At the Closing,
Oncor shall deliver to each Holder the certificates representing the Oncor
Shares set forth opposite the name of each Holder on Schedule A hereto as
payment of the purchase price for the Codon Shares against delivery of the
certificates representing the Codon Shares held by each Holder to Oncor.
2. Representations and Warranties of Oncor. Oncor hereby represents
and warrants to each Holder as follows:
2.1 Organization and Good Standing. Oncor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland.
<PAGE> 2
2.2 Authorization; Valid Issuance. All corporate action on the part
of Oncor necessary for the authorization, execution and delivery of this
Agreement and the performance of all of its obligations hereunder, and the
issuance, sale and delivery of the Oncor Shares being delivered hereunder has
been taken or will be taken prior to the Closing. The Oncor Shares, when issued,
sold and delivered pursuant to the terms hereof, will be duly and validly
issued, fully paid and non-assessable. This Agreement has been duly executed and
delivered by Oncor, and assuming due authorization, execution and delivery by
each of the Holders, constitutes a valid and legally binding obligation of
Oncor, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.4 Governmental Consents. Except for any requisite filings under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of Oncor is required in connection with the
consummation of the transactions contemplated by this Agreement.
2.5 Offering. Subject in part to the truth and accuracy of each
Holder's representations set forth in Section 3 of this Agreement, the delivery
of the Oncor Shares in exchange for the Codon Shares as contemplated by this
Agreement are exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act").
2.6 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against Oncor that questions the validity of
this Agreement or the right of Oncor to enter into the Agreement, or to
consummate the transactions contemplated hereby.
2.7 Compliance with Other Instruments. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, a material
default under any material instrument, judgment, order, writ, decree or contract
to which Oncor is a party or by which it is bound and will not trigger any
preemptive rights, rights of first refusal or other rights of securityholders or
other persons to acquire securities of Oncor, unless waived by the holder of
such right.
2.8 Disclosure. Oncor has fully provided each Holder with all the
information that such Holder has reasonably requested in deciding whether to
exchange the Codon Shares held by such Holder for the Oncor Shares as set forth
herein, including without limitation, the following:
(a) Oncor's most recent filings with the Securities and
Exchange Commission (the "Commission") pursuant to the
Exchange Act, including its Proxy Statement dated April
30, 1997, Form 10-K for the fiscal year ended December 31,
1996, Form 10-Q for the fiscal
2.
<PAGE> 3
quarter ended March 31, 1997, Form 10-Q for the fiscal
quarter ended June 30, 1997 and Form 10-Q for the fiscal
quarter ended September 30, 1997;
(b) Oncor's press release dated August 29, 1997 relating to
the lawsuit against the Oncor by the University of
California and Vysis Inc.; and
(c) the description of the business, operations and financial
condition of Codon, including its (i) unaudited statement
of operations dated as of December 31, 1995 and 1996 and
March 31, 1996 and 1997 and (ii) unaudited balance sheet
at December 31, 1996 and March 31, 1997, attached hereto
as Exhibit A (the "Codon Information Statement").
2.9 Material Misstatements or Omissions. No representation or
warranty in this Agreement or any schedule, exhibit or other document furnished
or to be furnished by Oncor to the Holders pursuant to this Agreement contains
or will contain any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made therein, in light of the
circumstanced under which they were made, not misleading.
3. Representations and Warranties of the Holders. The Holders hereby,
severally, but not jointly, represent and warrant to Oncor as follows:
3.1 Organization and Authorization. If other than an individual, each
Holder is an entity duly organized, validly existing and in good standing under
the laws of the state of its organization. Each Holder has full power and
authority to enter into this Agreement and that this Agreement has been duly
executed and delivered by each such Holder, and assuming due authorization,
execution and delivery by Oncor, constitutes its valid and legally binding
obligation, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with
each Holder in reliance upon such Holder's representation to Oncor, which by
such Holder's execution of this Agreement such Holder hereby confirms, that the
Oncor Shares will be acquired for investment for such Holder's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Holder has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, each Holder further represents that such Holder does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Oncor Shares.
3.
<PAGE> 4
3.3 Disclosure of Information. Each Holder believes it has received
all the information it considers necessary or appropriate for deciding to
exchange the Codon Shares held by such Holder for the Oncor Shares as herein set
forth, including without limitation the information set forth in Section 2.8
above. Each Holder represents that it has carefully reviewed the Codon
Information Statement and that such Holder has had an opportunity to ask
questions and receive answers from the representatives of Oncor and Codon
regarding the business, properties, prospects and financial condition of Codon
and any and all other matters which the Holder considers necessary or
appropriate in connection with the consummation of the transactions contemplated
hereunder.
3.4 Investment Experience. Each Holder acknowledges that it can bear
the economic risk of the transactions contemplated hereunder, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of such transactions. If other than an
individual, the Holder also represents it has not been organized for the purpose
of acquiring the Oncor Shares.
3.5 Accredited Investor. Each Holder is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Each Holder understands that the Oncor
Shares are characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from Oncor in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act, only in
certain limited circumstances. In this connection, such Holder represents that
it is familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act.
3.7 Legends. It is understood that the certificates evidencing the
Oncor Shares may bear the following legend:
"These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under such Act
or an opinion of counsel satisfactory to Oncor that such
registration is not required or unless sold pursuant to Rule 144
of such Act."
3.8 Title and Ownership. Each Holder now has and at the Closing will
have good and marketable title to the Codon Shares to be delivered by each
Holder, free and clear of any liens, encumbrances, equities and claims.
3.9 Governmental Consents. Except for any requisite filings under the
Exchange Act, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the
4.
<PAGE> 5
part of such Holder is required in connection with the consummation of the
transactions contemplated by this Agreement.
3.10 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against such Holder that questions
the validity of this Agreement or the right of such Holder to enter into the
Agreement, or to consummate the transactions contemplated hereby.
3.11 Compliance with Other Instruments. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, a material
default under any material instrument, judgment, order, writ, decree or contract
to which such Holder is a party or by which it is bound.
3.12 Waiver. Each Holder hereby waives such Holder's right, if any,
to elect to treat the transaction contemplated by this Agreement as a
liquidation, dissolution or winding up of Codon pursuant to Subsection B.2. of
Article IV of Codon's Amended and Restated Certificate of Incorporation.
4. Conditions of Holder's Obligations at Closing. The obligations of
each Holder under Section 1 of this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of Oncor contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. Oncor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 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 required in connection with the consummation of the
transactions contemplated by this Agreement shall be duly obtained and effective
as of the Closing.
4.4 Delivery of Other Closing Documents. Oncor shall deliver to each
Holder the stock certificates representing the Oncor Shares being delivered to
such Holder hereunder.
5. Conditions of Oncor's Obligations at Closing. The obligations of
Oncor to each Holder under Section 1 of this Agreement are subject to the prior
execution of this Agreement by each and every Holder and the fulfillment on or
before the Closing of each of the following conditions by that Holder:
5.
<PAGE> 6
5.1 Representations and Warranties. The representations and
warranties of the Holder contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Performance. Each Holder shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 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 required in connection with the consummation of the
transactions contemplated by this Agreement shall be duly obtained and effective
as of the Closing.
5.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
counsel to Oncor, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
5.5 Delivery of Other Closing Documents. Each Holder shall deliver to
Oncor a duly executed stock assignment, together with the stock certificate(s)
representing the Codon Shares being delivered by such Holder to Oncor hereunder.
5.6 Fairness Opinion. The Board of Directors of Oncor shall have
received a fairness opinion from Lehman Brothers Inc. with respect to the
transactions contemplated by this Agreement, the costs of which shall be borne
solely by Oncor.
6. Miscellaneous.
6.1 Survival of Warranties. The warranties, representations and
covenants of Oncor and the Holders contained in or made pursuant to this
Agreement shall survive the Closing for a period of twelve (12) months and shall
terminate upon the expiration of such twelve (12) month period.
6.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
6.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Maryland as applied to agreements among Maryland
residents entered into and to be performed entirely within Maryland.
6.
<PAGE> 7
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
6.7 Finder's Fee. Each party represents that it neither is nor will
be obligated for any finders' fee or commission in connection with this
transaction.
6.8 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of Oncor and a majority of the Holders. Notwithstanding
anything to the contrary set forth herein, Oncor may, at its sole discretion,
waive any of the conditions set forth in Section 5 above.
6.9 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.10 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
6.11 Legal Requirements and Filings. Subject to the terms and
conditions of this Agreement, each party will use its reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable law and regulations to
consummate the transactions contemplated under this Agreement.
7. Market Stand-Off.
7.1 Definition. For the purpose of this Section 7, the "Lock-Up
Period" shall mean the period commencing on the date of the Closing and ending
on the date that is six months from the Closing.
7.
<PAGE> 8
7.2 Lock-Up. Each Holder hereby agrees that, during the Lock-Up
Period, it shall not, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any of the Oncor Shares held by it at any time during such
period without the prior written consent of Oncor. In order to enforce the
foregoing covenant, Oncor may impose stop-transfer instructions with respect to
the Oncor Shares of each Holder (and the shares or securities of every other
person subject to the foregoing restriction) until the end of such period.
8. Registration of Common Stock. Oncor covenants and agrees as follows:
8.1 Definitions. For purposes of this Section 8:
(a) The term "register", "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (1) the Oncor Shares
issued pursuant to this Agreement; or (2) any Common Stock of Oncor issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Oncor Shares, excluding in all
cases, however, any Registrable Securities which are sold, assigned, pledged,
hypothecated or otherwise disposed of by a Holder in a transaction in which such
Holder's rights under this Agreement are not assigned or assignable; and
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Oncor Shares
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
8.2 Required Registration.
(a) Oncor shall, subject to the limitations specified in this
Agreement, use its best efforts to file a registration statement on Form S-3
(together with any new registration statement filed pursuant to Section 8.3(a),
the "Registration Statement") within one hundred eighty (180) days from the date
hereof covering the registration under the Act of all Registrable Securities
then outstanding.
(b) Notwithstanding the foregoing, if Oncor shall furnish to the
Holders a certificate signed by the Chief Executive Officer and President of
Oncor stating that, in the good faith judgment of the Board of Directors of
Oncor, it would be seriously detrimental to Oncor and its stockholders for a
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, Oncor shall have the right to defer
taking action
8.
<PAGE> 9
with respect to such filing for a period of not more than ninety (90) days from
the delivery of such certificate to the Holders.
(c) The Registration Statement may include other securities of
Oncor (i) which are held by persons who, by virtue of agreements with Oncor, are
entitled to include their securities in any such registration, (ii) which are
held by officers and directors of Oncor, or (iii) which are being offered for
the account of Oncor.
8.3 Obligations of Oncor. When required under this Section 8 to
effect the registration of the Registrable Securities, Oncor shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC the Registration Statement with
respect to the Registrable Securities and use its best efforts to cause the
Registration Statement to become effective, and keep the Registration Statement
effective until the earlier of: (i) the second anniversary of the date hereof or
(ii) until all such Registrable Securities have been sold or are eligible to be
sold pursuant to Rule 144, without regard to the volume limitations set forth in
Rule 144; provided that if, during the period the Registration Statement is
required to be kept effective, Oncor delivers a certificate, as per Section
8.2(b), stating that, in the good faith judgment of the Board of Directors of
Oncor, it would be seriously detrimental to Oncor and its shareholders for such
Registration Statement to be kept effective during a specified period of time
(the "Blackout Period"), then Oncor shall not be obligated to keep the
Registration Statement effective for a period of not more than thirty (30) days,
and the Holders of the Registrable Securities covered by the Registration
Statement shall not sell any of their Registrable Securities covered by the
Registration Statement, during such Blackout Period. Oncor shall not utilize
this right more than twice in any twelve (12) month period. After the
termination of such Blackout Period, Oncor shall file an amendment to the
Registration Statement or a new registration statement with respect to the
unsold portion of the Registrable Securities included in the original
registration statement and shall keep such amendment or new registration
statement effective until the earlier of; (i) the second anniversary of the date
hereof, or (ii) until all such Registrable Securities have been sold or are
eligible to be sold pursuant to Rule 144, without regard to the volume
limitations set forth in Rule 144.
(b) Prepare and file with the SEC such amendments and supplements
to the Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by the
Registration Statement.
(c) Furnish to the Holders whose Registrable Securities are
covered by the Registration Statement such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by the Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as
9.
<PAGE> 10
shall be reasonably requested by the Holders whose Registrable Securities are
covered by the Registration Statement; provided that Oncor shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
(e) Notify the Holders whose Registrable Securities are covered
by the Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(f) Use its best efforts to furnish, at the request of the
Holders whose Registrable Securities are covered by the Registration Statement,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Section 8, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the Registration Statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing Oncor for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders whose
Registrable Securities are covered by the Registration Statement and (ii) a
letter dated such date, from the independent certified public accountants of
Oncor, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders whose Registrable Securities are
covered by the Registration Statement.
8.4 Furnish Information. It shall be a condition precedent to the
obligations of Oncor to take any action pursuant to this Section 8 with respect
to the Registrable Securities of the Holders whose Registrable Securities are
covered by the Registration Statement that each of such Holders shall furnish to
Oncor such information regarding itself, the Registrable Securities held by it,
and the intended method of disposition of such securities as shall be required
to effect the registration of such Holder's Registrable Securities.
8.5 Expenses of Registration. All expenses incurred in connection
with registrations, filings or qualifications pursuant to Section 8.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for Oncor, but excluding
underwriting discounts and commissions relating to the Registrable Securities,
shall be borne by Oncor.
8.6 Delay of Registration. The Holders shall not have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 8.
10.
<PAGE> 11
8.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 8:
(a) To the extent permitted by law, Oncor will indemnify and hold
harmless the Holder whose Registrable Securities are covered by the Registration
Statement, any underwriter (as defined in the Act) for such Holders and each
person, if any, who controls such Holders or underwriter within the meaning of
the Act or the Exchange Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Act or the
Exchange Act, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by Oncor of the Act, the Exchange Act, or any
rule or regulation promulgated under the Act or the Exchange Act; and Oncor will
pay to such Holders, and each such underwriter or controlling person any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 8.7 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of Oncor (which
consent shall not be unreasonably withheld), nor shall Oncor be liable in any
such case for any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by such Holders, or any such underwriter or
controlling person.
(b) To the extent permitted by law, each Holder whose Registrable
Securities are covered by the Registration Statement will indemnify and hold
harmless Oncor, each of its directors, each of its officers who has signed the
Registration Statement, each person, if any, who controls Oncor within the
meaning of the Act, any underwriter, and any controlling person of any such
underwriter, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and such Holder will pay any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this Section 8.7, in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 8.7 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of such Holder, which consent shall not be unreasonably withheld;
provided that, in no event shall any indemnity under this Section 8.7 exceed the
gross proceeds from the offering received by such Holder.
11.
<PAGE> 12
(c) Promptly after receipt by an indemnified party under this
Section 8.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 8.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
8.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 8.7.
(d) If the indemnification provided for in this Section 8.7 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 a 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.
(e) The obligations of Oncor and Holders under this Section 8.7
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 8, and otherwise.
8.8 Assignment of Registration Right. The right to have Oncor
register the Registrable Securities pursuant to this Section 8 may not be
assigned; provided, however, that (i) any heir or the estate of an Investor
which acquires the Registrable Securities from such Investor by will or
intestate succession shall be entitled to have Oncor register the Registrable
Securities pursuant to this Section 8 (provided that such heirs or such estate
shall have a single attorney-in-fact for the purpose of exercising any rights,
receiving any notices or taking any action under this Section 8), and (ii) any
individual Investor may sell, assign or transfer
12.
<PAGE> 13
Registrable Securities to his or her spouse or children or to a trust
established for the benefit of his or her spouse, children or himself or
herself, and such transferee shall be entitled to have Oncor register the
Registrable Securities pursuant to this Section 8, if, and only if, such
transferee agrees in writing to be bound by the terms of this Agreement. In each
such event and for purposes of this Agreement, the term "Holder" as used herein
shall include all such heirs, such estate or such transferees.
13.
<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ONCOR, INC.
By:
------------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
[Stock Exchange Agreement]
14.
<PAGE> 15
HOLDERS:
---------------------------------------------
Print Name:
--------------------------------
[Stock Exchange Agreement]
15.
<PAGE> 16
SCHEDULE A
<TABLE>
<CAPTION>
ONCOR, INC. ACQUISITION OF CODON SCHEDULE A
- ------------------------------------------------------------------------------------------------------------------------------------
Oncor Shares to be
Holder Shares of Codon Capital Stock Held by Holders Issued to Holder
- ------------------------------------------------------------------------------------------------------------------------------------
Common Series A Series B Series B Div. Total Pfd. for C/S for Pfd. Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Borgman, Robert 100,000 50,000 150,000 0 82,049 82,049
Brown, Greg 10,000 5,000 5,000 1,368 2,735 4,103
Capital Resource Company of Connecticut 16,667 8,333 25,000 0 13,675 13,675
Chandler, Carol 30,000 15,000 45,000 0 24,615 24,615
Chase 1991 Revocable Trust DTD 12,500 12,500 0 6,838 6,838
Davidowitz, William 25,000 25,000 0 13,675 13,675
Edgewater Private Equity Fund, L.P. 652,500 100,000 50,000 802,500 0 438,961 438,961
Egan, Jane 10,000 0 1,368 0 1,368
Fabiani, Dr. Joe 16,000 8,000 24,000 0 13,128 13,128
Farm Bureau 100,000 100,000 0 54,700 54,700
FBL Ventures of South Dakota 200,000 50,000 250,000 0 136,748 136,748
Feltman, Philip D. 5,000 2,500 7,500 0 4,103 4,103
Flerberg, Martin 5,000 2,500 7,500 0 4,103 4,103
Hoegh Ivest A/S 50,000 70,000 35,000 155,000 0 84,784 84,784
IASD Health Services Corp. 175,000 50,000 25,000 250,000 0 136,748 136,748
JIBS Equities 32,500 32,500 0 17,778 17,778
Kenneth John Pies, IRA Rollover ... 10,000 5,000 15,000 0 8,205 8,205
Konover, Simon 10,000 5,000 15,000 0 8,205 8,205
Kumar, Rajan 7,767 3,884 11,651 0 6,373 6,373
Kumar, Manju 2,233 1,116 3,349 0 1,832 1,832
Lieber, Irwin 25,000 10,000 5,000 40,000 0 21,880 21,880
Mutual Risk Insurance 35,000 17,500 52,500 0 28,718 28,718
O'Brien, James 5,000 5,000 0 2,735 2,735
Oldfield Company 12,500 12,500 0 6,838 6,838
Pappajohn, Ann, Intervivos Trust 100,000 0 13,675 0 13,675
Pappajohn, John 200,000 100,000 100,000 50,000 250,000 27,350 136,748 164,098
150,000 0 20,513 0 20,513
Penn Footwear Co. 25,000 25,000 0 13,675 13,675
Penn Footwear Retirement Trust 30,000 30,000 0 16,410 16,410
Presutti, John 10,000 5,000 15,000 0 8,205 8,205
Schaffer, M.D., Derace L 20,000 0 2,735 0 2,735
Tang, Cyrus 200,000 100,000 300,000 0 164,098 164,098
Thebes, Inc. 100,000 0 13,675 0 13,675
Viking Medical Ventures Limited 100,000 35,000 17,500 152,500 0 83,417 83,417
West Bank, Custodian, James ... 50,000 50,000 0 27,350 27,350
Totals 590,000 1,500,000 912,667 456,333 2,869,000 1,650,013
Date: February 24, 1998 (BP&H)
</TABLE>
17.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 20, 1998
(except with respect to the financial condition of the Company described in
Note 1, and to the Vysis and Key Technology matters described in Note 8, as to
which the date is April 30, 1998) included in Oncor, Inc.'s Amendment No. 1 to
Form 10-K for the year ended December 31, 1997 and to all references to our
Firm included in this registration statement.
/s/ Arthur Andersen LLP
-------------------------------
Arthur Andersen LLP
Washington, D.C.
Septmber 1, 1998
