<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SEQUENOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 8731 77-0365889
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
----------------
11555 SORRENTO VALLEY ROAD
SAN DIEGO, CALIFORNIA 92121
(858) 350-0345
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DR. HUBERT KOSTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SEQUENOM, INC.
11555 SORRENTO VALLEY ROAD
SAN DIEGO, CALIFORNIA 92121
(858) 350-0345
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
<TABLE>
<S> <C>
FAYE H. RUSSELL, ESQ. ALAN F. DENENBERG, ESQ.
THOMAS E. HORNISH, ESQ. SHEARMAN & STERLING
ROBERT H. CUTLER, ESQ. 1550 EL CAMINO REAL, SUITE 100
BROBECK, PHLEGER & HARRISON LLP MENLO PARK, CALIFORNIA 94025
550 WEST C STREET, SUITE 1300 (650) 330-2200
SAN DIEGO, CALIFORNIA 92101
(619) 234-1966
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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,
check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.001 per share......... $70,000,000 $19,460
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457(o) solely for the purpose of calculating the
amount of the registration fee.
----------------
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS Subject to completion November , 1999
- --------------------------------------------------------------------------------
Shares
[LOGO OF SEQUENOM INDUSTRIAL GENOMICS]
Common Stock
- --------------------------------------------------------------------------------
This is our initial public offering of shares of our common stock. We are
offering shares of our common stock to be sold in this offering. No public
market currently exists for our common stock. We expect the public offering
price to be between $ and $ per share.
We have applied to have our common stock listed on the Nasdaq National Market
under the symbol "SQNM."
Before buying any shares you should read the discussion of material risks of
investing in our common stock in "Risk factors" beginning on page 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
<TABLE>
<CAPTION>
PER
SHARE TOTAL
- -------------------------------------------------------------------------------------
<S> <C> <C>
Public offering price $ $
- -------------------------------------------------------------------------------------
Underwriting discounts and commissions $ $
- -------------------------------------------------------------------------------------
Proceeds, before expenses, to Sequenom $ $
- -------------------------------------------------------------------------------------
</TABLE>
The underwriters may also purchase up to shares of common stock from us
at the public offering price, less the underwriting discounts and commissions,
within 30 days from the date of this prospectus. This option may be exercised
to only cover over-allotments, if any. If the option is exercised in full, the
total underwriting discounts and commissions will be $ , and the total
proceeds, before expenses, to Sequenom, Inc. will be $ .
The underwriters are offering the common stock as set forth under
"Underwriting." Delivery of the shares will be made on or about .
WARBURG DILLON READ LLC
ROBERTSON STEPHENS
SG COWEN
<PAGE>
PHARMACOGENOMICS
GENOMIC DRUG DEVELOPMENT
AGRICULTURAL GENOMICS
DNA DIAGNOSTICS
SEQUENOM ADDRESSES MARKETS WITH AN IMMEDIATE OR EMERGING NEED FOR MARKER
VALIDATION AND HIGH THROUGHPUT GENOTYPING.
<PAGE>
- --------------------------------------------------------------------------------
[PICTURES OF COMPONENTS OF MASSARRAY SYSTEM]
THE TOTAL
SNPS
SOLUTION
ACCURACY
Label-free, direct measurement of molecules with unprecedented levels of
accuracy
HIGH THROUGHPUT
3 sec/sample; simultaneous running of assays
FLEXIBILITY
Rapidly configure for new analyses; biomolecules beyond DNA
AUTOMATION
Highly automated; no manual data interpretation
COST-EFFECTIVENESS
Low labor, no label, reduced assay volume through miniaturization, minimal
data processing
INDUSTRIAL GENOMICS
[REPRESENTATION OF DNA SEQUENCE; PHOTOGRAPH OF COMPONENTS OF MASSARRAY SYSTEMS]
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy shares of Sequenom, Inc. common stock only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of Sequenom, Inc. common stock.
----------------
Until , 2000 (25 days after the date of this prospectus), all
dealers selling shares of our common stock, whether or not participating in
this offering, may be required to deliver a prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Prospectus summary........................................................ 3
The offering.............................................................. 5
Summary consolidated financial and operating data......................... 6
Risk factors.............................................................. 7
Forward-looking information............................................... 16
Use of proceeds........................................................... 17
Dividend policy........................................................... 17
Capitalization............................................................ 18
Dilution.................................................................. 19
Selected consolidated financial data...................................... 21
Management's discussion and analysis of financial condition and results of
operations............................................................... 23
</TABLE>
<TABLE>
<S> <C>
Business.................................................................... 29
Management.................................................................. 43
Related party transactions.................................................. 55
Principal stockholders...................................................... 58
Description of securities................................................... 60
Shares eligible for future sale............................................. 65
Underwriting................................................................ 67
Legal matters............................................................... 69
Experts..................................................................... 69
Where you can find more information......................................... 70
</TABLE>
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<PAGE>
Prospectus summary
This summary highlights information contained elsewhere in this prospectus. You
should read the entire prospectus carefully, especially the risks of investing
in our common stock discussed under "Risk factors." Our principal executive
offices are located at 11555 Sorrento Valley Road, San Diego, CA 92121. Our
telephone number is (858) 350-0345.
OUR BUSINESS
We are a pioneer in the new field of industrial genomics. Industrial genomics
is the large scale commercial use of the knowledge of DNA variations for
improving health, agriculture and livestock. These variations are the origin of
most differences between individuals, including disease predispositions and
variations in drug responses. The most common variations are called SNPs. We
believe that SNP analysis, called SNP genotyping, will play an essential role
in the development of drugs, diagnostics and other life science applications in
the immediate future. Our goal is to be the leader in the commercialization of
industrial-scale SNP analysis.
We have developed the MassArray system, a highly accurate, cost-effective and
scalable technology that is capable of high throughput SNP analysis at high
speeds. Our strategy is to capitalize on the quickly emerging demand for SNP
genotyping in the areas of drug discovery and development, DNA diagnostics,
patient stratification in clinical trials, seed development and livestock
breeding. Six beta site centers, including several academic and governmental
sites, diagnostic laboratories and a leading biotechnology company, are using
our MassArray system and assessing its performance in the field.
THE SNP GENOTYPING MARKET
The SNP genotyping market represents a significant portion of both the biochip
and the DNA sequencing markets and can be divided into three segments:
. confirmation of new sites of genetic variation in DNA, which typically
requires the analysis of a SNP in up to a hundred people;
. validation of SNPs of medical importance, which typically requires the
analysis of a SNP in a few thousand diseased and healthy people; and
. utilization of SNPs in genomics-based drug development, disease
predisposition determination and diagnostic test development, which could
eventually require the analysis of multiple SNPs in millions of people.
Current methods of SNP analysis are inaccurate, non-automated, inflexible,
expensive or slow and are therefore primarily effective only as research tools.
To compensate for deficiencies in accuracy, either repetitive testing of each
sample or the use of a larger test population is required, which makes current
methods impractical for most commercial applications.
OUR SOLUTION
Our MassArray system directly analyzes SNPs by improving on a technology called
mass spectrometry. By using mass spectrometry to measure molecular weight, our
MassArray system is capable of characterizing molecules with unprecedented
levels of accuracy. This is done at a competitive price and in a single
reading. Our technology is also extremely versatile and can be rapidly
reconfigured for different types of analyses. In addition, the MassArray system
is capable of reading up to 20,000 SNPs per day, which we believe is a
throughput that can meet commercial needs.
3
<PAGE>
Our MassArray system has three components--hardware, software and disposables.
The hardware components include a mass spectrometer and liquid dispensing
units, which are off-the-shelf instruments modified to accommodate our
MassArray technology. Our proprietary Genolyzer bioinformatics software
calculates, records, compares and reports genotypes at a rate of three seconds
per sample. Our disposables consist of MassArray kits for SNP sample
preparation, including the proprietary SpectroCHIP on which samples are placed
in a 96 spot array for reading by the mass spectrometer.
COMMERCIALIZATION PLAN
We are seeking to penetrate the SNP genotyping market by identifying areas of
potential widespread interest and establishing commercial relationships with
opinion leaders. We have initiated this effort by selecting highly visible
academic, government and commercial centers as collaborators to validate our
MassArray system in beta site testing. Our six beta site centers are Genzyme
Corporation, the US Department of Agriculture, the National Institutes of
Health, the National Cancer Institute, the University of Munster and GLE
Medicon in Germany. In October 1999, we contracted for the first sale of a
MassArray system. We plan a full commercial launch of our MassArray system in
December 1999.
We intend to develop proprietary disposable SNP tests, called assays, and
software products that are useful initially as research tools to confirm the
association of particular SNPs with particular diseases and subsequently as
diagnostic kits that can be sold for SNP profiling. In addition, we will seek
to retain commercial rights to assays that we develop on behalf of or together
with our customers. Over time we plan to develop knowledge-based genomic
products that combine pharmaceutical, medical and genetic information with our
customers' information. Also, in addition to DNA, we believe our MassArray
technology can serve as a platform for the analysis of many other biomolecules.
We therefore intend to develop new products for applications other than DNA and
SNP analysis.
4
<PAGE>
The Offering
The following information assumes that the underwriters do not exercise the
over-allotment option granted by us to purchase additional shares in the
offering.
<TABLE>
<C> <S>
Common stock offered by us................. shares
Common stock to be outstanding after the
offering.................................. shares
Proposed Nasdaq National Market symbol..... SQNM
Use of proceeds............................ For general corporate purposes,
including hiring additional sales
and customer support personnel,
expansion of our facilities,
continued development and
manufacturing of existing
products, research and
development of additional
products, patent prosecution
expenses, working capital and
potential acquisitions of
products, technologies or
companies and repayment of long-
term debt and accrued interest of
approximately $4.2 million.
Please see "Use of proceeds."
</TABLE>
Except as otherwise indicated, information in this prospectus is based on the
following assumptions:
. the conversion of 14,842,757 outstanding shares of our preferred stock
into shares of our common stock on a for basis upon the
closing of this offering;
. the conversion of debt owed to Technologie Beteiligungs Gesellschaft, or TBG,
in the amount of DEM6 million into shares of our common stock upon
the closing of this offering; and
. no exercise of the underwriters' over-allotment option.
We are obligated to issue shares of common stock upon exercise of options and
warrants outstanding at September 30, 1999, in addition to the shares of common
stock to be outstanding after this offering. These shares, when issued, will
include:
. shares issuable upon exercise of the underwriters' over-allotment
option;
. 2,475,250 shares issuable upon the exercise of options outstanding as of
September 30, 1999 at a weighted average exercise price of $1.09 per share,
and 335,250 shares issuable upon the exercise of options with an exercise
price of $3.00 per share issued during October 1999;
. 176,503 shares issuable upon the exercise of warrants outstanding as of
September 30, 1999 at a weighted average exercise price of $2.10 per share;
and
. 84,000 additional shares available for future grant as of September 30, 1999
under our stock plans, an additional 500,000 shares made available in October
1999 for future grant under our stock plans and an additional 850,000 shares
made available for future grant under our stock plans to be adopted at the
close of this offering. For a description of our stock option and stock
purchase plans, please see "Management--Employee benefit plans."
The number of shares of common stock outstanding after the offering is based on
shares outstanding as of September 30, 1999. Please see "Capitalization."
5
<PAGE>
Summary consolidated financial and operating data
The as adjusted balance sheet data reflects the receipt of the net proceeds
from the sale of shares of our common stock at a price to the public of
per share and the repayment of long-term debt and accrued interest, after
deducting the underwriting discounts and commissions and estimated offering
expenses.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
1995 1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA (In thousands, except per share data)
- --------------------------------------------------------------------------------------
Research and development
grants................. $-- $893 $527 $351 $126 $81
Costs and expenses:
Research and
development.......... 1,274 3,136 3,532 6,188 2,778 7,138
General and
administrative....... 420 1,032 1,861 4,218 3,412 5,363
Amortization of
deferred stock
compensation......... -- -- -- -- -- 3,615
-------- -------- -------- -------- ------- --------
Total costs and
expenses............... 1,694 4,168 5,393 10,406 6,190 16,116
-------- -------- -------- -------- ------- --------
Loss from operations.... (1,694) (3,275) (4,866) (10,055) (6,064) (16,035)
Other income (expense):
Interest income....... 2 73 57 397 291 1,225
Interest expense...... (28) (275) (308) (613) (230) (576)
-------- -------- -------- -------- ------- --------
Net loss................ $(1,720) $(3,477) $(5,117) $(10,271) $(6,003) $(15,386)
======== ======== ======== ======== ======= ========
Net loss per share,
basic and diluted...... $(65.87) $(23.45) $(22.62) $(33.33) $(20.12) $(39.41)
Shares used in computing
net loss per share,
basic and diluted...... 26 148 226 308 298 390
Pro forma net loss per
share, basic and
diluted................ $(1.09) $(1.05)
Shares used in computing
pro forma net loss per
share basic and
diluted................ 9,452 14,714
<CAPTION>
SEPTEMBER 30, 1999
ACTUAL AS ADJUSTED
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA (In thousands)
- --------------------------------------------------------------------------------------
Cash, cash equivalents and short-term investments........... $28,069
Working capital............................................. 24,771
Total assets................................................ 34,632
Total long-term obligations................................. 7,690
Total stockholders' equity.................................. 22,967
</TABLE>
Please see Note 2 to our consolidated financial statements for an explanation
of the method used to calculate the net loss per share and the number of shares
used in the computation of per share amounts.
All share numbers are calculated assuming a reverse stock split of
for , which is subject to stockholder approval.
6
<PAGE>
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Risk factors
You should carefully consider the risks described below together with all of
the other information included in this prospectus before making an investment
decision. If any of the following risks actually occurs, our business,
financial condition or results of operations could be harmed. In that case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.
RISKS RELATED TO OUR BUSINESS
WE ARE AT AN EARLY STAGE OF DEVELOPMENT.
We commenced commercial operations in 1995 and are at an early stage of
development. We have incurred significant losses to date and our revenues have
been limited to grants from governmental bodies. Our initial products are in
testing at a number of sites and will not be commercially launched until late
1999. As a result, our business is subject to all of the risks inherent in the
development of a new business enterprise, such as the need:
. to obtain substantial capital to support the expenses of developing our
technology and commercializing our products;
. to develop a market for our products;
. to successfully transition from a company with a research focus to a company
capable of supporting commercial activities; and
. to attract and retain qualified management, sales, technical and scientific
staff.
Our operations also may be affected by problems frequently encountered with
the use of new technologies and by the competitive environment in which we
operate, as well as the risks detailed below.
WE HAVE GENERATED NO REVENUE FROM PRODUCT SALES TO DATE AND WE EXPECT TO INCUR
LOSSES IN THE FORESEEABLE FUTURE.
Since inception, we have recognized no revenue from product sales. Our
expenses have exceeded revenue in each of the years since our inception. It is
uncertain when, if ever, we will become profitable. As of September 30, 1999,
our accumulated deficit was $37.1 million. Our expenses have consisted
principally research and development and of general and administrative
expenses incurred while building our business infrastructure. We expect to
continue to experience significant operating losses in the future as we
continue our research and development efforts, further develop our
manufacturing capabilities and expand our marketing and sales force in an
effort to commercialize our products. Our net operating loss and credit
carryforwards may be limited due to a cumulative change in ownership of more
than 50%, which occurred during 1998 and which is anticipated to occur with
the offering.
WE WILL NEED ADDITIONAL FUNDS TO SUPPORT OUR OPERATIONS.
Based on our current plans, we believe our existing cash, cash equivalents and
short-term investments, together with the net proceeds of this offering will
be sufficient to fund our operating expenses, debt obligations and capital
requirements through at least the next 24 months. However, the actual amount
of funds that we will need during or after the next 24 months will be
determined by many factors, some of which are beyond our control, and we may
need funds sooner than currently anticipated. These factors include:
. the level of our success in selling our MassArray system and associated
technologies;
. our progress with research and development;
. our ability to introduce and sell new products;
- -------------------------------------------------------------------------------
7
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
. the level of our sales and marketing expenses;
. the level of our expenses associated with unforeseen litigation;
. the costs and timing of obtaining new patent rights; and
. regulatory changes and competition and technological developments in the
market.
If additional funds are required and we are unable to obtain them on terms
favorable to us, we may be required to cease or reduce further
commercialization of our products, to sell some or all of our technology or
assets or to merge with another entity. If we raise additional funds by
selling additional shares of our capital stock, the ownership interest of our
stockholders will be diluted.
WE MUST DEVELOP AND COMMERCIALIZE OUR NEXT GENERATION PRODUCTS AT REDUCED
COSTS FOR US TO BE PROFITABLE.
Our current products do not provide sufficient gross margin for us to become
profitable. We intend to develop and manufacture our next generation products
at a lower cost than the cost of our current products. We may not be
successful in doing so. In addition, our gross margin and profitability may be
negatively impacted if we are unable to achieve market acceptance or
appropriate pricing for our next generation products.
WE MAY NOT BE ABLE TO SUCCESSFULLY ADAPT OUR PRODUCTS FOR COMMERCIAL
APPLICATIONS.
We have completed the initial development of our MassArray technology for
applications in pharmacogenomics and life science research. We may not be able
to successfully adapt our products to the commercial requirements of these
fields. A number of potential applications of our technology in these fields
will require significant enhancements in our core technology, including
adaptation of our software and further miniaturization. In addition, we need
to enhance our population-based DNA bank, establish SNP validation databases
and rapidly design assays for SNP genotyping in sufficient quantity to meet
the high throughput that we expect our future customers will require. If we
are unable, for technological or other reasons, to complete the development,
introduction or scale-up of the manufacturing of any product, or if any
product does not achieve a significant level of market acceptance, our
business, financial condition and results of operations could be seriously
harmed. Market acceptance will depend on many factors, including demonstrating
to customers that our technology is superior to other technologies and
products which are available now or which may become available in the future.
We believe that our revenue growth and profitability will substantially depend
on our ability to overcome significant technological challenges and
successfully introduce our products into the marketplace.
THE SPEED OF SAMPLE PREPARATION AND THE NEED FOR ASSAY DESIGN CAN LIMIT OVER-
ALL THROUGHPUT OF SNP ANALYSIS AND CAN RESULT IN THE USE OF OUR MASSARRAY SYS-
TEM BELOW ITS CAPACITY.
The need to design a unique assay for each newly discovered SNP can
substantially delay the commencement of the analysis of that SNP. In addition,
the extraction of DNA from biological material is time consuming. MassArray
system users who need to develop assays or who lack sufficient sample
preparation resources therefore may be unable to use our system to its full
capacity. Customers who are unable to use our MassArray system to full
capacity may share MassArray systems, which would result in lower system
sales. Therefore, customers may not purchase sufficient quantities of
disposables for us to become profitable.
- -------------------------------------------------------------------------------
8
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
WE DEPEND ON OUR CUSTOMERS TO PURCHASE SUFFICIENT QUANTITIES OF SPECTROCHIPS
AND OTHER DISPOSABLES FOR US TO BE PROFITABLE.
Our customers may not generate sufficient throughput using our MassArray
system. This may limit their purchases of SpectroCHIPs and other disposables.
Factors which may limit the use of SpectroCHIPs and other disposables include:
the acceptance of our technology by our customers, the ability to analyze more
than one SNP simultaneously on a single spot and the training of customer
personnel. If our customers are slow to, or never, achieve sufficient
throughput, we may never achieve profitability.
SUCCESSFUL USE OF OUR PRODUCTS REQUIRES ADEQUATE SAMPLE PREPARATION BY OUR
CUSTOMERS.
Before using our MassArray system, customers must prepare samples by following
several steps that are prone to human error, including DNA isolation and DNA
segment amplification. If DNA samples are not prepared appropriately, our
MassArray system will not generate a reading. Some early users of our
MassArray system in beta site testing experienced initial difficulties in
preparing samples for use in our MassArray system. If our customers experience
similar difficulties, they may achieve lower levels of throughput than those
for which our system was designed.
THERE MAY BE ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFOR-
MATION.
Genetic testing has raised ethical issues regarding confidentiality and the
appropriate uses of the resulting information. For these reasons, governmental
authorities may call for limits on or regulation of the use of genetic testing
or prohibit testing for genetic predisposition to certain conditions,
particularly for those that have no known cure. Any of these scenarios could
reduce the potential markets for our products, which could seriously harm our
business, financial condition and results of operations.
WE DEPEND ON THIRD-PARTY PRODUCTS AND SERVICES AND SOLE OR LIMITED SOURCES OF
SUPPLY TO DEVELOP AND MANUFACTURE SOME COMPONENTS OF OUR PRODUCTS.
We rely to a substantial extent on outside vendors to manufacture many of the
components and subassemblies used in our products. Some of these components
and subassemblies are obtained from a single supplier or a limited group of
suppliers. Our reliance on outside vendors generally, and a sole or a limited
group of suppliers in particular, involves several risks, including:
. the inability to obtain an adequate supply of required components due to
manufacturing capacity constraints, a discontinuance of a product by a
third-party manufacturer or other supply constraints;
. reduced control over quality and pricing of components; and
. delays and long lead times in receiving materials from vendors.
WE HAVE LIMITED COMMERCIAL MANUFACTURING CAPABILITY AND EXPERIENCE.
We have not yet produced our SpectroCHIP in commercial quantities. We may not
be able to maintain acceptable quality standards while producing commercial
quantities. Our customers also require that we comply with current good
manufacturing practices that we may not be able to meet. To achieve the
production levels necessary for successful commercialization of our products,
we will need to scale-up our manufacturing facilities, establish more
automated manufacturing capabilities and maintain adequate levels of
inventory. We may not be able to manufacture sufficient quantities to meet
market demand. If we cannot achieve the required level and quality of
production, we may need to outsource production or rely on licensing and other
arrangements with third parties who possess sufficient manufacturing
facilities and capabilities. This could reduce our gross margins and expose us
to the risks inherent in relying on
- -------------------------------------------------------------------------------
9
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
others. We may not be able to successfully outsource our production or enter
into licensing or other arrangements with these third parties, which could
adversely affect our business.
WE HAVE A LIMITED SALES FORCE AND LIMITED EXPERIENCE IN SELLING, MARKETING,
SERVICING AND SUPPORTING OUR PRODUCTS.
Our direct sales force may not be sufficiently large or knowledgeable to
successfully penetrate the market. We may not be able to expand our direct
sales force to meet our commercial objectives. In addition, our sales force
may not be able to address complex scientific and technical issues raised by
our customers. Our customer support personnel may also lack the broad range of
technical expertise required to adequately service and support our products in
the field.
THE ABILITY OF INTELLECTUAL PROPERTY LAWS TO PROTECT OUR BUSINESS IS UNCER-
TAIN.
Our success will depend on our ability to obtain patents on our technology, to
obtain appropriate licenses from third parties and to protect our trade
secrets. Our patents, which have been or may be issued, may not afford
meaningful protection for our technology and products. Others may challenge
our patents and, as a result, our patents could be narrowed, invalidated or
unenforceable. In addition, our current and future patent applications may not
result in the issue of patents in the United States or foreign countries.
Competitors may develop products similar to ours that do not conflict with our
patents. In addition, others may develop products for use in the MassArray
system in violation of our patents that may reduce sales of disposables. The
patent position of biotechnology firms generally is highly uncertain, involves
complex legal and factual questions, and has recently been the subject of much
litigation. No consistent policy has emerged from the US Patent and Trademark
Office or the courts regarding the breadth of claims allowed or the degree of
protection afforded under biotechnology patents. In addition, there is a
substantial backlog of biotechnology patent applications at the US Patent and
Trademark Office, and the approval or rejection of patent applications may
take several years.
We require our employees, consultants and advisors to execute confidentiality
agreements. However, we cannot guarantee that these agreements will provide us
with adequate protection against improper use or disclosure of confidential
information. In addition, in some situations, these agreements may conflict
with, or be subject to, the rights of third parties with whom our employees,
consultants or advisors have prior employment or consulting relationships.
Further, others may independently develop substantially equivalent proprietary
information and techniques, or otherwise gain access to our trade secrets.
OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON
OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS, AS WELL AS OUR ABILITY
TO PREVENT OTHERS FROM INFRINGING ON OR MISAPPROPRIATING OUR PROPRIETARY
RIGHTS.
We may be required at times to take legal action in order to protect our
proprietary rights. In addition, we may be sued for infringing on the patent
rights of others. Intellectual property litigation is costly, and, even if we
prevail, the cost of such litigation could adversely affect our business,
financial condition and results of operations. In addition, litigation is time
consuming and could divert management attention and resources away from our
business. If we do not prevail in any litigation, in addition to any damages
we might have to pay, we could be required to stop the infringing activity or
obtain a license. Any required license may not be available to us on
acceptable terms, or at all. In addition, some licenses may be non-exclusive,
and therefore, our competitors may have access to the same technology licensed
to us. If we fail to obtain a required license, it could have a material
adverse affect on our business, financial condition and results of operations
if we cannot design around the patent. From time to time, we receive letters
from companies regarding their issued patents and patent applications alleging
possible infringement. For example, we have received correspondence from a
company informing us of its recently issued patent concerning a diagnostic
method relying upon a specific manner for comparing mass spectra, upon which
it believes we may be infringing. We do not believe that we infringe this
patent.
- -------------------------------------------------------------------------------
10
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
WE MAY NOT SUCCEED IN OBTAINING COMMERCIALIZATION RIGHTS FOR THE DEVELOPMENT
AND MARKETING OF SOME OF THE ASSAYS DEVELOPED IN COLLABORATION WITH OUR CUS-
TOMERS.
Our business strategy includes the development of assays in collaboration with
customers, and we intend to obtain commercialization rights for those assays.
If we are unable to obtain rights to those assays, our revenue and
profitability could be adversely affected. To date, we have not initiated
significant activities with respect to the exploitation of any
commercialization rights or products developed in collaboration with third
parties. Even if we obtain commercialization rights, commercialization of
products may require resources that we do not currently possess and may not be
able to develop or obtain.
WE MAY BE UNABLE TO OBTAIN LICENSES TO PATENTED SNPS.
The US Patent and Trademark Office has issued at least one patent to a third
party relating to a SNP. If important SNPs are patented, we will need to
obtain rights to those SNPs in order to develop, use and sell related assays.
Required licenses may not be available on commercially acceptable terms, or at
all. If we fail to obtain licenses to important patented SNPs, we may never
achieve significant revenue or become profitable.
BECAUSE OUR PRODUCTS CURRENTLY DEPEND ON COMPONENTS LICENSED FROM THIRD PAR-
TIES, A BREACH BY US OF ANY OF THE TERMS OF THESE LICENSES COULD RESULT IN THE
LOSS OF ACCESS TO THESE COMPONENTS AND COULD DELAY OR SUSPEND OUR COMMERCIAL-
IZATION EFFORTS.
Some aspects of our technology have been acquired or licensed from third
parties. A failure by us to maintain the right to use these components could
seriously harm our business, financial condition and results of operations. In
addition, changes to or termination of our agreements with these third parties
could have a material adverse effect on our business.
Our grants from the government give the government certain license rights to
inventions resulting from funded work in the event that we fail to
commercialize the technology developed using government funds. Our business
could be harmed if the government exercises those rights.
OUR ACADEMIC ARRANGEMENTS ARE AN IMPORTANT PART OF OUR BUSINESS AND FAILURE TO
MAINTAIN EXISTING RELATIONSHIPS OR ESTABLISH ADDITIONAL RELATIONSHIPS COULD
ADVERSELY AFFECT OUR RESEARCH AND PRODUCT DEVELOPMENT EFFORTS.
We have relationships with scientists and consultants at academic and other
institutions who conduct research at our request. Our existing relationships
may not be successful. These researchers are not employed by us and may have
commitments to, or consulting or advisory contracts with, other entities that
may limit their availability to work on our projects. As a result, we have
limited control over their activities and, except as otherwise required by our
agreements with these persons, we can expect only limited amounts of their
time to be dedicated to our projects. Our ability to make new discoveries and
to commercialize products based on those discoveries may depend in part on
continued arrangements with researchers at academic and other institutions. We
may not be able to negotiate acceptable arrangements with academic or other
institutions or individuals.
WE INTEND TO EXPAND OUR INTERNATIONAL OPERATIONS AND MAY NOT BE SUCCESSFUL IN
DOING SO.
We expect that a significant portion of our sales will be made outside the
United States. A successful international effort will require us to develop
relationships with international customers and partners. We may not be able to
identify, attract or retain suitable international customers and partners. As
a result, we may be unsuccessful in our international expansion efforts.
Furthermore, expansion into international markets will require us to continue
to establish and grow foreign operations, hire additional personnel to run
these operations and maintain good relations with our foreign customers and
partners.
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11
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
International operations involve a number of risks not typically present in
domestic operations, including:
. currency fluctuation risks;
. changes in regulatory requirements;
. costs and risks of deploying systems in foreign countries;
. licenses, tariffs and other trade barriers;
. political and economic instability;
. difficulties in staffing and managing foreign operations;
. potentially adverse tax consequences; and
. the burden of complying with a wide variety of complex foreign laws and
treaties.
Our international operations will also be subject to the risks associated with
the imposition of legislation and regulations relating to the import or export
of high technology products. We cannot predict whether tariffs or restrictions
upon the importation or exportation of our products will be implemented by the
United States or other countries.
WE MAY LOSE MONEY WHEN WE EXCHANGE FOREIGN CURRENCY RECEIVED FROM INTERNA-
TIONAL SALES INTO US DOLLARS.
A significant portion of our business is expected to be conducted in
currencies other than the US dollar. We recognize foreign currency gains or
losses arising from our operations in the period incurred. As a result,
currency fluctuations between the US dollar and the currencies in which we do
business will cause foreign currency translation gains and losses. We cannot
predict the effects of exchange rate fluctuations upon our future operating
results because of the number of currencies involved, the variability of
currency exposure and the potential volatility of currency exchange rates. We
do not currently engage in foreign exchange hedging transactions to manage our
foreign currency exposure.
THE SALES CYCLE FOR OUR PRODUCTS IS LENGTHY WHICH CAN MAKE BUSINESS PLANNING
DIFFICULT.
Our ability to obtain customers for our products and services depends in
significant part upon the perception that our products and services can help
accelerate efforts in genomics. The sales cycle is typically lengthy. Our
sales effort requires the effective demonstration of the benefits of our
products and services to and significant training of many different
departments within a potential customer. These departments might include
research and development personnel and key management. In addition, we may be
required to negotiate agreements containing terms unique to each customer. We
may expend substantial funds and management effort with no assurance that we
will successfully sell our products or services.
OUR INDUSTRY IS HIGHLY COMPETITIVE AND WE MAY NOT HAVE THE RESOURCES REQUIRED
TO SUCCESSFULLY COMPETE.
The biotechnology industry is highly competitive. We compete with companies in
the United States and abroad that are engaged in the development and
production of products that analyze genetic information. They include:
. biotechnology, pharmaceutical, chemical and other companies;
. academic and scientific institutions;
. governmental agencies; and
. public and private research organizations.
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12
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
Many of our competitors have much greater financial, technical, research,
marketing, sales, distribution, service and other resources than we do.
Moreover, our competitors may offer broader product lines and have greater
name recognition than we do, and may offer discounts as a competitive tactic.
In addition, several development stage companies are currently making or
developing products that compete with or will compete with our products. Our
competitors may develop or market technologies or products that are more
effective or commercially attractive than our current or future products, or
that may render our technologies and products obsolete.
WE ARE HIGHLY DEPENDENT ON PRINCIPAL MEMBERS OF OUR MANAGEMENT AND SCIENTIFIC
STAFF.
We are highly dependent on the principal members of our management and
scientific staff. The loss of the services of any of these persons could have
a material adverse effect on our product development and commercialization
efforts. In addition, we will require additional personnel in the areas of
scientific research, diagnostic testing, manufacturing and marketing. We may
not be able to attract and retain qualified personnel, which could seriously
harm our business, financial condition and results of operations.
WE MAY NOT HAVE ADEQUATE INSURANCE AND IF WE BECOME SUBJECT TO PRODUCT LIABIL-
ITY CLAIMS, WE MAY EXPERIENCE REDUCED DEMAND FOR OUR PRODUCTS OR BE REQUIRED
TO PAY DAMAGES THAT EXCEED OUR INSURANCE LIMITATIONS.
Our business exposes us to potential product liability claims that are
inherent in the life science field. A product liability claim or recall could
have a material adverse effect on our business, financial condition and
results of operations. It is difficult to determine whether we have obtained
sufficient insurance to cover potential claims. Also, we cannot assure you
that we can or will maintain our insurance policies on commercially acceptable
terms, or at all.
WE COULD HAVE ACCIDENTS RELATING TO HAZARDOUS MATERIALS.
We use controlled hazardous and radioactive materials in our business. The
risk of accidental contamination or injury from these materials cannot be
completely eliminated. If an accident with these substances occurs, we could
be liable for any damages that result, which could seriously harm our
business. Additionally, an accident could damage our research and
manufacturing facilities and operations, resulting in delays and increased
costs.
IF OUR MANUFACTURING FACILITY IS DAMAGED, WE COULD EXPERIENCE LOST REVENUE AND
OUR BUSINESS WOULD BE SERIOUSLY HARMED.
Our only manufacturing facility is located in San Diego, California. Damage to
our facility due to fire, natural disaster, power loss, communications
failure, unauthorized entry or other events could cause us to cease
development and manufacturing of our products. We have limited insurance to
protect against business interruption; however, there can be no assurance this
insurance will be adequate or will continue to be available to us on
commercially reasonable terms, or at all.
IF WE OR OUR SUPPLIERS FAIL TO BE YEAR 2000 OR Y2K COMPLIANT IT COULD CAUSE
INTERRUPTIONS IN OUR SUPPLY OF PRODUCTS AND GENERATE SUBSTANTIAL EXPENSES FOR
OUR BUSINESS.
The Y2K issue is a situation that results from computer systems and software
products being coded using two digits rather than four digits to define the
applicable year. Computer systems and software products often utilize embedded
technology that is time-sensitive and may recognize a date falling in the year
2000 as falling in the year 1900 which could cause computer system failures
and errors leading to a disruption of our business operations. The Y2K issue
could affect not only our operations but also the operations
- -------------------------------------------------------------------------------
13
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
of our business partners, customers and suppliers among others. If we or our
suppliers fail to be Y2K compliant, our business, financial condition and
results of operations could be materially adversely affected. Please see
"Management's discussion and analysis of financial condition and results of
operations--Impact of the year 2000" for additional information regarding the
Y2K issue.
IF WE DO NOT EFFECTIVELY MANAGE OUR GROWTH, IT COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.
Growth in our business has placed, and will continue to place, a significant
strain on our management systems and resources. We will need to continue to
improve our operational and financial systems and managerial controls and
procedures and expand, train and manage our workforce. We will have to
maintain close coordination among our technical, accounting, marketing, sales
and research departments. If we fail to effectively manage our growth and
address the above concerns, it could have a material adverse effect on our
business.
RISKS RELATED TO THIS OFFERING
CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK AMONG OUR EXISTING EXECUTIVE
OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS MAY PREVENT NEW INVESTORS FROM
INFLUENCING SIGNIFICANT CORPORATE DECISIONS.
Upon completion of this offering, our executive officers, directors and
beneficial owners of 5% or more of our common stock and their affiliates will,
in aggregate, beneficially own approximately % of our outstanding common
stock or % if the underwriters' over-allotment option is exercised in full.
As a result, these persons, acting together, will have the ability to
determine the outcome of all matters submitted to our stockholders for
approval, including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of our assets. In addition,
such persons, acting together, will have the ability to control the management
and affairs of our company. Accordingly, this concentration of ownership may
harm the market price of our common stock by:
. delaying, deferring or preventing a change in control of our company;
. impeding a merger, consolidation, takeover or other business combination
involving our company; or
. discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our company.
Please see "Principal stockholders" for additional information on
concentration of ownership of our common stock.
THERE MAY NOT BE AN ACTIVE, LIQUID TRADING MARKET FOR OUR COMMON STOCK.
We cannot assure you that an active trading market for our common stock will
develop following this offering. You may not be able to sell your shares
quickly or at the market price if trading in our stock is not active. The
initial public offering price will be determined by negotiations between us
and the representatives of the underwriters based upon a number of factors.
The initial public offering price may not be indicative of prices that will
prevail in the trading market. Please see "Underwriting" for more information
regarding our arrangement with the underwriters and the factors considered in
setting the initial public offering price.
THE MARKET PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLA-
TILITY.
The trading price of our common stock is likely to be highly volatile and
could be subject to wide fluctuations in price in response to various factors,
many of which are beyond our control, including:
. actual or anticipated variations in quarterly operating results;
- -------------------------------------------------------------------------------
14
<PAGE>
RISK FACTORS
- -------------------------------------------------------------------------------
. announcements of technological innovations by us or our competitors;
. new products or services introduced or announced by us or our competitors;
. changes in financial estimates by securities analysts;
. conditions or trends in the biotechnology, pharmaceutical and genomics
industries;
. changes in the market valuations of other similar companies;
. announcements by us of significant acquisitions, strategic partnerships,
joint ventures or capital commitments;
. additions or departures of key personnel; and
. sales of our common stock.
In addition, the stock market in general, and the Nasdaq National Market and
the market for technology companies in particular, has experienced extreme
price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of those companies. Further,
there has been particular volatility in the market prices of securities of
biotechnology and life sciences companies. These broad market and industry
factors may seriously harm the market price of our common stock, regardless of
our operating performance. In the past, following periods of volatility in the
market price of a company's securities, securities class-action litigation has
often been instituted against that company. Such litigation, if instituted
against us, could result in substantial costs and a diversion of management's
attention and resources, which could seriously harm our business, financial
condition and results of operations.
THE LARGE NUMBER OF SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD
CAUSE OUR STOCK PRICE TO DECLINE.
Sales of substantial amounts of our common stock in the public market after
this offering could seriously harm prevailing market prices for our common
stock. These sales might make it difficult or impossible for us to sell
additional securities when we need to raise capital. The number of additional
shares available for sale in the public market will be affected by
restrictions imposed by:
. the Securities Act and related rules, including the volume and other
restrictions of Rule 144; and
. lock-up agreements between us and selected stockholders or between
stockholders and the underwriters.
Please see "Shares eligible for future sale" for a description of the number
of shares which may be sold by existing stockholders in the future.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD MAKE
A THIRD-PARTY ACQUISITION OF US DIFFICULT.
The anti-takeover provisions in our certificate of incorporation, our bylaws
and Delaware law could make it more difficult for a third party to acquire us
without approval of our board of directors. As a
result of these provisions, we could delay, deter or prevent a takeover
attempt or third party acquisition that our stockholders consider to be in
their best interests, including a takeover attempt that results in a premium
over the market price for the shares held by our stockholders. Please see
"Description of securities" for more information on these anti-takeover
provisions.
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15
<PAGE>
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Forward-looking information
This prospectus may contain forward-looking statements. When used in this
prospectus, the words "anticipate," "believe," "estimate," "will," "intend"
and "expect" and similar expressions identify forward-looking statements.
Although we believe that our plans, intentions and expectations reflected in
any such forward-looking statements are reasonable, we can give no assurance
that these plans, intentions or expectations will be achieved. Actual results,
performance or achievements could differ materially from those contemplated,
expressed or implied, by any such forward-looking statements contained in this
prospectus. Important factors that could cause actual results to differ
materially from our forward-looking statements are set forth in this
prospectus, including under the heading "Risk factors." All forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements set forth in this
prospectus. We are under no obligation to update any forward-looking
statement, whether as a result of new information, future events or otherwise.
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16
<PAGE>
- -------------------------------------------------------------------------------
Use of proceeds
We estimate that the net proceeds from the sale of the shares of common
stock that we are selling in this offering will be approximately $
million, or approximately $ million if the underwriter's over-allotment
option is exercised in full, based on an assumed initial public offering price
of $ per share and after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us.
We anticipate using the net proceeds from the offering for general corporate
purposes, including hiring additional sales and customer support personnel,
expansion of our facilities, continued development and manufacturing of
existing products, research and development of additional products, patent
prosecution expenses and working capital. We expect, if the opportunity
arises, to use an unspecified portion of the net proceeds to acquire or invest
in product, technologies or companies. While we engage in preliminary
discussions with respect to acquisitions, we are not a party to any agreements
or commitments and have no understandings with respect to any acquisitions.
We expect to use approximately $4.2 million of the proceeds of this offering
for the repayment of long-term bank debt and accrued interest. This debt,
which originated in 1995 and 1997, is denominated in German deutsche marks,
DEM, and totals DEM6 million. Interest is payable semi-annually on the loans.
The 1995 loans began accruing nominal interest at a rate of 6% per year on
March 31, 1997 and payments commenced in June 1997. The effective nominal
interest rate over the life of the 1995 loans is 4.8%. The 1997 loan bears
interest at 7% per year and payments commenced in 1998. We are also required
to pay additional interest equal to 9% of our German subsidiary's annual
profits, to the extent that such profits exceed DEM100,000 per year. The
combined annual interest rate, consisting of nominal interest and additional
interest, may not exceed 7% per year through December 31, 2000. Commencing
January 1, 2001 and January 1, 2003, any amounts still outstanding will accrue
additional interest at the rates of 6% and 7% per year for the 1995 loans and
the 1997 loan, respectively. In addition, at the end of the loan term, which
is the earlier of repayment or December 31, 2005 and December 31, 2007 for the
1995 loans and the 1997 loan, respectively, our German subsidiary is obligated
to pay terminal interest equal to 25%, 30% and 35% of the amounts loaned under
the DEM1 million, DEM3 million and DEM2 million agreements, respectively,
estimated to be $1.2 million at the end of the loan term. We have accrued
interest in the amount of $930,630 relating to the terminal interest
representing approximately 75% of the terminal interest to be paid at the end
of the loan term. The bank may elect to forego these payments in some
situations. As of September 30, 1999, a total of DEM6 million in principal was
outstanding under this long-term debt.
The amounts and timing of our actual expenditures depend on several factors,
including future sales growth, the progress of our product development efforts
and the amount of cash generated or used by our operations. Other than the
$4.2 million debt repayment, we have not determined the amount or timing of
the expenditures in the areas listed above. Pending utilization, we will
invest the net proceeds in short-term, investment grade, interest bearing
instruments.
Dividend policy
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain all available funds for use in our business, and do
not anticipate paying any cash dividends in the foreseeable future. Any future
determination relating to dividend policy will be made at the discretion of
our board of directors and will depend on a number of factors, including
future earnings, capital requirements, financial condition and future
prospects and other factors the board of directors may deem relevant.
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17
<PAGE>
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Capitalization
The following table shows our capitalization as of September 30, 1999:
. on an actual basis; and
. on an as adjusted basis to give effect to:
. the automatic conversion of 14,842,757 shares of our preferred stock
outstanding as of the date of this prospectus into shares of our
common stock on a for basis;
. the conversion of debt owed to TBG in the amount of DEM4 million,
approximately $2.2 million, into shares of our common stock upon the
closing of this offering assuming an initial public offering price of
$ per share;
. the repayment of approximately DEM7.7 million, approximately $4.2
million, of long-term debt and accrued interest; and
. the receipt of the estimated net proceeds from this sale of shares
of stock offered by this prospectus at an assumed initial public offering
price of per share.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
ACTUAL AS ADJUSTED
(dollars in thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
Current portion of capital lease obligations.......... $441 $
===========
Capital lease obligations, less current portion....... 1,313
Long-term debt commitments............................ 5,446
Accrued long-term interest payable.................... 931
-----------
Total long-term obligations......................... 7,690
Preferred stock, par value $0.001 per share;
14,842,757 shares authorized; 14,842,757 shares
issued and outstanding, actual; 5,000,000 shares
authorized, as adjusted; no shares issued and
outstanding, as adjusted............................. 15
Common stock, par value $0.001 per share; 19,500,000
shares authorized; 873,369 shares issued and
outstanding, actual; 75,000,000 shares authorized, as
adjusted; shares issued and outstanding, as
adjusted............................................. 1
Additional paid-in capital............................ 62,533
Notes receivable for common stock..................... (511)
Deferred compensation related to stock options........ (2,167)
Accumulated other comprehensive income................ 216
Deficit accumulated during the development stage...... (37,120)
----------- ----------
Total stockholders' equity.......................... 22,967
----------- ----------
Total capitalization................................ $30,657 $
=========== ==========
</TABLE>
The outstanding share information in the table above excludes:
. 2,475,250 shares issuable upon the exercise of options outstanding as of
September 30, 1999 at a weighted average exercise price of $1.09 per share,
and 335,250 shares issuable upon the exercise of options granted during
October 1999 at an exercise price of $3.00 per share;
. 176,503 shares issuable upon the exercise of warrants outstanding as of
September 30, 1999 at a weighted average exercise price of $2.10 per share;
and
. 84,000 additional shares available as of September 30, 1999 for future grant
under our stock plan, an additional 500,000 shares made available in October
1999 for future grant under our stock plans and an additional 850,000 shares
made available for future grant under our stock plans to be adopted at the
close of this offering.
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18
<PAGE>
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Dilution
Our pro forma net tangible book value as of September 30, 1999 was
approximately $ million, or approximately $ per share, based on the
pro forma number of common shares outstanding as of September 30, 1999
calculated after giving effect to:
. the repayment of approximately DEM7 million, approximately $4.2 million, of
long-term debt and accrued interest;
. the sale of shares of common stock offered in this offering at an
assumed initial public offering price of $ per share; and
. a for reverse stock split.
Pro forma net tangible book value per share is equal to the amount of our
total tangible assets less total liabilities, divided by the pro forma number
of shares of common stock outstanding as of September 30, 1999 of .
Dilution in pro forma net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of our
common stock in this offering and the net tangible book value per share of our
common stock immediately afterwards. This represents an immediate increase in
pro forma net tangible book value of $ per share to existing stockholders
and an immediate dilution in pro forma net tangible book value of $ per
share to new investors. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $
----
Pro forma net tangible book value per share as of September 30,
1999............................................................. $
Increase attributable to the offering.............................
-----
Pro forma net tangible book value per share after the offering......
----
Pro forma dilution per share to new investors....................... $
====
</TABLE>
The following table summarizes, on a pro forma basis as of September 30, 1999,
after giving effect to this offering, the total number of shares of common
stock purchased from us and the total consideration and the average price per
share paid by existing stockholders and by new investors:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... % $ % $
New investors............ $
---------- ----- ----------- -----
Total.................... 100.0% $ 100.0%
========== ===== =========== =====
</TABLE>
The tables and calculations above assume no exercise of outstanding options or
warrants. At September 30, 1999, there were:
. 2,475,250 shares issuable upon the exercise of options outstanding at a
weighted average exercise price of $1.09 per share;
. 176,503 shares issuable upon the exercise of warrants outstanding at a
weighted average exercise price of $2.10 per share; and
. 84,000 additional shares available for future grant under our stock plan.
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19
<PAGE>
DILUTION
- -------------------------------------------------------------------------------
In October 1999, we issued options to purchase 335,250 shares of common stock
at an exercise price of $3.00 per share and through November 1999, we
authorized an additional 1,350,000 shares for future grant under our stock
plan.
To the extent that these options or warrants are exercised, there will be
further dilution to new investors. Please see "Management--Employee benefit
plans" for further information regarding our stock option plan and stock
purchase plan.
If the underwriters exercise their over-allotment option in full, the
following will occur:
. the number of shares of our common stock held by existing stockholders will
decrease to approximately % of the total number of shares of our common
stock outstanding after this offering; and
. the number of shares of our common stock held by new public investors will
increase to , or approximately % of the total number of shares of our
common stock outstanding after this offering.
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20
<PAGE>
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Selected consolidated financial data
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and the notes to such
statements and "Management's discussion and analysis of financial condition
and results of operations" included elsewhere in this prospectus. The
consolidated statement of operations data for the years ended December 31,
1997 and 1998 and the nine-month period ended September 30, 1999, and the
consolidated balance sheet data at December 31, 1998 and September 30, 1999,
are derived from our consolidated financial statements which have been audited
by Ernst & Young LLP, independent auditors, and are included elsewhere in this
prospectus. The consolidated statement of operations data for the years ended
December 31, 1995 and 1996 and the consolidated balance sheet data at
December 31, 1995, 1996 and 1997 are derived from audited consolidated
financial statements not included in this prospectus. The consolidated
statement of operations data for the nine-month period ended September 30,
1998 is derived from our unaudited financial statements included elsewhere in
this prospectus. These unaudited financial statements have been prepared on
the same basis as our audited financial statements, and, in our opinion,
include all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly this unaudited financial information.
Historical results are not necessarily indicative of the results to be
expected in the future.
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21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
- --------------------------------------------------------------------------------
The pro forma net loss per share is calculated as if our convertible preferred
stock as of September 30, 1999 was converted into shares of our common stock on
the date of its issuance on a one-for-one basis.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
1995 1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF (In thousands, except per share
OPERATIONS DATA data)
- ----------------------------------------------------------------------------------------------
Research and development
grants....................... $-- $893 $527 $351 $126 $81
Costs and expenses:
Research and development.... 1,274 3,136 3,532 6,188 2,778 7,138
General and administrative.. 420 1,032 1,861 4,218 3,412 5,363
Amortization of deferred
compensation............... -- -- -- -- -- 3,615
-------- -------- -------- -------- -------- --------
Total costs and expenses...... 1,694 4,168 5,393 10,406 6,190 16,116
-------- -------- -------- -------- -------- --------
Loss from operations.......... (1,694) (3,275) (4,866) (10,055) (6,064) (16,035)
Other income (expense):
Interest income............. 2 73 57 397 291 1,225
Interest expense............ (28) (275) (308) (613) (230) (576)
-------- -------- -------- -------- -------- --------
Net loss...................... $(1,720) $(3,477) $(5,117) $(10,271) $(6,003) $(15,386)
======== ======== ======== ======== ======== ========
Net loss per share
attributable to common
stockholders, basic and
diluted...................... $(65.87) $(23.45) $(22.62) $(33.33) $(20.12) $(39.41)
Shares used in computing net
loss per share attributable
to common stockholders, basic
and diluted.................. 26 148 226 308 298 390
Pro forma net loss per share,
basic and diluted............ $(1.09) $(1.05)
Shares used in computing pro
forma net loss per share
basic and diluted............ 9,452 14,714
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA
- ----------------------------------------------------------------------------------------------
Cash, cash equivalents and
short-term investments....... $1,877 $1,326 $833 $28,497 $28,069
Working capital............... 1,379 820 (125) 26,014 24,771
Total assets.................. 2,911 2,714 2,273 32,777 34,632
Total long-term obligations... 891 2,872 3,772 7,408 7,690
Total stockholders' equity
(deficit) ................... 1,354 (1,206) (2,747) 22,635 22,967
</TABLE>
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22
<PAGE>
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Management's discussion and analysis of financial condition and results of
operations
The following discussion of our financial condition and results of operations
should be read in conjunction with the financial statements and the notes to
those statements included elsewhere in this prospectus. This discussion may
contain forward-looking statements that involve risks and uncertainties. As a
result of many factors, such as those set forth under "Risk factors" and
elsewhere in this prospectus, our actual results may differ materially from
those anticipated in these forward-looking statements.
We are a pioneer in the new field of industrial genomics. Since our inception
in 1994, we have been primarily involved in the research and development of
high definition DNA analysis tools for industrial biomedical and life science
applications.
We are a development stage company. Since our inception, we have incurred
significant losses and, as of September 30, 1999, we had an accumulated
deficit of $37.1 million. To date, our revenues have been solely from research
grants. We began placing MassArray systems at beta sites and with pre-launch
users in July 1999. Information received from these sites is being used to
optimize our product offerings. We expect revenues generated from our
commercial launch to begin during the first quarter of 2000.
We expect to recognize revenues from the sale of both MassArray systems at the
time of placement and disposable products, including SpectroCHIPs. We expect
that each system placed in the field will generate a recurring revenue stream
from the sale of disposables. We also expect the volume of disposables
purchased from each site will increase over time as the customer becomes
familiar with the technology and incorporates MassArray into a broad range of
SNP analysis programs. In addition, we may generate revenue from the sale of
proprietary assays and software products and other services provided to the
customer. In some cases we may retain some rights to assays developed in
collaborations with third parties. This may allow us to offer an expanded line
of products to a broader market. Our sales will be initially driven by the
need for SNP validation and later could expand into the areas of genomic drug
development, diagnostics and agricultural genomics.
Our expenses have consisted primarily of costs incurred in research and
development, manufacturing scale-up, business development and from general and
administrative costs associated with our operations. We expect our research
and development expenses to increase in the future as we continue to improve
and develop products. Our selling expenses will increase as we commercialize
our products. Expansion of our facilities and the additional obligations of a
public reporting entity will also add to our expenses. As a result, we expect
to incur losses for the foreseeable future.
Our current products do not provide sufficient gross margin for us to become
profitable. To become profitable, we will need to develop and introduce new
higher margin products and generate significant sales of disposables.
We have a limited history of operations and we anticipate that our quarterly
results of operations will fluctuate for the foreseeable future due to several
factors, including market acceptance of current or new products, patent
conflicts, the introduction of new products by our competitors, the timing and
extent of our research and development efforts, and the timing of significant
orders. Our limited operating history makes accurate prediction of future
operations difficult or impossible.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OP-
ERATIONS
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RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
REVENUE
Research and development grant revenue decreased to approximately $81,000 in
the first nine months of 1999 from approximately $126,000 in the first nine
months of 1998. As we have approached the commercial launch of our products,
we have not actively pursued grants, and accordingly, revenue from grants has
decreased.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased to $7.1 million in the first nine
months of 1999 from $2.8 million in the first nine months of 1998. These
expenses consist primarily of salaries and related personnel costs, materials
costs and costs related to completion of our product development. This
increase resulted from the expansion of our research and development efforts
and scale-up of manufacturing for our SpectroCHIPs.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased to $5.4 million in the first
nine months of 1999 from $3.4 million in the first nine months of 1998. These
expenses consist primarily of salaries and related costs for executive,
finance and other administrative personnel, general and patent related legal
expenses, and business development expenses. Legal expenses related to patent
prosecution represented most of this increase, while continued expansion of
administrative resources to support our growth accounted for the remainder.
AMORTIZATION OF DEFERRED STOCK COMPENSATION
Deferred stock compensation represents the difference between the deemed fair
value of our common stock and the exercise price of options at the date of
grant. During the nine months ended September 30, 1999, we recorded
amortization of deferred stock compensation totaling $3.6 million, including
$1.6 million related to a remeasurement of options originally granted to an
officer in 1997. We anticipate that additional deferred compensation totaling
$2.2 million will be recorded for options granted in October 1999. These
amounts are being amortized over the vesting periods of the individual stock
options using the graded vesting method. We expect to record amortization for
deferred compensation approximately as follows: $761,000 during the quarter
ended December 31, 1999, $2.6 million during 2000, $745,000 during 2001,
$280,000 during 2002, and $35,000 during 2003.
INTEREST INCOME
Interest income increased to $1.2 million in the first nine months of 1999
from approximately $291,000 in the first nine months of 1998. This increase
resulted from higher average balances of cash and cash equivalents and short-
term investments in 1999 from investment of the proceeds from the sale of
Series D Convertible Preferred Stock in late 1998 and early 1999.
INTEREST EXPENSE
Interest expense increased to approximately $576,000 in the first nine months
of 1999 from approximately $230,000 in the first nine months of 1998. The
increase was due to higher average debt levels resulting from additional
indebtedness under our capital lease financing arrangement.
INCOME TAXES
As of September 30, 1999, we had federal and state net operating loss
carryforwards of approximately $24.8 million and $13.1 million. We also have
federal and state research and development tax credit carryforwards of
approximately $410,000 and $200,000 and German net operating loss
carryforwards
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OP-
ERATIONS
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of approximately $7.2 million. The federal and state net operating loss and
credit carryforwards expire on various dates through 2018. The German net
operating losses may be carried forward indefinitely. Pursuant to Internal
Revenue Code Sections 382 and 388, our net operating loss and credit
carryforwards may be limited due to a cumulative change in ownership of more
than 50%, which occurred during 1998 and which is anticipated to occur with
the offering. However, we do not believe these limitations will materially
impact the use of the net operating loss and credit carryforwards.
YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUE
Research and development grant revenue decreased to $351,000 in 1998 from
approximately $527,000 in 1997. As we have approached the commercial launch of
our products, we have received funding from private equity financings and have
not pursued grant funding.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased to $6.2 million in 1998 from $3.5
million in 1997. The increase resulted primarily from increased costs for
personnel and supplies related to the development of our MassArray system.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased to $4.2 million in 1998 from
$1.9 million in 1997. Legal expenses related to patent prosecution represented
most of the increase, with expenses attributable to employing more personnel
representing the remainder of the increase. Patent prosecution expenses
increased because a higher number of patents were filed worldwide.
INTEREST INCOME
Interest income increased to approximately $397,000 in 1998 from approximately
$57,000 in 1997. The increase was due to higher average balances of cash and
cash equivalents and short-term investments in 1998, resulting from the
investment of the proceeds from the sale of Series C convertible preferred
stock in February 1998.
INTEREST EXPENSE
Interest expense increased to approximately $613,000 in 1998 from
approximately $308,000 in 1997. The 1998 increase in debt from borrowings
under a capital lease agreement and from proceeds received from convertible
debt funding resulted in the increase in interest expense.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations with $55.6 million of private equity financings,
$6.0 million in loans and convertible loans, and $2.2 million from equipment
financing arrangements. At September 30, 1999, cash, cash equivalents and
short-term investments totaled $28.0 million compared to $28.5 million at
December 31, 1998. Our cash reserves are held in a variety of interest-bearing
instruments including high-grade corporate bonds, commercial paper and money
market accounts.
Cash used in operations for the nine months ended September 30, 1999 was $9.4
million compared with $5.5 million for the same period in 1998. A net loss of
$15.4 million for the first nine months of 1999 was partially offset by non-
cash charges of $3.6 million for amortization of deferred compensation, $1.3
million for depreciation and amortization expense and an increase of $1.2
million in accounts payable and accrued expenses. Investing activities, other
than the changes in our short-term investments, consumed $3.3 million in cash
during the first nine months in 1999 due to leasehold improvements and
equipment expenditures.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OP-
ERATIONS
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Cash provided by financing activities was $12.5 million for the nine months
ended September 30, 1999 compared to $14.2 million for the same period in
1998. Financing activities included the receipt of net proceeds of $11.8
million from the sale of preferred stock to investors in the nine month period
ended September 30, 1999 and $11.0 million in the nine month period ended
September 30, 1998.
Working capital decreased to $24.8 million at September 30, 1999 from $26.0
million at December 31, 1998. The decrease in working capital was due to our
use of cash in operations, higher accounts payable and accrued liabilities as
a result of increased product and business development, expenses, and payment
of capital lease obligations, offset in part by higher inventory and prepaid
expenses.
As of September 30, 1999, we had an aggregate of $7.2 million in future
obligations of principal payments under capital leases and long-term debt, of
which $0.4 million is to be paid within the next year. We expect to use
approximately $4.2 million of the proceeds of this offering for the repayment
of long-term bank debt and accrued interest. This debt, which originated in
1995 and 1997, is denominated in German deutsche marks, DEM, and totals DEM6
million. For a more detailed description of this bank debt, please see "Use of
Proceeds."
We believe our existing cash, cash equivalents and short-term investments,
together with the net proceeds of this offering will be sufficient to fund our
operating expenses, debt obligations and capital requirements through at least
the next 24 months. Our future capital uses and requirements depend on
numerous factors, including:
. our success in selling our MassArray system and associated technologies;
. our progress with research and development;
. our ability to introduce and sell new products;
. our sales and marketing expenses;
. expenses associated with unforeseen litigation;
. costs and timing of obtaining new patent rights; and
. regulatory changes and competition and technological developments in the
market.
Therefore, our capital requirements may increase in future periods. As a
result, we may require additional funds and may attempt to raise additional
funds through equity or debt financings, collaborative arrangements with
corporate partners or from other sources.
We have a $5.0 million bank line of credit, all of which is available for
borrowing. We have no commitments for any additional financings, and we cannot
assure you that additional funding will be available to finance our operations
when needed or, if available, that the terms for obtaining such funds will be
favorable or will not result in dilution to our stockholders.
IMPACT OF THE YEAR 2000
The computer systems and software programs of many companies and governmental
agencies are currently coded to accept or recognize only two digit entries in
the date code field. These systems may recognize a date using "00" as the year
1900 rather than the year 2000. As a result, these computer systems and/or
software programs may need to be upgraded to comply with such year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities.
STATE OF READINESS
We have made an assessment of the year 2000 readiness of our technology
systems, including our hardware and software in our products and our non-
information technology systems. We intend to revise our proprietary software
to improve our year 2000 compliance, if necessary. We have been informed by
our vendors who provide the hardware in our products that the hardware we use
is year 2000 compliant.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OP-
ERATIONS
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We believe that substantially all of our applications, databases and
infrastructure are year 2000 compliant. We have been informed by many of our
vendors of material hardware and software components of our information
technology systems that substantially all of the products we use are currently
year 2000 compliant. We have requested vendors of the material hardware and
software components of our information technology systems to provide
assurances of their year 2000 compliance. We plan to complete this process
prior to the end of 1999. We are currently assessing our material non-
information technology systems and will seek assurances of year 2000
compliance from providers of these systems. Until such testing is complete and
these vendors and providers have replied to our requests, we will not be able
to completely evaluate whether our information technology systems or non-
information technology systems will need to be revised or replaced.
COSTS
We have not identified any internally used capital equipment or software or
any components of our products that will require an additional material
expenditure. As of September 30, 1999, we have expensed approximately $25,000
for assessing our state of readiness and making upgrades for year 2000
compliance.
RISKS
We are not currently aware of any year 2000 compliance problems relating to
our proprietary software and other products or our information technology or
non-information technology systems that would have a material adverse effect
on our business. We cannot assure you that we will not discover year 2000
compliance problems in our proprietary software and other products that will
require substantial revisions. In addition, we cannot assure you that third-
party software, hardware or services incorporated into our material
information technology and non-information technology systems will not need to
be revised or replaced, all of which could be time consuming and expensive.
Our failure to fix our proprietary software and other products or to fix or
replace third-party software, hardware or services on a timely basis could
result in lost revenues, increased operating costs, the loss of customers and
other business interruptions, any of which could have a material adverse
effect on our business. Moreover, the failure to adequately address year 2000
compliance issues in our proprietary software and other products and our
information technology and non-information technology systems could result in
claims of mismanagement, misrepresentation or breach of contract and related
litigation, which could be costly and time-consuming to defend. In addition,
we cannot assure you that governmental agencies, utility companies, third-
party service providers and others outside our control will be year 2000
compliant. The failure by these entities to be year 2000 compliant could
result in a systemic failure beyond our control, such as a prolonged
telecommunications or electrical failure, which could have a material adverse
effect on our business.
CONTINGENCY PLAN
In the event that year 2000-related problems materialize, we maintain
relationships with several suppliers of services and products to mitigate the
risks associated with using suppliers which are not year 2000 compliant.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The functional currency for our German subsidiary is the deutsche mark. The
translation from the German deutsche mark to the US dollar is translated for
balance sheet accounts using the current exchange rate in effect at the
balance sheet date and for revenues and expense accounts using the average
exchange rate during the period. The effects of translation are recorded as a
separate
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OP-
ERATIONS
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component of stockholders' equity. Our German subsidiary conducts its business
with customers in local European currencies. Exchange gains and losses arising
from these transactions are recorded using the actual exchange differences on
the date of the transaction.
INFLATION
We do not believe that inflation has had a material adverse impact on our
business or operating results during the periods presented.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
changes the previous accounting definition of derivative--which focused on
freestanding contracts such as options and forwards, including futures and
swaps--expanding it to include embedded derivatives and many commodity
contracts. Under the statement, every derivative is recorded in the balance
sheet as either an asset or liability measured at its fair value. The
statement requires that changes in the derivatives fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. SFAS
No. 133 is effective for fiscal years beginning after June 15, 2000. We do not
anticipate that the adoption of SFAS No. 133 will have a material impact on
our financial position or results of operations.
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Business
BACKGROUND
DNA, GENES AND THE HUMAN GENOME PROJECT
Deoxyribonucleic acid, or DNA, is present in all living cells and is
responsible for determining the inherited characteristics of all living
organisms. Each DNA molecule contains two complementary strands comprised of
four different types of nucleotide bases, commonly known as G, C, A and T. The
order of these letters is called the DNA sequence. Each G on one strand pairs
with a C on the complementary strand, and similarly each A pairs with a T. The
entire DNA content of an organism is called its genome.
The human genome is organized into 46 chromosomes, or two sets of 23
chromosomes, one set inherited from each parent. Each chromosome is one
continuous double-stranded DNA molecule. The DNA contributed by one parent is
called the haploid genome. The DNA content of one haploid genome is
approximately 4 billion bases, which is organized into more than 100,000
distinct genes. Genes are segments of DNA located throughout the chromosomes.
Since parents are not identical, each individual has two similar but slightly
different copies of each chromosome and therefore two copies of each gene.
Genes comprise approximately 5% of the DNA in a human cell. Some additional
amount is used to regulate DNA function. More than 90% of the DNA has no known
function.
All cells contain a full copy of DNA, but each cell type expresses only those
genes necessary for its specific function. When a gene is expressed, a copy of
its DNA sequence, called messenger RNA, is used as a template to direct the
synthesis of a protein. Proteins are composed of 20 different constituents
called amino acids. Three adjacent letters of DNA, known as a codon, direct
the position and identity of one amino acid in a protein. Cells use proteins
to carry out their functions. For example, blood cells use the protein
hemoglobin to transport oxygen and muscle cells use the protein myoglobin to
store oxygen. Likewise, pancreatic islet cells secrete the protein insulin to
regulate blood sugar levels. DNA sequences referred to as regulatory elements
help to determine where a protein is made and in what quantities. For an
individual to be healthy, the correct proteins must be produced at the right
time in the appropriate amounts in the correct cells. DNA variations can
change the properties of a protein, or where, when or how much of a protein is
produced.
In order to develop new medical treatments and diagnostics based on genetic
information, efforts to sequence human DNA began in the mid-1980s when the
technology for sequencing became available. Efforts funded by governments and
foundations began in earnest by the end of the 1980s. These efforts came to be
known as the Human Genome Project. This project is expected to produce a rough
draft of the human DNA sequence by March 2000, with a complete draft expected
in several years. The overall public sector expenditure is expected to
approach $3 billion. In parallel with the public sector effort, a large
private sector effort emerged in the early 1990s. Unlike the public effort
that targets the entire genome, commercial efforts have focused on sequencing
the genes themselves. This private effort claims to have identified many human
genes some of which have been made available for a variety of biological and
biomedical studies.
GENETIC VARIABILITY AND SINGLE NUCLEOTIDE POLYMORPHISMS, OR SNPS
Each individual has two identical copies of many genes, but some genes
inherited from the mother will be different from their counterpart inherited
from the father. A difference in one or more letters of a DNA sequence,
referred to as a genetic variation, can modify the way a gene functions.
Genetic variations lead to a spectrum of observable differences, such as eye
and hair color. Genetic variations are also a major component of nearly all
diseases, including cancer, diabetes and
cardiovascular disease. Many chronic diseases are affected by multiple genetic
variations.
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Single nucleotide polymorphisms, or SNPs, are the most common type of genetic
variation. SNPs are a change in a single letter of DNA text, such as replacing
a G with a T in one location and on the complementary DNA strand replacing a C
with an A. Another common variation is the insertion or deletion of one or
several letters. A third common variation is an increase or decrease in the
length of simple repeating DNA sequences. Nearly every person carries numerous
examples of each of these three kinds of variations, some of which can result
in disease.
GENOTYPING
The process of determining the SNPs present in an individual is called
genotyping. It is estimated that there are 3 million to 10 million SNPs
inherited from each parent. Some SNPs are a major cause of inherited diseases
and are responsible for most individual differences in drug responsiveness;
however, most SNPs are of no medical consequence. For example, if the third
letter of a codon varies, the result is usually to produce the same amino acid
or one with similar properties. However, to date, thousands of SNPs have been
identified as medically relevant. Many genes exist in highly redundant sets so
that even if one is totally removed, there are no functional consequences. We
believe that only one SNP in a thousand may be medically relevant to disease
susceptibility or responsiveness to disease therapy. To capture this
information, tens of thousands of SNPs will have to be measured in each
individual.
Existing DNA sequence databases with samples from multiple individuals contain
many clues about potential sites in the human genome where SNPs occur.
Sequence variation between these individuals may suggest the presence of a
SNP. Ongoing sequencing efforts promise to increase the amount of available
sequence data tremendously and should discover most human SNPs within the next
few years.
After a SNP is discovered, its potential relevance for human health must be
validated by determining how common the variation is in different segments of
the population. To identify the small subset of SNPs that occur with the
greatest frequency in human disease or are responsible for variations in drug
responsiveness, hundreds of millions of SNP measurements must be made and
correlated with health and other physical and mental features of interest.
SNPs with a validated medical relevance may be used for drug development and
human medical diagnostics. Identification of these SNPs will require a highly
accurate, high throughput DNA analysis technology at a competitive cost.
PHARMACOGENOMICS
It has long been known that people respond differently to the same drug. The
field of pharmacogenomics studies these variations in drug response based on
genetic differences. The emerging ability to correlate drug responses with
SNPs promises to enable doctors to prescribe appropriate drugs to patients
with the goal of maximizing drug response and minimizing side effects. For
example, a test that could distinguish poor responders from good responders to
drugs in which more than one therapeutic alternative exists could
significantly reduce health care costs. In addition, pharmacogenomics may
allow pharmaceutical companies to include a genetic component in the design of
clinical trials so that the candidate drug is targeted to individuals with a
specific genotype. Genetic variations shown to correlate with poor efficacy
could be used as a basis for excluding non-responders from clinical trials
thereby potentially improving results and reducing the costs of clinical
trials.
SNPS IN AGRICULTURE AND LIVESTOCK
As living organisms, plants and animals are composed of cells that contain
DNA. As with humans, genetic variations in plants and animals result in
differences in species characteristics. For example, plants
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may have SNPs responsible for differences in resistance to insects and
herbicides or agricultural yields. Likewise, animals may have SNPs responsible
for traits such as variations in milk production, fat content of meat or
fertility. Plant and animal SNPs can be exploited through selective breeding
to develop plants and animals with desired quality traits.
SNP MARKET
The SNP genotyping market represents a significant portion of both the biochip
market and the DNA sequencing market. The SNP genotyping market can be divided
into three segments:
. confirmation of new sites of genetic variation in DNA, which typically
requires the analysis of a SNP in up to a hundred people;
. validation of SNPs of medical importance, which typically requires the
analysis of a SNP in a few thousand diseased and healthy people; and
. use of SNPs in genomics-based drug development, disease predisposition
determination and diagnostic test development, which may require the
analysis of multiple SNPs in millions of people.
Several companies claim to have identified, in the aggregate, more than 50,000
SNPs, and The SNP Consortium, comprised of drug companies and public entities,
has announced a group effort to discover 300,000 more. If The SNP Consortium
successfully identifies 300,000 SNPs and seeks to discover the associated
disease genes, they would have to conduct a case study involving several
thousand people, which would require the analysis of hundreds of millions of
SNPs.
CURRENT GENOMICS ANALYSIS TOOLS AND LIMITATIONS
Current DNA analysis technologies have been developed primarily to conduct DNA
research including DNA sequencing and expression profiling. Presently, the two
leading methods are gel electrophoresis and hybridization.
Gel electrophoresis measures how far a DNA fragment migrates through the pores
of gels in response to an applied electrical field over a fixed time interval.
DNA can be sequenced by using enzymes to copy a DNA sequence. The enzymes
begin at a fixed point and then terminate at all positions where an A occurs.
Gel electrophoresis is then used to measure the lengths of the terminated
sequences and thereby the location of all As. When this process is repeated
three more times for C, T and G, the resulting information can be lined up to
generate a complete sequence. In order to make this method totally accurate,
the same experiment must be repeated multiple times. In a single run,
commercial DNA sequencers using this gel-based method can measure up to 600
bases with a statistically significant error-rate.
Hybridization arrays, or biochips, use single stranded DNA fragments
immobilized on a flat surface in known positions. These are powerful tools for
the analysis of gene expression, but can also be used for gene sequencing.
When used for gene sequencing, DNA fragments of varying lengths labeled with a
fluorescent tag are washed over the surface of the biochip. These DNA
fragments then specifically interact, or hybridize, with a complementary
sequence immobilized on the biochip and can be detected using a fluorescent
microscope. Because the position of the complementary sequence on the biochip
is known, the sequence of the target DNA fragment can be determined by reading
the biochip. However, because DNA fragments sometimes bind to strands that are
not fully complementary, hybridization arrays do not correctly detect all of
the sequence information in a target sample.
Gel electrophoresis and hybridization play an interim role in SNP validation
and analysis as these methods are well accepted and established for research
applications. However, neither of these two
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methods is ideally suited to the analysis of sequence variations. In both
cases, the analytical process examines many nucleotides of a sequence even
though the target variation may occur at a single site. This increases the
cost, complexity and time involved in the analytical process. In order to be
able to measure thousands of SNPs in thousands of samples, one must focus on
the SNPs themselves with methods that are cost-effective, accurate and fully
automated.
At the site of any SNP, one must analyze simultaneously the variant inherited
from each parent. If each parent has a different SNP at the same position, the
difficulty of detecting those variations is magnified because only one-half of
the DNA from each parent is available to generate a signal. In addition, in
practice, one SNP variant may be present at a lower concentration than the
other and therefore may be undetectable or generate an ambiguous signal using
conventional methods. Using gel electrophoresis and hybridization, the
detection of these multiple SNP variants is therefore often unreliable.
To reduce costs, many users of SNP assays are trying to perform two or more
assays in a single tube and read the results simultaneously. This may involve
different SNPs in the same individual or the same SNP in different
individuals. Current gel technology limits this process to four available
dyes, and simultaneous assays involving multiple individuals are impossible on
biochips. However, biochips are theoretically capable of simultaneously
analyzing many SNPs for a single individual, but their utility is limited by
low accuracy. The large quantity of reagents and labor-intensive data
processing needed to achieve useable results are also cost limitations when
using current technologies for large-scale genotyping. Reagent costs represent
most of the sample preparation costs. Data analysis costs associated with
current gel or hybridization-based assays using fluorescent detection are
estimated to be most of the overall costs.
Errors in SNP analysis have serious consequences. In studies to correlate
identified SNPs with disease conditions, it has been estimated that to
compensate for a 1% error rate in individual measurements, the study
population would have to increase by a factor of three. This significantly
increases the cost of a SNP study. In addition, in order to accurately
identify a real SNP from a sequencing error when the sequencing error occurs
with a frequency of 1%, a suspected SNP has to be verified through repetitive
sequencing. When identifying 10,000 SNPs in an individual, 100 SNPs may be
incorrectly determined using gel electrophoresis, with no ability to determine
where the errors occurred. Therefore, the value of using gel electrophoresis
as a SNP analysis tool is dramatically reduced unless the test is repeated
several times. As a result, when genotyping SNPs on an industrial scale, a 1%
error rate becomes cost-prohibitive.
THE SEQUENOM SOLUTION--INDUSTRIAL GENOMICS
We are a pioneer in the new field of industrial genomics. To draw conclusions
from huge data sets associated with genotyping, we have developed a highly
accurate, high throughput, cost-effective and scalable technology that
addresses the demand for large-scale SNP analysis. Our MassArray system
represents a novel approach to genotyping by combining our proprietary
enzymology and software processing of biological data, or bioinformatics, in a
miniaturized chip-based format with the proven technology of mass
spectrometry. The unprecedented accuracy, high throughput, miniaturization and
automation to minimize labor represent major cost savings potentials.
ACCURACY
The MassArray system analyzes molecules directly and accurately by determining
their molecular weight, an intrinsic property. Our technology eliminates the
use of labels, such as fluorescent labels, which is an indirect way of
analyzing molecules and is a common source of ambiguous results. Therefore,
because we capture direct information about molecules, we are able to obtain
unprecedented levels of accuracy and eliminate the need to do repetitive
testing of each sample.
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THROUGHPUT
Our MassArray system can analyze a sample in three seconds, which is
significantly faster than currently available gel electrophoresis systems. In
addition, our system eliminates the need for repetitive testing of every
sample, thereby increasing throughput, or the number of different samples that
can be analyzed in a given time period. Throughput using the MassArray system
can be further enhanced by full automation and also by running more than one
experiment simultaneously.
FLEXIBILITY
MassArray is unique among all genomics technologies because it can be rapidly
reconfigured for new analyses. A test to analyze a newly discovered SNP can be
designed in several days. In addition to SNPs, simple sequence repeats, short
DNA sequencing reads, and the analysis of proteins and metabolites can all be
carried out using the same MassArray technology.
COST
Our MassArray system significantly reduces the costs associated with SNP
analysis by reducing reaction volume and reagent requirements, enhancing data
processing and eliminating repetitive testing of every sample to verify
results. Our proprietary SpectroCHIP is capable of working with nanoliters,
which is one thousandth of the sample volume generally used with other
technologies. This ability to miniaturize the sample volume significantly
reduces reagent costs. Our proprietary bioinformatics reduce expensive data
interpretation time and labor by rendering raw data points directly
interpretable without extensive data processing and allowing for significant
data compression.
SEQUENOM STRATEGY
Our goal is to become the leader in the emerging markets of industrial
genomics and diagnostics by making our MassArray system the market standard
for industrial scale SNP analysis. Our strategy is to capitalize on the
quickly emerging demand for genotyping in the areas of drug target discovery,
drug development, DNA diagnostics, patient stratification in clinical trials,
marker-assisted breeding, animal husbandry and seed production. Key elements
of our strategy consist of the following:
DEVELOP RECURRING REVENUE STREAM THROUGH DISPOSABLE PRODUCT SALES
We seek to establish an installed base of instruments that require the use of
various disposables, including our BiomassPROBE kits and single-use
SpectroCHIPs. As our installed base of MassArray systems grows, we expect the
majority of our ongoing revenue stream will consist of sales of these
disposables.
FOCUS ON KEY ACCOUNTS AND PRODUCT AREAS
We are seeking to penetrate the genotyping market by establishing commercial
relationships with opinion leaders and identifying areas of potential
widespread interest. We have initiated this effort by selecting highly visible
academic, government and commercial centers to validate our MassArray system
in beta site testing. In addition, we intend to develop proprietary disposable
assays and software products that are useful for popular areas of scientific
investigation--first as research tools to confirm the association of
particular SNPs with particular diseases and subsequently as diagnostic kits
that can be sold for basic SNP profiling.
RETAIN COMMERCIAL RIGHTS
We will seek to retain commercial rights to tests that we develop on behalf of
or together with third parties in exchange for providing our assay development
capacity and expertise. By obtaining commercial rights to assays that we
initially develop for key accounts, we will seek to develop a broad product
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offering that will appeal to a large group of potential customers. We intend
to generate in collaboration with these customers validated marker sets to
enable the multi-dimensional understanding of the medical and environmental
components of disease. Together with our customers, we intend to develop
knowledge-based genomic products that combine pharmaceutical, medical and
genetic information.
ADDRESS MULTIPLE MARKET SEGMENTS
We are introducing our technology into existing markets that have an immediate
need for SNP validation and high throughput genotyping. We will seek to expand
our marketing efforts as additional SNP analysis becomes necessary for genomic
drug development, clinical DNA diagnostics, pharmacogenomics and agricultural
genomics.
EXPAND APPLICATIONS FOR MASSARRAY TECHNOLOGY
Because molecular weight is an intrinsic property of all molecules, our
MassArray technology can serve as a platform for the analysis of many
biomolecules, such as proteins, carbohydrates and metabolites. This leads to
the understanding of the multidimensional aspects of genetic diversity,
including how DNA, RNA, proteins and resulting metabolites contribute to
traits, such as drug response and disease susceptibility. We intend to use
this flexibility to develop new products for applications in areas other than
DNA and SNP analysis.
MASSARRAY TECHNOLOGY
The starting point for SNP analysis using the MassArray system is genomic DNA
that is easily accessed in a sample of biological material such as blood. A
small amount of blood provides sufficient material to allow tens of thousands
of SNPs to be analyzed in one individual. DNA is prepared by standard
procedures that break open the blood cells, release the DNA and discard other
material. Next, specific DNA regions, about 200 base pairs in length, are
amplified by enzymatic reactions into multiple copies to produce more
concentrated samples for easier analysis. The amplified fragments are then
attached by one strand to a solid surface and the non-immobilized strands are
removed by standard denaturation conditions. The immobilized single strand
then serves as a template for additional automated enzymatic reactions that
produce the analytical samples. The products of these reactions are removed
from the solid surface prior to mass spectrometry. All these steps are
performed in the same reaction tube lending the entire process to full
automation. Very small quantities of the products, typically five to ten
nanoliters, are transferred with the SpectroJET nanoliter dispensing system
onto the SpectroCHIP for subsequent automatic analysis with the SpectroSCAN
mass spectrometer. Because the four different text letters have different
weights, measuring the weights reveals the identity of the letters. The
Genolyzer software then calculates, records, compares and reports the
genotypes at the rate of three seconds per sample.
Our fundamental proprietary technology is based on the integration of four
components:
. mass spectrometry;
. chips as miniaturized launching pads;
. MassArray applications and assays; and
. bioinformatics.
MASS SPECTROMETRY
Our MassArray system has enabled the use of mass spectrometry for high
throughput automated SNP analysis. Using mass spectrometry to measure
relatively small molecules is a proven technology because it directly and
accurately determines molecular weight. While mass spectrometry has existed in
many
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variations for several decades, it could not be used for larger biomolecules
because they were fragmented during the process and therefore could not be
measured as whole molecules.
Our MassArray system uses technology called MALDI-TOF, or Matrix-Assisted-
Laser-Desorption/ Ionization-Time-of-Flight, mass spectrometry. Through the
combination of MALDI-TOF and our proprietary SpectroCHIP and enzymology, we
are now capable of effectively analyzing biomolecules in an automated mode. In
the MALDI-TOF process, the target molecules are mixed with light-absorbing
molecules to form a crystalline matrix on the surface of our SpectroCHIP. In a
process known as desorption, this matrix is hit with a pulse of laser beam.
The laser energy vaporizes the matrix molecules that then carry the target
molecules aloft. During the process, some of the molecules acquire a charge,
or become ionized. Next an electrical field pulse launches the charged
molecules down a flight tube toward a detector. The time between the
electrical field pulse and collision with the detector is measured, and is
referred to as time-of-flight. Time-of-flight is directly correlated to
molecular weight because large molecules fly slower than small molecules. All
the steps in the MALDI-TOF process are accomplished in less than a thousandth
of a second.
CHIPS AS MINIATURIZED LAUNCHING PADS
SpectroCHIPs are flat silicon wafers with an array of 96 small, evenly spaced
water-attracting spots surrounded by water-repelling surface areas. Because
biomolecules are water soluble, they migrate to the water-attracting spots.
These spots are treated with the light-absorbing matrix that makes the mass
spectrometry of biomolecules possible. As such, our proprietary SpectroCHIPs
serve as a launching pad for vaporizing a variety of biomolecules
appropriately prepared for use with the MassArray system. In addition, the
SpectroCHIPs are essential for the miniaturization and automation of the
MALDI-TOF process. A SpectroCHIP's high precision surface structure allows
very small samples to be accurately positioned and distributed uniformly into
an array format which serves as an effective launching pad for the automated
MALDI-TOF process.
The DNA samples are transferred from a microtiter plate to the spots on the
chip using our SpectroJET nanoliter dispensing unit. Ten chips then can be
positioned on a cartridge and transferred to the SpectroSCAN array reading
mass spectrometer. The mass spectrometer utilizes our proprietary Genolyzer
software and sequentially scans the positions on the array in a fully
automated mode, completing each scan within three seconds. This proprietary
technology to shrink the scale of samples from microliter to nanoliter volumes
is the key element for highly accurate and automatic data acquisition.
ASSAYS AND ENZYMATIC REACTIONS
A key element of the MassArray system is the BioMASS assay. An assay is a test
that provides analytical information about a reaction of interest, such as the
weight of a biomolecule. In order to use our MassArray system, the user must
prepare the sample using the BioMASS assay. The central components of any
BioMASS assay are ingredients such as beads for immobilization and buffer
solutions for conditioning the sample necessary for mass spectrometry
analysis. Every SNP analysis using our MassArray system requires the use of a
BioMASS assay. Prior to the BioMASS assay, DNA must be extracted from cells
and a specific segment must be amplified using commercially available kits.
The BioMASS assay includes all of the ingredients required to prepare a DNA
fragment for SNP analysis, except the enzymes and nucleotide building blocks
which are necessary for the primer extension reaction. The primer extension
reaction known as a BiomassPROBE assay is the step where a known sequence of
DNA, known as a primer, binds to a specific region of DNA in which a SNP is
located. Users of the MassArray system can prepare their own primer extension
reaction, or we can collaborate with customers to develop a customized primer
extension reaction by way of assay design. When we develop primer extension
reactions for the analysis of specific SNPs, customers can purchase a specific
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BiomassPROBE assay from us that contains the customized primer extension
reaction for the SNP of interest. We currently offer a generic BiomassPROBE
assay kit and are collaborating with our beta site and pre-launch users on a
variety of SNP-specific BiomassPROBE assays. In the future, we intend to
develop chips that allow the performance of BiomassPROBE reactions in a
miniaturized format on the surface of the chip.
BIOINFORMATICS
The Genolyzer software calculates, records, compares and reports the genotypes
at the rate of three seconds per sample. It includes advanced digital signal
processing, data compression and interpretation to achieve full automation of
the analysis and archiving of molecular weight signals as SNP genotypes. This
software distinguishes between signal and noise, identifies patterns that
correspond to assays and interprets the signals as SNP genotypes without
labor-intensive data processing.
PRODUCTS
We have developed a suite of products that we collectively call the MassArray
system. The MassArray system consists of the SpectroSCAN array-scanning mass
spectrometer, SpectroJET nanoliter-dispensing unit, a MassArray kit and the
Genolyzer MassArray workstation. The MassArray kit contains the BiomassPROBE
assay including the SpectroCHIP, buffer solutions and enzymes. The hardware
components, including the mass spectrometer and the dispensing unit, are off-
the-shelf instruments modified to run our MassArray technology.
We are currently in beta site testing of our system for high throughput,
highly accurate SNP analysis and expect to commence our commercial launch in
December 1999. To date, our MassArray system has been installed at six sites.
Current sites include Genzyme, USDA, National Institutes of Health and
National Cancer Institute in the United States and University of Munster and
GLE Medicon in Germany.
MASSARRAY SYSTEM
Our MassArray system consists of hardware, software and disposable components:
HARDWARE COMPONENTS
The MassArray system is a series of integrated hardware components that
processes prepared DNA samples for SNP reading and analysis. The 96-well
microtiter plates contain prepared samples of extended DNA fragments. Samples
from each well are then transferred by the dispensing unit onto an array of
individual water-attracting spots that are located on the surface of the
SpectroCHIPs. The SpectroCHIPs are then run through the mass spectrometer for
SNP reading and analysis.
Sample preparation system and automation
The MassArray system has been designed to be either partially automated using
a customized 96-channel microliter dispenser or fully automated with the
addition of our automated process line for users with industrial-scale
throughput needs. Our process line links several liquid-handling modules using
a robot to fully automate the DNA sample preparation process including
amplification, enzymatic extension and conditioning for SNP analysis. The
process line has been designed for a capacity of up to 100-microtiter plates
per 24 hours.
SpectroJET nanoliter-dispensing unit
The SpectroJET nanoliter-dispensing unit is a liquid-handling module that
transfers samples from microtiter plates to the SpectroCHIP. The SpectroJET
dispenses nanoliter volumes of DNA samples onto precise locations on the
SpectroCHIP's surface.
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The reading system
The SpectroSCAN array mass spectrometer is the analytical component of the
MassArray system adapted specifically for the analysis of our SpectroCHIPs. We
have adapted the mass spectrometer to analyze interchangeable cartridges
holding 10 SpectroCHIPs in the SpectroSCAN. This dramatically improves the
automation and throughput of our MassArray system because all the positions on
the 10 chips can be analyzed in a single, automated, unattended run. The
SpectroSCAN separates, detects and characterizes the SNPs according to their
different molecular weights.
SOFTWARE COMPONENT
Interpretation software
Our suite of software products, called the MassArray Genolyzer, incorporates
proprietary modules for molecular weight recognition and data compression and
interpretation. The software correlates a reading from the SpectroSCAN with a
genotype in the SNP sample. The MassArray technology allows the Genolyzer
software to interpret raw data without extensive processing. This reduces the
amount of time and computer resources necessary and increases the reliability
for SNP analysis. The MassArray Genolyzer runs on Windows NT and uses an
Oracle database.
DISPOSABLE COMPONENTS
The SpectroCHIP
The key component of our MassArray system is our SpectroCHIP, a small,
approximately 2x3 cm, silicon chip. The SpectroCHIP allows for reliable and
automated scanning of samples of the array and substantially increases the
capacity of MALDI-TOF mass spectrometry. Additional throughput can be obtained
by simultaneously preparing DNA fragments for multiple SNP analysis, a process
referred to as multiplexing. Samples are placed on the surface of the
SpectroCHIP using our SpectroJET nanoliter- dispenser. SpectroCHIPs are
designed for single-use only and we expect their consumption to generate a
recurring revenue stream.
MassArray kit
The MassArray kit consists of a BiomassPROBE assay including the SpectroCHIP,
buffer solutions and enzymes. Each kit can be used to read and analyze 10
SpectroCHIPs for a total of 960 reactions. We have in-house expertise to
design specific assays in collaboration with our customers that deliver highly
accurate results. In addition, our assays serve a wide range of applications
and can be designed for simultaneous analyses.
POPULATION-BASED DNA BANK
We have established a population-based DNA bank as a value-added universal
reference tool for marker validation of genetic variances potentially involved
in the development of diseases. We intend to sell access or license
subscriptions to this resource to pharmaceutical and genomics companies to
validate the existence of potential SNPs. Our bank complements the patient-
based DNA banks collected by these potential customers, which are typically
disease specific. We believe the data sets derived will represent essential
tools for decision making in genomic drug development and the interpretation
of diagnostic and genetic profiling results.
Our DNA bank currently consists of approximately 7,000 individual samples
collected from the North American continent. These samples were collected
using stringent criteria and are sorted by age, sex and ethnicity. We have the
capacity to increase the size of our bank to include tens of thousands of
samples.
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FUTURE PRODUCT DEVELOPMENT
Our product development efforts will seek to provide value-added applications
for a broader customer base and advanced MassArray systems that offer reduced
cost and higher throughput.
384 SPECTROCHIP
We intend to introduce a SpectroCHIP with 384 sample spots on the chip
surface. The size of the silicon chip will remain the same. This chip may
significantly increase sample throughput and reduce reagent consumption per
sample.
FUTURE-GENERATION FUNCTIONALIZED SPECTROCHIP
We intend to further miniaturize by moving some of the DNA sample preparation
steps onto the chip surface. With the functionalized SpectroCHIP, the
enzymatic reactions will take place on the surface of the chip thereby
eliminating the need for the microtiter plate, providing a significant
reduction in reaction volumes.
THE MASSARRAY INTEGRATED SYSTEM AND BIOINFORMATICS
The implementation of the functionalized chip should allow us to integrate all
steps of the DNA analysis process, including sample preparation, into one
automated system. We intend for the MassArray integrated system and
bioinformatics to be compatible with all leading commercial and public domain
genetic database formats so customers will be able to integrate the MassArray
system seamlessly into whichever downstream analytical processes they prefer.
FUTURE APPLICATIONS
Our MassArray system is not restricted to DNA analysis. It can analyze a broad
range of molecules of medical and biological importance, such as proteins,
carbohydrates and metabolites. We intend to make enhancements to our MassArray
system for the analysis of additional medically relevant biomolecules.
COMMERCIAL LAUNCH PLAN
PRE-LAUNCH AND BETA TESTING PROGRAM
In July 1999 we started the implementation of our pre-launch and beta testing
program with the placement of six MassArray systems. The pre-launch users were
selected based on the following criteria:
. opinion leadership within the genomic community;
. coverage of diverse programs in basic genomic research, agricultural
genomics, human DNA diagnostics and genomic drug discovery and development;
. substantial genotyping demands in terms of both sample volumes and
number/complexity of assays to be designed;
. willingness and ability to provide beta testing feedback; and
. potential for conversion into a commercial customer.
We have placed MassArray systems with:
. United States Department of Agriculture Meat Animal Research Center;
. Genzyme Corporation;
. National Cancer Institute;
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. National Institutes of Health--Centers for Disease Control and Prevention
Control;
. University of Munster, Institute for Clinical Chemistry and Laboratory
Medicine; and
. GLE Medicon GmbH, Hamburg.
KEY ACCOUNT PRODUCT LAUNCH
We intend to launch the MassArray system through a key account strategy in
December 1999. We have initiated this effort by selecting highly visible
academic, government and commercial centers to validate our MassArray system
in beta site testing. We intend to focus on these users in order to establish
our MassArray system as the method of choice in SNP analysis.
SALES AND MARKETING
Our sales strategy is to initially place systems and then promote ongoing
disposables and assay sales and system upgrades. The initial placement is
executed by a business development team with expertise in the pharmaceutical
industry, drug development and contract marketing. Identification and active
development of lead customer contacts is based on a thorough knowledge of the
marketplace and supported by highly visible scientists employed by or
associated with us. The sales and marketing team, which has core competencies
in molecular biology, biochemistry, microfluidics and mass spectrometry,
focuses on ongoing disposables and new product sales. These teams collectively
consist of 12 people and are based out of our San Diego, Boston and Hamburg
offices. We expect to add additional business development and sales and
marketing team members to commercialize our MassArray system.
All our facilities have MassArray systems available for demonstration and
customer training purposes. Fully automated high throughput process lines have
been installed in San Diego and Hamburg for large-scale assay design projects
and high value marker validation programs.
OPERATIONS
We manufacture SpectroCHIPs, required reagents and Genolyzer software at our
San Diego facility. Total current capacity of this facility is estimated at
100,000 SpectroCHIPs a year with the ability to double our manufacturing
capacity at the existing facility.
The manufacturing area is designed to optimize material flow and personnel
movement with all the manufacturing and quality control operations located in
one area. Critical components are produced in an environmentally controlled
clean room and isolated from the rest of the facility in compliance with
quality system requirements, or QSRs, and ISO 9001 registration standards.
Access and safety features are designed to meet federal, state and local
health ordinances.
We have established some and intend to develop additional alternate/multiple
sources of system components other than those produced in-house. Current major
equipment suppliers are Bruker Datonik GmbH and PE Biosystems for mass
spectrometers, GeSIM GmbH for the nanoliter-dispensing unit, Beckman
Instruments, Inc. for the 96-channel dispenser, and Robocon Incorporated for
the robotic components of the automated process line.
We utilize a company-wide enterprise resource planning system to manage and
control our material and product inventories. This system encompasses product
costing, materials procurement, production planning and scheduling, inventory
tracking and control, product engineering and configuration control, with
links to document control for all manufacturing, quality control, quality
assurance and regulatory compliance procedures.
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INTELLECTUAL PROPERTY
To establish and protect our proprietary technologies and products, we rely on
a combination of patent, copyright, trademark and trade secret laws, as well
as confidentiality provisions in our contracts.
We have implemented an aggressive patent strategy designed to provide us with
freedom to operate and facilitate commercialization of our current and future
products. Focusing on a global economy, our patent portfolio reflects our
transatlantic nature and includes 47 pending patent applications in the United
States and corresponding international and foreign filings in major industrial
nations. We currently own nine and license five issued patents in the United
States and have received notices of allowances for five additional patent
applications. We also own two foreign issued patents.
Our patent strategy uniquely positions us by providing patent protection for
systems and technology that allows the direct detection of biomolecules
without labels using mass spectrometry in a manner amenable to high throughput
genotyping.
The issued, allowed and pending patents distinguish us from competitors by
claiming proprietary methods for directly genotyping DNA and other
biomolecules by measuring the mass of the molecules without requiring labels
for detection. Claims to these novel methods include protection for carrying
out biopolymer purification and diagnostic methods in solution or directly by
immobilization on solid supports such as beads or chip surfaces. These methods
also allow multiplexing or analysis of more than one sample both in a single
reaction and as arrays of compounds allowing the system to be easily amenable
to high throughput genotyping. Industrial genomics is possible because mass
spectrometric analysis can be miniaturized and therefore automated. We have
extensive patent protection for novel nanoliter liquid dispensing systems and
pending claims to multifunctional solid surfaces containing nanoliter sized
elements including our SpectroCHIP. Generally, US patents have a term of 17
years from the date of issue for patents issued from applications filed with
the US Patent Office prior to June 8, 1995, and 20 years from the application
filing date or earlier claimed priority date in the case of patents issued
from applications filed on or after June 8, 1995. Patents in most other
countries have a term of 20 years from the date of filing the patent
application. Our issued United States patents will expire between 2013 and
2017. Our success depends to a significant degree upon our ability to develop
proprietary products and technologies. We intend to continue to file patent
applications as we develop new products and technologies.
Patents provide some degree of protection for our intellectual property.
However, the assertion of patent protection involves complex legal and factual
determinations and is therefore uncertain. In addition, the laws governing
patentability and the scope of patent coverage continue to evolve,
particularly in the areas of molecular biology of interest to us. As a result,
there can be no assurance that patents will issue from any of our patent
applications or from applications licensed to us. The scope of any of our
issued patents may not be sufficiently broad to offer meaningful protection.
In addition, our issued patents or patents licensed to us may be successfully
challenged, invalidated, circumvented or unenforceable so that our patent
rights would not create an effective competitive barrier. Moreover, the laws
of some foreign countries may not protect our proprietary rights to the same
extent as do the laws of the United States and Canada. In view of these
factors, our intellectual property positions bear some degree of uncertainty.
We also rely in part on trade secret protection of our intellectual property.
We attempt to protect our trade secrets by entering into confidentiality
agreements with third parties, employees and consultants. Our employees and
consultants also sign agreements requiring that they assign to us their
interests in patents and copyrights arising from their work for us. All
employees sign an agreement not to compete unfairly with us during their
employment and upon termination of their employment, through the misuse of
confidential information, soliciting employees, soliciting customers, and the
like. However, it is
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possible that these agreements may be breached or invalidated and if so, there
may not be an adequate corrective remedy available. Despite the measures we
have taken to protect our intellectual property, we cannot assure you that
third parties will not breach the confidentiality provisions in our contracts
or infringe or misappropriate our patents, copyrights, trademarks, trade
secrets and other proprietary rights. In addition, we cannot assure you that
third parties will not independently discover or invent competing technologies
or reverse engineer our trade secrets, or other technology. Therefore, the
measures we are taking to protect our proprietary rights may not be adequate.
Although we are not a party to any material legal proceedings, in the future,
third parties may file claims asserting that our technologies or products
infringe on their intellectual property. We cannot predict whether third
parties will assert such claims against us or against the licensors of
technology licensed to us, or whether those claims will harm our business. If
we are forced to defend against such claims, whether they are with or without
any merit, whether they are resolved in favor of or against us or our
licensors, we may face costly litigation and diversion of management's
attention and resources. As a result of such disputes, we may have to develop
costly non-infringing technology, or enter into licensing agreements. These
agreements, if necessary, may be unavailable on terms acceptable to us, or at
all, which could seriously harm our business or financial condition.
COMPETITION
The markets for our products are very competitive, and we expect the intensity
of competition to increase. Currently, we compete primarily with other
companies performing similar tasks using alternative technologies. Many of our
competitors have greater financial, operational, sales and marketing
resources, and more experience in research and development than we have. These
competitors and other companies may have developed or could in the future
develop new technologies that compete with our products or which could render
our products obsolete.
In the SNP genotyping marketplace, MassArray competes with alternative
technology concepts which differ in the areas of sample amplification,
analysis process, sample separation or SNP detection and are all based on
indirect detection of the molecule hybridization and/or labeling. Such
technologies include:
. Gel-based fluorescent sequencing as offered by PE Corporation, Amersham
Pharmacia Biotech, Visible Genetics, Inc. and others and primarily developed
for DNA analysis, such as DNA sequencing;
. Single base primer extensions and colormetric detection offered by the
genetic bit analysis of Orchid Biocomputer Inc.;
. Fluorescence resonance energy transfer, or FRET, offering real-time PCR-
based fluorescent detection and incorporated in PE Corporation's TaqMan
product line;
. Invader and Invader Squared SNP detection, an alternative linear
amplification technology including structure-based hybridization and enzyme
cleavage developed by Third Wave Technologies, Inc.;
. Hybridization methods, such as those used by Affymetrix, Inc., Hyseq, Inc.,
Nanogen, Inc., Protogene Laboratories Inc. and others with miniaturized chip
formats and those offered by Genometrix in microtiter plate arrays; and
. Bead-based capture technologies involving hybridization and fluorescent
detection as developed by Illumina, Inc., which uses fiber optics, or
Luminex Corporation, which uses flow cytometry.
The number of entities applying mass spectrometry in DNA analysis is
increasing continuously. PE Corporation and GeneTrace Systems Inc. have
implemented analysis concepts that involve direct analysis of enzymatically-
generated nucleic acid fragments by MALDI-TOF. Rapigene Inc. and
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Genetrace Systems Inc. use a mass spectrometry approach that incorporates mass
labels and therefore is an indirect analysis of the molecule.
GOVERNMENT REGULATION
We are not subject to direct governmental regulation other than the laws and
regulations generally applicable to businesses in the jurisdictions in which
we operate.
SCIENTIFIC ADVISORY BOARD
We have established a scientific advisory board made up of leading scholars in
the field of mass spectrometry, molecular medicine, proteonomics and molecular
microbiology. Members of our scientific advisory board consult with us on
matters relating to the development of our products described elsewhere in
this prospectus. Members of our Scientific Advisory Board are reimbursed for
the reasonable expenses of attending meetings of the scientific advisory
board. Some of the members may also receive options to purchase shares of our
common stock. The members of the scientific advisory board are as follows:
<TABLE>
<CAPTION>
ADVISOR INSTITUTION
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<S> <C>
Charles R. Cantor, PhD, Chairman Sequenom, Inc.
Robert Cotter, PhD Johns Hopkins University School of Medicine
Catherine Fenselau, PhD University of Maryland
Ulf Goebel, PhD Charite University Clinic, Berlin, Germany
Franz Hillenkamp, PhD University of Munster, Germany
Ulf Landegren, PhD Uppsala University, Sweden
Peter Roepstorff, PhD University of Odense, Denmark
</TABLE>
EMPLOYEES
As of October 31, 1999, we employed 96 persons, of whom 29 hold PhD or MD
degrees and 16 hold other advanced degrees. Approximately 50 employees are
engaged in research and development, 12 in business development, sales and
marketing, 10 in manufacturing and 24 in intellectual property, finance and
other administrative functions. Our success will depend in large part upon our
ability to attract and retain employees. We face competition in this regard
from other companies, research and academic institutions, government entities
and other organizations. We believe that we maintain good relations with our
employees.
FACILITIES
We lease an approximately 31,000 square foot facility in San Diego, California
for our headquarters and as the base for marketing and product support
operations, research and development and manufacturing activities. The lease
expires in September 2004. We also lease an approximately 3,000 square foot
facility in Sudbury, Massachusetts for product and customer support. In
addition, we lease an approximately 15,000 square foot facility in Hamburg,
Germany to support sales and distribution in Europe. Under the terms of these
leases, we presently pay rent of approximately $53,000 per month. We believe
that our current facilities will be adequate to meet our near-term space
requirements. We also believe that suitable additional space will be available
to us, when needed, on commercially reasonable terms.
ORGANIZATION
We were incorporated in the state of Delaware in 1994.
LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings.
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<PAGE>
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Management
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
Set forth below is the name, age, position and a brief account of the business
experience of each of our executive officers, directors and key employees.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Executive Officers & Directors
Hubert Koster, PhD............... 59 President, Chief Executive Officer and Director
Charles R. Cantor, PhD........... 57 Chief Scientific Officer
Stephen L. Zaniboni.............. 42 Senior Vice President and Chief Financial Officer
Antonius Schuh, PhD.............. 36 Executive Vice President, Business Development
and Marketing
Delbert F. Foit, Jr. ............ 53 Chief Operating Officer
Andreas Braun, PhD, MD........... 43 Chief Medical Officer
Karsten Schmidt, PhD............. 38 Managing Director, Sequenom GmbH
Helmut Schuhsler, PhD(1)......... 40 Chairman of the Board of Directors
Ernst-Gunter Afting, PhD, MD(2).. 57 Director
John E. Lucas(1)(2).............. 68 Director
Peter Reinisch, PhD.............. 59 Director
Key Employees
Charles P. Rodi, PhD............. 47 Vice President, Molecular Biology
Paul J. Heaney, PhD.............. 40 Vice President, Advanced Systems
</TABLE>
- --------
(1) Member of the compensation committee.
(2) Member of the audit committee.
Hubert Koster, PhD Dr. Koster is our founder, President, Chief Executive
Officer and a member of our board of directors and our scientific advisory
board. In 1978, Dr. Koster was appointed tenured professor of organic
chemistry and biochemistry at Hamburg University. Dr. Koster founded
Biosyntech, GmbH, the first biotech company in Germany in 1981 and served on
its board of directors and scientific advisory board. In 1987, he co-founded
MilliGen/Biosearch, the biotech division of Millipore Corporation in Bedford,
MA, and served as Vice President of Science and Technology. Dr. Koster
currently holds more than 20 patents and authored more than 110 publications
prior to founding Sequenom in 1994. Dr. Koster studied chemistry at Hamburg
University, completed doctoral research at the Max Planck Institute for
Experimental Medicine in Gottingen, and completed post-doctoral research work
at the Max Planck Institute for Virus Research in Tubingen.
Charles R. Cantor, PhD Dr. Cantor joined us as our Chief Scientific Officer
and Chairman of our scientific advisory board in August 1998. From 1992 until
joining us, Dr. Cantor served as the chair of, and as a professor in the
department of biomedical engineering and biophysics, and Director of the
Center for Advanced Biotechnology at Boston University. Prior to that time,
Dr. Cantor held positions at Columbia University and the University of
California, Berkeley. He was also Director of the Human Genome Center of the
Department of Energy at Lawrence Berkeley Laboratory. Dr. Cantor published the
first textbook on genomics: The Science and Technology of the Human Genome
Project and remains active in the Human Genome Project through his membership
in a number of the project's advisory committees and review boards. He is a
scientific advisor to 16 biotech and life science companies and two venture
capital firms. He is also a member of the National Academy of Sciences. Dr.
Cantor earned his PhD from the University of California, Berkeley.
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MANAGEMENT
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Stephen L. Zaniboni Mr. Zaniboni joined us as our Chief Financial Officer in
April 1997. From 1994 until joining us, Mr. Zaniboni served as Vice President,
Finance for Aspect Medical Systems, Inc. Prior to joining Aspect, Mr. Zaniboni
was Corporate Controller for Behring Diagnostics from 1988 to 1994 where he
implemented financial systems during a dramatic growth period. Before joining
Behring, he held various financial management positions at Boston Scientific
Corp. Mr. Zaniboni began his career with Arthur Andersen & Co. He earned his
MBA from Boston College and he is a Certified Public Accountant.
Antonius Schuh, PhD Dr. Schuh joined our German subsidiary as Managing
Director in December 1996 and was promoted to Executive Vice President,
Business Development and Marketing, in 1998 when he moved to our headquarters
in San Diego, California. From 1993 until joining us, Dr. Schuh was with Helm
AG, an international pharma/chemical trading and distribution corporation.
While at Helm AG, he established and headed the Pharma Business Development
Group and the associated technical and regulatory affairs department. Prior to
that, from 1992 to 1993, he was with Fisons Pharmaceuticals. Dr. Schuh is a
co-founder of BIOND, Heidelberg, a board member of Austrian Orphan
Pharmaceuticals AG, Vienna, and an advisor to Juelich Enzyme Products,
Juelich, Federal Republic Germany. Dr. Schuh earned his PhD in pharmaceutical
chemistry from the University of Bonn, in Germany.
Delbert F. Foit, Jr. Mr. Foit joined us as our Chief Operating Officer in
March 1999. From 1996 until joining us, Mr. Foit served as Vice President of
North American Operations for the Laboratory Systems Division of Boehringer
Mannheim Inc. He also served in various other positions, beginning in 1992,
where he implemented a number of successful productivity initiatives first
with Microgenics then with Boehringer Mannheim's North American Laboratory
Systems. After the acquisition of Boehringer Mannheim by Hoffmann-La Roche,
Mr. Foit assumed overall responsibility for the combined Laboratory Systems
Operations of Roche and Boehringer in North America. Prior to his tenure with
Boehringer, Mr. Foit held positions as Director of Operations and Director of
Manufacturing for Ortho Diagnostics Systems, a Johnson and Johnson Company.
Mr. Foit earned his MBA from Rider University.
Andreas Braun, PhD, MD Dr. Braun joined us in 1995 and was promoted from Vice
President, Genomics to Chief Medical Officer in September 1999. From 1992
until joining us, Dr. Braun served as Deputy Head of the Clinical Laboratory
at the Childrens Hospital, University of Munich. Dr. Braun has published more
than 45 peer-reviewed scientific publications. His research work in functional
pharmacogenomics targeting the human bradykin receptor was recognized in 1996
with the Garbor Szasz Award which was granted by the German Society of
Clinical Chemistry. Dr. Braun earned doctorate degrees in biology and medical
science from the University of Munich.
Karsten Schmidt, PhD Dr. Schmidt joined our German subsidiary as Director,
Business Development in January 1999 and was appointed as Managing Director in
May of 1999. From 1996 until joining us, Dr. Schmidt served in a senior
management position at Rhone-Poulenc Rorer, Germany, where he was responsible
for all drug regulatory affairs for asthma and allergies. From 1994 to 1996,
Mr. Schmidt served as a manager in charge of regulatory affairs, for Fisons
Araneimittel, GmbH. As a member of the International Pharmaceutical Aerosol
Consortium, Dr. Schmidt was involved in the joint activities of five prominent
pharmaceutical companies in this field to develop inhaled asthma therapies
with ozone-friendly propellants. Dr. Schmidt is a trained pharmacist and has a
broad scientific background in biochemistry and molecular biology. Dr. Schmidt
earned his PhD in pharmaceutical biology from the University in Bonn.
Helmut Schuhsler, PhD Dr. Schuhsler joined us as the Chairman of our Board of
Directors in 1996. Since 1998, Dr. Schuhsler has served as a managing partner
at TVM Techno Venture Management, a German and US venture capital firm. He has
been with TVM since 1990 and has been responsible for over 25 healthcare
investments of the firm. He is currently a Director of several biotechnology
and instrumentation companies. Dr. Schuhsler earned a PhD in the Social and
Economic Sciences from the University of Economics in Vienna.
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44
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MANAGEMENT
- -------------------------------------------------------------------------------
Ernst-Gunter Afting, PhD, MD Dr. Afting joined us as a Director in 1996. Since
1995, Dr. Afting has served as the Managing Director of Gesellschaft fur
Strahlenforschung, one of the largest German research organizations. From 1993
to 1995, he served as President and Chief Executive Officer of Roussel UCLAF,
Paris. He also headed the pharmaceutical division of Hoechst Group and was
Chairman of the Divisional Pharma Board of Hoechst. Dr. Afting earned a PhD
and an MD in Chemistry from the University of Freiburg/Breisgau.
John E. Lucas Mr. Lucas joined us as a Director in 1998. Mr. Lucas currently
serves as a management consultant to six biomedical companies. From 1994 to
1996, he was Founder, President and CEO of American Scientific Resources,
Ltd., a manufacturer of blood testing materials. From 1991 to 1994, he held
the positions of President, CEO and Chairman at Oxigene, Inc. and held similar
positions from 1974 to 1991 at Luconex, Mast ImmunoSystems, Xoma, Millipore
Ventures, Chemetrics and Oxford Laboratories. Mr. Lucas serves as a Director
of InSite Vision Incorporated. Mr. Lucas earned an MBA from Harvard
University.
Peter Reinisch, PhD Dr. Reinisch joined us as a Director in 1998. Dr. Reinisch
has served as an advisor to the general partners of Global Life Sciences LP
located in Guernsey, Channel Islands, a position he has held since 1996. Dr.
Reinisch is on the board of directors or has board visitation rights for eight
companies. From 1994 to 1998, he advised companies in the Corange Group and
played a key role in the co-establishment of Global Life Sciences LP. Prior to
that time, Dr. Reinisch held various senior management positions with
Corange/Boehringer Mannheim primarily in the area of business development of
the Diagnostics division. Dr. Reinisch earned a PhD in Business Administration
from the Technical University of Vienna.
Charles P. Rodi, PhD Dr. Rodi joined us as our Vice President, Molecular
Biology in May 1999. From 1998 until joining us, Dr. Rodi was Director of the
Genome Sequencing Center at Monsanto Company. He began at Monsanto in 1984
where he was involved in exploiting and developing molecular biological
technologies such as plasmid and library construction, expression profiling
and SNP discovery. Dr. Rodi earned his PhD in Cellular and Developmental
Biology from the University of Minnesota and pursued postdoctoral research on
molecular virology at the National Institutes of Health.
Paul J. Heaney, PhD Dr. Heaney joined us as our Vice President, Advanced
Systems in May 1999. From 1997 until joining us, Dr. Heaney served as Senior
Director of New Technologies and Applications at Orchid Biocomputer. From 1995
to 1997, he was Head of Bioelectronics at the Sarnoff Corporation in
Princeton, New Jersey, where he developed microfabricated fluidic systems for
combinatorial chemistry and DNA diagnostics--a core technology that led to the
formation of Orchid. Dr. Heaney was Vice President of R&D in the early days of
Genometrix and also worked at Amersham International and Kodak Clinical
Diagnostics in the United Kingdom. Dr. Heaney earned his PhD in Bio-Organic
Chemistry from University of Glasgow and was a Research Fellow at the Imperial
Cancer Research Fund in London.
CLASSES OF THE BOARD
Our board currently has five members. Under our bylaws to be adopted upon the
closing of this offering, beginning at our next annual meeting of
stockholders, our board will be divided into three classes of directors
serving staggered three-year overlapping terms, with one class of directors to
be elected at each annual meeting of stockholders.
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MANAGEMENT
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BOARD COMMITTEES
The audit committee of the board of directors was established in November 1999
and reviews, acts on and reports to the board of directors with respect to
various auditing and accounting matters, including the recommendation of our
auditors, the scope of the annual audits, the fees to be paid to the auditors,
the performance of our independent auditors and our accounting practices. The
members of the audit committee are Messrs. Afting and Lucas.
The compensation committee of the board of directors was established in
November 1999 and recommends, reviews and oversees the salaries, benefits and
stock plans for our employees, consultants, directors and other individuals
compensated by us. The compensation committee also administers our
compensation plans. The members of the compensation committee are
Messrs. Lucas and Schuhsler.
DIRECTOR COMPENSATION
We do not pay directors cash compensation; however, they are reimbursed for
the reasonable expenses of attending the meetings of the board of directors or
committees. Under our 1999 Stock Incentive Plan, each individual who first
becomes a non-employee member of the board of directors at any time after the
completion of this offering will receive an option to purchase 15,000 shares
of our common stock on the date the individual joins the board of directors,
provided the individual has not previously been employed by us or any parent
or subsidiary corporation. In addition, on the date of each annual
stockholders meeting held after the effective date of this offering beginning
in 2000, each non-employee member of the board of directors will automatically
be granted an option to purchase 3,000 shares of common stock, provided such
individual has served as a non-employee member of the board of directors for
at least six months. For a further description of our benefit plans, please
see "Employee benefit plans."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our compensation committee currently consists of Messrs. Lucas and Schuhsler.
Neither member of the compensation committee has been an officer or employee
of ours at any time. None of our executive officers serves as a member of the
board of directors or compensation committee of any other company that has one
or more executive officers serving as a member of our board of directors or
compensation committee. Prior to the formation of the compensation committee
in November 1999, the board of directors as a whole made decisions relating to
compensation of our executive officers.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
All of our current employees have entered into agreements with us which
contain restrictions and covenants. These provisions include covenants
relating to the protection of our confidential information, the assignment of
inventions, and restrictions on competition and soliciting our clients,
employees, or independent contractors.
None of our employees is employed for a specified term, and each employee's
employment with us is subject to termination at any time by either party for
any reason, with or without cause.
Dr. Koster's employment agreement provides for a salary of $240,000 per year,
subject to periodic increases by our board of directors at its discretion. In
connection with his employment with us, Dr. Koster was granted an option to
purchase 300,000 shares of our common stock under our 1994 and 1998 stock
plans. Dr. Koster has exercised these options. We recorded deferred
compensation as a result of a remeasurement of these options originally
granted in 1997. Dr. Koster was also reimbursed for expenses he incurred in
relocating from Hamburg, Germany to our corporate offices in San Diego,
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MANAGEMENT
- -------------------------------------------------------------------------------
California, in connection with his employment agreement. If Dr. Koster's
employment is terminated involuntarily or without cause, Dr. Koster will be
entitled to receive his annual salary in periodic payments, until he secures
other full-time employment with another company or until one year has elapsed
after termination, whichever is earlier.
Mr. Zaniboni's employment agreement provides for a salary of $195,000 per
year, subject to periodic increases by our board of directors at its
discretion. Mr. Zaniboni is also entitled to receive a bonus of $10,000 per
year. In connection with his employment with us, Mr. Zaniboni was granted
options to purchase 210,000 shares of our common stock under our 1994 and 1998
stock plans. Mr. Zaniboni has exercised these options. If Mr. Zaniboni's
employment is terminated involuntarily or without cause, Mr. Zaniboni will be
entitled to receive his annual salary in periodic payments, until he secures
other full-time employment with another company or until six months have
elapsed after termination, whichever is earlier.
Dr. Schuh's employment agreement provides for a salary of $195,000 per year,
subject to periodic increases by our board of directors at its discretion. Dr.
Schuh is also entitled to receive a bonus of $10,000 per year. In connection
with his employment with us, Dr. Schuh was granted options to purchase 280,000
shares of our common stock under our 1994 and 1998 stock plans. Dr. Schuh has
exercised these options. If Dr. Schuh's employment is terminated involuntarily
or without cause, Dr. Schuh will be entitled to receive his annual salary in
periodic payments, until he secures other full-time employment with another
company or until six months have elapsed after termination, whichever is
earlier.
The compensation committee, as plan administrator of our 1999 Stock Incentive
Plan, will have the authority to grant options and to structure repurchase
rights under that plan so that the shares subject to those options or
repurchase rights will immediately vest in connection with a change in control
of us, whether by merger, asset sale, successful tender offer for more than
50% of the outstanding voting stock or by a change in the majority of the
board by reason of one or more contested elections for board membership.
Vesting of these options will occur either at the time of the change in
control or upon the subsequent involuntary termination of the individual's
service within a designated period not to exceed 18 months following the
change in control.
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MANAGEMENT
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EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table shows all compensation received during the year ended
December 31, 1998 by our Chief Executive Officer and our other three executive
officers whose salary and bonus exceeded $100,000 in 1998 for services
rendered in all capacities to us during 1998.
Other annual compensation shown below for Dr. Koster includes $94,266 paid in
connection with his relocation to our corporate headquarters in San Diego from
Hamburg, Germany, $3,900 for use of a company automobile and $1,000 paid in
connection with various tax services. Other annual compensation for Mr.
Zaniboni includes $12,098 paid in connection with his relocation to San Diego,
California and $1,275 paid for various tax services. Other annual compensation
for Andreas Braun reflects the amount paid for various tax services.
SUMMARY COMPENSATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING OTHER
POSITION SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hubert Koster............. $252,000 $10,000 $99,166 255,000 --
President and Chief
Executive Officer
Stephen L. Zaniboni....... 132,500 10,000 13,373 140,000 --
Senior Vice President and
Chief
Financial Officer
Antonius Schuh............ 150,426 10,000 -- 130,000 --
Executive Vice President,
Business
Development and Marketing
Andreas Braun............. 136,000 10,000 350 50,000 --
Chief Medical Officer
</TABLE>
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48
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MANAGEMENT
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OPTIONS
The following table shows information regarding options granted to the
executive officers listed in the summary compensation table above during the
fiscal year ended December 31, 1998. We have not granted any stock
appreciation rights.
Each option represents the right to purchase one share of our common stock.
The options generally become vested over four years. To the extent not already
vested, some of these options may also accelerate and become exercisable in
the event of a merger in which we are not the surviving corporation or upon
the sale of substantially all of our assets. Please see "Management--Employee
benefit plans" for more details regarding these options. In the year ended
December 31, 1998, we granted options to purchase an aggregate of 1.3 million
shares of common stock to various officers, employees, directors and
consultants.
The potential realizable value at assumed annual rates of stock price
appreciation for the option term represents hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. The 5% and 10% assumed annual rates of compounded stock price
appreciation are required by rules of the Securities and Exchange Commission
and do not represent our estimate or projection of our future common stock
prices. These amounts represent assumed rates of appreciation in the value of
our common stock from the fair market value on the date of grant. Actual
gains, if any, on stock option exercises are dependent on the future
performance of our common stock and overall stock market conditions. The
amounts reflected in the table may not necessarily be achieved.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
- -------------------------------------------------------------------------------------------
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
NUMBER % OF TOTAL VALUE AT ASSUMED
OF SECURITIES OPTIONS EXERCISE ANNUAL RATES OF
UNDERLYING GRANTED TO PRICE APPRECIATION OF STOCK
OPTIONS EMPLOYEES PER EXPIRATION PRICE FOR OPTION TERM
NAME GRANTED IN 1998 SHARE DATE 5% 10%
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hubert Koster........... 75,000 6% $0.55 09/18/08 $ 25,942 $ 65,742
72,656 6 1.10 12/11/08 50,262 127,374
107,344 9 1.00 12/11/08 67,508 171,079
Stephen L. Zaniboni..... 20,000 2 0.50 04/02/08 6,289 15,937
20,000 2 0.50 06/04/08 6,289 15,937
100,000 8 1.00 12/11/08 62,889 159,374
Antonius Schuh.......... 30,000 2 0.50 09/18/08 9,433 23,906
100,000 8 1.00 12/11/08 62,889 159,374
Andreas Braun........... 50,000 4 1.00 12/11/08 31,444 79,687
</TABLE>
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The following table shows information at December 31, 1998 concerning the
number and value of unexercised options held by each of the executive officers
listed in the summary compensation table above. Options shown as exercisable
in the table below are immediately exercisable. However, we have rights to
repurchase shares of the common stock underlying some of these options upon
termination of the holder's employment with us. There was no public trading
market for the common stock as of December 31, 1998. Accordingly, the value of
unexercised in-the-money options listed below has been calculated on the basis
of the assumed initial public offering price of $ per share, less the
applicable exercise price per share, multiplied by the number of shares
underlying such options.
AGGREGATED OPTION EXERCISES IN THE YEAR ENDED DECEMBER 31, 1998 AND YEAR-END
OPTION VALUES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1998 AT DECEMBER 31, 1998
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hubert Koster............... 406,354 228,646
Stephen L. Zaniboni......... 128,750 81,250
Antonius Schuh.............. 175,938 104,062
Andreas Braun............... 21,250 98,750
</TABLE>
EMPLOYEE BENEFIT PLANS
1999 STOCK INCENTIVE PLAN
INTRODUCTION
Our 1999 Stock Incentive Plan is intended to serve as the successor program to
our 1998 Stock Option/Stock Issuance Plan. The 1999 plan was adopted by our
board of directors on November 6, 1999 and approved by the stockholders in
November 1999. The 1999 plan will become effective at the close of this
offering. At that time, all outstanding options under our existing 1998 Stock
Option/Stock Issuance Plan will be transferred to the 1999 plan, and no
further option grants will be made under the 1998 plan. Prior to the 1998 plan
being adopted, we granted options under our 1994 Stock Plan. All options
granted under our 1994 Stock Plan were transferred to our 1998 Stock
Option/Stock Issuance Plan. The transferred options will continue to be
governed by their existing terms, unless our compensation committee decides to
extend one or more features of the 1999 plan to those options. Except as
otherwise described below, the transferred options have substantially the same
terms as will be in effect for grants made under the discretionary option
grant program of our 1999 plan.
SHARE RESERVE
We have reserved 4,750,000 shares of our common stock for issuance under our
1999 Stock Incentive Plan. This share reserve consists of the number of shares
we estimate will be carried over from our 1998 plan plus an additional 850,000
shares. The share reserve under our 1999 plan will automatically increase on
the first trading day in January each calendar year, beginning with calendar
year 2001, by an amount equal to 4% of the total number of shares of our
common stock outstanding on the last trading day of December in the prior
calendar year, but in no event will this annual increase exceed 2,000,000
shares. In addition, no participant in our 1999 plan may be granted stock
options or direct stock issuances for more than 1,000,000 shares of common
stock in total in any calendar year. All share numbers regarding our 1999 plan
are calculated prior to a reverse stock split of for , which is
subject to stockholder approval.
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MANAGEMENT
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PROGRAMS
Our 1999 plan has five separate programs:
. the discretionary option grant program, under which eligible individuals may
be granted options to purchase shares of our common stock at an exercise
price not less than the fair market value of those shares on the grant date;
. the stock issuance program, under which eligible individuals may be issued
shares of common stock directly, upon the attainment of performance
milestones or the completion of a specified period of service or as a bonus
for past services;
. the salary investment option grant program, under which our executive
officers and other highly compensated employees may be given the opportunity
to apply a portion of their base salary each year to the acquisition of
special below market stock option grants;
. the automatic option grant program, under which option grants will
automatically be made at periodic intervals to eligible non-employee board
members to purchase shares of common stock at an exercise price equal to the
fair market value of those shares on the grant date; and
. the director fee option grant program, under which our non-employee board
members may be given the opportunity to apply a portion of any retainer fee
otherwise payable to them in cash each year to the acquisition of special
below market option grants.
ELIGIBILITY
The individuals eligible to participate in our 1999 plan include our officers
and other employees, our board members and any consultants we use.
ADMINISTRATION
The discretionary option grant and stock issuance programs will be
administered by our compensation committee. This committee will determine
which eligible individuals are to receive option grants or stock issuances
under those programs, the time or times when the grants or issuances are to be
made, the number of shares subject to each grant or issuance, the status of
any granted option as either an incentive stock option or a nonstatutory stock
option under the federal tax laws, the vesting schedule to be in effect for
the option grant or stock issuance and the maximum term for which any granted
option is to remain outstanding. The compensation committee will also have the
authority to select the executive officers and other highly compensated
employees who may participate in the salary investment option grant program if
the program is put into effect for one or more calendar years.
PLAN FEATURES
Our 1999 plan will include the following features:
. the exercise price for any options granted under the plan may be paid in
cash or in shares of our common stock valued at fair market value on the
exercise date. The option may also be exercised through a same-day sale
program without any cash outlay by the optionee;
. our compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program, including any
transferred options from our 1998 plan, in return for the grant of new
options for the same or different number of option shares with an exercise
price per share based upon the fair market value of our common stock on the
new grant date; and
. stock appreciation rights may be issued under the discretionary option grant
program. These rights will provide the holders with the election to
surrender their outstanding options for a payment from us equal to the fair
market value of the shares subject to the surrendered options less the
exercise price payable for those shares. We may make the payment in cash or
in shares of our common stock. None of the options under our 1998 plan have
any stock appreciation rights.
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CHANGE IN CONTROL
Our 1999 plan will include the following change in control provisions which
may result in the accelerated vesting of outstanding option grants and stock
issuances if:
. we are acquired by merger or asset sale, each outstanding option under the
discretionary option grant program which is not to be assumed by the
successor corporation will immediately become exercisable for all the option
shares, and all outstanding unvested shares will immediately vest, except to
the extent our repurchase rights with respect to those shares are to be
assigned to the successor corporation;
. our compensation committee will have complete discretion to grant one or
more options which will become exercisable for all the option shares in the
event those options are assumed in the acquisition but the optionee's
service with us or the acquiring entity is subsequently terminated. The
vesting of any outstanding shares under our 1999 plan may be accelerated
upon similar terms and conditions; and
. our compensation committee may grant options and structure repurchase rights
so that the shares subject to those options or repurchase rights will
immediately vest in connection with a successful tender offer for more than
50% of our outstanding voting stock or a change in the majority of our board
through one or more contested elections. Such accelerated vesting may occur
either at the time of such transaction or upon the subsequent termination of
the individual's service.
SALARY INVESTMENT OPTION GRANT PROGRAM
If our compensation committee decides to put this program into effect for one
or more calendar years, each of our executive officers and other highly
compensated employees may elect to reduce his or her base salary for the
calendar year by an amount not less than $10,000 nor more than $50,000. Each
individual who makes such an election will automatically be granted, on the
first trading day in January of the calendar year for which his or her salary
reduction is to be in effect, an option to purchase that number of shares of
common stock determined by dividing the salary reduction amount by two-thirds
of the fair market value per share of our common stock on the grant date. The
option will have an exercise price per share equal to one-third of the fair
market value of the option shares on the grant date. As a result, the option
will be structured so that the fair market value of the option shares on the
grant date less the exercise price payable for those shares will be equal to
the amount of the salary reduction. The option will become exercisable in a
series of twelve equal monthly installments over the calendar year for which
the salary reduction is to be in effect.
AUTOMATIC OPTION GRANT PROGRAM
Each individual who first becomes a non-employee board member at any time
after the effective date of this offering will receive an option grant to
purchase 15,000 shares of our common stock on the date such individual joins
the board. In addition, on the date of each annual stockholders meeting held
after the effective date of this offering, each non-employee board member who
is to continue to serve as a non-employee board member, including each of our
current non-employee board members, will automatically be granted an option to
purchase 3,000 shares of our common stock, provided such individual has served
on the board for at least six months.
Each automatic grant will have an exercise price per share equal to the fair
market value per share of our common stock on the grant date and will have a
term of 10 years, subject to earlier termination following the optionee's
cessation of board service. The option will be immediately exercisable for all
of the option shares; however, we may repurchase, at the exercise price paid
per share, any shares purchased under the option which are not vested at the
time of the optionee's cessation of board service. The shares subject to each
initial 15,000 share automatic option grant will vest in a series of three
successive annual installments upon the optionee's completion of each year of
board service over the three year period
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52
<PAGE>
MANAGEMENT
- -------------------------------------------------------------------------------
measured from the grant date. The shares subject to each 3,000 share annual
option grant will vest upon the optionee's completion of one year of board
service measured from the grant date. The shares subject to each option will
immediately vest in full upon various changes in control or ownership or upon
the optionee's death or disability while a board member.
DIRECTOR FEE OPTION GRANT PROGRAM
If this program is put into effect in the future, then each non-employee board
member may elect to apply all or a portion of any cash retainer fee for the
year to the acquisition of a below-market option grant. The option grant will
automatically be made on the first trading day in January in the year for
which the non-employee board member would otherwise be paid the cash retainer
fee in the absence of his or her election. The option will have an exercise
price per share equal to one-third of the fair market value of the option
shares on the grant date, and the number of shares subject to the option will
be determined by dividing the amount of the retainer fee applied to the
program by two-thirds of the fair market value per share of our common stock
on the grant date. As a result, the option will be structured so that the fair
market value of the option shares on the grant date less the exercise price
payable for those shares will be equal to the portion of the retainer fee
applied to that option. The option will become exercisable in a series of
twelve equal monthly installments over the calendar year for which the
election is in effect. However, the option will become immediately exercisable
for all the option shares upon the death or disability of the optionee while
serving as a board member. Currently our directors do not have any cash
retainer fee.
ADDITIONAL PLAN FEATURES
Our 1999 plan will also have the following features:
. Outstanding options under the salary investment and director fee option
grant programs will immediately vest if we are acquired by a merger or asset
sale or if there is a successful tender offer for more than 50% of our
outstanding voting stock or a change in the majority of our board through
one or more contested elections.
. Limited stock appreciation rights will automatically be included as part of
each grant made under the salary investment option grant program and the
automatic and director fee option grant programs, and these rights may also
be granted to one or more officers as part of their option grants under the
discretionary option grant program. Options with this feature may be
surrendered to us upon the successful completion of a hostile tender offer
for more than 50% of our outstanding voting stock. In return for the
surrendered option, the optionee will be entitled to a cash distribution
from us in an amount per surrendered option share based upon the highest
price per share of our common stock paid in that tender offer.
. Our board of directors may amend or modify our 1999 plan at any time,
subject to any required stockholder approval. Our 1999 plan will terminate
no later than November 6, 2009.
1999 EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
Our 1999 Employee Stock Purchase Plan was adopted by our board of directors on
November 6, 1999 and approved by our stockholders in November 1999. The plan
will become effective immediately upon the signing of the underwriting
agreement for this offering. The plan is designed to allow our eligible
employees and the eligible employees of our participating subsidiaries to
purchase shares of common stock, at semi-annual intervals, with their
accumulated payroll deductions.
SHARE RESERVE
We have reserved 250,000 shares of our common stock for issuance under our
1999 Employee Stock Purchase Plan. The reserve will automatically increase on
the first trading day in January each calendar
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53
<PAGE>
MANAGEMENT
- -------------------------------------------------------------------------------
year, beginning in calendar year 2001, by an amount equal to 1% of the total
number of outstanding shares of our common stock on the last trading day in
December in the prior calendar year. In no event will any such annual increase
exceed 500,000 shares. All share numbers regarding our 1999 Employee Stock
Purchase Plan are calculated prior to a reverse stock split of for
, which is subject to shareholder approval.
OFFERING PERIODS
Our 1999 Employee Stock Purchase Plan will have a series of concurrent
offering periods, each with a maximum duration of 24 months. The initial
offering period will start on the date the underwriting agreement for the
offering covered is signed and will end on the last business day in January
2002. Additional offering periods of up to 24 months duration will begin on
the first day of February and August each year. However, no employee may
participate in more than one offering period at a time.
ELIGIBILITY
Individuals scheduled to work more than 20 hours per week for more than five
calendar months per year are eligible to participate in the plan and may join
the plan on the start date of any offering period.
PAYROLL DEDUCTIONS
A participant may contribute up to 15% of his or her base salary through
payroll deductions, and the accumulated deductions will be applied to the
purchase of shares on each semi-annual purchase date. The purchase price per
share in effect for each participant will be equal to 85% of the fair market
value per share on the start date of the offering period in which he or she is
participating or, if lower, 85% of the fair market value per share on the
semi-annual purchase date. Semi-annual purchase dates will occur on the last
business day of January and July each year. However, a participant may not
purchase more than 1,000 shares on any purchase date, and not more than
62,500 shares may be purchased in total by all participants on any purchase
date. Our compensation committee will have the authority to change these
limitations for any subsequent offering period.
RESET FEATURE
If the fair market value per share of our common stock on any purchase date
within a particular offering period is less than the fair market value per
share on the start date of that offering period, then that offering period
will automatically terminate, and a new offering period of up to 24 months
duration will begin on the next business day. All eligible participants in the
terminated offering will be transferred to the new offering period.
CHANGE IN CONTROL
If we are acquired by merger or a sale of substantially all of our assets or
more than 50% of our voting securities, then all outstanding purchase rights
will automatically be exercised immediately prior to the effective date of the
acquisition. The purchase price in effect for each participant will be equal
to 85% of the market value per share on the start date of the particular
offering period in which he or she is participating at the time of the
acquisition or, if lower, 85% of the fair market value per share immediately
prior to the acquisition.
PLAN FEATURES
The following features will also be in effect under the plan:
. our plan will terminate no later than the last business day of January 2010;
and
. our board may at any time amend, suspend or discontinue our plan; however,
certain amendments may require stockholder approval.
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54
<PAGE>
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Related party transactions
SALES OF SECURITIES
Since January 1996, we have issued the following securities in private
placement transactions:
. 643,330 shares of our Series B convertible preferred stock for an aggregate
price of $964,995 in March 1996;
. warrants to purchase 70,000 shares of our Series A convertible preferred
stock in connection with the Comdisco lease arrangement;
. 4,573,331 shares of our Series C convertible preferred stock for an
aggregate price of $14,405,993 in May 1997 and January 1998;
. warrants to purchase 106,503 shares of our Series C convertible preferred
stock in connection with the sale of our Series C preferred stock;
. 5,712,763 shares of our Series D convertible preferred stock for an
aggregate price of $37,132,959 in December 1998 and March 1999;
. 1,969,750 shares of our common stock issued upon the exercise of options to
purchase such stock for an aggregate consideration of $1,322,467; and
. 6,349 shares of our common stock issued to one of our executive officers for
an aggregate consideration of $20,000.
The purchasers of more than $60,000 of these securities include, among others,
the following executive officers, directors and holders of more than 5% of our
outstanding stock and their affiliates:
<TABLE>
<CAPTION>
PREFERRED STOCK
EXECUTIVE OFFICERS, DIRECTORS TOTAL
AND 5% STOCKHOLDERS COMMON STOCK SERIES B SERIES C SERIES D CONSIDERATION
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hubert Koster.................. 680,000 100,000 -- -- $ 602,542
Stephen L. Zaniboni............ 210,000 -- -- -- 137,500
Antonius Schuh................. 280,000 -- -- -- 152,500
Charles R. Cantor.............. 357,349 -- -- -- 415,800
Ernst-Gunter Afting............ -- -- -- 15,018 97,617
TVM Group...................... -- 1,094,666 388,571 726,768 7,589,990
Alpinvest International B.V. .. -- 666,667 317,460 461,538 4,999,997
Lombard Odier & Cie............ -- -- 952,381 -- 3,000,000
</TABLE>
For additional information regarding the ownership of securities by executive
officers, directors and stockholders who beneficially own 5% or more of our
outstanding common stock, please see "Principal stockholders."
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of Dr. Koster, Mr.
Zaniboni and Dr. Schuh. For information regarding these agreements, please see
"Management--Employment and severance arrangements." In addition to these
agreements, we have also entered into employment agreements with each of Dr.
Charles R. Cantor, our Chief Scientific Officer, Delbert F. Foit, our Chief
Operating Officer, Dr. Karsten Schmidt, the Managing Director of our
subsidiary, Dr. Paul J. Heaney, our Vice President, Advanced Systems and Dr.
Charles R. Rodi, our Vice President, Molecular Biology.
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55
<PAGE>
RELATED PARTY TRANSACTIONS
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Dr. Cantor's employment agreement provides for a salary of $180,000 per year,
subject to periodic increases by our board of directors at its discretion. Dr.
Cantor is also entitled to receive a bonus of $21,000 per year. In addition,
Dr. Cantor will be paid $30,000 in connection with his service as the Chairman
of our scientific advisory board. Moreover, we will pay for up to 12 visits
per year to Boston University that Dr. Cantor is required to make in
connection with his leave of absence from his positions at the university. In
connection with his employment with us, Dr. Cantor was granted options to
purchase 280,000 shares of our common stock under our 1994 and 1998 stock
plans. Dr. Cantor has exercised these options. If Dr. Cantor's employment is
terminated involuntarily or without cause, Dr. Cantor will be entitled to
receive his annual salary in periodic payments, until he secures other full-
time employment with another company or until six months have elapsed after
termination, whichever is earlier.
Mr. Foit's employment agreement provides for a salary of $180,000 per year,
subject to periodic increases by our board of directors at its discretion. Mr.
Foit is also entitled to receive a bonus of $10,000 per year. We also agreed
to pay reasonable expenses, up to a maximum of $50,000, associated with
Mr. Foit's relocation to our corporate offices in San Diego, California. Mr.
Foit was also granted an additional $1,000 monthly housing allowance during
his first twelve months of service with us. In connection with his employment
with us, Mr. Foit was granted options to purchase 100,000 shares of our common
stock under our 1998 Stock Option/Stock Issuance Plan. Mr. Foit has not
exercised these options. If Mr. Foit's employment is terminated involuntarily
or without cause, Mr. Foit will be entitled to receive his annual salary in
periodic payments, until he secures other full-time employment with another
company or until six months have elapsed after termination, whichever is
earlier.
Dr. Schmidt's employment agreement provides for a salary of DEM160,000 per
year, subject to periodic increases. We also paid, during the first six months
of 1999, housing expenses for Dr. Schmidt's use of an apartment in Hamburg. We
also paid, during that time period, reasonable travel expenses relating to Mr.
Schmidt's travel to his former place of residence on a weekly basis. In
connection with his employment with us, Dr. Schmidt was granted options to
purchase 60,000 shares of our common stock under our 1998 Stock Option/Stock
Issuance Plan. Dr. Schmidt has not exercised these options.
Dr. Rodi's employment agreement provides for a salary of $140,000 per year,
subject to periodic increases by our board of directors at its discretion. Dr.
Rodi was also entitled to a bonus of $30,000 payable upon execution of his
employment agreement. In addition, Dr. Rodi is entitled to receive a bonus of
$10,000 per year. We also agreed to pay reasonable expenses, up to a maximum
of $50,000, associated with Dr. Rodi's relocation to our corporate offices in
San Diego, California. Dr. Rodi was also granted an additional $1,500 monthly
housing allowance during his first three months of service with us. In
connection with his employment with us, Dr. Rodi was granted options to
purchase 50,000 shares of our common stock under our 1998 Stock Option/Stock
Issuance Plan. Dr. Rodi has not exercised these options. If Dr. Rodi's
employment is terminated involuntarily or without cause, Dr. Rodi will be
entitled to receive his annual salary in periodic payments, until he secures
other full-time employment with another company or until six months have
elapsed after termination, whichever is earlier.
Dr. Heaney's employment agreement provides for a salary of $175,000 per year,
subject to periodic increases by our board of directors at its discretion. Dr.
Heaney was also entitled to a bonus of $15,000 payable upon execution of his
employment agreement. In addition, Dr. Heaney is also entitled to receive a
bonus of $10,000 per year. We also agreed to pay reasonable expenses, up to a
maximum of $50,000, associated with Dr. Heaney's relocation to our corporate
offices in San Diego, California. In connection with his employment with us,
Dr. Heaney was granted options to purchase 100,000 shares of our common stock
under our 1998 Stock Option/Stock Issuance Plan. Dr. Heaney has not exercised
these options. If Dr. Heaney's employment is terminated involuntarily or
without cause, Dr. Heaney will be
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56
<PAGE>
RELATED PARTY TRANSACTIONS
- -------------------------------------------------------------------------------
entitled to receive his annual salary in periodic payments, until he secures
other full-time employment with another company or until six months have
elapsed after termination, whichever is earlier.
INDEBTEDNESS OF MANAGEMENT
We have loaned money to some of our executive officers under the terms of
promissory notes and stock pledge agreements, whereby the executive officers
pledge shares of our common stock issued upon the exercise of options to
purchase such common stock. These loans were used by the executive officers
upon the exercise of these options to acquire the underlying shares of common
stock. Each loan is required to be repaid on the earlier of two years after
its execution or the completion of a secondary public offering by us, in which
the officer making the note is allowed to sell his shares of our common stock.
The amount outstanding at October 31, 1999 on each loan shown below represents
the largest aggregate amount of indebtedness outstanding at any time during
the term of each such loan. The executive officers to whom we have made these
loans and the principal terms of the loans are shown in the following table:
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING INTEREST RATE
EXECUTIVE OFFICER POSITION AT OCTOBER 31, 1999 PER ANNUM
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Hubert Koster............. President and Chief Executive Officer $614,188 6.02%
Charles R. Cantor......... Chief Scientific Officer 472,640 5.98
Antonius Schuh............ Executive Vice President, Business Development 161,008 6.02
and Marketing
Stephen L. Zaniboni....... Senior Vice President, Chief Financial Officer 143,969 6.02
</TABLE>
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with each of our directors and
officers containing provisions that may require us to indemnify them against
liabilities that may arise by reason of their status or service as directors
or officers and to advance their expenses incurred as a result of any
proceeding against them. However, we will not indemnify directors or officers
with respect to liabilities arising from willful misconduct of a culpable
nature. For more information concerning these agreements, see "Description of
securities--limitation of liabilities and indemnification matters."
CONSULTING AGREEMENT
During the period beginning when we were organized in 1994 until July 1997,
Dr. Hubert Koster worked for us as a consultant. We paid Dr. Koster $5,000 per
month until September 1996 at which time we increased his consulting
compensation to $12,500 per month, in consideration for his services to us.
Dr. Koster's consulting arrangement was terminated when he was appointed as
our President and Chief Executive Officer in 1997.
INTELLECTUAL PROPERTY ASSIGNMENTS
Since our inception, Dr. Koster has assigned several personal patents and
other intellectual property rights to us that are key in the development of
our products and technology. As partial consideration for these assignments,
we reimbursed Dr. Koster for patent application costs and prior to 1996 we
issued shares of our Series A convertible preferred stock to Dr. Koster. We
have paid no additional consideration to Dr. Koster except for those amounts
paid in connection with his employment or consulting services to us since
January 1996.
Dr. Cantor is named as an inventor on a number of patents which we have
licensed from Boston University. If we are commercially successful and are
required to make royalty payments to Boston University under our license
arrangements, Dr. Cantor could receive additional compensation from Boston
University. In addition, we fund research at Boston University; however, Dr.
Cantor receives no direct compensation from Boston University as a result of
this funding.
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57
<PAGE>
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Principal stockholders
The following table shows information known to us with respect to the
beneficial ownership of our common stock as of October 31, 1999, and as
adjusted to reflect the sale of the shares of common stock offered under this
prospectus, by
. each person (or group of affiliated persons) who owns beneficially 5% or
more of our common stock;
. each of our directors;
. our executive officers listed in the "summary compensation" table above; and
. all of our directors and executive officers as a group.
Except as indicated in the footnotes to this table and subject to community
property laws where applicable, the persons named in the table have sole
voting and investment power with respect to all shares of our common stock
shown as beneficially owned by them. Beneficial ownership and percentage
ownership are determined in accordance with the rules of the SEC. The table
below includes the number of shares underlying options and warrants which are
exercisable within 60 days from the date of this offering. In addition, the
table below assumes the conversion of all shares of our preferred stock into
shares of our common stock on a for basis prior to this offering, and
is therefore based on 2,124,350 shares of our common stock outstanding prior
to this offering and shares outstanding immediately after this offering.
The address for those individuals for which an address is not otherwise
indicated is: 11555 Sorrento Valley Road, San Diego, California 92121.
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58
<PAGE>
PRINCIPAL STOCKHOLDERS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THIS OFFERING OWNED AFTER THIS OFFERING
NUMBER OF
SHARES NUMBER OF
NUMBER OF UNDERLYING NUMBER OF SHARES
SHARES OPTIONS OR SHARES UNDERLYING
BENEFICIAL OWNER OUTSTANDING WARRANTS PERCENT OUTSTANDING OPTIONS PERCENT
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Five percent stockholders
Funds affiliated with TVM
Techno Venture
Management(1)............ 2,536,405 38,854 14%
Maximilianstrasse 35
Einang C
80539 Munich
Germany
Alpinvest International
B.V. .................... 1,445,665 31,746 8
De Gooise Poort
Gooimeer 3 NL 1410 AB
Nararden
The Netherlands
Lombard Odier & Cie....... 952,381 -- 5
Todistrass 36
8027 Zurich
Switzerland
Directors and named
executive officers
Hubert Koster, PhD........ 1,900,001 110,000 11
Helmut Schuhsler, PhD..... 2,606,405 38,854 16
Ernst-
Gunter Afting, PhD, MD .. 15,018 60,000 *
John E. Lucas............. 40,000 -- *
Peter Reinisch, PhD(2).... 832,111 10,000 4
Stephen L. Zaniboni....... 210,000 50,000 1
Antonius Schuh, PhD....... 280,000 50,000 2
All directors and
executive officers as a
group (7 persons)........ 5,883,535 318,854 32%
</TABLE>
- --------
* Less than 1% of total.
(1) Includes 834,902 shares owned by TVM Zweite Beteiligung-US L.P; 538,461
shares owned by TVM Medical Ventures; 474,957 shares owned by TVM Eurotech
L.P.; 388,749 shares owned by TVM Techno Venture Enterprises No. II L.P.;
259,168 shares owned by TVM Intertech L.P.; and 40,168 shares owned by TVM
Techno Venture Investors No. 1 L.P. Dr. Schuhsler is a Managing Director
of TVM Techno Venture Management and a member of the Board of Management
of TVM Medical Ventures. Dr. Schuhsler disclaims beneficial ownership of
all shares issued or issuable to the foregoing entities, except to the
extent of his pecuniary interest, but exercises shared voting and
investment power with respect to some of these shares.
(2) Represents shares owned by GLS LP Investments III Limited. Dr. Reinish is
affiliated with GLS LP Investments III Limited. Dr. Reinisch disclaims
beneficial ownership of all shares issued or issuable to the foregoing
entities, except to the extent of his pecuniary interest, but exercises
shared voting and investment power with respect to some of these shares.
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59
<PAGE>
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Description of securities
The following information describes our common stock and preferred stock, as
well as options and warrants to purchase our common stock, and provisions of
our certificate of incorporation and our bylaws, all as will be in effect upon
the closing of this offering. This description is only a summary. You should
also refer to the certificate and bylaws which have been filed with the SEC as
exhibits to our registration statement, of which this prospectus forms a part.
The descriptions of the common stock and preferred stock, as well as options
and warrants to purchase our common stock, reflect changes to our capital
structure that will occur upon the closing of this offering in accordance with
the terms of the certificate. All share numbers are calculated prior to a
reverse stock split of for , which is subject to stockholder
approval.
Our authorized capital stock consists of 75,000,000 shares of common stock,
par value $0.001 per share, and 5,000,000 shares of preferred stock, par value
$0.001 per share.
COMMON STOCK
As of October 31, 1999, there were 2,124,350 shares of common stock
outstanding and held of record by 68 stockholders. There will be
shares of common stock outstanding upon the closing of this offering, which
gives effect to:
. a for reverse stock split of our common stock to be effected prior
to the closing of this offering; and
. the issuance of shares of common stock offered by us under this
prospectus.
Holders of our common stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of common
stock entitled to vote in any election of directors may elect all of the
directors standing for election, subject to the rights of any outstanding
preferred stock. Holders of common stock are entitled to receive dividends on
a pro rata basis, if any, as may be declared by the board of directors out of
funds legally available therefor, subject to any preferential dividend rights
of any outstanding preferred stock. Holders of common stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of common stock are, and the shares offered by us in this offering will
be, when issued and paid for, fully paid and nonassessable. The rights,
preferences and privileges of holders of common stock are subject to, and may
be materially adversely affected by, the rights of the holders of shares of
any series of preferred stock which we may designate and issue in the future.
Upon the closing of this offering, there will be no shares of preferred stock
outstanding.
PREFERRED STOCK
As of October 31, 1999, there were 14,842,757 shares of convertible preferred
stock outstanding. All outstanding shares of convertible preferred stock will
be converted into shares of our common stock upon the closing of
this offering and these shares of convertible preferred stock will no longer
be authorized, issued or outstanding.
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<PAGE>
DESCRIPTION OF SECURITIES
- -------------------------------------------------------------------------------
Upon the closing of this offering, the board of directors will be authorized,
without further stockholder approval, to issue from time to time up to an
aggregate of 5,000,000 shares of preferred stock in one or more series. Our
board of directors may also designate the powers, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices and liquidation preferences, any or all of which
may be superior to the rights of our common stock, and the number of shares
constituting any series or designations of such series. We have no present
plans to issue any shares of preferred stock. Please see "Description of
securities--Anti-takeover effects of provisions of Delaware law and our
certificate of incorporation and bylaws."
OPTIONS
As of October 31, 1999, options to purchase a total of 1,559,500 shares of
common stock were outstanding at a weighted average exercise price of $1.86.
Options to purchase a total of 4,500,000 shares of common stock may be granted
under the 1999 Stock Incentive Plan. Please see "Management--Employee benefit
plans" and "Shares eligible for future sale."
WARRANTS
We have outstanding warrants to purchase a total of 176,503 shares of our
capital stock, at a weighted average exercise price of $2.10 per share. The
warrants contain anti-dilution provisions providing for adjustments of the
exercise price and the number of shares underlying the warrants upon the
occurrence of certain events, including any recapitalization,
reclassification, stock dividend, stock split, stock combination or similar
transaction. The warrants grant to the holders registration rights with
respect to the common stock issuable upon their exercise, which are described
below. All of these warrants will be exercisable immediately before this
offering. Warrants to purchase shares expire in , warrants to
purchase shares expire in and warrants to purchase
shares expire in .
REGISTRATION RIGHTS
Under the terms of an agreement with some of our stockholders, after the
closing of this offering the holders of shares of common stock will be
entitled to demand the registration of their shares under the Securities Act
of 1933. The holders of 50% of such shares are entitled to demand that we
register their shares under the Securities Act of 1933 subject to limitations
described in the relevant agreement. We are not required to effect more than
two registrations for such holders pursuant to these demand registration
rights. These demand rights expire on December 21, 2001. In addition, after
the closing of this offering these holders will be entitled to piggyback
registration rights with respect to the registration of their shares of common
stock. If we propose to register any shares of common stock either for our
account or for the account of other security holders, the holders of shares
having piggyback rights are entitled to receive notice of the registration and
are entitled to include their shares in the registration, subject to some
limitations. Further, at any time after we become eligible to file a
registration statement on Form S-3, the holders of 25% of the shares held by
all holders of registration rights may require us to file registration
statements under the Securities Act of 1933 on Form S-3 with respect to their
shares of our common stock. These registration rights are subject to
conditions and limitations, among which is the right of the underwriters of an
offering to limit the number of shares of common stock held by security
holders with registration rights to be included in such registration. We are
generally required to bear all of the expenses of all these registrations,
including the reasonable fees of a single counsel acting on behalf of all
selling stockholders, except underwriting discounts and selling commissions.
Registration
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61
<PAGE>
DESCRIPTION OF SECURITIES
- -------------------------------------------------------------------------------
of any of the shares of our common stock held by security holders with
registration rights would result in such shares becoming freely tradable
without restriction under the Securities Act of 1933 immediately upon
effectiveness of such registration.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DELAWARE LAW AND OUR CERTIFI-
CATE OF INCORPORATION AND BYLAWS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to exceptions, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless the business combination is approved in a prescribed
manner. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to exceptions, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years did own, 15% or
more of the corporation's voting stock. This statute could prohibit or delay
the accomplishment of mergers or other takeover or change in control attempts
with respect to us and, accordingly, may discourage attempts to acquire us.
In addition, provisions of our certificate of incorporation and bylaws, which
will be in effect upon the closing of this offering and are summarized in the
following paragraphs, may have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt that a stockholder might consider
in its best interest, including those attempts that might result in a premium
over the market price for the shares held by stockholders.
BOARD OF DIRECTORS VACANCIES
Our bylaws authorize the board of directors to fill vacant directorships or
increase the size of the board of directors. This may deter a stockholder from
removing incumbent directors and simultaneously gaining control of the board
of directors by filling the vacancies created by such removal with its own
nominees.
STAGGERED BOARD
Our bylaws provide that our board will be classified into three classes of
directors beginning at the next annual meeting of stockholders. Please see
"Management--Classes of the board" for more information regarding our
staggered board. This may inhibit a stockholder from nominating and electing
directors and gaining control of the board of directors.
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS
Our certificate of incorporation provides that our stockholders may not take
action by written consent, and may only act at a duly called annual or special
meetings of our stockholders. Our bylaws further provide that special meetings
of our stockholders may be called only by the President, Chief Executive
Officer or Chairman of the board of directors or a majority of the board of
directors.
- -------------------------------------------------------------------------------
62
<PAGE>
DESCRIPTION AND SECURITIES
- -------------------------------------------------------------------------------
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Our bylaws provide that stockholders seeking to bring business before our
annual meeting of stockholders, or to nominate candidates for election as
directors at our annual meeting of stockholders, must provide timely notice of
their intent in writing. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, our principal executive offices not
less than 120 days before the first anniversary of the date of our notice of
annual meeting provided with respect to the previous year's annual meeting of
stockholders; provided, that if no annual meeting of stockholders was held in
the previous year or the date of the annual meeting of stockholders has been
changed to be more than 30 calendar days earlier than such anniversary, notice
by the stockholder, to be timely, must be so received a reasonable time before
the solicitation is made. Our bylaws also contain specific requirements as to
the form and content of a stockholder's notice. These provisions may inhibit
our stockholders from bringing matters before our annual meeting of
stockholders or from making nominations for directors at our annual meeting of
stockholders.
AUTHORIZED BUT UNISSUED SHARES
Our authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval, subject to
limitations imposed by the Nasdaq National Market. These additional shares may
be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans. The existence of authorized but unissued and unreserved common
stock and preferred stock could render more difficult or discourage an attempt
to obtain control of us by means of a proxy contest, tender offer, merger or
otherwise.
Delaware law provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws requires a greater percentage.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our certificate of incorporation provides that, except to the extent
prohibited by Delaware law, our directors shall not be personally liable to us
or our stockholders for monetary damages for any breach of fiduciary duty as
our directors. Under Delaware law, our directors have a fiduciary duty to us
which is not eliminated by this provision of the certificate and, in
appropriate circumstances, equitable remedies such as injunctive or other
forms of nonmonetary relief will remain available. In addition, each of our
directors will continue to be subject to liability under Delaware law for
breach of the director's duty of loyalty to us for acts or omissions which are
found by a court of competent jurisdiction to be not in good faith or which
involve intentional misconduct, or knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited
by Delaware law. This provision also does not affect the directors'
responsibilities under any other laws, such as the Federal securities laws or
state or Federal environmental laws.
Section 145 of the Delaware General Corporation Law empowers a corporation to
indemnify its directors and officers and to purchase insurance with respect to
liability arising out of their capacity or status as directors and officers,
provided that this provision shall not eliminate or limit the liability of a
director for the following:
. any breach of the director's duty of loyalty to us or our stockholders;
. acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law;
- -------------------------------------------------------------------------------
63
<PAGE>
DESCRIPTION OF SECURITIES
- -------------------------------------------------------------------------------
. unlawful payments of dividends or unlawful stock purchases or redemptions;
or
. for any transaction from which the director derived an improper personal
benefit.
Delaware law provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under our bylaws, any agreement, a vote of
stockholders or otherwise. The certificate eliminates the personal liability
of directors to the fullest extent permitted by Delaware law. In addition, the
certificate provides that we may fully indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person is or was one of our
directors or officers or is or was serving at our request as a director or
officer of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding.
We have also entered into agreements to indemnify our directors and executive
officers, in addition to the indemnification provided for in our bylaws. We
believe that these provisions and agreements are necessary to attract and
retain qualified directors and executive officers. Our bylaws also permit us
to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions, regardless of
whether Delaware law would permit indemnification. We have applied for
liability insurance for our officers and directors.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under our certificate of incorporation or otherwise. We
are not aware of any threatened litigation or proceeding that may result in a
claim for such indemnification.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.
- -------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------------------
Shares eligible for future sale
Prior to this offering, there has been no public offering for our stock. The
market price of our common stock could decline as a result of sales of a large
number of shares of our common stock in the market after this offering, or the
perception that such sales could occur. Such sales also could make it more
difficult for us to sell equity securities in the future at a time and price
that we deem appropriate. After this offering, we will have outstanding
shares of common stock. Of these shares, the shares being offered
hereby are freely tradable. This leaves shares eligible for sale in the
public market as follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES DATE
- -----------------------------------------------------------------------------
<C> <S>
After the date of this prospectus
Upon the filing of a registration statement to register for resale
shares of common stock issuable upon the exercise of options
granted under our stock option plans
At various times after 90 days from the date of this prospectus
under Rules 701 and 144
At various times after 180 days from the date of this prospectus,
subject, in some cases, to volume limitations under lock-up
agreements and Rule 144
</TABLE>
Our directors and officers and some of our stockholders who hold shares
in the aggregate, together with the holders of options to purchase
shares of common stock and the holders of warrants to purchase shares
of common stock, have entered into lock-up agreements under which they have
agreed that they will not sell, directly or indirectly, any shares of common
stock without the prior written consent of Warburg Dillon Read LLC for a
period of 180 days from the date of this prospectus.
In general, under Rule 144 of the Securities Act of 1933, as currently in
effect, a person or persons whose shares are required to be aggregated,
including an affiliate, who has beneficially owned shares for at least one
year is entitled to sell, within any three-month period commencing 90 days
after the date of this prospectus, a number of shares that does not exceed the
greater of 1% of the then outstanding shares of common stock--approximately
shares immediately after this offering--or the average weekly trading
volume in our common stock during the four calendar weeks preceding the date
on which notice of such sale is filed, subject to certain restrictions. In
addition, a person who is not deemed to have been an affiliate of ours at any
time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above. To the extent that shares were acquired from one of our affiliates,
such person's holding period for the purpose of effecting a sale under Rule
144 commences on the date of transfer from the affiliate.
Following the expiration of the lock-up period, shares issued upon
exercise of options that we granted prior to the date of this offering will
also be available for sale in the public market pursuant to Rule 701 under the
Securities Act of 1933. Rule 701 permits resales of such shares in reliance
upon Rule 144 under the Securities Act of 1933 but without compliance with the
restrictions, including the holding-period requirement, imposed under Rule
144.
As of the date of this prospectus, options to purchase a total of 2,475,250
shares of common stock are outstanding, all of which are currently
exercisable. Upon the closing of this offering, we intend to file a
registration statement to register for resale the shares of common
stock reserved for issuance under our stock option plans. We expect the
registration statement to become effective immediately upon filing. Shares
issued upon the exercise of stock options granted under our stock option plans
will be eligible for resale in the public market from time to time subject to
vesting and, in the case of certain options, the expiration of the lock-up
agreements referred to below.
- -------------------------------------------------------------------------------
65
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
- -------------------------------------------------------------------------------
Stockholders holding approximately shares of common stock have the
right, subject to various conditions and limitations, to include their shares
in registration statements relating to our securities. By exercising their
registration rights and causing a large number of shares to be registered and
sold in the public market, these holders may cause the price of the common
stock to fall. In addition, any demand to include such shares in our
registration statements could have a material adverse effect on our ability to
raise needed capital. Please see "Management--Benefit plans," "Principal
stockholders," "Description of securities--Registration rights," "Shares
eligible for future sale" and "Underwriting."
- -------------------------------------------------------------------------------
66
<PAGE>
- -------------------------------------------------------------------------------
Underwriting
Sequenom and the underwriters for the offering named below have entered into
an underwriting agreement concerning the shares being offered. Subject to
conditions, each underwriter has severally agreed to purchase the number of
shares indicated in the following table. Warburg Dillon Read LLC, BancBoston
Robertson Stephens Inc. and SG Cowen Securities Corporation are the
representatives of the underwriters.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- -------------------------------------------------------------------------------
<S> <C>
Warburg Dillon Read LLC........................................
BancBoston Robertson Stephens Inc..............................
SG Cowen Securities Corporation................................
----
Total........................................................
====
</TABLE>
If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have a 30-day option to buy from us up to an
additional shares at the initial public offering price less the
underwriting discounts and commissions to cover these sales. If any shares are
purchased under this option, the underwriters will severally purchase shares
in approximately the same proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and
commissions we will pay to the underwriters. These amounts are shown assuming
both no exercise and full exercise of the underwriters' option to purchase up
to an additional shares.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
- --------------------------------------------------------------------------------
<S> <C> <C>
Per share............................................. $ $
Total............................................... $ $
</TABLE>
We estimate that the total expenses of the offering payable by us, excluding
underwriting discounts and commissions, will be approximately $ .
Shares sold by the underwriters to the public will initially be offered at the
initial public offering price set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a
discount of up to $ per share from the initial public offering price.
Any of these securities dealers may resell any shares purchased from the
underwriters to other brokers or dealers at a discount of up to $ per
share from the initial public offering price. If all the shares are not sold
at the initial public offering price, the representatives may change the
offering price and the other selling terms.
The underwriters have informed us that they do not expect discretionary sales
to exceed 5% of the shares of common stock to be offered.
Sequenom, its directors, officers and certain of its stockholders have agreed
with the underwriters not to offer, sell, contract to sell, hedge or otherwise
dispose of, directly or indirectly, or file with the SEC a registration
statement under the Securities Act relating to, any of its common stock or
securities convertible into or exchangeable for shares of common stock during
the period from the date of this prospectus continuing through the date 180
days after the date of this prospectus, without the prior written consent of
Warburg Dillon Read LLC. This agreement does not apply to any securities
issued under existing employee benefit plans.
- -------------------------------------------------------------------------------
67
<PAGE>
UNDERWRITING
- -------------------------------------------------------------------------------
The underwriters have reserved for sale, at the initial public offering price,
up to shares of our common stock being offered for sale to our
customers and business partners. At the discretion of our management, other
parties, including our employees, may participate in the reserved shares
program. The number of shares available for sale to the general public in the
offering will be reduced to the extent these persons purchase reserved shares.
Any reserved shares not so purchased will be offered by the underwriters to
the general public on the same terms as the other shares.
Prior to this offering, there has been no public market for our common stock.
The initial public offering price will be negotiated by us and the
representatives. The principal factors to be considered in determining the
initial public offering price include:
. the information set forth in this prospectus and otherwise available to the
representatives;
. the history and the prospects for the industry in which we compete;
. the ability of our management;
. our prospects for future earnings, the present state of our development, and
our current financial position;
. the general condition of the securities markets at the time of this
offering; and
. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.
In connection with the offering, the underwriters may purchase and sell shares
of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock
while the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the representatives have repurchased shares sold by or
for the account of that underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by
the underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
We have agreed to indemnify the several underwriters against some liabilities,
including liabilities under the Securities Act of 1933 and to contribute to
payments that the underwriters may be required to make in respect thereof.
- -------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------------------
Legal matters
The validity of the shares of common stock offered hereby will be passed upon
for us by Brobeck, Phleger & Harrison LLP, San Diego, California and for the
underwriters by Shearman & Sterling, Menlo Park, California.
Experts
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1998 and September 30, 1999 and for each
of the two years in the period ended December 31, 1998 and the nine months
ended September 30, 1999, and the period from February 14, 1994 (inception) to
September 30, 1999, as set forth in their report, which, as to the period from
February 14, 1994 (inception) to December 31, 1995 is based on the report of
other auditors. We have included our financial statements in this prospectus
and elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
- -------------------------------------------------------------------------------
69
<PAGE>
- -------------------------------------------------------------------------------
Where you can find more information
We have filed with the SEC a registration statement on Form S-1, including the
exhibits, schedules and amendments to the registration statement, under the
Securities Act of 1933 with respect to the shares of common stock to be sold
in this offering. This prospectus does not contain all the information set
forth in the registration statement. For further information with respect to
Sequenom and the shares of common stock to be sold in this offering, please
refer to the registration statement. Statements contained in this prospectus
as to the contents of any contract, agreement or other document referred to
are not necessarily complete, and in each instance reference is made to the
copy of such contract, agreement or other document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.
You may read and copy all or any portion of the registration statement or any
other information we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference room. Our SEC filings, including the registration statement,
are also available to you on the SEC's Web site (http://www.sec.gov).
As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934, and, in
accordance therewith, will file periodic reports, proxy statements and other
information with the SEC. Upon approval of the common stock for quotation on
the Nasdaq National Market, such reports, proxy and information statements and
other information may also be inspected at the offices of Nasdaq Operations,
1735 K Street, N.W., Washington, D.C. 20006.
We intend to furnish our stockholders with annual reports containing audited
financial statements.
- -------------------------------------------------------------------------------
70
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
- -------------------------------------------------------------------------------
<S> <C>
Report of Ernst & Young LLP, independent auditors........................ F-2
Consolidated balance sheets as of December 31, 1998 and September 30,
1999.................................................................... F-3
Consolidated statements of operations for the years ended December 31,
1997 and 1998, the nine months ended September 30, 1999, the nine months
ended September 30, 1998 (unaudited) and the period February 14, 1994
(inception) to September 30, 1999....................................... F-4
Consolidated statements of stockholders' equity (deficit) for the period
February 14, 1994 (inception) to September 30, 1999..................... F-5
Consolidated statements of cash flows for the years ended December 31,
1997 and 1998, the nine months ended September 30, 1999, the nine months
ended September 30, 1998 (unaudited) and the period February 14, 1994
(inception) to September 30, 1999....................................... F-7
Notes to consolidated financial statements............................... F-8
</TABLE>
- --------------------------------------------------------------------------------
F-1
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Sequenom, Inc.
We have audited the accompanying consolidated balance sheets of Sequenom, Inc.
(a development stage company) as of December 31, 1998 and September 30, 1999
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the years ended December 31, 1997 and 1998, the
nine month period ended September 30, 1999 and the period from February 14,
1994 (inception) to September 30, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. The financial statements for the period
February 14, 1994 (inception) through December 31, 1995, which include a net
loss of $2,869,699, were audited by other auditors whose report dated March
26, 1996 expressed an unqualified opinion on those statements. Our opinion on
the consolidated statements of operations, stockholders' equity, and cash
flows for the period from February 14, 1994 (inception) to September 30, 1999,
insofar as it relates to amounts for the period from February 14, 1994
(inception) through December 31, 1995, is based solely on the report of other
auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable basis
for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Sequenom, Inc. (a development
stage company) at December 31, 1998 and September 30, 1999, and the results of
its operations and its cash flows for the years ended December 31, 1997 and
1998, the nine month period ended September 30, 1999 and the period from
February 14, 1994 (inception) to September 30, 1999, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
San Diego, California
November 18, 1999
- -------------------------------------------------------------------------------
F-2
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, SEPTEMBER 30, STOCKHOLDERS'
1998 1999 EQUITY
- --------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......... $8,559,612 $3,046,600
Short-term investments, available-
for-sale.......................... 19,937,876 25,022,660
Inventories........................ -- 242,829
Other current assets and prepaid
expenses.......................... 251,596 434,057
------------ ------------
Total current assets................ 28,749,084 28,746,146
Equipment and leasehold improve-
ments, net........................ 3,941,888 5,810,844
Other assets....................... 86,312 74,636
------------ ------------
Total assets........................ $32,777,284 $34,631,626
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued ex-
penses............................ $2,385,254 $3,534,003
Current portion of capital lease
obligations....................... 349,489 441,446
------------ ------------
Total current liabilities........... 2,734,743 3,975,449
Capital lease obligations, less
current portion.................... 730,064 1,312,713
Long-term debt...................... 5,964,000 5,446,000
Accrued long-term interest payable
on long-term debt.................. 713,500 930,625
Commitments
Stockholders' equity:
Convertible preferred stock, par
value $0.001;
Authorized shares--14,842,757 at
September 30, 1999; 5,000,000 pro
forma............................
Issued and outstanding shares--
12,973,694 at December 31, 1998
and 14,842,757 at September 30,
1999; no shares pro forma........
Aggregate liquidation preference--
$44,645,038 at December 31, 1998
and $56,793,947 at September 30,
1999............................. 12,974 14,843 $--
Common stock, par value $0.001;
Authorized shares--19,500,000
Issued and outstanding shares--
331,010 at December 31, 1998 and
873,369 at September 30, 1999;
15,716,104 shares pro forma...... 331 873 15,716
Additional paid-in capital......... 46,798,743 62,533,274 62,533,274
Notes receivable for stock......... -- (511,281) (511,281)
Deferred compensation related to
stock options..................... (2,420,150) (2,167,162) (2,167,162)
Accumulated other comprehensive in-
come (loss)....................... (22,649) 216,602 216,602
Deficit accumulated during the
development stage................. (21,734,272) (37,120,310) (37,120,310)
------------ ------------ ------------
Total stockholders' equity.......... 22,634,977 22,966,839 $22,966,839
------------ ------------ ------------
Total liabilities and stockholders'
equity............................. $32,777,284 $34,631,626
============ ============
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-3
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM FEBRUARY
14, 1994
NINE MONTHS ENDED (INCEPTION) TO
YEARS ENDED DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1998 1999 1999
- ----------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Research and development
grants................. $526,573 $351,067 $126,000 $80,653 $1,851,196
Costs and expenses:
Research and
development........... 3,531,558 6,187,572 2,777,762 7,137,677 22,189,265
General and
administrative........ 1,860,629 4,218,453 3,412,378 5,363,295 13,124,367
Amortization of
deferred
compensation.......... -- -- -- 3,615,150 3,615,150
----------- ------------ ----------- ------------ ------------
5,392,187 10,406,025 6,190,140 16,116,122 38,928,782
----------- ------------ ----------- ------------ ------------
Loss from operations.... (4,865,614) (10,054,958) (6,064,140) (16,035,469) (37,077,586)
Interest income........ 56,986 397,361 290,929 1,225,696 1,758,021
Interest expense....... (308,191) (612,975) (229,947) (576,265) (1,800,745)
----------- ------------ ----------- ------------ ------------
Net loss................ $(5,116,819) $(10,270,572) $(6,003,158) $(15,386,038) $(37,120,310)
=========== ============ =========== ============ ============
Historical net loss per
share, basic and
diluted................ $(22.62) $(33.33) $(20.12) $(39.41)
=========== ============ =========== ============
Weighted average shares
outstanding, basic and
diluted................ 226,251 308,121 298,375 390,486
Pro forma net loss per
share, basic and
diluted................ $(1.09) $(1.05)
============ ============
Pro forma weighted
average shares
outstanding, basic and
diluted................ 9,452,092 14,714,027
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-4
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
DEFERRED DEFICIT
NOTES COMPENSATION ACCUMULATED ACCUMULATED
CONVERTIBLE ADDITIONAL RECEIVABLE RELATED TO OTHER DURING THE
PREFERRED STOCK COMMON STOCK PAID-IN FROM STOCK COMPREHENSIVE DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL OFFICERS OPTIONS INCOME (LOSS) STAGE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss........ -- $-- -- $-- $-- $-- $-- $-- $(1,149,498)
Translation
adjustment...... -- -- -- -- -- -- -- (1,703) --
Comprehensive
loss............ -- -- -- -- -- -- -- -- --
Issuance of
common stock.... -- -- 1 -- 1 -- -- -- --
Issuance of
Series A
Convertible Preferred
Stock, net of
issuance costs
of $35,484...... 442,000 442 -- -- 185,074 -- -- -- --
Issuance of
Series A
Convertible Preferred
Stock for
services........ 38,000 38 -- -- 18,962 -- -- -- --
Issuance of
Series A
Convertible Preferred
Stock for
assets.......... 1,100,000 1,100 -- -- 548,900 -- -- -- --
--------- ------ ------- ------ ---------- --- ------- -------- -----------
Balance at
December 31,
1994............. 1,580,000 1,580 1 -- 752,937 -- -- (1,703) (1,149,498)
Net loss........ -- -- -- -- -- -- -- -- (1,720,201)
Translation
adjustment...... -- -- -- -- -- -- -- (3,222) --
Comprehensive
loss............ -- -- -- -- -- -- -- -- --
Issuance of
Series B
Convertible Preferred
Stock, net of
issuance costs
of $32,940...... 2,333,333 2,333 -- -- 3,464,727 -- -- -- --
Issuance of
common stock.... -- -- 26,250 26 1,287 -- -- -- --
Exercise of
stock options... -- -- 122,000 122 5,978 -- -- -- --
--------- ------ ------- ------ ---------- --- ------- -------- -----------
Balance at
December 31,
1995............. 3,913,333 3,913 148,251 148 4,224,929 -- -- (4,925) (2,869,699)
Net loss........ -- -- -- -- -- -- -- -- (3,477,182)
Translation
adjustment...... -- -- -- -- -- -- -- (63,554) --
Comprehensive
loss............ -- -- -- -- -- -- -- -- --
Issuance of
Series B
Convertible Preferred
Stock, net of
issuance costs
of $10,592...... 643,330 644 -- -- 953,647 -- -- -- --
Issuance of
warrants........ -- -- -- -- 18,000 -- -- -- --
Deferred
compensation.... -- -- -- -- 33,000 -- (25,000) -- --
--------- ------ ------- ------ ---------- --- ------- -------- -----------
Balance at
December 31,
1996............. 4,556,663 4,557 148,251 148 5,229,576 -- (25,000) (68,479) (6,346,881)
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIT)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Net loss........ $(1,149,498)
Translation
adjustment...... (1,703)
-------------
Comprehensive
loss............ (1,151,201)
Issuance of
common stock.... 1
Issuance of
Series A
Convertible Preferred
Stock, net of
issuance costs
of $35,484...... 185,516
Issuance of
Series A
Convertible Preferred
Stock for
services........ 19,000
Issuance of
Series A
Convertible Preferred
Stock for
assets.......... 550,000
-------------
Balance at
December 31,
1994............. (396,684)
Net loss........ (1,720,201)
Translation
adjustment...... (3,222)
-------------
Comprehensive
loss............ (1,723,423)
Issuance of
Series B
Convertible Preferred
Stock, net of
issuance costs
of $32,940...... 3,467,060
Issuance of
common stock.... 1,313
Exercise of
stock options... 6,100
-------------
Balance at
December 31,
1995............. 1,354,366
Net loss........ (3,477,182)
Translation
adjustment...... (63,554)
-------------
Comprehensive
loss............ (3,540,736)
Issuance of
Series B
Convertible Preferred
Stock, net of
issuance costs
of $10,592...... 954,291
Issuance of
warrants........ 18,000
Deferred
compensation.... 8,000
-------------
Balance at
December 31,
1996............. (1,206,079)
</TABLE>
- --------------------------------------------------------------------------------
F-5
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
<TABLE>
<CAPTION>
DEFERRED DEFICIT
NOTES COMPENSATION ACCUMULATED ACCUMULATED
CONVERTIBLE ADDITIONAL RECEIVABLE RELATED TO OTHER DURING THE
PREFERRED STOCK COMMON STOCK PAID-IN FROM STOCK COMPREHENSIVE DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL OFFICERS OPTIONS INCOME (LOSS) STAGE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss........ -- $-- -- $-- $-- $-- $-- $-- $(5,116,819)
Translation ad-
justment........ -- -- -- -- -- -- -- 209,162 --
Comprehensive
loss............ -- -- -- -- -- -- -- -- --
Exercise of
stock options... -- -- 144,009 144 35,856 -- -- -- --
Issuance of Se-
ries C Convert-
ible Preferred
Stock, net of
issuance costs
of $49,661...... 1,065,079 1,065 -- -- 3,304,273 -- -- -- --
Amortization of
deferred compen-
sation.......... -- -- -- -- -- -- 25,000 -- --
---------- ------- ------- ---- ----------- --------- ----------- -------- ------------
Balance at Decem-
ber 31, 1997..... 5,621,742 5,622 292,260 292 8,569,705 -- -- 140,683 (11,463,700)
Net loss........ -- -- -- -- -- -- -- -- (10,270,572)
Unrealized gain
on available-
for-sale securi-
ties............ -- -- -- -- -- -- -- 23,326 --
Translation ad-
justment........ -- -- -- -- -- -- -- (186,658) --
Comprehensive
loss............ -- -- -- -- -- -- -- -- --
Exercise of
stock options... -- -- 38,750 39 7,086 -- -- -- --
Issuance of
stock options to
consultants..... -- -- -- -- 10,000 -- -- -- --
Issuance of Se-
ries C Convert-
ible Preferred
Stock, net of
issuance costs
of $47,370...... 3,508,252 3,508 -- -- 11,000,115 -- -- -- --
Issuance of Se-
ries D Convert-
ible Preferred
Stock, net of
Issuance costs
of $188,519..... 3,843,700 3,844 -- -- 24,791,687 -- -- -- --
Deferred compen-
sation.......... -- -- -- -- 2,420,150 -- (2,420,150) -- --
---------- ------- ------- ---- ----------- --------- ----------- -------- ------------
Balance at Decem-
ber 31, 1998..... 12,973,694 12,974 331,010 331 46,798,743 (2,420,150) (22,649) (21,734,272)
Net loss........ -- -- -- -- -- -- -- -- (15,386,038)
Unrealized loss
available-for-
sale securi-
ties............ -- -- -- -- -- -- -- (48,083) --
Translation ad-
justment........ -- -- -- -- -- -- -- 287,334 --
Comprehensive
loss............ -- -- -- -- -- -- -- -- --
Exercise of
stock options... -- -- 542,359 542 495,008 (511,281) -- -- --
Issuance of
stock options to
consultants..... -- -- -- -- 102,527 -- -- -- --
Issuance of Se-
ries D Convert-
ible Preferred
stock, net of
issuance costs
of $372,206..... 1,869,063 1,869 -- -- 11,774,834 -- -- -- --
Deferred compen-
sation.......... -- -- -- -- 3,362,162 -- (3,362,162) -- --
Amortization of
deferred compen-
sation.......... -- -- -- -- -- -- 3,615,150 -- --
---------- ------- ------- ---- ----------- --------- ----------- -------- ------------
Balance at Sep-
tember 30, 1999.. 14,842,757 $14,843 873,369 $873 $62,533,274 $(511,281) $(2,167,162) $216,602 $(37,120,310)
========== ======= ======= ==== =========== ========= =========== ======== ============
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIT)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Net loss........ $(5,116,819)
Translation ad-
justment........ 209,162
-------------
Comprehensive
loss............ (4,907,657)
Exercise of
stock options... 36,000
Issuance of Se-
ries C Convert-
ible Preferred
Stock, net of
issuance costs
of $49,661...... 3,305,338
Amortization of
deferred compen-
sation.......... 25,000
-------------
Balance at Decem-
ber 31, 1997..... (2,747,398)
Net loss........ (10,270,572)
Unrealized gain
on available-
for-sale securi-
ties............ 23,326
Translation ad-
justment........ (186,658)
-------------
Comprehensive
loss............ (10,433,904)
Exercise of
stock options... 7,125
Issuance of
stock options to
consultants..... 10,000
Issuance of Se-
ries C Convert-
ible Preferred
Stock, net of
issuance costs
of $47,370...... 11,003,623
Issuance of Se-
ries D Convert-
ible Preferred
Stock, net of
Issuance costs
of $188,519..... 24,795,531
Deferred compen-
sation.......... --
-------------
Balance at Decem-
ber 31, 1998..... 22,634,977
Net loss........ (15,386,038)
Unrealized loss
available-for-
sale securi-
ties............ (48,083)
Translation ad-
justment........ 287,334
-------------
Comprehensive
loss............ (15,146,787)
Exercise of
stock options... (15,731)
Issuance of
stock options to
consultants..... 102,527
Issuance of Se-
ries D Convert-
ible Preferred
stock, net of
issuance costs
of $372,206..... 11,776,703
Deferred compen-
sation.......... --
Amortization of
deferred compen-
sation.......... 3,615,150
-------------
Balance at Sep-
tember 30, 1999.. $22,966,839
=============
</TABLE>
- --------------------------------------------------------------------------------
F-6
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FEBRUARY 14,
1994
YEARS ENDED NINE MONTHS ENDED (INCEPTION) TO
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1998 1999 1999
- ----------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................ $(5,116,819) $(10,270,572) $(6,003,158) $(15,386,038) $(37,120,310)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Amortization of
deferred
compensation.......... -- -- -- 3,615,149 3,615,149
Warrants issued in
conjunction with lease
financing............. -- -- -- -- 18,000
Options issued to
consultants........... 25,000 10,000 -- 102,527 145,527
Stock issued for
technology and
services.............. -- -- -- -- 569,000
Depreciation and
amortization.......... 351,173 961,051 797,599 1,285,789 3,060,173
Changes in operating
assets and
liabilities:
Inventories............ -- -- -- (243,036) (243,036)
Other current assets... 75,364 47,305 (238,993) (263,499) (556,508)
Other assets........... (107,427) 56,085 59,405 4,829 (16,160)
Accounts payable and
accrued expenses...... 356,155 1,237,892 (29,252) 1,217,450 3,733,659
Unearned revenue....... (125,000) (126,000) (126,000) -- --
Other liabilities...... 149,500 289,500 74,750 217,125 805,125
----------- ------------ ----------- ------------ ------------
Net cash used in
operating activities... (4,392,054) (7,794,739) (5,465,649) (9,449,704) (25,989,381)
INVESTING ACTIVITIES
Purchase of equipment
and leasehold
improvements........... (490,891) (3,830,666) (2,613,514) (3,275,247) (8,997,999)
Purchases of marketable
securities............. -- (19,914,550) -- (22,655,545) (42,570,095)
Maturities of marketable
securities............. -- -- -- 17,476,703 17,476,703
----------- ------------ ----------- ------------ ------------
Net cash used in
investing activities... (490,891) (23,745,216) (2,613,514) (8,454,089) (34,091,391)
FINANCING ACTIVITIES
Proceeds from issuance
of Convertible
Preferred Stock........ 3,305,338 35,799,154 11,009,967 11,776,703 53,908,061
Proceeds from long-term
debt................... 1,165,000 2,276,560 2,233,200 -- 6,039,160
Borrowings under capital
lease obligations...... -- 1,306,312 1,074,549 912,149 2,218,461
Payments on capital
lease obligations...... -- (226,758) (132,286) (237,542) (464,300)
Proceeds from issuance
of convertible term
notes to stockholders.. -- -- -- -- 1,580,000
Proceeds from issuance
of Common Stock........ 36,000 7,125 36 37,721 88,260
----------- ------------ ----------- ------------ ------------
Net cash provided by
financing activities... 4,506,338 39,162,393 14,185,466 12,489,031 63,369,642
----------- ------------ ----------- ------------ ------------
Net increase (decrease)
in cash and cash
equivalents............ (376,607) 7,622,438 6,106,303 (5,414,762) 3,288,870
Effect of exchange rate
change on cash and cash
equivalents............ (116,748) 104,392 120,775 (98,250) (242,270)
Cash and cash
equivalents at
beginning of period.... 1,326,137 832,782 832,782 8,559,612 --
----------- ------------ ----------- ------------ ------------
Cash and cash
equivalents at end of
period................. $832,782 $8,559,612 $7,059,860 $3,046,600 $3,046,600
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Conversion of
convertible term notes
to Series B Convertible
Preferred Stock........ $-- $-- $-- $-- $1,580,000
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION:
Interest paid........... $158,691 $323,475 $155,197 $359,140 $841,306
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-7
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF THE BUSINESS
Sequenom, Inc. (the "Company") was incorporated on February 14, 1994 in the
State of Delaware. Since inception, the Company has been primarily involved in
the research and development of high definition DNA analysis tools for
industrial biomedical and life science applications, and has not yet generated
revenues from its planned commercial operations. Accordingly, through the date
of these financial statements, the Company is considered to be a development
stage company.
Since inception, the Company has incurred significant losses and, as of
September 30, 1999, has an accumulated deficit of $37.1 million. Revenues to
date have been solely from research grants. The Company began placing
MassArray systems at beta sites and pre-launch partners in July 1999.
Information received from these sites is being used to optimize product
offerings. The Company expects to generate revenue from the commercial launch
of its MassArray system in the first quarter of 2000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Sequenom GmbH. All significant
intercompany transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with original maturities
when purchased of less than three months.
SHORT-TERM INVESTMENTS AND CONCENTRATION OF CREDIT RISK
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
115, Accounting for Certain Investments in Debt and Equity Securities, the
Company's investment securities are classified as available-for-sale and
unrealized holding gains or losses are included in comprehensive income
(loss.) Realized gains or losses, calculated based on the specific
identification method, were not material for the years ended December 31, 1997
and 1998, or the nine-month period ended September 30, 1999.
At December 31, 1998, short-term investments consisted of the following:
<TABLE>
<CAPTION>
AMORTIZED MARKET UNREALIZED
COST VALUE GAIN
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Obligations of U.S. government agencies..... $ 6,829,729 $ 6,830,085 $ 356
Corporate debt securities................... 13,084,821 13,107,791 22,970
----------- ----------- -------
Total short-term investments................ $19,914,550 $19,937,876 $23,326
=========== =========== =======
</TABLE>
Approximately 75% and 25% of these securities mature within one and two years
of December 31, 1998, respectively.
- -------------------------------------------------------------------------------
F-8
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At September 30, 1999, short-term investments consisted of the following:
<TABLE>
<CAPTION>
AMORTIZED MARKET UNREALIZED
COST VALUE GAIN
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Obligations of U.S. government agencies..... $ 8,484,336 $ 8,459,315 $25,021
Corporate debt securities................... 16,609,057 16,563,345 45,712
----------- ----------- -------
Total short-term investments................ $25,093,393 $25,022,660 $70,733
=========== =========== =======
</TABLE>
Approximately 76% and 24% of these securities mature within one and two years
of September 30, 1999, respectively.
INVENTORIES
Inventories consist principally of raw materials and are stated at the lower
of cost or market. Cost is determined by the first-in, first-out (FIFO)
method.
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment is stated at cost and depreciated using the straight-line method
over the estimated useful lives of the assets, generally 3 to 5 years, or the
lease term, whichever is shorter. Leasehold improvements are amortized using
the straight-line method over the estimated useful life of the improvement or
the remaining term of the lease, whichever is shorter.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, if indicators of
impairment exist, the Company assesses the recoverability of the affected
long-lived assets by determining whether the carrying value of such assets can
be recovered through undiscounted future operating cash flows. If impairment
is indicated, the Company will measure the amount of such impairment by
comparing the carrying value of the asset to the present value of the expected
future cash flows associated with the use of the asset. To date, no such
indicators of impairment have been identified.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments, including cash and cash equivalents, accounts
receivable, accounts payable, accrued liabilities, and long-term debt and the
related accrued interest, are carried at cost, which management believes
approximates fair value because of the short-term maturity of these
instruments.
REVENUE RECOGNITION
Grant revenue is recorded as the research expenses relating to the grants are
incurred.
The Company's product shipments through September 30, 1999 have been under
arrangements whereby the customer is performing beta testing on the MassArray
product and may elect to purchase the product following the completion of an
evaluation period. Revenue under these arrangements will be recognized upon
the completion of the evaluation period and upon the customer's definitive
acceptance of the product. Certain of these arrangements require the customer
to make one or more payments during the testing and evaluation period. Amounts
received under these arrangements ($100,000 at September 30, 1999) are
recorded as customer advances, which are included in accounts payable and
accrued expenses in the accompanying balance sheet.
- -------------------------------------------------------------------------------
F-9
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed in the period incurred.
INCOME TAXES
In accordance with SFAS No. 109, Accounting for Income Taxes, a deferred tax
asset or liability is determined based on the difference between the financial
statement and tax basis of assets and liabilities as measured by the enacted
tax rates which will be in effect when these differences reverse. The Company
provides a valuation allowance against net deferred tax assets unless, based
upon the available evidence, it is more likely than not that the deferred tax
assets will be realized.
PATENT COSTS
Costs related to patent prosecution are expensed as incurred as recoverability
of such expenditures is uncertain.
FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's German subsidiary are measured using
the German Deutsche Mark (DEM) as the functional currency. Assets and
liabilities of this subsidiary are translated at the rates of exchange at the
balance sheet date. The resulting translation adjustments are included as a
separate component of other comprehensive income (loss). Income and expense
items are translated at the average daily rate of exchange.
STOCK-BASED COMPENSATION
As permitted by SFAS No. 123, Accounting for Stock-Based Compensation, the
Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, ("APB 25") and related
Interpretations in accounting for stock-based employee compensation. Under APB
25, if the exercise price of the Company's employee and director stock options
equals or exceeds the deemed fair value of the underlying stock on the date of
grant, no compensation expense is recognized.
When the exercise price of the employee or director stock options is less than
the deemed fair value of the underlying stock on the grant date, the Company
records deferred compensation for the difference and amortizes this amount to
expense in accordance with FASB Interpretation No. 28, or FIN 28, over the
vesting period of the options. Options or stock awards issued to non-employees
are recorded at their fair value as determined in accordance with SFAS No. 123
and recognized over the related service period.
COMPREHENSIVE INCOME (LOSS)
As of January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 requires unrealized gains or losses on the
Company's available-for-sale securities and foreign currency translation
adjustments, which prior to adoption were reported separately in stockholders'
equity, to be included in other comprehensive income (loss).
SEGMENT REPORTING
The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise
and Related Information, during 1998. SFAS No. 131 requires the use of a
management approach in identifying segments of an enterprise. Management has
determined that the Company operates in one business segment.
- -------------------------------------------------------------------------------
F-10
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTERIM FINANCIAL DATA
The consolidated statements of operations and cash flows for the nine months
ended September 30, 1998 are unaudited. The unaudited consolidated financial
statements have been prepared on the same basis as the audited consolidated
financial statements and, in the opinion of management, include all
adjustments, consisting of only normal recurring adjustments, necessary to
state fairly therein, in accordance with generally accepted accounting
principles.
NET LOSS PER SHARE AND UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY
In accordance with SFAS No. 128, Earnings Per Share, and SEC Staff Accounting
Bulletin (or SAB) No. 98, basic net income (loss) per share is computed by
dividing the net income (loss) for the period by the weighted average number
of common shares outstanding during the period. Diluted net income (loss) per
share is computed by dividing the net income (loss) for the period by the
weighted average number of common and common equivalent shares outstanding
during the period. Potentially dilutive securities composed of incremental
common shares issuable upon the exercise of stock options and warrants, and
common shares issuable on conversion of preferred stock, were excluded from
historical diluted loss per share because of their anti-dilutive effect.
Under the provisions of SAB No. 98, common shares issued for nominal
consideration, if any, would be included in the per share calculations as if
they were outstanding for all periods presented. No common shares have been
issued for nominal consideration.
Pro forma net loss per share has been computed as described above and also
gives effect to common equivalent shares arising from preferred stock that
will automatically convert upon the closing of the initial public offering
contemplated by this prospectus (using the as-if converted method from the
original date of issuance).
Unaudited pro forma stockholders' equity at September 30, 1999, as adjusted
for the conversion of the convertible preferred stock into common stock, is
disclosed on the balance sheet.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
- -------------------------------------------------------------------------------
F-11
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified
to conform to current year presentation.
NEW ACCOUNTING PRONOUNCEMENTS
The Company expects to adopt SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, effective January 1, 2001. SFAS No. 133
will require the Company to recognize all derivatives on the balance sheet at
fair value. The Company does not anticipate that the adoption of the SFAS
No. 133 will have a significant effect on its results of operations or
financial position.
3. EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements and related accumulated depreciation and
amortization are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
- -------------------------------------------------------------------------------
<S> <C> <C>
Laboratory equipment................................ $3,982,149 $4,906,210
Leasehold improvements.............................. 1,044,891 1,392,927
Office furniture and equipment...................... 417,990 1,875,083
---------- ----------
5,445,030 8,174,220
Less accumulated depreciation and amortization...... 1,503,142 2,363,376
---------- ----------
$3,941,888 $5,810,844
========== ==========
</TABLE>
Total depreciation and amortization expense amounted to $351,173 and $961,051
for the years ended December 31, 1997 and 1998, respectively, and $1,285,789
for the nine month period ended September 30, 1999. Depreciation expense for
the period from inception (February 14, 1994) through September 30, 1999 was
$3,046,135.
4. LONG-TERM DEBT
In 1995, the Company entered into agreements with Technologie Beteiligungs
Gesellschaft ("TBG") for two unsecured loans, one for DEM1 million
(approximately $700,000) and the other for DEM3 million (approximately $2.0
million). In 1997, the Company's subsidiary entered into another agreement
with the same German bank for an additional unsecured loan of DEM2 million
(approximately $1.2 million).
Interest is payable semi-annually on the loans. The 1995 loans began accruing
interest at 6% per annum commencing March 31, 1997 and payments commenced in
June 1997. The effective nominal interest rate over the life of the 1995 loans
is 4.8%. The 1997 loan bears interest at 7% and payments commenced in 1998.
The subsidiary is also required to pay additional interest equal to 9% of the
subsidiary's annual profits, to the extent that such profits exceed DEM100,000
per year. The combined annual interest rate (nominal interest and additional
interest) may not exceed 7% per year through December 31, 2000. Commencing
January 1, 2001 and January 1, 2003, any amounts still outstanding will accrue
additional interest at 6% and 7% per annum for the 1995 loans and 1997 loan,
respectively.
In addition, at the end of the loan term (earlier of repayment or December 31,
2005 and December 31, 2007 for the 1995 loans and 1997 loan, respectively),
the subsidiary is obligated to pay terminal interest equal to 25%, 30% and 35%
of the amounts loaned under the DEM1 million, DEM3 million and DEM2 million
agreements, respectively, estimated to be approximately $1.2 million at the
end of the loan term. The Company has accrued interest in the amount of
$590,000 relating to the terminal interest
- -------------------------------------------------------------------------------
F-12
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
representing approximately 50% of the terminal interest to be paid at the end
of the loan term. The bank may elect to forego collection of such amounts in
certain situations.
Under certain conditions, the Company may exercise a put option to sell its
shares of capital stock in the subsidiary to TBG for an amount equal to 50% of
the Company's equity contribution to the subsidiary pursuant to the DEM3
million loan. Through December 31, 1998, the Company had made capital
contributions to the subsidiary under the DEM3 million loan agreement of DEM3
million; therefore, the potential amount recoverable under this put option was
approximately DEM1.5 million at December 31, 1998. If the Company exercises
such put option, then the Series B Preferred Stockholders have a right to
demand redemption of their Series B Preferred Stock in the amount of $1.50 per
share. At the present time, the Company has no intention of exercising the put
option.
In January 1998, the Company entered into an agreement with TBG for debt of
DEM4 million (approximately $2.3 million) which is convertible into Common
Stock. Interest is payable at 6% of the subsidiary's annual profits. However,
the combined annual interest rate on all loans granted by TBG may not exceed
9% of the subsidiary's annual profits or 7% of the principal outstanding. The
Company may call for conversion in the event of a triggering event, as defined
in the agreement. TBG may call for conversion at any time. The conversion
ratio is calculated as the arithmetic mean between $3.15 per share and a
current valuation of the Common Stock at the time of conversion, not to exceed
$8.40 per share. The loan must be repaid by December 31, 2007, if not
previously converted.
In 1999, the Company established a $5 million revolving line of credit with a
bank. The Company may borrow under this agreement through June 2000. Payments
of principal and interest would be made over a 48 month period, commencing
October 31, 2001. Payments prior to that date would consist of interest only.
Borrowings bear interest at LIBOR plus 1.75%. Any amounts borrowed will be
secured by short-term investments maintained at the bank. No borrowings had
been made under this agreement as of September 30, 1999.
5. STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
At September 30, 1999, convertible Preferred Stock outstanding is as follows:
<TABLE>
<CAPTION>
PRICE PER NUMBER OF LIQUIDATION
DATE ISSUED SERIES SHARE SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March-August 1995....................... A $0.50 1,580,000 $790,000
December 1995........................... B $1.50 2,333,333 3,500,000
February-March 1996..................... B $1.50 643,330 964,995
May 1997................................ C $3.15 1,065,079 3,354,999
January 1998............................ C $3.15 3,508,252 11,050,994
December 1998........................... D $6.50 3,843,700 24,984,050
February-March 1999..................... D $6.50 1,869,063 12,148,909
---------- -----------
14,842,757 $56,793,947
========== ===========
</TABLE>
Each share of Preferred Stock is convertible into one share of Common Stock at
the option of the holder. In addition, each share of Preferred Stock will
automatically convert to Common Stock upon the closing of the initial public
offering contemplated by this prospectus. A particular series of Preferred
Stock may be converted upon at least a two-thirds vote of the related holders
of such series of Preferred Stock.
No dividends shall be declared or paid to the holders of Series A Preferred
Stock or Common Stock unless the holders of Series B, Series C and Series D
Preferred Stock have been paid in full for all of the
- -------------------------------------------------------------------------------
F-13
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
dividends to which they are entitled. No dividends can be declared or paid to
the holders of Series A Preferred Stock or Common Stock at a rate greater than
the rate paid to the holders of Series B and Series C Preferred Stock.
The Series D Preferred Stock has preference as to the assets of the Company
upon liquidation over all other classes of capital stock. In liquidation, the
holders of Series A, Series B, Series C, and Series D Preferred Stock are
entitled to the greater of (i) $0.50, $1.50, $3.15 or $6.50 per share of
Series A, Series B, Series C, or Series D Preferred Stock, respectively
(subject to certain adjustments), plus declared but unpaid dividends, or (ii)
the amount per share of the Series D Preferred Stock as would have been
payable had all shares been converted to Common Stock immediately prior to a
liquidation event, plus declared but unpaid dividends. If the assets of the
Company are insufficient to permit payment in full, the entire assets of the
Company available for distribution will be distributed ratably first among the
holders of the Series D Preferred Stock and then the Series C, Series B,
Series A and Common Stock, respectively.
The holders of Series B Preferred Stock have redemption rights under certain
limited conditions as discussed in Note 4.
In February 1998, a German bank purchased 2,700 shares or approximately 5% of
Sequenom GmbH common stock for DM3 million (approximately $1.7 million). These
shares were subsequently converted to 540,000 shares of Series C Preferred
Stock at $3.15 per share.
WARRANTS
In 1994, the Company entered into a $1 million equipment lease. Under the
terms of this agreement, the Company issued warrants to purchase 70,000 shares
of Series A Preferred Stock at an exercise price of $0.50 per share. In
connection with those warrants, the Company recorded $18,000 of additional
interest expense.
In connection with the Series C Preferred Stock issued in May 1997, the
Company issued warrants to purchase 106,503 shares of Series C Preferred Stock
at an exercise price of $3.15 per share.
NOTES RECEIVABLE
In 1999, the Board of Directors authorized the issuance of approximately $3.0
million in loans to executive officers, related to the exercise of their stock
options. The notes are full recourse and are also secured by the underlying
stock. The notes bear interest at the applicable federal rate in existence
when the notes were made (approximately 6%). The principal amount of the notes
and the related interest are required to be repaid on the earlier of two years
from the origination date of the loans or in the event of a secondary public
offering, if the executive officers making the note are allowed to sell their
stock. Approximately $500,000 of such loans were issued as of September 30,
1999, and the remainder will be issued through early 2000.
STOCK COMPENSATION PLANS
In December 1998, the Company adopted the 1998 Stock Option/Stock Issuance
Plan ("1998 Plan"). The Plan provides for the granting of options to purchase
Common Stock and the issuance of shares of Common Stock, subject to Company
repurchase rights, to directors, employees and consultants. Prior to the 1998
Plan, the Company granted options under the 1994 Stock Plan ("1994 Plan"). All
options previously granted under the 1994 Plan were transferred to the 1998
Plan in 1999. The number of shares of Common Stock issuable under the plans
was 1,700,000 and 2,700,000 in 1997 and 1998, respectively. At September 30,
1999 the number of shares issuable under the 1998 Plan was 3,400,000. In
October 1999 the number of shares issuable under the 1998 plan was increased
to 3,900,000.
- -------------------------------------------------------------------------------
F-14
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In November 1999, the Company adopted the Stock Incentive Plan ("the 1999
Plan"). The 1999 Plan provides for the grant of 4,750,000 shares of common
stock, which consists of the number of shares estimated to carryover from the
1998 Plan, plus an increase of approximately 850,000 shares. Beginning in
2001, the amount of authorized shares available under the 1999 Plan will
automatically increase each January 1st by an amount equal to 4% of the
outstanding common stock on the prior December 31st, subject to an annual
increase limitation of 2,000,000 shares. Officers, employees, board members
and consultants are eligible to participate in the 1999 Plan.
In November 1999, the Company adopted the 1999 Employee Stock Purchase Plan
("1999 ESPP"). The Company has reserved 250,000 shares of common stock for
issuance under the 1999 ESPP. Beginning in 2001, the amount of authorized
shares available under the 1999 ESPP will automatically increase each January
1st by an amount equal to 1% of the outstanding common stock on the prior
December 31st, subject to an annual increase limitation of 500,000. The 1999
ESPP will have a series of concurrent offering periods, each with a maximim
duration of 24 months, however, no employee may participate in more than one
offering period at a time.
The stock option activity is summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
- -------------------------------------------------------------------------------
<S> <C> <C>
Balance at December 31, 1996............................... 683,000 $0.18
Granted................................................... 731,000 $0.25
Cancelled................................................. (50,000) $0.25
Exercised................................................. (144,000) $0.25
---------
Balance at December 31, 1997............................... 1,220,000 $0.21
Granted................................................... 1,268,500 $0.71
Cancelled................................................. (71,250) $0.28
Exercised................................................. (38,750) $0.18
---------
Balance at December 31, 1998............................... 2,378,500 $0.47
Granted................................................... 685,250 $3.00
Cancelled................................................. (52,500) $0.60
Exercised................................................. (536,000) $0.89
---------
Balance at September 30, 1999.............................. 2,475,250 $1.09
=========
</TABLE>
At September 30, 1999, 84,000 shares were available for future option grants
and 2,559,250 shares of Common Stock were reserved for issuance of all
options. The weighted average grant-date fair value of options granted in 1997
and 1998 and for the nine month period ended September 30, 1999 was $0.07,
$0.17 and $2.86, respectively.
- -------------------------------------------------------------------------------
F-15
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes information about options outstanding at
September 30, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
WEIGHTED
RANGE OF AVERAGE WEIGHTED NUMBER WEIGHTED
EXERCISE NUMBER REMAINING AVERAGE EXERCISABLE AVERAGE
PRICE 0UTSTANDING CONTRACTUAL LIFE EXERCISE PRICE AND VESTED EXERCISE PRICE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.05-$0.25 977,000 7.4 $0.22 951,451 $0.18
$0.50-$1.10 913,000 9.0 $0.79 371,884 $0.67
$3.00-$3.30 585,250 8.9 $3.00 49,625 $3.00
--------- ---------
$0.05-$3.30 2,475,250 8.3 $1.09 1,372,960 $0.42
========= =========
</TABLE>
Had compensation cost for these option grants been determined consistent with
the fair value method prescribed in SFAS No. 123, the Company's net loss would
have been changed to the following pro forma amounts:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER
1997 1998 30, 1999
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net loss................... $(5,122,653) $(10,325,893) $(15,812,155)
Net loss as reported................. $(5,116,819) $(10,270,572) $(15,386,038)
Pro forma net loss per share, basic
and diluted......................... $ (22.64) $ (33.51) $ (40.50)
Net loss per share, basic and
diluted, as reported................ $ (22.62) $ (33.33) $ (39.41)
</TABLE>
The fair value of these options was estimated at the date of grant using the
minimum value pricing model with the following weighted average assumptions
for 1997 and 1998 and for the nine months ended September 30, 1999: risk-free
interest rate of 6%; dividend yield of 0%; and a weighted-average life of the
options of four years.
The minimum value pricing model is similar to the Black-Scholes option
valuation model which was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully transferable,
except that it excludes the factor for volatility. In addition, option
valuation models require the input of highly subjective assumptions. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.
DEFERRED COMPENSATION
The Company has recorded deferred compensation totalling $2,420,150 in
December 1998 and $1,689,662 in the nine months ended September 30, 1999 in
connection with the grants of stock options to employees. In addition, the
Company recorded deferred compensation of $1,672,500 in July 1999 related to a
remeasurement of certain options originally granted to an officer in 1997.
Amortization of deferred compensation totalled $3,615,150 during the nine
months ended September 30, 1999.
In October 1999, the Company granted options to purchase 335,250 shares of
stock at $3.00 per share and recorded additional deferred compensation of
$2,212,650.
- -------------------------------------------------------------------------------
F-16
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets are shown below. A valuation allowance of
$15,091,000 has been recorded as realization of such assets is uncertain.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
- -------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................. $7,495,000 $13,178,000
Research and development credits.................. 521,000 541,000
Capitalized research expenses..................... 1,028,000 1,222,000
Other, net........................................ 150,000 150,000
----------- ------------
Total deferred tax assets.......................... 9,194,000 15,091,000
Valuation allowance................................ (9,194,000) (15,091,000)
----------- ------------
Net deferred tax assets............................ $-- $--
=========== ============
</TABLE>
At September 30, 1999, the Company has federal and state tax net operating
loss carryforwards of approximately $24,800,000 and $13,100,000, respectively.
The difference between the federal and state tax loss carryforwards is
attributable to the capitalization of research and development expenses for
state tax purposes. The federal tax loss carryforwards will begin to expire in
2008, unless previously utilized.
Approximately $278,000 of the state tax loss carryforwards expired in 1998,
and the state tax loss carryforwards will continue to expire in 1999 unless
previously utilized. The Company also has German net operating loss
carryforwards of approximately $7,200,000, which may be carried forward
indefinitely. The Company also has federal and state research and development
tax credit carryforwards of approximately $410,000 and $200,000, respectively,
which will begin to expire in 2011 unless previously utilized.
Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company's
net operating loss and credit carryforwards may be limited due to a cumulative
change in ownership of more than 50% which occurred during 1998, and which is
anticipated to occur with the offering. However, the Company does not believe
these limitations will materially impact the use of the net operating loss and
credit carryforwards.
7. COMMITMENTS
LEASES
The Company leases facilities in both the United States and Germany. In
September 1999, the Company amended its lease of office and research
development space to extend through September 2004. Prior to that date, the
Company had been subject to a short-term lease agreement that commenced in
October 1996. The Company's subsidiary entered into a lease of office and
research and development space in 1995 that extends through June 2001. Total
rent expense under these leases was approximately $250,000 in 1997, $446,00 in
1998, and $411,000 for the nine month period ended September 30, 1999. Total
rent expense under these leases was approximately $1,154,000 for the period
from February 14, 1994 (inception) to September 30, 1999.
- -------------------------------------------------------------------------------
F-17
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
During 1998, the Company entered into a master equipment lease agreement
providing for borrowings up to $2,100,000. Under the agreement, the lessor
will purchase equipment that the Company will lease for a 42-month period. At
September 30, 1999, the Company had borrowed the full amount available under
the agreement.
Property under capital leases is included in equipment and leasehold
improvements, as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Laboratory equipment................................. $957,323 $1,571,537
Leasehold improvements............................... 33,211 34,357
Office furniture and equipment....................... 115,701 354,223
---------- ----------
1,106,235 1,960,117
Less accumulated amortization........................ 174,270 658,174
---------- ----------
$931,965 $1,301,943
========== ==========
The following is a schedule by year of future minimum lease payments at
September 30, 1999:
<CAPTION>
CAPITAL OPERATING
YEAR LEASES LEASES
- --------------------------------------------------------------------------------
<S> <C> <C>
1999 (three months).................................. $181,026 $176,392
2000................................................. 724,102 858,570
2001................................................. 870,743 917,422
2002................................................. 508,276 712,974
2003................................................. 18,055 684,420
2004................................................. -- 533,109
---------- ----------
2,302,202 $3,882,887
==========
Less amount representing interest.................... 548,043
----------
Present value of minimum lease payments.............. 1,754,159
Less current portion................................. 441,446
----------
Long-term capital lease obligations.................. $1,312,713
==========
</TABLE>
CONSULTING AGREEMENTS
The Company has entered into consulting agreements with a number of
individuals for scientific advisory services. Each individual receives a
certain number of nonqualified stock options. In certain cases, the options
vest upon the later of the achievement of milestones or ten years. In other
cases, the options vest ratably over a specified period, generally two years.
Compensation expense is measured either upon the achievement of the milestones
or ratably over the service period, in accordance with EITF 96-18, and
aggregated $10,000 and $102,527 in the year ended December 31, 1998 and the
nine months ended September 30, 1999, respectively.
DEVELOPMENT AGREEMENTS
In August 1994, the Company entered into a development agreement with a
university for the design and construction of a prototype DNA sequencing mass
spectrometer. In September 1997, the Company extended the agreement through
September 30, 1999. Through September 30, 1999, the Company has paid
approximately $592,000 under this agreement and is committed to pay
approximately $21,000 in the remainder of 1999.
- -------------------------------------------------------------------------------
F-18
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In September 1994, the Company entered into a development agreement with
another university for the design of a system for preparation of DNA samples.
In September 1998, the agreement was extended to September 30, 1999. Through
September 30, 1999, the Company has paid approximately $677,000 under this
agreement and is committed to pay approximately $55,000 in the remainder of
1999.
LICENSE AGREEMENTS
The Company has entered into license agreements allowing the Company to
utilize certain patents. If these patents are used in connection with a
commercial product sale, the Company will pay royalties ranging from 1%-5% on
the related product revenues. As of September 30, 1999, the Company has not
made any commercial sales related to these agreements.
8. SAVINGS PLAN
In 1998, the Company initiated a 401(k) savings plan covering most United
States employees. Individual employees may make contributions to the plan,
which can be matched by the Company in an amount determined by the Board of
Directors. The Company may also make profit sharing contributions as
determined by the Board of Directors. As of September 30, 1999, the Company
has not made any contributions to the plan.
9. GERMAN GOVERNMENT GRANTS
The Company's wholly owned subsidiary, Sequenom GmbH, has been the recipient
of three grants from German government authorities. The first grant, received
in 1996 from the City/State of Hamburg, is for DEM 800,000 (approximately
$475,000). This grant reimburses the subsidiary for the cost of certain
equipment to be used in a three-year research project. If the equipment is not
used for the grant's express purpose the equipment must be relinquished to the
City/State of Hamburg. Through December 31, 1998, approximately DEM 704,000
(approximately $420,000) of such equipment had been purchased under the grant
program and was being used for the grant's express purpose. No additional
amounts are expected to be expended or received related to this grant.
The second grant, also received in 1996, is from the German Federal Ministry
of Research and Development and amounts to DEM 2.2 million (approximately $1.3
million). This grant reimburses the Company for certain materials, personnel,
travel and development costs. Through December 31, 1998, approximately DEM 2.1
million (approximately $1.2 million) had been expended and recognized under
this grant program. No additional amounts are expected to be expended or
received related to this grant.
A third grant, received in 1998, is also from the German Federal Ministry of
Research and Development and amounts to DEM 1.4 million (approximately
$860,000). This grant reimburses the Company for certain materials, personnel,
travel and development costs. Through September 30, 1999, approximately DEM
296,000 (approximately $160,000) had been expended and recognized under this
grant program.
- -------------------------------------------------------------------------------
F-19
<PAGE>
SEQUENOM, INC. (A DEVELOPMENT STAGE COMPANY)
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. GEOGRAPHIC INFORMATION
The Company has a wholly-owned subsidiary located in Germany. The following
table presents information about the Company by geographic area. There were no
material amounts of transfers between geographic areas. Included in the
consolidated balance sheets are the following domestic and foreign components
at December 31, 1998 and for the year then ended and at September 30, 1999 and
for the nine months then ended:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
- -------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Domestic.......................................... $26,828,538 $28,478,929
Foreign........................................... 1,920,546 267,217
------------ ------------
$28,749,084 $28,746,146
============ ============
Equipment and leasehold improvements, net:
Domestic.......................................... $2,805,418 $4,221,833
Foreign........................................... 1,136,470 1,589,011
------------ ------------
$3,941,888 $5,810,844
============ ============
Other assets:
Domestic.......................................... $12,550 $28,331
Foreign........................................... 73,762 46,305
------------ ------------
$86,312 $74,636
============ ============
Total assets:
Domestic.......................................... $29,646,506 $32,729,093
Foreign........................................... 3,130,778 1,902,533
------------ ------------
$32,777,284 $34,631,626
============ ============
Net loss:
Domestic.......................................... $(7,929,395) $(13,274,509)
Foreign........................................... (2,341,177) (2,111,529)
------------ ------------
$(10,270,572) $(15,386,038)
============ ============
</TABLE>
- -------------------------------------------------------------------------------
F-20
<PAGE>
INSIDE BACK PANEL:
[PICTURES OF COMPONENTS OF MASSARRAY SYSTEM]
DNA AMPLIFIER
SPECTROJET
SPECTROCHIP
SPECTROSCAN
GENOLYZER SOFTWARE
MASSARRAY(TM) PRINCIPLE
SEQUENOM has developed powerful product development tools that industrialize
the process of analyzing newly discovered genes, thus ushering in a new level
of genetic analysis--INDUSTRIAL GENOMICS.
SEQUENOM's MassArray system represents a novel approach to genotyping by
combining its proprietary enzymology and bioinformatics in a miniaturized
chip-based format with the proven technology of mass spectrometry.
IBC
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy shares of Sequenom, Inc. common stock only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of Sequenom, Inc. common stock.
TABLE OF CONTENTS
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
Prospectus summary........................................................ 3
The offering.............................................................. 5
Summary consolidated financial and operating data......................... 6
Risk factors.............................................................. 7
Forward-looking information............................................... 16
Use of proceeds........................................................... 17
Dividend policy........................................................... 17
Capitalization............................................................ 18
Dilution.................................................................. 19
Selected consolidated financial data...................................... 21
Management's discussion and analysis of financial condition and results of
operations............................................................... 23
Business.................................................................. 29
Management................................................................ 43
Related party transactions................................................ 55
Principal stockholders.................................................... 58
Description of securities................................................. 60
Shares eligible for future sale........................................... 65
Underwriting.............................................................. 67
Legal matters............................................................. 69
Experts................................................................... 69
Where you can find more information....................................... 70
</TABLE>
PRELIMINARY PROSPECTUS November , 1999
SHARES
[LOGO OF SEQUENOM INDUSTRIAL GENOMICS]
COMMON STOCK
WARBURG DILLON READ LLC
ROBERTSON STEPHENS
SG COWEN
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PART II
Information not required in prospectus
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Registrant are as follows. All amounts other
than the SEC registration fee, the NASD filing fees and the Nasdaq National
Market listing fee are estimates.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
- --------------------------------------------------------------------------------
<S> <C>
SEC registration fee.................................................. $19,460
NASD filing fee....................................................... 7,500
Nasdaq National Market listing fee.................................... *
Legal fees and expenses............................................... 350,000
Accounting fees and expenses.......................................... 250,000
Printing and engraving................................................ 260,000
Blue Sky fees and expenses (including legal fees)..................... 10,000
Transfer agent fees................................................... 10,000
Miscellaneous......................................................... *
--------
Total............................................................... $ *
========
</TABLE>
- --------
* To be included by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933.
As permitted by the Delaware General Corporation Law, the registrant's Second
Amended and Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability (1) for any
breach of the director's duty of loyalty to the registrant or its
stockholders, (2) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (3) under section 174 of
the Delaware General Corporation Law (regarding unlawful dividends and stock
purchases) or (4) for any transaction from which the director derived an
improper personal benefit.
As permitted by the Delaware General Corporation Law, the bylaws of the
registrant provide that (1) the registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to certain very limited exceptions, (2) the
registrant may indemnify its other employees and agents as set forth in the
Delaware General Corporation Law, (3) the registrant is required to advance
expenses, as incurred, to its directors and executive officers in connection
with a legal proceeding to the fullest extent permitted by the Delaware
General Corporation Law, subject to certain very limited exceptions and (4)
the rights conferred in the bylaws are not exclusive.
The registrant has entered into indemnification agreements with each of its
directors and executive officers to give such directors and officers
additional contractual assurances regarding the scope of the
- -------------------------------------------------------------------------------
II-1
<PAGE>
PART II
- -------------------------------------------------------------------------------
indemnification set forth in the registrant's Second Amended and Restated
Certificate of Incorporation and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of the registrant regarding which indemnification is
sought, nor is the registrant aware of any threatened litigation that may
result in claims for indemnification.
Reference is also made to Section of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling
persons of the registrant against certain liabilities. The indemnification
provision in the registrant's Second Amended and Restated Certificate of
Incorporation, bylaws and the indemnification agreements entered into between
the registrant and each of its directors and executive officers may be
sufficiently broad to permit indemnification of the registrant's directors and
executive officers for liabilities arising under the Securities Act of 1933.
The registrant has applied for liability insurance for its officers and
directors.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere in this prospectus:
<TABLE>
<CAPTION>
EXHIBIT
DOCUMENT NUMBER
- ------------------------------------------------------------------------------
<S> <C>
Underwriting Agreement (draft dated , 1999)..................... 1.1
Form of Second Amended and Restated Certificate of Incorporation of
Registrant........................................................... 3.2
Form of Restated Bylaws of Registrant................................. 3.4
Form of Indemnification Agreement..................................... 10.48
Form of Indemnification Agreement..................................... 10.49
</TABLE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant has sold and issued the following securities since January 1996
(such share numbers do not reflect the -for- reverse stock
split):
A. The Registrant from time to time has granted stock options to employees and
consultants in reliance upon exemption from registration pursuant to either
(1) Section 4(2) of the Securities Act of 1933 or (2) Rule 701 promulgated
under the Securities Act of 1933. The following table sets forth certain
information regarding such grants:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICES
- --------------------------------------------------------------------------------
<S> <C> <C>
January 1, 1996 to December 31, 1996...................... 435,000 $0.25
January 1, 1997 to December 31, 1997...................... 731,000 $0.25
January 1, 1998 to December 31, 1998...................... 1,268,500 $0.50-$1.10
January 1, 1999 to November 20, 1999...................... 1,020,500 $3.00-$3.30
</TABLE>
For additional information concerning these transactions, please see
"Management--Employee benefit plans" in the prospectus included in this
registration statement.
B. On December 23, 1996, we issued a warrant to purchase 70,000 shares of
Series A preferred stock to Comdisco, Inc. in consideration of entering into a
certain rental agreement.
C. On May 8, 1997, we issued 1,065,079 shares of Series C preferred stock and
warrants to purchase 106,503 shares of Series C preferred stock to various
venture capitalists and individuals for an aggregate consideration of
$3,354,999.
D. On January 12, 1998, we issued 3,508,252 shares of Series C preferred stock
to various venture capitalists for an aggregate consideration of $11,050,994.
E. On December 21, 1998, we issued 3,843,700 shares of Series D preferred
stock to various venture capitalists and individuals for an aggregate
consideration of $24,984,050.
- -------------------------------------------------------------------------------
II-2
<PAGE>
PART II
- -------------------------------------------------------------------------------
F. On February 28, 1999, we issued 900,303 shares of Series D preferred stock
to various venture capitalists and individuals for an aggregate consideration
of $5,851,970.
G. On March 30, 1999, we issued 968,760 shares of Series D preferred stock to
various venture capitalists, insiders, and individuals for an aggregate
consideration of $6,296,939.
H. From January 1, 1996 through November 19, 1999, we issued 1,969,750 shares
of common stock upon exercise of options for an aggregate consideration of $
1,322,467.
I. On March 23, 1999, we issued 6,349 shares of common stock to a consultant
for consideration of $20,000.
J. The above securities were offered and sold by the Registrant in reliance
upon exemptions from registration pursuant to either (1) Section 4(2) of the
Securities Act of 1933 as transactions not involving any public offering, or
(2) Rule 701 promulgated under the Securities Act of 1933. No underwriters
were involved in connection with the sales of securities referred to in this
Item 15.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
3.2 Form of Second Amended and Restated Certificate of Incorporation of
the Registrant to become effective immediately prior to the Offering.
3.3 Bylaws of Registrant, as amended.
3.4 Form of Restated Bylaws to be in effect upon the completion of the
Offering.
4.1* Specimen common stock certificate.
5.1* Opinion of Brobeck, Phleger & Harrison LLP.
10.1*+ Series B Convertible Preferred Stock Purchase Agreement, dated
December 22, 1995.
10.2*+ Series C Convertible Preferred Stock Purchase Agreement, dated May 8,
1997.
10.3* Form of Warrant Agreement between the Registrant and holders of the
Series C Preferred Stock warrants.
10.4*+ Series D Convertible Preferred Stock Purchase Agreement, dated
December 21, 1998.
10.5 Amended and Restated Registration Rights Agreement, dated December 21,
1998.
10.6 Amended and Restated Voting Agreement, dated December 21, 1998.
10.7 Amended and Restated Stock Restriction Agreement, dated December 21,
1998.
10.8 Amended and Restated Amendment Agreement to the Series D Convertible
Preferred Stock Purchase Agreement, dated March 1, 1999.
10.9 Warrant Agreement, dated December 23, 1996, between the Registrant and
Comdisco, Inc.
10.10* Form of Note Secured by Stock Pledge Agreement between the Registrant
and the individuals listed on Schedule A thereto.
10.11 Form of Stock Pledge Agreement between the Registrant and the
individuals listed on Schedule A thereto.
10.12*+ Investment Contract, dated May 18, 1995, between the Registrant's
subsidiary and TBG.
10.13*+ Cooperation Agreement, dated May 1995, between the Registrant and TBG.
10.14*+ Investment Contract, dated December 14, 1995, between the Registrant's
subsidiary and TBG.
</TABLE>
- -------------------------------------------------------------------------------
II-3
<PAGE>
PART II
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
10.15*+ Cooperation Agreement, dated December 14, 1995, between the Registrant
and TBG.
10.16*+ Investment Contract, dated September 22, 1997, between the
Registrant's subsidiary and TBG.
10.17*+ Cooperation Agreement, dated October 7, 1997, between the Registrant
and TBG.
10.18 Security Agreement, dated April 29, 1999, between the Registrant and
Union Bank of California.
10.19 Promissory Note, dated April 29, 1999, between the Registrant and
Union Bank of California.
10.20 Business Loan Agreement, dated May 25, 1999, between the Registrant
and Union Bank of California.
10.21*+ Beta Test Agreement, dated March 1, 1999, between the Registrant and
GLE Medicon, GmbH.
10.22*+ Beta Test Agreement, dated April 21, 1999, between the Registrant and
Universitat Munster.
10.23*+ Beta Test Agreement, dated July 15, 1999, between the Registrant and
Genzyme Corporation.
10.24*+ Sponsored Research Agreement, dated September 15, 1994, between the
Registrant and the Trustees of Boston University extended by Letter
Agreements dated February 5, 1997 and September 6, 1998.
10.25*+ Patent and Know-How License Agreement, dated June 1, 1996, between the
Registrant and the Trustees of Boston University.
10.26*+ License Agreement, dated July 3, 1997 between the Registrant and Johns
Hopkins University.
10.27*+ Agreement, dated July 8, 1997, between the Registrant's subsidiary and
Dr. Bertram Muller-Myhsok.
10.28*+ Letter Agreement, dated October 8, 1997, between the Registrant and
Community Technology Fund, Office of Technology Transfer of Community
Technology Fund and Center for Advanced Biotechnology (BU).
10.29*+ Collaboration Agreement, dated November 24, 1997, between the
Registrant and Bruker-Franzen Analytik, GmbH.
10.30*+ Contractual Agreement, dated October 1, 1998, between the Registrant
and GeSIM.
10.31*+ License Agreement, dated January 14, 1999, and Addendum to License
Agreement and Patent Assignment, dated September 29, 1999, between the
Registrant and Franz Hillenkamp.
10.32*+ Supply Agreement, dated April 1, 1999, between the Registrant and
Tactical Fabs, Inc.
10.33*+ OEM Supply and License Agreement, dated June 15, 1999, between the
Registrant and PerSeptive Biosystems, Inc.
10.34*+ Specific Cooperative Research Agreement No. 58-5438-9-120, dated June
15, 1999, between the Registrant and US Department of Agriculture (US
Meat Animal Research Center).
10.35*+ OEM Supply Agreement, dated June 24, 1999, between the Registrant and
Beckman Coulter.
10.36*+ Cooperative Research and Development Agreement, dated September 17,
1999, between the Registrant and Public Health Service.
10.37 Employment Agreement, dated July 1, 1997, between the Registrant and
Hubert Koster.
10.38* Form of Employment Agreement between the Registrant and the employees
listed on Schedule A thereto.
</TABLE>
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II-4
<PAGE>
PART II
- -------------------------------------------------------------------------------
<TABLE>
<C> <S>
10.39*+ Consulting Services Agreement, dated October 4, 1996, between the
Registrant and Franz Hillenkamp.
10.40*+ Consulting Services Agreement, dated January 30, 1997, between the
Registrant and Peter Roepstorff.
10.41*+ Consulting Services Agreement, dated February 17, 1997, between the
Registrant and Ulf B. Gobel.
10.42*+ Consulting Services Agreement, dated March 1, 1999, between the
Registrant and John Cashman.
10.43*+ Consulting Services Agreement, dated March 1, 1999, between the
Registrant and Lindsay Farrer.
10.44 Standard Industrial Gross Lease, dated December 12, 1996, between
Registrant and Sorrento Business Complex, L.P., as amended.
10.45* Master Equipment Lease Agreement No. 0135 and Letter extending the
equipment lease, dated October 22, 1998, between Registrant and
Phoenix Leasing Incorporated, as amended.
10.46* Standard Form Commercial Lease, dated June 24, 1999, between
Registrant and Cummings Properties, LLC, as amended.
10.47* Agreement for office space in Hamburg, dated May 1996, between the
Registrant and Fiszman-Steinriede, GbR, as amended.
10.48 Form of Indemnification Agreement between the Registrant and each of
its directors.
10.49 Form of Indemnification Agreement between the Registrant and each of
its officers.
10.50 1994 Stock Plan.
10.51* 1994 Stock Plan Form of Non-Qualified Stock Option Grant.
10.52* 1994 Stock Plan Form of Incentive Stock Option Grant.
10.53* 1994 Stock Plan Form of Stock Restriction Agreement.
10.54 1998 Stock Option/Stock Issuance Plan.
10.55 1998 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock
Option.
10.56 1998 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.57 1998 Stock Option/Stock Issuance Plan Form of Stock Purchase
Agreement.
10.58* 1998 Stock Option/Stock Issuance Plan Form of Stock Issuance
Agreement.
10.59* 1999 Stock Incentive Plan.
10.60* 1999 Employee Stock Purchase Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1 Powers of Attorney (See Signature Page on Page II-6).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
+ Certain confidential portions of this Exhibit were omitted by means of
redacting a portion of the text (the "Mark"). This Exhibit has been filed
separately with the Secretary of the Commission without the Mark pursuant
to the Company's Application Requesting Confidential Treatment under Rule
406 under the Securities Act.
- -------------------------------------------------------------------------------
II-5
<PAGE>
PART II
- -------------------------------------------------------------------------------
(b) Financial Statement Schedules.
All financial statement schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission
have been omitted because they are not required under the related instructions
or are inapplicable as the information has been provided in the consolidated
financial statements or related notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriter at
the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
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 SEC 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 the 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 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 that:
(1) For purposes of determining any liability under the Securities Act of 1933
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933 each post-effective amendment that contains a form of prospectus 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-6
<PAGE>
PART II
- -------------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Act of 1933 the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in San Diego, California, on this 24th
day of November 1999.
SEQUENOM, INC.
/s/ Hubert Koster
By: _________________________________
Name: Hubert Koster
Title: President and Chief
Executive Officer
Power of attorney
We, the undersigned directors and/or officers of SEQUENOM, INC. (the
"Company"), hereby severally constitute and appoint Hubert Koster, President
and Chief Executive Officer, and Stephen Zaniboni, Senior Vice President and
Chief Financial Officer, and each of them individually, with full powers of
substitution and resubstitution, our true and lawful attorneys, with full
powers to them and each of them to sign for us, in our names and in the
capacities indicated below, the Registration Statement on Form S-1 filed with
the SEC, and any and all amendments to said Registration Statement (including
post-effective amendments), and any registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933 in connection with the
registration under the Securities Act of 1933 of our equity securities, and to
file or cause to be filed the same, with all exhibits thereto and other
documents in connection therewith, with the SEC, granting unto said attorneys,
and each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in connection therewith, as
fully to all intents and purposes as each of them might or could do in person,
and hereby ratifying and confirming all that said attorneys, and each of them,
or their substitute or substitutes, shall do or cause to be done by virtue of
this Power of Attorney.
Pursuant to the requirements of the Securities Act of 1933 this Registration
Statement has been signed by the following persons in the capacities indicated
on November 24, 1999:
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Hubert Koster President and Chief November 24, 1999
____________________________________ Executive Officer
HUBERT KOSTER (principal executive
officer) and Director
/s/ Stephen Zaniboni Senior Vice President and November 24, 1999
____________________________________ Chief Financial Officer
STEPHEN ZANIBONI (principal financial and
accounting officer)
/s/ Helmut Schuhsler Director November 24, 1999
____________________________________
HELMUT SCHUHSLER
/s/ Ernst-Gunter Afting Director November 24, 1999
____________________________________
ERNST-GUNTER AFTING
/s/ John Lucas Director November 24, 1999
____________________________________
JOHN LUCAS
/s/ Peter Reinisch Director November 24, 1999
____________________________________
PETER REINISCH
</TABLE>
- -------------------------------------------------------------------------------
II-7
<PAGE>
- --------------------------------------------------------------------------------
Index to exhibits
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
3.2 Form of Second Amended and Restated Certificate of Incorporation of
the Registrant to become effective immediately prior to the Offering.
3.3 Bylaws of Registrant, as amended.
3.4 Form of Restated Bylaws to be in effect upon the completion of the
Offering.
4.1* Specimen common stock certificate.
5.1* Opinion of Brobeck, Phleger & Harrison LLP.
10.1*+ Series B Convertible Preferred Stock Purchase Agreement, dated
December 22, 1995.
10.2*+ Series C Convertible Preferred Stock Purchase Agreement, dated May 8,
1997.
10.3* Form of Warrant Agreement between the Registrant and holders of the
Series C Preferred Stock warrants.
10.4*+ Series D Convertible Preferred Stock Purchase Agreement, dated
December 21, 1998.
10.5 Amended and Restated Registration Rights Agreement, dated December 21,
1998.
10.6 Amended and Restated Voting Agreement, dated December 21, 1998.
10.7 Amended and Restated Stock Restriction Agreement, dated December 21,
1998.
10.8 Amended and Restated Amendment Agreement to the Series D Convertible
Preferred Stock Purchase Agreement, dated March 1, 1999.
10.9 Warrant Agreement, dated December 23, 1996, between the Registrant and
Comdisco, Inc.
10.10* Form of Note Secured by Stock Pledge Agreement between the Registrant
and the individuals listed on Schedule A thereto.
10.11 Form of Stock Pledge Agreement between the Registrant and the
individuals listed on Schedule A thereto.
10.12*+ Investment Contract, dated May 18, 1995, between the Registrant's
subsidiary and TBG.
10.13*+ Cooperation Agreement, dated May 1995, between the Registrant and TBG.
10.14*+ Investment Contract, dated December 14, 1995, between the Registrant's
subsidiary and TBG.
10.15*+ Cooperation Agreement, dated December 14, 1995, between the Registrant
and TBG.
10.16*+ Investment Contract, dated September 22, 1997, between the
Registrant's subsidiary and TBG.
10.17*+ Cooperation Agreement, dated October 7, 1997, between the Registrant
and TBG.
10.18 Security Agreement, dated April 29, 1999, between the Registrant and
Union Bank of California.
10.19 Promissory Note, dated April 29, 1999, between the Registrant and
Union Bank of California.
10.20 Business Loan Agreement, dated May 25, 1999, between the Registrant
and Union Bank of California.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
INDEX TO EXHIBITS
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
10.21*+ Beta Test Agreement, dated March 1, 1999, between the Registrant and
GLE Medicon, GmbH.
10.22*+ Beta Test Agreement, dated April 21, 1999, between the Registrant and
Universitat Munster.
10.23*+ Beta Test Agreement, dated July 15, 1999, between the Registrant and
Genzyme Corporation.
10.24*+ Sponsored Research Agreement, dated September 15, 1994, between the
Registrant and the Trustees of Boston University extended by Letter
Agreements dated February 5, 1997 and September 6, 1998.
10.25*+ Patent and Know-How License Agreement, dated June 1, 1996, between the
Registrant and the Trustees of Boston University.
10.26*+ License Agreement, dated July 3, 1997 between the Registrant and Johns
Hopkins University.
10.27*+ Agreement, dated July 8, 1997, between the Registrant's subsidiary and
Dr. Bertram Muller-Myhsok.
10.28*+ Letter Agreement, dated October 8, 1997, between the Registrant and
Community Technology Fund, Office of Technology Transfer of Community
Technology Fund and Center for Advanced Biotechnology (BU).
10.29*+ Collaboration Agreement, dated November 24, 1997, between the
Registrant and Bruker-Franzen Analytik, GmbH.
10.30*+ Contractual Agreement, dated October 1, 1998, between the Registrant
and GeSIM.
10.31*+ License Agreement, dated January 14, 1999, and Addendum to License
Agreement and Patent Assignment, dated September 29, 1999, between the
Registrant and Franz Hillenkamp.
10.32*+ Supply Agreement, dated April 1, 1999, between the Registrant and
Tactical Fabs, Inc.
10.33*+ OEM Supply and License Agreement, dated June 15, 1999, between the
Registrant and PerSeptive Biosystems, Inc.
10.34*+ Specific Cooperative Research Agreement No. 58-5438-9-120, dated June
15, 1999, between the Registrant and US Department of Agriculture (US
Meat Animal Research Center).
10.35*+ OEM Supply Agreement, dated June 24, 1999, between the Registrant and
Beckman Coulter.
10.36*+ Cooperative Research and Development Agreement, dated September 17,
1999, between the Registrant and Public Health Service.
10.37 Employment Agreement, dated July 1, 1997, between the Registrant and
Hubert Koster.
10.38* Form of Employment Agreement between the Registrant and the employees
listed on Schedule A thereto.
10.39*+ Consulting Services Agreement, dated October 4, 1996, between the
Registrant and Franz Hillenkamp.
10.40*+ Consulting Services Agreement, dated January 30, 1997, between the
Registrant and Peter Roepstorff.
10.41*+ Consulting Services Agreement, dated February 17, 1997, between the
Registrant and Ulf B. Gobel.
10.42*+ Consulting Services Agreement, dated March 1, 1999, between the
Registrant and John Cashman.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
INDEX TO EXHIBITS
- -------------------------------------------------------------------------------
<TABLE>
<C> <S>
10.43*+ Consulting Services Agreement, dated March 1, 1999, between the
Registrant and Lindsay Farrer.
10.44 Standard Industrial Gross Lease, dated December 12, 1996, between
Registrant and Sorrento Business Complex, L.P., as amended.
10.45* Master Equipment Lease Agreement No. 0135 and Letter extending the
equipment lease, dated October 22, 1998, between Registrant and
Phoenix Leasing Incorporated, as amended.
10.46* Standard Form Commercial Lease, dated June 24, 1999, between
Registrant and Cummings Properties, LLC, as amended.
10.47* Agreement for office space in Hamburg, dated May 1996, between the
Registrant and Fiszman-Steinriede, GbR, as amended.
10.48 Form of Indemnification Agreement between the Registrant and each of
its directors.
10.49 Form of Indemnification Agreement between the Registrant and each of
its officers.
10.50 1994 Stock Plan.
10.51* 1994 Stock Plan Form of Non-Qualified Stock Option Grant.
10.52* 1994 Stock Plan Form of Incentive Stock Option Grant.
10.53* 1994 Stock Plan Form of Stock Restriction Agreement.
10.54 1998 Stock Option/Stock Issuance Plan.
10.55 1998 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock
Option.
10.56 1998 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.57 1998 Stock Option/Stock Issuance Plan Form of Stock Purchase
Agreement.
10.58* 1998 Stock Option/Stock Issuance Plan Form of Stock Issuance
Agreement.
10.59* 1999 Stock Incentive Plan.
10.60* 1999 Employee Stock Purchase Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1 Powers of Attorney (See Signature Page on Page II-6).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
+ Certain confidential portions of this Exhibit were omitted by means of
redacting a portion of the text (the "Mark"). This Exhibit has been filed
separately with the Secretary of the Commission without the Mark pursuant
to the Company's Application Requesting Confidential Treatment under Rule
406 under the Securities Act.
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF SEQUENOM, INC.,
a Delaware corporation
Sequenom, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Sequenom, Inc. The original
Certificate of Incorporation of the corporation was filed with the Secretary of
State of the State of Delaware on February 14, 1994 and was amended pursuant to
Certificates of Amendment of Certificate of Incorporation of the corporation
filed with the Secretary of State of the State of Delaware on May 24, 1994,
March 8, 1995, December 22, 1995, November 18, 1996, May 8, 1997, January 9,
1998 and September 2, 1998.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, the Amended and Restated Certificate of Incorporation was
adopted by the corporation's Board of Directors and stockholders, the
stockholders of the corporation having approved the Amended and Restated
Certificate of Incorporation by the written consent of the holders of at least
the required percentages of the outstanding shares in accordance with Section
228 thereof. The Amended and Restated Certificate of Incorporation restates,
integrates and amends the provisions of the Certificate of Incorporation of this
corporation.
3. The Certificate of Incorporation of the corporation is hereby
amended and restated in its entirety as follows:
FIRST: The name of this corporation is Sequenom, Inc.
SECOND: The address of this corporation's registered office in the State
of Delaware is 30 Old Rudnick Lane, City of Dover, County of Kent 19901. The
name of its registered agent at such address is CorpAmerica, Inc.
THIRD: The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the
Corporation has authority to issue is 34,960,347 shares, consisting of
19,500,000 shares of Common Stock, par value $.001 per share (the "Common
Stock"), 1,650,000 shares of Series A Convertible Preferred Stock, par value
$.001 per share (the "Series A Preferred Stock"), 2,976,663 shares of Series B
Convertible Preferred Stock, par value $.001 per share (the "Series B Preferred
Stock") and 4,679,834 shares of Series C Convertible Preferred Stock, par value
$.001 per share (the "Series C Preferred Stock"), 6,153,850 shares of Series D
Convertible Preferred Stock, par value $.001 per share (the "Series D Preferred
Stock", and, together with the Series A Preferred Stock, the Series B Preferred
Stock and the Series C Preferred Stock, the "Preferred Stock"), amounting to an
aggregate par value of $34,960.347.
<PAGE>
The powers, preferences and rights, and the qualifications, limitations or
restrictions thereof, in respect of each class or series of stock of the
Corporation shall be as follows:
Section 1. Liquidation Rights.
---------- ------------------
(a) Liquidation Payments.
--------------------
(i) In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or involuntary, the
holders of shares of the Series D Preferred Stock shall be entitled to be paid
first out of the assets of the Corporation available for distribution to holders
of the Corporation's capital stock of all classes an amount equal to the greater
of:
(1) $6.50 per share of the Series D Preferred Stock
(which amount shall be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event with respect to the Series D Preferred Stock) plus all
dividends declared but unpaid thereon, to and including the date full payment
shall be tendered to the holders of the Series D Preferred Stock with respect to
such liquidation, dissolution or winding up, or
(2) such amount per share of the Series D Preferred
Stock as would have been payable had all shares of the Preferred Stock been
converted to Common Stock immediately prior to such event of liquidation,
dissolution or winding up pursuant to the provisions of Section 2 hereof, plus
all dividends declared but unpaid on each share of the Series D Preferred Stock
to and including the date full payment shall be tendered to the holders of the
Series D Preferred Stock with respect to such liquidation, dissolution or
winding up.
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Series D Preferred Stock of all amounts so
distributable to them, then the entire assets of the Corporation available for
such distribution shall be distributed ratably among the holders of the Series D
Preferred Stock in proportion to the full preferential amount each such holder
is otherwise entitled to receive under this Subsection 1(a)(i).
(ii) After such payments shall have been made in full to the
holders of the Series D Preferred Stock or funds necessary for such payments
shall have been set aside by the Corporation in trust for the account of holders
of the Series D Preferred Stock so as to be available for such payments, the
holders of shares of the Series C Preferred Stock shall be entitled to be paid
out of the assets of the Corporation available for distribution to holders of
the Corporation's capital stock of all classes an amount equal to the greater
of:
(1) $3.15 per share of the Series C Preferred Stock
(which amount shall be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event with respect to the Series C Preferred Stock) plus all
dividends declared but unpaid thereon, to and including the date full payment
shall be tendered to the holders of the Series C Preferred Stock with respect to
such liquidation, dissolution or winding up, or
-2-
<PAGE>
(2) such amount per share of Series C Preferred Stock as would have
been payable had all shares of the Preferred Stock been converted to Common
Stock immediately prior to such event of liquidation, dissolution or winding up
pursuant to the provisions of Section 2 hereof, plus all dividends declared but
unpaid on each share of the Series C Preferred Stock with respect to such
liquidation, dissolution or winding up.
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Series C Preferred Stock of all amounts so
distributable to them, then the entire assets of the Corporation available for
such distribution shall be distributed ratably among the holders of the Series
Preferred Stock in proportion to the full preferential amount each such holder
is otherwise entitled to receive under this Subsection 1(a)(ii).
(iii) After such payments have been made in full to the
holders of the Series D Preferred Stock and the Series C Preferred Stock or
funds necessary for such payments have been set aside by the Corporation in
trust for the account of the holders of the Series D Preferred Stock and the
Series C Preferred Stock so as to be available for such payments, the holders of
shares of the Series B Preferred Stock shall be entitled to be paid out of the
assets of the Corporation available for distribution to holders of the
Corporation's capital stock of all classes an amount equal to the greater of:
(1) $1.50 per share of the Series B Preferred Stock
(which amount shall be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event with respect to the Series B Preferred stock) plus all
dividends declared but unpaid thereon, to and including the date full payment
shall be tendered to the holders of the Series B Preferred Stock with respect to
such liquidation, dissolution or winding up, or
(2) such amount per share of the Series B Preferred
Stock as would have been payable had all shares of the Preferred Stock been
converted to Common Stock immediately prior to such event of liquidation,
dissolution or winding up pursuant to the provisions of Section 2 hereof, plus
all dividends declared but unpaid on each share of the Series B Preferred Stock
to and including the date full payment shall be tendered to the holders of the
Series B Preferred Stock with respect to such liquidation, dissolution or
winding up.
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Series B Preferred Stock of all amounts so
distributable to them, then the entire remaining assets of the Corporation
available for such distribution shall be distributed ratably among the holders
of the Series B Preferred Stock in proportion to the full preferential amount
each such holder is otherwise entitled to receive under this Subsection
1(a)(iii).
(iv) After such payments shall have been made in full to
the holders of the Series D Preferred Stock, the Series C Preferred Stock and
the Series B Preferred Stock or funds necessary for such payments shall have
been set aside by the Corporation in trust for the account of holders of the
Series D Preferred Stock, the Series C Preferred Stock and the Series B
Preferred Stock so as to be available for such payments, the holders of shares
of the Series A Preferred Stock shall be entitled to be paid out of the assets
of the Corporation available for
-3-
<PAGE>
distribution to holders of the Corporation's capital stock of all classes an
amount equal to the greater of:
(1) $0.50 per share of the Series A Preferred Stock
(which amount shall be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event with respect to the Series A Preferred Stock) plus all
dividends declared but unpaid thereon, to and including the date full payment
shall be tendered to the holders of the Series A Preferred Stock with respect to
such liquidation, dissolution or winding up, or
(2) such amount per share of the Series A Preferred
Stock as would have been payable had all shares of the Preferred Stock been
converted to Common Stock immediately prior to such event of liquidation,
dissolution or winding up pursuant to the provisions of Section 2 hereof, plus
all dividends declared but unpaid on each share of the Series A Preferred Stock
to and including the date full payment shall be tendered to the holders of the
Series A Preferred Stock with respect to such liquidation, dissolution or
winding up.
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Series A Preferred Stock of all amounts so
distributable to them, then the entire remaining assets of the Corporation
available for such distribution shall be distributed ratably among the holders
of the Series A Preferred Stock in proportion to the full preferential amount
each such holder is otherwise entitled to receive under this Subsection
1(a)(iv).
(v) After such payments shall have been made in full to
the holders of the Preferred Stock, or funds necessary for such payments shall
have been set aside by the Corporation in trust for the account of holders of
Preferred Stock so as to be available for such payments, the remaining assets
available for distribution shall be distributed among the holders of the Common
Stock ratably in proportion to the number of shares of Common Stock held by
them.
(vi) Upon conversion of shares of Preferred Stock into
shares of Common Stock pursuant to Section 2 below, the holders of such Common
Stock shall not be entitled to any preferential payment or distribution in case
of any liquidation, dissolution or winding up, but shall share ratably in any
distribution of the assets of the Corporation to all the holders of Common
Stock.
(vii) The amounts payable with respect to shares of
Preferred Stock under this Subsection 1(a) are sometimes hereinafter referred to
as "Series D Liquidation Payments", "Series C Liquidation Payments", "Series B
Liquidation Payments" and "Series A Liquidation Payments", respectively, and
together are sometimes hereinafter referred to as the "Liquidation Payments".
(b) Distributions Other than Cash. Whenever the distributions
-----------------------------
provided for in this Section 1 shall be payable in property other than cash, the
value of such distributions shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation.
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<PAGE>
(c) Merger as Liquidation, etc. The merger or consolidation of
--------------------------
the Corporation into or with another corporation (except a merger in which (i)
the Corporation is the surviving corporation, (ii) there is no change in the
terms, including without limitation the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof, of any class or series of
capital stock of the Corporation, (iii) there is not issued any capital stock of
the Corporation senior in any respect to the Preferred Stock, or any rights,
options, warrants or securities exercisable or exchangeable for or convertible
into any such capital stock, and (iv) the holders of capital stock of the
Corporation immediately prior to such merger continue to hold at least eighty
percent (80%) in voting power of the Corporation immediately after the merger),
or the sale of all or substantially all of the assets of the Corporation, shall
be deemed to be a liquidation, dissolution or winding up of the affairs of the
Corporation for purposes of this Section 1 with respect to an outstanding series
of Preferred Stock, unless the holders of at least two-thirds of the then
outstanding shares of that series of Preferred Stock elect to the contrary, such
election in each such case to be deemed made upon receipt of notice thereof by
the Corporation at least three days before the effective date of such event.
Unless such election is made, any amounts received by the holders of the
Preferred Stock as a result of such merger or consolidation shall be deemed to
be applied toward, and all consideration received by the Corporation in such
asset sale together with all other available assets of the Corporation shall be
distributed toward, the Liquidation Payments attributable to such shares of
Preferred Stock in the order of preference set forth in Subsection 1(a).
(d) Notice. Notice of any proposed liquidation, dissolution or
------
winding up of the affairs of the Corporation (including any merger,
consolidation or sale of assets which may be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation under Subsection
1(c)), stating a payment date, the amount of the Liquidation Payments and the
place where said Liquidation Payments shall be payable, shall be sent to the
holders of record of the Preferred Stock not less than twenty (20) days prior to
the payment date stated therein. Any holder of outstanding shares of Preferred
Stock may waive any notice required by this Subsection by a written document
specifically indicating such waiver.
Section 2. Conversion. The holders of Preferred Stock shall have
--------- ----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert; Conversion Price. Each share of Preferred
----------------------------------
Stock shall be convertible, without the payment of any additional consideration
by the holder thereof and at the option of the holder thereof, at any time after
the date of issuance of such share, at the office of the Corporation or any
transfer agent for the Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined in accordance with the
following:
(i) in the case of the Series D Preferred Stock, by
dividing $6.50 by the Series D Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of the Series D
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "Series D Conversion Price") shall initially be $6.50 per
share of Common Stock. Such initial Series D Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series D Preferred Stock is convertible, as hereinafter provided.
-5-
<PAGE>
(ii) in the case of the Series C Preferred Stock, by
dividing $3.15 by the Series C Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of the Series C
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "Series C Conversion Price") shall initially be $3.15 per
share of Common Stock. Such initial Series C Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series C Preferred Stock is convertible, as hereinafter provided.
(iii) in the case of the Series B Preferred Stock, by
dividing $1.50 by the Series B Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of the Series B
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "Series B Conversion Price") shall initially be $1.50 per
share of Common Stock. Such initial Series B Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series B Preferred Stock is convertible, as hereinafter provided.
(iv) in the case of the Series A Preferred Stock, by
dividing $0.50 by the Series A Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of the Series A
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "Series A Conversion Price") shall initially be $0.50 per
share of Common Stock. Such initial Series A Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series A Preferred Stock is convertible, as hereinafter provided.
(b) Automatic Conversion. Each share of Preferred Stock shall
--------------------
automatically be converted into shares of Common Stock at the applicable
Conversion Price for its series then in effect upon:
(i) the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Corporation to the public at an offering price per share (prior
to underwriter commissions and discounts) of not less than $10.00 (as adjusted
pursuant to Subsection 2(e)(vi) hereof to reflect any stock dividends,
distributions, combinations, reclassifications or other like transactions
effected by the Corporation in respect of its Common Stock) and with gross
proceeds to the Corporation of not less than $20,000,000 (in the event of which
offering, the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted that
Preferred Stock until the closing of such offering); or
(ii) with respect to any particular series of Preferred
Stock, the written election of the holders of not less than two-thirds of the
then outstanding shares of such series of Preferred Stock to require such
mandatory conversion.
-6-
<PAGE>
(c) Mechanics of Optional Conversions. Before any holder of
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any transfer agent for the Preferred Stock,
and shall send notice to the Corporation at such office that the holder elects
to convert the same and shall state therein the holder's name or the name or
names of the holder's nominees in which the holder wishes the certificate or
certificates for shares of Common Stock to be issued. On the date of conversion,
all rights with respect to the Preferred Stock so converted shall terminate,
except any of the rights of the holder thereof, upon surrender of the holder's
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock into which such Preferred Stock has been converted and
cash in an amount equal to all dividends declared but unpaid thereon and any and
all other amounts owing with respect thereto at such time. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. No fractional share of Common
Stock shall be issued upon the optional conversion of Preferred Stock. In lieu
of any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the applicable
Conversion Price then in effect. The Corporation shall, as soon as practicable
after surrender of the certificate or certificates for conversion, issue and
deliver at such office to such holder of Preferred Stock, or to the holder's
nominee or nominees, a certificate or certificates for the number of shares of
Common Stock to which the holder shall be entitled as aforesaid, together with
cash in lieu of any fraction of a share and cash in an amount equal to all
dividends declared but unpaid thereon and any and all other amounts owing with
respect thereto at such time. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date.
(d) Mechanics of Automatic Conversions. Upon the occurrence of
----------------------------------
an event specified in Subsection 2(b), the affected Series of Preferred Stock
shall be converted automatically without any further action by the holders of
shares thereof and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; provided, however, that
all holders of shares of Preferred Stock being converted shall be sent notice of
the occurrence of an event specified in Subsection 2(b) including the date such
event occurred (the "Automatic Conversion Date"), and the Corporation shall not
be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless certificates evidencing such shares of the
Preferred Stock being converted are either delivered to the Corporation or its
transfer agent, or the holder notifies the Corporation or any transfer agent
that such certificates have been lost, stolen, or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection therewith and, if the Corporation so elects,
provides an appropriate indemnity bond. On the Automatic Conversion Date, all
rights with respect to the Preferred Stock so converted shall terminate, except
any of the rights of the holder thereof, upon surrender of the holder's
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock into which such Preferred Stock has been converted,
together with cash in an amount equal to all
-7-
<PAGE>
dividends declared but unpaid on, and any and all other amounts owing with
respect to, the shares of Preferred Stock converted to and including the time of
conversion. Upon the automatic conversion of the Preferred Stock, the holders of
such Preferred Stock shall surrender the certificates representing such shares
at the office of the Corporation or of its transfer agent. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon surrender of such
certificates there shall be issued and delivered to such holder, promptly at
such office and in the holder's name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which the shares of the Preferred Stock surrendered were convertible
on the date on which such automatic conversion occurred, together with cash in
an amount equal to all dividends declared but unpaid on, and any and all other
amounts owing with respect to, the shares of Preferred Stock converted to and
including the time of conversion. No fractional share of Common Stock shall be
issued upon the automatic conversion of the Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the applicable
Conversion Price then in effect.
(e) Adjustments to Conversion Price for Diluting Issues.
---------------------------------------------------
(i) Special Definitions. For purposes of this Subsection
-------------------
2(e), the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to
------
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(2) "Original Issue Date" shall mean, with respect to
-------------------
each series of Preferred Stock, the first date on which a share of such series
of Preferred Stock was issued.
(3) "Convertible Securities" shall mean any evidences
----------------------
of indebtedness, shares of capital stock (other than Common Stock) or other
securities directly or indirectly convertible into or exchangeable for Common
Stock.
(4) "Additional Shares of Common Stock" shall mean all
---------------------------------
shares of Common Stock issued (or, pursuant to Subsection 2(e)(iii), deemed to
be issued) by the Corporation after the applicable Original Issue Date, other
than:
(A) shares of Common Stock or Convertible
Securities issued or issuable upon exercise of Options outstanding on the
Original Issue Date;
(B) up to 2,700,000 shares of Common Stock issued
or issuable to officers or employees or directors of, or consultants to, the
Corporation pursuant to a stock purchase or option plan or other employee stock
bonus arrangement (collectively, the "Plans") approved by the Board of
Directors;
-8-
<PAGE>
(C) shares of Common Stock issued or issuable upon
conversion of shares of Preferred Stock;
(D) shares of Series C Preferred Stock issued or
issuable upon exercise of Options outstanding as of the Original Issue Date for
the Series D Preferred Stock;
(E) shares of Common Stock issued to Technologie-
Beteiligungs-Gesellschaft mbH der Deutschen Ausgleichsbank ("TBG") upon
conversion of the DM 4 million silent partnership arrangement in the
Corporation's German subsidiary; and
(F) shares of Common Stock issued to TBG upon
conversion of any repayment premiums payable to TBG by the Corporation's German
subsidiary payment to other silent partnership arrangements in the aggregate
amount of DM 6 million.
(ii) No Adjustment of Conversion Price. Except as set
---------------------------------
forth in Subsection 2(e)(vi), no adjustment in the number of shares of Common
Stock into which a series of Preferred Stock is convertible shall be made, by
adjustment in the Conversion Price for such series of Preferred Stock in respect
of the issuance of Additional Shares of Common Stock, unless the consideration
per share for an Additional Share of Common Stock (determined pursuant to
Subsection 2(e)(v)) issued or deemed to be issued by the Corporation is less
than the Conversion Price for such series of Preferred Stock in effect on the
date of, and immediately prior to, the issue of such Additional Share.
(iii) Issue of Securities Deemed Issue of Additional Shares
-----------------------------------------------------
of Common Stock.
- ---------------
(1) Options and Convertible Securities. In the event
----------------------------------
the Corporation at any time or from time to time after the applicable Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:
(A) no further adjustment in the Conversion Price
of any series of Preferred Stock adjusted as a result of such deemed issuance
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, or decrease in the number of
shares of Common Stock issuable, upon
-9-
<PAGE>
the exercise, conversion or exchange thereof, the Conversion Price of any series
of Preferred Stock adjusted upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be readjusted to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price of any series of Preferred
Stock adjusted upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration, be readjusted as if:
(I) in the case of Convertible Securities or
Options for Common Stock the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange; and
(II) in the case of Options for Convertible
Securities only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
(determined pursuant to Subsection 2(e)(v)) upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price of any series of
Preferred Stock to an amount which exceeds the lower of (i) the Conversion Price
of such series of Preferred Stock immediately prior to the original adjustment
for such deemed issuance, or (ii) the Conversion Price of such series of
Preferred Stock that would have resulted from any issuance of Additional Shares
of Common Stock between the original adjustment for such deemed issuance and
such readjustment date;
(E) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no adjustment
of the Conversion Price of any series of Preferred Stock shall be made until the
exercise of such Options; and
(F) if such record date shall have been fixed and
such Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price of any series
of Preferred Stock which became effective on such record date shall be cancelled
as of the close of business on such record date, and
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<PAGE>
thereafter the Conversion Price of such series of Preferred Stock shall be
adjusted pursuant to this Subsection 2(e)(iii) as of the actual date of their
issuance.
(2) Stock Dividends, Stock Distributions and
----------------------------------------
Subdivisions. In the event the Corporation at any time or from time to time
- ------------
after the applicable Original Issue Date shall declare or pay any dividend or
make any other distribution on the Common Stock payable in Common Stock or
effect a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock),
then and in any such event, Additional Shares of Common Stock shall be deemed to
have been issued:
(A) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend or distribution, or
(B) in the case of any such subdivision, at the
close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and no part of such dividend
shall have been paid on the date fixed therefor, the adjustment previously made
in the Conversion Price of any series of Preferred Stock which became effective
on such record date shall be cancelled as of the close of business on such
record date, and thereafter the Conversion Price of such series of Preferred
Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the time of
actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
-----------------------------------------------
Additional Shares of Common Stock. In the event that at any time or from time to
- ---------------------------------
time after the applicable Original Issue Date, the Corporation shall issue
Additional Shares of Common Stock (including, without limitation, Additional
Shares of Common Stock deemed to be issued pursuant to Subsection 2(e)(iii)(1)
but excluding Additional Shares of Common Stock deemed to be issued pursuant to
Subsection 2(e)(iii)(2), which event is dealt with in Subsection 2(e)(vi)(1)),
without consideration or for a consideration per share less than the Conversion
Price of any series of Preferred Stock in effect on the date of and immediately
prior to such issue, then and in such event, the Conversion Price of such series
of Preferred Stock shall be reduced, concurrently with such issue, to a price
(calculated to the nearest cent) determined in accordance with the following
formula:
(P1) (Q1) + (P2) (Q2)
NCP = ---------------------
Q1 + Q2
where:
NCP = New Conversion Price of the affected series of Preferred
Stock.
P1 = Conversion Price for such series of Preferred Stock in
effect immediately prior to new issue.
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<PAGE>
Q1 = Number of shares of Common Stock outstanding, or deemed
to be outstanding as set forth below, immediately prior
to such issue.
P2 = Weighted average price per share received by the
Corporation upon such issue.
Q2 = Number of shares of Common Stock issued, or deemed to
have been issued, in the subject transaction.
provided that for the purpose of this Subsection 2(e)(iv), all shares of Common
- --------
Stock issuable upon exercise or conversion of any Options or Convertible
Securities outstanding immediately prior to such issue shall be deemed to be
outstanding, and immediately after any Additional Shares of Common Stock are
deemed issued pursuant to Subsection 2(e)(iii), such Additional Shares of Common
Stock shall be deemed to be outstanding; and provided further, that the
----------------
applicable Conversion Price shall not be so reduced at any time if the amount of
such reduction would be an amount less than $.01, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount and any
other amount or amounts so carried forward, shall aggregate $.01 or more.
(v) Determination of Consideration. For purposes of this
------------------------------
Subsection 2(e), the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property: Such consideration shall:
-----------------
(A) insofar as it consists of cash, be computed at
the aggregate amounts of cash received by the Corporation excluding amounts paid
or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The
----------------------------------
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 2(e)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the
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<PAGE>
exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by (y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) Adjustment for Dividends, Distributions, Subdivisions,
-----------------------------------------------------
Combinations or Consolidations of Common Stock.
- ----------------------------------------------
(1) Stock Dividends, Distributions or Subdivisions. In
----------------------------------------------
the event the Corporation shall be deemed to issue Additional Shares of Common
Stock pursuant to Subsection 2(e)(iii)(2) in a stock dividend, stock
distribution or subdivision, the Conversion Price of each series of Preferred
Stock in effect immediately before such deemed issuance shall, concurrently with
the effectiveness of such deemed issuance, be proportionately decreased.
(2) Combinations or Consolidations. In the event the
------------------------------
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price of each series of Preferred Stock in effect immediately
prior to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
(f) Adjustments for Certain Dividends and Distributions. In the
---------------------------------------------------
event that at any time or from time to time after the applicable Original Issue
Date the Corporation shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Corporation other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of Preferred Stock shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation that they would have received had their Preferred
Stock been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities receivable by them as aforesaid during
such period, giving application during such period to all adjustments called for
herein.
(g) Adjustment for Reclassification, Exchange, or Substitution. In
----------------------------------------------------------
the event that at any time or from time to time after the applicable Original
Issue Date, the Common Stock issuable upon the conversion of Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above), then and in each such event the holder of any share or
shares of Preferred Stock shall have the right thereafter to convert such shares
into the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification, or other change, by the
holder of a number of shares of Common Stock equal to the number of shares of
Common Stock into which such shares of Preferred Stock might have been converted
immediately prior to such reorganization, reclassification, or change, all
subject to further adjustment as provided herein.
-13-
<PAGE>
(h) No Impairment. The Corporation shall not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but shall at
all times in good faith assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
Preferred Stock against impairment.
(i) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price of any series of Preferred
Stock pursuant to this Section 2, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of such series of Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of any such series of Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Price of such series
of Preferred Stock at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of each share of such series of Preferred Stock.
(j) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall send notice to
each holder of Preferred Stock at least ten (10) days prior to such record date
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.
(k) Common Stock Reserved. The Corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Preferred Stock.
(l) Certain Taxes. The Corporation shall pay any issue or transfer
-------------
taxes payable in connection with the conversion of Preferred Stock, provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer to a name other than that of the holder of
the Preferred Stock.
(m) Closing of Books. The Corporation shall at no time close its
----------------
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Preferred
Stock in any manner which interferes with the timely conversion or transfer of
such Preferred Stock or Common Stock.
Section 3. Restrictions.
---------- ------------
(a) At any time when shares of Preferred Stock are
outstanding, except where the vote of the holders of a greater number of shares
of the Corporation is required by law or by this
-14-
<PAGE>
Certificate of Incorporation, and in addition to any other vote required by law
or this Certificate of Incorporation, without the affirmative vote of the
holders of at least two-thirds of the then outstanding shares of Preferred Stock
(with calculations based upon the number of shares of Common Stock into which
such shares of Preferred Stock are then convertible), voting collectively as a
single class, the Corporation will not:
(i) consent to any liquidation, dissolution or winding up
of the Corporation or merge or consolidate with or into any other entity or
entities;
(ii) sell, abandon, transfer, lease or otherwise dispose of
all or substantially all of its properties and other assets; or
(iii) amend this Certificate of Incorporation or the
Corporation's By-Laws.
(b) At any time when shares of a series of Preferred Stock are
outstanding, except where the vote of the holders of a greater number of shares
of the Corporation is required by law or by this Certificate of Incorporation,
and in addition to any other vote required by law or this Certificate of
Incorporation, without the affirmative vote of the holders of at least two-
thirds of the then outstanding shares of that series of Preferred Stock, the
Corporation will not:
(i) amend, alter or change the designation or any
preferences, voting powers, qualifications, or special or relative rights or
privileges of that series of Preferred Stock in a manner adverse to the
interests of the holders of that series of Preferred Stock in any material
respect;
(ii) increase the authorized number of shares of that
series of Preferred Stock;
(iii) create or authorize the creation of any additional
class or series of shares of stock unless such class or series ranks junior to
that series of Preferred Stock as to both dividends and the distribution of
assets on the liquidation, dissolution, winding up or insolvency of the
Corporation, or increase the authorized amount of any other class or series of
shares of stock unless the same ranks junior to that series of Preferred Stock
as to dividends and the distribution of assets on the liquidation, dissolution,
winding up or insolvency of the Corporation, or create or authorize any
obligation or security convertible into shares of that series of Preferred Stock
or into shares of any other class or series of shares of stock unless the same
ranks junior to that series of Preferred Stock as to dividends and the
distribution of assets on the liquidation, dissolution, winding up or insolvency
of the Corporation, whether any such creation, authorization or increase shall
be by means of amendment to this Certificate of Incorporation or by merger,
consolidation or otherwise.
Section 4. Voting Rights. Except as otherwise required by law or
---------- -------------
hereinafter set forth, the holders of Preferred Stock shall be entitled to
notice of any meeting of stockholders and shall vote together with the holders
of Common Stock as a single class upon any matter submitted to the stockholders
for a vote, on the following basis:
(a) Holders of Common Stock shall have one vote per share; and
-15-
<PAGE>
(b) Holders of Preferred Stock shall have that number of votes per
share as is equal to the number of shares of Common Stock (including fractions
of a share) into which each such share of Preferred Stock held by such holder
could be converted on the date for determination of stockholders entitled to
vote at the meeting or on the date of any written consent.
With respect to all questions as to which, under law, stockholders are
required to vote by classes or series, each series of Preferred Stock shall vote
separately as a single class and series apart from each other and from the
Common Stock.
Section 5. Dividends.
---------- ---------
(a) Dividends may be declared and paid on the Preferred Stock
and the Common Stock from funds lawfully available therefor as and when
determined by the Board of Directors.
(b) If, when and as dividends are declared and paid on shares of
the Series C Preferred Stock, the Corporation shall declare and pay at the same
time to each holder of the Series D Preferred Stock, a dividend at the same
rate, based on the number of shares of Common Stock into which the Series D
Preferred Stock and the Series C Preferred Stock are convertible on the record
date for the determination of holders of the Series C Preferred Stock entitled
to receive such dividend.
(c) If, when and as dividends are declared and paid on shares of
the Series B Preferred Stock, the Corporation shall declare and pay at the same
time to each holder of the Series D Preferred Stock and the Series C Preferred
Stock, a dividend at the same rate, based on the number of shares of Common
Stock into which the Series D Preferred Stock, the Series C Preferred Stock and
the Series B Preferred Stock are convertible on the record date for the
determination of holders of the Series B Preferred Stock entitled to receive
such dividend.
(d) If, when and as dividends are declared and paid on shares of
the Series A Preferred Stock, the Corporation shall declare and pay at the same
time to each holder of the Series D Preferred Stock, Series C Preferred Stock
and the Series B Preferred Stock, a dividend at the same rate, based on the
number of shares of Common Stock into which the Series D Preferred Stock, the
Series C Preferred Stock, the Series B Preferred Stock and the Series A
Preferred Stock is convertible on the record date for the determination of
holders of the Series A Preferred Stock entitled to receive such dividend.
(e) If, when and as dividends are declared and paid on shares of
Common Stock, the Corporation shall declare and pay at the same time to each
holder of the Preferred Stock, a dividend equal to the dividend which would have
been payable to such holder if the shares of the Preferred Stock held by such
holder had been converted into Common Stock on the record date for the
determination of holders of Common Stock entitled to receive such dividend.
-16-
<PAGE>
Section 6. Series B Preferred Stock Redemption.
---------- -----------------------------------
(a) In the event that the Corporation shall exercise its put
option to sell shares of capital stock of Sequenom Instruments GmbH to TBG
pursuant to that certain Kooperationsvertrag between the Corporation and TBG
relating to the investment by the Corporation of DM 3 million in Sequenom
Instruments GmbH, the Corporation shall, within 30 days after receipt of the
proceeds of the sale of such shares to the TBG, send notice of such exercise
(the "Series B Put Exercise Notice") to each holder of record of Series B
Preferred Stock, specifying (A) the amount of proceeds so received from the TBG
net of any expenses incurred in connection therewith (the "Series B Put Net
Proceeds"), (B) the date (the "Series B Redemption Date") on which the
Corporation will redeem shares of Series B Preferred Stock from electing holders
of the Series B Preferred Stock in accordance with this Section 6, which Series
B Redemption Date shall be not less than 45 days nor more than 90 days after the
date of such notice (the "Series B Notice Date") and (C) each such holder's
Series B Pro Rata Redemption Amount (as hereinafter defined).
(b) Each holder of Series B Preferred Stock may elect to have
the Corporation redeem from it on the Series B Redemption Date, to the extent
the Corporation has funds legally available for such purpose, up to a number of
shares of Series B Preferred Stock equal to such holder's Series B Pro Rata
Redemption Amount (as hereinafter defined) at a redemption price of $1.50 per
share. Such election may be made only by delivering to the Corporation within
thirty (30) days after the Series B Notice Date (A) a written election signed by
such holder specifying the number of shares of Series B Preferred Stock so to be
redeemed (which number shall be not more than such holder's Series B Pro Rata
Redemption Amount), and (B) certificates for the shares of Series B Preferred
Stock so to be redeemed, together with stock powers therefor duly executed by
such holder in blank.
(c) For purposes of this Section 6, each holder of Series B
Preferred Stock's "Series B Pro Rata Redemption Amount" shall be the greatest
whole number represented by a fraction, the numerator of which is the product of
the number of shares of Series B Preferred Stock held by such holder times the
Series B Put Net Proceeds, and the denominator of which is the product of the
total number of shares of Series B Preferred Stock issued and outstanding times
$1.50.
(d) On the Series B Redemption Date the Corporation shall redeem
from the electing holders of Series B Preferred Stock the shares of Series B
Preferred Stock as to which election notices have been properly sent, to the
extent the Corporation has funds legally available for such purpose.
(e) If the funds of the Corporation legally available for
redemption of shares of Series B Preferred Stock on the Series B Redemption Date
are insufficient to redeem the total number of shares of Series B Preferred
Stock submitted for redemption, those funds which are legally available will be
used to redeem the maximum possible number of whole shares ratably among the
holders of such shares in accordance with the manner of determining the Series B
Pro Rata Redemption Amount set forth above. The shares of Series B Preferred
Stock not redeemed shall remain outstanding and entitled to all rights and
preferences provided herein.
-17-
<PAGE>
Section 7. Residual Rights. All rights accruing to the outstanding
---------- ---------------
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.
Section 8. Notices. All notices required or permitted to be sent
---------- -------
pursuant to this Article Fourth shall be deemed sufficient if contained in a
written instrument and delivered in person or duly sent by first-class mail
postage prepaid (other than in the case of notices to non-U.S. residents) or by
fax or DHL, Federal Express or other recognized express international courier
service, addressed to the intended recipient at the recipient's address as it
appears on the books of the Corporation.
FIFTH: The corporation shall have a perpetual existence.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of this corporation is expressly authorized to
make, alter, amend, rescind or repeal the Bylaws of the corporation.
SEVENTH: The number of directors which constitute the entire Board of
Directors of the corporation shall be as specified in the Bylaws of the
corporation.
EIGHTH: Elections of directors need not be by written ballot except and to
the extent provided in the Bylaws of the corporation.
NINTH: To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, no director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Neither any
amendment nor repeal of this Article NINTH, nor the adoption of any provision of
this Restated Certificate of Incorporation inconsistent with this Article NINTH,
shall eliminate or reduce the effect of this Article NINTH in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article NINTH, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-18-
<PAGE>
IN WITNESS WHEREOF, the Amended and Restated Certificate of Incorporation
has been signed under the seal of this corporation as of this 16th day of
------
December, 1998.
SEQUENOM INC.
By: /s/ Hubert Koster
-----------------------------
Hubert Koster, President
ATTEST:
/s/ Stephen Zaniboni
- ----------------------------------
Stephen Zaniboni, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SEQUENOM, INC.,
a Delaware Corporation
Sequenom, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That resolutions were duly adopted by the Board of Directors of the
Corporation setting forth a proposed amendment to the existing Amended and
Restated Certificate of Incorporation of the Corporation, and declaring said
amendment to be advisable and recommended for approval by the stockholders of
the Corporation. The resolutions setting forth the proposed amendment are as
follows:
RESOLVED, FURTHER, that Section B of Subsection 2(e)(i)(4) of Article
Fourth of the Amended and Restated Certificate of Incorporation of this
Corporation is hereby amended to read in its entirety as follows.
"(B) up to 3,400,000 shares of Common Stock issued or
issuable to officers or employees or directors of, or
consultants to, the Corporation pursuant to a stock purchase
or option plan or other employee stock bonus arrangement
(collectively, the "Plans") approved by the Board of
Directors;"
SECOND: That, thereafter, the stockholders of said Corporation approved
the amendment by written consent in accordance with Section 228 of the Delaware
General Corporation Law.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
<PAGE>
FOURTH: That the capital of said Corporation shall not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, Sequenom, Inc., has caused this certificate to be
signed by Hubert Koster, its President, on this 8 day of April 1999.
/s/ Hubert Koster
---------------------------
Hubert Koster, President
<PAGE>
EXHIBIT 3.2
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF SEQUENOM, INC.,
a Delaware corporation
SEQUENOM, INC., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
1. The name of the corporation is SEQUENOM, INC. The original Certificate
of Incorporation of the corporation was filed with the Secretary of State of the
State of Delaware on February 14, 1994, and was amended pursuant to Certificates
of Amendment of Certificate of Incorporation of the Corporation filed with the
Secretary of State of the State of Delaware on May 24, 1994, March 8, 1995,
December 22, 1995, November 18, 1996, May 8, 1997, January 9, 1998, September 2,
1998 and April 8, 1999 and pursuant to an Amended and Restated Certificate of
Incorporation of the Corporation filed with the Secretary of State of the State
of Delaware on December 16, 1998.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Second Amended and Restated Certificate of Incorporation
was adopted by the corporation's Board of Directors and stockholders, the
stockholders of the Corporation having approved the Second Amended and Restated
Certificate of Incorporation by the written consent of the holders of at least
the required percentages of the outstanding shares in accordance with Section
228 thereof. The Second Amended and Restated Certificate of Incorporation
restates, integrates and amends the provisions of the Certificate of
Incorporation of this Corporation.
3. The text of the Certificate of Incorporation as heretofore amended or
supplemented is hereby restated and further amended to read in its entirety as
follows:
ARTICLE I
The name of this corporation is SEQUENOM, INC.
ARTICLE II
The address of this corporation's registered office in the State of
Delaware is 30 Old Rudnick Lane, City of Dover, County of Kent 19901. The name
of its registered agent at such address is CorpAmerica, Inc.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may now or hereafter be organized under the Delaware
General Corporation Law.
ARTICLE IV
(A) Classes of Stock. This corporation is authorized to issue two classes
----------------
of stock, denominated Common Stock and Preferred Stock. The Common Stock shall
have a par value of $0.001 per share and the Preferred Stock shall have a par
value of $0.001 per share. The total
<PAGE>
number of shares of Common Stock which the Corporation is authorized to issue is
seventy-five million (75,000,000), and the total number of shares of Preferred
Stock which the Corporation is authorized to issue is five million (5,000,000),
which shares of Preferred Stock shall be undesignated as to series.
(B) Issuance of Preferred Stock. The Preferred Stock may be issued from
---------------------------
time to time in one or more series. The Board of Directors is hereby authorized,
by filing one or more certificates pursuant to the Delaware General Corporation
Law (each, a "Preferred Stock Designation"), to fix or alter from time to time
the designations, powers, preferences and rights of each such series of
Preferred Stock and the qualifications, limitations or restrictions thereof,
including without limitation the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), redemption price or prices, and the liquidation preferences of any
wholly-unissued series of Preferred Stock, and to establish from time to time
the number of shares constituting any such series and the designation thereof,
or any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be decreased in accordance with the foregoing sentence, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
(C) Rights, Preferences, Privileges and Restrictions of Common Stock.
----------------------------------------------------------------
1. Dividend Rights. Subject to the prior or equal rights of
---------------
holders of all classes of stock at the time outstanding having prior or equal
rights as to dividends, the holders of the Common Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of any assets of
the corporation legally available therefor, such dividends as may be declared
from time to time by the Board of Directors.
2. Redemption. The Common Stock is not redeemable upon demand
----------
of any holder thereof or upon demand of this corporation.
3. Voting Rights. The holder of each share of Common Stock
-------------
shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of this corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V
(A) Exculpation. A director of the corporation shall not be personally
-----------
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to further reduce or to authorize, with the approval of the
corporation's stockholders, further reductions in the liability of the
corporation's directors for breach of fiduciary duty, then a director of the
corporation shall not be
2
<PAGE>
liable for any such breach to the fullest extent permitted by the Delaware
General Corporation Law as so amended.
(B) Indemnification. To the extent permitted by applicable law, this
---------------
corporation is also authorized to provide indemnification of (and advancement of
expenses to) such agents (and any other persons to which Delaware law permits
this corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
corporation, its stockholders and others.
(C) Effect of Repeal or Modification. Any repeal or modification of any
--------------------------------
of the foregoing provisions of this Article V shall be prospective and shall not
adversely affect any right or protection of a director, officer, agent or other
person existing at the time of, or increase the liability of any director of the
corporation with respect to any acts or omissions of such director occurring
prior to, such repeal or modification.
ARTICLE VI
Elections of directors need not be by written ballot except and to the
extent provided in the Bylaws of the corporation. At the next Annual Meeting of
Stockholders, the Directors shall be classified into three classes, as nearly
equal in number as possible as determined by the Board of Directors, with the
term of office of the first class to expire at the second Annual Meeting of
Stockholders, the term of office of the second class to expire at the third
Annual Meeting of Stockholders and the term of office of the third class to
expire at the fourth Annual Meeting of Stockholders. At each Annual Meeting of
Stockholders following such initial classification and election, Directors
elected to succeed those Directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting of Stockholders
after their election. Additional directorships resulting from an increase in
the number of Directors shall be apportioned among the classes as equally as
possible as determined by the Board of Directors.
ARTICLE VII
No holder of shares of stock of the corporation shall have any preemptive
or other right, except as such rights are expressly provided by contract, to
purchase or subscribe for or receive any shares of any class, or series thereof,
of stock of the corporation, whether now or hereafter authorized, or any
warrants, options, bonds, debentures or other securities convertible into,
exchangeable for or carrying any right to purchase any share of any class, or
series thereof, of stock; but such additional shares of stock and such warrants,
options, bonds, debentures or other securities convertible into, exchangeable
for or carrying any right to purchase any shares of any class, or series
thereof, of stock may be issued or disposed of by the Board of Directors to such
persons, and on such terms and for such lawful consideration as in its
discretion it shall deem advisable or as the corporation shall have by contract
agreed.
ARTICLE VIII
The corporation is to have a perpetual existence.
3
<PAGE>
ARTICLE IX
The corporation reserves the right to repeal, alter, amend or rescind any
provision contained in this Second Amended and Restated Certificate of
Incorporation and/or any provision contained in any amendment to or restatement
of this Second Amended and Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE X
The Board of Directors may from time to time make, amend, supplement or
repeal the Bylaws by the requisite affirmative vote of Directors as set forth in
the Bylaws; provided, however, that the stockholders may change or repeal any
bylaw adopted by the Board of Directors by the requisite affirmative vote of
stockholders as set forth in the Bylaws; and, provided further, that no
amendment or supplement to the Bylaws adopted by the Board of Directors shall
vary or conflict with any amendment or supplement thus adopted by the
stockholders.
ARTICLE XI
No action shall be taken by the stockholders of the corporation except at
an annual or special meeting of stockholders called in accordance with the
Bylaws, and no action shall be taken by the stockholders by written consent.
ARTICLE XII
Advance notice of stockholder nominations for the election of directors and
of business to be brought by stockholders before any meeting of the stockholders
of the corporation shall be given in the manner provided in the Bylaws of the
corporation.
ARTICLE XIII
This certificate shall be effective as of January ___, 2000 at 9:00 a.m.
eastern standard time.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
4
<PAGE>
IN WITNESS WHEREOF, this Second Amended and Restated Certificate of
Incorporation has been signed under the seal of the corporation as of this ___
day of January, 2000.
SEQUENOM, INC., a Delaware corporation
By:_____________________________________
Hubert Koster
President and Chief Executive Officer
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF SEQUENOM, INC.]
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
SEQUENOM, INC.
Section 1. CERTIFICATE OF INCORPORATION AND BYLAWS
--------- ---------------------------------------
1.1 These Bylaws are subject to the certificate of incorporation of the
corporation. In these bylaws, references to the certificate of incorporation
and bylaws mean the provisions of the certificate of incorporation and the
bylaws as are from time to time in effect.
Section 2. OFFICES
--------- -------
2.1 Registered Office. The registered office shall be in the City of
-----------------
Wilmington, County of New Castle, State of Delaware.
2.2 Other Offices. The corporation may also have offices at such other
-------------
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
Section 3. STOCKHOLDERS
--------- ------------
3.1 Location of Meetings. All meetings of the stockholders shall be held
--------------------
at such place either within or without the State of Delaware as shall be
designated from time to time by the board of directors. Any adjourned session
of any meeting shall be held at the place designated in the vote of adjournment.
3.2 Annual Meeting. The annual meeting of stockholders shall be held at
--------------
10:00 a.m. on the second Wednesday in May in each year, unless that day be a
legal holiday at the place where the meeting is to be held, in which case the
meeting shall be held at the same hour on the next succeeding day not a legal
holiday, or at such other date and time as shall be designated from time to time
by the board of directors, at which they shall elect a board of directors and
transact such other business as may be required by law or these bylaws or as may
properly come before the meeting.
3.3 Special Meeting in Place of Annual Meeting. If the election for
------------------------------------------
directors shall not be held on the day designated by these bylaws, the directors
shall cause the election to be held as soon thereafter as convenient, and to
that end, if the annual meeting is omitted on the day herein provided therefor
or if the election of directors shall not be held thereat, a special meeting of
the stockholders may be held in place of such omitted meeting or election, and
any business transacted or election held at such special meeting shall have the
same effect as if transacted or held at the annual meeting, and in such case all
references in these bylaws to the annual meeting of the stockholders, or to the
annual election of directors, shall be deemed to refer to or include such
special meeting. Any such special meeting shall be called and the purposes
thereof shall be specified in the call, as provided in Section 3.4.
<PAGE>
3.4 Notice of Annual Meeting. Written notice of the annual meeting
------------------------
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting. Such notice may specify the business
to be transacted and actions to be taken at such meeting. No action shall be
taken at such meeting unless such notice is given, or unless waiver of such
notice is given by the holders of outstanding stock having not less than the
minimum number of votes necessary to take such action at a meeting at which all
shares entitled to vote thereon were voted. Prompt notice of all action taken
in connection with such waiver of notice shall be given to all stockholders not
present or represented at such meeting.
3.5 Other Special Meetings. Special meetings of the stockholders, for any
----------------------
purpose or purposes, unless otherwise prescribed by law or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of the holders of at least ten percent
of all capital stock of the corporation issued and outstanding and entitled to
vote at such meeting. Such request shall state the purpose or purposes of the
proposed meeting and business to be transacted at any special meeting of the
stockholders.
3.6 Notice of Special Meeting. Written notice of a special meeting
-------------------------
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more than
sixty days before the date of the meeting, to each stockholder entitled to vote
at such meeting. No action shall be taken at such meeting unless such notice is
given, or unless waiver of such notice is given by the holders of outstanding
stock having not less than the minimum number of votes necessary to take such
action at a meeting at which all shares entitled to vote thereon were voted.
Prompt notice of all action taken in connection with such waiver of notice shall
be given to all stockholders not present or represented at such meeting.
3.7 Stockholder List. The officer who has charge of the stock ledger of
----------------
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
3.8 Quorum of Stockholders. The holders of a majority of the stock issued
----------------------
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise required by law, or by the
certificate of incorporation or by these bylaws. Except as otherwise provided
by law, no stockholder present at a meeting may withhold his shares from the
quorum count by declaring his shares absent from the meeting.
2
<PAGE>
3.9 Adjournment. Any meeting of stockholders may be adjourned from time
-----------
to time to any other time and to any other place at which a meeting of
stockholders may be held under these bylaws, which time and place shall be
announced at the meeting, by a majority of votes cast upon the question, whether
or not a quorum is present. At such adjourned meeting at which a quorum shall
be present or represented any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
3.10 Proxy Representation. Every stockholder may authorize another person
--------------------
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, objecting to
or voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. Except as provided by
law, a revocable proxy shall be deemed revoked if the stockholder is present at
the meeting for which the proxy was given. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
A proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally. The authorization of a proxy may but need not be limited to
specified action, provided, however, that if a proxy limits its authorization to
a meeting or meetings of stockholders, unless otherwise specifically provided
such proxy shall entitle the holder thereof to vote at any adjourned session
but shall not be valid after the final adjournment thereof.
3.11 Inspectors. The directors or the person presiding at the meeting
----------
may, but need not, appoint one or more inspectors of election and any substitute
inspectors to act at the meeting or any adjournment thereof. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting, the inspectors shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them.
3.12 Action by Vote. When a quorum is present at any meeting, whether the
--------------
same be an original or an adjourned session, a plurality of the votes properly
cast for election to any office shall elect to such office and a majority of the
votes properly cast upon any question other than an election to an office shall
decide the question, except when a larger vote is required by law, by the
certificate of incorporation or by these bylaws. No ballot shall be required
for any election unless requested by a stockholder present or represented at the
meeting and entitled to vote in the election.
3
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3.13 Action Without Meetings. Unless otherwise provided in the
-----------------------
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Section 4. DIRECTORS
--------- ---------
4.1 Number. The number of directors which shall constitute the whole
------
board shall not be less than three nor more than seven, except that whenever
there shall be only one stockholder or prior to issuance of any stock, the
number of directors which shall constitute the whole board shall be not less
than one. Within the foregoing limits, the stockholders at the annual meeting
shall determine the number of directors, and within such limits, the number of
directors may be increased or decreased at any time or from time to time by the
stockholders or by the directors by vote of a majority of directors then in
office, except that any such decrease by vote of the directors shall only be
made to eliminate vacancies existing by reason of the death, resignation or
removal of one or more directors. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 4.4 of these bylaws.
Directors need not be stockholders.
4.2 Tenure. Except as otherwise provided by law, by the certificate of
------
incorporation or by these bylaws, each director shall hold office until the next
annual meeting and until his successor is elected and qualified, or until he
sooner dies, resigns, is removed or becomes disqualified.
4.3 Powers. The business of the corporation shall be managed by or under
------
the direction of the board of directors which shall have and may exercise all
the powers of the corporation and do all such lawful acts and things as are not
by law, the certificate of incorporation or these bylaws directed or required to
be exercised or done by the stockholders.
4.4 Vacancies. Vacancies and any newly created directorships resulting
---------
from any increase in the number of directors may be filled by vote of the
stockholders at a meeting called for the purpose, or by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. When one or more directors shall resign from the board, effective at a
future date, a majority of the directors then in office, including those who
have resigned, shall have power to fill such vacancy or vacancies, the vote or
action by writing thereon to take effect when such resignation or resignations
shall become effective. The directors shall have and may exercise all their
powers notwithstanding the existence of one or more vacancies in their number,
subject to any requirements of law or of the certificate of incorporation or of
these bylaws as to the number of directors required for a quorum or for any vote
or other actions.
4
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4.5 Committees. The board of directors may, by vote of a majority of the
----------
whole board, (a) designate, change the membership of or terminate the existence
of any committee or committees, each committee to consist of one or more of the
directors; (b) designate one or more directors as alternate members of any such
committee who may replace any absent or disqualified member at any meeting of
the committee; and (c) determine the extent to which each such committee shall
have and may exercise the powers and authority of the board of directors in the
management of the business and affairs of the corporation, including the power
to authorize the seal of the corporation to be affixed to all papers which
require it and the power and authority to declare dividends or to authorize the
issuance of stock; excepting, however, such powers which by law, by the
certificate of incorporation or by these bylaws they are prohibited from so
delegating. In the absence or disqualification of any member of such committee
and his alternate, if any, the member or members thereof present at any meeting
and not disqualified from voting, whether or not constituting a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Except as the
board of directors may otherwise determine, any committee may make rules for the
conduct of its business, but unless otherwise provided by the board or such
rules, its business shall be conducted as nearly as may be in the same manner as
is provided by these bylaws for the conduct of business by the board of
directors. Each committee shall keep regular minutes of its meetings and report
the same to the board of directors upon request.
4.6 Regular Meeting. Regular meetings of the board of directors may be
---------------
held without call or notice at such place within or without the State of
Delaware and at such times as the board may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent directors. A regular meeting of the
directors may be held without call or notice immediately after and at the same
place as the annual meeting of the stockholders.
4.7 Special Meetings. Special meetings of the board of directors may be
----------------
held at any time and at any place within or without the State of Delaware
designated in the notice of the meeting, when called by the president, or by
one-third or more in number of the directors, reasonable notice thereof being
given to each director by the secretary or by the president or by any one of the
directors calling the meeting.
4.8 Notice. It shall be reasonable and sufficient notice to a director to
------
send notice by mail at least forty-eight hours or by telegram at least twenty-
four hours before the meeting, addressed to him at his usual or last known
business or residence address or to give notice to him in person or by telephone
at least twenty-four hours before the meeting. Notice of a meeting need not be
given to any director if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any director
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.
4.9 Quorum. Except as may be otherwise provided by law, by the
------
certificate of incorporation or by these bylaws, at any meeting of the
directors a majority of the directors then in office shall constitute a quorum;
a quorum shall not in any case be less than one-third of the total number of
directors constituting the whole board. Any meeting may be adjourned from
5
<PAGE>
time to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
4.10 Action by Vote. Except as may be otherwise provided by law, by the
--------------
certificate of incorporation or by these bylaws, when a quorum is present at any
meeting the vote of a majority of the directors present shall be the act of the
board of directors.
4.11 Action Without a Meeting. Unless otherwise restricted by the
------------------------
certificate of incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting if all the members of the board or of such
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the records of the meetings of the board or of such
committee. Such consent shall be treated for all purposes as the act of the
board or of such committee, as the case may be.
4.12 Participation in Meetings by Conference Telephone. Unless otherwise
-------------------------------------------------
restricted by the certificate of incorporation or these bylaws, members of the
board of directors or of any committee thereof may participate in a meeting of
such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Such participation shall constitute presence in
person at such meeting.
4.13 Compensation. Unless otherwise restricted by the certificate of
------------
incorporation or these bylaws, the board of directors shall have the authority
to fix from time to time the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the board of
directors and the performance of their responsibilities as directors and may be
paid a fixed sum for attendance at each meeting of the board of directors and/or
a stated salary as director. No such payment shall preclude any director from
serving the corporation or its parent or subsidiary corporations in any other
capacity and receiving compensation therefor. The board of directors may also
allow compensation for members of special or standing committees for service on
such committees.
4.14 Interested Directors and Officers.
---------------------------------
(a) No contract or transaction between the corporation and one or more of
its directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of the
corporation's directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the board of directors
or the committee, and the board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a
6
<PAGE>
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the board of directors, a
committee thereof, or the stockholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
4.15 Resignation or Removal of Directors. Unless otherwise restricted by
-----------------------------------
the certificate of incorporation or by law, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority of
the stock issued and outstanding and entitled to vote at an election of
directors. Any director may resign at any time by delivering his resignation in
writing to the president or the secretary or to a meeting of the board of
directors. Such resignation shall be effective upon receipt unless specified to
be effective at some other time; and without in either case the necessity of its
being accepted unless the resignation shall so state. No director resigning and
(except where a right to receive compensation shall be expressly provided in a
duly authorized written agreement with the corporation) no director removed
shall have any right to receive compensation as such director for any period
following his resignation or removal, or any right to damages on account of such
removal, whether his compensation be by the month or by the year or otherwise;
unless in the case of a resignation, the directors, or in the case of removal,
the body acting on the removal, shall in their or its discretion provide for
compensation.
Section 5. NOTICES
--------- -------
5.1 Form of Notice. Whenever, under the provisions of law, or of the
--------------
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, such notice may be given by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Unless written notice by mail is required by law, written notice may also be
given by telegram, cable, telecopy, commercial delivery service, telex or
similar means, addressed to such director or stockholder at his address as it
appears on the records of the corporation, in which case such notice shall be
deemed to be given when delivered into the control of the persons charged with
effecting such transmission, the transmission charge to be paid by the
corporation or the person sending such notice and not by the addressee. Oral
notice or other in-hand delivery (in person or by telephone) shall be deemed
given at the time it is actually given.
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<PAGE>
5.2 Waiver of Notice. Whenever notice is required to be given under the
----------------
provisions of law, the certificate of incorporation or these bylaws, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any meeting of the stockholders, directors or members of a
committee of the directors need be specified in any written waiver of notice.
Section 6. OFFICERS AND AGENTS
--------- -------------------
6.1 Enumeration; Qualification. The officers of the corporation shall be
--------------------------
a president, a treasurer, a secretary and such other officers, if any, as the
board of directors from time to time may in its discretion elect or appoint
including without limitation one or more vice presidents. Any officer may be,
but none need be, a director or stockholder. Any two or more offices may be
held by the same person. Any officer may be required by the board of directors
to secure the faithful performance of his duties to the corporation by giving
bond in such amount and with sureties or otherwise as the board of directors may
determine.
6.2 Powers. Subject to law, to the certificate of incorporation and to
------
the other provisions of these bylaws, each officer shall have, in addition to
the duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such additional duties and powers as the board of
directors may from time to time designate.
6.3 Election. The board of directors at its first meeting after each
--------
annual meeting of stockholders shall choose a president, a secretary and a
treasurer. Other officers may be appointed by the board of directors at such
meeting, at any other meeting or by written consent. At any time or from time
to time, the directors may delegate to any officer their power to elect or
appoint any other officer or any agents.
6.4 Tenure. Each officer shall hold office until the first meeting of the
------
board of directors following the next annual meeting of the stockholders and
until his successor is elected and qualified unless a shorter period shall have
been specified in terms of his election or appointment, or in each case until he
sooner dies, resigns, is removed or becomes disqualified. Each agent of the
corporation shall retain his authority at the pleasure of the directors, or the
officer by whom he was appointed or by the officer who then holds agent
appointive power.
6.5 President and Vice Presidents. The president shall be the chief
-----------------------------
executive officer and shall have direct and active charge of all business
operations of the corporation and shall have general supervision of the entire
business of the corporation, subject to the control of the board of directors.
He shall preside at all meetings of the stockholders and of the board of
directors at which he is present, except as otherwise voted by the board of
directors.
The president or treasurer shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise
8
<PAGE>
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation.
Any vice presidents shall have such duties and powers as shall be
designated from time to time by the board of directors or by the president.
6.6 Treasurer and Assistant Treasurers. The treasurer shall be the chief
----------------------------------
financial officer of the corporation and shall be in charge of its funds and
valuable papers, and shall have such other duties and powers as may be assigned
to him from time to time by the board of directors or by the president.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
treasurer.
6.7 Secretary and Assistant Secretaries. The secretary shall record all
-----------------------------------
proceedings of the stockholders, of the board of directors and of committees of
the board of directors in a book or series of books to be kept therefor and
shall file therein all writings of, or related to, action by stockholder or
director consent. In the absence of the secretary from any meeting, an
assistant secretary, or if there is none or he is absent, a temporary secretary
chosen at the meeting, shall record the proceedings thereof. Unless a transfer
agent has been appointed, the secretary shall keep or cause to be kept the stock
and transfer records of the corporation, which shall contain the names and
record addresses of all stockholders and the number of shares registered in the
name of each stockholder. The secretary shall have such other duties and powers
as may from time to time be designated by the board of directors or the
president.
Any assistant secretaries shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
secretary.
6.8 Resignation and Removal. Any officer may resign at any time by
-----------------------
delivering his resignation in writing to the president or the secretary or to a
meeting of the board of directors. Such resignation shall be effective upon
receipt unless specified to be effective at some other time, and without in any
case the necessity of its being accepted unless the resignation shall so state.
The board of directors may at any time remove any officer either with or without
cause. The board of directors may at any time terminate or modify the authority
of any agent. No officer resigning and (except where a right to receive
compensation shall be expressly provided in a duly authorized written agreement
with the corporation) no officer removed shall have any right to any
compensation as such officer for any period following his resignation or
removal, or any right to damages on account of such removal, whether his
compensation be by the month or by the year or otherwise; unless in the case of
a resignation, the directors, or in the case of removal, the body acting on the
removal, shall in their or its discretion provide for compensation.
6.9 Vacancies. If the office of the president or the treasurer or the
---------
secretary becomes vacant, the directors may elect a successor by vote of a
majority of the directors then in office. If the office of any other officer
becomes vacant, any person or body empowered to elect or appoint that office may
choose a successor. Each such successor shall hold office for the unexpired
term of his predecessor, and in the case of the president, the treasurer and the
secretary
9
<PAGE>
until his successor is chosen and qualified, or in each case until he sooner
dies, resigns, is removed or becomes disqualified.
Section 7. CAPITAL STOCK
--------- -------------
7.1 Stock Certificates. Each stockholder shall be entitled to a
------------------
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the bylaws, be prescribed from time to time
by the board of directors. Such certificate shall be signed by the president or
a vice-president and (i) the treasurer or an assistant treasurer or (ii) the
secretary or an assistant secretary. Any of or all the signatures on the
certificate may be a facsimile. In case an officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed on such certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the time of its
issue.
7.2 Lost Certificates. The board of directors may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 8. TRANSFER OF SHARES OF STOCK
--------- ---------------------------
8.1 Transfer on Books. Subject to any restrictions with respect to the
-----------------
transfer of shares of stock, shares of stock may be transferred on the books of
the corporation by the surrender to the corporation or its transfer agent of the
certificate therefor properly endorsed or accompanied by a written assignment
and power of attorney properly executed, with necessary transfer stamps affixed,
and with such proof of the authenticity of signature as the board of directors
or the transfer agent of the corporation may reasonably require. Except as may
be otherwise required by law, by the certificate of incorporation or by these
bylaws, the corporation shall be entitled to treat the record holder of stock as
shown on its books as the owner of such stock for all purposes, including the
payment of dividends and the right to receive notice and to vote or to give any
consent with respect thereto and to be held liable for such calls and
assessments, if any, as may lawfully be made thereon, regardless of any
transfer, pledge or other disposition of such stock until the shares have been
properly transferred on the books of the corporation.
It shall be the duty of each stockholder to notify the corporation of his
post office address.
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Section 9. GENERAL PROVISIONS
--------- ------------------
9.1 Record Date. In order that the corporation may determine the
-----------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action to which
such record date relates. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting. If no record date is fixed,
(a) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held;
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed; and
(c) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating to such purpose.
9.2 Dividends. Dividends upon the capital stock of the corporation may be
---------
declared by the board of directors at any regular or special meeting or by
written consent, pursuant to law. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the certificate
of incorporation.
9.3 Payment of Dividends. Before payment of any dividend, there may be
--------------------
set aside out of any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
9.4 Checks. All checks or demands for money and notes of the corporation
------
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
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9.5 Fiscal Year. The fiscal year of the corporation shall begin on the
-----------
first of January in each year and shall end on the last day of December next
following, unless otherwise determined by the board of directors.
9.6 Seal. The board of directors may, by resolution, adopt a corporate
----
seal. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The seal may be altered from time to time by the board
of directors.
Section 10. INDEMNIFICATION
---------- ---------------
10.1 It being the intent of the corporation to provide maximum protection
available under the law to its officers and directors, the corporation shall
indemnify its officers and directors to the full extent the corporation is
permitted or required to do so by the General Corporation Law of Delaware. In
furtherance of and not in limitation of the foregoing, the corporation shall
advance expenses, including attorneys' fees, incurred by an officer or director
of the corporation in defending any civil, criminal, administrative or
investigative action, suit or proceeding in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such advances if it shall be ultimately
determined that he is not entitled to be indemnified by the corporation. The
corporation shall have the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or who is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation has the power to
indemnify such person under the General Corporation Law of Delaware.
Section 11. AMENDMENTS
---------- ----------
11.1 These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the board of directors when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors. If the power
to adopt, amend or repeal bylaws is conferred upon the board of directors by the
certificate of incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
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EXHIBIT 3.4
RESTATED BYLAWS
OF
SEQUENOM, INC.
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office shall be in
-----------------
the City of Dover, County of Kent, State of Delaware.
Section 2. Other Offices. The corporation may also have offices at
-------------
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. All meetings of the stockholders for
-----------------
the election of Directors shall be held in the City of San Diego, State of
California, at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of
California as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
California, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual Meeting.
--------------
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of Directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be: (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the corporation.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the corporation no later than the date
specified in the corporation's proxy statement released to stockholders in
connection with the previous year's annual meeting of stockholders, which date
shall be not less than one hundred twenty (120) calendar days in advance of the
date of such proxy statement; provided, however, that in the event that no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) days from the date
<PAGE>
contemplated at the time of the previous year's proxy statement, notice by the
stockholder to be timely must be so received a reasonable time before the
solicitation is made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
corporation which are beneficially owned by the stockholder, (iv) any material
interest of the stockholder in such business and (v) any other information that
is required to be provided by the stockholder pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), in such
stockholder's capacity as a proponent to a stockholder proposal. In addition to
the foregoing, in order to include information with respect to a stockholder
proposal in the proxy statement and form of proxy for a stockholder's meeting,
stockholders must provide notice as required by the regulations promulgated
under the 1934 Act to the extent such regulations require notice that is
different from the notice required above. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this paragraph (b) of this
Section 2. The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this paragraph (b),
and, if he or she should so determine, the chairman shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as Directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of Directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 2. Timely notice shall also be given of any
stockholder's intention to cumulate votes in the election of Directors at a
meeting if cumulative voting is available. Such stockholder's notice shall set
forth (i) as to each person, if any, whom the stockholder proposes to nominate
for election or re-election as a Director: (A) the name, age, business address
and residence address of such person, (B) the principal occupation or employment
of such person, (C) the class and number of shares of the corporation that are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
Director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to subitems (ii), (iii) and (iv) of
paragraph (b) of this Section 2 and, if cumulative voting is available to such
stockholder, whether such stockholder intends to request cumulative voting in
the election of Directors at the meeting. At the request of the Board of
Directors, any person nominated by a stockholder for election as a Director
shall furnish to the
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<PAGE>
Secretary of the corporation that information required to be set forth in the
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a Director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if the chairman should so determine, he or she shall so
declare at the meeting, and the defective nomination shall be disregarded.
Section 3. Notice of Annual Meeting. Written notice of the annual
------------------------
meeting stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
Section 4. Voting List. The officer who has charge of the stock
-----------
ledger of the corporation shall prepare and make, or have prepared and made, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 5. Special Meetings. Special meetings of the stockholders,
----------------
for any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, as amended from time to time, may only be called
as provided in this Section 5 by the President, Chief Executive Officer or
Chairman of the Board and shall be called by the President or Secretary at the
request in writing of a majority of the Board of Directors. Such request shall
state the purpose or purposes of the proposed meeting. The place, date and time
of any special meeting shall be determined by the Board of Directors. Such
determination shall include the record date for determining the stockholders
having the right of and to vote at such meeting.
Section 6. Notice of Special Meeting. Written notice of a special
-------------------------
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten (10)
nor more than sixty (60) days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 7. Action at Special Meeting. Business transacted at any
-------------------------
special meeting of stockholders shall be limited to the purposes stated in the
notice.
Section 8. Quorum and Adjournments.
-----------------------
(a) The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation, as amended. If, however, such quorum shall not be
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<PAGE>
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
(b) When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of statute or of the
Certificate of Incorporation, as amended, a different vote is required, in which
case such express provision shall govern and control the decision of such
question.
Section 9. Voting Rights. Unless otherwise provided in the Certificate of
-------------
Incorporation, as amended, each stockholder shall at every meeting of the
stockholders be entitled to one (1) vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on after three (3) years from its date, unless the proxy provides
for a longer period.
Section 10. Action Without Meeting. No action shall be taken by the
----------------------
stockholders of the corporation except at an annual or special meeting of
stockholders called in accordance with these Bylaws, and no action shall be
taken by the stockholders by written consent.
ARTICLE III
DIRECTORS
---------
Section 1. Classes, Number, Term of Office and Qualification. At the next
-------------------------------------------------
annual meeting of stockholders following the adoption of these Bylaws, the
Directors shall be classified into three classes, as nearly equal in number as
possible as determined by the Board of Directors, with the term of office of the
first class to expire at the second annual meeting of stockholders following the
adoption of these Bylaws, the term of office of the second class to expire at
the third annual meeting of stockholders following the adoption of these Bylaws
and the term of the third class to expire at the fourth annual meeting of
stockholders following the adoption of these Bylaws. At each annual meeting of
stockholders following such initial classification and election, Directors
elected to succeed those Directors whose terms expire shall be elected for a
term of office to expire at the third succeeding annual meeting of stockholders
after their election. Additional directorships resulting from an increase in the
number of Directors shall be apportioned among the classes as equally as
possible as determined by the Board of Directors. The number of directors that
shall constitute the whole board shall not be less than four (4) nor more than
seven (7). The number of Directors which shall constitute the whole Board shall
be fixed by resolution of the Board of Directors, with the number initially
fixed at five (5). The number of Directors shall be determined by resolution of
sixty-six and two-thirds percent (66-2/3%) of the Directors then in office or by
sixty-six and two-thirds percent (66-2/3%) of the
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<PAGE>
stockholders at the annual meeting of the stockholders, and each Director
elected shall hold office until his or her successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies. Vacancies may be filled only by a two-thirds
---------
majority of the Directors then in office or by a sole remaining Director. Each
Director so chosen shall hold office until a successor is duly elected and shall
qualify or until his or her earlier death, resignation or removal. If there are
no Directors in office, then an election of Directors may be held in the manner
provided by statute; provided, however, that each Director shall be elected by
an affirmative vote of at least two-thirds of the stockholders. If, at the time
of filling any vacancy, the Directors then in office shall constitute less than
a majority of the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such Directors, summarily
order an election to be held to fill any such vacancies, or to replace the
Directors chosen by the Directors then in office.
Section 3. Powers. The business of the corporation shall be managed
------
by or under the direction of its Board of Directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation, as amended, or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 4. Regular and Special Meetings. The Board of Directors of
----------------------------
the corporation may hold meetings, both regular and special, either within or
without the State of California.
Section 5. Annual Meeting. The annual meeting of the Board of
--------------
Directors shall be held without notice other than this Bylaw immediately after,
and at the same place as, the annual meeting of stockholders. In the event the
annual meeting of the Board of Directors shall not be held immediately after,
and at the same place as, the annual meeting of stockholders, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors.
Section 6. Notice of Regular Meetings. Regular meetings of the Board
--------------------------
of Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
Section 7. Notice of Special Meetings. Special meetings of the Board
--------------------------
may be called by the Chief Executive Officer or President on no less than forty-
eight (48) hours notice to each Director either personally, or by telephone,
mail, telegram or facsimile; special meetings shall be called by the Chief
Executive Officer, President or Secretary in like manner and on like notice on
the written request of two Directors unless the Board consists of only one
Director, in which case special meetings shall be called by the Chief Executive
Officer, President or Secretary in like manner and on like notice on the written
request of the sole Director. A written waiver of notice, signed by the person
entitled thereto, whether before or after the time of the meeting stated
therein, shall be deemed equivalent to notice.
Section 8. Quorum. At all meetings of the Board a majority of the
------
Directors shall constitute a quorum for the transaction of business and the act
of a majority of the Directors
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<PAGE>
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by these Bylaws,
by statute or by the Certificate of Incorporation, as amended. If a quorum shall
not be present at any meeting of the Board of Directors, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Action Without Meeting. Unless otherwise restricted by
----------------------
the Certificate of Incorporation, as amended, or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee.
Section 10. Meetings by Telephone Conference Calls. Unless otherwise
--------------------------------------
restricted by the Certificate of Incorporation, as amended, or these Bylaws,
members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone, video conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 11. Committees. The Board of Directors may, by resolution
----------
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the Directors of the corporation. The
Board may designate one or more Directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he, she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, as amended,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
Bylaws of the corporation; and, unless the resolution or the Certificate of
Incorporation, as amended, expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
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<PAGE>
Section 12. Fees and Compensation. Unless otherwise restricted by
---------------------
the Certificate of Incorporation, as amended, or these Bylaws, the Board of
Directors shall have the authority to fix the compensation of Directors. The
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
Section 13. Removal. Subject to any limitations imposed by law or
-------
the Certificate of Incorporation, as amended, the Board of Directors, or any
individual Director, may be removed from office at any time only with cause by
the affirmative vote of the holders of at least a majority of shares entitled to
vote at an election of Directors.
ARTICLE IV
NOTICES
-------
Section 1. Notice. Whenever, under the provisions of statute or of
------
the Certificate of Incorporation, as amended, or of these Bylaws, notice is
required to be given to any Director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such Director or stockholder, at his, her or its address as it
appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to Directors may also be given
personally, by telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, telegram, facsimile
electronic mail or other electronic means.
Section 2. Waiver of Notice. Whenever any notice is required to be
----------------
given under the provisions of statute or of the Certificate of Incorporation, as
amended, or of these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
--------
Section 1. Enumeration. The officers of the corporation shall be
-----------
chosen by the Board of Directors and shall include a Chief Executive Officer, a
Chief Financial Officer and a Secretary. The Board of Directors may elect from
among its members a Chairman of the Board and a Vice Chairman of the Board. The
Board of Directors may also choose a President, one or more Vice Presidents and
one or more Assistant Secretaries. Any number of offices may be held by the
same person, unless the Certificate of Incorporation, as amended, or these
Bylaws otherwise provide.
The compensation of all officers and agents of the corporation shall
be fixed by the Board of Directors, and no officer shall be prevented from
receiving such compensation by virtue of such officer also being a Director of
the corporation.
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<PAGE>
Section 2. Election or Appointment. The Board of Directors at its
-----------------------
first meeting after each annual meeting of stockholders shall choose a Chief
Executive Officer, a Chief Financial Officer and a Secretary and may choose a
President, one or more Vice Presidents and one or more Assistant Secretaries.
The Board of Directors may appoint such other officers and agents as
it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
Section 3. Tenure, Removal and Vacancies. The officers of the
-----------------------------
corporation shall hold office until their successors are chosen and qualified.
Any officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the corporation shall be filled by the Board
of Directors.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
---------------------
shall preside at all meetings of the Board of Directors and of the stockholders
at which he or she shall be present. The Chairman of the Board shall have and
may exercise such powers as are, from time to time, assigned to him or her by
the Board and as may be provided by law.
Section 5. Vice Chairman of the Board. In the absence of the
--------------------------
Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors and of the stockholders at which he or
she shall be present. The Vice Chairman of the Board shall have and may
exercise such powers as are, from time to time, assigned to him or her by the
Board and as may be provided by law.
Section 6. Chief Executive Officer. The Chief Executive Officer of
-----------------------
the corporation shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and the officers of
the corporation. In the absence or nonexistence of a Chairman of the Board and a
Vice Chairman of the Board, the Chief Executive Officer shall preside at all
meetings of the Board of Directors and of the stockholders. The Chief Executive
Officer shall have the general powers and duties of management usually vested in
the Chief Executive Officer of a corporation, including general supervision,
direction and control of the business and supervision of other officers of the
corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws.
The Chief Executive Officer shall, without limitation, have the
authority to execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the corporation.
Section 7. President. Subject to such supervisory powers as may be
---------
given by these Bylaws or the Board of Directors to the Chairman of the Board or
the Chief Executive Officer, if there be such officers, the President shall have
general supervision, direction and control of the business and supervision of
other officers of the corporation, and shall have such other powers
-8-
<PAGE>
and duties as may be prescribed by the Board of Directors or these Bylaws. In
the event a Chief Executive Officer shall not be appointed, the President shall
have the duties of such office.
Section 8. Vice Presidents. The Vice President, or if there shall be
---------------
more than one, the Vice Presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the President, act with all of
the powers and be subject to all the restrictions of the President. The Vice
Presidents shall also perform such other duties and have such other powers as
the Board of Directors, the Chief Executive Officer, the President or these
Bylaws may, from time to time, prescribe.
Section 9. Secretary. The Secretary shall attend all meetings of the
---------
Board of Directors, all meetings of the committees thereof and all meetings of
the stockholders and record all the proceedings of the meetings in a book or
books to be kept for that purpose. Under the Chief Executive Officer's or
President's supervision, the Secretary shall give, or cause to be given, all
notices required to be given by these Bylaws or by law; shall have such powers
and perform such duties as the Board of Directors, the Chief Executive Officer,
the President or these Bylaws may, from time to time, prescribe; and shall have
custody of the seal of the corporation. The Secretary, or an Assistant
Secretary, shall have authority to affix the seal of the corporation to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature.
Section 10. Assistant Secretary. The Assistant Secretary, if any, or
-------------------
if there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors, shall, in the absence, disability or refusal to act of
the Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Board of
Directors, the Chief Executive Officer, the President, the Secretary or these
Bylaws may, from time to time, prescribe.
Section 11. Chief Financial Officer. The Chief Financial Officer
-----------------------
shall act as Treasurer and shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors. The Chief
Financial Officer may alternatively be designated by the title "Treasurer."
The Chief Financial Officer shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the Chief Executive Officer or, if
there be no Chief Executive Officer, the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an account
of all his or her transactions as Chief Financial Officer and of the financial
condition of the corporation.
If required by the Board of Directors, the Chief Financial Officer
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the
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<PAGE>
duties of his or her office and for the restoration to the corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in the Chief
Financial Officer's possession or under his or her control belonging to the
corporation.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these Bylaws, shall have such authority and perform such duties
as may from time to time be prescribed by the Board of Directors, the Chief
Executive Officer or the President.
Section 13. Absence or Disability of Officers. In the case of the
---------------------------------
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may delegate the powers and duties of such
officer to any officer or to any Director, or to any other person who it may
select.
ARTICLE VI
CERTIFICATES OF STOCK
---------------------
Section 1. Certificates of Stock. Every holder of stock in the
---------------------
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the Chairman or Vice Chairman of the Board of Directors,
or the Chief Executive Officer or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation, certifying the number of shares owned by him in the
corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Execution of Certificates. Any or all of the signatures
-------------------------
on the certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation
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<PAGE>
with the same effect as if he or she were such officer, transfer agent or
registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a
-----------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or the owner's legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 4. Transfer of Stock. Upon surrender to the corporation or
-----------------
the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5. Fixing Record Date. In order that the corporation may
------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholder or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 6. Registered Stockholders. The corporation shall be
-----------------------
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII
INDEMNIFICATION
---------------
Section 1. Indemnification of Directors and Executive Officers.
---------------------------------------------------
The corporation shall indemnify its Directors and executive officers to the
fullest extent not prohibited by the Delaware General Corporation Law; provided,
however, that the corporation may limit the extent of such indemnification by
individual contracts with its Directors and executive officers; and, provided,
further, that the corporation shall not be required to indemnify any Director or
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<PAGE>
executive officer in connection with any proceeding (or part thereof) initiated
by such person or any proceeding by such person against the corporation or its
Directors, officers, employees or other agents unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the corporation and (iii) such indemnification is
provided by the corporation, in its sole discretion, pursuant to the powers
vested in the corporation under the Delaware General Corporation Law.
Section 2. Indemnification of Other Officers, Employees and Other
------------------------------------------------------
Agents. The corporation shall have power to indemnify its other officers,
- ------
employees and other agents as set forth in the Delaware General Corporation Law.
Section 3. Good Faith.
----------
(a) For purposes of any determination under this Bylaw, a
Director or executive officer shall be deemed to have acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe that his or her conduct
was unlawful, if his or her action is based on information, opinions, reports
and statements, including financial statements and other financial data, in each
case prepared or presented by:
(1) one or more officers or employees of the corporation
whom the Director or executive officer believed to be reliable and competent in
the matters presented;
(2) counsel, independent accountants or other persons as
to matters which the Director or executive officer believed to be within such
person's professional competence; and
(3) with respect to a Director, a committee of the Board
upon which such Director does not serve, as to matters within such committee's
designated authority, which committee the Director believes to merit confidence;
so long as, in each case, the Director or executive officer acts without
knowledge that would cause such reliance to be unwarranted.
(b) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
proceeding, that such person had reasonable cause to believe that his or her
consent was unlawful.
(c) The provisions of this Section 3 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the Delaware
General Corporation Law.
Section 4. Expenses. The corporation shall advance, prior to the
--------
final disposition of any proceeding, promptly following request therefor, all
expenses incurred by any Director or executive officer in connection with such
proceeding upon receipt of an undertaking by or on
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<PAGE>
behalf of such person to repay said amounts if it should be determined
ultimately that such person is not entitled to be indemnified under this Bylaw
or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 4 of this Bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made (i) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to the
proceeding or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
Section 5. Enforcement. Without the necessity of entering into an
-----------
express contract, all rights to indemnification and advances to Directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a Director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting such claim. The corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual determination
by the corporation (including its Board of Directors, independent legal counsel
or its stock-holders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 6. Non-Exclusivity of Rights. The rights conferred on any
-------------------------
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, as amended, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding office. The
corporation is specifically authorized to enter into individual contracts with
any or all of its Directors, officers, employees or agents respecting
indemnification and advances, to the fullest extent not prohibited by the
Delaware General Corporation Law.
Section 7. Survival of Rights. The rights conferred on any person by
------------------
this Bylaw shall continue as to a person who has ceased to be a Director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
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<PAGE>
Section 8. Insurance. To the fullest extent permitted by the
---------
Delaware General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
Section 9. Amendments. Any repeal or modification of this Bylaw
----------
shall only be prospective and shall not affect the rights under this Bylaw in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any agent of the corporation.
Section 10. Saving Clause. If this Bylaw or any portion hereof shall
-------------
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated or by any other applicable law.
Section 11. Certain Definitions. For the purposes of this Bylaw, the
-------------------
following definitions shall apply:
(a) The term "proceeding" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of the testimony
in, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
(b) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.
(c) The term the "corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its Directors, officers, and employees or agents, so that any person
who is or was a Director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a Director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(d) References to a "Director," "officer," "employee," or
"agent" of the corporation shall include, without limitation, situations where
such person is serving at the request of the corporation as a Director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
(e) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a Director,
officer, employee or agent of the corporation which imposes duties on,
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<PAGE>
or involves services by, such Director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner such person reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this Bylaw.
ARTICLE VIII
LOANS TO OFFICERS
-----------------
Section 1. Loans to Officers. The corporation may lend money to,
-----------------
or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiaries, including any officer or
employee who is a Director of the Corporation or its subsidiaries, whenever, in
the judgment of the Board of Directors, such loan, guarantee or assistance may
reasonably be expected to benefit the corporation. The loan, guarantee or other
assistance may be with or without interest and may be unsecured, or secured in
such manner as the Board of Directors shall approve, including, without
limitation, a pledge of shares of stock of the corporation. Nothing in this
Bylaw shall be deemed to deny, limit or restrict the powers of guaranty or
warranty of the corporation at common law or under any statute.
ARTICLE IX
GENERAL PROVISIONS
------------------
Section 1. Declaration of Dividends. Dividends upon the capital
------------------------
stock of the corporation, subject to the provisions of the Certificate of
Incorporation, as amended, if any, may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation, as amended.
Section 2. Dividend Reserve. Before payment of any dividend, there
----------------
may be set aside out of any funds of the corporation available for dividends
such sum or sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purposes as the Directors shall think conducive
to the interest of the corporation, and the Directors may modify or abolish any
such reserve in the manner in which it was created.
Section 3. Execution of Corporate Instruments. All checks or
----------------------------------
demands for money and notes of the corporation shall be signed by such officer
or officers or such other person or persons as the Board of Directors may from
time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall be
-----------
fixed by resolution of the Board of Directors.
Section 5. Corporate Seal. The Board of Directors may adopt a
--------------
corporate seal having inscribed thereon the name of the corporation, the year of
its organization and the words "Corporate Seal, Delaware." The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
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<PAGE>
ARTICLE X
AMENDMENTS
----------
Section 1. Amendments.
----------
(a) Except as otherwise set forth in Section 9 of Article
VII of these Bylaws, the Bylaws may be altered or amended or new Bylaws adopted
by the affirmative vote of a majority of the voting power of all of the then-
outstanding shares of capital stock of the corporation entitled to vote
generally in the election of Directors (the "Voting Stock"). The Board of
Directors shall also have the power, if such power is conferred upon the Board
of Directors by the Certificate of Incorporation, as amended, to adopt, amend or
repeal Bylaws by a vote of the majority of the Board of Directors unless a
greater or different vote is required pursuant to the provisions of the Bylaws,
the Certificate of Incorporation or any applicable provision of law.
(b) Notwithstanding any other provisions of these Bylaws or
any provision of law which might otherwise permit a lesser vote or no vote, but
in addition to any affirmative vote of the holders of any particular class or
series of the Voting Stock required by law, the Certificate of Incorporation, as
amended, or any Preferred Stock Designation (as the term is defined in the
Certificate of Incorporation, as amended), the affirmative vote of the holders
of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of
all of the then-outstanding shares of the Voting Stock, voting together as a
single class, shall be required to alter, amend or repeal this paragraph (b) or
Section 2, Section 5 or Section 10 of Article II or Section 1, Section 2 or
Section 13 of Article III of these Bylaws.
(c) Notwithstanding any other provisions of these Bylaws or
any provision of law which might otherwise permit a lesser vote or no vote, but
in addition to any affirmative vote of the holders of any particular class or
series of the Voting Stock required by law, the Certificate of Incorporation, as
amended, or any Preferred Stock Designation (as the term is defined in the
Certificate of Incorporation, as amended), the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the Directors shall be required to
alter, amend or repeal this paragraph (c) or Section 2, Section 5 or Section 10
of Article II or Section 1, Section 2 or Section 13 of Article III of these
Bylaws.
[The Remainder of This Page Left Intentionally Blank]
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<PAGE>
CERTIFICATE OF SECRETARY
The undersigned, being the Secretary of SEQUENOM, INC., a Delaware
corporation, does hereby certify the foregoing to be the Bylaws of said
Corporation, as adopted by a majority of the stockholders and Directors of the
Corporation and which remain in full force and effect as of the date hereof.
Executed at San Diego, California effective as of _____________, 2000.
__________________
<PAGE>
EXHIBIT 10.5
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (this "Agreement")
is entered into as of December 21, 1998 by and among Sequenom, Inc., a Delaware
corporation (the "Corporation"); the holders (the "Series B Investors") of
shares of the Corporation's Series B Convertible Preferred Stock, $.001 par
value per share (the Series B Preferred Stock"); the holders (the "Series C
Investors") of shares of the Corporation's Series C Convertible Preferred Stock,
$.001 par value per share (the "Series C Preferred Stock"); and the purchasers
of shares of the Corporation's Series D Convertible Preferred Stock, par value
$.001 per share (the "Series D Preferred Stock"), pursuant to the Series D
Convertible Preferred Stock Purchase Agreement dated as of the date hereof (the
"Purchase Agreement"), including any Additional Investors as defined in the
Purchase Agreement (such purchasers of Series D Preferred Stock being
hereinafter sometimes referred to individually as an "Investor" and collectively
as the "Investors").
WHEREAS, the Corporation, the Series B Investors and the Series C Investors
are the parties to a Registration Rights Agreement dated as of May 8, 1997, as
amended as of January 12, 1998 (the "Prior Registration Rights Agreement"),
pursuant to which the Corporation granted certain registration rights to the
Series B Investors, the Series C Investors and certain of their transferees;
WHEREAS, the Corporation now wishes to sell to the Investors certain shares
of its Series D Preferred Stock;
WHEREAS, the Series B Preferred Stock, the Series C Preferred Stock and the
Series D Preferred Stock are convertible into shares of the Corporation's Common
Stock; and
WHEREAS, as a condition to entering into the Purchase Agreement, the
Investors have required that the Corporation, the Series B Investors and the
Series C Investors execute this Agreement to provide the Investors rights to
register the shares of Common Stock issuable upon conversion of their Series D
Preferred Stock and certain other securities of the Corporation described below;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
-----------
following meanings:
(a) The term "Act" means the Securities Act of 1933, as amended;
(b) The term "Holder" means any Investor, any Series B Investor, any
Series C Investor and any other person or entity holding Registrable Securities
to whom the registration rights granted in this Agreement have been transferred
pursuant to Section 14 hereof;
(c) The term "Preferred Stock" means the Series B Preferred Stock,
the Series C Preferred Stock and the Series D Preferred Stock;
<PAGE>
(d) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of such
registration statement; and
(e) The term "Registrable Securities" means (1) the Common Stock
issuable upon conversion of the Preferred Stock, (2) Common Stock purchased by
an Investor pursuant to Section 8.1 of the Purchase Agreement (or Common Stock
for or into which New Securities (as therein defined) purchased by the Investor
pursuant to such Section 8.1 may be exercised or converted) or pursuant to the
Stock Restriction Agreement dated as of the date hereof among the Corporation,
the Series B Investors, the Series C Investors, the Investors and certain
additional parties identified therein, and (3) any Common Stock of the
Corporation issued as a dividend or other distribution with respect to, or in
exchange or in replacement of, such Preferred Stock or Common Stock.
In addition, for purposes of all calculations and notices under this
Agreement, and all other provisions of this Agreement where the context permits,
the term "Registrable Securities" shall include securities issuable upon
conversion of the Preferred Stock, a holder of the Preferred Stock shall be
deemed the Holder of such securities and such securities shall be deemed
outstanding Registrable Securities hereunder. Notwithstanding the foregoing,
nothing in this Agreement shall require the Corporation actually to register any
shares of the Preferred Stock.
2. Request for Registration. If at any time after the earlier of (i) the
------------------------
first underwritten public offering of securities for the account of the
Corporation, and (ii) the date two (2) years from the date hereof, the
Corporation shall receive a written request (specifying that it is being made
pursuant to this Section 2) from the Holder or Holders at least fifty percent
(50%) of the then outstanding Registrable Securities that the Corporation file a
registration statement under the Act, or a similar document pursuant to any
other statute then in effect corresponding to the Act, covering the registration
of at least the lesser of (i) at least twenty-five percent (25%) of the then
outstanding Registrable Securities and (ii) Registrable Securities the expected
price to the public of which equals or exceeds $10,000,000, then the Corporation
shall promptly notify all other Holders of such request and shall use its best
efforts to cause all Registrable Securities that Holders have requested be
registered to be registered under the Act.
Notwithstanding the foregoing, (a) the Corporation shall not be obligated
to effect a registration pursuant to this Section 2 during the period starting
with the date sixty (60) days prior to the Corporation's estimated date of
filing of, and ending on a date six (6) months following the effective date of,
a registration statement pertaining to an underwritten public offering of
securities for the account of the Corporation, provided that the Corporation is
actively employing in good faith its best efforts to cause such registration
statement to become effective and that the Corporation's estimate of the date of
filing such registration statement is made in good faith; (b) the Corporation
shall not be obligated to effect a registration pursuant to this Section 2
within six (6) months after the effective date of a prior registration under
such Section; (c) if the Corporation shall furnish to the Holders a certificate
signed by the President of the Corporation stating that in the good faith
judgment of the Board of Directors it would be seriously detrimental to the
Corporation or its stockholders for a registration statement to be filed in the
near future, then the Corporation's obligation to use its best efforts to file a
registration
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<PAGE>
statement shall be deferred for a period not to exceed three (3) months; and (d)
the Corporation may postpone a registration pursuant to this election for such
period of time as may be required to permit the use of regular audited year-end
financial statements with supplemental short period figures for a period not
exceeding six (6) months unless the Holders agree to bear the costs of any
special audit.
The Corporation shall not be obligated to effect more than two (2)
registrations pursuant to this Section 2. Any request for registration under
this Section 2 must be for a firm commitment underwritten public offering to be
managed by an underwriter or underwriters of recognized national standing
reasonably acceptable to the Corporation.
3. Corporation Registration. Subject to Section 8 of this Agreement, if
------------------------
at any time the Corporation proposes to register any of its Common Stock under
the Act in connection with the public offering of such securities for its own
account or for the accounts of other stockholders, solely for cash on a form
that would also permit the registration of the Registrable Securities, the
Corporation shall, each such time, promptly give each Holder written notice of
such determination. Upon the written request of any Holder given within thirty
(30) days after mailing of any such notice by the Corporation, the Corporation
shall, subject to the limitations set forth in Section 8(a), use its best
efforts to cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested be registered.
4. Obligations of the Corporation. Whenever required under Section 2, 3,
------------------------------
or 11 to use its best efforts to effect the registration of any Registrable
Securities, the Corporation shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such Registrable Securities and
use its best efforts to cause such registration statement to become and remain
effective; provided, however, that in connection with any proposed registration
intended to permit an offering of any securities from time to time (i.e., a so-
called "shelf registration"), the Corporation shall in no event be obligated to
cause any such registration to remain effective for more than one hundred eighty
(180) days.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders 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 such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement, provided
that the Corporation shall not be required in connection therewith or as a
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<PAGE>
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, and further provided
that (anything in this Agreement to the contrary notwithstanding with respect to
the bearing of expenses) if any jurisdiction in which the securities shall be
qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by selling
stockholders, then such expenses shall be payable by selling stockholders pro
rata, to the extent required by such jurisdiction.
(e) Provide a transfer agent for the Common Stock no later than the
effective date of the first registration of any Registrable Securities.
5. Furnish Information. It shall be a condition precedent to the
obligations of the Corporation to take any action pursuant to this Agreement
that the Holders shall furnish to the Corporation such information regarding
them, the Registrable Securities held by them, and the intended method of
disposition of such securities as the Corporation shall reasonably request and
as shall be required in connection with the action to be taken by the
Corporation.
6. Expenses of Demand Registration. All expenses incurred in connection
-------------------------------
with registrations pursuant to Section 2 (excluding underwriters' discounts and
commissions), including, without limitation, all registration and qualification
fees, printers, and accounting fees, fees and disbursements of counsel for the
Corporation, and the reasonable fees and disbursements of one special counsel
for the selling Holders, shall be borne by the Corporation.
7. Corporation Registration Expenses. All expenses (excluding
---------------------------------
underwriters' discounts and commissions) incurred in connection with a
registration pursuant to Section 3, including, without limitation, any
additional registration and qualification fees and any additional fees and
disbursements of counsel to the Corporation that result from the inclusion of
securities held by the Holders in such registration and the reasonable fees and
disbursements of one special counsel for the selling stockholders, shall be
borne by the Corporation; provided, however, that if the registration is of
exclusively a secondary offering, the holders shall bear their proportionate
share of the expenses incurred in connection with any registration (provided all
stockholders registering shares thereunder bear their proportionate share of
expenses), except expenses which the Corporation would have incurred whether or
not the securities held by the Holders were included in such registration
(including, without limitation, the expense of preparing normal audited or
unaudited financial statements).
8. Underwriting Requirements.
-------------------------
(a) In connection with any offering involving an underwriting of
shares being issued by the Corporation, the Corporation shall not be required
under Section 3 to include any of the Holders' Registrable Securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Corporation and the underwriters selected by it, and then only in
such quantity as will not, in the reasonable opinion of the underwriters,
jeopardize the success of the offering by the Corporation. If the total amount
of securities that all Holders request to be included in an underwritten
offering exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, the Corporation
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<PAGE>
shall only be required to include in the offering so many of the securities of
the selling Holders as the underwriters reasonably believe will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling Holders according to the total amount of securities owned
by said selling Holders, or in such other proportions as shall mutually be
agreed to by such selling Holders), provided that in the case of an offering
involving shares being issued by the Corporation, no such reduction shall be
made with respect to any securities offered by the Corporation for its own
account, and provided further that no securities of any stockholder who is not a
Holder shall be included in such offering, other than securities of stockholders
who have initiated such registration pursuant to the exercise of contractual
rights to do so, unless all securities which the Holders have requested to be
included are included on a pro rata basis with the securities of any other
stockholders who have a contractual right to include their securities in such
offering.
(b) With respect to any underwriting of shares to be registered under
Section 2, or an underwriting of shares to be registered under Section 11, if
the Holders of a majority of the then outstanding Registrable Securities have
requested registration thereunder, such Holders shall have the right to
designate the managing underwriter or underwriters, subject to the consent of
the Corporation. In all other circumstances under such Sections and in
connection with registrations under Section 3, the Corporation shall have the
right to designate the managing underwriter or underwriters, subject to the
consent of the Holders of a majority of the Registrable Securities participating
in the underwriting. In any such case, such consent shall not be unreasonably
withheld or delayed.
9. Delay of Registration. No Holder shall have any right to take any
---------------------
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
10. Indemnification. In the event any Registrable Securities are included
---------------
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Corporation will indemnify and hold
harmless each Holder requesting or joining in a registration, any underwriter
(as defined in the Act) for it, and each person, if any, who controls such
Holder or underwriter within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several, to which they may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based on any untrue or alleged
untrue statement of any material fact contained in such registration statement,
including, without limitation, any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or arise out of or
are based upon 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 arise out of any violation by the Corporation of any rule or
regulation promulgated under the Act applicable to the Corporation and relating
to action or inaction required of the Corporation in connection with any such
registration; and will reimburse each such Holder, such underwriter, or
controlling person for 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 10(a) shall not apply
-5-
<PAGE>
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Corporation
(which consent shall not be unreasonably withheld or delayed) nor shall the
Corporation 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 an
untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary prospectus,
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each Holder requesting or joining
in a registration will indemnify and hold harmless the Corporation, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Corporation within the meaning of the Act, and
any underwriter for the Corporation (within the meaning of the Act) against any
losses, claims, damages or liabilities to which the Corporation or any such
director, officer, controlling person or underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon 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,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary prospectus or final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and will reimburse the Corporation or any such director,
officer, controlling person or underwriter for 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 10(b) 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) and provided further that no Holder shall have any
liability under this Section 10(b) in excess of the net proceeds actually
received by such Holder in the relevant public offering.
(c) Promptly after receipt by an indemnified party under this Section 10 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 10, notify the indemnifying party in writing 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. The
failure to notify an indemnifying party promptly, of the commencement of
any such action, if prejudicial to his ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party
under this Section 10, but the omission so to notify the indemnifying party
will not relieve him of any liability that he may have to any indemnified
party otherwise than under this Section 10.
-6-
<PAGE>
11. Registrations on Form S-3.
-------------------------
(a) If (i) the Corporation shall receive a written request
(specifying that it is being made pursuant to this Section 11) from the Holder
or Holders of at least twenty-five percent (25%) of the then outstanding
Registrable Securities that the Corporation file a registration statement on
Form S-3 (or any successor form to Form S-3 regardless of its designation) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which would exceed Two Million
Dollars ($2,000,000), and (ii) the Corporation is a registrant entitled to use
Form S-3 to register such shares, then the Corporation shall use its best
efforts to cause such shares to be registered on Form S-3 (or any successor form
to Form S-3).
(b) All expenses (excluding underwriters' discounts and commissions)
incurred in connection with the first two registrations requested pursuant to
Section 11(a), including, without limitation, all registration, qualification,
printing, and accounting fees, and fees and disbursements of one special counsel
to the selling Holder or Holders and counsel to the Corporation, shall be borne
by the Corporation. All such expenses for registrations pursuant to Section
11(a) after the first two such registrations shall be borne by the Corporation,
except that the selling Holders shall pay all fees of their legal counsel, if
any, in connection therewith.
(c) Holders' rights to registration under this Section 11 are in
addition to, and not in lieu of, their rights to registration under Sections 2
and 3 of this Agreement.
12. Reports Under Securities Exchange Act of 1934. With a view to making
---------------------------------------------
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Corporation to the public without registration, the
Corporation agrees to use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to ninety (90) days
after the effective date of the first registration statement covering an
underwritten public offering filed by the Corporation;
(b) file with the SEC in a timely manner all reports and other
documents required of the Corporation under the Act and the Securities Exchange
Act of 1934, as amended (the "1934 Act"); and
(c) furnish to any Holder forthwith upon request a written statement
by the Corporation that it has complied with the reporting requirements of Rule
144 (at any time after ninety (90) days after the effective date of said first
registration statement filed by the Corporation), and of the Act and the 1934
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Corporation, and such
other reports and documents so filed by the Corporation as may be reasonably
requested in availing any such holder to take advantage of any rule or
regulation of the SEC permitting the selling of any such securities without
registration.
-7-
<PAGE>
13. Limitations in Connection with Future Grants of Registration Rights.
-------------------------------------------------------------------
Without the prior written consent of the Holder or Holders of a majority of the
then outstanding Registrable Securities issued or issuable upon conversion of
the Preferred Stock, the Corporation shall not grant rights to cause the
Corporation to register any of its securities to any person or entity other than
the Additional Investors as contemplated hereunder.
14. Transfer of Registration Rights. The registration rights of any
-------------------------------
Series B Investor, Series C Investor or Investor (and of any permitted
transferee of any Series B Investor, Series C Investor or Investor or its
permitted transferees) under this Agreement with respect to any shares of
Registrable Securities may be transferred to any Affiliate of such Series B
Investor, Series C Investor or Investor or such permitted transferee, or to any
transferee who acquires (otherwise than in a registered public offering) at
least 20,000 shares of Registrable Securities held or acquired as of the date
hereof by such Series B Investor, Series C Investor or Investor; provided,
however, that the Corporation is given written notice by the Holder at the time
of such transfer stating the name and address of the transferee and identifying
the securities with respect to which the rights under this Agreement are being
assigned. For such purpose, an "Affiliate" of any Series B Investor, Series C
Investor or Investor (or any such transferee) means any general or limited
partner of such Series B Investor, Series C Investor or Investor (or transferee)
if it is a partnership, or any person or entity that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Series B Investor, Series C Investor or Investor or
transferee. In addition, for purposes of this section, in the case of any Series
B Investor, Series C Investor or Investor that is a limited partnership for
which TVM Techno Venture Management Limited Partnership, TVM Techno Venture
Management III GmbH or any of their respective Affiliates serves as a general
partner, the term "Affiliate" of any such Series B Investor, Series C Investor
or Investor shall include KBL Founder Ventures SCA, KB Lux Venture Capital
Fund -European Biotechnology and their respective Affiliates and Alpinvest
International B.V. and its Affiliates.
15. Mergers, Etc. The Corporation shall not, directly or indirectly,
------------
enter into any merger, consolidation or reorganization in which the Corporation
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Corporation under this Agreement, and for that
purpose references hereunder to "Registrable Securities" shall be deemed to be
references to the securities which the Holders would be entitled to receive in
exchange for Registrable Securities under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Agreement shall
not apply in the event of any merger, consolidation or reorganization in which
the Corporation is not the surviving corporation if the Holders of Registrable
Securities are entitled to receive in exchange therefor (i) cash, or (ii)
securities of the acquiring corporation which may be immediately sold to the
public without registration under the Act.
16. Stand-Off Agreement. Each Holder, if requested by the Corporation and
-------------------
the managing underwriter of an offering by the Corporation of Common Stock or
other securities of the Corporation pursuant to a registration statement under
the Act, shall agree not to sell publicly or otherwise transfer or dispose of
any Registrable Securities or other securities of the
-8-
<PAGE>
Corporation held by such Holder for a specified period of time (not to exceed
180 days) following the effective date of such registration statement; provided,
that:
(a) such agreement shall only apply to the first registration
statement covering Common Stock to be sold on the Corporation's behalf to the
public in an underwritten offering; and
(b) all holders of five percent (5%) or more of the shares of Common
Stock then outstanding (including shares of Common Stock issuable upon the
conversion of Preferred Stock, or other convertible securities, or upon the
exercise of options, warrants or rights) and all officers and directors of the
Corporation enter into similar agreements.
17. Accession. Any Additional Investors as defined in the Purchase
---------
Agreement shall automatically become an Investor hereunder by delivering to the
Corporation a written instrument in the form of Exhibit A hereto, by which such
Additional Investor agrees to be bound by the obligations imposed under this
Agreement, whereupon such Additional Investor shall automatically become a party
to this Agreement and shall thereupon be deemed an "Investor" for all purposes
of this Agreement.
18. Notices. All notices, requests, consents and other communications
-------
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or duly sent by first class mail postage
prepaid (other than to non-U.S. parties) or by fax or DHL, Federal Express or
other internationally recognized courier service, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by the addressee to the addressor listing all parties:
1. if to the Corporation, to:
Sequenom, Inc.
11555 Sorrento Valley Road, Suite C
San Diego, CA 92121
Attention: President
Fax: (619) 350-0344
with a copy to:
John A. Denniston, Esq.
Brobeck, Phleger & Harrison LLP
550 West C Street, Suite 1300
San Diego, California 92101
Fax: (619) 234-3848
2. if to the Series B Investors, the Series C Investors or the
Investors (or their respective transferees), to their respective last known
address or their respective address, if any, appearing in the books of the
Corporation.
-9-
<PAGE>
19. Miscellaneous.
-------------
(a) This Agreement states the entire agreement of the parties
concerning the subject matter hereof, and supersedes all prior agreements,
written or oral, between or among them concerning such subject matter.
(b) This Agreement may be amended, and compliance with any provision
of this Agreement may be omitted or waived, only by the written agreement of the
Corporation and the Holders of at least two-thirds in voting power of the then
outstanding Registrable Securities issued or issuable upon conversion of the
Preferred Stock to be bound thereby.
(c) This Agreement amends and restates the Prior Registration Rights
Agreement, which upon execution hereof shall be of no further force or effect.
(d) This Agreement shall be governed by, and construed and enforced
in accordance with, the substantive laws of the State of California, without
regard to its principles of conflicts of laws.
(e) This Agreement may be executed in any number of counterparts,
each such counterpart shall be deemed to be an original instrument, and all such
counterparts together shall constitute but one agreement. Any such counterpart
may contain one or more signature pages.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Registration Rights Agreement as of the date first written above.
SEQUENOM, INC.
By: /s/ illegible
------------------------------
Its President
SERIES B INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
------------------------------
Its: illegible
------------------------------
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
------------------------------
Its: Treasurer
------------------------------
<PAGE>
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
------------------------------
Its: Treasurer
------------------------------
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-----------------------------
Its: Treasurer
-----------------------------
TVM TECHNO VENTURE INVESTORS NO. I
LIMITED PARTNERSHIP
By: /s/ illegible
-----------------------------
General Partner
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
-----------------------------
Its: Director Director
-----------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
ALPINVEST INTERNATIONAL B.V.
By: /s/ illegible /s/ illegible
-------------------------------
Its: illegible illegible
-------------------------------
BOSTON UNIVERSITY NOMINEE
PARTNERSHIP
By:
---------------------------------
General Partner
------------------------------------
Gerald E. Coughlan
------------------------------------
Charles P. Floe
/s/ illegible
------------------------------------
Hellmut Kirchner
------------------------------------
Herwig Brunner
------------------------------------
Franz A. Wirtz
------------------------------------
Hannemarie Wirtz
/s/ illegible
------------------------------------
Hubert Koster
/s/ illegible
------------------------------------
Ernst-Gunter Afting
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SVE STAR VENTURES
ENTERPRISES NO. III GbR,
A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
------------------------------
Managing Partner
SVE STAR VENTURES
ENTERPRISES NO. IIIa GbR,
A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
------------------------------
Managing Partner
SVE STAR VENTURES
MANAGEMENTGESELLSCHAFT MBH
Nr. 3 & CO. BETEILIGUNGS KG
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
------------------------------
Managing Partner
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SERIES C INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
------------------------------
Its: Treasurer
------------------------------
TVM INTERTECH
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
------------------------------
Its: Treasurer
------------------------------
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
------------------------------
Its: Treasurer
------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
TVM EUROTECH
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
-------------
Its: General Partner
---------------
TVM TECHNO VENTURE INVESTORS NO. I
LIMITED PARTNERSHIP
By:
---------------------------------
General Partner
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
------------------------------
Its: Director Director
-------------------------------
ALPINVEST INTERNATIONAL B.V.
By:
---------------------------------
Its:
--------------------------------
/s/ illegible
------------------------------------
Hellmut Kirchner
/s/ illegible
------------------------------------
Hellmut Kirchner as Trustee
------------------------------------
Franz A. Wirtz
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
-----------------------------------------------
Hannemarie Wirtz
GLS LP INVESTMENT III LIMITED
By: /s/ illegible
------------------------------------------
Its: Director
------------------------------------------
KLEINWORT BENSON LIMITED
By: /s/ illegible
------------------------------------------
Its: Director
------------------------------------------
LOMBARD ODIER & CIE
By: /s/ illegible /s/ illegible
------------------------------------------
Is: Assistant Vice President Vice President
------------------------------------------
MERIFIN CAPITAL N.V.
By:
-----------------------------------------------
Its:
-----------------------------------------------
S.R. ONE, LIMITED
By: /s/ illegible
------------------------------------------
Its: Vice President
------------------------------------------
SVM Star Ventures Managementgesellschaft
mbH Nr. 3 & Co. Beteiligungs KG
By: SVM Star Ventures Managementgesellchaft mbH Nr. 3
By: /s/ illegible
-----------------------------------------------
Its:
-----------------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SVE STAR VENTURES ENTERPRISES
NO. IIIA, a German Civil Law Partnership (with
limitation of liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-----------------------------------------
Its:
-----------------------------------------
SVE STAR VENTURES ENTERPRISES
NO. III, a German Civil Law Partnership (with
limitation of liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-----------------------------------------
Its:
-----------------------------------------
TBG-TECHNOLOGIE-
BETEILIGUNGSGESELLSCHAFT MBH
DER DEUTSCHEN AUSGLEICHSBANK
By: /s/ illegible /s/ illegible
-----------------------------------------
Its: General Manager Authorized Representative
-----------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
illegible
---------------------------------------
(print name)
By: /s/ illegible
------------------------------------
Title: Director
--------------------------------
Address:
-----------------------------
--------------------------------------
--------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
TVM TECHNO VENTURE ENTERPRISES NO.
II LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
---------------------------------------
Title: Treasurer
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
---------------------------------------
Title: Treasurer
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
TVM ZWEITE BETELIGUNG-US LIMITED
PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
---------------------------------------
Title: Treasurer
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
TVM TECHNO VENTURE INVESTORS NO. I
LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
---------------------------------------
Title: General Partner
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
---------------------------------------
Title: General Partner
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
TVM MEDICAL VENTURES
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible /s/ illegible
---------------------------------------
Title: Managing Partner CFO
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
Prof. Dr.med. Dr.rer.nat
Ernst-Gunter Afting
-------------------------------------------
(print name)
By: /s/ illegible
---------------------------------------
Title:
------------------------------------
Address:
----------------------------------
-------------------------------------------
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
Alpinvest International B.V.
------------------------------------
(print name)
By: /s/ illegible
--------------------------------
Title:
-----------------------------
Address: Gooimeer 3, P.O. Box 5073
---------------------------
1410 AB Naarden
---------------------------
The Netherlands
---------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
KREDIETBENK S.A. LUXEMBOURCEOIE AS NOMINEE FOR KB
LUX VENTURE CAPITAL FUND (illegible)
By: /s/ illegible
----------------------------------
Title: Manager
------------------------------
Address: 43 Boulevard Royal
-----------------------------
L-2955 Luxembourg
-----------------------------
-----------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
-------------------------------------
Title: Director Director
---------------------------------
Address: 43 Boulevard Royal
--------------------------------
L-2955 Luxembourg
--------------------------------
--------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
S.R. ONE, LIMITED
------------------------------------------
(print name)
By: /s/ illegible
--------------------------------------
Title: Vice President
-----------------------------------
Address: Four Tower Bridge - Suite 250
---------------------------------
200 Barr Harbor Drive
---------------------------------
West Conshohocken
---------------------------------
PA 19428
---------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
----------------------------------------------
(print name)
By: /s/ illegible
------------------------------------------
Title:
---------------------------------------
Address:
-------------------------------------
----------------------------------------------
----------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
HASPA BETEILIGUNGSGESELLSCHAFT FUER DEN
MITTELSTAND Mbh
Joerg Wohlers Dr. Juergen Wagenmann
---------------------------------------------
By: /s/ illegible /s/ illegible
-----------------------------------------
Title: Managing Director Managing Director
--------------------------------------
Address: 20454 Hamburg
------------------------------------
Germany
---------------------------------------------
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
ERIK HORNNAESS
----------------------------------------
(print name)
By: /s/ Erik Hornnaess
------------------------------------
Title: Retired
--------------------------------
Address: Parkstrasse 75
-------------------------------
65191 Wesbaden
----------------------------------------
Germany
----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
H. KIRCHNER
-------------------------------------------
(print name)
By: /s/ illegible
---------------------------------------
Title: Man. Director
-----------------------------------
Address: Martelsgraren 2
----------------------------------
D - 82327 Tutzing
----------------------------------
----------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
RESIDENTIE PARTICIPATIES
--------------------------------------------
(print name)
By: /s/ M. Kleywegt
----------------------------------------
Title: Managing Director
-------------------------------------
Address: illegible
-----------------------------------
--------------------------------------------
--------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
GLS LP INVESTMENT III LIMITED
-------------------------------------------
(print name)
By: /s/ illegible
---------------------------------------
Title: Director
------------------------------------
Address: Barfield House
----------------------------------
St. Julian's Avenue
-------------------------------------------
St. Peter's Port Guernsey
-------------------------------------------
GY1 3QL
-------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
SEQUENOM, INC.
Registration Rights Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" as defined in the Registration Rights Agreement
dated as of December 21, 1998, by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 21st day of December, 1998.
DB UK FINANCE PLC
---------------------------------------------
(print name)
By: /s/ illegible
-----------------------------------------
Title: Director
--------------------------------------
By: /s/ illegible
-----------------------------------------
Title: Director
--------------------------------------
Address: 6 Bishopsgate
------------------------------------
London EC2N 4DA
---------------------------------------------
UK
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 13th day of January, 1999.
ALAFI CAPITAL CO.
-----------------
(print name)
By: /s/ illegible
-------------
Title: General Partner
-----------------
Address: P. O. Box 7338
--------------
Berkley, CA 94707
-----------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 19th day of January, 1999.
MATTHEW J. BURNS
ASSISTANT TREASURER
BOSTON UNIVERSITY
-----------------
(print name) Trustee of Boston University
By: /s/ illegible
-------------
Title: Assistant Treasurer
-------------------
Address: c/o Community Technology Fund
-----------------------------
108 Bay State Road
------------------
Boston, MA 02215
----------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 22nd day of February, 1999.
HARRY A. COLLINS
----------------
(print name)
By: /s/ Harry A. Collins
--------------------
Title: Chairman of the Board
---------------------
Address: 11750 Sorrento Valley Road
--------------------------
San Diego, CA 92121
-------------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 19th day of February, 1999.
E. Tyler Miller
---------------
(print name)
By: /s/ E. Tyler Miller
-------------------
Title: Vice Chairman
-------------
Address: 11750 Sorrento Valley Road
--------------------------
San Diego, CA 92121
-------------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this ____ day of ____________, 1999.
Florean W. J. Homm
------------------
(print name)
By: /s/ illegible
-------------
Title: CIO at Value Management Research AG
-----------------------------------
Address:
--------------------------
--------------------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 22nd day of February, 1999.
/s/ Koh Soo Boon
----------------
(print name)
Vertex Technology Fund Ltd.
By: Koh Soo Boon
------------
Title: Senior Vice President/Deputy General
-------------------------------------
Manager
-------
Address: c/o 77 Science Park Drive, #02-15
---------------------------------
Cintech III, Singapore Science Park,
------------------------------------
Singapore 118256
----------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 28th day of February, 1999.
DB UK FINANCE PLC
-----------------
(print name)
By: /s/ illegible /s/ illegible
------------- -------------
Title: Director Director
-------- --------
Address: 6 Bishopsgate
-------------
London, EC2N 4DA
----------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this ____ day of ____________, 1999.
MANFRED FERBER
--------------
(print name)
By: /s/ Manfred Ferber
------------------
Title:
-----------------
Address:
--------------------
--------------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this ____ day of ____________, 1999.
KIRCHNER
--------
(print name)
By: /s/ Kirchner
------------
Title:
-------------
Address: Martelsgraben 2
---------------
82327 Tutzing
-------------
<PAGE>
EXHIBIT A
---------
SEQUENOM, INC.
Registration Rights Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby
agrees (i) that it is an "Additional Investor" as defined in the Series D
Convertible Preferred Stock Purchase Agreement dated as of December 21, 1998 and
an "Investor" as defined in the Registration Rights Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Registration Rights Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the
Registration Rights Agreement.
EXECUTED this 29th day of March, 1999.
NOMURA INTERNATIONAL PLC
------------------------
(print name)
By: /s/ illegible
-------------
Title: Managing Director
-----------------
Address: 1 st Martins Le Grand
---------------------
London
------
ECIA 4NP
--------
<PAGE>
EXHIBIT 10.6
AMENDED AND RESTATED VOTING AGREEMENT
This Amended and Restated Voting (this "Agreement") is entered into as of
December 21, 1998 by and among Sequenom, Inc., a Delaware corporation (the
"Corporation"); Hubert Koster, Nola E. Masterson and Robert E. Patterson (the
"Founders"); TVM Techno Venture Enterprises No. II Limited Partnership, TVM
Intertech Limited Partnership, TVM Zweite Beteiligung-U.S. Limited Partnership,
TVM Eurotech Limited Partnership, TVM Techno Venture Investors No. 1 Limited
Partnership and KBL Founder Ventures SCA (the "Original Investors"); the holders
(the "Series B Investors") of shares of the Corporation's Series B Convertible
Preferred Stock, $.001 par value per share (the "Series B Preferred Stock"); the
holders (the "Series C Investors") of shares of the Corporation's Series C
Convertible Preferred Stock, $.001 par value per share (the "Series C Preferred
Stock"); and the purchasers of shares of the Corporation's Series D Convertible
Preferred Stock, $.001 par value per share ("Series D Preferred Stock"),
pursuant to the Series D Convertible Preferred Stock Purchase Agreement (the
"Purchase Agreement") dated as of the date hereof, including any Additional
Investors as defined in the Purchase Agreement (all such purchasers of Series D
Preferred Stock under the Purchase Agreement being referred to as the
"Investors," and all such Founders, Original Investors, Series B Investors,
Series C Investors and Investors being referred to as the "Stockholders").
AGREEMENT
---------
In consideration of the mutual covenants herein contained, the parties
hereto agree as follows:
1. Board of Directors. The Stockholders agree to vote all shares of the
------------------
Corporation's Common Stock, $.001 par value per share ("Common Stock"), Series A
Convertible Preferred Stock, $.001 par value per share ("Series A Preferred
Stock"), Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and any other class of voting security of the Corporation (the "Shares")
now or hereafter owned or controlled by them, and otherwise to use their
respective best efforts as stockholders of the Corporation, to set the number of
directors of the Corporation at five and to elect as directors, on the date of
this Agreement and in any subsequent election of directors of the Corporation:
(a) one person designated by the Founders;
(b) one person designated by the Original Investors;
(c) one person designated by either (i) GLS LP Investment III Limited
("GLS") for so long as GLS holds at least 793,650 shares of Series C
Preferred Stock, or (ii) the holders of a majority of the Series C Preferred
Stock if GLS holds less than 793,650 shares of Series C Preferred Stock; and
(d) two persons who are not employees of the Corporation (the "Independent
Directors"), who have experience in the Corporation's industry and who are
reasonably acceptable to a majority of the other directors.
<PAGE>
Any person or entity or group of persons or entities entitled to make a
director designation hereunder (a "Designating Party") shall furnish written
notice to the Corporation at least 30 days prior to any election of directors of
its director-designee or director-designees and the Corporation shall furnish
written notice thereof to the Stockholders at least 10 days prior to any such
election of directors. In the absence of such notice, the director-designee or
director-designees of such Designating Party then serving and previously
designated shall be reelected if still eligible to serve as provided herein. In
the event that any Designating Party that is a group of Stockholders cannot
agree upon a director-designee, the identity of the director-designee of such
Designating Party shall be determined by a plurality in voting power of the
outstanding capital stock of the Corporation held by the Stockholders
constituting such Designating Party.
This Agreement is not intended, and shall not be construed, to confer upon
any person designated hereunder for election to the Board of Directors any right
to serve or to continue to serve in such capacity. Any Designating Party may,
at any time, determine to remove its then-current director-designee and
designate another person for election to the Board of Directors in place of the
person then serving as the director-designee of such Designating Party. In the
event any such determination is made, the Stockholders shall promptly vote to
remove the director-designee of such Designating Party then serving, and to
elect as a director the replacement director-designee of such Designating Party.
At any time a majority of the directors other than the Independent
Directors may determine to remove any Independent Director from the Board of
Directors and designate another person for election to the Board of Directors in
place of the person then serving as such Independent Director. In the event any
such determination is made, the Stockholders shall promptly vote to remove the
applicable Independent Director and to elect as a director the replacement
Independent Director-designee.
Any vacancy on the Board of Directors created by the resignation, removal,
incapacity, or death of any person designated under this Section 1 shall be
filled by another person designated by the original Designating Party. The
Stockholders shall vote their respective Shares in accordance with such new
designation, and any such vacancy shall not be filled in the absence of a new
designation by the original Designating Party.
This Section 1 shall terminate and be of no further force and effect upon
the closing of a firm commitment underwritten public offering of Common Stock of
the Corporation pursuant to an effective registration statement under the
Securities Act of 1933, as amended, in which the aggregate gross proceeds to the
Corporation from such offering are not less than $20,000,000 and the offering
price per share is not less than $10.00, appropriately adjusted to take account
of any stock split, stock dividend, combination of shares or similar event.
In the event that any Designating Party (or its or their respective
partners, stockholders and affiliates) owns, in the aggregate, fewer than
200,000 shares of the Corporation's Common Stock, subject to adjustment for
stock splits, stock dividends, combinations of shares and similar events, such
Designating Party's right to make designations under this Section 1 shall
terminate, and the obligation of the other parties under this Section 1 to vote
for any members of the Board of Directors designated by such Designating Party
shall terminate, but all other obligations of all parties hereunder shall
continue unless otherwise terminated. For purposes of this paragraph, in
-2-
<PAGE>
determining the number of shares of Common Stock owned by a Designating Party,
ownership by such Designating Party of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
shall be deemed to be ownership by it of that number of shares of Common Stock
into which such shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock are convertible.
2. Director Indemnification. In the event that any director contemplated by
------------------------
this Agreement shall be made or threatened to be made a party to any action,
suit or proceeding with respect to which he may be entitled to indemnification
by the Corporation pursuant to its Certificate of Incorporation, By-Laws or
otherwise, he shall be entitled to be represented in such action, suit or
proceeding by counsel of his choice and the expenses of such representation
shall be reimbursed by the Corporation to the extent provided in or authorized
by said Certificate of Incorporation or other provision and permitted by
applicable law.
The Corporation and the Stockholders agree not to take any action to amend
any provision of the Certificate of Incorporation or By-Laws of the Corporation
relating to indemnification of directors, as presently in effect, without the
prior written consent of holders of at least two-thirds in voting power of the
Shares held by Founders, Original Investors, Series B Investors, Series C
Investors and the Investors, voting together as a single class.
3. Accession. Any Additional Investors as defined in the Purchase Agreement
---------
shall automatically become an Investor hereunder by delivering to the
Corporation a written instrument in the form of Exhibit A hereto, by which such
---------
Additional Investor agrees to be bound by the obligations imposed under this
Agreement, whereupon such Additional Investor shall automatically become a party
to this Agreement and shall thereupon be deemed an "Investor" and a
"Stockholder" for all purposes of this Agreement.
4. Notices. All notices, requests, consents and other communications hereunder
-------
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class mail postage prepaid
(other than to non-U.S. parties), by fax, or by DHL, Federal Express or any
other internationally recognized express courier service, addressed to such
party at the address set forth below or such other address as may hereafter be
designated in writing by the addressee to the addressor listing all parties:
(i) if to the Corporation, to:
Sequenom, Inc.
11555 Sorrento Valley Road, Suite C
San Diego, CA 92121
Attention: President
Fax: (619) 350-0344
-3-
<PAGE>
(ii) with a copy to:
John A. Denniston, Esq.
Brobeck, Phleger & Harrison LLP
550 West C Street, Suite 1300
San Diego, CA 92101
Fax: (619) 234-3848
(iii) if to the Stockholders, to their respective last known address or
their respective address, if any, appearing in the books of the
Corporation.
5. Assignment; Binding Effect. No Designating Party may assign its or their
--------------------------
rights hereunder. Subject to termination or partial termination as provided in
Section 1, this Agreement shall be binding on the parties hereto and their
respective legal representatives, successors and permitted assigns and on the
transferees of any Shares now owned or hereafter acquired by them.
6. Entire Agreement; Amendment and Waiver. This Agreement contains the sole
--------------------------------------
and entire understanding of the parties with respect to its subject matter and
supersedes all prior negotiations, commitments, agreements and understandings
heretofore had among any of them with respect thereto. Without limiting the
generality of the foregoing, this Agreement amends and restates the Voting
Agreement among the Corporation, the Founders, the Original Investors, the
Series B Investors and the Series C Investors dated as of May 8, 1997, as
amended as of January 12, 1998, which shall no longer have any force or effect.
This Agreement may not be changed or terminated or any performance or condition
waived, in whole or in part, except by the written agreement of the Corporation
and Stockholders or transferees of their rights hereunder holding at least two-
thirds in voting power of the Shares held by the Founders, two-thirds in voting
power of the Shares held by the Original Investors, two-thirds in voting power
of the Shares held by the Series B Investors, two-thirds in voting power of the
Shares held by the Series C Investors, and two-thirds in voting power of the
Shares held by the Investors. A waiver on one occasion shall not constitute a
waiver on any further occasion.
7. Counterparts. This Agreement may be executed in more than one counterpart,
------------
each of which shall be deemed to be an original and which, together, shall
constitute one and the same instrument. Any such counterpart may contain one or
more signature pages.
8. Applicable Law. This Agreement shall be governed by, and construed and
--------------
enforced in accordance with, the substantive laws of the State of California,
without regard to its principles of conflicts of laws.
9. Legend. Each certificate for Shares shall bear a legend stating in
------
substance as follows, and each of the Stockholders shall cause its certificates
to be so legended promptly after the execution and delivery of this Agreement:
The shares of stock represented by this certificate are subject to the
terms and provisions of a Voting Agreement among the Corporation and
certain stockholders of the Corporation. The Corporation will furnish a
copy of
-4-
<PAGE>
the Voting Agreement to the holder hereof upon written request and
without charge.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Voting Agreement as of the date first written above.
SEQUENOM, INC.
By: /s/ Hubert Koster
-----------------
Its President
FOUNDERS:
/s/ Hubert Koster
-----------------------
Hubert Koster
/s/ Nola E. Masterson
-----------------------
Nola E. Masterson
/s/ Robert E. Patterson
-----------------------
Robert E. Patterson
ORIGINAL INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
<PAGE>
TVM INTERTECH LIMITED
PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
TVM TECHNO VENTURE INVESTORS NO. I LIMITED
PARTNERSHIP
By: /s/ illegible
-------------------
General Partner
KBL FOUNDER VENTURES SCA
By:
-------------------
Its:
SERIES B INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: /s/ Treasurer
-------------------
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM TECHNO VENTURE INVESTORS NO. I LIMITED
PARTNERSHIP
By: /s/ illegible
-------------------
General Partner
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
------------------- --------------------
Its: Director Director
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
ALPINVEST INTERNATIONAL B.V.
By: /s/ illegible
-------------------
Its: authorized signature
BOSTON UNIVERSITY NOMINEE PARTNERSHIP
By:
-------------------
General Partner
-------------------------
Gerald E. Coughlan
-------------------------
Charles P. Floe
/s/ Hellmut Kirchner
-------------------------
Hellmut Kirchner
-------------------------
Herwig Brunner
-------------------------
Franz A. Wirtz
-------------------------
Hannemarie Wirtz
/s/ Hubert Koster
-------------------------
Hubert Koster
/s/ Ernst-Gunter Afting
-------------------------
Ernst-Gunter Afting
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
SVE STAR VENTURES
ENTERPRISES NO. III GbR,
A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-------------------
Managing Partner
SVE STAR VENTURES
ENTERPRISES NO. IIIa GbR,
A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-------------------
Managing Partner
SVE STAR VENTURES
MANAGEMENTGESELLSCHAFT MBH
Nr. 3 & CO. BETEILIGUNGS KG
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-------------------
Managing Partner
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
SERIES C INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM INTERTECH
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
-------------------
Its: Treasurer
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
TVM EUROTECH
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
-------------------
Its: Treasurer
TVM TECHNO VENTURE INVESTORS NO. I LIMITED
PARTNERSHIP
By: /s/ illegible
-------------------
General Partner
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
------------------- -------------------
Its: Director Director
ALPINVEST INTERNATIONAL B.V.
By: /s/ illegible
-------------------
Its: authorized signature
/s/ Hellmut Kirchner
-------------------------
Hellmut Kirchner
/s/ Hellmut Kirchner
--------------------
Hellmut Kirchner as Trustee
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
-------------------------
Franz A. Wirtz
-------------------------
Hannemarie Wirtz
GLS LP INVESTMENT III LIMITED
By: /s/ L. S. McNairn
-------------------
Its: Director
KLEINWORT BENSON LIMITED
By: /s/ illegible
-------------------
Its: Director
LOMBARD ODIER & CIE
By: /s/ Michaela Troyanov /s/ A. Plattet
--------------------- ------------------
Assistant Vice President Vice President
MERIFIN CAPITAL N.V.
By:
--------------------
Its:
S.R. ONE, LIMITED
By: /s/ illegible
-------------------
Its: Vice President
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
SVM Star Ventures Managementgesellschaft
mbH Nr. 3 & Co. Beteiligungs KG
By: SVM Star Ventures Managementgesellchaft
mbH Nr. 3
By: /s/ illegible
-------------------
Managing Partner
SVE STAR VENTURES ENTERPRISES
NO. IIIA, a German Civil Law Partnership (with
limitation of liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-------------------
Managing Partner
SVE STAR VENTURES ENTERPRISES
NO. III, a German Civil Law Partnership (with
limitation of liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-------------------
Managing Partner
TBG-TECHNOLOGIE-
BETEILIGUNGSGESELLSCHAFT MBH
DER DEUTSCHEN AUSGLEICHSBANK
By: /s/ illegible /s/ illegible
------------------ ------------------
Its: General Manager Authorized Representative
[SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
Alpinvest International B.V.
----------------------------
(Print name)
By:/s/ illegible /s/ illegible
---------------------- ---------------------
Title: Authorized Signatories
Address: Gooimeer 3, P.O. Box 5073
1410 AB Naarden
The Netherlands
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
---------------------- --------------------
Title: Director Director
Address: 43 Boulevard Royal
L - 2955 Luxembourg
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
S. R. ONE, LIMITED
------------------
(Print name)
By: /s/ illegible
----------------------
Title: Vice President
Address: Four Tower Bridge - Suite 250
200 Barr Harbor Drive
West Conshohocken
PA 19428
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
KREDIETBANK S.A. LUXEMBOURGEISE AS NOMINEE FOR KB
LUX VENTURE CAPITAL FUND (illegible)
By: /s/ illegible /s/ illegible
---------------------- --------------------
Title: Manager General Manager
Address: 43 Boulevard Royal
L - 2955 Luxembourg
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
----------------------
Title: Treasurer
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
TVM TECHNO VENTURE ENTERPRISES NO. II LIMITED
PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By:/s/ illegible
----------------------
Title: Treasurer
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
----------------------
Title: Treasurer
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
TVM TECHNO VENTURE INVESTORS NO. I LIMITED
PARTNERSHIP
By:/s/ illegible
----------------------
Title: General Partner
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
TVM ZWEITE BETEILIGUNG-US LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
----------------------
Title: Treasurer
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
-------------------------
(Print name)
By: /s/ illegible
---------------------
Title:
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
ERIK HORNNAESS
--------------
(Print name)
By: ERIK HORNNAESS
---------------
Title: Retired
Address: Parkstrasse 75
65191 Weisbaden 75
Germany
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
H. KIRCHNER
-------------------------
(Print name)
By:/s/ illegible
----------------------
Title: Man. Dir.
Address: Martelsgrasen 2
D - 82327 (illegible)
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
TVM MEDICAL VENTURES
By: /s/ illegible /s/ illegible
---------------------- --------------------
Title: Managing Partner CFO
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
GLS LP INVESTMENT III LIMITED
-----------------------------
(Print name)
By: /s/ L. S. McNairn
-------------------------
Title: Director
Address: Barfield House
St. Julian's Avenue
St. Peter Port Guernsey
GY1 3QL
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
HASPA Beteiligungsgesellscaft fuer den Mittelstand
mbH
Joerg Wohlers Dr. Juergen Wagenmann
------------------------- -----------------------
(Print name)
By: /s/ illegible /s/ illegible
---------------------- -----------------------
Title: Managing Director Managing Director
Address: 20454 Hamburg
Germany
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
RESIDENTIE PARTICIPATIES IV CV
------------------------------
(Print name)
By: /s/ illegible
----------------------
Title: Managing Director
Address: illegible
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
illegible
-------------------------
(Print name)
By:/s/ illegible
----------------------
Title: Director
Address:
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
DB UK FINACE PLC
-------------------------
(Print name)
By:/s/ illegible
----------------------
Title: Director
By:/s/ illegible
----------------------
Title: Director
Address: 6 Bishopsgate
London EC2N 4DA
U.K.
<PAGE>
SEQUENOM, INC.
Voting Agreement
Investor Signature Page
-----------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Investor" and a "Stockholder" as defined in the Voting
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Voting Agreement for all
purposes and (iii) that it is bound by all terms and conditions of the Voting
Agreement.
EXECUTED this 21st day of December, 1998.
Prof. Dr. med. Dr. rer. nat.
Ernst-Gunter Afting
----------------------------
(Print name)
By:/s/ illegible
-------------------------
Title:
Address:
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this 13 day of January, 1999.
Alafi Capital Co.
-------------------------
(Print name)
By:/s/ illegible
----------------------
Title: General Partner
Address: P.O. Box 7338 Berkley CA 94707
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this 19 day of January, 1999.
Matthew J. Burns
Assistant Treasurer
Boston University
Trustee of Boston University
----------------------------
(Print name)
By: /s/ illegible
----------------------
Title: Assistant Treasurer
Address: c/o Community Technology Fund
108 Bay State Road
Boston, MA 02215
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this 22 day of Feb., 1999.
Harry A. Collins
-------------------------
(Print name)
By:/s/ illegible
----------------------
Title: Chairman of Board
Address: 11750 Sorrento Valley Road
San Diego, CA 92121
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this 19 day of Feb., 1999.
E. Tyler Miller
-------------------------
(Print name)
By: /s/ illegible
----------------------
Title: Vice Chairman
Address: 11750 Sorrento Valley Road
San Diego, CA 92121
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this ____ day of _________________, 1999.
Florean W.J. Hom
-------------------------
(Print name)
By: /s/ illegible
----------------------
Title: CIO at Value Management Research Ag
Address:
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this 22 day of February, 1999.
/s/ illegible
-------------------------
(Print name)
Vertex Technology Fund Ltd
By: Koh Soo Boon
----------------------
Title: Senior Vice President/Deputy General Man.
Address: c/o 77 Science Park Drive, #02-15
Cintech III, Singapore Science Park,
Singapore 118256
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this 28 day of February, 1999.
DB UK FINANCE PLC
-------------------------
(Print name)
By: /s/ illegible /s/ illegible
---------------------- -----------------
Title: Director Director
Address: 6 Bishopsgate, London
EC2N 4DA
[ADDITIONAL INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Voting Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998, and an
"Investor" and a "Stockholder" as defined in the Voting Agreement dated as of
December 21, 1998, each by and among Sequenom, Inc. and the parties named
therein, (ii) that it is a party to the Voting Agreement for all purposes and
(iii) that it is bound by all terms and conditions of the Voting Agreement
EXECUTED this ____ day of _________________, 1999.
MANFRED FERBER
-------------------------
(Print name)
By: /s/ illegible
----------------------
Title:
Address:
[ADDITIONAL INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED VOTING AGREEMENT]
<PAGE>
EXHIBIT 10.7
AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT
This Amended and Restated Stock Restriction Agreement (this "Agreement") is
entered into as of December 21, 1998 by and among Sequenom, Inc., a Delaware
corporation (the "Corporation"); Hubert Koster ("Koster"), Nola E. Masterson
("Masterson") and Robert E. Patterson ("Patterson," and together with Koster and
Masterson, the "Founders"); the holders (the "Series B Investors") of shares of
the Corporation's Series B Convertible Preferred Stock, $.001 par value per
share (the "Series B Preferred Stock"); the holders (the "Series C Investors")
of shares of the Corporation's Series C Convertible Preferred Stock, $.001 par
value per share (the "Series C Preferred Stock"); and the purchasers of shares
of the Corporation's Series D Convertible Preferred Stock, par value $.001 per
share ("Series D Preferred Stock"), pursuant to the Series D Convertible
Preferred Stock Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), including any Additional Investors as defined in the Purchase
Agreement (such purchasers being hereinafter referred to as the "Series D
Investors", and, together with the Series B Investors and the Series C
Investors, the "Investors").
W I T N E S S E T H T H A T
WHEREAS, the Series D Investors wish to purchase from the Corporation
certain shares of Series D Preferred Stock;
WHEREAS, the Series D Investors' purchase of such Series D Preferred Stock
would materially benefit the Founders, the Series B Investors and the Series C
Investors as holders of certain shares of the Corporation's capital stock and
rights to acquire such capital stock;
WHEREAS, it is a condition to the obligations of the Series D Investors
under the Purchase Agreement that this Agreement be executed by the Corporation,
the Founders, the Series B Investors and the Series C Investors, and the
Corporation, the Founders, the Series B Investors and the Series C Investors are
willing to execute this Agreement and to be bound by the provisions hereof;
NOW, THEREFORE, in consideration of the foregoing, the agreements set forth
below, and the parties' desire to provide for continuity of ownership of the
Corporation to further the interests of the Corporation and its present and
future stockholders, the parties hereby agree with each other as follows:
1. Certain Defined Terms. As used in this Agreement, the following terms
---------------------
shall have the following respective meanings:
(a) "Common Stock" means the Corporation's Common Stock, $.001 par
value per share.
(b) "Convertible Securities" means any evidences of indebtedness,
shares of capital stock or other securities directly or indirectly convertible
into or exchangeable for Common Stock.
<PAGE>
(c) "Options" means any rights, options, or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities.
(d) "Series A Preferred Stock" means the Corporation's Series A
Convertible Preferred Stock, $.001 par value per share.
(e) "Shares" shall mean and include all shares of Stock now owned or
hereafter acquired by any Founder or any Investor.
(f) "Stock" shall mean and include all shares of Common Stock, all
Convertible Securities, all Options, and all other securities of the Corporation
which may be issued in exchange for or in respect of shares of Common Stock,
Convertible Securities or Options (whether by way of stock split, stock
dividend, combination of shares, reclassification, recapitalization,
reorganization, or any other means).
2. Prohibited Transfers. None of the Investors or Founders shall sell or
--------------------
otherwise transfer, by gift or otherwise, all or any part of his Shares except
in compliance with the terms of this Agreement.
3. Offer of Sale; Notice of Proposed Sale or Transfer. If any Founder
--------------------------------------------------
desires to sell or otherwise transfer any of his Shares, or of any interest
therein, whether voluntarily or by operation of law, in any transaction other
than pursuant to clauses (iii) or (iv) of Section 7(a) of this Agreement, such
Founder (the "Selling Founder") shall first deliver written notice of his desire
to do so (the "Selling Founder's Notice") to the Corporation and each of the
other Investors. If any Investor desires to sell or otherwise transfer an
aggregate of 50,000 or more Shares in one transaction or multiple transactions,
or of any interest therein, whether voluntarily or by operation of law, other
than in connection with any transaction described in Section 8(c) of this
Agreement, such Investor (the "Selling Investor") shall first deliver written
notice of his desire to do so (the "Selling Investor's Notice") to the
Corporation. The Selling Founder's Notice and the Selling Investor's Notice
must specify: (i) the name and address of the party to which the Selling
Investor or Selling Founder proposes to sell or otherwise transfer the Shares or
an interest in the Shares (the "Proposed Transferee"), (ii) the number of Shares
the Selling Investor or Selling Founder proposes to sell or otherwise transfer
(the "Offered Shares"), (iii) the consideration per Share to be delivered to the
Selling Investor or Selling Founder for the proposed sale or transfer, and (iv)
all other material terms and conditions of the proposed transaction, which must
be bona fide.
4. Corporation's Option to Purchase Shares of Selling Founder.
----------------------------------------------------------
(a) Except as set forth in Section 7(a), the Corporation shall have
the first option to purchase all or any part of the Offered Shares for the
consideration per Share and on the terms and conditions specified in the Selling
Founder's Notice. The Corporation must exercise such option, no later than
fifteen (15) business days after such Selling Founder's Notice is deemed to have
been delivered to it, by written notice to the Selling Founder.
(b) In the event the Corporation does not exercise its option within
such fifteen-business-day period with respect to all of the Offered Shares, the
Chief Financial Officer of the Corporation shall, by the last day of such
period, give written notice of that fact to the
-2-
<PAGE>
Investors (the "Investor Notice"). The Investor Notice shall specify the number
of Offered Shares the Corporation has elected not to purchase (the "Remaining
Shares").
(c) In the event the Corporation duly exercises its option to purchase
all or a portion of the Offered Shares, the closing of such purchase shall take
place at the offices of the Corporation on the later of (i) the date five
business days after the expiration of such fifteen-business-day period or (ii)
the date that the Investors consummate their purchase of Offered Shares under
Section 5(c) hereof.
(d) To the extent that the consideration proposed to be paid by the
Proposed Transferee for the Offered Shares consists of property other than cash
or a promissory note, the consideration required to be paid by the Corporation
and/or the Investors exercising their options under Sections 4 and 5 hereof,
respectively, may consist of cash equal to the value of such property, as
determined in good faith by agreement of the Selling Founder and the Corporation
and/or the Investors acquiring such Offered Shares.
5. Investors' Option to Purchase and Right to Participate in Sales by
------------------------------------------------------------------
Founders.
- --------
(a) Except as set forth in Section 7(a), each Investor shall have an
option, exercisable for a period of fifteen (15) business days from the date of
delivery of the Investor Notice, to purchase, on a pro rata basis, its
Proportionate Percentage (as defined below) of the Remaining Shares, for the
consideration per Share and on the terms and conditions set forth in the Selling
Founder's Notice. Such option shall be exercised by delivery of written notice
to the Chief Financial Officer of the Corporation. Alternatively, each Investor
may, within the same fifteen-business-day period, notify the Chief Financial
Officer of the Corporation of its desire to participate in the sale of Shares
and to sell, on the terms as set forth in the Selling Founder's Notice including
at the same price per Share on a common equivalent basis, up to an equivalent
proportion of the Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock owned by such Investor as the proposed sale of the Remaining
Shares represents with respect to the Shares then owned by the Selling Founder.
(b) In the event options to purchase have been exercised by the
Investors with respect to some but not all of the Remaining Shares, the Chief
Financial Officer of the Corporation shall promptly give written notice of that
fact to those Investors who have exercised their options within such period (the
"Second Investor Notice"). The Second Investor Notice shall specify the number
of Remaining Shares the Investors have not elected to purchase (the "Additional
Remaining Shares"). The Investors who have exercised their options within the
fifteen-business-day period specified in Section 5(a) shall have an additional
option, for a period of ten (10) business days after delivery of the Second
Investor Notice, to purchase all or any part of the Additional Remaining Shares
on the terms and conditions set forth in the Selling Founder's Notice, which
option shall be exercised by the delivery of written notice to the Chief
Financial Officer of the Corporation. In the event that there are two or more
such Investors that choose to exercise the last-mentioned option for a total
number of Additional Remaining Shares in excess of the number available, the
Additional Remaining Shares available for each such Investor's option shall be
allocated to such Investors pro rata based on that percentage calculated by
dividing (i) the number of Remaining Shares each such Investor elected to
purchase in response to the Investor Notice by (ii) the aggregate number of
Remaining Shares elected to be
-3-
<PAGE>
purchased (in response to the Investor Notice) by all such Investors, and only
those Investors, electing to purchase any portion of the Additional Remaining
Shares (in response to the Second Investor Notice), provided, however, that if
the number of Additional Remaining Shares so calculated for any such Investor
exceeds the number of the Additional Remaining Shares such Investor has elected
to purchase, then that Investor shall receive the number of Additional Remaining
Shares such Investor has elected to purchase, and the excess Additional
Remaining Shares shall be reallocated on an equitable basis (as determined by
the Board of Directors of the Corporation) among the remaining Investors
electing to purchase any of the Additional Remaining Shares.
(c) Promptly after the expiration of the last period for exercise of
an Investor's purchase option, the Chief Financial Officer of the Corporation
shall give written notice to the Selling Founder and the purchasing Investors,
specifying the number of Remaining Shares to be purchased by each purchasing
Investor. The closing of the purchase of the Remaining Shares shall take place
at the offices of the Corporation no later than five (5) business days after
delivery of such notice to the Selling Founder and the purchasing Investors.
(d) As used in this Section 5, the term "Proportionate Percentage"
shall mean with respect to each Investor a fraction, the numerator of which
shall be the amount of Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock owned by such Investor, and the denominator of which
shall be the total amount of Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock owned by all Investors, in each case on a common
equivalent basis.
6. Co-Sale.
-------
(a) If the Corporation and the Investors do not exercise their options
to purchase all of the Offered Shares within the periods described in this
Agreement (the "Option Period"), then each Investor which has, pursuant to
Section 5(a), expressed a desire to sell shares of Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock in the transaction (a
"Participating Investor") shall be entitled to do so pursuant to this Section.
The Chief Financial Officer of the Corporation shall promptly, on expiration of
the Option Period, notify the Selling Founder of the aggregate amount of Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock the
Participating Investors wish to sell. The Selling Founder shall use his best
efforts to interest the Proposed Transferee in purchasing, in addition to the
Remaining Shares not subscribed for by the Investors, the Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock the Participating
Investors wish to sell. If the Proposed Transferee does not wish to purchase
all of the Stock so made available by the Selling Founder and the Participating
Investors, then each Participating Investor and the Selling Founder shall be
entitled to sell, on the terms and conditions set forth in the Selling Founder's
Notice and on the same price per share on a common equivalent basis, a portion
of the Stock being sold to the Proposed Transferee, in the same proportion as
such Selling Founder or Participating Investor's ownership of Stock on a common
equivalent basis bears to the aggregate amount of Stock owned by the Selling
Founder and the Participating Investors on a common equivalent basis. The
transaction contemplated by the Selling Founder's Notice shall be consummated
not later than 60 days after the expiration of the Option Period.
-4-
<PAGE>
(b) If the Participating Investors do not elect to sell the full
amount of Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock which they are entitled to sell pursuant to Section 6(a), the
Selling Founder shall be entitled to sell to the Proposed Transferee, according
to the terms set forth in the Selling Founder's Notice, that number of his
Shares which equals the difference between the amount of Stock desired to be
purchased by the Proposed Transferee and the number of shares of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock the
Participating Investors wish to sell, in each case on a common equivalent basis.
(c) If the Selling Founder wishes to sell or otherwise transfer any of
his Shares at a price per Share which differs from that set forth in the Selling
Founder's Notice, upon terms different from those previously offered to the
Corporation and the Investors, or more than 60 days after the expiration of the
Option Period, then, as a condition precedent to such transaction, such Shares
must first be offered to the Corporation and the Investors on the same terms and
conditions as given the Proposed Transferee, and the Investors must first be
offered the opportunity to participate in such transaction, in accordance with
the procedures and time periods set forth above.
7. Permitted Transfers.
-------------------
(a) Subject to the provisions of Section 7(b) and Section 8, the
Corporation's and the Investors' right of first refusal and the Investors' right
of co-sale described in Sections 4 through 6 shall not apply to: (i) any
transfer of Shares by a Founder by gift or bequest or through inheritance to, or
for the benefit of, any member or members of such Founder's immediate family;
(ii) any transfer of Shares by a Founder to a trust (A) in respect of which such
Founder serves as trustee, provided that the trust instrument governing such
trust shall provide that such Founder, as trustee, shall retain sole and
exclusive control over the voting and disposition of such Shares until the
termination of this Agreement or (B) for the benefit solely of any member or
members of such Founder's immediate family; (iii) any sale or transfer of Shares
to the Corporation; (iv) any underwritten public offering of Common Stock
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"); and (v) with respect to sales or other
transfers of up to an aggregate of the following number of Shares (as adjusted
to reflect any stock split, stock dividend, combination of shares or other
similar transaction), but subject in any case to the restrictions set forth in
Section 8: (A) in the case of each of Koster and Masterson, 130,000 Shares; and
(B) in the case of Patterson, 50,000 Shares;
(b) In the event of any sale or transfer described in clauses (i) or
(ii) of Section 7(a), the transferee of the Shares shall hold the Shares so
acquired subject to all the restrictions imposed by this Agreement and shall be
deemed a Founder for all purposes hereof, and as a condition to such transfer,
any such transferee shall, at the request of the Corporation or any Investor,
execute and deliver a written instrument agreeing to be bound by the provisions
of this Agreement.
-5-
<PAGE>
8. Consent of the Corporation to Transfer.
--------------------------------------
(a) As a condition to selling or otherwise transferring any Shares
proposed to be sold or transferred by a Selling Founder and any Participating
Investor to any Proposed Transferee, other than a sale or transfer described in
clause (iii) or (iv) of Section 7(a), the Selling Founder or Participating
Investor shall have obtained the written consent to such transfer by the Board
of Directors of the Corporation by majority vote at a meeting or by unanimous
consent in lieu of a meeting. Such consent shall not be unreasonably withheld,
and shall be based on the Board of Directors' determination, after such inquiry
as it deems appropriate, but within thirty days of the date of the Selling
Founder's Notice to the Corporation under Section 3, that the Proposed
Transferee is not a competitor of the Corporation and is not otherwise an
inappropriate investor in the Corporation. In the event the Selling Founder
disagrees with such determination, and the Board of Directors and the Selling
Founder are unable to resolve the disagreement, an independent third party
selected and agreed upon by the Board of Directors and the Selling Founder shall
arbitrate and finally resolve the disagreement.
(b) As a condition to selling or otherwise transferring 50,000 or more
Shares proposed to be sold or transferred by a Selling Investor to any Proposed
Transferee, the Selling Investor shall have obtained the consent, by majority
vote at a meeting or by unanimous written consent in lieu of a meeting, of the
Board of Directors of the Corporation. Such consent shall not be unreasonably
withheld, and shall be based on the Board of Directors' determination, after
such inquiry as it deems appropriate, but within ten (10) business days of the
date of the Selling Investor' s Notice to the Corporation under Section 3, that
the Proposed Transferee is not a competitor of the Corporation. In the event
the Selling Investor disagrees with such determination, and the Board of
Directors and the Selling Investor are unable to resolve the disagreement, an
independent third party selected and agreed upon by the Board of Directors and
the Selling Investor shall arbitrate and finally resolve the disagreement.
(c) Notwithstanding the foregoing, Section 8(b) shall not apply to any
Investor's sale or transfer of Shares to any Affiliate of such Investor. For
such purpose, an "Affiliate" of any Investor means any general or limited
partner of such Investor if it is a partnership, or any person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Investor. In addition, for such purpose,
in the case of any Investor that is a limited partnership for which TVM Techno
Venture Management Limited Partnership, TVM Techno Venture Management III GmbH
or any of their respective Affiliates serves as general partner, the term
"Affiliate" shall include KBL Founder Ventures SCA, KB Lux Venture Capital Fund-
- -European Biotechnology and their respective Affiliates and Alpinvest
International B.V. and its Affiliates.
9. Corporation's Option to Purchase Shares of Selling Investor.
-----------------------------------------------------------
(a) If the Board of Directors determines that the Proposed Transferee
of a Selling Investor is a competitor of the Corporation, the Corporation shall
have the option to purchase all, but not less than all, of the Offered Shares
for the consideration per Share and on the terms and conditions specified in the
Selling Investor's Notice. The Corporation must exercise such option, no later
than ten (10) business days after such Selling Investor's Notice is deemed to
have been delivered to it, by written notice to the Selling Investor.
-6-
<PAGE>
(b) In the event the Corporation does not exercise its option within
such ten-business-day period with respect to all of the Offered Shares, the
Selling Investor shall be entitled to sell to the Proposed Transferee, according
to the terms set forth in the Selling Investor's Notice, the Offered Shares.
(c) In the event the Corporation duly exercises its option to purchase
all of the Offered Shares, the closing of such purchase shall take place at the
offices of the Corporation no later than ten (10) business days after the notice
by the Corporation to exercise its option is deemed to have been delivered to
the Selling Investor.
(d) To the extent that the consideration proposed to be paid by the
Proposed Transferee for the Offered Shares consists of property other than cash
or a promissory note, the consideration required to be paid by the Corporation
exercising its option under this Section 9, may consist of cash equal to the
value of such property, as determined in good faith by agreement of the Selling
Investor and the Corporation.
10. Lock-up. Each Founder agrees that upon the request of the Corporation
-------
or the underwriters managing an underwritten offering of the Corporation's
securities, such Founder will not sell, make any short sale or loan of, grant
any option for the purchase of, or otherwise dispose of any Shares held by him
without the prior written consent of the Corporation or such underwriters, as
the case may be, for a period of up to 180 days from effective date of the
applicable registration statement.
11. Sale or Transfer in Violation of this Agreement. If any sale or other
-----------------------------------------------
transfer of Shares is made or attempted in violation of any provision of this
Agreement, or if any Shares are not offered to the Corporation or the Investors
as required hereby, the Corporation and the Investors, as the case may be, shall
have the right to purchase such Shares from the owner thereof or his transferee
at any time before or after the transfer, as herein provided. In addition to
any other legal or equitable remedies which it or they may have, the Corporation
and the Investors may enforce their respective rights hereunder by actions for
specific performance (to the extent permitted by law). The Corporation shall
not be required (i) to transfer on its books any Shares or other Stock which has
been sold or transferred in violation of any provision of this Agreement or (ii)
to treat as the owner of such Shares or Stock, or to pay dividends to, any
transferee to whom any such Shares or Stock have been so sold or transferred.
If a Founder becomes obligated to sell any Shares to the Corporation under this
Agreement and fails to deliver such Shares in accordance with the terms of this
Agreement, the Corporation may, at its option, in addition to all other remedies
it may have, send to such Founder the purchase price for such Shares as is
herein specified and cancel on its books the certificate or certificates
representing the Shares to be sold. Thereafter, all of the Founder's rights in
and to such Shares shall terminate.
12. Disposition of Shares. Any Shares that the Corporation elects to
---------------------
purchase hereunder may be disposed of by it in such manner as it deems
appropriate with or without restrictions on the transfer thereof, and the
Corporation may require their transfer to a nominee or designee as part of any
purchase of the Shares from the Founders.
13. Restrictive Legend. All certificates representing Shares held by the
------------------
Founders or Investors which are subject to this Agreement shall have affixed
thereto a legend in substantially
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<PAGE>
the following form, in addition to any other legends that may be required by the
Corporation in connection with compliance with federal or state securities laws
or otherwise:
"The shares of stock represented by this certificate are subject to restrictions
on transfer and/or an option to purchase set forth in a Stock Restriction
Agreement between the Corporation and the registered owner of the shares
represented by this certificate (or his predecessor in interest). The
Corporation will furnish a copy of such agreement to the holder of this
certificate upon written request without charge."
The Founders and Investors shall cause such legend to be affixed to any of such
certificates not so legended.
14. Term. This Agreement shall terminate upon the closing of a firm
----
commitment underwritten public offering of Common Stock pursuant to an effective
registration statement under the Securities Act in which (i) the public offering
price per share is not less than $10.00 (appropriately adjusted to take account
of any stock split, stock dividend, combination of shares or similar event) and
(ii) the aggregate gross proceeds to the Corporation are not less than
$20,000,000.
15. Specific Enforcement. Each Investor and Founder expressly agrees that
--------------------
a violation of this Agreement by such Investor or Founder could not be
adequately compensated by money damages alone and that the Investors and the
Corporation will be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by any Investor or Founder, the other Investors and
the Corporation shall, in addition to all other remedies, each be entitled to a
temporary or permanent injunction, and/or a decree for specific performance, in
accordance with the provisions hereof.
16. Other Agreements. The restrictions on the Founders' right to dispose
----------------
of their Shares pursuant to this Agreement are in addition to and to be
construed consistently with the Founders' rights and obligations (including
restrictions on the Founders' right to dispose of shares of the Corporation's
capital stock) contained in any other agreement relating to restrictions on the
transferability of such Shares that the Founders execute before, on, or after
the date hereof; provided, that this Agreement shall amend and restate the Stock
Restriction Agreement dated as of May 8, 1997, as amended as of January 12,
1998, among the Corporation, the Founders, the Series B Investors and the Series
C Investors, which shall no longer be of any force or effect.
17. Waiver, Modification and Termination. No provision of this Agreement
------------------------------------
shall be deemed to have been waived by the Corporation or any Investor in the
absence of a written agreement executed by such party with respect to such
waiver. This Agreement may be modified or terminated only with the written
consent of the Founders, the Corporation, and the holders of two-thirds in
voting power of the Shares then held by the Investors.
18. Accession. Any Additional Investors as defined in the Purchase
---------
Agreement shall automatically become an Investor hereunder by delivering to the
Corporation a written instrument in the form of Exhibit A hereto, by which such
---------
Additional Investor agrees to be bound by the obligations imposed under this
Agreement, whereupon such Additional Investor
-8-
<PAGE>
shall automatically become a party to this Agreement and shall thereupon be
deemed an "Investor" for all purposes of this Agreement..
19. Binding Effect; Assignment. This Agreement shall be binding upon the
--------------------------
parties hereto and their heirs, legal representatives, successors and assigns.
The rights and obligations of the Founders and Investors hereunder may not be
assigned or delegated without the written consent of the Corporation.
20. Notices. All notices, requests, consents, deliveries and other
-------
communications hereunder shall be in writing and shall be delivered in person or
duly sent by first class mail postage prepaid (other than in the case of non-
U.S. parties) or by fax or DHL, Federal Express or other internationally
recognized express courier service, to the Corporation at its principal place of
business, and to the Investors and the Founders at their respective last known
address or at their respective address, if any, appearing on the books of the
Corporation.
21. Severability. If any provision of this Agreement shall be held to be
------------
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
22. Governing Law. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with, the substantive law of the State of California,
without regard to its principles of conflicts of laws.
23. Captions. Captions are for convenience only and are not deemed to be
--------
part of this Agreement.
24. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument. Each such counterpart may
contain one or more signature pages.
* * *
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Stock Restriction Agreement as of the day and year first above written.
SEQUENOM, INC.
By: /s/ illegible
-------------------------------
Its President
FOUNDERS:
/s/ illegible
-------------------------------
Hubert Koster
/s/ illegible
-------------------------------
Nola E. Masterson
/s/ illegible
-------------------------------
Robert E. Patterson
SERIES B INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
--------------------------
Its: Treasurer
--------------------------
-10-
<PAGE>
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-----------------------------------
Its: Treasurer
-----------------------------------
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------------------------
Its: Treasurer
-------------------------------------
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------------------------------
Its: Treasurer
-------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-11-
<PAGE>
TVM TECHNO VENTURE INVESTORS NO. I
LIMITED PARTNERSHIP
By: /s/ illegible
--------------------------------------
General Partner
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
-------------------------------------
Its: Director Director
-------------------------------------
ALPINVEST INTERNATIONAL B.V.
By: /s/ illegible /s/ illegible
-------------------------------------
Its: illegible
-------------------------------------
BOSTON UNIVERSITY NOMINEE
PARTNERSHIP
By:
--------------------------------------
General Partner
------------------------------------------
Gerald E. Coughlan
------------------------------------------
Charles P. Floe
/s/ illegible
------------------------------------------
Hellmut Kirchner
------------------------------------------
Herwig Brunner
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-12-
<PAGE>
------------------------------------------
Franz A. Wirtz
------------------------------------------
Hannemarie Wirtz
/s/ illegible
------------------------------------------
Hubert Koster
/s/ illegible
------------------------------------------
Ernst-Gunter Afting
SVE STAR VENTURES
ENTERPRISES NO. III GbR,
A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
--------------------------------------
Managing Partner
SVE STAR VENTURES
ENTERPRISES NO. IIIa GbR,
A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
--------------------------------------
Managing Partner
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-13-
<PAGE>
SVE STAR VENTURES
MANAGEMENTGESELLSCHAFT MBH
Nr. 3 & CO. BETEILIGUNGS KG
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
----------------------------------------
Its:
----------------------------------------
SERIES C INVESTORS:
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
----------------------------------------
Its: Treasurer
----------------------------------------
TVM INTERTECH
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By: /s/ illegible
----------------------------------------
Its: Treasurer
----------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-14-
<PAGE>
TVM ZWEITE BETEILIGUNG-US
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By:
----------------------------------------
Its:
----------------------------------------
TVM EUROTECH
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its general partner
By: TVM Management LLC
its general partner
By:
----------------------------------------
Its:
----------------------------------------
TVM TECHNO VENTURE INVESTORS NO. I
LIMITED PARTNERSHIP
By:
----------------------------------------
General Partner
KBL FOUNDER VENTURES SCA
By:
----------------------------------------
Its:
----------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-15-
<PAGE>
ALPINVEST INTERNATIONAL B.V.
By: /s/ illegible /s/ illegible
----------------------------------------
Its: illegible illegible
----------------------------------------
/s/ illegible
---------------------------------------------
Hellmut Kirchner
/s/ illegible
----------------------------------------------
Hellmut Kirchner as Trustee
----------------------------------------------
Franz A. Wirtz
----------------------------------------------
Hannemarie Wirtz
GLS LP INVESTMENT III LIMITED
By: /s/ illegible
-----------------------------------------
Its: Director
-----------------------------------------
KLEINWORT BENSON LIMITED
By: /s/ illegible
-----------------------------------------
Its: Director
-----------------------------------------
LOMBARD ODIER & CIE
By: /s/ illegible /s/ illegible
-----------------------------------------
Its: Assistant Vice President Vice President
-----------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-16-
<PAGE>
MERIFIN CAPITAL N.V.
By:
-----------------------------------------
Its:
-----------------------------------------
S.R. ONE, LIMITED
By: /s/ illegible
-----------------------------------------
Its: Vice President
-----------------------------------------
SVM Star Ventures Managementgesellschaft
mbH Nr. 3 & Co. Beteiligungs KG
By: SVM Star Ventures
Managementgesellchaft mbH Nr. 3
By: /s/ illegible
-----------------------------------------
Its:
-----------------------------------------
SVE STAR VENTURES ENTERPRISES
NO. IIIA, a German Civil Law Partnership (with
limitation of liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-----------------------------------------
Its:
-----------------------------------------
SVE STAR VENTURES ENTERPRISES
NO. III, a German Civil Law Partnership (with
limitation of liability)
By: SVM Star Ventures
Managementgesellschaft mbH Nr. 3
By: /s/ illegible
-----------------------------------------
Its:
-----------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-17-
<PAGE>
TBG-TECHNOLOGIE-
BETEILIGUNGSGESELLSCHAFT MBH
DER DEUTSCHEN AUSGLEICHSBANK
By: /s/ illegible /s/ illegible
-----------------------------------------
Its: General Manager Authorized Rep.
-----------------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT]
-18-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
Alpinvest International B.V.
---------------------------------------------
(print name)
By: /s/ illegible /s/ illegible
-----------------------------------------
Title: Authorized Signatures
--------------------------------------
Address: Gooimeer 3, P.O. Box 5073
-------------------------------------
1410 AB Naarden
---------------------------------------------
The Netherlands
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-19-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
Prof. Dr. med. Dr. rer. nat.
Ernst-Gunter Afting
-----------------------------------------
(print name)
By:/s/ illegible
--------------------------------------
Title:
----------------------------------
Address:
--------------------------------
-----------------------------------------
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-20-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
S. R. ONE, LIMTED
-----------------------------------------
(print name)
By: /s/ illegible
-------------------------------------
Title: Vice President
----------------------------------
Address: Four Tower Bridge - Suite 250
--------------------------------
200 Barr Harbor Drive
-----------------------------------------
West Conshohocken
-----------------------------------------
PA 19428
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-21-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
KREDIETBANK S.A. LUXEMBARCEOISE AS
NOMINEE FOR KB LUX VENTURE CAPITAL
FUND (illegible)
By: /s/ illegible /s/ illegible
-----------------------------------------
Title: Manager General Manager
--------------------------------------
Address: 43 Boulevard Royal
------------------------------------
L - 2955
---------------------------------------------
Luxembourg
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-22-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
KBL FOUNDER VENTURES SCA
By: /s/ illegible /s/ illegible
-----------------------------------------
Title: Director Director
--------------------------------------
Address: 43 Boulevard Royal
------------------------------------
L - 2955 Luxembourg
---------------------------------------------
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-23-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
-----------------------------------------
Title: Treasurer
--------------------------------------
Address:
------------------------------------
---------------------------------------------
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-24-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
TVM TECHNO VENTURE ENTERPRISES NO.
II LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
-----------------------------------------
Title: Treasurer
--------------------------------------
Address:
------------------------------------
---------------------------------------------
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-25-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
-----------------------------------------
Title: Treasurer
-------------------------------------
Address:
-----------------------------------
--------------------------------------------
--------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-26-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
TVM TECHNO VENTURE INVESTORS NO. I
LIMITED PARTNERSHIP
By: /s/ illegible
-----------------------------------------
Title: General Partner
--------------------------------------
Address:
------------------------------------
---------------------------------------------
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-27-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
TVM ZWEITE BETEILIGUNG-US LIMITED
PARTNERSHIP
By: TVM Techno Venture Management Limited
Partnership, its General Partner
By: TVM Management, LLC its General Partner
By: /s/ illegible
-----------------------------------------
Title: Treasurer
--------------------------------------
Address:
------------------------------------
---------------------------------------------
---------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-28-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
-----------------------------------------
(print name)
By: /s/ illegible
-------------------------------------
Title:
----------------------------------
Address:
--------------------------------
-----------------------------------------
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-29-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
ERIK HORNNAESS
-----------------------------------------
(print name)
By: /s/ illegible
--------------------------------------
Title: Retired
----------------------------------
Address: Parkstrasse 75
--------------------------------
65191 Wiebaden
-----------------------------------------
Germany
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-30-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
H. KIRCHNER
-----------------------------------------
(print name)
By: /s/ illegible
--------------------------------------
Title: Man. Dir.
----------------------------------
Address: Martelsgraben 2
--------------------------------
D - 82327 (illegible)
-----------------------------------------
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-31-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
TVM MEDICAL VENTURE
By: /s/ illegible /s/ illegible
-----------------------------------------
Title: Managing Partner CFO
-------------------------------------
Address:
-----------------------------------
--------------------------------------------
--------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-32-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
Joerg Wohlers Dr. Juergen Wagenmann
------------------------------------------------
(print name)
By: /s/ illegible /s/ illegible
--------------------------------------------
Title: Managing Director Managing Director
-----------------------------------------
Address: 20454 Hamburg
----------------------------------------
Germany
-------------------------------------------------
-------------------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-33-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
GLS LP INVESTMENT III LIMITED
-----------------------------------------
(print name)
By: /s/ illegible
-------------------------------------
Title: Director
----------------------------------
Address: Barfield House
--------------------------------
St. Julian's Avenue
-----------------------------------------
St. Peter Port Guernsey
-----------------------------------------
GY1 3QL
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-34-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
RESIDENTIE PARTICIPATIES IV CV
-----------------------------------------
(print name)
By: /s/ illegible
--------------------------------------
Title: Managing Director
----------------------------------
Address:
--------------------------------
-----------------------------------------
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-35-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
illegible
-----------------------------------------
(print name)
By: /s/ illegible
--------------------------------------
Title: Director
----------------------------------
Address:
--------------------------------
-----------------------------------------
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-36-
<PAGE>
SEQUENOM, INC.
Stock Restriction Agreement
Series D Investor Signature Page
--------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is a "Series D Investor" as defined in the Stock Restriction
Agreement dated as of December 21, 1998, by and among Sequenom, Inc. and the
parties named therein, (ii) that it is a party to the Stock Restriction
Agreement for all purposes and (iii) that it is bound by all terms and
conditions of the Stock Restriction Agreement.
EXECUTED this 21st day of December, 1998.
DB UK FINANCE PLC
-----------------------------------------
(print name)
By: /s/ illegible
--------------------------------------
Title: Director
----------------------------------
By: /s/ illegible
-------------------------------------
Title: Director
----------------------------------
Address: 6 Bishopsgate
--------------------------------
London, EC2 N 4DA
-----------------------------------------
U.K.
-----------------------------------------
[INVESTOR SIGNATURE PAGE TO AMENDED AND RESTATED RESTRICTION AGREEMENT]
-37-
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this 13th day of January, 1999.
ALAFI CAPITOL CO.
-------------------------
(print name)
By: /s/ illegible
---------------------
Title: General Partner
Address: P.O. Box 7338
Berkley, CA 94707
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this 19th day of January, 1999.
MATTHEW J. BURNS
ASSISTANT TREASURER
BOSTON UNIVERSITY
-------------------------
(print name) Trustee of Boston University
By: /s/ illegible
---------------------
Title: Assistant Treasurer
Address: c/o Community Technology Fund
108 Bay State Road
Boston, MA 02215
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this 22nd day of February, 1999.
HARRY A. COLLINS
-------------------------
(print name)
By: /s/ Harry A. Collins
---------------------
Title: Chairman of the Board
Address: 11750 Sorrento Valley Road
San Diego, CA 92121
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this 19th day of February, 1999.
E. Tyler Miller
-------------------------
(print name)
By: /s/ E. Tyler Miller
---------------------
Title: Vice Chairman
Address: 11750 Sorrento Valley Road
San Diego, CA 92121
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this ____ day of ____________, 1999.
Florean W. J. Homm
-------------------------
(print name)
By: /s/ illegible
---------------------
Title: CIO at Value Management Research AG
Address:
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this ____ day of ____________, 1999.
/s/ Koh Soo Boon
-------------------------
(print name)
Vertex Technology Fund Ltd.
By: Koh Soo Boon
---------------------
Title: Senior Vice President/ Deputy General
Manager
Address: c/o 77 Science Park Drive, #02-15
Cintech III, Singapore Science Park,
Singapore 118256
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this 28th day of February, 1999.
DB UK FINANCE PLC
-------------------------
(print name)
By: /s/ illegible /s/ illegible
--------------------- ---------------------
Title: Director Director
Address: 6 Bishopsgate
London, EC2N 4DA
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this ____ day of ____________, 1999.
MANFRED FERBER
-------------------------
(print name)
By: /s/ Manfred Ferber
--------------------
Title:
Address:
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this ____ day of ____________, 1999.
KIRCHNER
-------------------------
(print name)
By: /s/ Kirschner
---------------------
Title:
Address: Marteslgraben 2
82327 Tutzjing
<PAGE>
Exhibit A
---------
SEQUENOM, INC.
Stock Restriction Agreement
Additional Investor Signature Page
----------------------------------
By executing this page in the space provided, the undersigned hereby agrees
(i) that it is an "Additional Investor" as defined in the Series D Convertible
Preferred Stock Purchase Agreement dated as of December 21, 1998 and an
"Investor" as defined in the Stock Restriction Agreement dated as of December
21, 1998 each by and among Sequenom, Inc. and the parties named therein, (ii)
that it is a party to the Stock Restriction Agreement for all purposes and (iii)
that it is bound by all terms and conditions of the Stock Restriction Agreement.
EXECUTED this 29th day of March, 1999.
NOMURA INTERNATIONAL PLC
-------------------------
(print name)
By: /s/ illegible
---------------------
Title: Managing Director
Address: 1 st Martins Le Grand
London
ECIA 4NP
<PAGE>
EXHIBIT 10.8
AMENDED AND RESTATED
AMENDMENT AGREEMENT
This Amended and Restated Amendment Agreement (this "Amended Amendment
Agreement") is made as of the 1st day of March, 1999 by and among Sequenom,
Inc., a Delaware corporation (the "Corporation"), and the parties to that
certain Series D Convertible Preferred Stock Purchase Agreement dated as of
December 21, 1998 (the "Stock Purchase Agreement"), including any parties
becoming parties to the Stock Purchase Agreement after such date. Capitalized
terms used but not defined herein shall have the meanings given them in the
Stock Purchase Agreement.
WHEREAS, the Initial Closing under the Stock Purchase Agreement
occurred on December 21, 1998, at which time Sequenom sold to certain parties
hereto an aggregate of 3,843,700 shares of its Series D Convertible Preferred
Stock, $.001 par value per share ("Series D Preferred Stock"); and
WHEREAS, an Additional Closing under the Stock Purchase Agreement
occurred on February 28, 1999, at which time the Corporation sold to certain
parties hereto an aggregate of 899,995 shares of its Series D Preferred Stock;
and
WHEREAS, additional parties desire to hold another Additional Closing
under the Stock Purchase Agreement; and
WHEREAS, in connection with such Additional Closing, the parties
desire to amend the Stock Purchase Agreement in certain respects as set forth
below; and
WHEREAS, under the terms of the Stock Purchase Agreement the parties
executing this Amended Amendment Agreement acting together have the power to
amend the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereby agree as follows:
1. Stock Purchase Agreement. The Stock Purchase Agreement is hereby
------------------------
amended as follows:
(a) Section 2.2 of the Stock Purchase Agreement is hereby amended
by deleting the first sentence thereof and replacing such sentence with the
following sentence:
"Subject to the terms and conditions of this Agreement, from time
to time after the Initial Closing, but on or before March 31,
1999, the Corporation agrees to issue and sell to one or more
Additional Investors who enter into this Agreement by executing
one or more counterparts hereof up to an aggregate number of
shares of Series D Preferred equal to 6,153,850 minus the number
of Initial Shares (the "Additional Shares")."
<PAGE>
(b) Section 3.2 of the Stock Purchase Agreement is hereby amended
by deleting the first sentence thereof and replacing such sentence with the
following sentence:
"The closings of the sale and purchase of the Additional Shares
under this Agreement (the "Additional Closings") shall take place
at such time, date and place as are mutually agreeable to the
Corporation and any Additional Investor, but such Additional
Closings, if any, shall take place on or before March 31, 1999."
2. Governing Law. This Amended Amendment Agreement shall be governed
-------------
by, and construed and enforced in accordance with, the substantive laws of the
State of California, without regard to its principles of conflicts of laws.
3. Entire Agreement. This Amended Amendment Agreement constitutes
----------------
the sole and entire agreement of the parties with respect to the amendment of
the Stock Purchase Agreement and supersedes all prior negotiations, commitments,
agreements and understandings among them with respect thereto.
4. Counterparts. This Amended Amendment 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.
5. Titles and Subtitles. The titles and subtitles used in this
--------------------
Amended Amendment Agreement are for convenience only and are not to be
considered in construing or interpreting any provision of this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amended
Amendment Agreement as of the day and year first above written.
SEQUENOM, INC.
By: /s/ Hubert Koster
-----------------
Its President
TVM TECHNO VENTURE
ENTERPRISES NO. II
LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------
Its: Treasurer
---------
TVM INTERTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------
Its: Treasurer
---------
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
<PAGE>
TVM ZWEITE BETEILIGUNG-US LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------
Its: Treasurer
---------
TVM EUROTECH LIMITED PARTNERSHIP
By: TVM Techno Venture Management
Limited Partnership
its General Partner
By: TVM Management LLC
its General Partner
By: /s/ illegible
-------------
Its: Treasurer
---------
TVM TECHNO VENTURE INVESTORS NO. 1 LIMITED
PARTNERSHIP
By: /s/ illegible
-------------
General Partner
TVM MEDICAL VENTURES
By: /s/ illegible /s/ illegible
------------- -------------
Its: CFO
------------- -------------
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
<PAGE>
ALPINVEST INTERNATIONAL B.V.
By: /s/ illegible /s/ illegible
------------- -------------
Its: authorized signatories
----------------------
DB UK FINANCE PLC
By: /s/ illegible
-------------
Its: Director
--------
By: /s/ illegible
-------------
Its: Director
--------
HASPA BANK
By:
--------------------
Its:
--------------------
KLEINWORT BENSON LTD
By: /s/ illegible
-------------
Its: authorized signatory
--------------------
RESIDENTIE PARTICIPATIES IV C.V.
By: Life Science Partners BV
Its: Managing Director
-----------------
By: /s/ illegible
-------------
Its:
-------------
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
<PAGE>
ALAFI CAPITAL CO.
By: /s/ illegible
-------------
Its: General Partner
---------------
VALUE MANAGEMENT & RESEARCH AG
By: /s/ Kevin Devine
----------------
Its: Vorstand
--------
VERTEX TECHNOLOGY FUND LTD
By: /s/ illegible
-------------
Its: authorized signatory
--------------------
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
<PAGE>
S.R. ONE, LIMITED
By: Raymond J. Whitaker, Ph.D.
--------------------------
Its: Vice President
--------------
GLS LP INVESTMENTS III LIMITED
By:
-------------------------
Its:
-------------------------
/s/ Hellmut Kirchner
--------------------
Hellmut Kirchner
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
<PAGE>
EXHIBIT 10.9
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933 AND SUCH LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Series A Convertible Preferred Stock of
SEQUENOM, INC.
Dated as of December 23, 1996 (the "Effective Date)
WHEREAS, Sequenom. Inc., a Delaware corporation (the 'Company") has
entered into a Global Master Rental Agreement dated as of July 18. 1994. with
Comdisco, Inc., a Delaware corporation (the "Warrantholder"); and Equipment
Schedule No. D-1, between Comdisco Deutschland GmbH, a subsidiary of
Warrantholder, and Sequenom, Inc. and related Schedules (the 'Leases'): and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series A Convertible
Preferred Stock:
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE SERIES A CONVERTIBLE PREFERRED STOCK.
-------------------------------------------------------------------
The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company 70,000 fully paid and non-assessable
shares of the Company's Series A Convertible Preferred Stock ("Preferred Stock")
at a purchase price of S.50 per share ("Exercise Price"). The number and
purchase price of such shares are subject to adjustment as provided in Section 8
hereof. Upon and after the earlier to occur of the IPO Effective Time (as
hereinafter defined) or the Automatic Conversion Effective Date (as hereinafter
defined), the right to purchase Preferred Stock granted herein shall terminate,
and this Warrant Agreement shall represent the fight to purchase Common Stock as
provided in Section 8 hereof.
<PAGE>
2. TERM OF THE WARRANT AGREEMENT.
-----------------------------
Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock (or Common Stock upon and following
the earlier to occur of the IPO Effective Time (as hereinafter defined) or the
Automatic Conversion Effective Date (as hereinafter defined) as granted herein
shall commence on the Effective Date and shall be exercisable for a period equal
to the shorter of (i) the period ending July 18, 2004. or (ii) five (5) years
from the IPO Effective Time.
3. EXERCISE OF THE PURCHASE RIGHTS.
-------------------------------
The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time. or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed, together
with payment of the Exercise price in the manner described below. Promptly upon
receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Preferred Stock (or other securities) purchased and
shall execute an Acknowledgment of Exercise indicating the number of securities
which remain subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or certified or official bank check, or (ii) by surrender of Warrants
("Net Issuance") as determined below. If the Warrantholder elects the Net
Issuance method, the Company will issue Preferred Stock or Common Stock as
follows:
(A) prior to the earlier to occur of the IPO Effective rime (as hereinafter
defined) or the Automatic Conversion Effective Time (as hereinafter defined),
the Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
------
A
Where: X the number of shares of Preferred Stock to be Issued to the
Warrantholder.
Y = the number of shares of Preferred Stock requested to be exercised
under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred Stock.
B = the Exercise Price.
As used herein. current fair market value of Preferred Stock shall mean
with respect to each share of Preferred Stock the product of (i) the fair market
value of a share of Common Stock, determined as set forth in subsection (B)
below, times (ii) the number of shares of
2
<PAGE>
Common Stock issuable upon conversion of each share of Preferred Stock
immediately prior to such exercise of the Warrant by the Net Issuance method.
(B) upon and after the earlier to occur of the IPO Effective Time (as
hereinafter defined) or the Automatic Conversion Effective Time (as hereinafter
defined), the Company will issue Common Stock in accordance with the following
formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
Warrantholder.
Y = the number of shares of Common Stock requested to be exercised
under this Warrant Agreement.
A = the fair market value of one (1) share of Common Stock.
2
B = the Exercise Price.
As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock:
(i) if the exercise is in connection with the Company's initial
public offering of Common Stock, and if the Company's Registration
Statement relating to such public offering has been declared effective
by the SEC, then the initial "Price to Public" specified in the final
prospectus with respect to the offering;
(ii) if this Warrant is exercised after, and not in connection with,
the Company's initial public offering of Common Stock, and:
(a) if the Common Stock is traded on a national securities
exchange or quoted on the Nasdaq National Market, the fair market
value shall be deemed to be the average of the closing prices
over a twenty-one (21) day period ending three days before the
day the current fair market value of the Common Stock, is being
determined; or
(b) if the Common Stock is not listed on a national securities
exchange or quoted on the Nasdaq National Market but is actively
traded over-the-counter, the fair market value shall be deemed to
be the average of the closing bid and asked prices reported by
the National Quotation Bureau (or similar system) over the
twenty-one (21) day period ending three days before the day the
current fair market value of the Common Stock is being
determined;
(iii) if at any time the Common Stock is not listed on any national
securities exchange or quoted on the Nasdaq National Market or actively
traded in or the over-the-counter market, the current fair market value
of Common Stock shall be the price per share which
3
<PAGE>
the Company could obtain from a willing buyer (not a current employee
or director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by its
Board of Directors, unless the Company shall become subject to a
merger, acquisition or other consolidation pursuant to which the
Company is not the surviving party, in which case the fair market value
of Common Stock shall be deemed to be the value received by the holders
of the Company's Common Stock pursuant to such merger or acquisition.
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
---------------------
(a) Authorization and Reservation of Shares. During the term of this
---------------------------------------
Warrant Agreement the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Listing. If any shares of Common Stock issuable hereunder upon and
-------
after the Company's initial public offering of Common Stock require listing on
any domestic securities exchange, before such shares may be issued upon exercise
of this Warrant Agreement, the Company will, at its expense and as expeditiously
as possible, use its best efforts to cause such shares to be duty approved for
listing on such domestic securities exchange.
5. NO FRACTIONAL SHARES OR SCRIP.
-----------------------------
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
------------------------
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
7. WARRANTHOLDER REGISTRY.
----------------------
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
-----------------
The Exercise Price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment as follows:
4
<PAGE>
(a) Merger and Sale of Assets. If at any time there shall be a capital
-------------------------
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation when the Company is not the surviving corporation, or the sale of
all or Substantially all of the Company's properties and assets to any other
person (hereinafter referred to as a "Merger Event"), then, as a part of such
Merger Event lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant. the number of
shares of Preferred Stock or other securities of the successor corporation
resulting from such Merger Event equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event. In any such case, appropriate adjustment (as determined in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this War-rant Agreement with respect to the rights and
interest of the Warrantholder after the Merger Event to the end that the
provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
--------------------------
reclassification or exchange of securities or otherwise (except as otherwise
specifically provided for herein), change any of the securities as to which
purchase rights under this Warrant Agreement exist into the same or a different
number of securities of any other class or classes, this Warrant Agreement shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
Agreement immediately prior to such reclassification, exchange, or other change.
(c) Subdivision or Combination of Shares. If the Company at any time shall
------------------------------------
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend or
---------------
make any other distribution (except any distribution specifically provided for
in the foregoing subsections (a) through (c)), with respect to its Preferred
Stock payable in shares of Preferred Stock, then the Exercise Price shall be
adjusted, from and after the record date of such dividend or distribution, to
that price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction (i) the numerator of which -shall be the
total number of all shares of the Company's Preferred Stock outstanding
immediately prior to such dividend or distribution. and (ii) the denominator of
which shall be the total number of all shares of the Company's Preferred Stock
outstanding immediately after such dividend or distribution. The Warrantholder
shall thereafter be entitled to purchase. at the Exercise Price resulting from
such adjustment the number of shares of Preferred Stock (calculated to the
nearest whole share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Preferred Stock
issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
(e) Antidilution Rights. Additional antidilution rights applicable to the
-------------------
Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as
5
<PAGE>
amended through the Effective Date, a true and complete copy of which has been
furnished to Warrantholder (the "Charter"). The Company shall promptly provide
the Warrantholder with any restatement amendment modification or waiver of the
Charter and with any Certificate of Adjustment sent to the holders of Preferred
Stock in accordance with the Charter relating to any adjustment or readjustment
of the Conversion Price of the Preferred Stock.
(f) Initial Public Offering of Common Stock; Automatic Conversion of
----------------------------------------------------------------
Preferred Stock. If at any time the Company shall effect an initial public
- ---------------
offering of its Common Stock pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the '"1933 Act"), or if at any
time the outstanding Preferred Stock shall be automatically converted to Common
Stock under the terms of the Company's Certificate of Incorporation, then upon
and after the earlier to occur of the effective time of such initial public
offering (the "IPO Effective Time"), or the effective time of such automatic
conversion of the Preferred Stock (the "Automatic Conversion Effective Time"),
the right to purchase Preferred Stock granted herein shall terminate, this
Warrant Agreement shall represent the right to purchase 2 number of shares of
Common Stock calculated as follows
X = (Y) (Z)
where: X = the number of shares of Common Stock purchasable under this
Warrant Agreement upon and after such IPO Effective Time or
Automatic Conversion Effective Time as the case may be:
Y = the number of shares of Preferred Stock purchasable under this
Warrant Agreement immediately prior to such IPO Effective Time or
Automatic Conversion Effective Time as the case may be:
Z = the number of shares of Common Stock issuable upon conversion of
each share of Preferred Stock immediately prior to such IPO
Effective Time or Automatic Conversion Effective Time as the case
may be;
and the Exercise Price per share of Common Stock shall be a price calculated as
follows:
A = (B) (Y) /X
where: A = the Exercise Price per share of Common Stock upon and after
such IPO Effective Time or Automatic Conversion Effective
Time as the case may be:
B = the Exercise Price per share of Preferred Stock immediately prior
to Such IPO Effective Time or Automatic Conversion Effective Time
as the case may be:
X = the number of shares of Common Stock purchasable under this
Warrant Agreement upon and after such IPO Effective Time or
Automatic Conversion Effective Time as the case may be;
6
<PAGE>
Y = the number of shares of Preferred Stock purchasable under this
Warrant Agreement immediately prior to such IPO Effective Time or
Automatic Conversion Effective Time as the case may be.
Thereafter, the number of shares of Common Stock purchasable hereunder and
the Exercise Price per share shall be subject to adjustment for the types of
events described in subsections (a) through (d) above that occur with respect
the Common Stock.
(g) Notices. If: (i) the Company shall declare any dividend or
-------
distribution upon its stock whether in cash. property, stock or other
securities; (ii) the Company shall offer for subscription prorata to the holders
of its Preferred Stock any additional shares of stock of any class or other
rights: (iii) there shall be any Merger Event; or (iv) there shall be any
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event the Company shall send to the
Warrantholder (A) at least twenty (20) days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken for such
dividend, distribution, subscription rights (specifying the date on which the
holders of Preferred Stock shall be entitled thereto) or for determining rights
to vote in respect of such Merger Event dissolution, liquidation or winding up;
and (B) in the case of any such Merger Event dissolution, liquidation or winding
up, at least twenty (20) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Preferred
Stock shall be entitled to exchange their Preferred Stock for securities or
other property deliverable upon such Merger Event, dissolution, liquidation or
winding up). In the case of a public offering, the Company shall give
Warrantholder at least twenty (20) days written notice prior to the, anticipated
effective date thereof
Upon any adjustment in the Exercise Price or securities purchasable under
this Warrant Agreement the Company shall give written notice thereof to the
Warrantholder, setting forth, in reasonable detail, (i) the event requiring the
adjustment. (ii) the amount of the adjustment (iii) the method by which such
adjustment was calculated, (iv) the Exercise Price. and (v) the number of shares
subject to purchase hereunder after giving effect to such adjustment. Such
notice shall be men by first class mail, postage prepaid, addressed to the
Warrantholder, at the address as shown on the books of the Company.
(g) Timely Notice. Failure to timely provide such notice required by
-------------
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall
begin on the date Warrantholder actually receives a written notice containing
all the information specified above.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
--------------------------------------------------------
The Company hereby represents. warrants and covenants to and with the
Warrantholder as of the Effective Date as follows:
(a) Reservation of Preferred Stock. The Prefer-red Stock issuable upon
------------------------------
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance
7
<PAGE>
with the provisions of this Warrant Agreement will be validly issued, fully paid
and non-assessable. and will be free of any taxes, liens, charges or
encumbrances of any nature whatsoever imposed through the Company; provided,
however, that the Preferred Stock issuable pursuant to this Warrant Agreement
may be subject to restrictions on transfer under state and/or Federal securities
laws. The Company has made available to the Warrantholder true, correct and
complete copies of its Charter and Bylaws, as amended. The issuance of
certificates for shares of Preferred Stock in the name of the Warrantholder upon
exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Preferred Stock. The Company shall not be required to pay any tax which may
be payable in respect of any transfer involved and the issuance and delivery of
any certificate in a name other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the Company of this
-------------
Warrant Agreement and the performance of all obligations of the Company
hereunder. including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and this Warrant Agreement does not violate
the Company's Charter or Bylaws, does not violate any law or governmental rule,
regulation or order applicable to R (not including federal and state securities
laws, which subject is dealt with in subsection (f) below), does not violate any
provision of, or constitute a default under. any indenture. mortgage. contract
or other instrument to which it is a party or by which it is bound. and this
Warrant Agreement constitutes the legal, valid and binding agreement of the
Company, enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditor's rights, and except that
equitable remedies may be unavailable or may be withheld as a matter of judicial
discretion.
(c) Consents and Approvals. No consent or approval of, giving of notice
----------------------
to, registration with, or taking of any other action in respect of any state.
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except such as may be required under applicable federal
and state securities laws.
(d) All issued and outstanding shares of Preferred Stock and Common Stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable. In addition:
(i) The authorized capital stock of the Company consists of (A)
5,726,700 shares of Common Stock, of which 148,251 shares are issued
and outstanding and (8) 1,650.000 shares of Preferred Stock, of which
1,580,000 shares are issued and outstanding and are currently
convertible into 1,660,000 shares of Common Stock and (C) 3,376,666
shares of Series B Convertible Preferred Stock, of which 2,976,663
shares are issued and outstanding and are currently convertible into
2,976,663 shares of Common Stock.
(ii) The Company has reserved 1,000,000 shares of Common Stock for
issuance under its 1994 Stock Plan, under which options to purchase
318,000 shares of Common Stock are outstanding at a weighted average
price of $0.095 per share. In addition, the Company's
8
<PAGE>
Board of Directors has authorized the grant of options to purchase an
additional 292,000 shares, all at an exercise price of $0.25 per share,
but such options have not yet been issued. There are no other options,
warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire any authorized but unissued shares of
the Company's capital stock or other securities of the Company.
(iii) No shareholder of the Company has preemptive rights to purchase
new issuances of the Company's capital stock except as provided in
Section 8 of the Stock Purchase Agreement dated May 26, 1994 and
Section 8 of the Stock Purchase Agreement dated December 22, 1995.
(e) Insurance. The Company has in full force and effect insurance
---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Exempt Transaction. Subject to the accuracy of the Warrantholders
------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act and (ii) the registration
requirements of the Illinois Securities Law of 1953, as amended.
(g) Compliance with Rule 144. If the Company becomes subject to the
------------------------
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), at the written request of the Warrantholder, who proposes to sell
Common Stock issuable upon the exercise of the Warrant in compliance with Rule
144 promulgated by the Securities and Exchange Commission, the Company shall
furnish to the Warrantholder, as soon as reasonable practicable, after receipt
of such request a written statement confirming (if such is the case) the
Company's compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.
10. REPRESENTATIONS WARRANTIES AND COVENANTS OF THE WARRANTHOLDER.
-------------------------------------------------------------
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations, warranties and covenants of the
Warrantholder:
(a) Investment Purpose. The right to acquire Preferred Stock or other
------------------
securities and the Preferred Stock or other securities issuable upon exercise of
the Warrantholder's rights contained herein am being and will be acquired for
investment and not with a view to the safe or distribution of any part thereof,
and the Warrantholder has no present intention of selling or engaging in any
public distribution of the same.
(b) Private Issue. The Warrantholder understands (i) that neither the
-------------
right to purchase Preferred Stock or other securities of the Company hereunder
nor the Preferred Stock issuable upon exercise of this Warrant has been or will
be registered under the 1933 Act or registered or qualified under applicable
state securities laws on the ground that the issuance thereof is exempt
9
<PAGE>
from the registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
-------------------------------------
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or other securities hereunder or Preferred Stock or other securities issuable
upon exercise of such rights unless and until (i) it shall have notified the
Company of the proposed disposition, and (ii) if requested by the Company, it
shall have furnished the Company with an opinion of counsel (which counsel may
be outside counsel to the Warrantholder) satisfactory to the Company and its
counsel to the effect that (A) appropriate action necessary for compliance with
the 1933 Act has been taken, or (B) an exemption from the registration
requirements of the 1933 Act is available. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of any of its rights to acquire
Preferred Stock or other securities hereunder or Preferred Stock or other
securities issuable on the exercise of such rights do not apply to transfer from
the beneficial owner of any of the aforementioned securities to its nominee or
from such nominee to its beneficial owner, and shall terminate as to any
particular share of Preferred Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be. if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the holder of shares of Preferred Stock then outstanding
as to which such restrictions have terminated shall be entitled to receive from
the Company, without expense to Such holder, one or more new certificates for
such shares of Preferred Stock not bearing any restrictive legend.
Warrantholder accepts the condition that the Company may maintain 'stop
transfer' orders with respect to this Warrant Agreement and the Preferred Stock
and other securities that my be issued hereunder and that each certificate or
other document evidencing any such securities shall bear a legend Substantially
in the form of the legend on the first page of this Warrant Agreement until such
time as the restrictions imposed hereunder have terminated.
(d) Financial Risk. The Warrantholder has such knowledge and experience in
--------------
financial and business Matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Warrantholder understands that if the
-----------------------
Company does not register its securities with the Securities and Exchange
Commission pursuant to Section 12 of the 1934 Act, or file reports Pursuant to
Section 15(d), of the 1934 Act or if at the time the Warrantholder desires to
Sell (i) the rights to purchase Preferred Stock (or other securities) pursuant
to this Warrant Agreement or (ii) the Preferred Stock or other securities
issuable upon exercise of the right to purchase and a registration statement
covering such offer and sale under the 1933 Act is not in effect it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
10
<PAGE>
Preferred Stock or other securities or Preferred Stock or other securities which
might be made by it in reliance upon Rule 144 under the 1933 Act may be made
only in accordance with the terms and conditions of that Rule.
(f) Status. Warrantholder is a Delaware corporation with its principal
------
place of business at 6111 North River Road, Rosemont, Illinois. Warrantholder
was not formed for the specific purpose of making the investment contemplated by
this Warrant Agreement. Warrantholder is an "accredited investor" within the
meaning of Rule 501 promulgated under the 1933 Act and an "institutional
investor" within the meaning of Section 4C of the Illinois Securities Act of
1953.
(g) Investigation. Warrantholder has fully investigated the Company and
-------------
its business and financial condition and has knowledge of the Company's current
activities. Warrantholder acknowledges that the Company has granted it and its
attorneys, accountants and other advisors access to all information about the
Company that they have requested. has offered them access to all further
information that they deemed relevant to an investment decision, and have
afforded them the opportunity to ask questions of, and receive answers from,
representatives of the Company concerning such information and the Company's
financial condition and prospects.
(h) Lock-Up. Warrantholder agrees that for a period of up to one hundred
-------
eighty (180) days from the effective date of any registration of securities of
the Company (upon request of the underwriters managing any underwritten offering
of the Company's securities), Warrantholder will not sell, make any short sale
or loan of, grant any option for the purchase of, or otherwise dispose of the
right to purchase Preferred Stock or other securities issued or issuable upon
exercise of such right to purchase without the prior written consent of the
Company or such underwriters, as the case may be.
11. TRANSFERS. Subject to compliance with federal and state securities laws
---------
and the terms and conditions contained in Section 10 hereof, this Warrant
Agreement and all rights hereunder are transferable in whole or in part by the
Warrantholder and any successor transferee, provided, however, in no event shall
the number of transfers of the rights and interests in all of the Warrants
exceed two (2) transfers. The transfer shall be recorded on the books of the
Company upon receipt by the Company of a notice of transfer in the form attached
hereto as Exhibit 11 (the 'Transfer Notice"), at its principal offices and the
payment to the Company of all transfer taxes and other governmental charges
imposed on such transfer.
12. MISCELLANEOUS.
-------------
(a) Effective Date. The provisions of this Warrant Agreement shall be
--------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall
be binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court proceeding
---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.
11
<PAGE>
(c) Governing Law. This Warrant Agreement shall be governed by and
-------------
construed for all purposes under and in accordance with the laws of the State of
Delaware.
(d) Counterparts. This Warrant 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
(e) Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mail. addressed (i) to the Warrantholder at
6111 North River Road, Rosemont, Illinois 60018, attention: James Labe, Venture
Leasing Director, cc: Legal Department, (and/or, if by facsimile, (708) 518-
5465) and (ii) to the Company c/o Techno Venture Management, 101 Arch Street
Suite 1950, Boston, MA 02110, (and/or if by facsimile, (617) 345-9377) or at
such other address as any such party may subsequently designate by written
notice to the other party.
(f) Remedies. In the event of any default hereunder, the non-defaulting
--------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all Provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of its
-----------------------
Charter or through any other means. avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and conditions of
--------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement
(i) Severability. In the event any one or more of the provisions of this
------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be amended by
----------
a written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
--------------------
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the
12
<PAGE>
issuance of this Warrant and the reservation of shares issuable upon exercise
hereof. If the purchase price for the Leases referenced in the preamble of this
Warrant Agreement exceeds $1,000,000, the Company will also provide
Warrantholder with an opinion from the Company's counsel in form and substance
satisfactory to the Warrantholder. The Company shall also supply such other
documents as Comdisco, Inc., as the Warrantholder may from time to time
reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized as of the Effective
Date.
Company: SEQUENOM, INC.
By: /s/ Joe DiBello
----------------
Title: CFO/Treasurer
Warrantholder: COMDISCO, INC.
By: /s/ James Labe
---------------
Title: President, Venture Lease Division
11/7/96
13
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
To:
---------------------------
(1) The undersigned Warrantholder hereby elects to purchase ______ shares of the
Preferred Stock of ___________________ pursuant to the terms of the Warrant
Agreement dated the ______ day of _______________, 19___ (the "Warrant
Agreement") between ____________________________ and the Warrantholder, and
tenders herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.
(2) In exercising its rights to purchase the Preferred Stock of
_____________________________________________, the undersigned hereby
confirms and acknowledges the investment representations and warranties
made in Section 10 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as is
specified below.
- ----------------------------------
(Name)
- ----------------------------------
(Address)
Warrantholder: COMDISCO, INC
By:
-------------------------------
Title:
Date:
14
<PAGE>
ACKNOWLEDGMENT OF EXERCISE
The undersigned ___________________________________, hereby acknowledge
receipt of the "Notice of Exercise" from Comdisco, Inc., to purchase _________
shares of the Preferred Stock of ____________________________, pursuant to the
terms of the Warrant Agreement and further acknowledges that _______ shares
remain subject to purchase under the terms of the Warrant Agreement.
Company:
By:
--------------------------------
Title:
Date:
15
<PAGE>
EXHIBIT 10.11
SEQUENOM, INC.
--------------
STOCK PLEDGE AGREEMENT
----------------------
AGREEMENT made as of this __ day of _____________, 1999 by and between
Sequenom, Inc., a Delaware corporation (the "Corporation"), and _____________
("Pledgor").
RECITALS
- --------
A. In connection with the purchase this day of _____________ (________)
shares of the Corporation's Common Stock (the "Purchased Shares") from the
Corporation, Pledgor has issued that certain promissory note (the "Note") dated
_____________, 1999 payable to the order of the Corporation in the principal
amount of _____________ Dollars ($________).
B. Such Note is secured by the Purchased Shares and other collateral upon
the terms set forth in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF SECURITY INTEREST. Pledgor hereby grants the Corporation
--------------------------
a security interest in, and assigns, transfers to and pledges with the
Corporation, the following securities and other property (collectively, the
"Collateral"):
(i) the Purchased Shares delivered to and deposited with the
Corporation as collateral for the Note;
(ii) any and all new, additional or different securities or other
property subsequently distributed with respect to the Purchased
Shares which are to be delivered to and deposited with the
Corporation pursuant to the requirements of Paragraph 3 of this
Agreement;
(iii) any and all other property and money which is delivered to
or comes into the possession of the Corporation pursuant to the
terms of this Agreement; and
(iv) the proceeds of any sale, exchange or disposition of the
property and securities described in subparagraphs (i), (ii) or
(iii) above.
2. WARRANTIES. Pledgor hereby warrants that Pledgor is the owner of
----------
the Collateral and has the right to pledge the Collateral and that the
Collateral is free from all liens, adverse claims and other security interests
(other than those created hereby).
3. DUTY TO DELIVER. Any new, additional or different securities or
---------------
other property (other than regular cash dividends) which may now or hereafter
become distributable with respect to the Collateral by reason of (i) any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the Common Stock as a class without the
Corporation's receipt of consideration or (ii) any merger, consolidation or
other reorganization affecting the capital structure of the Corporation shall,
upon receipt by Pledgor,
<PAGE>
be promptly delivered to and deposited with the Corporation as part of the
Collateral hereunder. Any such securities shall be accompanied by one or more
properly-endorsed stock power assignments.
4. PAYMENT OF TAXES AND OTHER CHARGES. Pledgor shall pay, prior to
----------------------------------
the delinquency date, all taxes, liens, assessments and other charges against
the Collateral, and in the event of Pledgor's failure to do so, the Corporation
may at its election pay any or all of such taxes and other charges without
contesting the validity or legality thereof. The payments so made shall become
part of the indebtedness secured hereunder and until paid shall bear interest at
the minimum per annum rate, compounded semi-annually, required to avoid the
imputation of interest income to the Corporation and compensation income to
Pledgor under the Federal tax laws.
5. SHAREHOLDER RIGHTS. So long as there exists no event of default
------------------
under Paragraph 10 of this Agreement, Pledgor may exercise all shareholder
voting rights and be entitled to receive any and all regular cash dividends paid
on the Collateral and all proxy statements and other shareholder materials
pertaining to the Collateral.
6. RIGHTS AND POWERS OF CORPORATION. The Corporation may, without
--------------------------------
obligation to do so, exercise at any time and from time to time one or more of
the following rights and powers with respect to any or all of the Collateral:
(i) subject to the applicable limitations of Paragraph 9, accept
in its discretion other property of Pledgor in exchange for all or
part of the Collateral and release Collateral to Pledgor to the
extent necessary to effect such exchange, and in such event the
other property received in the exchange shall become part of the
Collateral hereunder;
(ii) perform such acts as are necessary to preserve and protect
the Collateral and the rights, powers and remedies granted with
respect to such Collateral by this Agreement; and
(iii) transfer record ownership of the Collateral to the
Corporation or its nominee and receive, endorse and give receipt
for, or collect by legal proceedings or otherwise, dividends or
other distributions made or paid with respect to the Collateral,
provided and only if there exists at the time an outstanding event
--------------------
of default under Paragraph 10 of this Agreement. Any cash sums
which the Corporation may so receive shall be applied to the
payment of the Note and any other indebtedness secured hereunder,
in such order of application as the Corporation deems appropriate.
Any remaining cash shall be paid over to Pledgor.
Any action by the Corporation pursuant to the provisions of this
Paragraph 6 may be taken without notice to Pledgor. Expenses reasonably
incurred in connection with such action shall be payable by Pledgor and form
part of the indebtedness secured hereunder as provided in Paragraph 12.
7. CARE OF COLLATERAL. The Corporation shall exercise reasonable
------------------
care in the custody and preservation of the Collateral. However, the
Corporation shall have no obligation to
<PAGE>
(i) initiate any action with respect to, or otherwise inform Pledgor of, any
conversion, call, exchange right, preemptive right, subscription right, purchase
offer or other right or privilege relating to or affecting the Collateral, (ii)
preserve the rights of Pledgor against adverse claims or protect the Collateral
against the possibility of a decline in market value or (iii) take any action
with respect to the Collateral requested by Pledgor unless the request is made
in writing and the Corporation determines that the requested action will not
unreasonably jeopardize the value of the Collateral as security for the Note and
other indebtedness secured hereunder.
Subject to the limitations of Paragraph 9, the Corporation may at any
time release and deliver all or part of the Collateral to Pledgor, and the
receipt thereof by Pledgor shall constitute a complete and full acquittance for
the Collateral so released and delivered. The Corporation shall accordingly be
discharged from any further liability or responsibility for the Collateral, and
the released Collateral shall no longer be subject to the provisions of this
Agreement.
8. TRANSFER OF COLLATERAL. In connection with the transfer or
----------------------
assignment of the Note (whether by negotiation, discount or otherwise), the
Corporation may transfer all or any part of the Collateral, and the transferee
shall thereupon succeed to all the rights, powers and remedies granted the
Corporation hereunder with respect to the Collateral so transferred. Upon such
transfer, the Corporation shall be fully discharged from all liability and
responsibility for the transferred Collateral.
9. RELEASE OF COLLATERAL. Provided all indebtedness secured
---------------------
hereunder (other than payments not yet due and payable under the Note) shall at
the time have been paid in full and there does not otherwise exist any event of
default under Paragraph 10, the Purchased Shares, together with any additional
Collateral which may hereafter be pledged and deposited hereunder, shall be
released from pledge and returned to Pledgor in accordance with the following
provisions:
(i) Upon payment or prepayment of principal under the Note,
together with payment of all accrued interest to date on the
principal amount so paid or prepaid, one or more of the Purchased
Shares held as Collateral hereunder shall (subject to the
applicable limitations of Paragraphs 9(iii) and 9(v) below) be
released at the time of such payment or prepayment. The number of
the shares to be so released shall be equal to the number obtained
by multiplying (i) the total number of Purchased Shares held under
this Agreement at the time of the payment or prepayment, by (ii) a
fraction, the numerator of which shall be the amount of the
principal paid or prepaid and the denominator of which shall be
the unpaid principal balance of the Note immediately prior to such
payment or prepayment. In no event, however, shall any fractional
shares be released.
(ii) Any additional Collateral which may hereafter be pledged and
deposited with the Corporation (pursuant to the requirements of
Paragraph 3) with respect to the Purchased Shares shall be
released at the same time the particular shares of Common Stock to
which the additional Collateral relates are to be released in
accordance with the applicable provisions of Paragraph 9(i).
<PAGE>
(iii) Under no circumstances, however, shall any Purchased
Shares or any other Collateral be released if previously applied
to the payment of any indebtedness secured hereunder. In addition,
in no event shall any Purchased Shares or other Collateral be
released pursuant to the provisions of Paragraph 9(i) or 9(ii) if,
and to the extent, the fair market value of the Common Stock and
all other Collateral which would otherwise remain in pledge
hereunder after such release were effected would be less than the
unpaid principal and accrued interest under the Note.
(iv) For all valuation purposes under this Agreement, the fair
market value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(A) If the Common Stock is at the time traded on the Nasdaq
National Market, the fair market value shall be the closing
selling price per share of Common Stock on the date in
question, as such prices are reported by the National
Association of Securities Dealers on the Nasdaq National
Market. If there is no reported closing selling price for
the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such
quotation exists shall be determinative of fair market
value.
(B) If the Common Stock is at the time listed on the
American Stock Exchange or the New York Stock Exchange, then
the fair market value shall be the closing selling price per
share of Common Stock on the date in question on the
securities exchange serving as the primary market for the
Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is
no reported sale of Common Stock on such exchange on the
date in question, then the fair market value shall be the
closing selling price on the exchange on the last preceding
date for which such quotation exists.
(C) If the Common Stock is at the time neither listed on any
securities exchange nor traded on the Nasdaq National
Market, the fair market value shall be determined by the
Corporation's Board of Directors after taking into account
such factors as the Board shall deem appropriate.
(v) In the event the Collateral becomes in whole or in part
comprised of "margin stock" within the meaning of Section 221.2 of
Regulation U of the Federal Reserve Board, then no Collateral
shall thereafter be substituted for any Collateral under the
provisions of Paragraph 6(i) or be released under Paragraph 9(i)
or (ii), unless there is compliance with each of the following
additional requirements:
(A) The substitution or release must not increase the amount
by which the indebtedness secured hereunder at the time of
such substitution or release exceeds the maximum loan value
(as defined below) of the Collateral immediately prior to
such substitution or release.
(B) The substitution or release must not cause the amount of
indebtedness secured hereunder at the time of such
substitution or release
<PAGE>
to exceed the maximum loan value of the Collateral remaining
after, such substitution or release is effected.
(C) For purposes of this Paragraph 9(v), the maximum loan
value of each item of Collateral shall be determined on the
day the substitution or release is to be effected and shall,
in the case of the shares of Common Stock and any additional
Collateral (other than margin stock), equal the good faith
loan value thereof (as defined in Section 221.2 of
Regulation U) and shall, in the case of all margin stock
(other than the Common Stock), equal fifty percent (50%) of
the current market value of such stock.
10. EVENTS OF DEFAULT. The occurrence of one or more of the
-----------------
following events shall constitute an event of default under this Agreement:
(i) the failure of Pledgor to pay, when due under the Note, any
installment of principal or accrued interest; or
(ii) the occurrence of any other acceleration event specified in
the Note; or
(iii) the failure of Pledgor to perform any obligation imposed
upon Pledgor by reason of this Agreement; or
(iv) the breach of any warranty of Pledgor contained in this
Agreement.
Upon the occurrence of any such event of default, the Corporation may,
at its election, declare the Note and all other indebtedness secured hereunder
to become immediately due and payable and may exercise any or all of the rights
and remedies granted to a secured party under the provisions of the Delaware
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder.
Any proceeds realized from the disposition of the Collateral pursuant
to the foregoing power of sale shall be applied first to the payment of expenses
incurred by the Corporation in connection with the disposition, then to the
payment of the Note and finally to any other indebtedness secured hereunder.
Any surplus proceeds shall be paid over to Pledgor. However, in the event such
proceeds prove insufficient to satisfy all obligations of Pledgor under the
Note, then Pledgor shall remain personally liable for the resulting deficiency.
11. OTHER REMEDIES. The rights, powers and remedies granted, to the
--------------
Corporation pursuant to the provisions of this Agreement shall be in addition to
all rights, powers and remedies granted to the Corporation under any statute or
rule of law. Any forbearance, failure or delay by the Corporation in exercising
any right, power or remedy under this Agreement shall not be deemed to be a
waiver of such right, power or remedy. Any single or partial exercise of any
right, power or remedy under this Agreement shall not preclude the further
exercise thereof, and every right, power and remedy of the Corporation under
this
<PAGE>
Agreement shall continue in full force and effect unless such right, power or
remedy is specifically waived by an instrument executed by the Corporation.
12. COSTS AND EXPENSES. All costs and expenses (including reasonable
------------------
attorneys fees) incurred by the Corporation in the exercise or enforcement of
any right, power or remedy granted it under this Agreement shall become part of
the indebtedness secured hereunder and shall constitute a personal liability of
Pledgor payable immediately upon demand and bearing interest until paid at the
minimum per annum rate, compounded semi-annually, required to avoid the
imputation of interest income to the Corporation and compensation income to
Pledgor under the Federal tax laws.
13. APPLICABLE LAW. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of California without resort
to that State's conflict-of-laws rules.
14. SUCCESSORS. This Agreement shall be binding upon the Corporation
----------
and its successors and assigns and upon Pledgor and the executors, heirs and
legatees of Pledgor's estate.
15. SEVERABILITY. If any provision of this Agreement is held to be
------------
invalid under applicable law, then such provision shall be ineffective only to
the extent of such invalidity, and neither the remainder of such provision nor
any other provisions of this Agreement shall be affected thereby.
IN WITNESS WHEREOF, this Agreement has been executed by Pledgor and
the Corporation on this day of 1999.
----------------------------------------
PLEDGOR
Address:
--------------------------------
----------------------------------------
AGREED TO AND ACCEPTED BY:
SEQUENOM, INC.
By:
---------------------------------
Title:
Dated: , 1999
---------------------------
<PAGE>
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _____________ hereby sell(s), assign(s) and transfer(s)
unto Sequenom, Inc. (the "Corporation"), _____________ (________) shares of the
Common Stock of the Corporation standing in his name on the books of the
Corporation represented by Certificate No. ________ herewith and do(e)s hereby
irrevocably constitute and appoint _____________ Attorney to transfer the said
stock on the books of the Corporation with full power of substitution in the
premises.
Dated:
------------------------
Signature:
--------------------------
<PAGE>
Schedule A.
----------
Form of Stock Pledge Agreement.
------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Date Pledgor Purchased Shares Date of Note Amount of Note
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
10/06/99 Hubert Koster 680,000 10/06/99 $611,631
10/05/99 Steve Zaniboni 210,000 10/05/99 $143,346
10/09/99 Antonius Schuh 280,000 10/09/99 $160,418
09/13/99 Charles Cantor 351,000 09/13/99 $468,901
07/01/99 Andreas Braun 120,000 07/01/99 $ 42,380
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
UNION EXHIBIT 10.18
BANK OF
CALIFORNIA
SECURITY AGREEMENT (INVESTMENT SECURITIES)
THIS SECURITY AGREEMENT (INVESTMENT SECURITIES) ("Agreement") is entered into as
--
of April 29, 1999, between Sequenom, Inc.,
- ----------- -----------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
("Debtor") and UNION BANK OF CALIFORNIA, N.A. ("Bank"). In consideration of
any financial accommodations given, to be given or continued, Debtor and Bank
agree as follows:
1. Grant of Security Interest. As security for the payment and performance of
all of Debtor's obligations to Bank, irrespective of the manner in which or the
time at which such obligations arose or shall arise, and whether direct or
indirect, alone or with others, or absolute or contingent, but excluding
indebtedness which is now or hereafter defined as "consumer credit" in the
Federal Truth in Lending Act and the regulations thereunder ("Act") unless the
security interest granted to Bank under this Agreement is disclosed as required
by the Act (collectively, "Obligations"), Debtor hereby grants to Bank a
continuing security interest in and to all of the below described personal
property in which Debtor now has or hereafter acquires an interest, wherever
located:
account no. 5100016400 maintained with UNION BANK OF CALIFORNIA
------------------ ------------------------
INVESTMENT SERVICES ("Securities Intermediary"), all security entitlements,
- ------------------------
investment property and other financial assets now or hereafter credited to said
securities account, and all of Debtor's rights in respect of said securities
account, security entitlements, investment property and other financial assets;
and deposit account no. 5100016400 maintained by Debtor with Bank;
----------
together with all products, proceeds and revenues of and from the personal
property described above, and all substitutions and additions including stock
rights, rights to subscribe, dividends of any kind, interest, new securities and
other property to which Debtor is or may hereafter become entitled to receive on
account of such personal property (collectively, "Collateral"). In the event an
Accommodation Encumbrance Rider is executed in connection herewith, the
obligations of Accommodator hereunder shall be limited as described in said
rider. In such event, the word "Debtor" as used herein shall mean
"Accommodator" in all cases where the context so requires.
2. Perfection of Security Interest. It is the intent of Debtor and Bank that
the security interest herein granted be perfected by "control" (as defined in
Section 8-106 of the Uniform Commercial Code or the equivalent section of
Division/Article 8 of the Commercial Code, as amended from time to time, of the
state whose law governs this Agreement). Debtor agrees that it will from time
to time as required by Bank execute and deliver all notices and other documents
Bank deems necessary or desirable for Bank to obtain and maintain a first
priority perfected security interest in, and control over, the Collateral, will
perform such other acts, and execute and deliver to Bank such additional
assignments, agreements and instruments, as Bank may require in connection with
the administration and enforcement of this Agreement and Bank's rights, powers
and remedies hereunder, and will join with Bank in taking any other action
required by Bank to obtain and maintain such security interest and protect the
rights and priorities of Bank with respect to the Collateral. In particular,
Debtor will at Bank's request (a) deliver to Bank each and every certificated
security and instrument which constitutes part of the Collateral, accompanied by
appropriate assignments and/or stock or bond powers duly endorsed in blank, and
(b) originate such entitlement orders, and join with Bank in executing such
other instructions to or agreements with securities intermediaries, as may be
necessary or desirable for Bank to obtain control of each securities account,
each security entitlement and each other financial asset which constitutes part
of the Collateral. Debtor agrees that if any Collateral is now or hereafter
held by Bank in its capacity as a securities intermediary or pursuant to a
safekeeping or similar agreement, Bank shall be deemed to possess such
Collateral as a secured party for purposes of perfecting its security interest,
and if there is any conflict between the terms of the agreement under which Bank
is holding such Collateral and this Agreement, the terms of this Agreement shall
prevail.
3. Maintenance of Collateral Coverage. Debtor shall maintain the Collateral,
or shall cause the Collateral to be maintained, in an amount such that the
Obligations secured hereby shall not at any time exceed the sum of (a) EIGHTY-
------
THREE AND 300/1000 percent (83.30 %) of the Current Value (as hereinafter
- ------------------ -----
defined) of Collateral consisting of (i) United States government securities,
(ii) state or municipal government or agency securities rated BBB- or better by
Standard & Poor's, or Baa3 or better by Moody's, (iii) corporate debt or equity
<PAGE>
securities (exclusive, however, of corporate debt or equity securities issued by
Bank or Bank's corporate parent, UnionBanCal Corporation) which are regularly
traded on the New York Stock Exchange, the American Stock Exchange or NASDAQ
and, in the case of corporate debt, are rated BBB- or better by Standard &
Poor's, or Baa3 or better by Moody's, and (iv) money market securities
acceptable to Bank in its sole discretion, and (b) one hundred percent (1 00%)
of the amount of cash denominated in United States Dollars which is held by Bank
as Collateral pursuant to this Agreement. The "Current Value" of any given item
of Collateral is the fair market value of such item of Collateral as marked to
market monthly or at such other intervals as Bank deems desirable. If at any
time Bank's Collateral valuation indicates a deficiency with respect to the
required Collateral coverage, Bank shall give telephonic or other notice of such
deficiency to Debtor, and Debtor shall, within five (5) business days following
Debtor's receipt of such notice, either (x) deliver to Bank additional
Collateral, or (y) repay the outstanding principal balance of the Obligations,
in either case in an amount sufficient to restore compliance with the required
Collateral coverage.
4. Certain Transactions Involving Collateral. So long as there is no
deficiency with respect to required Collateral and no Event of Default (as
hereinafter defined) has occurred and is then continuing, Debtor may (a)
withdraw such portions of the Collateral as consist solely of cash dividends
paid in the ordinary course of business and/or interest income, and (b) sell,
trade, transfer or exchange (but not, except as provided in clause (a), above,
withdraw) assets out of, into or within any securities account which constitutes
all or any portion of the Collateral so long as any such sale, trade, transfer
or exchange is for fair market value and is either (i) in compliance with the
terms of the investment plan most recently agreed upon between Debtor and
Debtor's investment manager and acknowledged by Bank, or (ii) results in the
acquisition of a like-kind asset of equal or higher quality than the asset sold,
traded, transferred or exchanged. If there is a deficiency with respect to
required Collateral, or if an Event of Default has occurred and is then
continuing, Debtor agrees, on behalf of itself and its agents (if any), that
Bank may immediately take any and all actions which Bank deems necessary or
desirable to preclude Debtor or any agent of Debtor from making any withdrawals,
or effecting any sales, trades, transfers or exchanges, of Collateral.
5. Debtor's Representations, Warranties and Covenants. Debtor represents,
warrants and covenants that (a) Debtor has good and marketable title to the
Collateral, free and clear of all liens, encumbrances, claims and restrictions
of any kind or nature other than the security interest of Bank and any
restrictive legend appearing on any security certificate or instrument which
constitutes part of the Collateral, (b) Debtor has all requisite right, power
and authority to grant to Bank the security interest in the Collateral which is
herein granted, (c) Debtor will at all times keep the Collateral free and clear
of all liens, encumbrances and claims of any kind or nature other than the
security interest of Bank, (d) Debtor will not sell, transfer or otherwise
dispose of any of the Collateral or any interest therein to any individual or
entity, except as permitted by this Agreement or with the prior written consent
of Bank, (e) except for any restrictive legend appearing on any security
certificate or instrument which constitutes part of the Collateral, and except
as Debtor may have otherwise advised Bank in writing prior to the date of this
Agreement, no portion of the Collateral-(i) is subject to any condition which
relates to or would impair or restrict its transferability, or (ii) consists of
"restricted securities" or securities issued by an "affiliate" of Debtor, as
each of such terms is defined in Rule 144 of the Securities and Exchange
Commission, (f) Debtor will pay, prior to delinquency, all taxes, levies,
assessments or other claims which are or may become liens against the
Collateral, (g) Debtor will deliver to Bank promptly or ensure that Bank
promptly receives (i) all Collateral, (ii) except as otherwise provided herein,
all proceeds of, and all securities and other assets distributed in respect of,
any of the Collateral, (iii) such specific acknowledgments, Regulation U
Statement of Purpose forms or other agreements or writings as Bank may require
relating to the Collateral, and (iv) copies of records and other reports
relating to the Collateral in such form and detail and at such times as Bank may
from time to time require, and (h) Debtor will not exercise or refrain from
exercising any voting or consensual rights or powers relating to any Collateral
if, in the judgment of Bank, such action would have a material adverse effect on
the value of the Collateral.
6. Rights of Bank as Secured Party; Power Of Attorney. Debtor agrees that Bank
may, at any time whether before or after the occurrence of an Event of Default,
without notice or demand, and either in Bank's name or in the name of Debtor (a)
notify the issuer of any Collateral, or any securities intermediary, to make
payment to Bank of any amounts now or hereafter due or distributable on or in
respect of any Collateral, (b) enforce collection of any Collateral, whether by
legal proceedings or otherwise, and endorse, receive and receipt for all
proceeds, dividends, interest, principal and other sums so collected, (c) make
any compromise or settlement Bank deems desirable or proper with respect to any
Collateral, (d) participate in any recapitalization, reclassification,
reorganization, consolidation, redemption, stock split, merger or liquidation of
any issuer of any Collateral and, in connection therewith, deposit or surrender
control of any Collateral, accept money or other property in exchange for any
Collateral, and take such other actions as Bank deems proper in connection
therewith, (e) apply to the
2
<PAGE>
Obligations, in such order of application as Bank shall determine, any money or
other property received on or in respect of, or in exchange for, any Collateral,
or hold the same in a non-interest bearing account as additional or substitute
Collateral pursuant to the provisions of this Agreement, (f) cause all or any
portion of the Collateral to be transferred into Bank's name or into the name of
Bank's nominee, and (g) exercise as to the Collateral all rights, powers and
remedies of an owner. Debtor irrevocably appoints Bank, or any officer of Bank,
as Debtor's true and lawful attorney-in-fact coupled with an interest, with full
power of substitution, to sign or endorse any instrument, document or other
writing necessary or desirable to transfer title or other rights to or in any of
the Collateral, and to do all acts necessary or incidental to assert, protect
and enforce Bank's rights in the Collateral and under this Agreement.
7. Events of Default. The term "Event of Default" shall mean the occurrence of
any of the following events: (a) Debtor shall fail to pay when due any
principal, interest or other payment required under the terms of any note or
other agreement (including this Agreement) evidencing or relating to the
Obligations (collectively, 'Loan Documents'), (b) there shall occur any
"default". or "event of default" under and as defined in any of the Loan
Documents, (c) Debtor shall fail to perform any covenant or agreement contained
in this Agreement, or any representation, warranty, certificate or other
statement (financial or otherwise) made or furnished by or on behalf of Debtor
shall be false, incorrect, incomplete or misleading in any material respect when
made or furnished, (d) the Collateral shall decline in value, or otherwise
deteriorate, by an amount or to an extent which Bank in good faith deems
material, or Bank shall in good faith deem its rights with respect to the
Collateral to be impaired, or (e) Bank shall in good faith believe that the
prospect for due and punctual payment of all or any of the Obligations is
impaired.
8. Remedies upon Default. Upon the occurrence of an Event of Default, Bank
may, at its option and without notice or demand (a) declare the Obligations to
be immediately due and payable, and the same shall thereupon be and become
immediately due and payable, (b) cease advancing money or extending financial
accommodations to or for the benefit of Debtor under any of the Loan Documents,
(c) exercise all voting and other rights as a holder of the Collateral, (d)
exercise any or all rights available upon n default to a secured party under the
Commercial Code, as amended from time to time, of the state whose law governs
this Agreement, including without limitation the right to (i) take possession of
any Collateral and sell or dispose of all or any part thereof in such
commercially reasonable manner as Bank may elect, whether at public or private
sale, or both, by way of one or more contracts or transactions and for cash or
on terms, or (ii) order the Securities Intermediary to sell any Collateral on
any established market or over the counter or to cause any Collateral to be
redeemed, and (e) exercise or enforce any or all other rights or remedies
available to Bank under this Agreement, any of the other Loan Documents, at law,
in equity or otherwise. Debtor agrees that if notice to Debtor of any intended
disposition of the Collateral or any other intended action is required by law in
a particular instance, notice given at least five (5) calendar days prior to the
date of the intended disposition or other action shall be deemed commercially
reasonable.
9. Bank's Duties. The sole duty of care of Bank and its agents with respect to
Collateral in their respective possession shall be to exercise reasonable care
in the custody and preservation of such Collateral, and Bank and its agents
shall be deemed to have exercised reasonable care in the custody and
preservation of such Collateral if such Collateral is accorded treatment
substantially equivalent to that which each accords its own property. Debtor
agrees that neither Bank nor its agents shall have any responsibility for
ascertaining or initiating any action with respect to, or for informing Debtor
of, calls, conversions, exchanges, maturities, declining value, tenders or other
matters relating to any Collateral, regardless of whether they have or are
deemed to have knowledge of such matters, for taking any steps to preserve any
rights against any person or entity with respect to any Collateral or for
otherwise protecting any Collateral against any claims of others. Neither Bank
nor its agents shall be responsible for any injury or loss to the Collateral, or
any part thereof, arising from any cause beyond their reasonable control. Bank
may at any time deliver or cause to be delivered all or any part of the
Collateral to Debtor, and Debtor's receipt shall be a complete and full
acquittance for the Collateral so delivered, and Bank shall thereafter be
discharged from any liability or responsibility therefor.
10. Debtor's Waivers. Debtor waives any right to require Bank to (a) give
Debtor notice of Bank's acceptance of this Agreement, (b) to the extent not
contrary to public policy, give notice of the terms, time and place of any
public or private sale of the Collateral, (c) proceed against any person or
entity, or exhaust any Collateral or pursue any remedy in Bank's power
whatsoever, and (d) make any presentment, demand or protest, or give any notice
of default, nonperformance, protest or dishonor, in connection with any
instrument, document or agreement evidencing the Obligations. Debtor
acknowledges that Bank may release, substitute or add Collateral, endorsers or
guarantors without affecting the liability of Debtor hereunder and under the
other Loan Documents, and waives the right to
3
<PAGE>
plead any statute of limitations, or any defense to the personal liability of
Debtor, as a defense to Bank's exercise of any right or remedy hereunder.
11. Reimbursement of Costs And Expenses. Debtor shall, to the extent permitted
by applicable law, reimburse Bank, on demand, for all costs and expenses
incurred by Bank in performing any agreement of Debtor which Debtor shall fail
to perform, or in taking any other action which Bank deems necessary for the
maintenance or preservation of any Collateral or Bank's interest therein. In
addition, Debtor shall reimburse Bank, on demand, for all reasonable attorneys'
fees (including the reasonable estimate of the allocated costs and expenses of
Bank's in-house legal counsel and legal staff), costs and other expenses
incurred or paid by Bank in collecting, modifying or compromising the
Obligations or in enforcing or exercising its rights or remedies created by,
connected with or provided for in any of the Loan Documents, whether or not an
arbitration, judicial action or other proceeding is commenced. If such a
proceeding is commenced, only the prevailing party shall be entitled to
attorneys' fees and court costs.
12. Miscellaneous. All rights, powers and remedies of Bank hereunder shall be
cumulative and not alternative. This Agreement may be amended, modified or
waived only in a writing signed by all parties hereto. All representations and
warranties contained in this Agreement are continuing and shall survive the
execution, delivery and performance of this Agreement. If more than one Debtor
executes this Agreement, their obligations hereunder are joint and several. All
words used herein in the singular shall be deemed to have been used in the
plural when the context and construction so require. Any married person who
signs this Agreement expressly agrees that recourse may be had against his/her
separate property for all of his/her obligations hereunder. This Agreement
shall inure to the benefit of and be binding upon Bank and Debtor and their
respective successors and assigns; provided, however, that Debtor may not assign
its rights or delegate its duties hereunder without the prior written consent of
Bank. Upon any sale, assignment or transfer by Bank of all or any portion of
the Obligations, Bank shall be fully discharged from all liability with respect
to any Collateral transferred therewith. Should any one or more provisions of
this Agreement be determined to be illegal or unenforceable, all other
provisions shall nevertheless be effective. Any notices or other communications
provided for or allowed hereunder shall be effective only when given by one of
the following methods and addressed to the respective party at its address given
with the signatures at the end of this Agreement (or at such other address as
the party changing its address shall notify the other as provided herein) and
shall be considered to have been validly given (a) upon delivery, if delivered
personally, (b) upon receipt, if mailed, first class postage prepaid, with the
United States Postal Service, (c) on the guaranteed delivery date, if sent by
courier service of recognized standing, and (d) upon telephoned confirmation of
receipt, if telecopied. Unless separate notice is requested in writing by any
Debtor, notice given to any Debtor shall constitute notice to all Debtors.
Except for the Loan Documents and any other documents and instruments referenced
herein, this Agreement constitutes the entire agreement between Bank and Debtor
relating to the Collateral and supersedes all prior understandings or agreements
concerning the subject matter hereof. This Agreement shall be governed by the
laws of the State of CALIFORNIA and, unless otherwise defined or provided
----------
herein, all words used in this Agreement have the meanings given them in the
Commercial Code of such state.
4
<PAGE>
IN WITNESS WHEREOF, Debtor and Bank have executed this Agreement as of the date
first hereinabove set forth.
"DEBTOR"
SEQUENOM, INC.
By: /s/ Stephen Zaniboni
-------------------------------- ------------------------------
STEVE ZANIBONI, SEC./TREASURER/CFO
-------------------------------- ------------------------------
-------------------------------- ------------------------------
-------------------------------- ------------------------------
-------------------------------- ------------------------------
-------------------------------- ------------------------------
Address: 11555 Sorrento Valley Road
--------------------------
San Diego, CA 92121
--------------------------
"BANK"
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Dan Finster
--------------------------------
DAN FINSTER
Title: VICE PRESIDENT
------------------------------
Address: 4660 LA JOLLA VILLAGE DR. #775
------------------------------
SAN DIEGO, CA 92122
------------------------------
5
<PAGE>
EXHIBIT 10.19
UNION
BANK OF
CALIFORNIA
PROMISSORY NOTE
(BASE RATE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Borrower Name SEQUENOM, INC.
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Borrower Address Office 02105 Loan Number
11555 SORRENTO VALLEY ROAD
SAN DIEGO, CA 92121
- -------------------------------------------------------------------------------------------------------------
Maturity Date September 30, 2004 Amount $5,000,000.00
- -------------------------------------------------------------------------------------------------------------
</TABLE>
$5,000,000.00 Date April 29, 1999
- ------------- --------------
FOR VALUE RECEIVED, on SEPTEMBER 30, 2004, the undersigned ("Debtor") promises
------------------
to pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated
below, the principal sum of FIVE MILLION AND NO/100 Dollars ($5,000,000.00), or
----------------------- ------------
so much thereof as is disbursed, together with interest on the balance of such
principal from time to time outstanding, at the per annum rate or rates and at
the times set forth below.
1. PAYMENTS.
PRINCIPAL PAYMENTS. Debtor shall repay the principal amount outstanding
under this note in forty-eight (48) installments on the last day of each
calendar month (commencing October 31, 2000), forty-seven (47) of such
installments (being all installments other than that due on September 30, 2004)
-----
to be in an amount equal to one forty-eighth (1/48th) of the principal amount
outstanding hereunder on September 30, 2000, and one (1) of such installments
(being that due on September 30, 2004) to be in such amount as shall be required
to repay all principal then outstanding and unpaid hereunder.
INTEREST PAYMENTS During the period commencing on the date of this note and
ending on September 30, 2000, the principal sum from time to time outstanding
hereunder shall bear interest at a per annum rate equal one percent (1.00%) less
----
than the Reference Rate, such rate to change as and when the Reference Rate
shall change. During the period commencing on October 1, 2000 and ending on
September 30, 2004, the principal sum from time to time outstanding hereunder
shall bear interest as provided in paragraphs l.a and 1.b, below. All payments
of interest shall be due and payable on the last day of each calendar month
(commencing May 31, 1999). Should interest not be paid when due, it shall
become part of the principal and bear interest as herein provided. All
computations of interest under this note shall be made on the basis of a year of
360 days, for actual days elapsed.
a. BASE INTEREST RATE. During the period commencing on October 1, 2000
and ending on September 30, 2004, at Debtor's option, amounts outstanding
hereunder in minimum amounts of at least $100,000.00 shall bear interest at
a rate, based on an index selected by Debtor, which is 1.750% per annum in
------
excess of Bank's LIBOR Rate for the Interest Period selected by Debtor,
acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified until
the expiration of the Interest Period selected by Debtor. The exercise of
interest rate options by Debtor shall be as recorded in Bank's records,
which records shall be prima facie evidence of the amount borrowed under
either interest option and the interest rate; provided, however, that
failure of Bank to make any such notation in its records shall not
discharge Debtor from its obligations to repay in full with interest all
amounts borrowed. In no event shall any Interest Period extend beyond the
maturity date of this note.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which a Base Interest Rate is not accruing, and on
the expiration of any Interest Period with respect to principal outstanding
on which a Base Interest Rate has been accruing, select an index offered by
Bank for a Base Interest Rate Loan and an Interest Period by telephoning an
authorized lending officer of Bank located at the banking office identified
below prior to 10:00 a.m., Pacific time, on any Business Day and advising
that
<PAGE>
officer of the selected index, the Interest Period and the Origination Date
selected (which Origination Date, for a Base Interest Rate Loan based on
the LIBOR Rate, shall follow the date of such selection by no more than two
(2) Business Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the rate
selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves the
right to fund the principal from any source of funds notwithstanding any
Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. During the period commencing on October 1,
2000 and ending on September 30, 2004, all principal outstanding hereunder
which is not bearing interest at a Base Interest Rate shall bear interest
at a rate per annum of 0.50% less than the Reference Rate, which rate shall
-----
vary as and when the Reference Rate changes.
If any interest rate defined in this note ceases to be available from Bank
for any reason, then said interest rate shall be replaced by the rate then
offered by Bank, which, in the sole discretion of Bank, most closely
approximates the unavailable rate.
At any time prior to SEPTEMBER 30, 2000, subject to the provisions of
paragraph 4, below, of this note, Debtor may borrow, repay and reborrow
hereon so long as the total outstanding at any one time does not exceed the
principal amount of this note. Debtor shall pay all amounts due under this
note in lawful money of the United States at Bank's GOLDEN TRIANGLE BBC
-------------------
Office, or such other office as may be designated by Bank, from time to
time.
2. LATE PAYMENTS. If any payment required by the terms of this note shall
remain unpaid ten days after same is due, at the option of Bank, Debtor shall
pay a fee of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph 1.b, above,
calculated from the date of default until all amounts payable under this note
are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based on
the Reference Rate may be prepaid in whole or in part at any time, without
penalty or premium. Debtor may prepay amounts outstanding under this note
bearing interest at a Base Interest Rate in whole or in part provided
Debtor has given Bank not less than five (5) Business Days prior written
notice of Debtor's intention to make such prepayment and pays to Bank the
liquidated damages due as a result. Liquidated Damages shall also be paid,
if Bank, for any other reason, including acceleration or foreclosure,
receives all or any portion of principal bearing interest at a Base
Interest Rate prior to its scheduled payment date. Liquidated Damages
shall be an amount equal to the present value of the product of: (i) the
difference (but not less than zero) between (a) the Base Interest Rate
applicable to the principal amount which is being prepaid, and (b) the
return which Bank could obtain if it used the amount of such prepayment of
principal to purchase at bid price regularly quoted securities issued by
the United States having a maturity date most closely coinciding with the
relevant Base Rate Maturity Date and such securities were held by Bank
until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction,
the numerator of which is the number of days in the period between the date
of prepayment and the relevant Base Rate Maturity Date and the denominator
of which is 360; and (iii) the amount of the principal so prepaid (except
in the event that principal payments are required and have been made as
scheduled under the terms of the Base Interest Rate Loan being prepaid,
then an amount equal to the lesser of (A) the amount prepaid or (B) 50% of
the sum of (1) the amount prepaid and (2) the amount of principal scheduled
under the terms of the Base Interest Rate Loan being prepaid to be
outstanding at the relevant Base Rate Maturity Date). Present value under
this note is determined by discounting the above product to present value
using the Yield Rate as the annual discount factor.
2
<PAGE>
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim against
Bank, should the return which Bank could obtain under this prepayment
formula exceed the interest that Bank would have received if no prepayment
had occurred. All prepayments shall include payment of accrued interest on
the principal amount so prepaid and shall be applied to payment of interest
before application to principal. A determination by Bank as to the
prepayment fee amount, if any, shall be conclusive.
c. Bank shall provide Debtor a statement of the amount payable on account
of prepayment. Debtor acknowledges that (i) Bank establishes a Base
Interest Rate upon the understanding that it apply to the Base Interest
Rate Loan for the entire Interest Period, and (ii) any prepayment may
result in Bank incurring additional costs, expenses or liabilities; and
Debtor agrees to pay these liquidated damages as a reasonable estimate of
the costs, expenses and liabilities of Bank associated with such
prepayment.
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
not be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgement, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are
not paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this note. Debtor and any endorsers of this note, for the maximum period of
time and the full extent permitted by law, (a) waive diligence, presentment,
demand, notice of nonpayment, protest, notice of protest, and notice of every
kind; (b) waive the right to assert the defense of any statute of limitations to
any debt or obligation hereunder; and (c) consent to renewals and extensions of
time for the payment of any amounts due under this note. If this note is signed
by more than one party, the term "Debtor" includes each of the undersigned and
any successors in interest thereof; all of whose liability shall be joint and
several. Any married person who signs this note agrees that recourse may be had
against the separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option, shall not
be considered a payment on account until such check or other item of payment is
honored when presented for payment at the drawee bank. Bank may delay the
credit of such payment based upon Bank's schedule of funds availability, and
interest under this note shall accrue until the funds are deemed collected. In
any action brought under or arising out of this note, Debtor and any Obligor,
including their successors and assigns, hereby consent to the jurisdiction of
any competent court within the State of California, as provided in any
alternative dispute resolution agreement executed between Debtor and Bank, and
consent to service of process by any means authorized by said state's law. The
term "Bank" includes, without limitation, any holder of this note. This note
shall be construed in accordance with and governed by the laws of the State of
California. This note hereby incorporates any alternative dispute resolution
agreement previously, concurrently or hereafter executed between Debtor and
Bank.
3
<PAGE>
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "Base Interest Rate" means a rate of interest
based on the LIBOR Rate. "Base Interest Rate Loan" means amounts outstanding
under this note that bear interest at a Base Interest Rate. "Base Rate Maturity
Date" means the last day of the Interest Period with respect to principal
outstanding under a Base Interest Rate Loan. "Business Day" means a day on
which Bank is open for business for the funding of corporate loans, and, with
respect to the rate of interest based on the LIBOR Rate, on which dealings in
U.S. dollar deposits outside of the United States may be carried on by Bank.
"Interest Period" means with respect to funds bearing interest at a rate based
on the LIBOR Rate, any calendar period of one, three, six, nine or twelve
months. In determining an Interest Period, a month means a period that starts
on one Business Day in a month and ends on and includes the day preceding the
numerically corresponding day the next month. For any month in which there is
no such numerically corresponding day, then as to that month, such day shall be
deemed to be last calendar day of such month. Any Interest Period which would
otherwise end on a nonBusiness Day shall end on the next succeeding Business Day
unless that is the first day of a month, in which event such Interest Period
shall and on the next preceding Business Day. "LIBOR Rate" means a per annum
rate of interest (rounded upward, if necessary, to the nearest 1/100 of 1%) at
which dollar deposits, in immediately available funds and in lawful money of the
United States would be offered to Bank, outside of the United States, for a term
coinciding with the Interest Period selected by Debtor and for an amount equal
to the amount of principal covered by Debtor's interest rate selection, plus
Bank's costs, including the costs, if any, of reserve requirements.
"Origination Date" means the first day of the Interest Period. "Reference Rate"
means the rate announced by Bank from time to time at its corporate headquarters
as its Reference Rate. The Reference Rate is an index rate determined by Bank
from time to time as a means of pricing certain extensions of credit and is
neither directly tied to any external rate of interest or index nor necessarily
the lowest rate of interest charged by Bank at any given time.
SEQUENOM, INC.
- -------------------------------
By /s/ Steve Zaniboni
--------------------------
STEVE ZANIBONI, SECRETARY/TREASURER/CFO
4
<PAGE>
UNION
BANK OF
CALIFORNIA
ALTERNATIVE DISPUTE RESOLUTION AGREEMENT
(Judicial Reference and Waiver of Jury Trial)
THIS ALTERNATIVE DISPUTE RESOLUTION AGREEMENT ("Agreement') is made and
entered into as of the 29TH day of APRIL, 1999 , by and between the undersigned
("Obligor") and Union Bank of California, N.A. ("Bank") Obligor and Bank herein
collectively, the "Parties" and individually, a "Party").
1. CLAIMS SUBJECT TO JUDICIAL REFERENCE; SELECTION OF REFEREE. All Claims,
including any and all questions of law or fact relating thereto, shall, at the
written request of any Party, be determined by Reference. The Parties shall
select a, single neutral referee, who shall be a retired state or federal court
judge with at least five years of judicial experience in civil matters. In the
event that the Parties cannot agree upon a referee, the referee shall be
appointed by the court. The Parties shall equally bear the fees and expenses of
the referee unless the referee otherwise provides in the statement of decision.
2. WAIVER OF JURY TRIAL. In connection with a Reference or any other action or
proceeding, whether brought in state or federal court, the Parties hereby
expressly, intentionally and deliberately waive any right they may otherwise
have to trial by jury of any Claim.
3. CONDUCT OF REFERENCE. Except as provided in this Agreement, the Reference
shall be conducted pursuant to Applicable State Law. The referee shall
determine all issues relating to the applicability, interpretation, legality and
enforceability of this Agreement.
4. PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision of this
Agreement shall limit the right of any Party to (a) exercise self-help remedies
including, without limitation, set-off, (b) foreclose against or sell any
collateral, by power of sale or otherwise or (c) obtain or oppose provisional or
ancillary remedies from a court of competent jurisdiction before, after or
during the pendency of the Reference. The exercise of, or opposition to, any
such remedy does not waive the right of any Party to Reference pursuant to this
Agreement.
5. LIMITATION ON DAMAGES. In the event that punitive damages are permitted
under Applicable State Law, the amount thereof shall not exceed a sum equal to
three times the amount of actual damages as determined by the referee.
6. SEVERABILITY. In the event that any provision of this Agreement is found to
be illegal or unenforceable, the remainder of this Agreement shall remain in
full force and effect.
7. MISCELLANEOUS. In the event that multiple Claims are asserted, some of
which are found not subject to this Agreement, the Parties agree to stay the
proceedings of the Claims not subject to this Agreement until all other Claims
are resolved in accordance with this Agreement. In the event that Claims are
asserted against multiple parties, some of whom are not subject to this
Agreement, the Parties agree to sever the Claims subject to this Agreement and
resolve them in accordance with this Agreement. In the event of any challenge
to the legality or enforceability of this Agreement, the prevailing Party shall
be entitled to recover the costs and expenses, including reasonable attorneys'
fees, incurred by it in connection therewith. Applicable State Law shall govern
the interpretation of this Agreement. This Agreement fully states all of the
terms and conditions of the Parties' agreement regarding the matters mentioned
in, or incidental to, this Agreement. This Agreement supersedes all oral
negotiations and prior writings concerning the subject matter hereof.
8. DEFINED TERMS. As used in this Agreement, the following terms shall have
the respective meanings set forth below:
(a) "Applicable State Law" shall mean the law of the state in which this
Agreement is executed by Obligor; provided, however, that if any Party
seeks to (i) exercise self-help remedies, including without limitation,
set-off, (ii) foreclose against or sell any collateral, by power of sale or
otherwise or (iii) obtain or
5
<PAGE>
oppose provisional or ancillary remedies from a court of competent
jurisdiction before, after or during the pendency of the Reference, the law
of the state where such collateral is located shall govern the exercise of
or opposition to such rights and remedies.
(b) "Claim" shall mean any claim, cause of action, action, dispute or
controversy between or among the Parties, whether sounding in contract,
tort or otherwise, which arises out of or relates to: (i) any of the
Subject Documents; (ii) any negotiations or communications relating to any
of the Subject Documents, whether or not incorporated into the Subject
Documents or any indebtedness evidenced thereby; or (iii) any alleged
agreements, promises, representations or transactions in connection
therewith.
(c) "Reference" shall mean a judicial reference conducted pursuant to this
Agreement in accordance with Applicable State Law, as in effect at the time
the referee is selected pursuant to Paragraph 1 of this Agreement.
(d) "Subject Documents" shall mean any and all documents, instruments and
agreements previously, concurrently or hereafter executed by Obligor in
favor of Bank, or between Obligor and Bank, which incorporate by reference
an alternative dispute resolution agreement, any and all related documents,
instruments and agreements, and any and all extensions, renewals,
amendments and replacements of any of the foregoing; and "Subject
Documents" shall mean any one of such Subject Documents.
This Agreement is duly executed by the Parties as of the date first written
above.
UNION BANK OF CALIFORNIA, N.A.
BY: /s/ Dan Finster
------------------------------------
DAN FINSTER
TITLE: VICE PRESIDENT
-----------------------------------
SEQUENOM, INC.
BY: /s/ Steve Zaniboni
------------------------------------ ---------------------------------
STEVE ZANIBONI, SEC./TREASURER/CFO
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
6
<PAGE>
UNION AUTHORIZATION TO DISBURSE
BANK OF
CALIFORNIA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Borrower Name SEQUENOM, INC.
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Borrower Address Office 02105 Loan Number
11555 SORRENTO VALLEY ROAD
SAN DIEGO, CA 92121
- --------------------------------------------------------------------------------------------------------
Maturity Date September 30, 2004 Amount $5,000,000.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
Union Bank of California, N.A. ("Bank") is hereby authorized and instructed to
disburse the proceeds of that certain promissory note ("Note") evidencing the
obligation referred to above in the following manner:
Deposit the proceeds of my/our revolving note into my/our account
#0560023227 from time to time and in such amounts as may be requested
verbally or in writing.
- --------------------------------------------------------------------------------
Fees itemized below are payable as follows (check one):
[ ] Charge account #_________________ [ ] Check enclosed
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
1. Bank is authorized to charge account number 0560023227 in the
----------------------
name(s) of SEQUENOM, INC.
--------------
for payments of interest (or principal/interest) when due in connection
with the Note and all renewals or extensions thereof.
2. Bank shall disburse proceeds in the amounts stated above in accordance with
the foregoing authorization or when Bank receives verbal or written
authorization to do so from Borrower(s) or any one of the Borrowers, if
there are joint Borrowers, but not later than the final date for
availability provided in the loan documents. Bank, at its discretion, may
elect to extend this date without notice to or acknowledgement by the
Borrower(s). This Authorization and the Note will remain in full force and
effect until the obligations in connection with the Note have been
fulfilled.
3. Unless dated by Bank prior to execution, the Note shall be dated by Bank as
of the date on which Bank disburses proceeds.
4. Notwithstanding anything to the contrary herein, Bank reserves the right to
decline to advance the proceeds of the Note if there is a filing as to the
Borrower(s), or any of them of a voluntary or involuntary petition under
the provisions of the Federal Bankruptcy Act or any other insolvency law;
the issuance of any attachment, garnishment, execution or levy of any asset
of the Borrower(s), or any endorser or guarantor which results in Bank
deeming itself, in good faith insecure.
7
<PAGE>
5. The Borrower(s) authorizes Bank to release information concerning the
Borrower(s) financial condition to suppliers, other creditors, credit
bureaus and other credit reporters; and also authorizes Bank to obtain such
information from any third party at any time.
The Borrower(s) by their execution of this Authorization accept the foregoing
terms, conditions and instructions.
Executed on May 17, 1999
----------------------------
SEQUENOM, INC.
BY: /s/ Steve Zaniboni
------------------------------------ ---------------------------------
STEVE ZANIBONI, SEC./TREASURER/CFO
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
------------------------------------ ---------------------------------
8
<PAGE>
EXHIBIT 10.20
BUSINESS LOAN AGREEMENT
This Business Loan Agreement (this "Agreement") is entered into as of the date
set forth below between Union Bank of California, N.A. ("Bank") and the
undersigned ("Borrower") with respect to each and every extension of credit
(whether one or more, collectively referred to as the "Loan") from Bank to
Borrower. In consideration of the Loan, Bank and Borrower agree to the
following terms and conditions:
1. THE LOAN.
1.1 The Note. The Loan is evidenced by one or more promissory notes or
other evidences of indebtedness, including each amendment, extension,
renewal or replacement thereof, which are incorporated herein by this
reference (whether one or more, collectively referred to as the
"Note").
1.2 Revolving to Term Loan Availability Period. Loan proceeds shall be
available for disbursement from April 26, 1999 through September 30,
-------------- -------------
2000 only.
----
1.3 Collateral. The payment and performance of all obligations of
Borrower under the Loan Documents are and shall be during the term of
the Loan secured by a perfected security interest in such real or
personal property collateral as is required by Bank and each security
interest shall rank in first priority unless otherwise specified in
writing by Bank.
2. CONDITIONS TO AVAILABILITY OF THE LOAN. Before Bank is obligated to
disburse all or any portion of the Loan, Bank must have received (a) the
Note and every other document required by Bank in connection with the Loan,
each of which must be in form and substance satisfactory to Bank (together
with this Agreement, referred to as the "Loan Documents"), (b) confirmation
of the perfection of its security interest in any collateral for the Loan,
and (c) payment of any fee required in connection with the Loan.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants (and each
request for a disbursement of the proceeds of the Loan shall be deemed a
representation and warranty made on the date of such request) that:
3.1 Borrower is an individual or Borrower is duly organized and existing
under the laws of the state of its organization and is duly qualified
to conduct business in each jurisdiction in which its business is
conducted;
3.2 The execution, delivery and performance of the Loan Documents executed
by Borrower are within Borrower's power, have been duly authorized,
are legal, valid and binding obligations of Borrower, and are not in
conflict with the terms of any charter, bylaw, or other organization
papers of Borrower or with any law, indenture, agreement or
undertaking to which Borrower is a party or by which Borrower is bound
or affected;
*When "N/A" appears in a blank in this Agreement, it means the Subsection in
which it appears is deemed deleted from this Agreement. If only a portion of a
Subsection is to be deleted, it is crossed out.
<PAGE>
3.3 All financial statements and other financial information submitted by
Borrower to Bank are true and correct in all material respects, and
there has been no material adverse change in Borrower's financial
condition since the date of the latest of such financial statements;
3.4 Borrower is properly licensed and in good standing in each state in
which Borrower is doing business, and Borrower has complied with all
laws and regulations affecting Borrower, including without limitation,
each applicable fictitious business name statute;
3.5 There is no event which is, or with notice or lapse of time or both
would be, an Event of Default (as defined in Article 5);
3.6 Borrower is not engaged in the business of extending credit for the
purpose of, and no part of the Loan will be used, directly or
indirectly, for purchasing or carrying margin stock within the meaning
of Federal Reserve Board Reg. U; and
3.7 Borrower is not aware of any fact, occurrence or circumstance which
Borrower has not disclosed to Bank in writing which has, or could
reasonably be expected to have, a material adverse effect on
Borrower's ability to repay the Loan or perform its obligations under
the Loan Documents.
4. COVENANTS. Borrower agrees, so long as the Loan or any commitment to make
any advance under the Loan is outstanding and until full and final payment
of all sums outstanding under any Loan Document, that Borrower will:
4.1 Maintain:
(a) Collateral comprised of assignment of Borrower's short term fixed
income account number 510001164-00 sufficient to cover the full
credit line, plus all accrued interest by a 120% margin will be
required at all times.
All accounting terms used in this Agreement shall have the definitions given
them by generally accepted accounting principles, unless otherwise defined
herein.
4.2 Give written notice to Bank within 15 days of the following:
(a) Any material dispute which may exist between Borrower and any
government regulatory body or law enforcement body;
(b) Any Event of Default or any event which, upon notice, or lapse of
time, or both, would become an Event of Default;
(c) Any other matter which has resulted or is likely to result in a
material adverse chance in Borrower's financial condition or
operation; and
(d) Any change in Borrower's name or the location of Borrower's
principal place of business, or the location of any collateral
for the Loan, or the establishment of any new place of business
or the discontinuance of any existing place of business.
<PAGE>
4.3 Furnish to Bank an income statement, balance sheet, and statement of
retained earnings, with supportive schedules ("Financial Statement"),
and any other financial information requested by Bank, prepared in
accordance with generally accepted accounting principles and in a form
satisfactory to Bank as follows:
(a) Within 150 days after the close of each fiscal year, a copy of
---
Borrower's annual Financial Statement prepared by A Certified
-----------
Public Accountant on a(n) audited basis. Any independent
----------------- -------
certified public accountant who prepares Borrower's Financial
Statement shall be selected by Borrower and reasonably
satisfactory to Bank;
(b) Promptly upon request, any other financial information requested
by Bank.
4.4 Pay or reimburse Bank for all costs, expenses and fees incurred by
Bank in preparing and documenting this filing and recording fees,
Agreement and the Loan, and all amendments and modifications thereof,
including but not limited to all costs of appraisals, insurance and
attorneys' fees, including the reasonable estimate of the allocated
costs and expenses of in-house legal counsel and staff.
4.5 Maintain and preserve Borrower's existence, present form of business
and all rights, privileges and franchises necessary or desirable in
the normal course of its business, and keep all of Borrower's
properties in good working order and condition.
4.6 Maintain and keep in force insurance with companies acceptable to Bank
and in such amounts and types, including without limitation fire and
public liability insurance, as is usual in the business carried on by
Borrower, or as Bank may reasonably request. Such insurance policies
must be in form and substance satisfactory to Bank.
4.7 Maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally
accepted accounting principles, and in compliance with the regulations
of any governmental regulatory body having jurisdiction over Borrower
or Borrower's business and permit employees or agents of Bank at any
reasonable time to inspect Borrower's assets and properties, and to
examine or audit Borrower's books, accounts and records and make
copies and memoranda thereof.
4.8 At all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any
governmental authority having jurisdiction over Borrower or Borrower's
business, and all material agreements to which Borrower is a party.
4.9 Except as provided in this Agreement, or in the ordinary course of its
business as currently conducted, not make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any
manner, or extend credit.
4.11 Not purchase the debt or equity of another person or entity except in
compliance with the terms of the investment plan most recently agreed
upon between Borrower and Borrower's investment manager and
acknowledged by Bank.
4.12 Not sell or discount any account receivable or evidence of
indebtedness, except to Bank; not borrow any money or become
contingently liable for money borrowed, except pursuant to agreements
made with Bank.
<PAGE>
4.13 Neither liquidate, dissolve, enter into any consolidation, merger,
partnership or other combination; nor convey, sell or lease all or
the greater part of its assets or business; nor purchase or lease all
or the greater part of the assets or business of another.
4.14 Not engage in any business activities or operations substantially
different from or unrelated to Borrower's present business activities
and operations.
4.15 Borrower will promptly, upon demand by Bank, take such further action
and execute all such additional documents and instruments in
connection with this Agreement as Bank in its reasonable discretion
deems necessary, and promptly supply Bank with such other information
concerning its affairs as Bank may request from time to time.
5. EVENTS OF DEFAULT. The occurrence of any of the following events ("Events
of Default") shall terminate any obligation on the part of Bank to make or
continue the Loan and automatically, unless otherwise provided under the
Loan Documents, shall make all sums of interest and principal and any other
amounts owing under the Loan immediately due and payable, without notice of
default, presentment or demand for payment, protest or notice of nonpayment
or dishonor, or any other notices or demands:
5.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan
Documents;
5.2 Any default shall occur under the Note or any of the other Loan
Documents;
5.3 Borrower shall default in the due performance or observance of any
covenant or condition of the Loan Documents, OR
5.4 Any guaranty or subordination agreement required hereunder shall be
breached or become ineffective, or any guarantor or subordinating
creditor shall die or disavow or attempt to revoke or terminate such
guaranty or subordination agreement.
6. MISCELLANEOUS PROVISIONS.
6.1 The rights, powers and remedies given to Bank hereunder shall be
cumulative and not alternative and shall be in addition to all rights,
powers and remedies given to Bank by law against Borrower or any other
person, including but not limited to Bank's rights of setoff and
banker's lien.
6.2 Any forbearance or failure or delay by Bank in exercising any right,
power or remedy hereunder shall not be deemed a waiver thereof and any
single or partial exercise of any right, power or remedy shall not
preclude the further exercise thereof. No waiver shall be effective
unless it is in writing and signed by an officer of Bank.
6.3 The benefits of this Agreement shall inure to the successors and
assigns of Bank and the permitted successors and assigns of Borrower,
and any assignment by Borrower without Bank's consent shall be null
and void.
6.4 This Agreement and all other agreements and instruments required by
Bank in connection herewith shall be governed by and construed
according to the laws of the State of California.
<PAGE>
6.5 Should any one or more provisions of this Agreement be determined to
be illegal or unenforceable, all other provisions nevertheless shall
be effective.
6.6 Except for documents and instruments specifically referenced herein,
this Agreement constitutes the entire agreement between Bank and
Borrower regarding the Loan and all prior communications, verbal or
written, between Borrower and Bank shall be of no further effect or
evidentiary value.
6.7 The section and subsection headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
6.8 This Agreement may be amended only in writing signed by all parties
hereto.
6.9 Borrower and Bank may execute one or more counterparts to this
Agreement, each of which shall be deemed an original, but taken
together shall be one and the same instrument.
6.10 Any notices or other communications provided for or allowed hereunder
shall be effective only when given by one of the following methods and
addressed to the respective party at its address given with the
signatures at the end of this Agreement and shall be considered to
have been validly given: (a) upon delivery, if delivered personally;
(b) upon receipt, if mailed, first class postage prepaid, with the
United States Postal Service; (c) on the next business day if sent by
overnight courier service of recognized standing; and (d) upon
telephoned confirmation of receipt, if telecopied.
7. ADDITIONAL PROVISIONS
The following additional provisions, if any, are hereby made a part of this
Agreement:
None
<PAGE>
THIS AGREEMENT is executed on behalf of the parties as of May 25, 1999.
<TABLE>
<S> <C>
Union Bank of California, N.A. Sequenom, Inc.
("Bank") ("Borrower")
By: /s/ Dan Finster By: /s/ Steve Zaniboni
--------------------------------- -----------------------------------------------
Title: Vice President Title: Secretary/Treasurer/Chief Financial Officer
Printed Name: Dan Finster Printed Name: Steve Zaniboni
Address where notices to Bank are to be sent: Address where notices to Borrower are to be sent:
Union Bank of California Sequenom, Inc.
4660 La Jolla Dr., Suite 175 11555 Sorrento Valley Road
San Diego, CA 92122 San Diego, CA 92121
Attn: Dan Finster Attn: Steve Zaniboni
Fax: (619) 552-2044 Fax: (619) 350-0344
Phone: (619) 350-0345 Phone: (619) 350-0345
</TABLE>
<PAGE>
EXHIBIT 10.37
EMPLOYMENT AGREEMENT
--------------------
In consideration and as a condition of my employment or continued
employment by Sequenom, Inc., a Delaware corporation (the "Company"), and of the
compensation to be paid to me, and in recognition of the fact that as an
employee of the Company I will or may have access to confidential information, I
agree with the Company as follows:
1. Employment Status.
The Company hereby employs me, and I hereby accept employment, as the
President and Chief Executive Officer of the Company on the terms and conditions
set forth herein, effective July 1, 1997. I understand that I am employed for
an indefinite term and that either the Company or I may terminate the employment
relationship at any time.
2. Duties of Employee.
I shall perform the duties and responsibilities and shall be granted the
authority normally associated with the offices of President and Chief Executive
Officer of the Company including such duties, responsibilities and authority as
may be set forth in the Bylaws of the Company or as may be reasonably and
lawfully assigned to me from time to time by the Board of Directors of the
Company (the "Board"). As long as I am employed by the Company, I shall devote
my full time and efforts to the Company and shall not, without the prior express
written consent of the Board, engage directly or indirectly in any employment,
consulting or business activity other than for the Company. The foregoing
sentence shall not be deemed to prohibit my continuing to engage in the
activities set forth in Exhibit A.
---------
3. Compensation and Benefits.
(a) The Company shall pay me a salary at the rate of Two Hundred
Forty Thousand Dollars ($240,000) per year payable in accordance with the
Company's standard payroll policy. The base salary provided herein shall be
reviewed annually by a compensation committee to be designated by the Board.
(b) The Company shall issue me a stock option to purchase up to
300,000 shares of the Common Stock of the Company, $.001 par value per share, in
the form set forth in Exhibit B to this Agreement.
---------
(c) The Company shall reimburse me for the reasonable expenses
that I incur in relocating from the Hamburg, Germany and Boston, Massachusetts
areas to the San Diego, California area (the "Moving Expenses Reimbursement"),
including moving and temporary living expenses, subject to my presentation to
the Company of satisfactory documentation of such expenses, plus an additional
amount (the "Gross-Up Payment") equal to the amount necessary to cause the
amount retained by me from the Moving Expense Reimbursement and the Gross-Up
Payment, after deduction of any federal, state or local income tax on the Moving
Expense Reimbursement and the Gross-Up Payment, to be equal to the Moving
Expense Reimbursement.
(d) I shall be entitled to participate in such employee benefit
plans and to receive such other fringe benefits as are customarily afforded
Company employees. In addition, I shall be entitled to participate in such other
executive benefit plans as may be established by the
<PAGE>
Company for Company employees in similar executive positions with similar
tenure. I understand that these employee benefit plans and fringe benefits may
be amended, enlarged, diminished or terminated by the Company from time to time.
4. Termination. My employment hereunder shall terminate upon the
occurrence of any of the following events:
(a) my death or legal incapacity; or
(b) written notice from the Company to me at any time of the
decision of the Board to terminate my employment hereunder as a result of my
incapacity or inability to further perform services as contemplated herein for a
period aggregating 90 days or more within any six-month period because my
physical or mental health have become impaired as to notice it impossible or
impractical for me to perform the duties and responsibilities contemplated
hereunder; or
(c) written notice from the Company to me at any time of the
decision of the Board to terminate my employment hereunder for Cause (as
hereafter defined). There shall be "Cause" for termination of my employment if
the Board reasonably determines that any of the following have occurred:
(i) I have been convicted of, or pleaded guilty or nolo
----
contendere to, any felony, or any lesser crime or offense having as its
- ----------
predicate element fraud or dishonesty;
(ii) I have misappropriated, stolen or converted any of the
property of the Company;
(iii) I have knowingly and willfully perpetrated any act or
omission which subjects the Company to criminal liability, or knowingly and
willfully caused the Company to commit a material violation of local, state or
federal laws, rules or regulations;
(iv) I have breached in any material respect any provision
of this Agreement;
(v) I have breached any provision of any other agreement
between me and the Company and such breach has a material adverse effect on the
Company or any of its direct or indirect subsidiaries;
(vi) I have failed or refused to perform my duties hereunder
and such failure or refusal has confined for a period of 10 days following
written notice from the Company; or
(vii) By June 30, 1998, I have not either obtained a leave of
absence from the University of Hamburg or resigned from my tenured professorship
there; or
(d) written notice from the Company to me at any time of the
decision of the Board to terminate my employment hereunder other than under
Section 4(a), 4(b) or 4(c); or
-2-
<PAGE>
(e) written notice from me to the Board at any time of my
decision to terminate my employment hereunder.
5. Resignation for Constructive Termination.
(a) This Section 5 shall be effective if and only if, I resign my
tenured professorship at the University of Hamburg in order to comply with the
requirements of Section 4(c)(vii).
(b) Upon my discovery of the occurrence of any Constructive
Termination Event (as defined in Section 5(c) below), which occurs during the
term of my employment hereunder following or within six (6) months prior to a
Change in Control (as defined in Section 5(d) below), I shall be entitled to
regard my employment as being constructively terminated and shall have the right
to resign within ninety (90) days of my discovery of such Constructive
Termination Event if it occurs after a Change in Control or, if the Constructive
Termination Event occurs prior to a Change in Control, I shall be entitled to
resign within ninety (90) days after the Change in Control. In the event I
resign pursuant to this Section 5, I shall be entitled to receive all severance
pay and other benefits provided under Section 6 of this Agreement, as if the
Company had terminated my employment pursuant to Section 4(d) above.
(c) For purposes of this Agreement, the term "Constructive
Termination Event" shall mean each of the following events;
(1) Without my express written consent, I am assigned any
duties materially inconsistent with my position, duties, responsibilities and
status as an employee of the Company immediately prior to the Change in Control
or my subsequent removal from or any failure to re-elect me to any such
position;
(2) Without my express written consent, the termination
and/or material reduction in my facilities (including office space and general
location) and staff reporting and available to me immediately prior to the
Change in Control;
(3) A material reduction by the Company of my total
compensation as in effect prior to the Change in Control;
(4) The failure by the Company to maintain any of the
employee benefits to which I was entitled prior to the Change in Control at a
level substantially equal to or greater than the value of those employee
benefits in effect prior to a Change in Control through the continuation of the
same or substantially similar plans, programs and policies; or the taking of any
action by the Company or its affiliates which would materially affect my
participation in or reduce my benefits under any such plans, programs or
policies, or deprive me of any material fringe benefits enjoyed by me prior to
the Change in Control;
(5) The failure by the Company to provide me with at least
substantially the same number of paid vacation days and sick leave to which I
would have been entitled to prior to the Change in Control;
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<PAGE>
(6) The Company or any affiliate requiring me to be based
anywhere other than within San Diego County, California, except for required
travel on the Company's or affiliate's business to an extent substantially
consistent with my business travel obligations before the Change in Control;
(7) Any purported termination of my employment by the
Company or the Board other than pursuant to Sections 4(a), 4(b) or 4(c).
In determining whether a Constructive Termination Event has occurred, I
will be deemed to have, immediately prior to the Change in Control, the most
senior position and the duties and responsibilities of greatest scope and
authority held by me, the maximum facilities and staff reporting and available
to me, and the maximum compensation, benefits, vacation and sick leave, at any
time during the six months preceding the Change in Control.
(d) For the purposes of this Agreement, the term "Change in
Control" shall mean (i) a merger or consolidation of the Company with or into
any other entity as a result of which the shareholders of the Company
immediately prior to such event hold less than a majority in voting power of the
outstanding shares of voting securities of the surviving entity immediately
following such event, (ii) a sale of issued and outstanding capital stock of the
Company as a result of which the shareholders of the Company immediately prior
to such sale hold less than a majority in voting power of the outstanding shares
of voting securities of the Company immediately following such sale, or (iii) a
sale of all or substantially all of the assets of the Company.
6. Payment After Termination. Following termination of my employment, all
payments and benefits provided to me under this Agreement shall cease as of the
date of such termination, except that (a) I shall be entitled to any benefits
and distributions payable to terminated employees generally under the Company's
retirement plan, if any, or other benefit plans in accordance with the terms of
such plans, and (b) the event my employment is terminated by the Company
pursuant to Section 4(d), then for the "Severance Pay Period" (as hereafter
defined): (i) the Company shall pay me severance pay at the same rate as my
salary at the effective date of such termination, such payments to be made at
the same time as my salary otherwise would have been payable, and (ii) if and to
the extent that following such termination of employment I and my family members
are eligible to continue to be covered under the Company's group health
insurance plan in effect at the time of such termination of employment, if any,
the Company shall pay the premiums for such insurance coverage on my behalf and,
if I and my family members are not eligible to continue to be covered under such
group health insurance plan of the Company, the Company shall pay an equivalent
amount toward the premium for any independent health coverage for me and my
family members that I may obtain. The Company shall have no obligation to obtain
such independent health coverage for me or my family members. The term
"Severance Pay Period" shall mean the period commencing on the effective date of
the termination of my employment under Section 4(d) and ending on the earlier to
occur of my commencement of full-time employment for another employer or the
date one year after such effective date. As a condition to the Company's
obligation to make such payments to me or an my behalf during the Severance Pay
Period I will be available to consult with the Company on such matters as the
Company may reasonably request without the payment
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<PAGE>
of additional compensation to me by the Company and will promptly notify the
Company if I commence employment with another employer.
7. Employee Performance. I shall use my best efforts to perform my
assigned duties diligently, loyally, conscientiously and with reasonable skill,
and shall comply with all reasonable and lawful rules, procedures and standards
promulgated from time to time by the Company with regard to my conduct and my
access to and use of the Company's property, equipment and facilities. Among
such rules, procedure and standards are those governing ethical and other
professional standards for dealing with customers, government agencies, vendors,
competitors, consultants, fellow employees, and the public-at-large, security
provisions designed to protect Company property and the personal security of
Company employees, rules respecting attendance, punctuality, and hours of work,
and rules and procedures designed to protect the confidentiality of proprietary
information. The Company agrees to make reasonable efforts to inform me of such
rules, standards and procedures as are in effect from time to time.
8. The Company's Management Rights. The Company retains its full
management prerogatives and discretion to manage and direct its business
affairs, including the adoption, amendment or modification of research,
development, production or marketing decisions as it sees fit, notwithstanding
any individual interest in or expectation I may have regarding a particular
business program or product.
9. Customer Lists and Employees. I agree that I shall not for a period of
one (1) year immediately following the termination of my employment with the
Company for any reason, whether with or without cause, either directly or
indirectly: (1) call on, solicit, or take away any of the customers of the
Company on whom I called or with whom I became acquainted or bad any personal
contact during my employment with the Company, either for myself or for any
other person or entity, or (2) solicit or take away, or attempt to solicit or
take away any employees of the Company, either for myself or for any other
person or entity.
10. Unauthorized Disclosure of Confidential Information. While employed
by the Company and thereafter, I shall not, directly or indirectly, use any
Confidential Information (as hereinafter defined) other than pursuant to my
employment by and for the benefit of the Company, or disclose to anyone outside
of the Company any such Confidential Information. The term "Confidential
Information" as used throughout this Agreement shall mean all trade secrets,
proprietary information and other data or information (and any tangible
evidence, record or representation thereof), whether prepared, conceived or
developed by an employee of the Company (including myself) or received by the
Company from an outside source, which is in the possession of the Company
(whether or not the property of the Company), which in any way relates to the
present or future business of the Company, which is maintained in confidence by
the Company, or which might permit the Company or its customers to obtain a
competitive advantage over competitors who do not have access to such trade
secrets, proprietary information, or other data or information. Without limiting
the generality of the foregoing, Confidential Information shall include:
(a) any idea, improvement, invention innovation, development,
technical data, design, formula, device, pattern, concept, art, method, process,
machine, manufacturing method, composition of matter, computer program,
software, firmware, source code, object code,
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<PAGE>
algorithm subroutine, object module, schematic, model, diagram, flow chart, chip
masking specification, user manual, training or service manual, product
specification, plan for a new or revised product, compilation of information, or
work in process, and any and all revisions and improvements relating to any of
the foregoing (in each case whether or not reduced to tangible form); and
(b) the name of any customer, employee, prospective customer or
consultant, any other customer or prospective customer information, any sales
plan, marketing material plan, or survey, business plan or opportunity, product
or development plan or specification, business proposal, financial record, or
business record or other record or information relating to the present or
proposed business of the Company or any customer.
Notwithstanding the foregoing, the term Confidential Information shall not
apply to information which the Company has voluntarily disclosed to the public
without restriction, which has otherwise lawfully entered the public domain,
which was known to me prior to its disclosure to me by the Company, or which was
disclosed to me by a third party without breach of any obligation of
confidentiality.
I understand that the Company from time to time has in its possession
information which is claimed by customers and others to be proprietary and which
the Company has agreed to keep confidential. I agree that all such information
shall be Confidential Information for purposes of this Agreement.
11. All Developments the Property of the Company. I agree that all
originals and all copies of all manuscripts, drawings, prints, manuals,
diagrams, letters, notes, notebooks, reports, models, records, files, memoranda,
plans, sketches and all other documents and materials containing, representing,
evidencing, recording, or constituting any Confidential Information (as defined
in Section 10, above), however and whenever produced (whether by myself or
others), shall be the sole property of the Company, except those identified in
Exhibit C.
- ---------
I agree that all Confidential Information and an other discoveries,
inventions, ideas, concepts, research and other information, processes,
products, methods and improvements, or parts thereof (including without
limitation all inventions, discoveries, and innovations with regard to physics,
chemistry, enzymology, biology, biotechnology, genetic engineering or
recombinant DNA) conceived, developed, or otherwise made by me, alone or jointly
with others and in any way relating to the Company's present or proposed
products, programs or services or to tasks assigned to me during the course of
my employment, whether or not patentable or subject to copyright protection and
whether or not reduced to tangible form or reduced to practice, during the
period of my employment with the Company, whether or not made during my regular
working hours, and whether or not made on the Company's premises, and whether or
not disclosed by me to the Company (hereinafter referred to as "Developments")
shall be the sole property of the Company. I agree to, and hereby do, assign to
the Company all my right, title and interest throughout the world in and to all
Developments and to anything tangible which evidences, incorporates,
constitutes, represents or records any such Developments. I agree that all such
Developments shall constitute works made for hire under the copyright laws of
the United States and hereby assign and, to the extent any such assignment
cannot be made at present, I hereby agree to assign to the Company all
copyrights, patents and other proprietary
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<PAGE>
rights I may have in any such Developments, together with the right to file for
and/or own wholly without restriction United States and foreign patents,
trademarks, and copyrights. I agree to waive, and hereby waive, all moral rights
or proprietary rights in or to any Developments and to the extent that such
rights may not be waived, agree not to assert such rights against the Company or
its licensees, successors or assigns.
12. Employee's Obligation to Keep Records. I shall make and maintain
adequate and current written records of all Developments, which records shall be
available to and remain the property of the Company at all times. I shall
disclose all Developments promptly, fully and in writing to the Company
immediately upon production or development of the same and at any time upon
request.
13. Exceptions to this Agreement. I hereby certify that I have informed
the Company in writing of any and all continuing obligations to any previous
employers which require me not to disclose to the Company any information and
that Exhibit C sets forth any and all Confidential Information or Developments
---------
which I claim as my own or otherwise intend to exclude from this Agreement
because it was developed by me prior to the date of this Agreement. I understand
that after execution of this Agreement I shall have no right to exclude
Confidential Information or Developments from this Agreement.
14. Employee's Obligation to Cooperate. I will, at any time during my
employment, or after it terminates, on request of the Company, execute all
documents and perform all lawful acts which the Company considers necessary or
advisable to secure its rights hereunder and to carry out the intent of this
Agreement. Without finding the generality of the foregoing, I will assist the
Company in any reasonable manner to obtain for its own benefit patents or
copyrights in any and all countries with respect to all Developments assigned
pursuant to Section 11, and I will execute, when requested, patent and other
applications and alignments thereof to the Company, or persons designated by it,
and any other lawful documents deemed necessary by the Company to carry out the
purposes of this Agreement, and I will further assist the Company in every way
to enforce any patents and copyrights obtained, including, without limitation,
testifying in any suit or proceeding involving any of said patents or copyrights
or executing any documents deemed necessary by the Company, all without further
consideration than provided for herein. The Company shall advance all reasonable
out-of-pocket expenses of my assistance under this Section 14 requested by the
Company.
15. Return of Property. If I cease to be employed by the Company, or at
any other time upon request of the Company, I shall return promptly any and all
customer or prospective customer lists, other customer or prospective customer
information or related materials, computer programs, specifications, drawings,
blueprints, data storage devices, reproductions, sketches, notes, memoranda,
reports, records, proposals, business plans, or copies of them, other documents
or materials, tools, equipment, or other property belonging to the Company or
its customers which I may then possess or have under my control. I further agree
that upon termination of my employment that I shall not take with me any
documents or data of any description containing or pertaining to Confidential
Information or Developments.
If requested to do so by the Company, I agree to sign a Termination
Certificate in which I confirm that I have complied with the requirements of the
preceding paragraph and that I am
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<PAGE>
aware that certain restrictions imposed upon me by this Agreement continue after
termination of my employment. I understand, however, that my rights and
obligations under this Agreement will continue even if I do not sign a
Termination Certificate.
16. Other Obligations. I acknowledge that the Company from time to time
may have agreements with other persons including the government of the United
States or other countries and agencies thereof, which impose obligations or
restrictions on the Company regarding inventions made during the course of work
thereunder or regarding the confidential nature of such work. I agree to be
bound by all such obligations and restrictions of which I am aware and to take
all action necessary to discharge the obligations of the Company thereunder.
17. Miscellaneous.
(a) This Agreement contains the entire and only agreement between
me and the Company with respect to the subject matter hereof, superseding any
previous oral or written communications, representations, understandings, or
agreements with the Company or any officer or representative thereof, including
without limitation the Executive Employment Agreement between me and the Company
dated April 1, 1994 and the Consulting Agreements between me and the Company
dated April 1, 1994 and September 6, 1996. In the event of any inconsistency
between this Agreement and any other agreements between me and the Company, the
provisions of this Agreement shall prevail.
(b) In the event of any termination of my employment with the
Company, regardless of the manner of or reasons for such termination, my
obligations under Sections 9, 10, 11, 12, 14, 15, 16 and 17 and the Company's
obligations under Section 6 shall survive such termination. My obligations under
this Agreement shall be binding upon my heirs, assigns, executors,
administrators and representatives, and the provisions of this Agreement shall
inure to the benefit of and be binding on the successors and assigns of the
Company.
(c) If any provision of this Agreement shall be determined to be
unenforceable by any court of competent jurisdiction by reason of its extending
for too great a period of time or over too large a geographic area or over too
great a range of activities, it shall be interpreted to extend only over the
maximum period of time, geographic area or range of activities as to which it
may be enforceable. If, after application of the immediately preceding sentence,
any provision of this Agreement shall be determined to be invalid, illegal or
otherwise unenforceable by any court of competent jurisdiction, the validity,
legality and enforceability of the other provisions of this Agreement shall not
be affected thereby. Except as otherwise provided in this paragraph, any
invalid, illegal or unenforceable provision of this Agreement shall be
severable, and after any such severance, all other provisions hereof shall
remain in full force and effect.
(d) I recognize that money damages alone would not adequately
compensate the Company in the event of breach by me of this Agreement, and I
therefore agree that, in addition to all other remedies available to the Company
at law or in equity, the Company shall be entitled to injunctive relief to
restrain any such breach and to enforce the provisions hereof, without showing
or proving any actual damage to the Company.
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<PAGE>
(e) No failure by either party to insist upon strict compliance
with any of the terms, covenants, or conditions hereof and no delay or omission
by either party in exercising any right under this Agreement, will operate as a
waiver of such terms, covenants, conditions or rights. A waiver or consent given
by either party on any one occasion is effective only in that instance and will
not be construed as a bar to or waiver of any right on any other occasion.
(f) This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or in part, except by an
instrument in writing signed by me and the Company.
(g) This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of California, without regard
to its principles of conflicts of laws.
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<PAGE>
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
Date: 22 Dec, 1997 EMPLOYEE
------
Hubert Koster
/s/ Hubert Koster
--------------------
Employee's Signature
Address: 8636 C Via Mallorca Dr.
-----------------------
La Jolla, CA 92037
-------------------
Accepted:
SEQUENOM, INC.
By: /s/ (Illegible)
----------------
Title: Chairman of the Board
---------------------
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EXHIBIT A
With respect to Section 2 of the Employment Agreement the following activities
are being performed with the consent of the Company:
1) Supervision of some Ph.D. students at the University of Hamburg. No new
Ph.D. students are being accepted.
2) Supervision of grants of joint projects between Sequenom supported by the
BMBF (Ministry of Research and Technology, Bonn) and/or the State of
Hamburg. One grant currently runs until August 31, 1998 and another grant
together with the University of Munster (Hillenkamp) is in preparation.
3) Consultancy/member of the scientific advisory board of Hybridon (currently
silent), the Biotage Division of Dyax Corporation, both in Boston and
Eppendorfer Geratebau, Hamburg.
4) Continuation of being an Adjunct Professor at Boston University and having
affiliations with universities in Hamburg, Boston and/or San Diego.
<PAGE>
EXHIBIT 10.44
STANDARD INDUSTRIAL GROSS LEASE
This STANDARD INDUSTRIAL GROSS LEASE ("Lease") is entered into as of December
12, 1996, by and between Sorrento Business Complex, a Limited Partnership
("Landlord"), and Sequenom, Inc., a California Corporation ("Tenant").
1. BASIC LEASE TERMS.
The basic terms of the Lease set forth in this Article 1 shall be read in
conjunction with the other Articles of this Lease, which define and explain the
basic terms.
1.1 Address for Notice (see Section 24.19):
Landlord: 11750 Sorrento Valley Road
San Diego, CA 92121
Tenant: At the Premises, or
----------------
Address for Tenant other than at the Premises (required):
-------------------------------------------------------------
-------------------------------------------------------------
1.2 Description of Premises:
Center Name: Sorrento Business Complex
Address: 11555 Sorrento Valley Road
San Diego, CA 92121
Suite/Unit: see Exhibit "A"
Approximate Rentable Square Footage (see Exhibit "A"): 11,971
1.3 Commencement Date: April 1, 1997.
1.4 Lease Term (see Article 3): Approximately three (3) years and -0- months,
beginning on the Commencement Date and ending on the last day of the
calendar month of March, 2000 (the "Expiration Date").
1.5 Minimum Monthly Rent: $12,000.00 per month for the first Lease Year, as
provided in Article 4. The Minimum Monthly Rent shall be increased on the
first day of the second Lease Year and each Lease Year thereafter to be
fixed as follows: 4/l/98 - 3/31/99 - $18,585 per month; 4/l/99 - 3/31/2000
- $19,235 per month.
1.6 Security Deposit: $12, 000.00 (see Article 5).
1.7 Base Years:
(a) Base Year for Real Property Taxes (paid by Landlord): Tax Year 1996 -
1997 (see Article 8).
<PAGE>
(b) Base Year for Insurance Premiums (paid by Landlord): 1997 (see
Article 9).
1.8 Permitted Use (see Article 11): the legal office, research and
development, storage and science related uses associated with a
biotechnology company and for no other use.
1.9 Tenant's Guarantor (if none, so state): none
1.10 Tenant's Parking Spaces (Unassigned) (see Section 11.6): thirty-six (36)
1.11 Landlord's Broker (if none, so state): Asset Management Group
Tenant's Broker (if none, so state): John Burnham & Company
1.12 Additional Provisions: The following additional provisions are attached
to and made a part of this Lease (if none, so state): First Addendum
1.13 Exhibits: The following Exhibits are attached to and made a part of this
Lease:
Exhibit "A" Description of Premises
Exhibit "B" Rules and Regulations
Exhibit "C" Sign Criteria
2. LEASE OF PREMISES.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
the premises (the "Premises") described in Section 1.2, which are indicated on
the site/floor plan attached as Exhibit "A". The Premises are part of the
office or industry center identified in Section 1.2 (the "Center"). The
approximate Rentable Square Footage identified in Section 1 ___________
measurement of the net leasable floor area of the Premises, as determined by
Landlord and applied on a consistent basis throughout the Center.
3. LEASE TERM.
3.1 Commencement. The term of this Lease (the "Lease Term") shall
commence on the Commencement Date stated in Section 1.3 and shall continue for
the period stated in Section 1.4, unless sooner terminated pursuant to any
provision of this Lease.
3.2 Delay In Commencement. If Landlord cannot deliver possession of the
Premises to Tenant on the Commencement Date specified in Section 1 .3 for any
reason, Landlord shall not be subject to any liability therefor. Such non-
delivery shall not affect the validity of this Lease nor the obligations of
Tenant hereunder. However: (a) Tenant shall not be obligated to pay rent until
possession of the Premises is delivered to Tenant, (b) if possession of the
Premises is not delivered to Tenant within thirty (30) days of the Commencement
Date, the last day of the Lease Term shall be extended by the total number of
days that possession is so delayed, plus the minimum number of additional days
necessary to make the Expiration Date the last day of a calendar month, and (c)
if Landlord has not delivered possession of the Premises within ninety (90) days
after the Commencement Date, Tenant may elect to terminate this Lease by
delivering written notice to Landlord within ten (10) days thereafter, in which
event the parties shall be discharged from all further obligations hereunder.
3.3 Early Occupancy. If Tenant occupies the Premises prior to the
Commencement Date, such occupancy shall be subject to all provisions of this
Lease. Such occupancy shall not advance the Expiration Date.
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<PAGE>
4. RENT.
4.1 Minimum Monthly Rent. Tenant shall pay minimum monthly rent ("Minimum
Monthly Rent") in the initial amount stated in Section 1.5, which amount shall
be subject to increase as provided in Sections 1.5 and 4.3. Tenant shall pay the
Minimum Monthly Rent on or before the first day of each calendar month, in
advance, at the office of Landlord or at such other place designated by
Landlord, without deduction, offset or prior demand. If the Commencement Date
is not the first day of a calendar month, the rent for the partial month at the
beginning of the Lease Term shall be prorated on a per diem basis and shall be
due on the first day of such partial month.
4.2 Lease Year. As used in this Lease, the term "Lease Year" means (i)
the first period of twelve full calendar months following the Commencement Date
(including, if the Commencement Date is not the first day of a calendar month,
the period between the Commencement Date and the next first day of the month),
(ii) each period of twelve full calendar months thereafter, and(iii) any
remaining period at the end of the Lease Term of less than twelve full calendar
months.
4.3 Deleted.
4.4 Additional Rent. All charges payable by Tenant in addition to Minimum
Monthly Rent shall constitute Additional Rent to Landlord. All remedies
available to Landlord for nonpayment of rent shall be available for nonpayment
of any such Additional Rent. Unless this Lease provides otherwise, all
Additional Rent shall be paid by Tenant, without limitation or offset, within
fifteen (15) days after Tenant's receipt of a statement from Landlord.
Additional Rent includes, without limitation, Maintenance and Repairs (see
Article 7), excess Real Property Taxes (see Article 8), excess insurance costs
(see Article 9), Utilities (see Article 10), and attorneys' fees and costs (see
Article 24). All Minimum Monthly Rent, Additional Rent, and all other charges
and monetary amounts due Landlord from Tenant hereunder shall constitute rent.
4.5 Impounds. Landlord shall have the right, but not the obligation, to
collect and impound, in advance, any or all components of Real Property Taxes
and insurance costs based upon Landlord's reasonable estimate of Tenant's future
liability or such amounts under this Lease. Landlord shall initially establish
the monthly amount of such impound ("Monthly Impound Payments"), based upon its
estimate of one-twelfth of Tenant's annual liability therefor. Landlord shall
have the right, at any time during the Lease Term, to adjust the amount of the
Monthly Impound Payment upon notice to Tenant. The Monthly Impound Payment
shall be due and payable on the first day of each month throughout the Lease
Term. Any failure to pay the Monthly Impound Payment when due shall be an Event
of Default under this Lease and shall entitle Landlord to exercise any or all of
its remedies available in the same manner as the failure to pay rent, including
the imposition of late charges and interest, and the right of Landlord to
require that future payment of the Monthly Impound Payments be made by cashier's
check. Upon the occurrence of any Event of Default by Tenant hereunder,
Landlord shall have the right to apply all unapplied amounts of Monthly Impound
Payments to Tenant's default. Within ninety (90) days after the end of each
calendar year, Landlord shall deliver to Tenant an accounting of Tenant's actual
liability for Real Property Taxes and insurance costs and the estimated amounts
paid by Tenant. Any overpayment by Tenant shall be credited against next
Monthly Impound Payments due hereunder, or, at Landlord's option, shall be
remitted to Tenant forthwith. Tenant shall pay the amount of any underpayment
within fifteen (15) days after receipt of the accounting. Tenant acknowledges
that the Monthly Impound Payments are
3
<PAGE>
estimates only and not a representation or the amount of Tenant's ultimate
liability for Real Property Taxes and insurance costs.
5. SECURITY DEPOSIT.
Upon execution of this Lease, Tenant shall deposit with Landlord the amount
specified in Section 1.6 (the "Security Deposit"), to be held by Landlord,
without liability for interest, as security for Tenant's performance of its
obligations under this Lease. Landlord shall not be required to keep the
Security Deposit separate from its other accounts. Landlord may apply all or a
part of the Security Deposit to any unpaid rent or other monetary payments due
from Tenant (including unpaid Additional Rent or Monthly Impound Payments) or to
cure any other default of Tenant hereunder and to compensate Landlord for all
damage and expense sustained as a result of such default. If all or any portion
of the Security Deposit is so applied, Tenant shall deposit cash sufficient to
restore the Security Deposit to its original amount within fifteen (15) days
after receipt of Landlord's written demand. If Tenant fully and faithfully
performs each of its obligations under this Lease, the Security Deposit or any
balance thereof shall be returned to Tenant within 30 days of the later of the
expiration or earlier termination of this Lease or the vacation of the Premises
by Tenant. At Landlord's request, Tenant shall accompany Landlord or Landlord's
representative on a "walk-through" of the Premises prior to Landlord's return of
the Security Deposit.
6. COMMON FACILITIES.
"Common Facilities" means all areas, facilities, utilities, equipment and
services provided by Landlord for the common use or benefit of the occupants of
the Center, and their employees, agents, customers and other invitees, including
without limitation: building lobbies, common corridors and hallways, restrooms,
pedestrian walkways, driveways and access roads, access facilities for disabled
persons (including elevators), truck serviceways, loading docks, garages,
driveways, parking lots, landscaped areas, stairways, elevators, retaining
walls, all areas required to be maintained under the conditions of governmental
approvals for the Center, and other generally understood public or common areas.
Landlord reserves the right to relocate, alter, improve, or adjust the size and
location of any Common Facilities from time to time without liability to Tenant.
7. MAINTENANCE AND REPAIRS.
7.1 Tenant's Obligations. Except as provided in Section 7.2 and the
Addendum; Tenant shall keep the Premises in good order, condition and repair
during the Lease Term, including without limitation: all nonstructural,
interior, exterior, and landscaped areas, all heating, ventilation and air
conditioning systems and equipment exclusively serving the Premises; all glass,
glazing, windows, window moldings, partitions, doors and door hardware; all
interior painting; all fixtures and appurtenances in the Premises or exclusively
serving the Premises including electrical, lighting and plumbing fixtures; and
all other portions of the Premises seen or unseen. Tenant shall replace at its
sole cost and expense any of the systems and other portions of the Premises for
which it is responsible hereunder during the Lease Term, if necessary. Tenant
shall promptly replace any portion of the Premises or system or equipment
exclusively serving the Premises in the Premises which cannot be fully repaired,
regardless of whether the benefit of such replacement extends beyond the Lease
Term. If any heating and air conditioning system or equipment exclusively
serves the Premises, Tenant shall additionally obtain and keep in force a
preventive maintenance contract providing for the regular (at least quarterly)
inspection and maintenance of the heating and air conditioning system (including
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leaks around ducts, pipes, vents, and other parts of the air conditioning) by a
reputable licensed heating and air conditioning contractor acceptable to
Landlord. Prior to April 1 of each calendar year, Tenant shall deliver Landlord
written confirmation from such contractor verifying that such a contract has
been entered into and that the required service will be provided.
Notwithstanding the foregoing, Landlord shall have the right, upon written
notice to Tenant, to undertake the responsibility for preventive maintenance and
repair of the heating and air conditioning system, at Tenant's sole cost and
expense.
7.2 Landlord's Obligations. Landlord shall repair and maintain the Common
Facilities, and the roof, the foundations and structural portions of the
Premises and any building of which the Premises are a part. Provided, however,
that except to the extent paid for by insurance proceeds Tenant shall pay the
(a) the full amount of any maintenance and repairs necessitated by any act,
omission, conduct or activity of, or beach of this lease by, Tenant or any of
Tenant's officers, agents, customers or invitees (plus fifteen percent (15%) of
the cost thereof to reimburse Landlord for overhead), and (b) any maintenance
and repairs necessitated by breaking and entering of the Premises. Tenant shall
pay the cost of such required repairs, as Additional Rent, within
fifteen(l5)days after receipt of a statement from Landlord. There shall be no
abatement of rent, and no liability of Landlord, by reason of any injury to or
interference with Tenant's business arising from the making of any repairs, to
any portion of the Premises or the Center. Except as provided in Article 16
(Damage and Destruction) and Article 17 (Condemnation), Landlord shall have
absolutely no other responsibility to repair, maintain or replace any portion of
the Premises at any time. Tenant waives the right to make repairs at Landlord's
expense under California Civil Code Section 1942, or under any other law,
statute or ordinance now or hereafter in effect. Landlord's obligations under
this Section are not intended to alter or modify in any way the provisions of
Article 12.
7.3 Performance By Landlord. If Tenant refuses or neglects to perform its
maintenance obligations hereunder to the reasonable satisfaction of Landlord,
Landlord shall have the right (but not the obligation), upon ten (10) days'
prior notice to Tenant, to enter the Premises and perform such repairs and
maintenance on behalf of Tenant. Landlord shall also have the right (but not
the obligation), without prior notice to Tenant, to correct or remove any
dangerous or hazardous condition or to repair the heating, ventilation, air-
conditioning and plumbing systems and broken glass or glazing if Tenant fails to
correct or repair the same within 24 hours after the need arises. Landlord
shall not be liable to Tenant for any loss or damage to Tenant's merchandise,
fixtures, or other property or to Tenant's business in connection with
Landlord's performance hereunder, and Tenant shall pay Landlord's costs plus
fifteen percent (15%) of such amount for overhead, upon presentation of a
statement therefor, as Additional Rent. Tenant shall also pay interest at the
rate provided in Section 22.4 from the date of completion of repairs by Landlord
to the date paid by Tenant.
8. REAL PROPERTY TAXES.
8.1 Payment of Excess Real Property Taxes by Tenant. Tenant shall pay all
Real Property Taxes applicable to the Premises during the Lease Term that
exceed, during any tax year the Real Property Taxes for the Base Year identified
in Section 1.7. If the Premises are not separately assessed, a share of the tax
bill that includes the Premises shall be allocated to the Premises. Such share
shall be equitably determined by Landlord based upon the Rentable Square Footage
of the Premises compared to the total Rentable Square Footage covered by the tax
bill, the respective valuations assigned in the assessor's worksheet, or other
reasonably available information. Tenant shall pay such obligation for excess
Real Property Taxes to
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Landlord, to the extent such obligation exceeds any amount thereof impounded
under Section 4.5, within fifteen (15) days after receipt of a statement from
Landlord.
8.2 Real Property Taxes Defined. "Real Property Taxes" means all taxes,
assessments, levies, fees and other governmental charges levied on or
attributable to the Premises or any part thereof, including without limitation:
(a) real property taxes and assessments levied with respect to all or a portion
of the Premises, (b) assessments, charges and fees charged by governmental
agencies or districts for services or facilities provided to the Premises, (c)
transfer, transaction, rental, gross receipts, license or similar taxes or
charges measured by rent received by Landlord, excluding any federal or state
income, franchise, estate or inheritance taxes of Landlord, (d) taxes based upon
a reassessment of the Premises due to a transfer or change of ownership, and (e)
any assessment, charge or fee that is a substitute in whole or in part for any
tax now or previously included within the definition of Real Property Taxes. If
Landlord elects to contest an assessment of any Real Property Taxes, Landlord
shall have the right to recover its actual costs of such contest (including
attorneys' fees and costs) as part of Real Property Taxes, but only to the
extent such contest has resulted in a reduction of Real Property Taxes. Tenant
shall not be entitled to the benefit of any reduction, refund, rebate or credit
accruing or payable to Landlord prior to the commencement of or after the
expiration or other termination of the Lease Term.
8.3 Personal Property Taxes. Tenant shall pay prior to delinquency all
taxes charged against trade fixtures, furnishings, equipment or any other
personal property belonging to Tenant. Tenant shall attempt to have such
personal property taxed separately from the Premises. If any such taxes on
Tenant's personal property are levied against Landlord or the Premises, or if
the assessed value of the Premises is increased by inclusion of a value placed
upon such personal property of Tenant, then: (a) Landlord, after written notice
to Tenant, shall have the right to pay the taxes levied against Landlord, or the
taxes based upon such increased valuation, but under protest if so requested by
Tenant in writing, and (b) Tenant shall pay to Landlord the taxes levied against
Landlord, or the taxes resulting from such increased valuation, within fifteen
(15) days after Tenant's receipt of written statement from Landlord.
9 INSURANCE.
9.1 All Risk Coverage. During the Lease Term, Landlord shall maintain
insurance covering loss or damage to the Premises (excluding Tenant's
Alterations, fixtures, equipment and personal property), insuring against any or
all risks of physical loss (and including, at Landlord's option, flood and
earthquake coverage), with the scope and amounts of such coverage as determined
by Landlord. Said insurance shall provide for payment of loss thereunder to
Landlord or to the holder of a first mortgage or deed of trust on the Premises.
Landlord shall also maintain during the Lease Term, at Tenant's expense, a
policy of rental income insurance covering a period of one year, with loss
payable to Landlord.
9.2 Tenant's Personal Property and Fixtures. Tenant shall at all times
maintain insurance against any or all risks of physical loss in an amount
adequate to cover the cost of replacement of all of Tenant's Alterations, trade
fixtures, equipment and personal property. Such policy shall be issued by an
insurance company approved by Landlord, shall name Landlord and Landlord's
lender as additional insureds, and shall provide that no cancellation or
reduction in coverage shall be effective until thirty (30) days after written
notice to Landlord and Landlord's lender. Tenant shall deliver a certificate
evidencing such insurance to Landlord and a renewal or binder at least twenty
(20) days prior to expiration. Tenant acknowledges that Landlord's insurance is
not intended to cover Tenant's Alterations, trade fixtures, equipment, and
personal
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property. Provided, however, insurance required of it, that Landlord may obtain
at Tenant's expense any or all of the insurance described in this Section.
9.3 Tenant's Liability Insurance. Tenant shall, at Tenant's sole cost and
expense, provide comprehensive general liability insurance, fully covering and
indemnifying Landlord and Landlord's officers, directors, shareholders,
partners, principals, employees, agents, representatives, and other related
entities and individuals (together with, at Landlord's election, Landlord's
lender), as additional insureds, against any and all claims arising from
personal injury, death, and/or property damage occurring in or about the
Premises or the Center during the period of Tenant's possession (actual and/or
constructive) at the Premises. The initial limits of such insurance shall be at
least $2,000,000 combined single liability limit if the Rentable Square Footage
of the Premises (as indicated in Section 1.2) exceeds 3,000 square feet, or
$1,000,000 combined single liability limit if such Rentable Square Footage is
3,000 square feet or less. Such limits shall be subject to periodic increase,
at Landlord's option, based upon inflation, increased liability awards, lender
requirements, the recommendations of Landlord's professional insurance advisors,
and other relevant factors. Such liability insurance limits shall be subject to
periodic increase, at Landlord's election, based upon inflation, increased
liability awards, lender requirements, the recommendations of Landlord's
professional insurance advisors, and other relevant factors. Tenant shall also,
at its sole cost and expense, obtain workers' compensation insurance for the
protection of its employees such as will relieve Landlord of all liability to
such employees for any and all accidents that may arise on or about the Premises
or the Center. All insurance required to be carried by Tenant shall be primary
and noncontributory to any insurance carried by Landlord, regardless of the
absence of negligence or other fault of Tenant for alleged injury, death and/or
property damage. Each policy of insurance required to be carried by Tenant
hereunder shall: (a) contain cross-liability and contractual liability
endorsements, (b) provide that no cancellation or reduction in coverage shall be
effective until thirty (30) days after written notice to Landlord and Landlord's
lender, (c) be issued by an insurer licensed in California and reasonably
approved by Landlord, and (d) shall insure Tenant's performance of the indemnity
provisions of Article 13, but the amount of such insurance shall not limit
Tenant's liability nor relieve Tenant of any obligation hereunder. Prior to the
Commencement Date, Tenant shall deliver a certificate evidencing all such
insurance to Landlord. Tenant shall deliver a renewal binder of such policy at
least thirty (30) days prior to expiration thereof. Tenant shall, at Tenant's
expense, maintain such other liability insurance as Tenant deems necessary to
protect Tenant. Tenant shall be in material breach of this Lease if Tenant
fails to obtain the insurance required under this Section, or if Tenant obtains
insurance with terms, conditions and/or exclusions that are inconsistent with
the requirements and terms of this Lease.
9.4 Payment of Insurance Premium Increases and Deductibles. Tenant shall
pay directly all premiums for its liability insurance required under Section
9.3, for its personal property insurance to be carried by Tenant as required
under this Article, and for all other insurance Tenant elects to carry. Tenant
shall pay the premiums for the insurance to be carried or obtained by Landlord
as required under this Article in excess of the premiums payable during the Base
Year described in Section 1.7(b), whether such increase is the result of lender
requirements, increased valuation of the Premises, or general rate increases.
If the Lease Term expires before the expiration of any such insurance policy,
Tenant's liability for premiums shall be prorated on an annual basis. Tenant
shall pay such obligation for excess insurance premiums to Landlord, to the
extent such obligation exceeds any amount thereof impounded under Section 4.5,
within fifteen (15) days after receipt of a statement from Landlord. If any
insurance policy
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maintained by Landlord covers improvements or real property other than the
Premises, Landlord shall reasonably determine the portion of the premiums
applicable to the Premises, and Tenant shall pay such its share thereof of the
excess thereof as provided in this Section. In addition, Tenant shall pay the
full amount of any deductible amount under Landlord's insurance policies, or
where applicable its share thereof as equitably determined by Landlord, within
fifteen (15) days after receipt of a statement from Landlord.
9.5 Waiver of Subrogation. Each party waives all rights of recovery
against the other party, and its officers, employees, agents and representatives
for any claims for loss or damage to person or property caused by or resulting
from fire or any other risks insured against under any insurance policy in force
at the time of such loss or damage. Each party shall cause each insurance
policy obtained by it to provide that the insurer waives all rights of recovery
by way of subrogation against the other party in connection with any damage
covered by such policy.
9.6 Tenant's Use Not to Increase Premium. Tenant shall not keep, use,
manufacture, assemble, sell or offer for sale in or upon the Premises any
article that may be prohibited by, or that might invalidate, in whole or in
part, the coverage afforded by, a standard form of fire or all risk insurance
policy. Tenant shall pay the entire amount of any increase in premiums that may
be charged during the Lease Term for the insurance that may be maintained by
Landlord on the Premises or the Center resulting from the type of materials or
products stored, manufactured, assembled or sold by Tenant in the Premises,
whether or not Landlord has consented to the same. In determining whether
increased premiums are the result of Tenant's use of the Premises, a schedule
issued by the entity making the insurance rate on the Premises showing the
various components of such rate shall be conclusive evidence of the items and
charges that make up the fire insurance rate on the Premises.
9.7 Boiler and Machinery Coverage. At Landlord's option, Landlord may
maintain, at Tenant's expense, boiler broad form insurance, if applicable, in
the amount of One Hundred Fifty Thousand Dollars ($150,000) in the name of
Landlord. Tenant shall pay the premium therefor, or its share thereof equitably
determined by Landlord if the Premises are a part of a multi-tenant building.
10. UTILITIES.
Tenant shall pay the cost of all water, gas, heat, light, power, sewer,
telephone, refuse disposal, and all other utilities and services supplied to the
Premises. Tenant shall make payments for all separately metered utilities, when
due, directly to the appropriate supplier. Landlord shall have the right to
require Tenant to install, at Tenant's sole expense, separate meters for any
utility for which a separate meter is not installed as of the Commencement Date.
If any utilities or services are not separately metered to the Premises,
Landlord shall determine Tenant's equitable share thereof, based on rentable
square footage, intensity of use of any Utility, hours of operation, and such
other factors as Landlord deems relevant. Tenant shall pay its equitable share
of such utilities to Landlord, to the extent such obligation exceeds any amount
thereof impounded under Section 4.5, within fifteen (15) days after receipt of a
statement from Landlord. Landlord shall not be liable in damages or otherwise
for any failure or interruption of any utility service, and no such failure or
interruption shall entitle Tenant to terminate this Lease or abate the rent due
hereunder.
11. USE.
11.1 Permitted Use. The Premises shall be used and occupied only for the
permitted uses specified in Section 1.8. The Premises shall not be used or
occupied for any other purposes
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without the prior written consent of Landlord. Tenant shall provide such
information about such proposed use as may be reasonably requested by Landlord.
Landlord shall not unreasonably withhold or delay its consent to any requested
change of use, and shall have the right to impose reasonable restrictions on
such other use. Factors that Landlord may take into account in granting or
withholding its consent shall include, without limitation, whether the proposed
use is compatible with the character and tenant mix of the Center, whether the
proposed use poses any increased risk to Landlord or any other occupant of the
Center, whether any proposed Alterations to accommodate such proposed use might
decrease the rental or sale value of the Premises or the Center, and whether
Tenant has the requisite expertise and financial ability to successfully operate
in the Premises with the proposed use.
11.2 Compliance with Law and Other Requirements. Tenant shall not do or
permit anything to be done in or about the Premises in conflict with all laws,
ordinances, rules, regulations, orders, requirements, and recorded covenants and
restrictions applicable to the Premises, whether now in force or hereafter in
effect, including any requirement to make alterations or to install additional
facilities required by Tenant's specific occupancy or the conduct of Tenant's
specific business, and Tenant shall promptly comply with the same at its sole
expense.
11.3 Waste, Quiet Conduct. Tenant shall not use or permit the use of the
Premises in any manner that tends to create waste or a nuisance, that will cause
objectionable noise or odors, or that may disturb the quiet enjoyment of any
other tenant in the Center.
11.4 Rules and Regulations. Tenant shall comply with the Rules and
Regulations for the Center attached as Exhibit "B", as the same may be amended
by Landlord from time to time, upon notice to Tenant.
11.5 Signs. Tenant agrees, at Tenant's sole cost, to install a sign in
strict conformance with Landlord's sign criteria, attached hereto as Exhibit
"C", within fifteen (15) days after first occupying the Premises. Tenant shall
maintain all approved signs and other items described herein in good condition
and repair at all times. All signs must be fabricated by a contractor selected
by Landlord. Prior to construction of any such sign, a detailed drawing of the
proposed sign shall be prepared by the Landlord's contractor, at the sole
expense of Tenant, and submitted to Landlord and Tenant for written approval.
No sign, placard, pennant, flag, awning, canopy, or advertising matter of any
kind shall be placed or maintained on any exterior door, wall or window of the
Premises or in any area outside the Premises, and no decoration, lettering or
advertising matter shall be placed or maintained on the glass of any window or
door, or that can be seen through the glass, of the Premises without first
obtaining Landlord's written approval. All signs and sign cases shall be
considered fixtures and improvements and shall become the property of Landlord
upon expiration or termination of the Lease. Landlord shall have the right from
time to time after three (3) years after the Commencement Date to revise the
sign criteria, and within sixty (60) days after Tenant's receipt of written
notice of any new sign criteria, Tenant shall, at Tenant's expense, remove all
existing exterior signs and replace the same with new signs conforming to the
new sign criteria.
11.6 Parking. Tenant shall have the nonexclusive right, in common with
others, to use the parking areas of the Center; provided, however, that Tenant
shall not use more than the number of parking spaces designated in Section 1.10,
or if no number of such spaces is so indicated, Tenant shall not use more than
its reasonable share of parking spaces, as Landlord shall determine. Landlord
reserves the right, without liability to Tenant, to modify the parking
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areas, to designate the specific location of the parking for Tenant and Tenant's
customers and employees, and to adopt reasonable rules and regulations for use
of the parking areas.
11.7 Entry by Landlord. Tenant shall permit Landlord and Landlord's
agents to enter the Premises at all reasonable times for any of the following
purposes: (a) to inspect the Premises, (b) to supply any services or to perform
any maintenance obligations of Landlord, including the erection and maintenance
of such scaffolding, canopies, fences, and props as may be required, (c) to make
such improvements, replacements or additions to the Premises or the Center as
Landlord deems necessary or desirable, (d) to post notices of non -
responsibility, (e) to place any usual or ordinary "for sale" signs, or (e)
within six (6) months prior to the expiration of this Lease, to place any usual
or ordinary "for lease" signs. No such entry shall result in any rebate of rent
or any liability to Tenant for any loss of occupation or quiet enjoyment of the
Premises. Landlord shall give reasonable notice to Tenant prior to any entry
except in an emergency or unless Tenant consents at the time of entry. If
Tenant is not personally present to open and permit an entry into the Premises,
at any time when for any reason an entry therein shall be necessary by reason of
emergency or otherwise or permissible, Landlord or Landlord's agents may enter
the same by a master key, or may forcibly enter the same without rendering
Landlord or such agents liable therefor, and without in any manner affecting the
obligations and covenants of this Lease. Nothing herein contained, however,
shall be deemed or construed to impose upon Landlord any obligation,
responsibility or liability whatsoever for the care, maintenance or repair of
the Premises or any part thereof, except as otherwise specifically provided
herein.
12. ACCEPTANCE OF PREMISES; NON-LIABILITY OF LANDLORD; DISCLAIMER.
12.1 Acceptance of Premises. By taking possession hereunder, Tenant
acknowledges that it has examined the Premises and accepts the condition
thereof. Tenant acknowledges and agrees that Landlord has no obligation to
improve the Premises other than as set forth specifically in this Lease, if at
all. In particular, Tenant acknowledges that any additional improvements or
alterations needed to accommodate Tenant's intended use shall be made solely at
Tenant's sole cost and expense, and strictly in accordance with the requirements
of this Lease (including the requirement to obtain Landlord's consent thereto),
unless such improvements and alterations are specifically required of Landlord.
Landlord shall have no responsibility to do any work required under any building
codes or other governmental requirements not in effect or applicable at the time
the Premises were constructed, including without limitation any requirements
related to sprinkler retrofitting, seismic structural requirements,
accommodation of disabled persons, or hazardous materials. Landlord shall be
under no obligation to provide utility, telephone or other service or access
beyond that which exists at the Premises as of the date of this Lease, unless
Landlord specifically agrees in writing to provide the same. If it is
anticipated that Tenant will be doing any Alterations or installations prior to
taking occupancy, any delays encountered by Tenant in accomplishing such work or
obtaining any required permits therefor shall not delay the Commencement Date or
the date that Tenant becomes liable to pay rent, or the date that Landlord may
effectively deliver possession of the Premises to Tenant. By taking possession
hereunder, Tenant acknowledges that it accepts the square footage of the
Premises as delivered and as stated in this Lease. No discovery or alleged
discovery after such acceptance of any variance in such square footage as set
forth in this Lease (or in any proposal, advertisement or other description
thereof) shall be grounds for any adjustment in any element of
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the rent payable hereunder, unless such adjustment is initiated by and
implemented by Landlord in writing.
12.2 Landlord's Exemption From Liability. Landlord shall not be liable
for injury to Tenant's business or loss of income therefrom, or for personal
injury or property damage that may be sustained by Tenant or any subtenant of
Tenant, or their respective employees, invitees, customers, agents or
contractors or any other person in or about the Premises, caused by or resulting
from fire, flood, earthquake or other natural disaster, or from steam,
electricity, gas, water or rain, that may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air-conditioning or lighting
fixtures, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant.
Landlord shall not be liable for any damages to property or for personal injury
or loss of life arising from any use, act or failure to act of any third parties
(including other occupants of the Center) occurring in, or about the Premises or
in or about the Center (including without limitation the criminal acts of any
third parties). Landlord shall not be liable for any latent defect in the
Premises or in the building of which the Premises are a part. All property of
Tenant kept or stored on the Premises shall be so kept or stored at the risk of
Tenant only, and Tenant shall indemnify, defend and hold Landlord harmless from
and against any claims arising out of damage to the same, including subrogation
claims by Tenant's insurance carriers. Provided, however, that the
indemnifications and waivers of Tenant set forth in this Section shall not apply
to damage and liability caused (i) by the gross negligence or wilful misconduct
of Landlord, and (ii) through no fault of Tenant, its assignees or subtenants,
or their respective agents, contractors, employees, customers, invitees or
licensees.
12.3 No Warranties or Representations.
(a) Neither Landlord nor Landlord's agents make any warranty or
representation with respect to the suitability or fitness of the space for the
conduct of Tenant's business, or for any other purpose.
(b) Neither Landlord nor Landlord's agents make any warranty or
representation with respect to any other tenants or users that may or may not
construct improvements, occupy space or conduct business within the Center, and
Tenant hereby acknowledges and agrees that it is not relying on any warranty or
representation relating thereto in entering into this Lease.
(c) Landlord specifically disavows any oral representations made by or
on behalf of its employees, agents and independent contractors, and Tenant
hereby acknowledges and agrees that it is not relying and has not relied on any
oral representations in entering into this Lease.
(d) Landlord has not made any promises or representations, expressed
or implied, that it will renew, extend or modify this Lease in favor of Tenant
or any permitted transferee of Tenant, except as may be specifically set forth
herein or in except in a written instrument signed by both parties amending this
Lease in the future.
(e) Notwithstanding that the rent payable to Landlord hereunder may at
times include the cost of guard service or other security measures, it is
specifically understood that Landlord does not represent, guarantee or assume
responsibility that Tenant will be secure from any damage, injury or loss of
life because of such guard service. Landlord shall have no obligation to hire,
maintain or provide such services, which may be withdrawn or changed at any
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time with or without notice to Tenant or any other person and without liability
to Landlord. To induce Landlord to provide such service if Landlord elects in
its sole discretion to do so, Tenant agrees that (i) Landlord shall not be
liable for any damage, injury or loss of life related to the provision or non-
provision of such service, and (ii) Landlord shall have no responsibility to
protect Tenant, or its employees, agents, from the acts of any third parties
(including other occupants of the Center) occurring in, or about the Premises or
in or about the Center (including without limitation the criminal acts of any
third parties), whether or not the same could have been prevented by any such
guard service or other security measures.
13. INDEMNIFICATION.
Tenant shall indemnify, hold harmless and defend Landlord and Landlord's
officers, directors, shareholders, partners, principals, employees, agents,
representatives, and other related entities and individuals (collectively,
"Landlord's Related Entities"), from and against any and all claims, actions,
damages, liability, costs, and expenses, including attorneys' fees and costs,
arising from personal injury, death, and/or property damage and arising from:
(a) Tenant's use or occupation of the Premises or any work or activity allowed
or permitted by Tenant in or about the Premises, (b) any activity, condition or
occurrence in the Premises or other area under the control of Tenant, (c) any
breach or failure to perform any obligation imposed on Tenant under this Lease;
or (d) any other act or omission of Tenant or its assignees or subtenants or
their respective agents, contractors, employees, customers, invitees or
licensees. Tenant's obligation to defend and indemnify shall include, but not
be limited to, claims based on duties, obligations, or liabilities imposed on
Landlord or Landlord's Related Entities by statute, ordinance, regulation, or
other law, such as claims based on theories of peculiar risk and non-delegable
duty, and to any and all other claims based on the negligent act or omission of
Landlord or Landlord's Related Entities. The parties intend that this provision
be interpreted as the broadest Type I indemnity provision as defined in McDonald
& Kruse, Inc. v. San Jose Steel Co., 29 Cal. App. 3rd 413 (1972), and as
allowed by law between a landlord and a tenant. Upon notice from Landlord,
Tenant shall, at Tenant's sole expense and by counsel satisfactory to Landlord,
defend any action or proceeding brought against Landlord or Landlord's Related
Entities by reason of any such claim. If Landlord or any of Landlord's Related
Entities is made a party to any litigation commenced by or against Tenant, then
Tenant shall hold harmless and defend Landlord and Landlord's Related Entities
and pay all costs, expenses and attorneys' fees and costs incurred or paid in
connection with such litigation. Tenant, as a material part of the
consideration to Landlord hereunder, assumes all risk of, and waives all claims
against Landlord for, personal injury or property damage in, upon or about the
Premises, from any cause whatsoever. Provided, however, that the
indemnifications and waivers of Tenant set forth in this Section shall not apply
to damage and liability caused (i) by the gross negligence or wilful misconduct
of Landlord, and (ii) through no fault of Tenant, its assignees or subtenants,
or their respective agents, contractors, employees, customers, invitees or
licensees.
14. HAZARDOUS MATERIALS.
14.1 Definitions. "Hazardous Materials Laws" means any and all federal,
state or local laws, ordinances, rules, decrees, orders, regulations or court
decisions relating to hazardous substances, hazardous materials, hazardous
waste, toxic substances, environmental conditions on, under or about the
Premises, or soil and ground water conditions, including, but not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended, 42 U.S.C. (S)9601, et seq., the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. (S)6901, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C.
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(S)1801, et seq., the California Hazardous Waste Control Act, Cal. Health and
Safety Code (S)25100, et seq., the Carpenter-Presley-Tanner Hazardous Substances
Account Act, Cal. Health and Safety Code (S)25300, et seq., the Safe Drinking
Water and Toxic Enforcement Act, Cal. Health and Safety Code (S)25249.5, et
seq., the Porter-Cologne Water Quality Control Act, Cal. Water Code (S) 13000,
et. seq., any amendments to the foregoing, and any similar federal, state or
local laws, ordinances, rules, decrees, orders or regulations. "Hazardous
Materials" means any chemical, compound, material, substance or other matter
that: (a) is defined as a hazardous substance, hazardous material, hazardous
waste or toxic substance under any Hazardous Materials Law, (b) is controlled or
governed by any Hazardous Materials Law or gives rise to any reporting, notice
or publication requirements hereunder, or gives rise to any liability,
responsibility or duty on the part of Tenant or Landlord with respect to any
third person hereunder; or (c) is flammable or explosive material, oil,
asbestos, urea formaldehyde, radioactive material, nuclear medicine material,
drug, vaccine, bacteria, virus, hazardous waste, toxic substance, or related
injurious or potentially injurious material (by itself or in combination with
other materials).
14.2 Use of Hazardous Materials. Tenant shall not allow any Hazardous
Material to be used, generated, manufactured, released, stored or disposed of
on, under or about, or transported from, the Premises, unless: (a) such use is
specifically disclosed to and approved by Landlord in writing prior to such use,
and (b) such use is conducted in compliance with the provisions of this Article.
Landlord's consent may be withheld in Landlord's sole discretion and, if
granted, may be revoked at any time. Landlord may approve such use subject to
reasonable conditions to protect the Premises and Landlord's interests.
Landlord may withhold approval if Landlord determines that such proposed use
involves a material risk of a release or discharge of Hazardous Materials or a
violation of any Hazardous Materials Laws or that Tenant has not provided
reasonably sufficient assurances of its ability to remedy such a violation and
fulfill its obligations under this Article. Notwithstanding the foregoing,
Landlord hereby consents to Tenant's use, storage or disposal of products
containing small quantities of Hazardous Materials, which products are of a type
customarily found in offices and households (such as aerosol cans containing
insecticides, toner for copies, paints, paint remover and the like), provided
that Tenant shall handle, use, store and dispose of such Hazardous Materials in
a safe and lawful manner and shall not allow such Hazardous Materials to
contaminate the Premises.
14.3 Compliance With Laws; Handling Hazardous Materials. Tenant shall
strictly comply with, and shall maintain the Premises in compliance with, all
Hazardous Materials Laws. Tenant shall obtain, maintain in effect and comply
with the conditions of all permits, licenses and other governmental approvals
required for Tenant's operations on the Premises under any Hazardous Materials
Laws, including, but not limited to, the discharge of appropriately treated
Hazardous Materials into or through any sanitary sewer serving the Premises. At
Landlord's request, Tenant shall deliver copies of, or allow Landlord to
inspect, all such permits, licenses and approvals. All Hazardous Materials
removed from the Premises shall be removed and transported by duly licensed
haulers to duly licensed disposal facilities, in compliance with all Hazardous
Materials Laws. Tenant shall perform any monitoring, testing, investigation,
clean-up, removal, detoxification, preparation of closure or other required
plans and any other remedial work required by any governmental agency or lender,
or recommended by Landlord's environmental consultants, as a result of any
release or discharge or potential release or discharge of Hazardous Materials
affecting the Premises or the Center or any violation or potential violation of
Hazardous Materials Laws by Tenant or any assignee or subtenant of
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Tenant or their respective agents, contractors, employees, licensees or invitees
(collectively, "Remedial Work"). Landlord shall have the right to intervene in
any governmental action or proceeding involving any Remedial Work, and to
approve performance of the work, in order to protect Landlord's interests.
Tenant shall not enter into any settlement agreement, consent decree or other
compromise with respect to any claims relating to Hazardous Materials without
notifying Landlord and providing ample opportunity for Landlord to intervene.
Tenant shall additionally comply with the recommendations of Landlord's and
Tenant's insurers based upon National Fire Protection Association standards or
other applicable guidelines regarding the management and handling of Hazardous
Materials.
14.4 Notice; Reporting. Tenant shall notify Landlord, in writing, within
three (3) days after any of the following: (a) Tenant has knowledge, or has
reasonable cause to believe, that any Hazardous Material has been released,
discharged or is located on, under or about the Premises, whether or not the
release or discharge is in quantities that would otherwise be reportable to a
public agency, (b) Tenant receives any order of a governmental agency requiring
any Remedial Work pursuant to any Hazardous Materials Laws, (c) Tenant receives
any warning, notice of inspection, notice of violation or alleged violation or
Tenant receives notice or knowledge of any proceeding, investigation or
enforcement action, pursuant to any Hazardous Materials Laws; or (d) Tenant
receives notice or knowledge of any claims made or threatened by any third party
against Tenant or the Premises relating to any loss or injury resulting from
Hazardous Materials. If the potential risk of any of the foregoing events is
material, Tenant shall deliver immediate verbal notice to Landlord, in addition
to written notice as set forth above. Tenant shall deliver to Landlord copies
of all test results, reports and business or management plans required to be
filed with any governmental agency pursuant to any Hazardous Materials Laws.
14.5 Indemnity. Tenant shall indemnify, protect, defend and hold Landlord
(and its partners and their respective officers, directors, employees and
agents) harmless from and against any and all liabilities, claims, suits,
judgments, actions, investigations, proceedings, costs and expenses (including
attorneys' fees and costs) arising out of or in connection with any breach of
any provisions of this Article or directly or indirectly arising out of the use,
generation, storage, release, disposal or transportation of Hazardous Materials
by Tenant, or any assignee or subtenant of Tenant, or their respective agents,
contractors, employees, licensees, or invitees, on, under or about the Premises
during the Lease Term or any other period of Tenant's actual or constructive
occupancy of the Premises, including, but not limited to, all foreseeable and
unforeseeable consequential damages and the cost of any Remedial Work. Any
defense of Tenant pursuant to this Section shall be by counsel reasonably
acceptable to Landlord. Neither the consent by Landlord to the use, generation,
storage, release disposal or transportation of Hazardous Materials nor the
strict compliance with all Hazardous Materials Laws shall excuse Tenant from
Tenant's indemnification obligations pursuant to this Article. The foregoing
indemnity shall be in addition to and not a limitation of the indemnification
provisions of Article 13 of this Lease. Tenant's obligations pursuant to this
Article shall survive the termination or expiration of this Lease.
14.6 Entry and Inspection; Cure. Landlord, and its agents, employees and
contractors, shall have the right, but not the obligation, to enter the Premises
at all reasonable times to inspect the Premises and Tenant's compliance with the
terms and conditions of this Article, or to conduct investigations and tests.
No prior notice to Tenant shall be required in the event of an emergency, or if
Landlord has reasonable cause to believe that violations of this
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Article have occurred, or if Tenant consents at the time of entry. In all other
cases, Landlord shall give at least 24 hours' prior notice to Tenant. Landlord
shall have the right, and not the obligation, to remedy any violation by Tenant
of the provisions of this Article pursuant to Section 22.3 of this Lease or to
perform any Remedial Work. Tenant shall pay, upon demand, all costs incurred by
Landlord in investigating any such violations or potential violations or
performing Remedial Work, plus interest thereon at the rate specified in this
Lease from the date of demand until the date paid by Tenant.
14.7 Termination/Expiration. Upon termination or expiration of this
Lease, Tenant shall, at Tenant's cost, remove any equipment, improvements or
storage facilities utilized in connection with any Hazardous Materials and shall
clean up, detoxify, repair and otherwise restore the Premises to a condition
free of Hazardous Materials, to the extent such condition is caused by Tenant or
any assignee or subtenant of Tenant or their respective agents, contractors,
employees, licensees or invitees.
14.8 Event of Default. The release or discharge of any Hazardous Material
or the violation of any Hazardous Materials Law by Tenant or any assignee or
subtenant of Tenant shall be a material Event of Default by Tenant under this
Lease. In addition to or in lieu of the remedies available under this Lease as
a result of such Event of Default, Landlord shall have the right, without
terminating this Lease, to require Tenant to suspend its operations and
activities on the Premises until Landlord is satisfied that appropriate Remedial
Work has been or is being adequately performed; Landlord's election of this
remedy shall not constitute a waiver of Landlord's right thereafter to declare
an Event of Default and pursue other remedies set forth in this Lease.
15. ALTERATIONS; LIENS.
15.1 Alterations by Tenant. Tenant shall not make any alterations,
additions or improvements ("Alterations") to the Premises without Landlord's
prior written consent (which shall not be unreasonably withheld or delayed),
except for nonstructural Alterations that cost $5,000 or less and are not
visible from the exterior of the Premises. All Alterations installed by Tenant
shall be new or completely reconditioned. Landlord shall have the right to
approve the contractor, the method of payment of the contractor, and the plans
and specifications for all proposed Alterations. Tenant shall obtain Landlord's
consent to all proposed alterations requiring Landlord's consent prior to the
commencement of any such Alterations. Tenant's request for consent shall be
accompanied by information identifying the contractor and method of payment and
two (2) copies of the proposed plans and specifications. All Alterations of
whatever kind and nature shall become at once a part of the realty and shall be
surrendered with the Premises upon expiration or earlier termination of the
Lease Term, unless Landlord requires Tenant to remove the same as provided in
Article 20. During the Lease Term, Tenant agrees to provide, at Tenant's
expense, a policy of insurance covering loss or damage to Alterations made by
Tenant, in an amount adequate to repair or replace the same, naming Landlord as
an additional insured. Provided, however, Tenant may install movable furniture,
trade fixtures, machinery or equipment in conformance with applicable
governmental rules and ordinances and remove the same upon expiration or earlier
termination of this Lease as provided in Article 20.
15.2 Permits and Governmental Requirements. Tenant shall obtain, at
Tenant's sole cost and expense, all building permits and other permits of every
kind and nature required by any governmental agency having jurisdiction in
connection with the Alterations. Tenant shall indemnify, hold harmless and
defend Landlord and Landlord's officers, directors, shareholders, partners,
principals, employees and agents, and their respective successors and assigns,
from and
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against any and all claims, actions, damages, liability, costs, and expenses,
including attorneys' fees and costs, arising out of any failure by Tenant or
Tenant's contractor or agents to obtain all required permits, regardless of when
such failure is discovered. Tenant shall do any and all additional construction,
alterations, improvements and retrofittings required to be made to the Premises
and/or the Center, or any other property of Landlord as a result of, or as may
be may be triggered by, Tenant's Alterations. Landlord shall have the right to
do such construction itself; but in all instances Tenant shall pay all costs
directly or indirectly related to such work and shall indemnify, defend and hold
Landlord and Landlord's officers, directors, shareholders, partners, principals,
employees and agents, and their respective successors and assigns, harmless from
and against any and all claims, actions, damages, liability, costs, and
expenses, including attorneys' fees and costs, arising out of any such
additionally required work. All payment and indemnification obligations under
this Section shall survive the expiration or earlier termination of the Lease
Term.
15.3 Liens. Tenant shall pay when due all claims for any work performed,
materials furnished or obligations incurred by or for Tenant, and Tenant shall
keep the Premises free from any liens arising with respect thereto. If Tenant
fails to cause any such lien to be released within fifteen (15) days after
imposition, by payment or posting of a proper bond, Landlord shall have the
right (but not the obligation) to cause such release by such means as Landlord
deems proper. Tenant shall reimburse Landlord upon demand for all costs
incurred by Landlord in connection therewith (including attorneys' fees and
costs), with interest at the rate specified in Section 22.4 from the date of
payment by Landlord to the date of payment by Tenant. Tenant will notify
Landlord in writing thirty (30) days prior to commencing any alterations,
additions, improvements or repairs in order to allow Landlord timely to file a
notice of non-responsibility.
16. DAMAGE AND DESTRUCTION.
16.1 Partial Insured Damage. If the Premises or any building in which the
Premises are located are partially damaged or destroyed during the Lease Term,
Landlord shall make the necessary repairs, provided such repairs can reasonably
be completed within sixty (60) days after the date of the damage or destruction
in accordance with applicable laws and regulations and provided that Landlord
receives sufficient insurance proceeds to pay the cost of such repairs. In such
event, this Lease shall continue in full force and effect. If such repairs
cannot reasonably be completed within sixty (60) days after the date of the
damage or destruction or if Landlord does not receive sufficient insurance
proceeds, then Landlord may, at its option, elect within 45 days of the date of
the damage or destruction to proceed with the necessary repairs, in which event
this Lease shall continue in full force and effect and Landlord shall complete
the same within a reasonable time. If Landlord does not so elect to make such
repairs or if such repairs cannot be made under applicable laws and regulations,
this Lease may be terminated at the option of either party within 90 days of the
occurrence of such damage or destruction.
16.2 Insurance Deductible. If Landlord elects to repair any damage caused
by an insured casualty as provided in Section 16.1, Tenant shall, within fifteen
(15) days after receipt of written notice from Landlord, pay the amount of any
deductible (or its share thereof) under any insurance policy covering such
damage or destruction, in accordance with Section 9.4 above.
16.3 Uninsured Damage. In the event of any damage or destruction of the
Premises or any building in which the Premises are located by an uninsured
casualty, Landlord shall have the right to elect either to repair such damage or
to terminate this Lease. Such election shall be exercised by written notice to
Tenant within forty-five (45) days of such damage or destruction.
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16.4 Total Destruction. A total destruction (including any destruction
required by any authorized public authority) of either the Premises or any
building in which the Premises are located shall terminate this Lease.
16.5 Partial Destruction of Center. If fifty percent (50%) or more of the
rentable area of the Center is damaged or destroyed by fire or other cause,
notwithstanding that the Premises may be unaffected, Landlord shall have the
right, to be exercised by notice in writing delivered to Tenant within ninety
(90) days after said occurrence, to elect to terminate this Lease.
16.6 Tenant's Obligations. Landlord shall not be required to repair any
injury or damage by fire or other cause, or to make any restoration or
replacement of any Alterations, trade fixtures, equipment or personal property
placed or installed in the Premises by or on behalf of Tenant. Unless this
Lease is terminated pursuant to this Article, Tenant shall promptly repair,
restore or replace the same in the event of damage. Nothing contained in this
Article shall be construed as a limitation on Tenant's liability for any damage
or destruction if such liability otherwise exists.
16.7 Rent Abatement. If Landlord repairs the Premises or the building
after damage or destruction as described in this Article, rent payable by Tenant
hereunder from the date of damage until the repairs are completed shall be
equitably reduced, based upon the extent to which such repairs interfere with
the business carried on by Tenant in the Premises, but only to the extent
Landlord receives proceeds from rental income insurance paid for by Tenant.
Landlord agrees to take reasonable steps to make a claim for and collect any
rental income insurance proceeds that might be available.
16.8 Waiver of Inconsistent Statutes. The parties' rights and obligations
in the event of damage or destruction shall be governed by the provisions of
this Lease; accordingly, Tenant waives the provisions of California Civil Code
Sections 1932(2) and 1933(4), and any other statute, code or judicial decisions
that grants a tenant a right to terminate a lease in the event of damage or
destruction of a leased premises.
17. CONDEMNATION.
17.1 Condemnation of Premises. If any portion of the Premises is taken or
condemned for a public or quasi-public use ("Condemnation"), and a portion
remains that is susceptible of occupation, then this Lease shall terminate as to
the portion so taken as of the date title vests in the condemnor, but shall
remain in full force and effect as to the remaining Premises. Landlord shall,
within a reasonable period of time, restore the remaining Premises as nearly as
practicable to the condition existing prior to the condemnation; provided,
however, if Landlord receives insufficient funds from the condemnor for such
purpose, Landlord may elect to terminate this Lease. If this Lease continues in
effect, the Minimum Monthly Rent shall be equitably adjusted, based upon the
value of the Premises remaining after the Condemnation compared to the value of
the Premises prior to Condemnation. Provided, however, in the event of any such
partial condemnation, Landlord shall have the option to terminate this Lease
entirely as of the date title vests in the condemnor. If all the Premises are
condemned, or such portion so that there does not remain a portion that is
susceptible of occupation, or if such a substantial portion of the Center is
condemned that it is no longer economically appropriate to lease the Premises on
the terms and conditions of this Lease, as reasonably determined by Landlord,
then at the election of Landlord this Lease shall terminate as of the date title
vests in the condemnor.
17.2 Condemnation of Parking Area. If all or any portion of the parking
area in the Center is condemned such that the ratio of the total square footage
of parking and other Common Facilities compared to the total rentable building
square footage of the Center is reduced to a
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ratio below two to one, then at the election of Landlord this Lease shall
terminate as of the date title vests in the condemnor.
17.3 Condemnation Award. All compensation awarded upon any such partial
or total Condemnation shall be paid to Landlord and Tenant shall have no claim
thereto, and Tenant hereby irrevocably assigns and transfers to Landlord any
right to compensation or damages by reason of any such Condemnation. Provided,
however, that Tenant shall have the right to claim and recover from the
condemning authority, but not from Landlord, such compensation as may be
separately awarded or recoverable by Tenant in Tenant's own right on account of
any damage to Tenant's business by reason of the Condemnation and on account of
any cost that Tenant may incur in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment. If this Lease is terminated, in
whole or in part, in accordance with this Article as a result of a Condemnation,
Tenant shall have no claim for the value of any unexpired term of this Lease.
18. ASSIGNMENT AND SUBLETTING.
18.1 Landlord's Consent Required. Tenant shall not voluntarily or
involuntarily assign, sublease, mortgage, encumber, or otherwise transfer all or
any portion of the Premises or its interest in this Lease (collectively,
"Transfer") without Landlord's prior written consent, which consent Landlord
shall not unreasonably withhold or delay. Landlord may withhold its consent
until Tenant has complied with the provisions of Sections 18.2 and 18.3. Any
attempted Transfer without Landlord's written consent shall be void and shall
constitute a non-curable Event of Default under this Lease. If Tenant is a
corporation, any cumulative Transfer of more than twenty percent (20%) of the
voting stock of such corporation shall constitute a Transfer requiring
Landlord's consent hereunder; provided, however that this sentence shall not
apply to any corporation whose stock is publicly traded. If Tenant is a
partnership, limited liability company, trust or other entity, any cumulative
Transfer of more than twenty percent (20%) of the partnership, membership,
beneficial or other ownership interests therein shall constitute a Transfer
requiring Landlord's consent hereunder. Tenant shall not have the right to
consummate a Transfer or to request Landlord's consent to any Transfer if any
Event of Default has occurred and is continuing or if Tenant or any affiliate of
Tenant is in default under any lease of any other real property owned or managed
(in whole or in part) by Landlord or any affiliate of Landlord.
18.2 Landlord's Election. Tenant's request for consent to any Transfer shall
be accompanied by a written statement setting forth the details of the proposed
Transfer, including the name, business and financial condition of the
prospective Transferee, financial details of the proposed Transfer (e.g., the
term and the rent and security deposit payable), and any other related
information that Landlord may reasonably require. Landlord shall have the
right: (a) to withhold consent to the Transfer, if reasonable, (b) to grant
consent, (c) to terminate this Lease as to the portion of the Premises affected
by any proposed Transfer, in which event Landlord may enter into a lease
directly with the proposed Transferee, or (d) to consent on the condition that
Landlord be paid, as Additional Rent hereunder, 50% of all subrent or other
consideration to be paid to Tenant under the terms of the Transfer in excess of
the total rent due hereunder. The grounds on which Landlord may reasonably
withhold its consent to any requested Transfer include, without limitation,
that: (i) the proposed Transferee's contemplated use of the Premises following
the proposed Transfer is not reasonably similar to the use of the Premises
permitted hereunder, (ii) in Landlord's reasonable business judgment, the
proposed Transferee lacks sufficient business reputation or experience to
operate a successful business of the type and quality permitted under this
Lease, (iii) in Landlord's reasonable business judgment, the
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proposed Transferee lacks sufficient net worth, working capital, anticipated
cash flow and other indications of financial strength to meet all of its
obligations under this Lease, (iv) the proposed Transfer would breach any
covenant of Landlord respecting a radius restriction, location, use or
exclusivity in any other lease, financing agreement, or other agreement relating
to the Center, and (v) in Landlord's reasonable business judgment, the
possibility of a release of Hazardous Materials is materially increased as a
result of the Transfer or if Landlord does not receive sufficient assurances
that the proposed Transferee has the experience and financial ability to remedy
a violation of Hazardous Materials and to fulfill its obligations under Articles
13 and 14. Landlord need only respond to any request by Tenant hereunder within
a reasonable time of not less that ten (10) business days after receipt of all
information and other submission required in connection with such request.
18.3 Transfer Fee. Tenant shall pay all attorneys' fees and costs
incurred by Landlord and a fee of $350 to reimburse Landlord for costs and
expenses incurred in connection with any request by Tenant for Landlord's
consent to a Transfer. Such fee shall be delivered to Landlord concurrently
with Tenant's request for consent.
18.4 Assumption; No Release of Tenant. Any permitted transferee shall
assume in writing all obligations of Tenant under this Lease, utilizing a form
of assumption agreement provided or approved by Landlord, and an executed copy
of such assumption agreement shall be delivered to Landlord within fifteen (15)
days after the effective date of the Transfer. The taking of possession of all
or any part of the Premises by any such permitted assignee or subtenant shall
constitute an agreement by such person or entity to assume without limitation or
qualification all of the obligations of Tenant under this Lease, notwithstanding
any failure by such person to execute the assumption agreement required in the
immediately preceding sentence. No permitted Transfer shall release or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article or a consent to Transfer.
Consent to one Transfer shall not constitute a consent to any subsequent
Transfer. If any transferee defaults under this Lease, Landlord may proceed
directly against Tenant without pursuing remedies against the transferee.
Landlord may consent to subsequent Transfers or modifications of this Lease by
Tenant's transferee, without notifying Tenant or obtaining its consent, and such
action shall not relieve Tenant of its liability under this Lease.
18.5 No Merger. No merger shall result from any Transfer pursuant to this
Article, any surrender by Tenant of its interest under this Lease, or any
termination hereof in any other manner. In any such event, Landlord may either
terminate any or all subleases or succeed to the interest of Tenant thereunder.
18.6 Reasonable Restriction. Tenant acknowledges that the restrictions on
Transfer contained herein are reasonable restrictions for purposes of Section
22.2 of this Lease and California Civil Code Section 1951 .4.
19. SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE.
19.1 Subordination. This Lease is junior and subordinate to all ground
leases, mortgages, deeds of trust, and other security instruments now or
hereafter affecting the real property of which the Premises are a part, and to
all advances made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof. If any mortgagee,
beneficiary under deed of trust or ground lessor shall elect to have this Lease
prior to the lien of its mortgage, deed of trust or ground lease, and gives
written notice thereof to Tenant, this Lease shall be deemed prior thereto.
Tenant agrees to execute any documents required to
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effectuate such subordination or to make this Lease prior to the lien of any
such mortgage, deed of trust or ground lease, as the case may be, and if Tenant
fails to do so within fifteen (15) days after written demand, Tenant does hereby
make, constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact
and in Tenant's name, place and stead, to do so.
19.2 Attornment. If Landlord sells, transfers, or conveys its interest in
the Premises or this Lease, or if the same is foreclosed judicially or
nonjudicially, or is otherwise acquired, by a mortgagee, beneficiary under deed
of trust or ground lessor, upon the request and at the sole election of
Landlord's lawful successor, Tenant shall attorn to said successor, provided
said successor accepts the Premises subject to this Lease. Tenant shall, upon
request of Landlord or any such mortgagee, beneficiary under deed of trust or
ground lessor, execute an attornment agreement confirming the same, in form and
substance acceptable to Landlord. Such agreement shall provide, among other
things, that said successor shall not be bound by (a) any prepayment of more
than one (1) month's rent (except any Security Deposit) or (b) any material
amendment of this Lease made after the later of the initial effective date of
this Lease, or the date that such successor's lien or interest first arose,
unless said successor shall have consented to such amendment.
19.3 Estoppel Certificates. Within fifteen (15) days after written
request from Landlord, Tenant at Tenant's sole cost shall execute, acknowledge
and deliver to Landlord a written statement certifying: (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modifications and certifying that this Lease is in full force and effect as
so modified), (b) the amount of any rent paid in advance, and (c) that, to
Tenant's knowledge, there are no uncured defaults on the part of Landlord, or
specifying the nature of such defaults if any are claimed. Any such statement
may be conclusively relied upon by any prospective purchaser of or lender on the
Premises. If Tenant fails to deliver such statement within said 15-day period,
Tenant shall be liable for the immediate payment of all foreseeable and
unforeseeable damages, penalties and attorneys' fees and costs incurred by
Landlord as a result of such failure. Tenant's failure to deliver such
statement within said 15-day period shall constitute a conclusive acknowledgment
by Tenant: (i) that this Lease is in full force and effect without modification
except as may be represented by Landlord, (ii) that not more than one month's
rent has been paid in advance, and (iii) that there are no uncured defaults in
Landlord's performance.
20. SURRENDER OF PREMISES.
20.1 Condition of Premises. Upon the expiration or earlier termination of
this Lease, Tenant shall surrender the Premises to Landlord, broom clean and in
the same condition and state of repair as at the commencement of the Lease Term,
except for casualty, damage by fire, condemnation, and ordinary wear and tear
that Tenant is not otherwise obligated to remedy under the provisions of this
Lease. Tenant shall deliver all keys to the Premises and the building of which
the Premises are a part to Landlord. Upon Tenant's vacation of the Premises,
Tenant shall remove all portable furniture, trade fixtures, machinery,
equipment, signs and other items of personal property (unless prohibited from
doing the same under Section 20.2), and shall remove any Alterations (whether or
not made with Landlord's consent) that Landlord may require Tenant to remove.
Tenant shall repair all damage to the Premises caused by such removal, and shall
restore the Premises to its prior condition, all at Tenant's expense. Such
repairs shall be performed in a manner satisfactory to Landlord and shall
include, but are not limited to, the following: capping all plumbing, capping
all electrical wiring, repairing all holes in walls, restoring damaged floor
and/or ceiling tiles, and thorough cleaning of the Premises. If Tenant
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fails to remove any items that Tenant has an obligation to remove under this
Section when required by Landlord or otherwise, such items shall, at Landlord's
option, become the property of Landlord and Landlord shall have the right to
remove and retain or dispose of the same in any manner, without any obligation
to account to Tenant for the proceeds thereof. Tenant waives all claims against
Landlord for any damages to Tenant resulting from Landlord's retention or
disposition of such Alterations or personal property. Tenant shall be liable to
Landlord for Landlord's costs of removing, storing and disposing of such items.
20.2 Removal of Certain Alterations, Fixtures and Equipment Prohibited.
All Alterations, fixtures (whether or not trade fixtures), machinery, equipment,
signs and other items of personal property that Landlord has not required Tenant
to remove under Section 20.1 shall become Landlord's property and shall be
surrendered to Landlord with the Premises, regardless of who paid for the same.
In particular and without limiting the foregoing, Tenant shall not remove any of
the following materials or equipment without Landlord's prior written consent,
regardless of who paid for the same and regardless of whether the same are
permanently attached to the Premises: any power wiring and power panels; any
piping for industrial gasses or liquids; any laboratory benches, sinks, cabinets
and casework; fume hoods or specialized air-handling and evacuation systems; any
drains or other equipment for he handling of waste water or hazardous materials;
computer, telephone, telecommunications wiring, panels and equipment; lighting
and lighting fixtures; wall coverings; drapes, blinds and other window
coverings; carpets and other floor coverings; heaters, air conditioners and
other heating or air conditioning equipment; fencing; security gates and
systems; and other building operating equipment and decorations.
20.3 Holding Over. Tenant shall vacate the Premises upon the expiration
or earlier termination of this Lease, and Tenant shall indemnify Landlord
against all liabilities, damages and expenses incurred by Landlord as a result
of any delay by Tenant in vacating the Premises. If Tenant remains in
possession of the Premises or any part thereof after the expiration of the Lease
Term with Landlord's written permission, Tenant's occupancy shall be a tenancy
from month-to-month only, and not a renewal or extension hereof. All provisions
of this Lease (other than those relating to the term) shall apply to such month-
to-month tenancy, except that the Minimum Monthly Rent shall be increased to
200% of the Minimum Monthly Rent in effect during the last month of the Lease
Term. No acceptance of rent, negotiation of rent checks or other act or
omission of Landlord or its agents shall extend the Expiration Date of this
Lease other than a writing executed by Landlord giving Tenant permission to
remain in occupancy beyond the Expiration Date under the terms of the
immediately preceding sentence.
21. DEFAULT BY TENANT.
The occurrence of any of the following shall constitute an "Event of
Default" under this Lease by Tenant:
(c) Abandonment or vacation of the Premises by Tenant, or failure to occupy
the Premises for a period of ten (10) consecutive days.
(d) If any of the following occurs: (i) A petition is filed for an order
of relief under the federal Bankruptcy Code or for an order or decree of
insolvency or reorganization or rearrangement under any state or federal law,
and such petition is not dismissed within sixty (60) days after the filing
thereof; (ii) Tenant makes a general assignment for the benefit of creditors;
(iii) a receiver or trustee is appointed to take possession of any substantial
part of Tenant's assets, unless such appointment vacated within sixty (60) days
after the date thereof; (d) Tenant consents to or suffers an attachment,
execution or other judicial seizure of any substantial part of
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its assets or its interest under this Lease, unless such process is released or
satisfied within sixty (60) days after the occurrence thereof; or If a court of
competent jurisdiction determines that any of the foregoing events is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession), and such trustee or Tenant transfers
Tenant's interest hereunder, then Landlord shall receive, as Additional Rent,
the difference between the rent (or other consideration) paid in connection with
such transfer and the rent payable by Tenant hereunder. Any assignee pursuant to
the provisions of any bankruptcy law shall be deemed without further act to have
assumed all of the obligations of the Tenant hereunder arising on or after the
date of such assignment. Any such assignee shall upon demand execute and deliver
to Landlord an instrument confirming such assumption.
(e) The occurrence of any other event that is deemed to be an Event of
Default under any other provision of this Lease.
22. REMEDIES.
Upon the occurrence of any Event of Default by Tenant, Landlord shall have
the following remedies, each of which shall be cumulative and in addition to any
other remedies now or hereafter available at law or in equity.
22.1 Termination of Lease. Landlord can terminate this Lease and Tenant's
right to possession of the Premises by giving written notice of termination, and
then re-enter the Premises and take possession thereof. No act by Landlord
other than giving written notice to Tenant of such termination shall terminate
this Lease. Upon termination, Landlord has the right to recover all damages
incurred by Landlord as a result of Tenant's default, including:
(a) The worth at the time of award of any unpaid rent that had been
earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid
rent that would have been earned after the date of termination until the time of
award exceeds the amount of the loss of rent that Tenant proves could have been
reasonably avoided; plus
(c) The worth at the time of award of the amount by which the unpaid
rent for the balance of the Lease Term after the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(d) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's default, including, but not limited to
expenses for cleaning, repairing or restoring the Premises, (ii) expenses for
altering, remodeling or otherwise improving the Premises for the purpose of
reletting, (iii) brokers' fees and commissions, advertising costs and other
expenses of reletting the Premises, (iv) costs of carrying the Premises such as
taxes, insurance premiums, utilities and security precautions, (v) expenses in
retaking possession of the Premises, (vi) attorneys' fees and costs, (vii) any
unearned brokerage commissions paid in connection with this Lease and (viii)
reimbursement of any previously waived or abated Minimum Monthly Rent and/or
Additional Rent; plus
(e) At Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time under applicable
California law. As used in paragraphs (a) and (b) above, the "worth at the time
of award" shall be computed by allowing interest at the maximum permissible
legal rate. As used in paragraph (c) above, the "worth at the time of award"
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
22.2 Continuation of Lease. Landlord has the remedy described in
California Civil Code Section 1951.4 (Landlord may continue the Lease in effect
after Tenant's breach and
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abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations), as follows:
(a) Landlord can continue this Lease in full force and effect without
terminating Tenant's right of possession, and Landlord shall have the right to
collect rent and other monetary charges when due and to enforce all other
obligations of Tenant hereunder. Landlord shall have the right to enter the
Property to do acts of maintenance and preservation of the Property, to make
alterations and repairs in order to re-let the Property, and/or to undertake
other efforts to re-let the Property. Landlord may also remove personal
property from the Property and store the same in a public warehouse at Tenant's
expense and risk. No act by Landlord permitted under this paragraph shall
terminate this Lease unless a written notice of termination is given by Landlord
to Tenant or unless the termination is decreed by a court of competent
jurisdiction.
(b) In furtherance of the remedy set forth in this Section, Landlord
may re-let the Property or any part thereof for Tenant's account, for such term
(which may extend beyond the Lease Term), at such rent, and on such other terms
and conditions as Landlord may deem advisable in its sole discretion. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in
reletting the Property. Any rents received by Landlord from such reletting
shall be applied to the payment of: (i) any indebtedness other than rent due
hereunder from Tenant to Landlord, (ii) the costs of such reletting, including
brokerage and attorneys' fees and costs, and the cost of any alterations and
repairs to the Property, and (iii) the payment of rent due and unpaid hereunder,
including any previously waived or abated rent (if any). Any remainder shall be
held by Landlord and applied in payment of future amounts as the same become due
and payable hereunder. In no event shall Tenant be entitled to any excess rent
received by Landlord after an Event of Default by Tenant and the exercise of
Landlord's remedies hereunder. If the rent from such reletting during any month
is less than the rent payable hereunder, Tenant shall pay such deficiency to
Landlord immediately upon demand.
(c) Landlord shall not, by any reentry or other act, be deemed to have
accepted any surrender by Tenant of the Property or Tenant's interest therein,
or be deemed to have terminated this Lease or Tenant's right to possession of
the Property or the liability of Tenant to pay rent thereafter to accrue or
Tenant's liability for damages under any of the provisions hereof, unless
Landlord shall have given Tenant notice in writing that it has so elected to
terminate this Lease.
(d) Tenant acknowledges and agrees that the restrictions on the
Transfer of the Lease set forth in Article 18 of this Lease constitute
reasonable restrictions on such transfer for purposes of this Section and
California Civil Code Section 1951.4.
22.3 Performance By Landlord. If Tenant fails to pay any sum of money or
perform any other act to be performed by Tenant hereunder and such failure
continues for fifteen (15) days after notice by Landlord, Landlord shall have
the right (but not the obligation) to make such payment or perform such other
act without waiving or releasing Tenant from its obligations. All sums so paid
by Landlord and all necessary incidental costs, together with interest thereon
at the rate specified in Section 22.4, shall be payable to Landlord on demand.
Landlord shall have the same rights and remedies in the event of non-payment by
Tenant as in the case of default by Tenant in the payment of the rent.
22.4 Late Charge; Interest on Overdue Payments. The parties acknowledge
that late payment by Tenant of Minimum Monthly Rent or any Additional Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impractical to determine, including,
but not limited to, processing and accounting
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charges, administrative expenses, and additional interest expenses or late
charges that Landlord may be required to pay as a result of late payment on
Landlord's obligations. Therefore, if any installment of Minimum Monthly Rent or
Additional Rent is not received by Landlord on the due date, and without regard
to whether Landlord gives Tenant notice of such failure or exercises any of its
remedies upon an Event of Default, Tenant shall pay a late charge equal to the
greater of five percent (5%) of the overdue amount or $100, as Additional Rent
hereunder. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the damages Landlord will incur by reason of late payment
by Tenant. In addition, any amount due from Tenant that is not paid when due
shall bear interest at a rate equal to 2% over the then current Bank of America
prime or reference rate, but not to exceed the maximum permissible legal rate,
from the date such payment is due until the date paid by Tenant. Landlord's
acceptance of any interest or late charge shall not constitute a waiver of
Tenant's default or prevent Landlord from exercising any other rights or
remedies available to Landlord.
22.5 Landlord's Right to Require Advance Payment of Rent; Cashier's
Checks. If Tenant is late in paying any component of rent more than three (3)
times during the Lease Term, Landlord shall have the right, upon notice to
Tenant, to require that all rent be paid three (3) months in advance.
Additionally, if any of Tenant's checks are returned for non-sufficient funds,
or if Landlord at any time serves upon Tenant a Three Day Notice to Pay Rent or
Quit (pursuant to California Civil Code Sections 1161 et seq. or any successor
or similar unlawful detainer statutes), Landlord may, at its option, require
that all future rent (including any sums demanded in any subsequent three (3)
day notice) be paid exclusively by money order or cashier's check.
23. DEFAULT BY LANDLORD.
23.1 Notice to Landlord. Landlord shall not be in default under this
Lease unless Landlord fails to perform an obligation required of Landlord within
a reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to each Mortgagee as provided in Section 23.2,
specifying the nature of the alleged default; provided, however, that if the
nature of the obligation is such that more than thirty (30) business days are
required for performance, then Landlord shall not be in default if Landlord
commences performance within such 30-day period and thereafter diligently
prosecutes the same to completion.
23.2 Notice to Mortgagees. Tenant agrees to give each mortgagee or trust
deed holder on the Premises or the Center ("Mortgagee"), by registered mail, a
copy of any notice of default served upon Landlord, provided that Tenant has
been previously notified in writing of the address of such Mortgagee. Tenant
further agrees that if Landlord fails to cure such default within the time
provided for in this Lease, then the Mortgagees shall have an additional thirty
(30) days within which to cure such default, or if such default cannot
reasonably be cured within that time, then such additional time as may be
necessary if, within said 30 day period, any Mortgagee has commenced and is
diligently pursuing the remedies necessary to cure the default (including but
not limited to commencement of foreclosure proceedings if necessary to affect
such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued.
23.3 Limitations on Remedies Against Landlord. In the event Tenant has
any claim or cause of action against Landlord: (a) Tenant's sole and exclusive
remedy shall be against Landlord's interest in the building of which the
Premises are a part, and neither Landlord nor any partner of Landlord nor any
other property of Landlord shall be liable for any deficiency, (b) no partner of
Landlord shall be sued or named as a party in any suit or action (except as may
be
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necessary to secure jurisdiction over Landlord), (c) no service of process shall
be made against any partner of Landlord (except as may be necessary to secure
jurisdiction over the partnership), and no such partner shall be required to
answer or otherwise plead to any service of process, (d) no judgment shall be
taken against any partner of Landlord and any judgment taken against any partner
of Landlord may be vacated and set aside at any time, and (e) no writ of
execution will ever be levied against the assets of any partner of Landlord. The
covenants and agreements set forth in this Section shall be enforceable by
Landlord and/or by any partner of Landlord. If Landlord fails to give any
consent that a court later holds Landlord was required to give under the terms
of this Lease, Tenant shall be entitled solely to specific performance and such
other remedies as may be specifically reserved to Tenant under this Lease, but
in no event shall Landlord be responsible for monetary damages (including
incidental and consequential damages) for such failure to give consent.
24. GENERAL PROVISIONS.
24.2 Arbitration and Mediation: Waiver of Jury Trial. Except as provided
in this Section, if any dispute ensues between Landlord and Tenant arising out
of or concerning this Lease and if said dispute cannot be settled through direct
discussions between the parties, the parties shall first to attempt to settle
the dispute through mediation before a mutually acceptable mediator. The cost
of mediation shall be divided equally between the parties. Thereafter, any
remaining, unresolved disputes or claims shall be resolved by binding
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court of competent jurisdiction. The prevailing party in any
such arbitration shall be entitled to recover reasonable costs and attorneys'
fees and costs as determined by the arbitrator. Provided, however, that the
foregoing provisions regarding mediation and arbitration shall not apply to (a)
any issue or claim that might properly be adjudicated in an unlawful detainer
proceeding, or (b) to any issue or claim that Landlord elects not to have
resolved through arbitration and with respect to which Landlord commences an
action in law or equity to determine the same. Without limiting the foregoing,
Landlord and Tenant hereby waive trial by jury in any action, proceeding or
counterclaim (including any claim of injury or damage and any emergency and
other statutory remedy in respect thereof) brought by either against the other
on any matter arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, or Tenant's use or occupancy of the
Premises.
24.3 Attorneys' Fees. If either party brings any legal action or
proceeding, declaratory or otherwise, arising out of this Lease, including any
suit by Landlord to recover rent or possession of the Premises or to otherwise
enforce this Lease, the losing party shall pay the prevailing party's costs and
attorneys' fees and costs incurred in such proceeding. If Landlord issues
notice(s) to pay rent, notice(s) to perform covenant, notice(s) of abandonment
or comparable documents as a result of Tenant's default under this Lease, and if
Tenant cures such default, Tenant shall pay to Landlord the reasonable costs
incurred by Landlord, including Landlord's attorneys' fees and costs, of
preparation and delivery of same.
24.4 Authority of Tenant. Tenant represents and warrants that it has full
power and authority to execute and fully perform its obligations under this
Lease pursuant to its governing instruments, without the need for any further
action, and that the person(s) executing this Agreement on behalf of Tenant are
the duly designated agents of Tenant and are authorized to do so. Prior to
execution of this Lease, Tenant shall supply Landlord with such evidence as
Landlord may request regarding the authority of Tenant to enter into this Lease.
Any actual or
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constructive taking of possession of the Premises by Tenant shall constitute a
ratification of this Lease by Tenant.
24.5 Binding Effect. Subject to the provisions of Article 18 restricting
transfers by Tenant and subject to Section 24.27 regarding transfer of
Landlord's interest, all of the provisions of this Lease shall bind and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
24.6 Brokers. Tenant warrants that it has had no dealings with any real
estate brokers or agents in connection with the negotiation of this transaction
except only the broker whose name is set forth in the Basic Lease Provisions,
and it knows of no other real estate broker or agents who is entitled to a
commission in connection with this transaction. Tenant agrees to indemnify,
hold harmless and defend the Landlord from and against any obligation or
liability to pay any commission or compensation to any other party arising from
the act or agreement of Tenant.
24.7 Construction. The headings and captions used in this Lease are for
convenience only and are not a part of the terms and provisions of this Lease.
In any provision relating to the conduct, acts or omissions of Tenant, the term
"Tenant" shall include Tenant, its subtenants and assigns and their respective
agents, employees, contractors, and invitees, and any others using the Premises
with Tenant's express or implied permission. Any use in this Lease, or in any
addendum, amendment or other document related hereto, of the terms "lessor" or
"lessee" to refer to a party to this Lease shall be deemed to be references to
Landlord and Tenant, respectively.
24.8 Counterparts. This Lease may be executed in multiple copies, each of
which shall be deemed an original, but all of which shall constitute one Lease
binding on all parties after all parties have signed such a counterpart.
24.9 Covenants and Conditions. Each provision to be performed by Tenant
shall be deemed to be both a covenant and a condition.
24.10 Entire Agreement. This Lease, together with, constitutes the entire
agreement between the parties with respect to the subject matter hereof. There
are no oral or written agreements or representations between the parties hereto
affecting this Lease, and this Lease supersedes, cancels, merges any and all
previous verbal or written negotiations, arrangements, representations,
brochures, displays, models, photographs, renderings, floor plans, elevations,
projections, estimates, agreements and understandings if any, made by or between
Landlord and Tenant and their agents, with respect to the subject matter, and
none thereof shall be used to interpret, construe, supplement or contradict this
Lease. This Lease and all amendments thereto is and shall be considered to be
the only agreement between the parties hereto and their representatives and
agents. There are no other representations or warranties between the parties,
and all reliance with respect to representations is solely based upon the
representations and agreements contained in this Lease.
24.11 Exhibits. All exhibits, addenda and riders attached or referred to
herein are hereby incorporated herein by reference.
24.12 Financial Statements. Within ten (10) days after written request
from Landlord, Tenant shall deliver to Landlord such financial statements as are
reasonably requested by Landlord to verify the net worth of Tenant, or any
assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall deliver
to any proposed or actual lender or purchaser of the Premises designated by
Landlord any financial statements required by such party to facilitate the sale,
financing or refinancing of the Premises, including the past three years'
financial statements.
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Tenant represents and warrants to Landlord that: (a) each such financial
statement is a true and accurate statement as of the date of such statement; and
(b) at all times during the Lease Term or any extension thereof, Tenant's net
worth shall not be reduced below Tenant's net worth as of the date of execution
of this Lease. All such financial statement shall be received in confidence and
shall be used only for the purposes set forth herein. Tenant hereby irrevocably
authorizes Landlord to do credit checks or other investigations into Tenant's
financial affairs.
24.13 Force Majeure. If Landlord is delayed in performing any of its
obligations hereunder due to strikes, labor problems, inability to procure
utilities, materials, equipment or transportation, governmental regulations,
weather conditions, riots, insurrection, war or other events beyond Landlord's
control, then the time for performance of such obligation shall be extended to
the extent reasonably necessary as a result of such event.
24.14 Governing Law. This Lease shall be governed, construed and enforced
in accordance with the laws of the State of California.
24.15 Joint and Several Liability. If more than one person or entity
executes this Lease as Tenant, each of them is jointly and severally liable for
all of the obligations of Tenant hereunder.
24.16 Modification. The provisions of this Lease may not be modified or
amended, except by a written instrument signed by both parties.
24.18 Nondiscrimination. Tenant for itself and its officers, directors,
shareholders, partners, principals, employees, agents, representatives, and
other related entities and individuals, agrees to comply fully with any and all
laws and other requirements prohibiting discrimination against any person or
group of persons on account of race, color, religion, creed, sex, marital
status, sexual orientation, national origin, ancestry, age, physical handicap or
medical condition, in the use occupancy or patronage of the Premises and/or of
Tenant's business, Tenant shall indemnify and hold Landlord and its affiliates
harmless from and against all damage and liability incurred by Landlord in the
event of any violation of the foregoing covenant or because of any event of or
practice of discrimination against any such persons or group of persons by
Tenant or its officers, directors, shareholders, partners, principals,
employees, agents, representatives, and other related entities and individuals
in accordance with the indemnification provisions of Article 13.
24.19 Notice. Any and all notices to either party shall be personally
delivered or sent by regular mail, postage prepaid, addressed to the party to be
notified at the address specified in Section 1.1 , or at such other address as
such party may from time to time designate in writing. Notice shall be deemed
delivered on the date of personal delivery or three (3) business days after
deposit in the U.S. Mail, certified, return receipt requested.
24.20 Partial Invalidity. If any provision of this Lease is determined by
a court of competent jurisdiction to be invalid or unenforceable, the remainder
of this Lease shall not be affected thereby. Each provision shall be valid and
enforceable to the fullest extent permitted by law.
24.21 Quiet Enjoyment. Landlord agrees that Tenant, upon paying the rent
and performing the terms, covenants and conditions of this Lease, may quietly
have, hold and enjoy the Premises from and after Landlord's delivery of the
Premises to Tenant and until the end of the Lease Term, subject, however, to the
lien and provisions of any mortgage or deed of trust to which this Lease is or
shall become subordinate.
24.22 Recording. Tenant shall not record this Lease or any memorandum
hereof without Landlord's prior written consent.
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24.23 Relationship of the Parties. Nothing contained in this Lease shall
be deemed or construed as creating a partnership, joint venture, principal-
agent, or employer-employee relationship between Landlord and any other person
or entity (including, without limitation, Tenant) or as causing Landlord to be
responsible in any way for the debts or obligations of such other person or
entity.
24.25 Rights of Redemption Waived. Tenant hereby expressly waives any and
all rights of redemption under any present or future laws in the event Tenant is
evicted or dispossessed for any cause, or in the event Landlord obtains
possession of the Premises by reason of Tenant's violation of any of the
covenants and conditions of this Lease or otherwise.
24.26 Time of Essence. Time is of the essence of each and every provision
of this Lease.
24.27 Transfer of Landlord's Interest. In the event of a sale,
assignment, exchange or other disposition of Landlord's interest in the
Premises, other than a transfer for security purposes only, Landlord shall be
relieved of all obligations and liabilities accruing hereunder after the
effective date of said sale, assignment, exchange or other disposition, provided
that any Security Deposit or other funds then held by Landlord in which Tenant
has an interest are delivered to Landlord's successor. The obligations to be
performed by Landlord hereunder shall be binding on Landlord's successors and
assigns only during their respective periods of ownership.
24.28 Waiver. No provision of this Lease or the breach thereof shall be
deemed waived, except by written consent of the party against whom the waiver is
claimed. A waiver of any such breach shall not be deemed a waiver of any
preceding or succeeding breach of the same or any other provision. No delay or
omission by Landlord in exercising any of its remedies shall impair or be
construed as a waiver thereof, unless such waiver is expressly set forth in a
writing signed by Landlord. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant,
other than the failure of Tenant to pay the particular rental so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent.
THE SUBMISSION OF THIS LEASE FOR EXAMINATION AND/OR SIGNATURE BY
TENANT IS NOT A COMMITMENT BY LANDLORD OR ITS AGENTS TO RESERVE THE
PREMISES OR TO LEASE THE PREMISES TO TENANT. THIS LEASE SHALL BECOME
EFFECTIVE AND LEGALLY BINDING UPON ONLY UPON FULL EXECUTION AND
DELIVERY BY BOTH LANDLORD AND TENANT. UNTIL LANDLORD DELIVERS A FULLY
EXECUTED COUNTERPART HEREOF TO TENANT, LANDLORD HAS THE RIGHT TO OFFER
AND TO LEASE THE PREMISES TO ANY OTHER PERSON TO THE EXCLUSION OF
TENANT.
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EXECUTED, by Landlord and Tenant as of the date first written above.
<TABLE>
<CAPTION>
TENANT: LANDLORD:
<S> <C>
Sequenom, Inc. Sorrento Business Complex, a Limited
a California corporation Partnership, by: Collins Development Company,
General Partner
By:/s/ illegible By:/s/ illegible
---------------------------------- -------------------------------------
Title: President CEO Sequenom, Inc. Title:
------------------------------- ----------------------------------
By: By:/s/ illegible
---------------------------------- -------------------------------------
Title: Title:
------------------------------ ---------------------------------
Tenant's Information:
Driver's Lic. No. _______________
SSNEIN __________________________
</TABLE>
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FIRST ADDENDUM TO STANDARD INDUSTRIAL GROSS LEASE
-------------------------------------------------
This Addendum is made to that certain Standard Industrial Gross Lease dated
December 4, 1996, by and between Sorrento Business Complex, a Limited
Partnership ("Landlord") and Sequenom, Inc., a California corporation ("Tenant")
for Suite A, located at 11555 Sorrento Valley Road, San Diego, California,
containing approximately 11,971 square feet.
25. Tenant Improvements:
-------------------
25.1 Space Plan; Construction: Tenant shall arrange to have tenant improvements
------------------------
("Tenant Improvements") constructed in the premises in accordance with plans and
specifications ("Plans and Specifications") prepared by Tenant's architect and
approved by Landlord and Tenant, which approval shall not be unreasonably
withheld, within fifteen (15) days of Tenant's submitting the same to Landlord
("Approval"). Upon full execution of the lease and as soon after the Approval
as is reasonably practicable, Tenant shall cause its general contractor to
commence construction of the Tenant Improvements and shall thereafter exercise
reasonable efforts to complete the Tenant Improvements by April 1, 1997. The
rent shall commence April 1, 1997, regardless of whether the Tenant Improvements
are completed by Tenant prior to April 1, 1997, or thereafter.
25.2 Tenant Improvement Allowance: Landlord hereby grants to Tenant a tenant
----------------------------
improvement allowance ("Allowance") of Twenty Five Thousand Dollars ($25,000),
which Landlord shall pay to Tenant to reimburse Tenant for the cost of the
Tenant Improvements. Prior to the commencement of construction of the Tenant
Improvements, Tenant shall prepare and submit to Landlord for Landlord's
approval a line item construction budget ("Budget") setting forth the cost of
the Tenant Improvements. If the Budget (as approved by Landlord) exceeds the
Allowance, the excess costs ("Excess Costs") shall he borne by Tenant. The
tenant improvement allowance shall be promptly paid to Tenant as follows: fifty
percent (50%) upon fifty percent (50%) completion of the work and fifty percent
(50%) upon the completion of tenant improvements. Tenant shall request
reimbursement of said allowance in writing and provide receipts evidencing the
completion of the construction, together with lien releases, building permits
and any other documentation reasonably required by Landlord. If Tenant does not
complete such Tenant Improvements by April 30, 1997, the allowance shall expire
and Landlord shall have no obligation to further supply said allowance.
25.3 Changes to Tenant Improvements: Should Tenant desire to make any changes
-------------------------------
or additions to the Tenant Improvements, Tenant shall request such changes in
writing, which request shall be accompanied by a sufficiently detailed
description of the requested changes or additions, and, if reasonably requested
by Landlord, a set of working drawings for such requested changes or additions.
Landlord shall have the right to approve such requested changes or additions, or
disapprove such requested changes or additions if, in the Landlord's good faith
judgment, the requested changes or additions will have an adverse effect on the
value of the premises for reletting. If Landlord approves such requested
changes or additions, Tenant shall bear 100% of the cost (if any) attributable
to such changes or additions. Any increased costs due to delays in the work
caused by the integration of such changes or additions, any delays in the work
to be done by Tenant, and any deficiencies, errors or omissions in any plans,
specifications or other documents provided by Tenant shall be paid by Tenant.
26. Option to Renew. Provided Tenant is not in default under the term of this
----------------
Lease beyond applicable cure periods, and provided further that no condition
exists that, with the giving of notice or the passage of time or both would
constitute a default under this Lease, Tenant shall have the option (the
"Option") to extend the term of this Lease for one (1) additional period of two
(2) years upon all of the terms and conditions of the Lease, other than the
Minimum Monthly Rent, which shall be determined as described below. The Option
must be exercised, if at all, by Tenant giving Landlord written notice of the
exercise thereof no less than one hundred eighty (180) days prior to the
expiration of the Lease Term. Any failure of Tenant to give due notice of its
exercise of the Option within such time shall constitute an irrevocable election
on the part of Tenant not to exercise the Option.
The Minimum Monthly Rent during the Option Term shall be the then "Fair Market
Rental Value" of the Premises, as defined below; provided, however, that in no
event shall the Minimum Monthly Rent for any portion of the Option Term be less
than the Minimum Monthly Rent in effect for the last month of the Term
immediately preceding the commencement of the Option Term, regardless of any
determination of a Fair Market Rental Value
1
<PAGE>
pursuant to the other provisions of this Section that would result in a lower
Minimum Monthly Rent. Upon exercise of the Option, Landlord and Tenant shall, in
good faith, attempt to reach a mutually acceptable Fair Market Rental Value of
the Premises and consequent Minimum Monthly Rent for the Option Term.
If Landlord and Tenant cannot agree upon the Fair Market Rental Value within
thirty (30) days of Tenant's exercise of the Option, then, within five (5) days
thereafter, Landlord and Tenant shall each select and notify the other of the
name of an "Evaluator," who, for purposes of the Lease, shall be an independent
and impartial real estate professional (such as a licensed real estate agent)
having more than ten years' experience in the leasing of space comparable to the
Premises. Each Evaluator shall promptly proceed to select a third Evaluator,
who shall have the aforesaid qualifications of an Evaluator. Such third
Evaluator shall determine the Fair Market Rental Value of the Premises and shall
deliver to both Landlord and Tenant a copy of such determination within thirty
(30) days after his or her appointment as the third Evaluator. The parties
agree that the third Evaluator's determination as aforesaid shall be considered
as the Fair Market Rental Value of the Premises and shall be conclusive and
binding upon Landlord and Tenant. If the original two Evaluators shall fail to
agree upon the selection of a third Evaluator, the same shall be designated by
the president of the San Diego Board of Realtors, or any successor organization
thereto. Landlord and Tenant shall each pay any fees of their own Evaluator and
shall share equally the fees of the third Evaluator, if any.
As used herein, the term "Fair Market Rental Value" shall mean the then-
prevailing rental for space comparable to the Premises in the Sorrento Valley
area of the City of San Diego that a willing, comparable Tenant would pay to a
willing Landlord, neither of whom is compelled to rent, at arms length during a
term as the case may be on all of the terms and conditions of the Lease (other
than the Minimum Monthly Rent, which is to be determined pursuant to this
Section, and taking into account the option lease term elected by Tenant). The
determination of Fair Market Rental Value shall also include any appropriate
adjustments over the term of the Option Term in the Minimum Monthly Rent based
on the cost of living or otherwise, including any minimums and maximums in the
adjustment thereof.
27. Right of First Offer on Adjacent Space. Provided that Tenant is not in
--------------------------------------
default under the terms of this Lease beyond applicable cure periods, and
provided that no condition exists that with the giving of notice or the passage
of time or both would constitute a default under this Lease, Landlord agrees
that it will offer to lease any unleased portion of 11555 Sorrento Valley Road
(the "Additional Space") to Tenant prior to offering the Additional Space to any
other person. Tenant shall have ten (10) days after receipt of such offer to
accept or reject the same. Tenant's failure to accept the same in writing
unconditionally and without change within such 10-day period shall constitute a
rejection of such offer. The rental rate and term of occupancy applicable to
the Additional Space shall be as set forth in this Lease, except that (i) the
Minimum Monthly Rent shall be increased by the proportion that the square
footage of the Premises is thereby increased, effective upon the date possession
of the Additional Space is delivered to Tenant (thereby resulting in the same
per-square-foot rate as then applicable to the initial Premises), (ii) Tenant
shall not be entitled to any abated rent or rental concession, notwithstanding
any such items as may have been contained it this Lease, and (iii) Tenant's
share of Maintenance and Repairs, excess Real Property Taxes, excess insurance
costs and other items (and any impound thereof) shall be increased by the
proportion that the square footage of the Premises is thereby increased,
effective upon the date possession of the Additional Space is delivered to
Tenant. If Landlord's offer is rejected or deemed rejected, then Landlord shall
be free to let the Additional Space covered by such offer to any person, on
terms and conditions determined by Landlord (which may be more or less
advantageous than those offered to Tenant).
28. Replacement/Upgrade of HVAC System. Notwithstanding anything to the
----------------------------------
contrary contained in the Lease, in the event the existing HVAC equipment
serving the Premises requires replacement during the Lease Term. Landlord shall
not include in the cost of Maintenance or Repairs the expense of any replacement
HVAC system with capacity substantially similar to the existing HVAC system.
The parties acknowledge that Tenant may desire to increase the HVAC capacity
serving the Premises and may elect (subject to all of the other terms and
conditions of this Lease) to install additional HVAC equipment serving the
Premises. However, in order to achieve efficiencies of equipment expense and
air handling in the Premises, Tenant agrees to give Landlord the opportunity to
replace the existing HVAC equipment serving the Premises with a system with an
increased capacity equal to that of the existing system plus that of the
additional system planned by Tenant. If Landlord elects to replace the existing
HVAC system at the time of such upgrade, then Landlord shall undertake to do
such work, and Tenant shall only pay the increased cost of the system
attributable to the increase in the system's capacity required by Tenant. In no
2
<PAGE>
event shall Tenant be required to pay more that it otherwise would have paid for
an additional, separate system. Landlord shall have the right to require
Tenant's contribution to be deposited with Landlord prior to the commencement of
the work.
For example, if the replacement of Landlord's system would have cost $200,000
and if Tenant's additional HVAC equipment would have cost $40,000, and if a
single system with a capacity equal to the combined capacities of the Landlord's
initial system and Tenant's additional system costs $220,000, then Tenant's
contribution shall be $20,000.
29. Additional Rent; Audit at Election of Tenant. Notwithstanding my provision
--------------------------------------------
in Section 4.6 to the contrary, Tenant shall have the right to audit Landlord's
determination of any Additional Rent due with an accounting firm reasonably
acceptable to Landlord. If such accounting firm shall determine that Landlord's
determination of any Additional Rent is overstated by more than five (5)
percent. Landlord shall bear the cost of such audit. The determination of such
accounting firm shall be final. Any overpayments or underpayment shall be
subject to the provisions of Section 4.5 herein.
30. Damage or Destruction; Condemnation.
-----------------------------------
30.1 Notwithstanding anything in Section 16.9 to the contrary, if any damage,
by any casualty occurs that decreases the rentable square footage of the
Premises by 25% or more, and if the remaining portion of the Premises is
insufficient for Tenant's use, and if such damage is expected to take or shall
take more than one hundred twenty (120) days to repair or if such casualty
occurs during the last six (6) months of the then-current term of the Lease,
then Tenant may terminate this Lease within 30 days of the occurrence of such
damage.
30.2 Notwithstanding anything in Section 17.1 to the contrary, if any
Condemnation occurs that permanently decreases the rentable square footage of
the Premises by 25% or more, and if the remaining portion of the Premises is
insufficient for Tenant's use, the lease will terminate at Tenants electing with
30 days written notice.
31. Non-Disturbance. Notwithstanding anything in Section 19.1 to the contrary,
---------------
Tenant's obligation to subordinate this Lease (and the automatic subordination
of this Lease under the terms of Section 19.1) shall, with respect to all future
ground leases, mortgages, deeds of trust and other security instruments, be
conditioned upon Tenant having first have received an executed non-disturbance
agreement wherein such ground lessor, mortgagee or beneficiary agrees not to
disturb Tenant's right to quiet possession and other rights under this Lease so
long as Tenant pays the rent and performs its other obligations under this
Lease.
32. Limit on Additional Rent in First Lease Year. Notwithstanding anything in
--------------------------------------------
Section 29 to the contrary, if any amounts due under the Lease are based upon
Tenant's Rentable Square Footage in the Building (including, without limitation,
excess Real Property Taxes, excess insurance premiums and Utilities), during the
first Lease Year Tenant's Rentable Square Footage shall be 9,515 square feet
until such time as Tenant occupies and makes use of the space comprising 2,500
square feet and identified on Exhibit A as the "Other Lease Area," during which
time Tenant's Rentable Square Foot shall increase to 11,971 square feet. The
foregoing provision shall have no force or effect after the first Lease Year.
32. Early Occupancy. Tenant shall have the right to occupy the Premises
---------------
beginning March 15, 1997. Tenant shall not be responsible for the payment of
minimum monthly rent during such early occupancy.
33. Balance of Any Overpaid Impound Amounts. If a positive balance of any
---------------------------------------
impound account under Section 4.5 exists as of the date the term of this Lease
expires or has otherwise terminated, then such overpayment shall be paid by
Landlord to Tenant promptly after the expiration or the termination of this
Lease.
34. Documentation of Additional Rent Charges. At Tenant's request, Landlord
----------------------------------------
shall provide documentation reasonably satisfactory to Tenant concerning
Tenant's obligation to pay excess Real Property Taxes or personal property taxes
under Section 8.1 and/or 8.3, and Tenant's obligation to pay excess insurance
premiums under Section 9.4.
3
<PAGE>
35. Calculation of Excess Real Property Taxes. Notwithstanding the provisions
-----------------------------------------
of Section 8.2 to the contrary, Landlord agrees not to impose upon Tenant any
charges for excess real property taxes attributable to assessments or other Real
Property Taxes not paid over the longest period of time permitted by law without
penalty or additional charge.
36. Utility Interruption. Notwithstanding anything set forth in Article 10 to
--------------------
the contrary, if any failure or interruption of utilities lasts more than
fifteen (15) consecutive days, and if such failure or interruption is caused by
the sole negligence of Landlord, Tenant shall be entitled to an equitable
abatement of rent commencing after such fifteenth (15th) day to the extent such
failure or interruption interferes with Tenant's operations.
37. Permitted Transfers. Notwithstanding the provisions of Section 18.1,
-------------------
Landlord's consent shall not be required to any Transfer in the event of any
merger of Tenant into or with any other entity, sale of Tenant as a going
concern, or any corporate consolidation or reorganization of Tenant, so long as
the combined entity has a net worth and current assets ratio at least equal to
that of Tenant at the time of such event and Tenant promptly gives Landlord
notice thereof.
38. Remedies. Sections 2l(a), 21(b) and 2l(c) are hereby deleted and replaced
--------
with the following:
(a) Failure to pay when due the rent or any other monetary sums
required hereunder if such failure continues for ten (10) days after
written notice by Landlord to Tenant. Landlord's notice described herein
is intended to satisfy, and is not in addition to, any and all legal
notices required prior to commencement of an unlawful detainer action,
including without limitation the notice requirements of California Code of
Civil Procedure Sections 1161 et seq.
(b) Failure to perform any other agreement or obligation of
Tenant hereunder, if such failure continues for thirty (30) days after
written notice by Landlord to Tenant, except as to those Events of Default
that are non-curable, in which case no such grace period shall apply
(provided, however, that if such default cannot be cured within such thirty
(30) day period, then so long as Tenant is diligently pursuing a cure, such
period shall be extended for up to one hundred twenty (120) days).
Landlord's notice described herein is intended to satisfy, and is not in
addition to, any and all legal notices required prior to commencement of an
unlawful detainer action, including without limitation the notice
requirements of California Code of Civil Procedure Sections 1161 et. seq.
(c) Abandonment or vacation of the Premises by Tenant, or failure
to occupy the Premises for a period of ten (10) consecutive days, unless
Tenant continues to pay rent and is performing it other obligations under
this Lease..
39. Late Charge. Notwithstanding Section 22.4, Landlord shall only impose the
-----------
late charge required under Section 22.4 for the first late payment in any twelve
(12) month period only after thirty (30) days have elapsed from the date such
payment was due.
40. Financial Statements. Notwithstanding Section 24.12, so long as Sequenom,
--------------------
Inc. has not assigned or sublet the Premises or any part thereof, Landlord
agrees that Tenant's year-end financial statements for the year immediately past
shall be sufficient financial statements for the purposes described in Section
24.12.
41. Rules and Regulations. With respect to the Rules and Regulations, Landlord
---------------------
agrees not to unreasonably withhold or delay its consent to the installation of
any aerial, satellite dish, transceiver or other electronic communication
equipment under Section 2 of the Rules and Regulations. Additionally, Landlord
agrees that Section 7 of the Rules and Regulations shall not prohibit Tenant
from maintaining a microwave oven, toaster or coffee machine in the Premises.
4
<PAGE>
42. Notice to Lender. In Section 9.3. the words "Landlord's lender" that
----------------
appear in two places are hereby replaced with the words "Landlord's lender of
which Tenant is given written notice."
All other terms and conditions of said Lease shall remain in full force and
effect.
Sequenom, Inc., Sorrento Business Complex, a Limited
a California corporation Partnership
By: /s/ Fareed Kureshy By: Collins Development Company,
--------------------------------- General Partner
By: President By /s/ Robert Petersen
--------------------------------- ----------------------------
By Robert Petersen
"Tenant" "Landlord"
Date 2/13/97 Date 2/18/97
--------------- ------------------
5
<PAGE>
SECOND AMENDMENT TO STANDARD INDUSTRIAL GROSS LEASE
---------------------------------------------------
This Second Amendment ("Second Amendment") is made to that certain Standard
Industrial Gross Lease dated December 12, 1996, and amended 3/31/98, (the
"Master Lease") by and between Sorrento Business Complex, a Limited Partnership
("Landlord") and Sequenom, Inc., a California Corporation ("Tenant"), for Suite
A, located at 11555 Sorrento Valley Road, San Diego, California, containing
approximately 11,971 square feet, which was subsequently expanded to 15,784
square feet, per the First Amendment.
RECITALS
A. Tenant desires to increase its square footage by an additional 940
square feet on the second floor of the building located at 11555 Sorrento Valley
Road, San Diego, California.
B. Tenant desires to increase its square footage by 1,210 square feet of
warehouse area located at 11575 Sorrento Valley Road, Suite 207.
C. Tenant desires to occupy both of these additional premises for the
duration of the existing lease, which term ends on March 31, 2000.
The lease is hereby amended as follows:
Section 1.2 Description of Premises: Tenant square footage shall increase
------------------------------------
by an additional 940 square feet, known as Suite G, located at 11555 Sorrento
Valley Road, San Diego, California, and an additional 1,210 square feet, known
as Suite 207, located at 11575 Sorrento Valley Road, San Diego, California,
(each a "Premise" and collectively, the "Premises"). The total square footage
shall be 17,934 square feet.
Section 1.3 Commencement Date on Expansion Area: The commencement date
------------------------------------------------
for Suite G, consisting of 940 square feet, at 11555 Sorrento Valley Road, shall
be December 15, 1998. The commencement date for Suite 207, located at 11575
Sorrento Valley Road, consisting of 1,210 square feet, shall be November 1,
1998.
Section 3.2 Delay in Commencement: If Landlord can not deliver possession
---------------------------------
of either expansion Premise to Tenant on such Premises commencement date
specified in this Second Amendment for any reason, Landlord shall not be subject
to any liability therefore. Such non-delivery shall not affect the validity of
the Master Lease nor the obligation of the Tenant hereunder, provided, however,
(a) Tenant shall not be obligated to pay rent for either of the expansion
Premises until the possession of such Premise is delivered to Tenant, and (b) if
the possession of either of the Premises is not delivered to Tenant within sixty
(60) days of such Premises commencement date, Tenant may at its sole discretion
elect to terminate this Second Amendment with respect to the undelivered Premise
by delivering written notice to Landlord within ten (10) days thereafter, in
which event the parties shall be discharged from all further obligations
hereunder.
Section 1.4 Lease Term: The Premises shall be leased co-terminus with the
----------------------
master lease and shall begin on the commencement date and end on the last day of
the calendar month of March, 2000, the expiration of the Master Lease.
<PAGE>
Section 1.5 Minimum Monthly Rent: If the premises are not delivered to the
--------------------------------
Tenant on such Premises' respective commencement date, the rent listed below
will be reduced pro rata for each day (including the commencement day) that
Tenant is unable to occupy the undelivered Premise.
11/1/98- $24,628 per month;
12/15/98-3/13/99 $25,850 per month.
4/1/99-3/31/2000 $26,978 per month.
Tenant Improvements: Landlord, at Landlord's sole expense, shall provide
-------------------
the following:
1. The existing electrical, mechanical, lighting and plumbing systems to
be in good working order for both Suite G and Suite 207 within the Sorrento
Business Complex upon the commencement date of the lease.
2. Suite G, located at 11555 Sorrento Valley Road, shall be re-painted and
if Tenant reasonably determines that the carpet needs to be replaced, it will be
replaced at building standard.
3. Suite 207, located at 11575 Sorrento Valley Road, shall be cleaned and
will be provided on an "as is" basis, provided that Tenant shall agree to the
"as is" basis immediately prior to its occupancy of such Premise. By taking
possession of the Premises, Tenant acknowledges that it has examine the Premises
and accepts the condition of the Premises as to "good working order" as used in
this Second Amendment. All of the provisions of the Master Lease regarding
acceptance of the Premises shall apply to both Suite G and Suite 207.
All other terms and conditions contained in the Master Lease shall remain in
full force and effect.
<TABLE>
<CAPTION>
Sequenom, Inc., Sorrento Business Complex, a Limited
a California Corporation Partnership, by: Collins Development Collins
Development Company, General Partner
<S> <C>
By /s/ Steve Zaniboni By /s/ Robert Petersen
------------------------------ ---------------------------------------
By By /s/ Robert Petersen
------------------------------ ---------------------------------------
"Tenant" "Landlord"
Date 11/2/98 Date 11/19/98
---------------------------- -------------------------------------
</TABLE>
2
<PAGE>
THIRD AMENDMENT TO STANDARD INDUSTRIAL GROSS LEASE
--------------------------------------------------
This Third Amendment ("Third Amendment") is made to that certain Standard
Industrial Gross Lease dated December 12, 1996, and amended 3/31/98 and 11/2/98,
(the "Master Lease") by and between Sorrento Business Complex, a Limited
Partnership ("Landlord") and Sequenom, Inc., a California Corporation
("Tenant"), for Suite A, located at 11555 Sorrento Valley Road, San Diego,
California, containing approximately 11,971 square feet, which was subsequently
expanded to 15,784 square feet, per the First Amendment and 17,934 square feet
per the Second Amendment.
RECITALS
A. Tenant desires to increase its square footage by an additional 5,105
square feet of space on the second floor of the building located at 11555
Sorrento Valley Road, San Diego, California.
B. Tenant desires to extend its lease term for an additional two (2) years
through 3/31/2002.
The lease is hereby amended as follows:
Section 1.2 Description of Premises: Tenant square footage shall increase
------------------------------------
by an additional 5,105 square feet, known as Suite F & H, located at 11555
Sorrento Valley Road, San Diego, California. The total square footage shall be
23,039 square feet.
Section 1.3 Commencement Date of Rent on Expansion Area: The commencement
--------------------------------------------------------
date for Suite F & H shall be February 1, 1999.
Section 3.2 Delay in Commencement: If Landlord can not deliver possession
----------------------------------
of the expansion premises to Tenant on such premises commencement date specified
in this Third Amendment for any reason, Landlord shall not be subject for
liability therefore. Such non-delivery shall not affect the validity of the
Master Lease nor the obligation of the Tenant hereunder; provided, however, (a)
Tenant shall not be obligated to pay rent for the expansion premises until the
possession of Suite F & H is delivered to Tenant, and (b) if the possession of
Suite F & H is not delivered to Tenant within sixty (60) days of such
commencement date, Tenant may at its sole discretion elect to terminate the
Third Amendment with respect to the undelivered premises by delivering written
notice to Landlord within ten (10) days thereafter, in which event the parties
shall be discharged from all further obligations with regard to the expansion
premises hereunder.
Section 1.4 Lease Term: The lease term shall be extended for an additional
-----------------------
two (2) years, commencing April 1, 2000 and ending on the last day of the
calendar month of March, 2002, the new expiration date of the lease.
Section 1.5 Minimum Monthly Rent: If the expansion premises in Suite F & H
---------------------------------
are not delivered to the Tenant on such premises' commencement date, the rent
listed below will be reduced pro rata for each day (including the commencement
day) that Tenant is unable to occupy the undelivered expansion premise.
Section 1.5 Minimum Monthly Rent Continued:
-------------------------------------------
The minimum monthly rent shall be as follows:
2/1/1999 - 3/31/2000 $32,942 per month
4/1/2000 - 3/31/2001 - $46,087 per month
4/1/2001 - 3/31/2002 - $47,921 per month
1. Tenant Improvement Allowance: Landlord hereby grants to Tenant a
---------------------------------
Tenant Improvement Allowance ("Allowance") of Twenty-Five Thousand Dollars
($25,000), which Landlord shall pay to Tenant to reimburse Tenant for the Cost
of the Tenant Improvements. Prior to the commencement of construction of the
Tenant Improvements, Tenant shall prepare and submit to Landlord for Landlord's
reasonable approval a line item construction budget
<PAGE>
("Budget") setting forth the costs of Tenant Improvements,. If the Budget (as
approved by Landlord) exceeds the Allowance, the excess costs ("Excess Costs")
shall be borne by Tenant. The Tenant Improvement Allowance shall be promptly
paid to Tenant upon completion of the Tenant Improvements. Tenant shall request
reimbursement of said allowance in writing and provide receipts evidencing the
completion of the construction, together with lien releases, appropriate
building permits and any other documentation reasonably required by Landlord. If
Tenant does not complete such Tenant Improvements by December 31, 1999, the
allowance shall expire and Landlord shall have no obligation to further supply
said allowance.
It is understood that the premises shall be cleaned and is being provided
on an "as is" basis, provided that Tenant agrees to the "as is" basis
immediately prior to its occupancy of the expansion area. By taking possession
of the premises, Tenant acknowledges that it has examined the expansion premises
and accepts the condition of the expansion premises as to "good working order"
as used in this Third Amendment. All of the provisions of the Master Lease
regarding acceptance of the premises shall apply to the expansion suites.
Right of First Offer on Remaining Space in Building: During the entire
----------------------------------------------------
Term prior to leasing or offering to lease any space in the Building contiguous
to the Premises on the open market, Landlord agrees to first offer the space to
Tenant, 2/99 - 3/00 $.28/sq ft, 4/00 - 3/01 $2.00/sq ft, 4/01 - 3/02 $2.08/sq
ft, for such space as determined by the Landlord in its sole discretion. If,
within five (5) business days of such an offer, Tenant agrees to rent such
space, the Additional Space shall be included in the Premises and be leased to
Tenant under the offered terms. If Landlord's offer is rejected or deemed
rejected, then Landlord shall be free to let the Additional Space to any person,
on terms and conditions as may be acceptable to Landlord. If Landlord has not
received a proposal from a potential tenant that leads to the consummation of
the lease for the Additional Space within four (4) months of the date Tenant
rejects or is deemed to have rejected Landlord's offer, then Landlord shall not
let the Additional Space without re-offering the same to Tenant pursuant to the
Terms of this Section.
All other terms and conditions contained in the Master Lease remain in full
force and effect.
Sorrento Business Complex, a
Limited Partnership, by: Collins
Sequenom, Inc., Development Company,
a California Corporation General Partner
By: /s/ Steve Zaniboni By: /s/ illegible
--------------------------- -------------------------
By: /s/ illegible By: /s/ illegible
--------------------------- -------------------------
"Tenant" "Landlord"
Date: 2/12/99 Date: 2/19/99
-------------- ----------------
<PAGE>
EXHIBIT 10.48
INDEMNIFICATION AGREEMENT
(Directors)
THIS AGREEMENT is made and entered into this ____ day of _____________,
1999 between Sequenom, Inc., a Delaware corporation ("Corporation"), whose
address is 11555 Sorrento Valley Road, San Diego, California 92121 and
__________________ ("Director"), whose address is __________________.
RECITALS:
A. WHEREAS, Director, a member of the Board of Directors of Corporation,
performs a valuable service in such capacity for Corporation; and
B. WHEREAS, the Certificate of Incorporation of Corporation authorizes and
permits contracts between Corporation and the members of its Board of Directors
with respect to indemnification of such directors; and
C. WHEREAS, the Board of Directors of Corporation have adopted Bylaws (the
"Bylaws") providing for the indemnification of the officers, directors, agents
and employees of Corporation to the maximum extent authorized by Section 145 of
the Delaware General Corporation Law, as amended (the "Law"); and
D. WHEREAS, the Bylaws and the Law, as amended and in effect from time to
time or any successor or other statutes of Delaware having similar import and
effect, currently purports to be the controlling law governing Corporation with
respect to certain aspects of corporate law, including indemnification of
directors and officers; and
E. WHEREAS, in accordance with the authorization provided by the Law,
Corporation may from time to time purchase and maintain a policy or policies of
Directors and Officers Liability Insurance ("D & O Insurance"), covering certain
liabilities which may be incurred by its directors and officers in the
performance of services as directors and officers of Corporation; and
F. WHEREAS, as a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent and overall desirability of protection afforded members of the Board of
Directors by such D & O Insurance, if any, and by statutory and bylaw
indemnification provisions; and
G. WHEREAS, in order to induce Director to continue to serve as a member
of the Board of Directors of Corporation, Corporation has determined and agreed
to enter into this contract with Director.
<PAGE>
NOW, THEREFORE, in consideration of Director's continued service as a
director after the date hereof, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. The following terms used in this Agreement shall
have the meanings set forth below. Other terms are defined where appropriate in
this Agreement.
(a) "Disinterested Director" shall mean a director of Corporation who
is not or was not a party to the Proceeding in respect of which indemnification
is being sought by Director.
(b) "Expenses" shall include all direct and indirect costs
(including, without limitation, attorneys' fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
all other disbursements or out-of-pocket expenses and reasonable compensation
for time spent by Director for which he or she is otherwise not compensated by
Corporation) actually and reasonably incurred in connection with a Proceeding or
establishing or enforcing a right to indemnification under this Agreement,
applicable law or otherwise; provided, however, that "Expenses" shall not
include any Liabilities.
(c) "Final Adverse Determination" shall mean that a determination
that Director is not entitled to indemnification shall have been made pursuant
to Section 5 hereof and either (i) a final adjudication in a Delaware court or
decision of an arbitrator pursuant to Section 13(a) hereof shall have denied
Director's right to indemnification hereunder, or (ii) Director shall have
failed to file a complaint in a Delaware court or seek an arbitrator's award
pursuant to Section 13(a) for a period of one hundred twenty (120) days after
the determination made pursuant to Section 5 hereof.
(d) "Independent Legal Counsel" shall mean a law firm or member of a
law firm selected by Corporation and approved by Director (which approval shall
not be unreasonably withheld) and that neither is presently nor in the past five
years has been retained to represent: (i) Corporation, in any material matter,
or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Legal Counsel" shall not include any person who, under the applicable standards
of professional conduct then prevailing, would have a conflict of interest in
representing either Corporation or Director in an action to determine Director's
right to indemnification under this Agreement.
(e) "Liabilities" shall mean liabilities of any type whatsoever
including, but not limited to, any judgments, fines, ERISA excise taxes and
penalties, and penalties and amounts paid in settlement (including all interest
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines, penalties or amounts paid in settlement) of any
proceeding.
(f) "Proceeding" shall mean any threatened, pending or completed
action, claim, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative
2
<PAGE>
hearing or any other proceeding whether civil, criminal, administrative or
investigative, including any appeal therefrom.
(g) "Change of Control" shall mean the occurrence of any of the
following events after the date of this Agreement:
(i) A change in the composition of the Board of Directors of
Corporation (the "Board"), as a result of which fewer than two-thirds (2/3) of
the incumbent directors are directors who either (1) had been directors of
Corporation twenty-four (24) months prior to such change or (2) were elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the directors who had been directors of Corporation 24 months prior
to such change and who were still in office at the time of the election or
nomination; or
(ii) Any "person" (as such term is used in section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) through the
acquisition or aggregation of securities is or becomes the beneficial owner,
directly or indirectly, of securities of Corporation representing twenty percent
(20%) or more of the combined voting power of Corporation's then outstanding
securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the "Capital
Stock"), except that any change in ownership of Corporation's securities by any
person resulting solely from a reduction in the aggregate number of outstanding
shares of Capital Stock, and any decrease thereafter in such person's ownership
of securities, shall be disregarded until such person increases in any manner,
directly or indirectly, such person's beneficial ownership of any securities of
Corporation.
2. INDEMNITY OF DIRECTOR. Corporation hereby agrees to hold harmless and
indemnify Director to the fullest extent authorized or permitted by the
provisions of the Law, as may be amended from time to time.
3. ADDITIONAL INDEMNITY. Subject only to the exclusions set forth in
Section 4 hereof, Corporation hereby further agrees to hold harmless and
indemnify Director:
(a) against any and all expenses (including attorneys' fees), witness
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by Director in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation) to which
Director is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Director is, was or at any time becomes a
director, officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Director by
Corporation under the non-exclusivity provisions of the Bylaws of Corporation
and the Law.
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4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to Section
3 hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of such losses for which the Director is indemnified
pursuant to Section 2 hereof or reimbursed pursuant to any D & O Insurance
purchased and maintained by Corporation;
(b) in respect of remuneration paid to Director if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any action, suit or proceeding in which judgment is
rendered against Director for an accounting of profits made from the purchase or
sale by Director of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;
(d) on account of Director's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct if such conduct has been established by a judgment or other
final adjudication adverse to Director (an "Adverse Judgment");
(e) provided there has been no Change of Control, on account of or
arising in response to any action, suit or proceeding (other than an action,
suit or proceeding referred to in Section 14(b) hereof) initiated by Director or
any of Director's affiliates against Corporation or any officer, director or
stockholder of Corporation unless such action, suit or proceeding was authorized
in the specific case by action of the Board of Directors of Corporation; or
(f) if a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification is not lawful.
5. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) Whenever Director believes that he or she is entitled to
indemnification pursuant to this Agreement, Director shall submit a written
request for indemnification to Corporation. Any request for indemnification
shall include sufficient documentation or information reasonably available to
Director to support his or her claim for indemnification. Director shall submit
his or her claim for indemnification within a reasonable time not to exceed five
years after any judgment, order, settlement, dismissal, arbitration award,
conviction, acceptance of a plea of nolo contendere or its equivalent, final
termination or other disposition or partial disposition of any Proceeding,
whichever is the later date for which Director requests indemnification. The
President or the Secretary or other appropriate officer shall, promptly upon
receipt of Director's request for indemnification, advise the Board of Directors
in writing that Director has made such a request. Determination of Director's
entitlement to indemnification
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shall be made not later than ninety (90) days after Corporation's receipt of his
or her written request for such indemnification.
(b) The Director shall be entitled to select the forum in which
Director's request for indemnification will be heard, which selection shall be
included in the written request for indemnification required in Section 5(a).
This forum shall be any one of the following:
(i) The stockholders of Corporation;
(ii) A quorum of the Board of Directors consisting of
Disinterested Directors;
(iii) Independent Legal Counsel, who shall make the
determination in a written opinion; or
(iv) A panel of three arbitrators, one selected by Corporation,
another by Director and the third by the first two arbitrators selected. If for
any reason three arbitrators are not selected within thirty (30) days after the
appointment of the first arbitrator, then selection of additional arbitrators
shall be made by the American Arbitration Association. If any arbitrator resigns
or is unable to serve in such capacity for any reason, the American Arbitration
Association shall select his or her replacement. The arbitration shall be
conducted pursuant to the commercial arbitration rules of the American
Arbitration Association now in effect.
If Director fails to make such designation, his or her claim shall be
determined by the forum selected by Corporation.
6. PRESUMPTION AND EFFECT OF CERTAIN PROCEEDINGS. Upon making a request
for indemnification, Director shall be presumed to be entitled to
indemnification under this Agreement and Corporation shall have the burden of
proof to overcome that presumption in reaching any contrary determination. The
termination of any Proceeding by judgment, order, settlement, arbitration award
or conviction, or upon a plea of nolo contendere or its equivalent shall not
affect this presumption or, except as may be provided in Section 4 hereof,
establish a presumption with regard to any factual matter relevant to
determining Director's rights to indemnification hereunder. If the person or
persons so empowered to make a determination pursuant to Section 5(b) hereof
shall have failed to make the requested determination within thirty (30) days
after any judgment, order, settlement, dismissal, arbitration award, conviction,
acceptance of a plea of nolo contendere or its equivalent, or other disposition
or partial disposition of any Proceeding or any other event which could enable
Corporation to determine Director's entitlement to indemnification, the
requisite determination that Director is entitled to indemnification shall be
deemed to have been made.
7. CONTRIBUTION. If the indemnification provided in Sections 2 and 3 is
unavailable and may not be paid to Director for any reason other than those set
forth in Section 4, then in respect of any threatened, pending or completed
action, suit or proceeding in which Corporation is or is alleged to be jointly
liable with Director (or would be if joined in such action, suit or proceeding),
Corporation shall contribute to the amount of expenses (including
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attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Director in such proportion as is
appropriate to reflect (i) the relative benefits received by Corporation on the
one hand and Director on the other hand from the transaction from which such
action, suit or proceeding arose, and (ii) the relative fault of Corporation on
the one hand and of Director on the other hand in connection with the events
which resulted in such expenses, judgments, fines or settlement amounts, as well
as any other relevant equitable considerations. The relative fault of
Corporation on the one hand and of Director on the other shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such expenses, judgments, fines or settlement amounts. Corporation
agrees that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
8. INSURANCE AND FUNDING. Corporation hereby represents and warrants
that it shall purchase and maintain insurance to protect itself and/or Director
against any Expenses and Liabilities in connection with any Proceeding to the
fullest extent permitted by the Law. In the event of a Change of Control,
Corporation shall establish a letter of credit, as provided in Section 9, to
ensure the payment of such amounts as may be necessary to effect indemnification
or advancement of Expenses as provided in this Agreement.
9. LETTER OF CREDIT.
(a) In order to secure the obligations of Corporation to indemnify
and advance Expenses to Director pursuant to this Agreement, Corporation shall
obtain at the time of any Change of Control, upon request of any director, an
irrevocable standby letter of credit naming the directors of the Corporation in
office at the time of a Change of Control as joint beneficiaries (the "Letter of
Credit"). The Letter of Credit shall be in an appropriate amount not less than
two million dollars ($2,000,000), shall be issued by a commercial bank
headquartered in the United States having assets in excess of $10 billion and
capital according to its most recent published reports equal to or greater than
the then applicable minimum capital standards promulgated by such bank's primary
federal regulator and shall contain terms and conditions reasonably acceptable
to all directors. The Letter of Credit shall provide that Director may from time
to time draw certain amounts thereunder, upon written certification by Director
to the issuer of the Letter of Credit that (i) Director has made written request
upon Corporation for an amount not less than the amount he or she is drawing
under the Letter of Credit and that Corporation has failed or refused to provide
him with such amount in full within thirty (30) days after receipt of the
request, and (ii) Director believes that he or she is entitled under the terms
of this Agreement to the amount which he or she is drawing upon under the Letter
of Credit. The issuance of the Letter of Credit shall not, in any way, diminish
Corporation's obligation to indemnify Director against Expenses and Liabilities
to the full extent required by this Agreement.
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(b) Once Corporation has obtained the Letter of Credit, Corporation
shall maintain and renew the Letter of Credit or substitute letter of credit
meeting the criteria of Section 9(a) during the term of this Agreement so that
the Letter of Credit shall have an initial term of five years, be renewed for
successive five-year terms, and always have at least one year of its term
remaining.
10. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) and shall continue thereafter so long as Director shall be subject
to any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative, by reason of the fact that
Director was serving Corporation or such other entity in any capacity referred
to herein.
11. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by Director
of notice of the commencement of any action, suit or proceeding, Director will,
if a claim in respect thereof is to be made against Corporation under this
Agreement, notify Corporation of the commencement thereof; but the omission so
to notify Corporation will not relieve it from any liability which it may have
to Director otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which Director notifies Corporation of the
commencement thereof:
(a) Corporation will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Director. After notice from Corporation to Director of its
election to assume the defense thereof, Corporation will not be liable to
Director under this Agreement for any legal or other expenses subsequently
incurred by Director in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Director shall
have the right to employ his or her own counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after notice from
Corporation of its assumption of the defense thereof shall be at the expense of
Director unless (i) the employment of counsel by Director has been authorized by
Corporation, (ii) Director shall have reasonably concluded that there may be a
conflict of interest between Corporation and Director in the conduct of the
defense of such action or (iii) Corporation shall not in fact have employed
counsel to assume the defense of such action, in each of which cases the fees
and expenses of Director's separate counsel shall be at the expense of
Corporation. Corporation shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of Corporation or as to which
Director shall have made the conclusion provided for in (ii) above; and
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(c) Provided there has been no Change of Control, Corporation shall
not be liable to indemnify Director under this Agreement for any amounts paid in
settlement of any action or claim effected without its written consent, which
consent shall not be unreasonably withheld. Corporation shall be permitted to
settle any action except that it shall not settle any action or claim in any
manner which would impose any penalty, out-of-pocket liability, or limitation on
Director without Director's written consent.
12. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Director employs his or her own counsel
pursuant to Section 11(b)(i) through (iii) above, Corporation shall advance to
Director, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Director for such expenses.
(b) Director agrees that Director will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Director is not entitled, under the provisions of
the Law, the Bylaws, this Agreement or otherwise, to be indemnified by
Corporation for such expenses.
13. REMEDIES OF DIRECTOR.
(a) In the event that (i) a determination pursuant to Section 5
hereof is made that Director is not entitled to indemnification, (ii) advances
of Expenses are not made pursuant to this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement, or (iv) Director otherwise seeks enforcement of this
Agreement, Director shall be entitled to a final adjudication in an appropriate
court of his or her rights. Alternatively, Director at his or her option may
seek an award in arbitration to be conducted by a single arbitrator pursuant to
the commercial arbitration rules of the American Arbitration Association now in
effect, whose decision is to be made within ninety (90) days following the
filing of the demand for arbitration. The Corporation shall not oppose
Director's right to seek any such adjudication or arbitration award.
(b) In the event that a determination that Director is not entitled
to indemnification, in whole or in part, has been made pursuant to Section 5
hereof, the decision in the judicial proceeding or arbitration provided in
paragraph (a) of this Section 13 shall be made de novo and Director shall not be
prejudiced by reason of a determination that he or she is not entitled to
indemnification.
(c) If a determination that Director is entitled to indemnification
has been made pursuant to Section 5 hereof or otherwise pursuant to the terms of
this Agreement, Corporation shall be bound by such determination in the absence
of (i) a misrepresentation of a
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material fact by Director or (ii) a specific finding (which has become final) by
an appropriate court that all or any part of such indemnification is expressly
prohibited by law.
(d) In any court proceeding pursuant to this Section 13, Corporation
shall be precluded from asserting that the procedures and presumptions of this
Agreement are not valid, binding and enforceable. The Corporation shall
stipulate in any such court or before any such arbitrator that Corporation is
bound by all the provisions of this Agreement and is precluded from making any
assertion to the contrary.
(e) Expenses reasonably incurred by Director in connection with his
or her request for indemnification under this Agreement, meeting enforcement of
this Agreement or to recover damages for breach of this Agreement shall be borne
by Corporation.
(f) Corporation and Director agree herein that a monetary remedy for
breach of this Agreement, at some later date, will be inadequate, impracticable
and difficult of proof, and further agree that such breach would cause Director
irreparable harm. Accordingly, Corporation and Director agree that Director
shall be entitled to temporary and permanent injunctive relief to enforce this
Agreement without the necessity of proving actual damages or irreparable harm.
The Corporation and Director further agree that Director shall be entitled to
such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of posting bond or
other undertaking in connection therewith. Any such requirement of bond or
undertaking is hereby waived by Corporation, and Corporation acknowledges that
in the absence of such a waiver, a bond or undertaking may be required by the
court.
14. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, the Corporation shall reimburse Director for all Director's reasonable
fees and expenses in bringing and pursuing such action.
15. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any or all of
the provisions hereof shall be held to be invalid or unenforceable to any extent
for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof, or the obligation of
the Corporation to indemnify the Director to the full extent provided by the
Bylaws or the Law, and the affected provision shall be construed and enforced so
as to effectuate the parties' intent to the maximum extent possible.
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16. GOVERNING LAW. This Agreement shall be governed by and interpreted
and enforced in accordance with the internal laws of the State of Delaware.
17. CONSENT TO JURISDICTION. The Corporation and Director each
irrevocably consent to jurisdiction of the courts of the State of Delaware for
all purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.
18. BINDING EFFECT. This Agreement shall be binding upon Director and
upon Corporation, its successors and assigns, and shall inure to the benefit of
Director, his or her heirs, executors, administrators, personal representatives
and assigns and to the benefit of Corporation, its successors and assigns.
19. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties hereto and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter of
this Agreement, except as specifically referred to herein. This Agreement
supersedes any and all agreements regarding indemnification heretofore entered
into by the parties.
20. AMENDMENT AND TERMINATION. No amendment, modification, waiver,
termination or cancellation of this Agreement shall be effective for any purpose
unless set forth in writing signed by both parties hereto.
21. SUBROGATION. In the event of payment under this Agreement,
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Director, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable
Corporation effectively to bring suit to enforce such rights.
22. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Director by this
Agreement shall not be exclusive of any other right which Director may have or
hereafter acquire under any statute, provision of Corporation's Certificate of
Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding office.
23. SURVIVAL OF RIGHTS. The rights conferred on Director by this
Agreement shall continue after Director has ceased to be a director, officer,
employee or other agent of Corporation or such other entity and shall inure to
the benefit of Director's heirs, executors and administrators.
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24. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be addressed to Director or to
Corporation, as the case may be, at the address shown on page 1 of this
Agreement, or to such other address as may have been furnished by either party
to the other, and shall be deemed to have been duly given if (i) delivered by
hand and receipted for by the party to whom said notice or other communication
shall have been directed, or (ii) mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
DIRECTOR: CORPORATION:
SEQUENOM, INC.
___________________________________ By:___________________________________
(Signature) (Signature)
___________________________________ ______________________________________
Printed Name Printed Name and Title
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EXHIBIT 10.49
INDEMNIFICATION AGREEMENT
(Officers)
THIS AGREEMENT is made and entered into this ____ day of _______________,
1999 between Sequenom, Inc., a Delaware corporation ("Corporation"), whose
address is 11555 Sorrento Valley Road, San Diego, California 92121 and
__________________ ("Officer"), whose address is ___________________________.
RECITALS:
A. WHEREAS, Officer is an officer of Corporation and performs a valuable
service in such capacity for Corporation; and
B. WHEREAS, the Certificate of Incorporation of Corporation authorizes
and permits contracts between Corporation and its officers with respect to
indemnification of such officers; and
C. WHEREAS, the Board of Directors of Corporation have adopted Bylaws
(the "Bylaws") providing for the indemnification of the officers, directors,
agents and employees of Corporation to the maximum extent authorized by Section
145 of the Delaware General Corporation Law, as amended (the "Law"); and
D. WHEREAS, the Bylaws and the Law, as amended and in effect from time to
time or any successor or other statutes of Delaware having similar import and
effect, currently purports to be the controlling law governing Corporation with
respect to certain aspects of corporate law, including indemnification of
directors and officers; and
E. WHEREAS, in accordance with the authorization provided by the Law,
Corporation may from time to time purchase and maintain a policy or policies of
Directors and Officers Liability Insurance ("D & O Insurance"), covering certain
liabilities which may be incurred by its directors and officers in the
performance of services as directors and officers of Corporation; and
F. WHEREAS, as a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent and overall desirability of protection afforded officers by such D & O
Insurance, if any, and by statutory and bylaw indemnification provisions; and
G. WHEREAS, in order to induce Officer to continue to serve as an officer
of Corporation, Corporation has determined and agreed to enter into this
contract with Officer.
NOW, THEREFORE, in consideration of Officer's continued service as an
officer after the date hereof, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. The following terms used in this Agreement shall
have the meanings set forth below. Other terms are defined where appropriate in
this Agreement.
<PAGE>
(a) "Disinterested Director" shall mean a director of Corporation who
is not or was not a party to the Proceeding in respect of which indemnification
is being sought by Officer.
(b) "Expenses" shall include all direct and indirect costs
(including, without limitation, attorneys' fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
all other disbursements or out-of-pocket expenses and reasonable compensation
for time spent by Officer for which he or she is otherwise not compensated by
Corporation) actually and reasonably incurred in connection with a Proceeding or
establishing or enforcing a right to indemnification under this Agreement,
applicable law or otherwise; provided, however, that "Expenses" shall not
include any Liabilities.
(c) "Final Adverse Determination" shall mean that a determination
that Officer is not entitled to indemnification shall have been made pursuant to
Section 5 hereof and either (i) a final adjudication in a Delaware court or
decision of an arbitrator pursuant to Section 13(a) hereof shall have denied
Officer's right to indemnification hereunder, or (ii) Officer shall have failed
to file a complaint in a Delaware court or seek an arbitrator's award pursuant
to Section 13(a) for a period of one hundred twenty (120) days after the
determination made pursuant to Section 5 hereof.
(d) "Independent Legal Counsel" shall mean a law firm or member of a
law firm selected by Corporation and approved by Officer (which approval shall
not be unreasonably withheld) and that neither is presently nor in the past five
years has been retained to represent: (i) Corporation, in any material matter,
or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Legal Counsel" shall not include any person who, under the applicable standards
of professional conduct then prevailing, would have a conflict of interest in
representing either Corporation or Officer in an action to determine Officer's
right to indemnification under this Agreement.
(e) "Liabilities" shall mean liabilities of any type whatsoever
including, but not limited to, any judgments, fines, ERISA excise taxes and
penalties, and penalties and amounts paid in settlement (including all interest
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines, penalties or amounts paid in settlement) of any
proceeding.
(f) "Proceeding" shall mean any threatened, pending or completed
action, claim, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative, including any appeal therefrom.
(g) "Change of Control" shall mean the occurrence of any of the
following events after the date of this Agreement:
(i) A change in the composition of the Board of Directors of
Corporation (the "Board"), as a result of which fewer than two-thirds (2/3) of
the incumbent directors are directors who either (1) had been directors of
Corporation twenty-four (24) months prior to such change or (2) were elected, or
nominated for election, to the Board with the
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affirmative votes of at least a majority of the directors who had been directors
of Corporation 24 months prior to such change and who were still in office at
the time of the election or nomination; or
(ii) Any "person" (as such term is used in section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) through the
acquisition or aggregation of securities is or becomes the beneficial owner,
directly or indirectly, of securities of Corporation representing twenty percent
(20%) or more of the combined voting power of Corporation's then outstanding
securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the "Capital
Stock"), except that any change in ownership of Corporation's securities by any
person resulting solely from a reduction in the aggregate number of outstanding
shares of Capital Stock, and any decrease thereafter in such person's ownership
of securities, shall be disregarded until such person increases in any manner,
directly or indirectly, such person's beneficial ownership of any securities of
Corporation.
2. INDEMNITY OF OFFICER. Corporation hereby agrees to hold harmless and
indemnify Officer to the fullest extent authorized or permitted by the
provisions of the Law, as may be amended from time to time.
3. ADDITIONAL INDEMNITY. Subject only to the exclusions set forth in
Section 4 hereof, Corporation hereby further agrees to hold harmless and
indemnify Officer:
(a) against any and all legal expenses (including attorneys' fees),
witness fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Officer in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of Corporation) to which
Officer is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Officer is, was or at any time becomes a
director, officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Officer by
Corporation under the non-exclusivity provisions of the Bylaws of Corporation
and the Law.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to Section
3 hereof shall be paid by Corporation:
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of such losses for which the Officer is indemnified
pursuant to Section 2 hereof or reimbursed pursuant to any D & O Insurance
purchased and maintained by Corporation;
(b) in respect of remuneration paid to Officer if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any action, suit or proceeding in which judgment is
rendered against Officer for an accounting of profits made from the purchase or
sale by Officer of securities of Corporation pursuant to the provisions of
Section 16(b) of the Securities Exchange
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Act of 1934 and amendments thereto or similar provisions of any federal, state
or local statutory law;
(d) on account of Officer's conduct which is finally adjudged to have
been knowingly fraudulent or deliberately dishonest, or to constitute willful
misconduct if such conduct has been established by a judgment or other final
adjudication adverse to Officer (an "Adverse Judgment");
(e) provided there has been no Change of Control, on account of or
arising in response to any action, suit or proceeding (other than an action,
suit or proceeding referred to in Section 14(b) hereof) initiated by Officer or
any of Officer's affiliates against Corporation or any officer, director or
stockholder of Corporation unless such action, suit or proceeding was authorized
in the specific case by action of the Board of Directors of Corporation; or
(f) if a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification is not lawful.
5. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) Whenever Officer believes that he or she is entitled to
indemnification pursuant to this Agreement, Officer shall submit a written
request for indemnification to Corporation. Any request for indemnification
shall include sufficient documentation or information reasonably available to
Officer to support his or her claim for indemnification. Officer shall submit
his or her claim for indemnification within a reasonable time not to exceed five
years after any judgment, order, settlement, dismissal, arbitration award,
conviction, acceptance of a plea of nolo contendere or its equivalent, final
termination or other disposition or partial disposition of any Proceeding,
whichever is the later date for which Officer requests indemnification. The
President or the Secretary or other appropriate officer shall, promptly upon
receipt of Officer's request for indemnification, advise the Board of Directors
in writing that Officer has made such a request. Determination of Officer's
entitlement to indemnification shall be made not later than ninety (90) days
after Corporation's receipt of his or her written request for such
indemnification.
(b) The Officer shall be entitled to select the forum in which
Officer's request for indemnification will be heard, which selection shall be
included in the written request for indemnification required in Section 5(a).
This forum shall be any one of the following:
(i) The stockholders of Corporation;
(ii) A quorum of the Board of Directors consisting of
Disinterested Directors;
(iii) Independent Legal Counsel, who shall make the determination
in a written opinion; or
(iv) A panel of three arbitrators, one selected by Corporation,
another by Officer and the third by the first two arbitrators selected. If for
any reason three arbitrators
4
<PAGE>
are not selected within thirty (30) days after the appointment of the first
arbitrator, then selection of additional arbitrators shall be made by the
American Arbitration Association. If any arbitrator resigns or is unable to
serve in such capacity for any reason, the American Arbitration Association
shall select his or her replacement. The arbitration shall be conducted pursuant
to the commercial arbitration rules of the American Arbitration Association now
in effect.
If Officer fails to make such designation, his or her claim shall be
determined by the forum selected by Corporation.
6. PRESUMPTION AND EFFECT OF CERTAIN PROCEEDINGS. Upon making a request
for indemnification, Officer shall be presumed to be entitled to indemnification
under this Agreement and Corporation shall have the burden of proof to overcome
that presumption in reaching any contrary determination. The termination of any
Proceeding by judgment, order, settlement, arbitration award or conviction, or
upon a plea of nolo contendere or its equivalent shall not affect this
presumption or, except as may be provided in Section 4 hereof, establish a
presumption with regard to any factual matter relevant to determining Officer's
rights to indemnification hereunder. If the person or persons so empowered to
make a determination pursuant to Section 5(b) hereof shall have failed to make
the requested determination within thirty (30) days after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or other disposition or partial disposition
of any Proceeding or any other event which could enable Corporation to determine
Officer's entitlement to indemnification, the requisite determination that
Officer is entitled to indemnification shall be deemed to have been made.
7. CONTRIBUTION. If the indemnification provided in Sections 2 and 3 is
unavailable and may not be paid to Officer for any reason other than those set
forth in Section 4, then in respect of any threatened, pending or completed
action, suit or proceeding in which Corporation is or is alleged to be jointly
liable with Officer (or would be if joined in such action, suit or proceeding),
Corporation shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Officer in such proportion as is appropriate to
reflect (i) the relative benefits received by Corporation on the one hand and
Officer on the other hand from the transaction from which such action, suit or
proceeding arose, and (ii) the relative fault of Corporation on the one hand and
of Officer on the other hand in connection with the events which resulted in
such expenses, judgments, fines or settlement amounts, as well as any other
relevant equitable considerations. The relative fault of Corporation on the one
hand and of Officer on the other hand shall be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines or settlement amounts. Corporation agrees that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or any other method of allocation which does not take
account of the foregoing equitable considerations.
8. INSURANCE AND FUNDING. Corporation hereby represents and warrants that
it shall purchase and maintain insurance to protect itself and/or Officer
against any Expenses and Liabilities in connection with any Proceeding to the
fullest extent permitted by the Law. In the event of a Change of Control,
Corporation shall establish a letter of credit, as provided in Section
5
<PAGE>
9, to ensure the payment of such amounts as may be necessary to effect
indemnification or advancement of Expenses as provided in this Agreement.
9. LETTER OF CREDIT.
(a) In order to secure the obligations of Corporation to indemnify
and advance Expenses to Officer pursuant to this Agreement, Corporation shall
obtain at the time of any Change of Control, upon request of any Officer, an
irrevocable standby letter of credit naming the Officers of the Corporation in
office at the time of a Change of Control as joint beneficiaries (the "Letter of
Credit"). The Letter of Credit shall be in an appropriate amount not less than
one million dollars ($1,000,000), shall be issued by a commercial bank
headquartered in the United States having assets in excess of $10 billion and
capital according to its most recent published reports equal to or greater than
the then applicable minimum capital standards promulgated by such bank's primary
federal regulator and shall contain terms and conditions reasonably acceptable
to all Officers. The Letter of Credit shall provide that Officer may from time
to time draw certain amounts thereunder, upon written certification by Officer
to the issuer of the Letter of Credit that (i) Officer has made written request
upon Corporation for an amount not less than the amount he or she is drawing
under the Letter of Credit and that Corporation has failed or refused to provide
him with such amount in full within thirty (30) days after receipt of the
request, and (ii) Officer believes that he or she is entitled under the terms of
this Agreement to the amount which he or she is drawing upon under the Letter of
Credit. The issuance of the Letter of Credit shall not, in any way, diminish
Corporation's obligation to indemnify Officer against Expenses and Liabilities
to the full extent required by this Agreement.
(b) Once Corporation has obtained the Letter of Credit, Corporation
shall maintain and renew the Letter of Credit or substitute letter of credit
meeting the criteria of Section 9(a) during the term of this Agreement so that
the Letter of Credit shall have an initial term of five years, be renewed for
successive five-year terms, and always have at least one year of its term
remaining.
10. CONTINUATION OF OBLIGATIONS. All agreements and obligations of
Corporation contained herein shall continue during the period Officer is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) and shall continue thereafter so long as Officer shall be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative, by reason of the fact that
Officer was serving Corporation or such other entity in any capacity referred to
herein.
11. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by Officer
of notice of the commencement of any action, suit or proceeding, Officer will,
if a claim in respect thereof is to be made against Corporation under this
Agreement, notify Corporation of the commencement thereof; but the omission so
to notify Corporation will not relieve it from any liability which it may have
to Officer otherwise than under this Agreement. With respect to any such action,
suit or proceeding as to which Officer notifies Corporation of the commencement
thereof:
6
<PAGE>
(a) Corporation will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Officer. After notice from Corporation to Officer of its
election to assume the defense thereof, Corporation will not be liable to
Officer under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ his or her own counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from Corporation of
its assumption of the defense thereof shall be at the expense of Officer unless
(i) the employment of counsel by Officer has been authorized by Corporation,
(ii) Officer shall have reasonably concluded that there may be a conflict of
interest between Corporation and Officer in the conduct of the defense of such
action or (iii) Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
Officer's separate counsel shall be at the expense of Corporation. Corporation
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of Corporation or as to which Officer shall have made
the conclusion provided for in (ii) above; and
(c) Provided there has been no Change of Control, Corporation shall
not be liable to indemnify Officer under this Agreement for any amounts paid in
settlement of any action or claim effected without its written consent, which
consent shall not be unreasonably withheld. Corporation shall be permitted to
settle any action except that it shall not settle any action or claim in any
manner which would impose any penalty, out-of-pocket liability, or limitation on
Officer without Officer's written consent.
12. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Officer employs his or her own counsel pursuant
to Section 11(b)(i) through (iii) above, Corporation shall advance to Officer,
prior to any final disposition of any threatened or pending action, suit or
proceeding, whether civil, criminal, administrative or investigative, any and
all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving copies of invoices presented to Officer for such expenses.
(b) Officer agrees that Officer will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that Officer is not entitled, under the provisions of the
Law, the Bylaws, this Agreement or otherwise, to be indemnified by Corporation
for such expenses.
13. REMEDIES OF OFFICER.
(a) In the event that (i) a determination pursuant to Section 5
hereof is made that Officer is not entitled to indemnification, (ii) advances of
Expenses are not made pursuant to this Agreement, (iii) payment has not been
timely made following a determination of entitlement
7
<PAGE>
to indemnification pursuant to this Agreement, or (iv) Officer otherwise seeks
enforcement of this Agreement, Officer shall be entitled to a final adjudication
in an appropriate court of his or her rights. Alternatively, Officer at his or
her option may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the commercial arbitration rules of the American
Arbitration Association now in effect, whose decision is to be made within
ninety (90) days following the filing of the demand for arbitration. The
Corporation shall not oppose Officer's right to seek any such adjudication or
arbitration award.
(b) In the event that a determination that Officer is not entitled to
indemnification, in whole or in part, has been made pursuant to Section 5
hereof, the decision in the judicial proceeding or arbitration provided in
paragraph (a) of this Section 13 shall be made de novo and Officer shall not be
prejudiced by reason of a determination that he or she is not entitled to
indemnification.
(c) If a determination that Officer is entitled to indemnification
has been made pursuant to Section 5 hereof or otherwise pursuant to the terms of
this Agreement, Corporation shall be bound by such determination in the absence
of (i) a misrepresentation of a material fact by Officer or (ii) a specific
finding (which has become final) by an appropriate court that all or any part of
such indemnification is expressly prohibited by law.
(d) In any court proceeding pursuant to this Section 13, Corporation
shall be precluded from asserting that the procedures and presumptions of this
Agreement are not valid, binding and enforceable. The Corporation shall
stipulate in any such court or before any such arbitrator that Corporation is
bound by all the provisions of this Agreement and is precluded from making any
assertion to the contrary.
(e) Expenses reasonably incurred by Officer in connection with his or
her request for indemnification under this Agreement, meeting enforcement of
this Agreement or to recover damages for breach of this Agreement shall be borne
by Corporation.
(f) Corporation and Officer agree herein that a monetary remedy for
breach of this Agreement, at some later date, will be inadequate, impracticable
and difficult of proof, and further agree that such breach would cause Officer
irreparable harm. Accordingly, Corporation and Officer agree that Officer shall
be entitled to temporary and permanent injunctive relief to enforce this
Agreement without the necessity of proving actual damages or irreparable harm.
The Corporation and Officer further agree that Officer shall be entitled to such
injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of posting bond or
other undertaking in connection therewith. Any such requirement of bond or
undertaking is hereby waived by Corporation, and Corporation acknowledges that
in the absence of such a waiver, a bond or undertaking may be required by the
court.
14. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce
8
<PAGE>
Officer to continue as an officer of Corporation, and acknowledges that Officer
is relying upon this Agreement in continuing in such capacity.
(b) In the event Officer is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, Corporation shall reimburse Officer for all of Officer's reasonable fees
and expenses in bringing and pursuing such action.
15. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any or all of
the provisions hereof shall be held to be invalid or unenforceable to any extent
for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof, or the obligation of
the Corporation to indemnify the Officer to the full extent provided by the
Bylaws or the Law, and the affected provision shall be construed and enforced so
as to effectuate the parties' intent to the maximum extent possible.
16. GOVERNING LAW. This Agreement shall be governed by and interpreted
and enforced in accordance with the internal laws of the State of Delaware.
17. CONSENT TO JURISDICTION. The Corporation and Officer each irrevocably
consent to jurisdiction of the courts of the State of Delaware for all purposes
in connection with any action or proceeding which arises out of or relates to
this Agreement and agree that any action instituted under this Agreement shall
be brought only in the state courts of the State of Delaware.
18. BINDING EFFECT. This Agreement shall be binding upon Officer and upon
Corporation, its successors and assigns, and shall inure to the benefit of
Officer, his or her heirs, executors, administrators, personal representatives
and assigns and to the benefit of Corporation, its successors and assigns.
19. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties hereto and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter of
this Agreement, except as specifically referred to herein. This Agreement
supersedes any and all agreements regarding indemnification heretofore entered
into by the parties.
20. AMENDMENT AND TERMINATION. No amendment, modification, waiver,
termination or cancellation of this Agreement shall be effective for any purpose
unless set forth in writing signed by both parties hereto.
21. SUBROGATION. In the event of payment under this Agreement,
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Officer, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable
Corporation effectively to bring suit to enforce such rights.
22. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Officer by this
Agreement shall not be exclusive of any other right which Officer may have or
hereafter acquire under any statute, provision of Corporation's Certificate of
Incorporation or Bylaws, agreement,
9
<PAGE>
vote of stockholders or directors, or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding office.
23. SURVIVAL OF RIGHTS. The rights conferred on Officer by this Agreement
shall continue after Officer has ceased to be a director, officer, employee or
other agent of Corporation or such other entity and shall inure to the benefit
of Officer's heirs, executors and administrators.
24. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be addressed to Officer or to
Corporation, as the case may be, at the address shown on page 1 of this
Agreement, or to such other address as may have been furnished by either party
to the other, and shall be deemed to have been duly given if (i) delivered by
hand and receipted for by the party to whom said notice or other communication
shall have been directed, or (ii) mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
OFFICER: CORPORATION:
SEQUENOM, INC.
_______________________________
(Signature) By:_________________________________
(Signature)
_______________________________ ____________________________________
Printed Name Printed Name and Title
10
<PAGE>
EXHIBIT 10.50
Sequenom, Inc.
1994 Stock Plan
This 1994 Stock Plan (the "Plan") is intended to encourage ownership of
Common Stock. $.001 par value (the "Stock") of Sequenom, Inc. (the "Company") by
its directors, officers, employees and consultants ("Participants") so as to
provide additional incentives to promote the success of the Company through the
grant of Incentive Stock Options, Nonstatutory Stock Options (as such terms are
defined in Section 3(a) below (collectively, "Options") and Restricted Stock (as
such term is defined in Section 8 below).
1. Administration of the Plan.
--------------------------
The administration of the Plan shall be under the general supervision of
the Board or Compensation Committee of the Board of Directors of the Company
(the "Compensation Committee"). Within the limits of the Plan, the Compensation
Committee shall determine the individuals to whom, and the times at which,
Options or Restricted Stock shall be granted, and, in the case of Options, the
type of Option to be granted, the duration of each Option, the price and method
of payment for each Option and the time or times within which (during its term)
all or portions of each Option may be exercised or, the case of Restricted
Stock, the repurchase provisions of such Restricted Stock. The Compensation
Committee may establish such rules as it deems necessary for the proper
administration of the Plan, make such determinations and interpretations with
respect to the Plan and Options and Restricted Stock granted under it as may be
necessary or desirable and include such further provisions or conditions in
Options and Restricted Stock granted under the Plan as it deems advisable. To
the extent permitted by law, the Compensation Committee may delegate its
authority under the Plan to a sub-committee of the Compensation Committee.
2. Shares Subject to the Plan.
--------------------------
(a) Number and Type of Shares. The aggregate number of shares of
-------------------------
Stock of the Company which may be issued pursuant to Options or Restricted Stock
granted under the Plan is 520,000 shares. In the event that the Compensation
Committee in its discretion determines that any stock dividend, split-up,
combination or reclassification of shares, recapitalization or other similar
capital change affects the Stock such that adjustment is required in order to
preserve the benefits or potential benefits of the Plan or any Option granted
under the Plan, the maximum aggregate number and kind of shares or securities of
the Company which may be issued under the Plan and as to which Options then
outstanding shall be exercisable, and the option price of such Options or the
repurchase price of Restricted Stock, shall be appropriately adjusted by the
Compensation Committee (whose determination shall be conclusive) so that the
proportionate number of shares or other securities as to which Options or
Restricted Stock may be granted and the proportionate interest of holders of
outstanding Options shall be maintained as before the occurrence of such event.
(b) Effect of Certain Transactions. In the event of a consolidation
------------------------------
or merger of the Company with another corporation, or the sale or exchange of
all or substantially all of the assets of the Company, or a reorganization or
liquidation of the Company, each holder of an
<PAGE>
outstanding Option shall be entitled to receive upon exercise and payment in
accordance with the terms of the Option the same shares, securities or property
as he would have been entitled to receive upon the occurrence of such event if
he had been, immediately prior to such event, the holder of the number of shares
of Stock purchasable under his Option: provided, however, that in lieu of the
foregoing the Board of Directors of the Company (the "Board") may upon written
notice to each holder of an outstanding Option provide that such Option shall
terminate on a date not less than 20 days after the date of such notice unless
theretofore exercised. In connection with such notice, the Board may in its
discretion accelerate or waive any deferred exercise period.
(c) Restoration of Shares. If any Option expires or is terminated
---------------------
unexercised or is forfeited for any reason or settled in a manner that results
in fewer shares outstanding than were initially awarded, including without
limitation the surrender of shares in payment of the Option exercise price or
any tax obligation thereon, or if any shares of Restricted Stock are repurchased
by the Company pursuant to the terms thereof, the shares subject to such Option
or so surrendered or repurchased, as the case may be, to the extent of such
expiration, termination, forfeiture, repurchase or decrease, shall again be
available for granting Options or Restricted Stock under the Plan, subject,
however, in the case of Incentive Stock Options, to any requirements under the
Code (as defined below).
(d) Reservation of Shares. The Company shall at all times while the
---------------------
Plan is in force reserve such number of shares of Stock as will be sufficient to
satisfy the requirements of the Plan. Shares issued under the Plan may consist
in whole or in part of authorized but unissued shares or treasury shares.
3. Grant of Options; Eligible Persons.
----------------------------------
(a) Types of Options. Options shall be granted under the Plan either
as incentive stock options ("Incentive Stock Options"), as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or as Options
which do not meet the requirements of Section 422 ("Nonstatutory Stock
Options"). Options may be granted from time to time by the Compensation
Committee, within the limits set forth in Sections 1 and 2 of the Plan, to all
employees of thc Company or of any parent corporation or subsidiary corporation
of the Company (as defined in Sections 424(e) and (f), respectively, of the
Code), and, with regard to Nonstatutory Stock Options, to all consultants and
directors of the Company.
(b) Date of Grant. The date of grant for each Option shall be the
-------------
date on which it is approved by the Compensation Committee, or such later date
as the Compensation Committee may specify. No Options shall he granted
hereunder after ten years from the date on which the Plan was approved by the
Board.
(c) Automatic Awards. The Compensation Committee may provide for the
----------------
automatic award of an Option upon the delivery of shares to the Company in
payment of an Option for up to the number of shares so delivered.
4. Form of Options.
---------------
2
<PAGE>
Options granted hereunder shall be evidenced by a writing delivered to the
optionee specifying the terms and conditions thereof and containing such other
terms and conditions not inconsistent with the provisions of the Plan as the
Compensation Committee considers necessary or advisable to achieve the purposes
of the Plan or comply with applicable tax and regulatory laws and accounting
principles. The form of such Options may vary among optionees.
5. Option Price.
------------
In the case of Incentive Stock Options, the price at which shares may from
time to time be optioned shall be determined by the Compensation Committee,
provided that such price shall not be less than the fair market value of the
Stock on the date of granting as determined in good faith by the Compensation
Committee; and provided further that no Incentive Stock Option shall be granted
to any individual who is ineligible to be granted an Incentive Stock Option
because his ownership of stock of the Company or its parent or subsidiary
corporations exceeds the limitations set forth in Section 422(b)(6) of the Code
unless such option price is at least 110% of the fair market value of the Stock
on the date of grant.
In the case of Nonstatutory Stock Options, the price at which shares may
from time to time be optioned shall be determined by the Compensation Committee.
The Compensation Committee may in its discretion permit the option price to
be paid in whole or in part by a note or in installments or with shares of Stock
of the Company or such other lawful consideration as the Compensation Committee
may determine.
6. Term of Option and Dates of Exercise.
------------------------------------
(a) Exercisabillity. The Compensation Committee shall determine the
---------------
term of all Options, the time or times that Options are exercisable and whether
they are exercisable in installments; provided, however, that the term of each
non-statutory stock option granted under the Plan shall not exceed a period of
eleven years from the date of its grant, provided that no Incentive Stock Option
shall be granted to any individual who is ineligible to be granted such Option
because his ownership of stock of the Company or its parent or subsidiary
corporations exceeds the limitations set forth in Section 422(b)(6) of the Code
unless the term of his Incentive Stock Option does not exceed a period of five
years from the date of its grant. In the absence of such determination, the
Option shall be exercisable at any time or from time to time, in whole or in
part, during a period of ten years from the date of its grant or, in the case of
an Incentive Stock Option, the maximum term of such Option.
(b) Effect of Disability, Death or Termination of Employment. The
--------------------------------------------------------
Compensation Committee shall determine the effect of an Option of the
disability, death, retirement or other termination of employment of an optionee
and the extent to which, and during the period which, the optionee's estate,
legal representative, guardian, or beneficiary on death may exercise rights
thereunder. Any beneficiary on death shall be designated by the optionee, in
the manner determined by the Compensation Committee, to exercise rights of the
optionee in the case of the optionee's death.
3
<PAGE>
(c) Other Conditions. The Compensation Committee may impose such
----------------
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(d) Withholding. The optionee shall pay to the Company, or make
-----------
provision satisfactory to the Compensation Committee for payment of, any taxes
required by law to be withheld in respect or any Options under the Plan no later
than the date of the event creating the tax liability. In the Compensation
Committee's discretion, such tax obligations may be paid in whole or in part in
shares of Stock, including shares retained from the exercise of the Option
creating the tax obligation, valued at the fair market value of the Stock on the
date of delivery to the Company as determined in good faith by the Compensation
Committee. The Company and any parent corporation or subsidiary corporation of
the Company (as defined in Sections 424(e) and (f), respectively, of the Code)
may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the optionee.
(e) Amendment of Options. The Compensation Committee may amend,
--------------------
modify or terminate any outstanding Option, including substituting therefor
another Option of the same or different type, changing the date of exercise or
realization and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the optionee's consent to such action shall be required
unless the Compensation Committee determines that the action, taking into
account any related action, would not materially and adversely affect the
optionee.
7. Non-Transferability of Options.
------------------------------
Options granted under the Plan shall not be transferrable by the holder
thereof otherwise than by will or the laws of descent and distribution, and
shall be exercisable, during the holder's lifetime, only by him or her.
8. Restricted Stock.
----------------
(a) Subject to the provisions of the Plan, the Committee may award
shares of Stock subject to the Company's right to repurchase such shares
("Restricted Stock"). The Committee shall determine the duration of the period
of time (the "Restricted Period") during which, and the price at which and other
the conditions under which, the shares may be repurchased by the Company and
other terms and conditions of such grants. Shares of Restricted Stock may be
issued without cash consideration or for such consideration as may be determined
by the Committee.
(b) Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the
Committee, during the Restricted Period. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may determine. Any certificates issued
in respect of shares of Restricted Stock shall be registered in the name of the
holder and if requested by the Committee, shall be deposited by the holder,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant had died, to the Participant's
designated beneficiary.
4
<PAGE>
(c) Each recipient of Restricted Stock shall enter into a Restricted
Stock Purchase Agreement with the Company which shall specify the terms and
conditions of such grant of Restricted Stock and shall contain such other terms
and conditions not inconsistent with the provisions of this Plan as the
Committee considers necessary or advisable to achieve the purposes of the Plan
or comply with applicable tax and regulatory laws and accounting principles.
The form of such Restricted Stock Purchase Agreement may vary among
Participants.
9. No Right to Employment.
----------------------
No persons shall have any claim or right to be granted an Option or
Restricted Stock, and the grant of an Option or Restricted Stock shall not be
construed as giving an optionee the right to continued employment. The Company
expressly reserves the right at any time to dismiss a Participant free from any
liability or claim under the Plan, except as specifically provided in the
applicable Option or Restricted Stock Purchase Agreement.
10. No Rights as a Shareholder.
--------------------------
Subject to the provisions of the applicable Option or Restricted Stock
Purchase Agreement, no optionee or any person claiming through an optionee shall
have any rights as a shareholder with respect to any shares of Stock to be
distributed under the Plan until he or she becomes the holder thereof.
11. Amendment or Termination.
------------------------
The Board may amend or terminate the Plan at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any applicable tax or regulatory requirement, including
any requirement for exemptive relief under Section 16(b) of the Securities
Exchange Act of 1934, or any successor provision.
12. Stockholder Approval.
--------------------
The Plan is subject to approval by the stockholders of the Company by the
affirmative vote of the holders of a majority of the shares of capital stock of
the Company entitled to vote thereon and present or represented at a meeting
duly held in accordance with the laws of the State of Delaware, or by any other
action that would be given the same effect under the laws of such jurisdiction,
which action in either case shall be taken within twelve (12) months from the
date the Plan was adopted by the Board. In the event such approval is not
obtained, all Options granted under the Plan shall be void and without effect.
13. Governing Law.
-------------
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of Delaware.
Adopted by the Board of Directors in February 1994, and approved by the
stockholders in February 1994.
5
<PAGE>
Amendments to Sequenom, Inc. 1994 Stock Plan
--------------------------------------------
April 26, 1995:
- --------------
RESOLVED: That the Corporation's 1994 Stock Plan (the "Plan") be, and
it hereby is, amended by deleting the first sentence of
Section 2(a) thereof in its entirety and replacing such
sentence with the following sentence: "The aggregate number
of shares of stock of the Company which may be issued
pursuant to the Options or Restricted Stock granted under
the Plan is 700,000 shares."
September 6, 1996:
- -----------------
RESOLVED: That the Corporation's 1994 Stock Plan (the "Plan") be, and
it hereby is, amended by deleting the first sentence of
Section 2(a) thereof in its entirety and replacing such
sentence with the following sentence:
"The aggregate number of shares of stock of the Company
which may be issued pursuant to Options or Restricted Stock
granted under the Plan is 1,000,000 shares."
April 14.1997:
- -------------
RESOLVED: That the Corporation's 1994 Stock Plan (the "PlaN") be
amended by deleting the first sentence of Section 2(a)
thereof in its entirety and replacing such sentence with the
following sentence, such amendment to be effective only if
it is approved by the stockholders of the Corporation:
"The aggregate number of shares of stock of the Company
which may be issued pursuant to Options or Restricted Stock
granted under the Plan is 1,200,000 shares."
<PAGE>
EXHIBIT 10.54
SEQUENOM, INC.
1998 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
(As Amended and Restated July 9, 1999)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1998 Stock Option/Stock Issuance Plan is intended to promote the
interests of Sequenom, Inc., a Delaware corporation, by providing eligible
persons in the Corporation's employ or service with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to continue in such employ or service.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2) separate equity programs:
(i) the Option Grant Program under which
eligible persons may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common
Stock, and
(ii) the Stock Issuance Program under which
eligible persons may, at the discretion of the Plan
Administrator, be issued shares of Common Stock directly, either
through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary).
B. On July 9, 1999, the existing share reserve available for
issuance under the Corporation's 1994 Stock Plan, including the shares of Common
Stock subject to the outstanding options under the 1994 Plan and any additional
shares of Common Stock otherwise available for future grant thereunder, were
incorporated into this Plan. The incorporated options shall be treated as
options outstanding under this Plan, but those options shall continue to be
governed by the existing terms of the documents evidencing those grants, and
nothing in this Plan shall affect or otherwise modify the rights or obligations
of the holders of those options with respect to their acquisition of shares of
Common Stock. However, the Plan Administrator shall have full power and
authority, subject to the consent of the affected option holders, to extend one
or more features of this Plan to any or all of the incorporated options. No
further stock option grants shall be made, and no additional shares of Common
Stock shall be issued, under the 1994 Stock Plan.
<PAGE>
C. The provisions of Articles One and Four shall apply to both
equity programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.
B. The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the Plan and any
outstanding options or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any option grant or stock issuance
thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the
non-employee members of the board of directors of any Parent or
Subsidiary, and
(iii) consultants and other independent advisors
who provide services to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine,
(i) with respect to the grants made under the Option Grant Program, which
eligible persons are to receive the option grants, the time or times when those
grants are to be made, the number of shares to be covered by each such grant,
the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding, and (ii) with
respect to stock issuances made under the Stock Issuance Program, which eligible
persons are to receive such stock issuances, the time or times when those
issuances are to be made, the number of shares to be issued to each Participant,
the vesting schedule (if any) applicable to the issued shares and the
consideration to be paid by the Participant for such shares.
C. The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.
2.
<PAGE>
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 4,000,000
shares, subject to adjustment from time to time in accordance with the
provisions of this Section V of Article One. Such authorized share reserve is
comprised of (i) the 542,250 shares initially authorized and approved for
issuance under the Plan, (ii) the 700,000-share increase authorized by the Board
in January 1999, and approved by the stockholders on January 29, 1999, (iii) the
additional 500,000-share increase approved by the Board on July 9, 1999, subject
to stockholder approval, and (iv) the 2,157,250 shares of Common Stock available
for issuance under the Corporation's 1994 Stock Plan, including the shares
subject to the outstanding options under such plan and the additional shares
available for future grant thereunder, which were transferred to this Plan on
July 9, 1999.
B. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the 1994 Stock Plan) shall be available
for subsequent issuance under the Plan to the extent (i) the options expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option (including options
incorporated into this Plan from the 1994 Stock Plan) in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event shall
any such adjustments be made in connection with the conversion of one or more
outstanding shares of the Corporation's preferred stock into shares of Common
Stock.
3.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
(i) The exercise price per share shall not be
less than eighty-five percent (85%) of the Fair Market Value per
share of Common Stock on the option grant date.
(ii) If the person to whom the option is granted
is a 10% Stockholder, then the exercise price per share shall not
be less than one hundred ten percent (110%) of the Fair Market
Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Four and the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the Common Stock be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such
4.
<PAGE>
exercise and (B) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the
sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.
C. Effect of Termination of Service.
--------------------------------
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Should the Optionee cease to remain in
Service for any reason other than death, Disability or
Misconduct, then the Optionee shall have a period of three (3)
months following the date of such cessation of Service during
which to exercise each outstanding option held by such Optionee.
(ii) Should Optionee's Service terminate by
reason of Disability, then the Optionee shall have a period of
twelve (12) months following the date of such cessation of
Service during which to exercise each outstanding option held by
such Optionee.
(iii) If the Optionee dies while holding an
outstanding option, then the personal representative of his or
her estate or the person or persons to whom the option is
transferred pursuant to the Optionee's will or the laws of
inheritance shall have a twelve (12)-month period following the
date of the Optionee's death to exercise such option.
(iv) Under no circumstances, however, shall any
such option be exercisable after the specified expiration of the
option term.
(v) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more
than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service.
Upon the expiration of the applicable exercise period or (if
earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for
which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding with respect to any and all
option shares for which the option is not otherwise at the time
exercisable or in which the Optionee is not otherwise at that
time vested.
5.
<PAGE>
(vi) Should Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee
shall terminate immediately and cease to remain outstanding.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the
option is to remain exercisable following Optionee's cessation of
Service or death from the limited period otherwise in effect for
that option to such greater period of time as the Plan
Administrator shall deem appropriate, but in no event beyond the
expiration of the option term, and/or
(ii) permit the option to be exercised, during
the applicable post-Service exercise period, not only with
respect to the number of vested shares of Common Stock for which
such option is exercisable at the time of the Optionee's
cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested
under the option had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no
------------------
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become the
recordholder of the purchased shares.
E. Unvested Shares. The Plan Administrator shall have the discretion
---------------
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right. The Plan Administrator may not impose a vesting schedule upon
any option grant or the shares of Common Stock subject to that option which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the option grant date.
However, such limitation shall not be applicable to any option grants made to
individuals who are officers of the Corporation, non-employee Board members or
independent consultants.
F. First Refusal Rights. Until such time as the Common Stock is
--------------------
first registered under Section 12 of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Optionee (or any successor in interest) of any shares of Common Stock issued
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms established by the Plan Administrator and set forth in the
document evidencing such right.
6.
<PAGE>
G. Limited Transferability of Options. During the lifetime of the
----------------------------------
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
-----------
B. Exercise Price. The exercise price per share shall not be less
--------------
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares
-----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Stockholder, then the option term shall not exceed five (5)
years measured from the option grant date.
III. CORPORATE TRANSACTION
A. The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is to be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and any repurchase rights of the
Corporation with respect to the unvested option shares are concurrently to be
assigned to such successor corporation (or parent thereof) or (ii)
7.
<PAGE>
such option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested option shares at
the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to those unvested option
shares or (iii) the acceleration of such option is subject to other limitations
imposed by the Plan Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
--------
securities shall remain the same.
E. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to structure one or more options so that those options shall
automatically accelerate and vest in full (and any repurchase rights of the
Corporation with respect to the unvested shares subject to those options shall
immediately terminate) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed in the Corporate Transaction.
F. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which the option is assumed and the
repurchase rights applicable to those shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the expiration or sooner termination of the option term. In
addition, the Plan Administrator may provide that one or more of the
Corporation's outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately terminate
on an accelerated basis, and the shares subject to those terminated rights shall
accordingly vest at that time.
8.
<PAGE>
G. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.
H. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan (including the
options incorporated from the 1994 Stock Plan) and to grant in substitution
therefor new options covering the same or different number of shares of Common
Stock but with an exercise price per share based on the Fair Market Value per
share of Common Stock on the new option grant date.
9.
<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.
A. Purchase Price.
--------------
1. The purchase price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the issue date. However, the purchase
price per share of Common Stock issued to a 10% Stockholder shall not be less
than one hundred and ten percent (110%) of such Fair Market Value.
2. Subject to the provisions of Section I of Article Four,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. However, the Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting to
occur not later than one (1) year after the issuance date. Such limitation shall
not apply to any Common Stock issuances made to the officers of the Corporation,
non-employee Board members or independent consultants.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
10.
<PAGE>
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the non-
completion of the vesting schedule applicable to those shares. Such waiver shall
result in the immediate vesting of the Participant's interest in the shares of
Common Stock as to which the waiver applies. Such waiver may be effected at any
time, whether before or after the Participant's cessation of Service or the
attainment or non-attainment of the applicable performance objectives.
C. First Refusal Rights. Until such time as the Common Stock is
--------------------
first registered under Section 12 of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.
II. CORPORATE TRANSACTION
A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
11.
<PAGE>
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall automatically terminate on an
accelerated basis, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are assigned
to the successor corporation (or parent thereof).
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
12.
<PAGE>
ARTICLE FOUR
MISCELLANEOUS
-------------
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Option Grant Program or the purchase price
for shares issued under the Stock Issuance Program by delivering a full-
recourse, interest bearing promissory note payable in one or more installments
and secured by the purchased shares. The terms of any such promissory note
(including the interest rate and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion. In no event may the maximum
credit available to the Optionee or Participant exceed the sum of (i) the
aggregate option exercise price or purchase price payable for the purchased
shares (less the par value of those shares) plus (ii) any Federal, state and
local income and employment tax liability incurred by the Optionee or the
Participant in connection with the option exercise or share purchase.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective when adopted by the Board and was
subsequently approved by the stockholders. In January 1999, the Board
authorized a 700,000 share increase to the Plan which was subsequently approved
by the Corporation's stockholders. In July 1999, the Plan was amended and
restated to (i) increase the number of shares available for issuance under the
Plan by an additional 500,000 shares and (ii) transfer the reserve of Common
Stock which remained available for issuance under the 1994 Stock Plan as of July
9, 1999 to this Plan, including the shares subject to the outstanding options
under the 1994 Stock Plan and the additional shares otherwise be available for
future grant thereunder. No option granted on the basis of the 500,000 share
increase to the Plan may be exercised, and no shares shall be issued on the
basis of that increase, until the increase is approved by the Corporation's
stockholders. Should the stockholders not approve such increase on or before
July 9, 2000, then any options granted on the basis of such increase shall
terminate without ever becoming exercisable for those excess shares, and no
further stock options shall be granted on the basis of such increase.
B. The Plan shall terminate upon the earliest of (i) the expiration
--------
of the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. All options and
unvested stock issuances outstanding at the time of a clause (i) termination
event shall continue to have full force and effect in accordance with the
provisions of the documents evidencing those options or issuances.
13.
<PAGE>
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws and regulations.
B. Options may be granted under the Option Grant Program and shares
may be issued under the Stock Issuance Program which are in each instance in
excess of the number of shares of Common Stock then available for issuance under
the Plan, provided any excess shares actually issued under those programs shall
be held in escrow until there is obtained stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess grants or issuances are
made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Corporation
shall promptly refund to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
V. WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon
the exercise of any options granted under the Plan or upon the direct issuance
or vesting of any shares issued under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
14.
<PAGE>
VII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
VIII. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet and an income statement
at least annually to each individual holding an outstanding option under the
Plan, unless such individual is a key Employee whose duties in connection with
the Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.
15.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Code shall mean the Internal Revenue Code of 1986, as amended.
----
C. Committee shall mean a committee of two (2) or more Board members
---------
appointed by the Board to exercise one or more administrative functions under
the Plan.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Transaction shall mean either of the following
---------------------
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power
of the Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. Corporation shall mean Sequenom, Inc., a Delaware corporation,
-----------
and any successor corporation to all or substantially all of the assets or
voting stock of Sequenom, Inc., which shall by appropriate action adopt the
Plan.
G. Disability shall mean the inability of the Optionee or the
----------
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.
H. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. Exercise Date shall mean the date on which the Corporation shall
-------------
have received written notice of the option exercise.
A-1.
<PAGE>
J. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as such
price is reported by the National Association of Securities Dealers on the
Nasdaq National Market. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is at the time neither listed on
any Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem appropriate.
K. Incentive Option shall mean an option which satisfies the
----------------
requirements of Code Section 422.
L. Involuntary Termination shall mean the termination of the Service
-----------------------
of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially reduces
his or her duties and responsibilities or the level of management to which
he or she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and target bonuses under any
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected without the individual's consent.
A-2.
<PAGE>
M. Misconduct shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
N. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
O. Non-Statutory Option shall mean an option not intended to satisfy
--------------------
the requirements of Code Section 422.
P. Option Grant Program shall mean the option grant program in
--------------------
effect under the Plan.
Q. Optionee shall mean any person to whom an option is granted under
--------
the Plan.
R. Parent shall mean any corporation (other than the Corporation) in
------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. Participant shall mean any person who is issued shares of Common
-----------
Stock under the Stock Issuance Program.
T. Plan shall mean the Corporation's 1998 Stock Option/Stock
----
Issuance Plan, as set forth in this document.
U. Plan Administrator shall mean either the Board or the Committee
------------------
acting in its capacity as administrator of the Plan.
V. Service shall mean the provision of services to the Corporation
-------
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
W. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
X. Stock Issuance Agreement shall mean the agreement entered into by
------------------------
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
A-3.
<PAGE>
Y. Stock Issuance Program shall mean the stock issuance program in
----------------------
effect under the Plan.
Z. Subsidiary shall mean any corporation (other than the
----------
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
AA. 10% Stockholder shall mean the owner of stock (as determined
---------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
A-4.
<PAGE>
EXHIBIT 10.55
SEQUENOM, INC.
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Sequenom, Inc. (the "Corporation"):
Optionee: ____________________________________________________________
--------
Grant Date: __________________________________________________________
----------
Vesting Commencement Date: ___________________________________________
-------------------------
Exercise Price: $_________________________ per share
--------------
Number of Option Shares: _________________ shares of Common Stock
-----------------------
Expiration Date: _____________________________________________________
---------------
Type of Option: ____ Incentive Stock Option
---------------
____ Non-Statutory Stock Option:
Date Exercisable: Immediately Exercisable
----------------
Vesting Schedule: The Option Shares shall initially be unvested and
----------------
subject to repurchase by the Corporation at the Exercise Price paid
per share. Optionee shall acquire a vested interest in, and the
Corporation's repurchase right shall accordingly lapse with respect
to, (i) twenty-five percent (25%) of the Option Shares upon Optionee's
completion of one (1) year of Service measured from the Vesting
Commencement Date and (ii) the balance of the Option Shares in a
series of thirty-six (36) successive equal monthly installments upon
Optionee's completion of each additional month of Service over the
thirty-six (36)-month period measured from the first anniversary of
the Vesting Commencement Date. In no event shall any additional Option
Shares vest after Optionee's cessation of Service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Sequenom, Inc. 1998 Stock Option/Stock
Issuance Plan (the "Plan"). Optionee further agrees to be bound by the terms of
the Plan and the terms of the Option as set forth in the Stock Option Agreement
attached hereto as Exhibit A.
Optionee understands that any Option Shares purchased under the Option
will be subject to the terms set forth in the Stock Purchase Agreement attached
hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of the Plan
in the form attached hereto as Exhibit C.
<PAGE>
REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
-----------------
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS
ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE
AGREEMENT.
No Employment or Service Contract. Nothing in this Notice or in the
---------------------------------
attached Stock Option Agreement or Plan shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED: __________________, 199__
SEQUENOM, INC.
By: ____________________________________
Title: ____________________________________
____________________________________
OPTIONEE
Address: ____________________________________
____________________________________
Attachments:
- -----------
Exhibit A - Stock Option Agreement
Exhibit B - Stock Purchase Agreement
Exhibit C - 1998 Stock Option/Stock Issuance Plan
<PAGE>
EXHIBIT A
---------
STOCK OPTION AGREEMENT
----------------------
Filed as Exhibit 10.56 to the Registration Statement on Form S-1.
<PAGE>
EXHIBIT B
---------
STOCK PURCHASE AGREEMENT
------------------------
Filed as Exhibit 10.57 to the Registration Statement on Form S-1.
<PAGE>
EXHIBIT C
---------
1998 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
Filed as Exhibit 10.54 to the Registration Statement on Form S-1.
<PAGE>
EXHIBIT 10.56
SEQUENOM, INC.
STOCK OPTION AGREEMENT
----------------------
RECITALS
- --------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors in the service of the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as
---------------
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a term of ten (10) years
-----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. Limited Transferability. During Optionee's lifetime, this option
-----------------------
shall be exercisable only by Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following Optionee's death.
4. Dates of Exercise. This option shall become exercisable for the
-----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2
--------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
<PAGE>
(a) Should Optionee cease to remain in Service for any reason
(other than death, Disability or Misconduct) while this option is outstanding,
then Optionee shall have a period of three (3) months (commencing with the date
of such cessation of Service) during which to exercise this option, but in no
event shall this option be exercisable at any time after the Expiration Date.
(b) Should Optionee die while this option is outstanding, then
the personal representative of Optionee's estate or the person or persons to
whom the option is transferred pursuant to Optionee's will or in accordance with
the laws of inheritance shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the earlier of
-------
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease Service by reason of Disability while
this option is outstanding, then Optionee shall have a period of twelve (12)
months (commencing with the date of such cessation of Service) during which to
exercise this option. In no event shall this option be exercisable at any time
after the Expiration Date.
Note: Exercise of this option on a date later than
----
three (3) months following cessation of Service due to
Disability will result in loss of favorable Incentive
Option treatment, unless such Disability constitutes
Permanent Disability. In the event that Incentive
Option treatment is not available, this option will be
taxed as a Non-Statutory Option upon exercise.
(d) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
Option Shares in which Optionee is, at the time of Optionee's cessation of
Service, vested pursuant to the Vesting Schedule specified in the Grant Notice
or the special vesting acceleration provisions of Paragraph 6. Upon the
expiration of such limited exercise period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding for any vested
Option Shares for which the option has not been exercised. To the extent
Optionee is not vested in one or more Option Shares at the time of Optionee's
cessation of Service, this option shall immediately terminate and cease to be
outstanding with respect to those shares.
(e) Should Optionee's Service be terminated for Misconduct, then
this option shall terminate immediately and cease to remain outstanding.
6. Accelerated Vesting.
-------------------
(a) In the event of any Corporate Transaction, the Option Shares
at the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall, immediately prior to the effective date
of the Corporate Transaction, become exercisable for all of the Option Shares as
fully-vested shares and may be exercised for any or all of those Option Shares
as vested shares. However, the Option Shares shall not vest on such an
accelerated basis if and to the extent: (i) this option is assumed by the
successor corporation (or
2.
<PAGE>
parent thereof) in the Corporate Transaction and the Corporation's repurchase
rights with respect to the unvested Option Shares are assigned to such successor
corporation (or parent thereof) or (ii) this option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing on the unvested Option Shares at the time of the Corporate Transaction
(the excess of the Fair Market Value of those Option Shares over the Exercise
Price payable for such shares) and provides for subsequent payout in accordance
with the same Vesting Schedule applicable to those unvested Option Shares as set
forth in the Grant Notice.
(b) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(d) The Option Shares may also vest upon an accelerated basis in
accordance with the terms and conditions of any special addendum attached to
this Agreement.
(e) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. Adjustment in Option Shares. Should any change be made to the
---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the record holder
of the purchased shares.
9. Manner of Exercising Option.
---------------------------
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
3.
<PAGE>
(i) Execute and deliver to the Corporation a Purchase
Agreement for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation; or
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in accordance with
Paragraph 14.
Should the Common Stock be registered under Section 12 of the 1934 Act
at the time the option is exercised, then the Exercise Price may also be
paid as follows:
(C) in shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date; or
(D) to the extent the option is exercised for vested
Option Shares, through a special sale and remittance procedure pursuant to
which Optionee (or any other person or persons exercising the option) shall
concurrently provide irrevocable instructions (a) to a Corporation-
designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate Exercise Price
payable for the purchased shares plus all applicable Federal, state and
local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must
accompany the Purchase Agreement delivered to the Corporation in connection
with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee) have
the right to exercise this option.
4.
<PAGE>
(iv) Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it to
comply with the applicable requirements of Federal and state securities
laws.
(v) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option
Shares, with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE
-----------------
OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS
ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE
PURCHASE AGREEMENT.
11. Compliance with Laws and Regulations.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
12. Successors and Assigns. Except to the extent otherwise provided
----------------------
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
5.
<PAGE>
13. Notices. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. Financing. The Plan Administrator may, in its absolute
---------
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse,
interest-bearing promissory note secured by those Option Shares. The payment
schedule in effect for any such promissory note shall be established by the Plan
Administrator in its sole discretion.
15. Construction. This Agreement and the option evidenced hereby are
------------
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
16. Governing Law. The interpretation, performance and enforcement
-------------
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
17. Stockholder Approval. If the Option Shares covered by this
--------------------
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may be issued under the Plan as last approved by the stockholders, then
this option shall be void with respect to such excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.
18. Additional Terms Applicable to an Incentive Option. In the event
--------------------------------------------------
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is exercised
for one or more Option Shares: (i) more than three (3) months after the date
Optionee ceases to be an Employee for any reason other than death or Permanent
Disability or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of Permanent Disability.
(b) This option shall not become exercisable in the calendar
year in which granted if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which this option would
otherwise first become exercisable in such calendar year would, when added to
the aggregate value (determined as of the respective date or dates of grant) of
the Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
6.
<PAGE>
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
shall become exercisable in the first calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b)
would not be contravened, but such deferral shall in all events end immediately
prior to the effective date of a Corporate Transaction in which this option is
not to be assumed, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.
(c) Should Optionee hold, in addition to this option, one or
more other options to purchase Common Stock which become exercisable for the
first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
7.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Transaction shall mean either of the following stockholder-
----------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. Corporation shall mean Sequenom, Inc., a Delaware corporation.
-----------
G. Disability shall mean the inability of Optionee to engage in any
----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute Permanent Disability in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.
H. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. Exercise Date shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
J. Exercise Price shall mean the exercise price payable per Option Share
--------------
as specified in the Grant Notice.
K. Expiration Date shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
A-1.
<PAGE>
L. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem appropriate.
M. Grant Date shall mean the date of grant of the option as specified in
----------
the Grant Notice.
N. Grant Notice shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
P. Misconduct shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
A-2.
<PAGE>
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
R. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. Option Shares shall mean the number of shares of Common Stock subject
-------------
to the option.
T. Optionee shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
U. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Plan shall mean the Corporation's 1998 Stock Option/Stock Issuance
----
Plan.
W. Plan Administrator shall mean either the Board or a committee of the
------------------
Board acting in its capacity as administrator of the Plan.
X. Purchase Agreement shall mean the stock purchase agreement in
------------------
substantially the form of Exhibit B to the Grant Notice.
Y. Service shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or an independent consultant.
Z. Stock Exchange shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
AA. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
BB. Vesting Schedule shall mean the vesting schedule specified in the
----------------
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.
A-3.
<PAGE>
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between Sequenom, Inc. (the "Corporation") and ________________________
("Optionee") evidencing the stock option (the "Option") granted on this date to
Optionee under the terms of the Corporation's 1998 Stock Option/Stock Issuance
Plan, and such provisions shall be effective immediately. All capitalized terms
in this Addendum, to the extent not otherwise defined herein, shall have the
meanings assigned to them in the Option Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION
1. To the extent the Option is, in connection with a Corporate
Transaction, to be assumed in accordance with Paragraph 6 of the Option
Agreement, none of the Option Shares shall vest on an accelerated basis upon the
occurrence of that Corporate Transaction, and Optionee shall accordingly
continue, over his or her period of Service following the Corporate Transaction,
to vest in the Option Shares in one or more installments in accordance with the
provisions of the Option Agreement. However, upon an Involuntary Termination of
Optionee's Service within eighteen (18) months following such Corporate
Transaction, all the Option Shares at the time subject to the Option shall
automatically vest in full on an accelerated basis so that the Option shall
immediately become exercisable for all the Option Shares as fully-vested shares
and may be exercised for any or all of those Option Shares as vested shares. The
Option shall remain so exercisable until the earlier of (i) the Expiration Date
-------
or (ii) the expiration of the one (1)-year period measured from the date of the
Involuntary Termination.
2. For purposes of this Addendum, an Involuntary Termination shall
mean the termination of Optionee's Service by reason of:
(i) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than for Misconduct, or
(ii) Optionee's voluntary resignation following (A) a
change in Optionee's position with the Corporation (or Parent or
Subsidiary employing Optionee) which materially reduces
Optionee's duties and responsibilities or the level of management
to which he or she reports, (B) a reduction in Optionee's level
of compensation (including base salary, fringe benefits and
target bonuses under any corporate-performance based incentive
programs) by more than fifteen percent (15%) or (C) a relocation
of Optionee's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is
effected by the Corporation without Optionee's consent.
<PAGE>
3. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within eighteen (18) months after the
Corporate Transaction and shall supersede any provisions to the contrary in
Paragraph 5 of the Option Agreement. The provisions of this Addendum shall also
supersede any provisions to the contrary in Paragraph 18 of the Option Agreement
concerning the deferred exercisability of the Option.
IN WITNESS WHEREOF, Sequenom, Inc. has caused this Addendum to be
executed by its duly-authorized officer as of the Effective Date specified
below.
SEQUENOM, INC.
By: ___________________
Title: ___________________
EFFECTIVE DATE: ________________, 199__
2.
<PAGE>
EXHIBIT 10.57
SEQUENOM, INC.
STOCK PURCHASE AGREEMENT
AGREEMENT made this _____ day of ________________ 199__, by and
between Sequenom, Inc., a Delaware corporation, and _______________, Optionee
under the Corporation's 1998 Stock Option/Stock Issuance Plan.
All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.
A. EXERCISE OF OPTION
------------------
1. Exercise. Optionee hereby purchases _______ shares of Common
--------
Stock (the "Purchased Shares") pursuant to that certain option (the "Option")
granted Optionee on ____________________, 199__ (the "Grant Date") to purchase
up to _______________ shares of Common Stock (the "Option Shares") under the
Plan at the exercise price of $___________ per share (the "Exercise Price").
2. Payment. Concurrently with the delivery of this Agreement to the
-------
Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise, together with a duly-executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.
3. Stockholder Rights. Until such time as the Corporation exercises
------------------
the Repurchase Right or the First Refusal Right, Optionee (or any successor in
interest) shall have all the rights of a stockholder (including voting, dividend
and liquidation rights) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.
B. SECURITIES LAW COMPLIANCE
-------------------------
1. Restricted Securities. The Purchased Shares have not been
---------------------
registered under the 1933 Act and are being issued to Optionee in reliance upon
the exemption from such registration provided by SEC Rule 701 for stock
issuances under compensatory benefit plans such as the Plan. Optionee hereby
confirms that Optionee has been informed that the Purchased Shares are
restricted securities under the 1933 Act and may not be resold or transferred
unless the Purchased Shares are first registered under the Federal securities
laws or unless an exemption from such registration is available. Accordingly,
Optionee hereby acknowledges that Optionee is prepared to hold the Purchased
Shares for an indefinite period and that Optionee is aware that SEC Rule 144
issued under the 1933 Act which exempts certain resales of unrestricted
securities is not presently available to exempt the resale of the Purchased
Shares from the registration requirements of the 1933 Act.
<PAGE>
2. Restrictions on Disposition of Purchased Shares. Optionee shall
-----------------------------------------------
make no disposition of the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the following requirements:
(i) Optionee shall have provided the Corporation with a
written summary of the terms and conditions of the proposed disposition.
(ii) Optionee shall have complied with all requirements of
this Agreement applicable to the disposition of the Purchased Shares.
(iii) Optionee shall have provided the Corporation with
written assurances, in form and substance satisfactory to the Corporation,
that (a) the proposed disposition does not require registration of the
Purchased Shares under the 1933 Act or (b) all appropriate action necessary
for compliance with the registration requirements of the 1933 Act or any
exemption from registration available under the 1933 Act (including Rule
144) has been taken.
The Corporation shall not be required (i) to transfer on its books any
---
Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
--
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.
3. Restrictive Legends. The stock certificates for the Purchased
-------------------
Shares shall be endorsed with one or more of the following restrictive legends:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares may not be sold or
offered for sale in the absence of (a) an effective registration statement
for the shares under such Act, (b) a "no action" letter of the Securities
and Exchange Commission with respect to such sale or offer or (c)
satisfactory assurances to the Corporation that registration under such Act
is not required with respect to such sale or offer."
"The shares represented by this certificate are subject to certain
repurchase rights and rights of first refusal granted to the Corporation
and accordingly may not be sold, assigned, transferred, encumbered, or in
any manner disposed of except in conformity with the terms of a written
agreement dated ____________, 199___ between the Corporation and the
registered holder of the shares (or the predecessor in interest to the
shares). A copy of such agreement is maintained at the Corporation's
principal corporate offices."
C. TRANSFER RESTRICTIONS
---------------------
1. Restriction on Transfer. Except for any Permitted Transfer,
-----------------------
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which
2.
<PAGE>
are subject to the Repurchase Right. In addition, Purchased Shares which are
released from the Repurchase Right shall not be transferred, assigned,
encumbered or otherwise disposed of in contravention of the First Refusal Right
or the Market Stand-Off.
2. Transferee Obligations. Each person (other than the Corporation) to
----------------------
whom the Purchased Shares are transferred by means of a Permitted Transfer must,
as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to (i) the Repurchase
Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same
extent such shares would be so subject if retained by Optionee.
3. Market Stand-Off.
----------------
(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Purchased Shares without the prior written consent of the
Corporation or its underwriters. Such restriction (the "Market Stand-Off") shall
be in effect for such period of time from and after the effective date of the
final prospectus for the offering as may be requested by the Corporation or such
underwriters. In no event, however, shall such period exceed one hundred eighty
(180) days and the Market Stand-Off shall in all events terminate two (2) years
after the effective date of the Corporation's initial public offering.
(b) Owner shall be subject to the Market Stand-Off provided and
------------
only if the officers and directors of the Corporation are also subject to
- -------
similar restrictions.
(c) Any new, substituted or additional securities which are by
reason of any Recapitalization or Reorganization distributed with respect to the
Purchased Shares shall be immediately subject to the Market Stand-Off, to the
same extent the Purchased Shares are at such time covered by such provisions.
(d) In order to enforce the Market Stand-Off, the Corporation may
impose stop-transfer instructions with respect to the Purchased Shares until the
end of the applicable stand-off period.
D. REPURCHASE RIGHT
----------------
1. Grant. The Corporation is hereby granted the right (the
-----
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date Optionee ceases for any reason to remain in Service or (if
later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Exercise Price any or all of the Purchased
Shares in which Optionee is not, at the time of his or her cessation of Service,
vested in accordance with the Vesting Schedule applicable to those shares or the
special vesting
3.
<PAGE>
acceleration provisions of Paragraph D.6 of this Agreement (such shares to be
hereinafter referred to as the "Unvested Shares").
2. Exercise of the Repurchase Right. The Repurchase Right shall
--------------------------------
be exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on or before the close
of business on the date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay to Owner, in cash
or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Exercise Price previously paid for the
Unvested Shares which are to be repurchased from Owner.
3. Termination of the Repurchase Right. The Repurchase Right
-----------------------------------
shall terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Optionee vests in accordance with the Vesting Schedule. All Purchased
Shares as to which the Repurchase Right lapses shall, however, remain subject to
(i) the First Refusal Right and (ii) the Market Stand-Off.
4. Aggregate Vesting Limitation. If the Option is exercised in
----------------------------
more than one increment so that Optionee is a party to one or more other Stock
Purchase Agreements (the "Prior Purchase Agreements") which are executed prior
to the date of this Agreement, then the total number of Purchased Shares as to
which Optionee shall be deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not exceed in the aggregate
the number of Purchased Shares in which Optionee would otherwise at the time be
vested, in accordance with the Vesting Schedule, had all the Purchased Shares
(including those acquired under the Prior Purchase Agreements) been acquired
exclusively under this Agreement.
5. Recapitalization. Any new, substituted or additional
----------------
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
the Purchased Shares shall be immediately subject to the Repurchase Right and
any escrow requirements hereunder, but only to the extent the Purchased Shares
are at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of Purchased Shares subject to this Agreement and to the price per share
to be paid upon the exercise of the Repurchase Right in order to reflect the
effect of any such Recapitalization upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall remain the same.
6. Corporate Transaction.
---------------------
(a) The Repurchase Right shall automatically terminate in
its entirety, and all the Purchased Shares shall vest in full, immediately prior
to the consummation of any
4.
<PAGE>
Corporate Transaction, except to the extent the Repurchase Right is to be
assigned to the successor entity in such Corporate Transaction.
(b) To the extent the Repurchase Right remains in effect
following a Corporate Transaction, such right shall apply to any new securities
or other property (including any cash payments) received in exchange for the
Purchased Shares in consummation of the Corporate Transaction, but only to the
extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments shall be made to the price per share payable upon exercise of the
Repurchase Right to reflect the effect of the Corporate Transaction upon the
Corporation's capital structure; provided, however, that the aggregate purchase
--------
price shall remain the same. The new securities or other property (including any
cash payments) issued or distributed with respect to the Purchased Shares in
consummation of the Corporate Transaction shall be immediately deposited in
escrow with the Corporation (or the successor entity) and shall not be released
from escrow until Optionee vests in such securities or other property in
accordance with the same Vesting Schedule in effect for the Purchased Shares.
(c) The Repurchase Right may also terminate on an
accelerated basis, and the Purchased Shares shall immediately vest in full, in
accordance with the terms and conditions of any special addendum attached to
this Agreement.
E. RIGHT OF FIRST REFUSAL
----------------------
1. Grant. The Corporation is hereby granted the right of first
-----
refusal (the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Purchased Shares in which Optionee has vested in accordance with
the provisions of Article D. For purposes of this Article E, the term "transfer"
shall include any sale, assignment, pledge, encumbrance or other disposition of
the Purchased Shares intended to be made by Owner, but shall not include any
Permitted Transfer.
2. Notice of Intended Disposition. In the event any Owner of
------------------------------
Purchased Shares in which Optionee has vested desires to accept a bona fide
third-party offer for the transfer of any or all of such shares (the Purchased
Shares subject to such offer to be hereinafter referred to as the "Target
Shares"), Owner shall promptly (i) deliver to the Corporation written notice
(the "Disposition Notice") of the terms of the offer, including the purchase
price and the identity of the third-party offeror, and (ii) provide satisfactory
proof that the disposition of the Target Shares to such third-party offeror
would not be in contravention of the provisions set forth in Articles B and C.
3. Exercise of the First Refusal Right. The Corporation shall, for a
-----------------------------------
period of twenty-five (25) days following receipt of the Disposition Notice,
have the right to repurchase any or all of the Target Shares subject to the
Disposition Notice upon the same terms as those specified therein or upon such
other terms (not materially different from those specified in the Disposition
Notice) to which Owner consents. Such right shall be exercisable by delivery of
written notice (the "Exercise Notice") to Owner prior to the expiration of the
twenty-five (25)-day exercise period. If such right is exercised with respect to
all the Target Shares, then the Corporation shall effect the repurchase of such
shares, including payment of the purchase price,
5.
<PAGE>
not more than five (5) business days after delivery of the Exercise Notice; and
at such time the certificates representing the Target Shares shall be delivered
to the Corporation.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If Owner and the Corporation
cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser
of recognized standing selected by Owner and the Corporation or, if they cannot
agree on an appraiser within twenty (20) days after the Corporation's receipt of
the Disposition Notice, each shall select an appraiser of recognized standing
and the two (2) appraisers shall designate a third appraiser of recognized
standing, whose appraisal shall be determinative of such value. The cost of
such appraisal shall be shared equally by Owner and the Corporation. The
closing shall then be held on the later of (i) the fifth (5th) business day
-----
following delivery of the Exercise Notice or (ii) the fifth (5th) business day
after such valuation shall have been made.
4. Non-Exercise of the First Refusal Right. In the event the
---------------------------------------
Exercise Notice is not given to Owner prior to the expiration of the twenty-five
(25)-day exercise period, Owner shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms (including
the purchase price) no more favorable to such third-party offeror than those
specified in the Disposition Notice; provided, however, that any such sale or
--------
disposition must not be effected in contravention of the provisions of Articles
B and C. The third-party offeror shall acquire the Target Shares free and clear
of the First Refusal Right, but the acquired shares shall remain subject to the
provisions of Article B and Paragraph C.3. In the event Owner does not effect
such sale or disposition of the Target Shares within the specified thirty (30)-
day period, the First Refusal Right shall continue to be applicable to any
subsequent disposition of the Target Shares by Owner until such right lapses.
5. Partial Exercise of the First Refusal Right. In the event the
-------------------------------------------
Corporation makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within five (5) business days after Owner's receipt of the Exercise
Notice, to effect the sale of the Target Shares pursuant to either of the
following alternatives:
(i) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in full
compliance with the requirements of Paragraph E.4, as if the Corporation
did not exercise the First Refusal Right; or
(ii) sale to the Corporation of the portion of the Target Shares
which the Corporation has elected to purchase, such sale to be effected in
substantial conformity with the provisions of Paragraph E.3. The First
Refusal Right shall continue to be applicable to any subsequent disposition
of the remaining Target Shares until such right lapses.
6.
<PAGE>
Owner's failure to deliver timely notification to the Corporation
shall be deemed to be an election by Owner to sell the Target Shares pursuant to
alternative (i) above.
6. Recapitalization/Reorganization.
-------------------------------
(a) Any new, substituted or additional securities or other
property which is by reason of any Recapitalization distributed with respect to
the Purchased Shares shall be immediately subject to the First Refusal Right,
but only to the extent the Purchased Shares are at the time covered by such
right.
(b) In the event of a Reorganization, the First Refusal Right
shall remain in full force and effect and shall apply to the new capital stock
or other property received in exchange for the Purchased Shares in consummation
of the Reorganization, but only to the extent the Purchased Shares are at the
time covered by such right.
7. Lapse. The First Refusal Right shall lapse upon the earliest to
-----
occur of (i) the first date on which shares of the Common Stock are held of
record by more than five hundred (500) persons, (ii) a determination made by the
Board that a public market exists for the outstanding shares of Common Stock or
(iii) a firm commitment underwritten public offering, pursuant to an effective
registration statement under the 1933 Act, covering the offer and sale of the
Common Stock in the aggregate amount of at least ten million dollars
($10,000,000). However, the Market Stand-Off shall continue to remain in full
force and effect following the lapse of the First Refusal Right.
F. SPECIAL TAX ELECTION
--------------------
The acquisition of the Purchased Shares may result in adverse tax
consequences which may be avoided or mitigated by filing an election under Code
Section 83(b). Such election must be filed within thirty (30) days after the
date of this Agreement. A description of the tax consequences applicable to the
acquisition of the Purchased Shares and the form for making the Code Section
83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR
HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b)
ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN
IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.
G. GENERAL PROVISIONS
------------------
1. Assignment. The Corporation may assign the Repurchase Right
----------
and/or the First Refusal Right to any person or entity selected by the Board,
including (without limitation) one or more stockholders of the Corporation.
7.
<PAGE>
2. No Employment or Service Contract. Nothing in this Agreement or
---------------------------------
in the Plan shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.
3. Notices. Any notice required to be given under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4. No Waiver. The failure of the Corporation in any instance to
---------
exercise the Repurchase Right or the First Refusal Right shall not constitute a
waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other agreement
between the Corporation and Optionee. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or subsequent breach
or condition, whether of like or different nature.
5. Cancellation of Shares. If the Corporation shall make available,
----------------------
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
H. MISCELLANEOUS PROVISIONS
------------------------
1. Optionee Undertaking. Optionee hereby agrees to take whatever
--------------------
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.
2. Agreement is Entire Contract. This Agreement constitutes the
----------------------------
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the terms of the Plan.
8.
<PAGE>
3. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
4. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
5. Successors and Assigns. The provisions of this Agreement shall
----------------------
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
SEQUENOM, INC.
By: ________________________________
Title:______________________________
Address: ___________________________
___________________________
___________________________
OPTIONEE
Address: ___________________________
___________________________
9.
<PAGE>
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Corporation's
granting Optionee the right to acquire the Purchased Shares in accordance with
the terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound by all the terms of such Agreement, including (without limitation) the
right of the Corporation (or its assigns) to purchase any Purchased Shares in
which Optionee is not vested at time of his or her cessation of Service.
_____________________________________
OPTIONEE'S SPOUSE
Address:
_____________________________________
_____________________________________
<PAGE>
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ____________ hereby sell(s), assign(s) and
transfer(s) unto Sequenom, Inc. (the "Corporation"), _______________ (_________)
shares of the Common Stock of the Corporation standing in his or her name on the
books of the Corporation represented by Certificate No. ________________
herewith and do(es) hereby irrevocably constitute and appoint
_____________________ Attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated: ____________________
Signature__________________________________
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Optionee.
<PAGE>
EXHIBIT II
FEDERAL INCOME TAX CONSEQUENCES AND
SECTION 83(b) TAX ELECTION
I. Federal Income Tax Consequences and Section 83(b) Election For Exercise
-----------------------------------------------------------------------
of Non-Statutory Option. If the Purchased Shares are acquired pursuant to the
- -----------------------
exercise of a Non-Statutory Option, as specified in the Grant Notice, then under
Code Section 83, the excess of the Fair Market Value of the Purchased Shares on
the date any forfeiture restrictions applicable to such shares lapse over the
Exercise Price paid for such shares will be reportable as ordinary income on the
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. However, Optionee may elect under Code Section 83(b) to be
taxed at the time the Purchased Shares are acquired, rather than when and as
such Purchased Shares cease to be subject to such forfeiture restrictions. Such
election must be filed with the Internal Revenue Service within thirty (30) days
after the date of the Agreement. Even if the Fair Market Value of the Purchased
Shares on the date of the Agreement equals the Exercise Price paid (and thus no
tax is payable), the election must be made to avoid adverse tax consequences in
the future. The form for making this election is attached as part of this
exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY
PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE
FORFEITURE RESTRICTIONS LAPSE.
II. Federal Income Tax Consequences and Conditional Section 83(b) Election
----------------------------------------------------------------------
For Exercise of Incentive Option. If the Purchased Shares are acquired pursuant
- --------------------------------
to the exercise of an Incentive Option, as specified in the Grant Notice, then
the following tax principles shall be applicable to the Purchased Shares:
(i) For regular tax purposes, no taxable income will be
recognized at the time the Option is exercised.
(ii) The excess of (a) the Fair Market Value of the Purchased
Shares on the date the Option is exercised or (if later) on the date any
forfeiture restrictions applicable to the Purchased Shares lapse over (b)
the Exercise Price paid for the Purchased Shares will be includible in
Optionee's taxable income for alternative minimum tax purposes.
(iii) If Optionee makes a disqualifying disposition of the
Purchased Shares, then Optionee will recognize ordinary income in the year
of such disposition equal in amount to the excess of (a) the Fair Market
Value of the Purchased Shares on the date the Option is exercised or (if
later) on the date any forfeiture restrictions applicable to the Purchased
Shares lapse over (b) the Exercise Price paid for the Purchased Shares. Any
additional gain recognized upon the disqualifying disposition will be
either short-term or long-term capital gain depending upon the period for
which the Purchased Shares are held prior to the disposition.
II-1.
<PAGE>
(iv) For purposes of the foregoing, the term "forfeiture
restrictions" will include the right of the Corporation to repurchase the
Purchased Shares pursuant to the Repurchase Right. The term "disqualifying
disposition" means any sale or other disposition/1/ of the Purchased Shares
within two (2) years after the Grant Date or within one (1) year after the
exercise date of the Option.
(v) In the absence of final Treasury Regulations relating to
Incentive Options, it is not certain whether Optionee may, in connection
with the exercise of the Option for any Purchased Shares at the time
subject to forfeiture restrictions, file a protective election under Code
Section 83(b) which would limit (a) Optionee's alternative minimum taxable
income upon exercise and (b) Optionee's ordinary income upon a
disqualifying disposition to the excess of the Fair Market Value of the
Purchased Shares on the date the Option is exercised over the Exercise
Price paid for the Purchased Shares. Accordingly, such election if properly
filed will only be allowed to the extent the final Treasury Regulations
permit such a protective election. Page 2 of the attached form for making
the election should be filed with any election made in connection with the
exercise of an Incentive Option.
________________________
/1/ Generally, a disposition of shares purchased under an Incentive Option
includes any transfer of legal title, including a transfer by sale, exchange or
gift, but does not include a transfer to the Optionee's spouse, a transfer into
joint ownership with right of survivorship if Optionee remains one of the joint
owners, a pledge, a transfer by bequest or inheritance or certain tax free
exchanges permitted under the Code.
II-2.
<PAGE>
SECTION 83(b) ELECTION
This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
_____________ shares of the common stock of Sequenom, Inc..
(3) The property was issued on ______________, 199__.
(4) The taxable year in which the election is being made is the calendar year
199__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's service with the issuer terminates. The issuer's
repurchase right lapses in a series of annual and monthly installments over
a four (4)-year period ending on ___________, 200__.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $__________per share.
(7) The amount paid for such property is $___________ per share.
(8) A copy of this statement was furnished to Sequenom, Inc. for whom taxpayer
rendered the services underlying the transfer of property.
(9) This statement is executed on _________________, 199__.
___________________________ ___________________________________
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Optionee must retain two (2) copies of the completed form for filing with his or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE>
The property described in the above Section 83(b) election is
comprised of shares of common stock acquired pursuant to the exercise of an
incentive stock option under Section 422 of the Internal Revenue Code (the
"Code"). Accordingly, it is the intent of the Taxpayer to utilize this election
to achieve the following tax results:
1. The purpose of this election is to have the alternative minimum
taxable income attributable to the purchased shares measured by the amount by
which the fair market value of such shares at the time of their transfer to the
Taxpayer exceeds the purchase price paid for the shares. In the absence of this
election, such alternative minimum taxable income would be measured by the
spread between the fair market value of the purchased shares and the purchase
price which exists on the various lapse dates in effect for the forfeiture
restrictions applicable to such shares.
2. Section 421(a)(1) of the Code expressly excludes from income any
excess of the fair market value of the purchased shares over the amount paid for
such shares. Accordingly, this election is also intended to be effective in the
event there is a "disqualifying disposition" of the shares, within the meaning
of Section 421(b) of the Code, which would otherwise render the provisions of
Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer
hereby elects to have the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares on the date of
transfer to the Taxpayer over the amount paid for such shares. Since Section
421(a) presently applies to the shares which are the subject of this Section
83(b) election, no taxable income is actually recognized for regular tax
purposes at this time, and no income taxes are payable, by the Taxpayer as a
result of this election. The foregoing election is to be effective to the full
extent permitted under the Code.
THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION
WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Purchase Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Transaction shall mean either of the following stockholder-
---------------------
approved transactions:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. Corporation shall mean Sequenom, Inc., a Delaware corporation, and any
-----------
successor corporation to all or substantially all of the assets or voting stock
of Sequenom, Inc. which shall by appropriate action adopt the Plan.
G. Disposition Notice shall have the meaning assigned to such term in
------------------
Paragraph E.2.
H. Exercise Notice shall have the meaning assigned to such term in
---------------
Paragraph E.3.
I. Exercise Price shall have the meaning assigned to such term in
--------------
Paragraph A.1.
J. Fair Market Value of a share of Common Stock on any relevant date,
-----------------
prior to the initial public offering of the Common Stock, shall be determined by
the Plan Administrator after taking into account such factors as it shall deem
appropriate.
K. First Refusal Right shall mean the right granted to the Corporation in
-------------------
accordance with Article E.
L. Grant Date shall have the meaning assigned to such term in Paragraph
----------
A.1.
A-1.
<PAGE>
M. Grant Notice shall mean the Notice of Grant of Stock Option pursuant to
------------
which Optionee has been informed of the basic terms of the Option.
N. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
O. Market Stand-Off shall mean the market stand-off restriction specified
----------------
in Paragraph C.3.
P. 1933 Act shall mean the Securities Act of 1933, as amended.
--------
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
R. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. Option shall have the meaning assigned to such term in Paragraph A.1.
------
T. Option Agreement shall mean all agreements and other documents
----------------
evidencing the Option.
U. Optionee shall mean the person to whom the Option is granted under the
--------
Plan.
V. Owner shall mean Optionee and all subsequent holders of the Purchased
-----
Shares who derive their chain of ownership through a Permitted Transfer from
Optionee.
W. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
X. Permitted Transfer shall mean (i) a gratuitous transfer of the
------------------
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.
Y. Plan shall mean the Corporation's 1998 Stock Option/Stock Issuance
----
Plan.
Z. Plan Administrator shall mean either the Board or a committee of the
------------------
Board acting in its capacity as administrator of the Plan.
AA. Prior Purchase Agreement shall have the meaning assigned to such term
------------------------
in Paragraph D.4.
A-2.
<PAGE>
AB. Purchased Shares shall have the meaning assigned to such term in
----------------
Paragraph A.1.
AC. Recapitalization shall mean any stock split, stock dividend,
----------------
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
AD. Reorganization shall mean any of the following transactions:
--------------
(i) a merger or consolidation in which the Corporation is not
the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to a person or persons different from the
persons holding those securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.
AE. Repurchase Right shall mean the right granted to the Corporation in
----------------
accordance with Article D.
AF. SEC shall mean the Securities and Exchange Commission.
---
AG. Service shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.
AH. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
AI. Target Shares shall have the meaning assigned to such term in
-------------
Paragraph E.2.
AJ. Vesting Schedule shall mean the vesting schedule specified in the
----------------
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.
AK. Unvested Shares shall have the meaning assigned to such term in
---------------
Paragraph D.1.
A-3.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
consolidated financial data" and "Experts" and to the use of our report dated
November 18, 1999 in the Registration Statement (Form S-1) and related
Prospectus of Sequenom, Inc. dated November 24, 1999.
ERNST & YOUNG LLP
San Diego, California
November 18, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1999 DEC-31-1998 DEC-31-1997
<CASH> 3,047 8,560 833
<SECURITIES> 25,023 19,938 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 243 0 0
<CURRENT-ASSETS> 28,746 28,749 1,123
<PP&E> 8,174 5,068 1,356
<DEPRECIATION> 2,363 1,127 354
<TOTAL-ASSETS> 34,632 32,777 2,273
<CURRENT-LIABILITIES> 3,975 2,735 1,248
<BONDS> 6,759 730 3,348
0 0 0
15 13 6
<COMMON> 1 0 0
<OTHER-SE> 22,952 22,652 8,569
<TOTAL-LIABILITY-AND-EQUITY> 34,632 32,777 2,741
<SALES> 0 0 0
<TOTAL-REVENUES> 81 351 527
<CGS> 0 0 0
<TOTAL-COSTS> 16,116 10,406 5,392
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 576 613 308
<INCOME-PRETAX> (15,386) (10,271) (5,117)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (15,386) (10,271) (5,117)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (15,386) (10,271) (5,117)
<EPS-BASIC> (39.41) (33.33) (22.62)
<EPS-DILUTED> (39.41) (33.33) (22.62)
</TABLE>
